Good value shines through the gloom
After two years of falling sales, the motoring industry was resigned to a tough 2020 even before Covid-19 appeared. First-quarter vehicles sales dropped 13.1% compared with 2019. However, there were a few shining lights amid the gloom as buyers turned to brands offering good value.
One of these is MG, whose idea of buying a classic British trademark for its Chinese-built cars is starting to pay off. Its MG3 hatchback and ZS and HS SUVs helped it achieve a 93% jump in the first quarter, with its 3316 sales more than double those of established brands such as Renault and Skoda.
Another brand synonymous with value is Kia, which recorded a 4.5% jump, led by its Cerato and Sportage models.
Meanwhile, Holden demonstrated how stars shine brightest just before they implode, with a 30% jump in year-on-year sales in March, with buyers seeking firesale bargains. The Colorado ute proved particularly popular with 2391 sales, seeing it hit number five on the vehicle sales chart.
European lawmakers have sent a powerful signal about electronic waste that could have vast implications for technology companies.
In late January, a resolution approved in the European parliament called for the mandatory introduction of common chargers for all mobile devices. If new laws are enacted, it could mean the range of different charger types today (micro-USB, USB-C and Apple’s lightning) will consolidate into one universal standard. This would be easier for consumers, many think, and would mean less e-waste.
Then in March, the European Commission went further, announcing new pro-sustainability plans including an ambitious “right to repair” for electronic goods. It’s a great initiative, since most tech today is difficult or even impossible for ordinary people to ever attempt repairing themselves.
One website, iFixit, argues we need to take back this right to repair and reviews gadgets solely in terms of how easy and practical they are to fix. Here are some of the items with iFixit’s seal of approval, meaning they’re easier to repair, largely better for the environment and might even end up saving you money.
What is it? HP Elite x2 G4 tablet with keyboard (pictured)
How much? $2965 Pros: Tablets are notoriously difficult to repair. After all, attaching a thin slate of glass to a powerful touch-based computer only millimetres thick usually calls for a lot of specialised manufacturing wizardry (and glue). As a result, most iPads get scored 2/10 by iFixit in terms of repairability, but HP’s Elite x2 G4 fetches a solid 9/10.
Cons: A powerful Windows 10 hybrid (with a keyboard to boot), but not cheap. hp.com.au
What is it? Fairphone 3
How much? $808 Pros: Fairphone might not be a brand you’re familiar with, but it’s made waves in recent years for making sustainable smartphones that are repairable, ethically manufactured and produced with minimal environmental impact. iFixit gave the latest release a 10/10 for repairability whereas, for comparison, Google’s new Pixel 4 XL scores only 4/10.
Cons: Difficult to come by in Australia. They’re not sold or even shipped here, so you’ll need to figure out how to import one, if ethics compel you. fairphone.com
What is it? HP EliteBook 840 G6
How much? $2345 Pros: HP must be doing something right. In addition to making easily repairable tablets, it also seems to be just about the only company making easily repairable notebooks in recent years, at least according to iFixit’s review archive. This EliteBook nabbed a 10/10 from iFixit last year – 10 times the repairability score of most recent Apple laptops examined by the site.
Cons: None, really, but don’t let repairability be the only factor that guides your purchasing. hp.com.au
Iam 30 years old working in a stable government job earning about $120,000 gross. I have about $125,000 in a self-managed share portfolio (ASX traded) that includes some broad international exchange traded funds, $25,000 in an international managed fund, $60,000 in peer-to-peer lending and $100,000 cash. I have no debts and about $1000 a month in outgoings. I add $250pm to my international managed fund, $200pm to P2P lending, $160pm to super and save $1600pm cash.
I have a partner and all finances are kept separate and there is no plan to marry or have children in the near future. I have no immediate plans to buy property, but in the next five years would like to own something.
I plan to add another $25,000 to my self-managed share portfolio this year.
Is there something else I should consider to help grow my investment portfolio with the aim of retiring by 60? Robert
Well, Robert, since you emailed me, a lot of water has flowed under the bridge! It would have been difficult for us to paint this scenario just a couple of months ago, but here we are.
For nearly 40 years, my thoughts on money issues have been based on commonsense, an acceptance that risk and return are a pure money truth and a pretty good understanding of economic history. My focus is also very much on long-term outcomes, where history gives us reasonable certainty. So my advice to you today is not a lot different from what it would have been before Covid-19, but a global pandemic certainly means we need to look at some shorter-term factors.
First, your stable government job is gold. Your secure income becomes a powerful weapon, and the savings from it will buy more investment value today. I am not concerned about your existing investments. The long-term outlook for shares is sound. You have time in your favour and I would strongly suggest you keep adding to your portfolio.
A shorter-term tactical decision needs to be made about your cash. At age 30, adding cash to your portfolio while prices are down makes a lot of sense, so as well as the $25,000 you would add normally during the year, do you add a chunk of your cash? The answer to this is personal. Some may prefer to hold cash reserves during a downturn, and while cash is a terrible long-term asset it is powerful in tough times.
Property is also likely to fall. Some people are saying around 30% is possible. That makes a good headline, but I am not so sure. While the huge leap in unemployment is terrible news, the vast government support packages have never been seen before in a crisis. Also our population is growing strongly, typically by around 350,000 a year. This is after our normal annual death rate of about 160,000 people.
So for our population to be stable this year, we’d need an extra 350,000 or so people to die on top of “normal” deaths. Thankfully, our health experts are not projecting anywhere near this number, so I think it is reasonable to assume our population will be bigger, not smaller. This and jobs are the primary drivers of demand for goods, services and property.
Interest rates are also incredibly low, so while you have no immediate plans to own property I’d suggest you have a think about what your strategy would be if there is a reasonable fall in values in an area you would buy in. If for now property remains a “no”, that is fine, you have plenty of time. But in that case, I would suggest you think about dollar-cost averaging some of your cash into your share portfolio.
The part of your portfolio that could also be impacted by the pandemic is peer-to-peer lending. Obviously it won’t be a problem if the peer you are lending to is in a secure job like you. But asset values, in particular businesses, may have some really savage downgrades. I would urge caution here and ensure any P2P lending is going to someone offering appropriate security for the times we live in.
As a 30-year-old in a secure job, with no debts and solid assets, the most important thing you, your partner, family and friends can do is to stay healthy. That done, your finances and the actions you are taking have you on track for financial independence by 60, while the drop in value of good assets does present you with opportunity.
I love your photo – if it all turns to mud, fishing may be the way to keep food on the table!