Edi­tor’s let­ter

Money Magazine Australia - - CONTENTS -

As a re­cently ar­rived mi­grant (three years now) and a qual­i­fied ac­coun­tant, I am per­plexed to see the Aus­tralian ob­ses­sion with real es­tate (not­with­stand­ing the irony that de­spite be­ing a con­ti­nent with so much land, there ex­ists a hous­ing cri­sis), and vir­tu­ally no dis­cus­sion on eq­uity/man­aged funds on prime-time tele­vi­sion or from the govern­ment. Time and again, it has been proven that the best as­set class over a long pe­riod is eq­ui­ties. The Buf­fetts and Van­guards of the world be­came rich in­vest­ing in busi­nesses.

Even in devel­op­ing coun­tries such as In­dia, the govern­ment en­cour­ages in­vest­ment through mu­tual funds that yield high dou­ble-digit re­turns. These in­vest­ments in man­aged funds (eq­uity linked) with a lock-in pe­riod of three years lower tax li­a­bil­ity in the year of in­vest­ment, and the gains are tax free when sold.

No other as­set class gives you the re­turn of eq­ui­ties over the long term. Stocks are not every­one’s cup of tea and are per­ceived as risky but if one looks at su­per funds (which es­sen­tially make eq­uity in­vest­ments), the re­turns are not bad. In a well-reg­u­lated mar­ket such as Aus­tralia, where cor­po­rate gover­nance and re­port­ing stan­dards are de­cent (try China!), the ap­par­ent risks are low.

Per­haps it’s time we changed the nar­ra­tive and en­cour­aged or­di­nary peo­ple to in­vest in the mar­kets, rather than keep chas­ing real es­tate. And the govern­ment should en­cour­age this!

Adi, NSW

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