A2M shares skyrocket


Today was a good day to be a shareholder of A2M (a2 Milk Company Limited) which saw a 29.74% gain on the ASX (Australian Stock Exchange). I’ve held A2M shares since mid-2017 and currently sitting on a profit of 51%!!!

A2M has seen consistent gains over the last few years while they have focused strongly on tapping into international markets beyond just Australia and New Zealand.

The reason for today’s big leap was the announcement of A2M joining forces with another big dairy producer, Fonterra, in the ASX market Release. This joint-venture includes benefits such as access to large-scale manufacturing performance and producing a new A1 protein-free milk product line.

I’m a big believer in holding shares and low-cost index funds that pay dividends but A2M are my only exception, and who could argue when you look at their track record.

Source: Commsec

A2 Milk released some really strong figures and a promising outlook for 2018.

FY18 Outlook

  • Expecting marketing investment in 2H18 to exceed 1H18 by ~NZ$35-$40 million, driven by increased spend in China and USA.
  • Subject to currency movements and realisation of throughput efficiencies, GM% expected to be broadly consistent in 2H18
  • Inventory levels have improved during 1H18; forecasting further build in 2H18

1H18 Trading Performance

  • Group Revenue of NZ$434.7 million
  • Group EBITDA of NZ$143 million

A2 Milk has received amazing success in the Chinese markets with the demand for baby formula that is produced in New Zealand and Australia being viewed as a superior product compared to other products that are in the market.

China and Asia regions

  • Distribution in China Mother Baby Stores (MBS) now totalling approximately 6,700 stores
  • a2 Platinum infant formula launched in Hong Kong through approximately 350 high-end pharmacy outlets.
  • Extensive video billboard campaigns launched in Hong Kong

Australia and New Zealand

  • Australian market value share of a2 Platinum infant formula grew from 25% to 30%
  • a2 Milk named top brand of choice for Australian millennials (survey results from The Urban List, Food & Drink, May 2017)
  • a2 Milk is still the fastest growing infant formula brand by value in Australia



Warren Buffett won his multi-million dollar bet


10 years ago Warren Buffett placed a bet against the hedge fund managers that the S&P Index fund would outperform a collection of hedge funds. That decade has now come and Warren has won the bet with the market outperforming the hedge fund group, Protege Partners, LLC.

Warren Buffett, among many other experienced investors, has been quite public about the fact that everyday investors are forking out huge fees when being involved with hedge funds for inferior gains.

As we talked about in our Vanguard Index fund article, investing in low-cost index funds is a great game-plan when it comes to efficient investing. For this particular bet, Warren Buffet selected a Vanguard Index fund and the Protege group selected 5 hedge funds of funds but haven’t announced which ones those exactly were.

The chance of beating the market is extremely difficult, professionals work very long hours each day and still won’t achieve it most of the time. Only by sheer luck or pure brilliance, they may come out on top for a period of time.

Warren Buffett donated his winnings to the Girls, Inc charity.

Stock Market Corrections


The stock markets have seen big corrections over the past week with the Dow Jones and S&P being hit multiple times. During these corrections or even a full-blown crash, it’s important to not act on emotions and think logically. The decisions that you make can change the total figure of your portfolio come retirement vastly.

This article is from Tony Robbins’s monthly “Power Report,” which provides advice and tips about money, investing, and personal finance.

By Tony Robbins

The S&P 500 experienced an average intra-year decline of 14.2% from 1980 through the end of 2015. In other words, these market drops were remarkably regular occurrences over 36 years. Once again, nothing to be scared of — just a matter of winter putting in its usual seasonal appearance. But you know what really blows my mind? The market ended up achieving a positive return in 27 of those 36 years. That’s 75% of the time. This happened just recently when the S&P 500 sank 11% in January 2016. It then made a sharp U-turn and headed for new highs.

Why is this so important? Because it reminds us that the market generally rises over the long run — even though it hits a huge number of potholes along the way. You know as well as I do that the world had its fair share of problems over those 36 years, including two Gulf wars, 9/11, the conflicts in Iraq and Afghanistan, and the worst financial crisis since the Great Depression. Even so, the market ultimately rose in all but nine of those years.

But what if America’s economic future is lousy? It’s a fair question. We all know there are serious challenges, whether it’s the threat of terrorism, global warming, or Social Security liabilities. Even so, the U.S. boasts an incredibly dynamic and resilient economy with powerful trends driving its future growth. In his 2015 annual report to Berkshire Hathaway BRK.A, shareholders, Warren Buffett addressed this subject at length, explaining how population growth and extraordinary gains in productivity will create an enormous increase in wealth for the next generation of Americans. “This all-powerful trend is certain to continue: America’s economic magic remains alive and well,” he wrote. “For 240 years, it’s been a terrible mistake to bet against America, and now is no time to start.”

When the stock market starts tumbling — especially when it’s down more than 10% — many people hit their pain threshold and start to sell. They’re scared the slide could turn into a death spiral. Aren’t they just being sensible and prudent? Actually, not so much. It turns out that fewer than one in five corrections escalates to the point where they become a bear market.

To put it another way, 80% of stock-market corrections don’t turn into bear markets. If you panic and move into cash during a correction, you may well be doing so right before the market rebounds. Once you understand that the vast majority of corrections aren’t that bad, it’s easier to keep calm and resist the temptation to hit the eject button at the first sign of turbulence.

On average, there’s been a market correction every year since 1900. When I first heard this, I was floored. Just think about it: if you’re 50 years old today and have a life expectancy of 85, you can expect to live through another 35 corrections. To put it another way, you’ll experience the same number of corrections as birthdays. (Note: a correction is defined as a drop of at least 10% but not more than 20%. A bear market is a drop of more than 20%).

Why does this matter? Because it shows you that corrections are just a routine part of owning stocks. Instead of living in fear of corrections, accept them as regular occurrences. Historically, the average correction has sent the market down 13.5% and lasted 54 days — less than two months.

Still, in the midst of a correction, you might find yourself becoming emotional and wanting to sell because you’re anxious to avert the possibility of more pain. You’re certainly not alone. These widespread emotions create a crisis mentality. But the vast majority of the time, the sky is not falling. It is a simply a “seasonal storm.”

How bad does it get when the market really crashes? Historically, the S&P 500 SPX,  has dropped by an average of 33% during bear markets. In more than a third of bear markets, the U.S. benchmark index plunged by more than 40%. I’m not going to sugarcoat this. If you’re someone who panics, sells everything in the midst of this mayhem, and locks in a loss of more than 40%, you’re going to feel like a grizzly bear mauled you for real. Even if you have the knowledge and fortitude not to sell, you’ll likely find that bear markets are a gut-wrenching experience.

Even Vanguard Group founder Jack Bogle admits that bear markets are no walk in the park. “How do I feel when the market goes down 50%?” he asks rhetorically. “Honestly, I feel miserable. I get knots in my stomach. So what do I do? I get out a couple of my books on ‘staying the course’ and reread them!”

Sadly, many investment advisers fall victim to the same fear and hide under their desks during tumultuous times. Peter Mallouk (my co-author) told me that ongoing communication during these storms is key. Here’s what you need to know: bear markets don’t last. The 14 bear markets in the U.S. over the past 70 years have varied widely in duration, from a month-and-a-half (45 days) to nearly two years (694 days). On average, they lasted about a year.

If you would like to follow more of Tony Robbins thoughts on investing and personal finance, see our review on his best-selling book, Money Master the Game.

Diversify across stocks and bonds


We will go through the numbers of how your investment portfolio would look over the period 1926 to 2016 with various ratios across stocks and bonds. This will show the importance of having a diversified portfolio to minimise risk.

Different ratios will suit different people depending on many factors such as age, risk appetite and what your goals for retirement are.

Diversify-Across-Stocks-and-Bonds-income-master Diversify-Across-Stocks-and-Bonds-income-master Diversify-Across-Stocks-and-Bonds-income-master Diversify-Across-Stocks-and-Bonds-income-master Diversify-Across-Stocks-and-Bonds-income-master

The 100% allocation in stocks shows strong annual growth, but a whopping 25 years of losses. If you are getting into the investment game at a young age, you could consider this approach as you have a greater amount of time to ride out the bad years.

If you are older, you have much less time to bring the numbers back into the green so you are likely to end up at a loss overall. You are better to diversify your portfolio with more bonds and other options such as Term Deposits where you get paid a guaranteed amount.

Remember asset allocation. Have stocks in a broad range of industry sectors, or make use of low-cost index funds like those offered by Vanguard and Blackrock which capture stocks from all different sectors.

Another way to diversify your portfolio beyond just stocks and bonds is using annuity offerings.

Positives of annuities

  • You aren’t liable to pay tax on the investment earnings
  • If you purchase annuities using funds from your superannuation, they are tax-free from 60 years old
  • You receive a guaranteed income

Negatives of annuities

  • You have no say in how the money is invested
  • You can’t take out money in a lump sum, as it’s paid out to you gradually like a salary
  • Depending on how the markets perform, you may be paid out less than using other investment strategies




Numbers sourced from Vanguard

10 Australian Finance Podcasts

best podcasts income master

On the hunt for podcasts about money, buying and investing in property, shares and much more in Australia? We have put together a list of 10 popular money-related podcasts that are based in Australia.

    • The Property Couch
      One of my friends recommended this podcast to me last year when I mentioned that I was on the lookout for more interesting ones as I had binged through all of my current subscriptions. The hosts, Ben and Bryce, are entertaining and go through all facets of the Australian property market. They will cover investing, purchasing, tax minimisation and also have the occasional guest on.
      The Property Couch podcast income master
    • On The Money
      Peter Switzer hosts this podcast who has a long history working in the Australian financial industry. He discusses personal finance.
    • Money Podcast
      The Money Podcast is produced by the Australian website finder.com.au and they discuss personal finance as well as current money-related news across the world.
      Money podcast Finder income master
    • Financial Autonomy
      This podcast is hosted by Paul Benson and he has many guests on the show to talk about getting your money on track and achieving your financial goals.
      financial autonomy podcast income master
    • Work.Life.Money
      The Work.Life.Money podcast is hosted by Ross Greenwood who is Channel Nine’s finance editor and was originally the co-host host of the show, Sunday. They discuss finance, superannuation, budgeting, focussing on all age groups.
      work life money podcast income master
    • The Money
      The Money podcast is produced by the ABC network and features a range of different hosts that cover the Australian economy.
      The money podcast income master
    • Your Money Your Call
      This podcast is produced by the Sky News channel with a variety of different hosts featured on the show. This podcast is different compared to the others as it is structured as a Q&A show, meaning callers ring through and ask questions with the panel of experts providing their knowledge on the topic.
      Your money your call podcast income master
    • The Business Experiment
      This podcast is hosted by two ladies, Shevonne and Jeminah, who have experience in owning a business so this one will appeal to the entrepreneurship type of people.
      The business experiment podcast income master
    • The Money Cafe
      The Money cafe focus podcast is hosted by Kohler and Kirby and as advertised, the podcast is recorded in a cafe. This may turn some people off due to the distracting noises at times. The podcast is produced by The Australian newspaper.
    • The Rentvesting Podcast
      This podcast is hosted by Jayden Vecchio and produced by Red & Co. In their latest episode, they covered such topics as:
    • David Hyne is a Director of Herron Todd White National Valuers
    • He is based in Brisbane so we speak about the local Brisbane market, things to look for, indicators on when to spot growth, and how to look at markets and find the next hotspot.
    • Where you can buy houses and properties under $500k.
    • We then talk about buying property off the plan, and the difference between investor stock, compared to owner-occupied stock.
    • It’s something you might not have heard of and could be buying a property that is affected by its resale. Lastly, we close off for the next 3-5 years.

      Let us know in the comments section below if you have come across some other podcasts that you have found beneficial.

Why you should buy dividend paying stocks


We have talked about passive income before and receiving dividends from your stocks and ETFs is a great way to generate some on a regular frequency. They are also a useful tool in building your stock portfolio as you can use the funds to purchase more shares.

Before making a purchase on some new units of stock, it’s good to look into what the dividend history and yield is.

What are franking dividends?

Franked dividends are when the after-tax profits of a company are distributed to shareholders as dividends. A franking credit, or also known as imputation credits, defines the amount of tax the company has paid.

If you choose to reinvest the dividend payment to purchase more shares, it’s still required to be mentioned on your tax return. It’s a good idea to print your statements out or keep them in an online cloud storage service like Dropbox so you have everything accounted for come tax time.


What is the difference between franked and unfranked dividends?

Unfranked dividends will sometimes mean that you will have to pay more in tax than receiving fully franked dividends but the results will vary depending on which income bracket that you fall into.

So for example, if you fall into the $37k to $87k taxable income bracket and you received $700 in dividend payments,  paid fully franked with an imputation credit (or franking credit) of $300, this is how the calculation would look:

34% tax bracket (32.5% marginal tax rate + 1.5% Medicare levy).

$1,000 x 34% = $340 tax payable less the $300 in imputation credits already paid.

So $700 – $40 = $660 after tax.

Australian income tax rates

Resident tax rates 2017–18 (Source ato.gov.au)
Taxable incomeTax on this income
0 – $18,200Nil
$18,201 – $37,00019c for each $1 over $18,200
$37,001 – $87,000$3,572 plus 32.5c for each $1 over $37,000
$87,001 – $180,000$19,822 plus 37c for each $1 over $87,000
$180,001 and over$54,232 plus 45c for each $1 over $180,000

What are good Australian dividend paying stocks?

Here are some examples of good dividend paying stocks that you can buy from the ASX (Australian Stock Exchange).

  • Commonwealth Bank Of Australia [CBA]
    Annual Dividend yield 5.44%
    100% Franked
    EPS 5.776 AUD
  • Westpac Banking [WBC]
    Annual Dividend yield 6.15%
    100% Franked
    EPS 2.380 AUD
  • Australia and New Zealand Banking [ANZ]
    Annual Dividend yield 5.65%
    100% Franked
    EPS 2.201 AUD
  • National Australia Bank [NAB]
    Annual Dividend yield 6.83%
    100% Franked
    EPS $1.947 AUD
  • Telstra [TLS]
    Annual Dividend yield 8.68%
    100% Franked
    EPS $0.325 AUD
  • Cardinale Property Trust [CDP]
    Annual Dividend yield 5.21%
    EPS 0.633 AUD
  • Nick Scali Limited [NCK]
    Annual Dividend yield 4.78%
    EPS 0.460
    100% Franked

Banks, in general, all pay strongly so they are good to have in your investment portfolio. When making the decision to purchase stock, it pays to look at the dividend payout history. Some companies may struggle to build a nice, consistent payment growth and suffer pay cuts on weaker years.


Top 5 gainers on the ASX200 8th to 15th January

Vanguard low cost index funds VEU Income Master

Here are the top 5 gainers on the ASX200 across the period January 8th to January 15th.

  • (BPT) Beach Energy – 8.5%
  • (S32) SOUTH32 – 7.6%
  • (JBH) JB Hi-Fi – 7.4%
  • (BHP) BHP Billiton – 5.1%
  • (PTM) Platinum Asset Management – 5.0%

Beach Energy Limited [BPT]

This company sells gas, gas liquids, oil as well as develops and produces energy products.  They have a $3billion dollar market cap and are based in Glenside, South Australia.

Earning and Dividends forecast

EPS 2017 – 16.9

EPS 2018 – 10.2

EPS 2019 – 10.9

DPS 2017 – 2.0

DPS 2018 – 4.1

DPS 2019 – 4.5

Source: Morningstar Analyst Estimates

South32 Limited [S32]

South32 Limited is a metals and mining company based in South America, Australia and South Africa. They have a $20billion dollar market cap and have over 13,000 employees.

Earning and Dividends forecast

EPS 2017 – 29.8

EPS 2018 – 31.7

EPS 2019 – 26.2

DPS 2017 – 13.0

DPS 2018 – 18.4

DPS 2019 – 14.7

Source: Morningstar Analyst Estimates

JB Hi-Fi [JBH]

JB Hi-Fi is an electronics retailer based in Australia who performed well over the 2017 Christmas period despite there being a lot of talk about the increased competition with Amazon. JB Hi-Fi has around 12,000 employees and a market cap of $3billion.

Earning and Dividends forecast

EPS 2017 – 186.8

EPS 2018 – 207.1

EPS 2019 – 213.4

DPS 2017 – 118.0

DPS 2018 – 134.6

DPS 2019 – 139.2

Source: Morningstar Analyst Estimates

BHP Billiton [BHP]

BHP Billiton is a large mining company based in Australia with a market cap of $163billion. They have over 26,000 employees and well known for being a good stock to hold for dividend payments. BHP Billiton has an estimated 8.7% annual growth in earnings and expected to exceed the low-risk savings rate of 4.6%

Earning and Dividends forecast

EPS 2017 – 172.7

EPS 2018 – 196.5

EPS 2019 – 160.1

DPS 2017 – 106.1

DPS 2018 – 135.1

DPS 2019 – 113.8

Source: Morningstar Analyst Estimates

Platinum Asset Management [PTM]

Platinum Asset Management is a publicly owned hedge fund sponsor based in Sydney, Australia. They were founded in 1994 and have a market cap of just under $5billion. They have a 3% expected annual growth in earnings and have competitors such as Magellan Financial Group, BT Investment Management and Perpetual.

Earning and Dividends forecast

EPS 2017 – 31.7

EPS 2018 – 32.8

EPS 2019 – 36.5

DPS 2017 – 30.0

DPS 2018 – 31.0

DPS 2019 – 34.7

Source: Morningstar Analyst Estimates


A really cool investment portfolio website

I only came across Simply Wall St recently but have fallen in love with it. You can enter in all of the stocks that you hold and it will provide you with a really clean interface full of graphs, statistics, suggestions and much more.

It’s really easy to play around with the site for hours! If you’re like me that is always on the hunt for new shares to buy, it’s a great place to use as it will

provide you with so much vital information whether the investment fits your risk appetite profile, offers the dividends that you want etc.

Simply Wall St

The Ideas area offers a wide range of possible stocks or index funds that may be of interest to you with such catagories as renewable and clean technology, aerospace and defense, tech stocks and potentially undervalued stocks. Each Stock/Fund displays a snowflake graph which details 5 aspects. Value, Future, Past, Health and Dividend.

Simply Wall St

Simply Wall St is also available on the iTunes App store and the Google PlayStore. I recommend using the apps if you are intending to use it on a phone as I came across a few issues when using the mobile-based website.

Simply Wall St

They cover a wide range of exchanges like the ASX, NYSE, Nasdaq, NSE, BSE, TSX, TSXV, LSE, AIM, NZSE, SEHK and SGX. There are many others that are currently being worked on and will be supported soon.

Simply Wall St

There is 3 different tiers of plans offered. Free, The Investor Plan $174 and the Pro Plan, $480. The free plan is enough if you don’t hold a huge portfolio as it supports 6 company transactions in a portfolio.


Investing with BlackRock in Australia

BlackRock investors Income Master

Much like Vanguard, BlackRock is another provider of low-cost index funds and many other investment solutions.

BlackRock offers a large range of ETFs with low management fee rates across different asset classes and managed funds. There are different asset classes available such as Cash, Fixed Income and Equities.

They were founded back in 1988 are now the world’s number 1 asset manager with a massive $5.7 Trillion assets under management as of 2017.

Here is a small list of some of the ETFs that are available through BlackRock.

  • [Code: IVV] iShares S&P 500 ETF (Management fee: 0.04%)
  • [Code: IJR] iShares S&P Small-Cap ETF (Management fee: 0.07%)
  • [Code: BILL] iShares Core Cash ETF (Management fee: 0.07%)
  • [Code: IHHY] iShares Global High Yield Bond (AUD Hedged) ETF (Management fee: 0.56%)
  • [Code: IJP] iShares MSCI Japan ETF (Management fee: 0.49%)
  • [Code: IHVV] iShares S&P 500 AUD Hedged ETF (Management fee: 0.10%)

You can create an individual investor account on the BlackRock website to get started or you can also purchase their ETFs on investment platforms like ANZ Share Investing, Commsec and BT Panorama.

investment graph chart income master


Full fund list for BlackRock iShares ETFs

There are some great options available for passive income as the dividends are very generous. Below are the distribution yield rates which is calculated in Australian dollars when taking into account all the distributions that were paid out over a 12-month rolling period.

  • [Code: IVV] iShares S&P 500 ETF – Distribution Yield – 1.76%
  • [Code: IJR] iShares S&P Small-Cap ETF- Distribution Yield – 0.76%
  • [Code: IHHY] iShares Global High Yield Bond – Distribution Yield – 6.98%
  • [Code: IJP] iShares MSCI Japan ETF – Distribution Yield – 1.55%
  • [Code: IHVV] iShares S&P 500 AUD Hedged ETF – Distribution Yield – 1.78%

BlackRock have put together some really simple to understand and great brochures for their ETFs. These are recommended to read through before making a decision so you can see which one suits your risk-profile and how it suits with the rest of your investment portfolio so you remain diversified.


Low-cost Index Funds – Vanguard Investments

Vanguard Investments Income Master

An extremely effective way to invest your money is to make use out of Low-cost Index Funds, such as those offered by Vanguard Investments. Your money won’t get eaten up by fees like what can occur in Managed Funds and the performance is also very reliable.

When very financially successful people like Warren Buffett and Tony Robbins swear by using Low-cost Index Funds, it’s a good sign that you should take up the opportunity as well.

The Vanguard 2017 Index chart shows a snapshot of the past 30 years and shows the advantages of being diversified across a different range of assets. Asset allocation is king!

Getting involved with the Vanguard product offering is easy and cheap. I am personally using the Commonwealth Bank’s investment platform, Commsec.

Vanguard low cost index funds VEU Income Master
Source: Commsec

Commsec is a really good value investment platform, I find the mobile app is really nice and simple to use. They have lower brokerage costs (from as low as $10 per trade) than a lot of other competitors, no ongoing account fees, and access to all ASX-listed securities, ETFs, shares, options and warrants. The price of entry is a minimum investment of $500.

The Vanguard low-cost Index Funds such as VEU (VNGD ALL-WORLD EX-US) pay dividends so it is a great way to obtain some passive income. If you are older and have your holdings at a strong level, you could live off the dividend payments or supplement your income. If you’re younger it’s good to just continue to reinvest those dividends and obtain as many units as you can.

ETF’s have been very popular over the last decade, Vanguard has an ETF fee comparison calculator available. Fees add up over time just like we discussed in other posts regarding superannuation and can take away a huge chunk out of your profits.

stock charts income master

Advantages of investing using low-cost index funds

  • Lower fees
  • Shorter settlement period
  • The money is diversified across different sectors
  • Reliable track record of returns over the last 50 years
  • They generally generate smaller capital gains distributions compared to managed funds due to the lower level of trading activity involved
  • Lower tax exposure
  • Exposure to the asset classes you are interested in.