Month: December 2020

Simple steps to get financially fit in 2021

man jumping from 2020 cliff to 2021 cliff representing asx outlook 2021

Happy New Year, Fools!

Welcome to 2021.

Frankly, I’d hoped for a cleaner, COVID-Community-Transmission-free, transition from last year to this, but turns out we don’t always get what we want. How very 2020.

Speaking of which, It is worth remembering that on this day, last year, we’d kind of heard of a new respiratory virus out of China, but had no idea just what a wrecking ball it would be.

Indeed, our time and attention was taken up primarily by the threat — and reality — of bushfires, unprecedented in size, scale and ferocity, that were menacing much of the country.

Yes, I know everyone is sick of the retrospectives.

My point, though, is a slightly different one: If we didn’t know what was coming on January 1, 2020, why would you listen to forecasts for 2021?

I’ve been asked plenty of times over the past two weeks for my 2021 forecast. Each time, I politely decline, admitting that I don’t know what’s coming, and nor does anyone else.

And then I recite one of my favourite quotes, from John Kenneth Galbraith: “Pundits forecast not because they know, but because they are asked”.

(The generous questioners laugh along. I dare say more than one of them makes a mental note to ask someone else next year. Such are the occupational hazards when you’re a financial adviser.)

So, if you can’t accurately predict the future, what should you do?

The first, hopefully self-evidently, is ‘don’t try’. 

Accept that you don’t know, and move on.

The second is that you should, in the sporting and management consulting jargon, ‘control the controllables’.

In other words, stop worrying about the things you can’t control, but endeavour to do well those things you have within your area of influence.

Those are the things that can meaningfully improve your odds of investment success.

And yes, because it’s New Year’s Day, let’s call them resolutions.

And here they come.

Spoiler alert, though. Well, two, actually.

One; this list isn’t new.

Two: it’s not magic.

This list is probably best considered the ‘get rich slowly’ list.

I can offer no guarantees (legally, or morally).

But this list is, in my view, the best foundation you can have, as you continue (or start) a journey to wealth creation.

No, it can’t beat a trust fund, a lotto win, or an inheritance.

It won’t instantly lower your bills or get you a pay rise.

But it’s a list of actions and approaches that I think will put — and keep — you on the straight and narrow as you steadily build your wealth.

So here’s to 2021. And to just a little less drama than last year…

Fool on!

13 Foolish New Year’s Resolutions

To help you invest, better!

1. I will live below my means — spending less than I earn.

2. I will save money into a rainy-day fund so I’m ready for what life might bring.

3. I will pay off my credit card debt, and then only spend what I can pay off within the interest free period each month.

4. I will regularly add to my investment account.

5. I will invest money I don’t need for at least 3-5 years to build my nest egg.

6. I will learn more about investing, taking control of my financial future.

7. I will invest in quality businesses, buying a slice of the company, not just a code on a screen.

8. I will buy shares in a company with the intention of holding them for the long term.

9. I will sell when my investment thesis fails, the company is overvalued or I have a better idea.

10. I will avoid anchoring my decisions to the price I paid for my shares.

11. I will remember that the market can be moody and over-react, both on the upside and the downside.

12. I will expect volatility, and I won’t let it spook me into selling. Indeed, volatility can offer me great opportunities!

13. I will let the market offer me prices (be my servant), not dictate my mood or actions (be my master).

(Want a printable version? I’m glad you asked. Here it is!)

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Simple steps to get financially fit in 2021 appeared first on The Motley Fool Australia.

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2 important investment lessons from 2020

man holding a megaphone and shouting for people to invest in asx shares

2020 is certainly a year that we will not forget in a hurry. Never before (and hopefully never again) have we seen such incredible volatility on the Australian share market.

At the height of the pandemic, there were days when the S&P/ASX 200 Index (ASX: XJO) moved more in a single session than it would ordinarily do in a whole year. This was much to the delight of day traders, who thrive on volatility.

But for the average investor, this volatility was unsettling and a lot of tough lessons were learned over the last 12 months.

Here are two lessons learned during 2020:

Diversification is important.

Over the last few years, the bull market has seen most shares and sectors heading higher. In light of this, investors could be forgiven for entering 2020 without a truly diversified portfolio. However, the last 12 months have demonstrated just how important diversification is.

At the start of the year, nobody could have predicted what would happen to the travel market and thus the shares of Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB). Investors that were overweight with travel shares will have undoubtedly underperformed investors with more balanced portfolios.

Market crashes are opportunities.

When the share market is crashing and the ASX boards are a sea of red, it can be hard not to panic. But, as Warren Buffet once quipped, “Be fearful when others are greedy, and greedy when others are fearful.” The latter certainly proved to be excellent advice during the COVID-19 pandemic.

For example, at the height of the crisis the Afterpay Ltd (ASX: APT) share price dropped as low as $8.01 and the SEEK Limited (ASX: SEK) share price fell to a low of $11.23. Since then, the two companies have seen their share prices rise a massive ~1400% and 154%, respectively. This means that $10,000 investments at their lows would now be worth $150,000 and $25,400. Anyone brave enough to be greedy in March, will have been rewarded handsomely.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

More reading

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The 5 worst performing ASX 200 shares of 2020

hand selecting unhappy face icon from choice of happy and neutral faces signifying worst performing asx shares

What a year it was for the S&P/ASX 200 Index (ASX: XJO) in 2020. The benchmark index lost 1.4% of its value over the 12 months to end it at 6,587.1 points.

But it could have been so much worse. At the height of the pandemic the index had lost a third of its value.

Unfortunately, not all shares on the index rebounded as strongly and some recorded very disappointing declines.

Here’s why these were the worst performing ASX 200 shares of 2020:

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price was the worst performer on the ASX 200 in 2020 with a 60% decline. With the pandemic bringing both domestic and international travel to a standstill earlier this year, this travel agent giant’s bookings collapsed to previously unthinkable levels. So with little to no revenue coming in, Flight Centre was forced to raise funds to keep its operations going. Significant cost cutting means that its cash burn has reduced materially, but recent COVID outbreaks in Australia have sparked fears that its recovery could take a bit longer than hoped.

Unibail-Rodamco-Westfield CDI (ASX: URW)

The Unibail-Rodamco-Westfield share price wasn’t far behind and crashed 54.4% lower in 2020. The shopping centre operator is another company that was impacted negatively by the pandemic. Lockdowns, social distancing initiatives, and the shift to online shopping, meant that the company’s shopping centres were like ghost towns for much of 2020. This put a lot of pressure on rental collections and occupancy rates.

IOOF Holdings Limited (ASX: IFL)

The IOOF share price was out of form in 2020 and sank 51.4% lower. This financial services company’s shares came under pressure for a couple of reasons. One was its $1,040 million capital raising, which was undertaken at a 24.4% discount (at the time) of $3.50. This was launched to fund the acquisition of the National Australia Bank Ltd (ASX: NAB) wealth business, MLC Wealth for $1,440 million. Also weighing on its shares was its poor performance in FY 2020. IOOF reported a 34.9% decline in underlying net profit after tax to $128.8 million.

Oil Search Ltd (ASX: OSH)

The Oil Search share price was a poor performer and dropped 47.5% over the 12 months. Investors were selling this energy producer’s shares last year after oil prices collapsed amid demand concerns. Incredibly, at one stage in 2020 oil futures were actually in negative territory, which meant buyers were being paid to take oil off their hands. And while prices have been recovering in recent months, it hasn’t been enough to drive the Oil Search share price back to previous levels.

Webjet Limited (ASX: WEB)

The Webjet share price wasn’t far behind with a 46.4% decline in 2020. As with Flight Centre, this decline was driven by the pandemic’s impact on travel markets and the company’s need for a cash injection to keep it afloat. The good news for Webjet is that it looks set to come out of the crisis in a stronger market position and has seen its bookings recover twice as quickly as the market average.

This Tiny ASX Stock Could Be the Next Afterpay

One little-known Australian IPO has doubled in value since January, and renowned Australian Moonshot stock picker Anirban Mahanti sees a potential millionaire-maker in waiting…

Because ‘Doc’ Mahanti believes this fast-growing company has all the hallmarks of genuine Moonshot potential, forget ‘buy now pay later’, this stock could be the next hot stock on the ASX.

Doc and his team have published a detailed report on this tiny ASX stock. Find out how you can access what could be the NEXT Afterpay today!

Returns as of 6th October 2020

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The 5 worst performing ASX 200 shares of 2020 appeared first on The Motley Fool Australia.

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The 5 best performing ASX 200 shares of 2020

shares record high

It certainly was an eventful year for the S&P/ASX 200 Index (ASX: XJO) in 2020.

After losing as much as a third of its value at the height of the pandemic, the benchmark index was on course to finish the year flat until a last minute selloff on 31 December. This ultimately led to the ASX 200 index recording a 1.4% decline for the year.

The COVID-19 pandemic dominated the headlines last year and had a major impact on the performance of Australian companies.

While some companies were impacted negatively, others benefited greatly from changing consumer behaviours, the working from home initiative, and other tailwinds.

Listed below are the five best performing ASX 200 shares in 2020. Here’s why they were on fire over the 12 months:

Afterpay Ltd (ASX: APT)

The Afterpay share price was the best performer on the ASX 200 in 2020 with a whopping 303% gain. However, that gain is only telling you half the story. At the peak of the crisis, the Afterpay share price had plunged to a two-year low of $8.01 after investors panicked that bad debts would spike and underlying sales would collapse. However, those fears were extremely wide of the mark and Afterpay recorded exceptionally strong growth in the ANZ and US markets without compromising its bad debts. This led to the Afterpay share price ending the year at $118.00, which is a staggering ~1400% higher than its March low.

Kogan.com Ltd (ASX: KGN)

The Kogan share price was the next best performer with a 150% gain. This ecommerce company was one of the biggest winners from the pandemic thanks to the dramatic shift to online shopping. With bricks and mortar stores forced to close during lockdowns, consumers flocked online for their shopping. Many for the first time. This resulted in Kogan reporting explosive customer, sales, and profit growth. According to a report by IBM, the pandemic has accelerated the shift away from physical stores to online stores by approximately five years.

Mineral Resources Limited (ASX: MIN)

The Mineral Resource share price was a strong performer and stormed 127% higher in 2020. The catalyst for this was the mining and mining services company’s exposure to two of the hottest commodities of 2020. A rebound in lithium prices due to electric vehicle optimism and a surging iron ore price got investors excited.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price wasn’t far behind with an impressive 119% gain in 2020. As one of the world’s leading iron ore producers, investors were fighting to get hold of its shares after the price of the steel making ingredient jumped to multi-year highs. This was driven by supply constraints in Brazil and robust demand in China as it invests heavily in infrastructure to boost its economic growth. The iron ore price ended the year at US$155.84 per tonne. This compares incredibly favourably to Fortescue’s C1 costs of US$12.74 per wet metric tonne.

Netwealth Group Ltd (ASX: NWL)

The Netwealth share price was on form in 2020 and recorded a 104% gain. The investment platform provider was a strong performer in FY 2020 despite the pandemic. For the 12 months ended 30 September, Netwealth delivered a 21.7% increase in underlying net profit after tax to $43.8 million. The catalyst for this was a 35% increase in funds under administration (FUA) over the 12 months to $31.5 billion. Pleasingly, this strong form has continued since then, with Netwealth ending the first quarter of FY 2021 with FUA of $34 billion.

This Tiny ASX Stock Could Be the Next Afterpay

One little-known Australian IPO has doubled in value since January, and renowned Australian Moonshot stock picker Anirban Mahanti sees a potential millionaire-maker in waiting…

Because ‘Doc’ Mahanti believes this fast-growing company has all the hallmarks of genuine Moonshot potential, forget ‘buy now pay later’, this stock could be the next hot stock on the ASX.

Doc and his team have published a detailed report on this tiny ASX stock. Find out how you can access what could be the NEXT Afterpay today!

Returns as of 6th October 2020

More reading

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Netwealth. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The 5 best performing ASX 200 shares of 2020 appeared first on The Motley Fool Australia.

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