In your interest:

Sitting in a smoky haze as I write my column leaves me in rather a negative funk. The deaths of people protecting their property and the brave volunteers, plus people losing their houses and livelihoods and tens of thousands of people evacuating, is depressing. The vast devastation to our country, plus the deaths of hundreds of thousands of birds and animals, adds deeply to my reflective mood.

We’vehadtwoclosefriendslosetheirhomes,one near Forster late last year and more recently one near Tumbarumba. My friend near Tumbarumba also lost part of his vineyard.

The years 2019 and early 2020 have been hard for many people – and the planet. A large part of our global population has been impacted by regional wars, rapidly changing weather patterns and other disasters. In fact, it has been downright ugly for too many people.

Yet I need to also look out and up, because among all the bad news, which appropriately dominates everything we see and read, there has been significant progress in reducing global poverty and disease – in particular child survival rates. Medical advances are giving hundreds of millions of people a longer and better life and this is also to be celebrated.

So having cheered myself up somewhat, I can turn to pure money issues and remind myself and all of us that 2019 was a cracking year for both investors and mainstream borrowers. Borrowers always do better when interest rates fall – and fall they certainly have. At the Money magazine Best of the Best awards in

December, I was really interested to see that the “best” mortgages were charging customers under 3%. Wow, that is cheap money!

The bad investor news is that this means low returns on cash and term deposits. This would have impacted nearly every investor just a few decades ago, as we basically held cash. But thanks to superannuation and the popularity of shares and investment property, few investors hold solely cash these days. This means we have borrowers benefiting from much lower rates, while most investors had a cracking year.

If you simply held shares in the S&P/ASX 200 and reinvested your dividends, which is easily done in a low-cost index fund, you would have made around 23%. If you spent your dividends, which in 2019 were very healthy, you would have made around 18%.

Super funds are starting to announce their returns to December 31, but I see that my bogbasic, low-cost super “growth fund” earned me, after 15% tax on its earnings, over 17%.

The value of property is of no great interest to me. We live in our home, so its value is of little consequence, and with investment property we don’t eat the value of it, we eat the rent it returns and this has been pretty stable. Global shares have had a terrific year.

Yep, like many investors in our age group (I turn 65 this year – how did that happen!) we do hold some cash and term deposits as a safety buffer, so the 1.45% or so we are earning is pretty depressing, but as part of a diversified portfolio it makes sense for us to hold some safe and liquid assets.

No doubt 2020 will be another volatile year, with changing weather patterns, geopolitical instability, plus many and varied disasters. But in the middle of all of this, predictions are for the global population to grow by slightly over 90 million, poverty to decrease and hence wealth to increase. Huge advances will also continue to be made in medical science.

So while it does not feel like it, sitting here in smoke haze, it is likely that 2020 will be a good year for investors. My tip is to ensure you are paying low fees and are globally diversified. These days this is so easy with super, ETFs or indexed funds. There are just no excuses for not managing your investment risk through diversification.

Next up for my family is to use some of the benefits of a good year for investments to make a donation to some of the many good charities either directly assisting to fight the fires or helping people or wildlife impacted by the fires. I know millions of Australians are doing this and it is something that, when added together, makes a powerful difference.

I don’t know about you, but we feel a bit helpless and this is one way we can all make a contribution.