Author archives: Alex Jamieson

AJ Radio – Special Edition on Insights from CFA Institute New York

In this special edition of AJ Radio we reveal what the founder of AJ Financial Planning, Alex Jamieson, recently learnt from attending the CFA Institute Conference held in New York. Hear his insights on which sectors of the share market will be benefit from the election of Donald Trump.

AJ Radio – Episode 9 (Recorded 17th January 2017)

In AJ Radio’s ninth episode we delve into forecasts – what exactly is a forecast, and what might be in store for the 2017 year ahead. We will also discuss some legislative changes happening with Centrelink and superannuation and what this means for you. 

AJ Radio – Episode 8 (Recorded 6th December 2016)

In AJ Radio’s eighth episode we delve into the solar energy market to find out where this energy source sits on the exponential curve, and then then examine the oil market and what the key risks are with this sector when it comes to exponential technologies and potential disruptions.

AJ Radio – Special Edition on Insights from Singularity University Summit

AJ Radio – Special Edition on Insights from Singularity University Summit 

In this special edition of AJ Radio, we bring you the latest insights from the Singularity University Summit held in San Fransisco last month. Attended by our own Shaun Gilbert, he reveals the latest thoughts and insights from some of the leading minds in exponential thinking and cutting edge technology on future trends for businesses.



Why solar is not dead under Trump…….

Thinking of investing in renewables?

Does it make sense to invest in this sector, and what are the advantages?

Did you watch the sunrise this morning? Here’s some interesting facts:

  • Every 88 minutes, 470 exajoules of energy from the sun hits Earth’s surface. That is as much energy our planet consumes in one entire year.
  • Every 112 hours, which is around 4.6 days, the sun provides us with 36 zettajoules of energy. That’s as much energy as is contained in all proven reserves of oil, coal, and other natural resources on our planet.

Yet today, only around 1% of total global electricity comes from solar power.

In 1977, the cost per watt to use solar power energy was $76.67. Even in 2003, it was believed that the cost of solar power would never get below $1 per watt due to the cost of the raw materials required to manufacture solar panels.

Today, however, solar power sits at around 0.10 to 0.30 per watt – depending on the manufacture and location. In Chile a few weeks ago, they just set a new solar price record of $0.0291 pWh.

To put all these facts into perspective, consider other fuel sources such as natural gas, which sits at around 0.07 cents per watt, while coal sits at 0.13 per watt. So it would be fair to say that traditional resources are under threat –possibly even headed towards extinction.

When it comes to technological development, most people think of a linear model extrapolating this line into the future, or a rate of curve. For example, take 1, 2, 3, 4 … You would expect the next number to be 5. The reality is that in some aspects of technology and manufacturing, the development can be exponential. Consider the miscalculation of the projected cost of solar – out by 142%!

When you think about the renewable energy sector, solar has two powerful advantages that are not applicable to other sources:

  1. Sunshine is abundant worldwide, although ironically the poorest countries on Earth are often the sunniest places.
  2.  Solar has the ability to equalise the energy market from country to country and township to township.

What does this mean? Hopefully, solar has the potential to reduce the overall cost of energy and living costs in the long term.

So what are the opportunities for you, the investor? Where can you invest in solar or renewable energy listed companies within the Australian marketplace? At this stage the list is very small, but here are some you might consider:

  • Meridian Energy
  • Redflow
  • Infigen Energy

In comparison to the global markets, these Australian companies are fairly small and their journey on the development curve is still early in the business lifecycle.

If you don’t feel confident to pick and choose your investment options, you might prefer to consider an ethical or sustainable managed fund that might also have exposure to the renewables sector with other investments also pull together.

Please also remember that before embarking on any investment or strategic financial planning decisions, you should always seek professional guidance from a licensed financial planner –  and of course we would recommend our team at AJ Financial Planning.

AJ Radio – Episode 6 (Recorded 12th September 2016)

In AJ Radio’s sixth episode we reveal little financial tips and tricks to help you get ahead with your personal finances. We first delve into how you might get your bank to reduce your interest rate on your mortgage every 6 months, and then look at how self-employed people might use credit card points to help fund their next holiday.

AJ Radio – Episode 5 (Recorded 19th August 2016)

AJ Radio Episode 5

In AJ Radio’s fifth episode, we delve into what headline numbers you should look at when considering an investment into shares to ensure you are not paying too much. We also look at the property market and what information is now available to determine a fair value for your next purchase. And finally, we’ll look philosophically at the timelines that you need to keep in mind when buying an investment, whether it’s property or shares.

Navigating retirement funding: Is superannuation such a great idea?

Superannuation and retirement have always gone hand in hand. Yet recent budget announcements around taxation, contribution caps and other proposed changes have caused a stir and understandably, some Australians may be reconsidering the merits of superannuation.

Presently, retiree couples with a low income or seniors tax offset can each earn around $74,000–$83,580 p.a. before they start paying any taxation on income outside of their superannuation environment.

Let’s say, for example, that a couple’s capital was all invested in a term deposit. Based on today’s interest rates, they could each have around $2.7 million in a term deposit before paying any taxation.

Alternatively, if they invested their money in a share portfolio, each portfolio would have to be worth around $1.67 million before they had to pay any taxation.

So the question is, with all the confounding complexities around super; is it really worth the headache?

The other question is, will the proposed changes have much of an impact on the general retirement population? The budget announced a $1.67 million cap per person on a superannuation fund (combined $3,340,000 per couple) before any taxation comes into play. Anything above this may be subject to a 15% accumulation taxation on earnings.

For most Australians, this excess will likely move from their superannuation into their personal names once the measures are potentially introduced.

As you can see by these limits, for most retirees around Australia, taxation will only start to be a factor if they hold more than $4.94 million in combined assets, excluding their own home (both inside and outside of super).

On the other hand, if you only have a couple of hundred thousand in superannuation at retirement, does it make sense to have a superannuation fund with all the hassle of fees, regulation changes and complexities, etc., or are you better off just having the money invested in your own name?

Part of this answer will depend on the capital gains element of your portfolio, i.e., how much is generated on an ongoing or a forecasted basis in the future. The biggest benefit for superannuation is that if it is in pension phase, under the proposed limits from a capital gains standpoint it will be 100% tax-free.

Moving forward, I suspect that most people will look to manage their legislation risk—the risk of the government changing their mind—by holding some assets inside of superannuation, and some outside of superannuation.

This will also assist with distributing the tax base across both structures, and keeping a foot in both camps should there be any changes.

However, like most strategic financial planning, you have to consider all the above factors in context to your personal situation. You will also need to consider the benefits of salary sacrifice contribution into superannuation, or deductible contributions, as well as a whole range of other factors in determining which path is best.

Please also remember that before embarking on any investment or strategic financial planning decisions, you should always seek professional guidance from a licensed financial planner. Of course, I recommend AJ Financial Planning.

AJ Radio – Episode 4 (Recorded 19th of July 2016)

AJ Radio Episode 4

In AJ Radio’s fourth episode, we delve into interest rates and where they might be headed. We also look into the key trends taking place for people looking to make a fixed interest investment, and discuss philosophically the notion of debt and what it might mean for anybody contemplating a mortgage.

Which is a better investment for your child’s future; private schooling, or an investment property?

Over the years, I have often heard people ask ‘Should I send my kids to private school, or save the money and buy them a property instead?’

As private school fees continue to rise, the cost from Kindy to Year 12 can be as much as $320,000 per child. Parents who have their child at a public school but are considering private secondary schooling can expect to pay around $171,000. And remember, these figures are unlikely to include any impacts of inflation or ‘extras’ along the way.

Little wonder that today, people are thinking perhaps it’s better to put this money towards the deposit on a house for their child, to give them a head start financially?

The answer to this problem is not that simple. Really, you are making a decision whether to invest in your child’s education (and hence, their possible career path and earning capacity), or to give your child’s a financial head start in life.

Warren Buffett once said, ‘The most important investment you can make is in yourself … You can become … the person you want to be.’

On the flip side, as house prices continue to rise, a head start financially can make life a little easier for young people trying to get a foothold in the market while their earning capacity and savings are still low. It can give them a running start on the compounding impact of property growth while their peers are struggling to save a deposit.

If you had this insight, you could calculate this variance and determine the cross-point of the calculation. The hope is that by sending your child to private school, they will end up earning a high enough income to afford their own home and live comfortably.

Like all decisions regarding your child’s upbringing and future, the reality is they are not made solely for financial reasons, but it’s always interesting to consider the possible financial outcomes.

Please also remember that before embarking on any investment or strategic financial planning decisions, you should always seek professional guidance from a licensed financial planner. Of course, I recommend AJ Financial Planning.

Warren Buffett at Berkshire Hathaway annual meeting, Q&A session, 3 May 2008, quoted in ‘Warren Buffett’s Investment Advice: Invest in Yourself’, Life Compass Blog, 19 April 2010