Maeve Bannister and Andrew Brown
(Australian Associated Press)

Lifelong learning incentives and bringing more women into the workforce could drive productivity and leave Australians substantially better off.

The Business Council of Australia has released a report outlining a series of policy shifts it believes will drive productivity growth and help the nation seize its economic future.

If implemented, the council expects the package of reforms to leave every Australian $7000 better off each year after a decade.

BCA chief executive Jennifer Westacott said Australia needed a co-ordinated approach to strengthen its economic resilience.

“We cannot continue to experience record low levels of business investment as a share of GDP where more money leaves the country than comes in,” she said.

“Investment drives innovation, which drives productivity and drives higher wages.

“We cannot continue to have an underperforming skills system that is failing to prepare Australians for the huge changes in the tasks that make up their jobs as the world of work changes.”

The council proposed deepening trade ties with India and Southeast Asia, broad-based tax reform to incentivise investment and a commitment between federal, state and territory governments to decarbonise the economy by 2050.

It also proposed moving away from a “fragmented” education system and transforming it into a sector that encouraged lifelong learning and skills development to prepare workers for future jobs.

A 10-year road map for government and business should also be implemented to advance women’s economic inclusion, with progress reported annually.

“Pieced together (the reforms) would overhaul Australia’s competitiveness and productivity, increase our participation in big global markets and fundamentally drive stronger economic growth,” Ms Westacott said.

Treasurer Jim Chalmers said the report aligned with the government’s economic agenda.

“We need to make our economy more productive, not by making people work harder and longer for less, but by combining the things that we know will deliver productivity growth in the coming decades,” he told reporters in Canberra on Monday.

“We don’t agree with every direction that the BCA has proposed.

“(But) if you look right across energy and housing, human capital, institutional reform, there is a great deal of alignment with the Albanese government’s agenda.”

The treasurer said prosperity and productivity required “a much more modern, dynamic and competitive economy”.

Dr Chalmers will this week release the latest Intergenerational Report, which is expected to show the nation’s population will age rapidly over the next 40 years, leading to a surge in demand for aged care and social assistance workers.

It will also show the nation experienced the slowest productivity growth in 60 years in the decade to 2020.

(Feedsy Exclusive)

Every now and then, you may notice a friend, relative or acquaintance post a fundraising plea to help out a family that lost a parent or provider, or to support the education or hospitalisation of an orphaned child left in the care of elderly grandparents. There are many kinds of such posts, and they are indicative of the fact that most Australians are underinsured and even totally uninsured.

Underinsurance refers to the gap between how much life insurance an individual or family needs and the actual amount of life insurance they hold. Even with the default life insurance cover provided through their superannuation, a lot of Australians still do not have the cover required should they need to make a claim someday.

When it comes to income protection and disability cover, even fewer Australians are insured. But why is this so and how can you avoid becoming a statistic?

Why Australians are underinsured

Although like most people Australians understand the value of insurance, they remain underinsured for the following reasons:

• The insurance-is-too-expensive mindset: People think that insurance or additional cover is an unnecessary costly expense when, in fact, being under- or uninsured is so much more difficult and expensive in the long run. What you can do to avoid this mindset is to educate yourself, shop around and compare policies.
• Lack of trust in insurers: Some people don’t believe that their insurer will be there to back them up in case a crisis hits them. They’re held back by thoughts of being denied when they make a claim.
• Inadequate knowledge and resources: People can get lost in the insurance jargon and turned off when they don’t understand what it entails.
• Confidence in their youth and vitality: This applies to young people, such as those who are in their 20s to 40s. Young adults especially have a tendency to assume that diet and exercise are enough insurance to last them indefinitely throughout their lifetime.
• Insurance as a low priority: A lot of people know the value of insurance but put off getting it indefinitely until it’s too late or already too expensive.

What also makes underinsurance in Australia a difficult problem is that both individuals and businesses experience it, one time or another.

Who’s at risk of underinsurance?

Although anyone can be underinsured, you are especially vulnerable to it if you:

• Just got married or divorced
• Already have or are planning to have kids
• Experienced recent job loss or a reduction in income
• Got a loan or mortgage
• Have people depending on you financially, such as your parents or younger siblings

To reduce your risk of being underinsured, you need to make an honest assessment of your assets and liabilities, or simply your monthly incoming and outgoing. You also need to check the amount of life insurance you have against what you actually need and find ways to reconcile the two.

Why?

Because when you are underinsured, you may find yourself and your family to be financially at risk when an unexpected urgent expense comes up, such as hospitalisation or funeral expenses. Other life-changing events that could leave you vulnerable include losing your house to a fire, flood or unemployment.

Turn things around and avoid underinsurance

As mentioned earlier, there’s no need for you to become a statistic. There’s no reason for you to become desperate when a sudden major financial need arises.

To prevent yourself from becoming underinsured, you can always seek advice from an insurance broker. With the help of a licenced expert who knows the ins and outs of life insurance (or other forms of coverage you need), you can ask questions and get the information you need to make a wise choice. They can help you calculate your coverage requirements so you are no longer underinsured.

You should also make a point of reviewing your life insurance every time you experience a major life event, such as getting married or having a child. Talk to your family about the financial preparations you are making, and get their input and help so you can all look forward to a secure, happy life.

If you need help getting started on your investment journey or require expert financial advice, please get in touch with your Financial Adviser. They’re there to help you secure your future no matter what stage of life you are in.

General Advice Warning:
The information in this App is provided for information purposes and is of a general nature only. It is not intended to be and does not constitute financial advice or any other advice. Further, the information is not based on your personal objectives, financial situation or needs. You are encouraged to consult a financial planner before making any decision as to how appropriate this information is to your objectives, financial situation, and needs. Also, before making a decision, you should consider the relevant Product Disclosure Statement available from your financial planner.

(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.