Bitcoin bubble takes gold

FOR the past 13 years of writing this column, I’ve held my very own end-of-year awards ceremony, which I call the ‘‘Fogeys’’.

The Fogeys were born partly out of television’s night of nights, the Logies, and partly out of superannuation, which looks after old fogeys (and us financial types) to the tune of $80 million a day.

I see it as a celebration of the characters who’ve managed to put a bit of showbiz into the all-too-sensible world of investing. So let’s get into the winners for 2017.

Bronze Fogey: The Royal Commission into Banking

This one goes out to the hardworking bank lobbyists. They’ve spent years fighting against a banking royal commission … even going so far as to ditch their $2 ATM fees as a token gesture. But a few weeks ago they realised their goose was cooked. So they switched overnight and demanded a royal commission … and then proceeded to start lobbying the government on the commission’s terms of reference.

Banking Rule #232: Don’t call for a royal commission unless you already know the outcome.

The Silver Fogey: Amazon.com.au

Gerry Harvey described Amazon’s much-anticipated first day as “a lame duck”. Amazon described it as the biggest and most successful launch day in the company’s history. Someone is in the wrong aisle. My take? Amazon is a bit like Dennis Lillee coming in from a long run-up — they’re only getting started. Just wait till they deliver their mega-successful Amazon Prime membership (two-day shipping of anything, plus all the original online Amazon content you can binge on). Remember to duck, Gerry! The Gold Fogey: The Bitcoin Bubble

If you’d bought $1000 worth of Bitcoin in 2010 when it was trading at 5 cents, you would now be worth …. oh shut the hell up! You didn’t buy any (and neither did I). Still, that hasn’t deterred the housewives in my wife’s mothers’ group, who are ‘‘seriously considering’’ buying Bitcoin — now that it is sitting at $US16,634 a pop (well, that’s the price as I write this). And with good reason: if it keeps going up at the rate it has been, in 10 years’ time the price of one Bitcoin will be worth a very cool $50, 000,000,000,000,000,000.

Fifty million quintillion dollars (that’s a real number for those of you counting on your fingers and toes).

Pretty hard to wrap your noggin around it isn’t it?

Well let me try: $50 million quintillion is 55 billion times what Bill Gates, the world’s richest man, is currently worth.

And any investment that can turn a suburban housewife into the richest person on the planet is a worthy winner of the Gold Fogey for 2017. Can Bitcoin back it up in 2018? Well, that’s the fun of the Fogeys.

Till next year … Tread Your Own Path!

ALONE AND UNSURE

Louise asks: Sadly, my husband passed away seven months ago, and my four daughters and I are facing our first Christmas without him.

At the age of 52, I am terrified at the prospect of being alone and poor! I have a reasonably balanced share portfolio which generates about $24,000 per year, I have a job earning $52,000, and I own my own home.

I am not looking for a “quick fix”, but do you think I am too old to start a property portfolio as well? And what about my girls, who each have a small portfolio started by my father?

Should we all stick with shares, or think of property? Barefoot replies: My heart goes out to you and your girls this Christmas.

After what you’ve been through this year, you want financial safety and security — I get it. You’ve got your shortterm security sorted, by owning your home outright.

Now you need to work on your long-term financial security, and the best place for that is super.

(By the way, I don’t think you’re too old to start a property portfolio, but I’d question whether it’s the right investment for a single mum on a relatively low income. For your daughters, I’d suggest they continue holding and compounding their share portfolios until they need to cash them in and put a deposit on a home.)

So if I were you, I’d keep your living costs low and each year salary-sacrifice up to the maximum $25,000 a year (in- cluding your employer contributions) into super — ideally an ultra-low-fee fund.

You could also talk to your accountant about the tax implications of selling part of your existing investment portfolio and transferring it into your super fund. You can bring forward three years of aftertax contributions ($100,000 per year, or $300,000 total) and put it into super. Your aim should be to retire at age 67 with well over $1 million in super.

Do this and you’ll be fine. Promise. You got this!

ON THE CARDS ...

Felicity asks: My wife and I have accrued a shameful debt of $40,000 on credit cards.

I tried to get a debt consolidation loan with CommBank, as we have most of our accounts with them, but they declined.

I earn $71,000 p.a. and my wife earns $55,000. We are renting and do not foresee ever getting out of this hole and saving for a house deposit. I feel smothered — please help! Barefoot replies: CommBank is betting you’re losers.

They’re betting you’ll keep paying their compounding credit card interest. They’re betting you’ll continue working your guts out for the next 20 years and end up with nothing.

They’re betting you’ll continue living in shame.

The question is, are you willing to bet on yourself?

If you are, let me show you what winning looks like.

OFF THE CARDS ...

Kim writes: Today my hubby and I paid out our two last credit cards and closed them! Citibank was not happy.

We had a cup of coffee and a piece of Lions Christmas cake to celebrate, then danced around the kitchen in front of our children.

Last year I’d never heard of Scott Pape but each year I buy myself a book for Christmas. The only reason I bought yours was that you are Australian. I went home, started reading and did not stop until the final page.

The next day I began implementing the Barefoot Steps, with a focus on paying off the blasted credit cards. And today — one year later — they are GONE!

We still have plenty left to achieve, but being done with credit cards makes me plenty happy. Best Christmas present we can give ourselves. Buying the book is the best money I have ever spent — my kids can expect their own copies for Christmas! Barefoot replies: Well done, Kim!

Now back to you, Felicity. You and your wife are bringing home $8300 a month after tax … and that’s before you get second jobs. On these figures you can domino your debts inside two years ... as long as you get some “Alpaca attitude” about you.

Merry Christmas, Felicity, and I look forward to hearing your own success story in two years’ time.