(Feedsy Exclusive)

The investment technique known as ethical investing prioritises the investor’s moral, religious and social ideals over financial gain. The reason for this is that a growing number of investors have begun to demand social responsibility from the companies they invest in, primarily because of the rise in dubious and unlawful investment arrangements.

Ethical investing entails fair labour practices, the production of healthy and beneficial goods and services, and abstaining from unethical business activities.

Investors who want to utilise their money to support good causes should consider ethical investment. Those who are interested in this type of venture have several options to choose from.

Types of Ethical Investments

Below is a list of the different types of ethical investments:

1. Environmental, Social and Governance Funds (ESG Funds)

ESG investment strategies target shares in businesses that follow good corporate, social and environmental practices. ESG funds take into account the potential effects that environmental, social and governance factors may have on a company’s performance when making investment decisions.

2. Faith-Based Funds

Faith-based funds (aka morally or biblically responsible, or faith-driven funds) only own stocks that uphold certain religious principles and values. This family of mutual funds rigorously avoids investments that do not match that category. They wouldn’t invest in companies involved with alcohol, anti-family entertainment, gambling, tobacco and similar potentially offensive practices.

3. Impact Funds

Impact investing is a term used to describe an investment approach where ethical improvements or positive results for the community and environment take precedence over fund performance or financial returns. Examples of this include investing in non-profits or businesses producing or using clean technology.

4. Socially Responsible Investing Funds (SRI Funds)

Socially responsible investing entails eschewing investments in contentious industries or companies that manufacture or provide addictive substances or activities or whose products or services go against the principles of social justice, sustainability and clean technology. This is why SRI funds steer clear of businesses involved in gambling, guns and ammunition, tobacco, alcohol and oil.

Pros and Cons of Ethical Investing

It’s important to be aware of its pros and cons, so you know exactly what to expect when ethical investing.

Pros:

• When an ethical holding company performs well, the investor benefits financially and emotionally as the business shares their ideals.
• Investments in ethical funds have a great potential to increase dramatically as more people become aware of them.
• The growing relevance and popularity of ethical investing will motivate other companies to raise the bar on their ethical standards in order to attract investors.

Cons:

• It takes a lot of investigation or due diligence to verify that investing in a business is in line with the investor’s values and views because it is not a passive strategy.
• Since ethical investment may not offer the best returns, the investor may need to forgo financial benefits in favour of upholding their ethical philosophy.
• More work and research goes into finding the right investment, so the costs for ethical investing can be higher compared to conventional investments.

That being said, the number of investors who want to make a positive impact on the society and environment is expected to continue growing.

If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.

(Feedsy Exclusive)

Investing can be a challenging exercise, although the principle behind it is deceptively simple: buy when prices are low. However, this is easier said than done. Even seasoned investors who attempt to time the market to buy at the most advantageous periods don’t expect to succeed every single time.

Good thing there’s a proven investment strategy you can adopt that can make it simpler to manage your investments in a volatile market. It’s a method that allows you to purchase more when prices are lower and buy less when costs are higher. This investment approach is called dollar cost averaging.

Dollar cost averaging – the basics

Dollar cost averaging involves investing the same amount of money in a target security (e.g., stocks, exchange-traded funds (ETFs), mutual funds, etc.) at regular intervals within a set timeframe. This means you’ll be purchasing shares regardless of price using the same sum of money.

Let’s say, for example, you’re thinking of investing $1,000 in stocks within the first five months of the year. 

With dollar cost averaging, you’ll be investing $200 every month until you reach the fifth month.

Else, you could invest the entire $1,000 at any time within your target timeframe.

However, for investors who want to make investing a habit and are aiming to lower their average cost per share, dollar cost averaging makes total sense.

Going back to the example, dollar cost averaging lets you take advantage of the lower share prices in Months 3, 4, and 5, thereby reducing the average cost per share. Although the price per share is $10 in the first two months, the average cost per share turns out to be $8.64, thanks to your investments in the last three months. You also get to accumulate a total of 115.7 shares.

Conversely, should you decide to invest the entire $1,000 in Month 1, you’ll be paying $10 per share and be able to purchase 100 shares – which is 15 shares less compared to when you apply dollar cost averaging.

You may think you can always invest the entire sum in Month 3 or 4 to get the best results.

However, as pointed out at the beginning of this post, timing the market is a risky exercise. You can never really tell with absolute certainty when prices are going up or down. You need to make very calculated risks for this strategy to work for you.

With dollar cost averaging, you can lessen the effect of volatility on your portfolio.

Give dollar cost averaging a try

If you’re new to investing, dollar cost averaging is a prudent investment strategy worth considering.

Not only does it encourage you to make regular investments, but it can also cushion your investment from the highs and lows the market goes through.

If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.

Poppy Johnston
(Australian Associated Press)

Hundreds of thousands of young workers are missing out on super from their employers because of a rule that bars them from automatic contributions.

Under the law, under-18 workers are not entitled to compulsory super contributions unless they work 30 hours a week for the same employer.

Few young workers work such long hours and miss out on super contributions that their over-18 colleagues would get for the same job.

Numbers crunched by Industry Super Australia revealed teenage workers are heavily penalised by the rule, with the average young worker forgoing an extra $885 a year.

Upon retirement and after years of compound interest, this amounts to a $10,200 hit to their final super balances.

The industry super body wants the 30-hour threshold law removed.

Industry Super Australia chief executive Bernie Dean said modernising the rules would also benefit employers.

“Removing the 30-hour threshold wouldn’t just be fair for young workers, it would be good for the employers who have to face the administrative nightmare of keeping track of the weekly hours of a highly casual workforce,” he said.

The decades-old rules were intended to protect young workers from high fees that eat into low super balances.

But in 2018, administrative and investment fees on low-balance funds were capped.

“This is an out-of-date law that discriminates against our youngest workers just as they’re starting out – it’s unfair and the law needs to be modernised,” Mr Dean said.

(Feedsy Exclusive)

Being appointed as the executor of an estate is a significant responsibility that requires careful consideration.

While it may be an honour to be entrusted with this important role by a loved one, the reality is that estates can be quite complex.

Acting as an executor can often be stressful, time-consuming, and physically taxing. It can even harm family relations and friendships when expectations are not met.

Complications executors may face

Executors may be required to deal with various third parties, such as banks, real estate agents, utility providers, the deceased person’s superannuation fund, the taxation office and impatient beneficiaries.

They also need to carry out a million tasks — from making funeral arrangements, applying for the death certificate, informing family, friends and other loved ones of the deceased person’s passing, to locating the will and beneficiaries, sourcing hundreds of documents, paying off estate liabilities, taking an inventory of estate assets, claiming insurance and superannuation benefits and so on.

While carrying out their responsibilities, executors may also face the following problems:

• Exposure to personal financial risk and liability if they make any mistakes in the estate administration process.
• Challenges and delays in receiving superannuation death benefits and dealing with the fund trustee.
• Personal responsibility for losses resulting from the mismanagement of estate assets, including their failure to locate, secure and prudently invest estate assets, give proper notice to creditors, identify and pay all legitimate debts of the deceased, collect all debts owed to the deceased, etc.
• Financial penalties for taking too long to administer an estate or for distributing an estate too quickly.

Ensure a smoother estate administration process

If you’re the one leaving a will and appointing an executor, there are things you can do to help ensure your estate is administered properly.

• Write your will with the help of a probate lawyer or solicitor experienced in or who specialises in wills and estate administration. It’ll also help if they’re familiar with family and inheritance laws in your state or territory.
• Relationships and circumstances may change, so make sure you update your will, insurance policies and superannuation death benefit details.
• Note that your superannuation is not part of your estate, so you cannot include it in your will. However, you may reaffirm your intentions and whatever arrangements you’ve made in your super death benefit nominations in your will.
• Talk to your financial adviser and super fund about making death nominations that’ll make it easier for your beneficiaries to get the benefits allocated to them.
• Consider withdrawing your entire death benefit from the super fund while you’re still around, so you can distribute it yourself or put it away in a bank account that your executor can access faster should you pass away.

If you’ve been tasked to act as executor by a living relative or loved one, you would do well to discuss the above with the testator (the one who has appointed you as executor) and their solicitor (and financial adviser if they have one) to go over the above details.

By covering the legal bases, you can avoid costly mistakes and shield your loved ones from any potential liability and complications that may come with settling the estate and claiming death benefits.

If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.

This information does not take into account the objectives, financial situation or needs of any person.

Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation or needs.

Andrew Brown and Poppy Johnston
(Australian Associated Press)

Treasurer Jim Chalmers is confident Australia is not heading towards a recession despite some economists warning the path to a soft landing from soaring inflation is narrowing.

He says the Australian economy might stutter as interest rates lift, but neither the Reserve Bank nor Treasury are anticipating a recession.

“We do expect the Australian economy to slow considerably,” the treasurer said.

“This is the inevitable consequence of the interest rate rises that began before the election and continued after, and also the substantial slowdown in the global economy.”

Mr Chalmers said the Australian labour market was outperforming international peers, leaving the nation in a strong position to withstand economic challenges.

Reserve Bank governor Philip Lowe also maintains Australia is on its “narrow path” to return inflation to a two-to-three per cent target range with a growing economy.

But in his most recent public appearance, Dr Lowe conceded there were significant risks to this pathway.

Some economists are also growing more worried about a recession in Australia, including HSBC’s Paul Bloxham.

“A recession is not our central case, but despite the helpful support of strong population underpinning GDP, we see a 50-50 chance that Australia tips into a recession,” he wrote in a note.

Mr Bloxham said the risk was high inflation started to embed itself in the system as the sharply rising cost of living prompted workers to ask for pay rises.

“And that if wages growth picked up too much, it would become more difficult to get inflation back to the central bank’s target,” he said.

Under this scenario, there would need to be a much steeper fall in demand and a marked rise in unemployment to cool off wages growth.

But separate analysis by St George economists suggests goods inflation will ease quickly as wholesalers start discounting to get rid of excess stock, which could help take pressure off the RBA’s interest rate tightening cycle.

Businesses have scrambled to restock their warehouses after the COVID-19 pandemic disrupted supply chains.

Wholesale business inventories have shot to record highs, well above pre-pandemic levels.

Retailers have also rebuilt their supplies to pre-pandemic levels.

Under these conditions, St George economist Jameson Coombs said it was likely wholesalers would start lowering their prices as economic activity slowed.

“The sheer volume of inventories coupled with softer consumer demand means that more discounting than usual is likely to be necessary,” he said.

Mr Coombs said high industrial property rents were making it expensive to store goods, adding another incentive to unload stock.

The economist said the discounting would accelerate the disinflationary process already under way in goods prices.

Goods prices, as measured in the consumer price index, were rising at a rate of 7.6 per cent in the March quarter, down from 9.5 per cent in the December quarter.

Mr Coombs said the findings highlighted the importance of services in the fight against high inflation.