Author: therawinformant

The Money3 Corporation Limited (ASX: MNY) share price has sunk more than 7% today after the automotive lender released full year results below expectation. A $10.1 million impairment provision related to COVID-19 weighed on profits despite strong loan book growth.

What does Money3 do? 

Money3 provides personal and automotive loans in Australia and New Zealand. Prior to the pandemic, the company was originating more than $1 million in loans every business day. Money3 had previously provided guidance for net profits after tax (NPAT) of around $30 million for FY20, but withdrew guidance in March due to the coronavirus pandemic. 

How did Money3 perform?

Money3 saw strong growth in the loan book in the first half of the financial year, but growth slowed significantly in the second half.

With consumers paying extra attention to budgeting due to the economic slowdown, many were wary of taking on new financial commitments such as car and personal loans. Loan originations were lower than expected as a result of COVID-19 and tightened lending criteria. Over the full year, the gross loan book grew 16.4% to $433.8 million. 

Revenue increased 35.3% to $124 million while earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 31.1% to $60.7 million. Cash collections increased 36.3% to $277.2 million as customers made efforts to increase loan repayments in the face of uncertainty.

Money3 says the overall loan book quality and arrears performance has not deteriorated over 2020. Nonetheless, given increasing economic uncertainty as a result of COVID-19, the company has taken a $10.1 million non-cash economic outlook provision. 

Normalised NPAT increased 14.2% on the previous year to $32.3 million, but the impact of the COVID-19-related provision resulted in a statutory NPAT of $24.2 million. A final fully franked dividend of 3 cents per share was declared, taking the full year dividend to 8 cents per share.

Managing director Scott Baldwin said: “Through all the challenges the Group has faced, including COVID-19, we continued to grow, which is a testament to the team’s deep knowledge of the industry and commitment to succeed.” 

What’s the outlook for Money3? 

The Money3 share price has been punished by investors today, but is still up 125% from its March low. Despite tightened lending criteria, Money3 saw a return in loan application volumes in June and July. This, along with reduced competition in the sector, leaves the team confident of seeing solid loan growth in the new financial year.

A strategic review of product offerings has resulted in an expansion in the near prime sector, broadening the addressable market. Expanding distribution should lead to solid organic growth in FY21 with Money3 confident of loan book growth exceeding $500 million. 

More reading

• Why I would buy CBA and this ASX dividend share for income
• Why Cochlear, Kogan, Megaport, & Northern Star shares are charging higher
• Westpac share price slides 4% after third quarter result
• ASX 200 up 0.2%: Westpac cancels dividend, Treasury Wine hammered, Coles impresses
• Warren Buffett is dumping banks and buying gold, should you?

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) has overcome weakness in the banking sector and is pushing higher. The benchmark index is currently up 0.2% to 6,088.3 points.

Will the market be able to bounce back from this on Tuesday? Here are five things to watch:

Westpac cancels interim dividend.

The Westpac Banking Corp (ASX: WBC) share price is sinking lower and acting as a major drag on the ASX 200 on Tuesday. This morning the bank released its third quarter update which revealed unaudited quarterly cash earnings of $1.32 billion. While this was higher than its quarterly average during the first half, it fell short of expectations. In addition to this, news that there would be no interim dividend in FY 2020 is weighing on its shares. As is a lift in its provisions relating to the pandemic.

Coles delivers strong FY 2020 result.

The Coles Group Ltd (ASX: COL) share price is pushing higher today after the release of a strong full year result. Coles reported sales revenue growth of 6.9% to $37.4 billion. This was driven by growth across all segments and particularly strong comparable store sales growth across the Supermarkets business. In respect to earnings, Coles posted earnings before interest and tax (EBIT) of $1,387 million and a net profit after tax of $951 million. This represents a 4.7% and 7.1% increase, respectively, over the prior corresponding period.

Cochlear shares jump.

The Cochlear Limited (ASX: COH) share price is surging higher today after the release of its full year results this morning. The hearing solutions company reported a 6% decline in sales revenue to $1,352.3 million in FY 2020. This was driven by a 7% decline in Cochlear implant unit sales following COVID‐19‐related surgery deferrals. Judging by the share price reaction, investors may have been expecting a much worse sales result.

Best and worst ASX 200 shares.

The best performer on the ASX 200 on Tuesday has been the Monadelphous Group Limited (ASX: MND) share price with a 15% gain. This follows the release of the engineering company’s full year results. The worst performer has been the Treasury Wine Estates Ltd (ASX: TWE) share price with a 14% decline. This follows news that the Chinese Ministry of Commerce has initiated an anti-dumping investigation into Australian wine exports into China.

More reading

• Why Cochlear, Kogan, Megaport, & Northern Star shares are charging higher
• Westpac share price slides 4% after third quarter result
• The Monadelphous share price rockets 16% on FY20 results
• Why Tyro, Virtus Health, Webjet, & Westpac shares are dropping lower
• New investors should do this before investing in ASX shares

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Cochlear Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The finance news has been filled with stories about Warren Buffett’s latest gold play. It might be happening in another country, but when an investor as famous as Buffett changes his portfolio, the world takes notice.

What changes took place?

In a surprise move, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), Buffett’s multinational holding and investment company, dumped its entire position in Goldman Sachs shares in exchange for around US$565 million of Barrick Gold Corp (NYSE: GOLD) shares.

This latest change comes off the back of Buffett announcing in May that he had decided to close whole positions in the four major airlines in the United States – Delta Air Lines, Southwest Airlines, American Airlines Group and United Airlines Holdings. 

With Berkshire Hathaway’s portfolio evolving, investors around the world are speculating on the reasoning.

The last time Barrick Gold’s share price went on a major run was in 2007, during the start of the GFC and the price was around US$30.00 per share. Once the GFC began, Barrick Gold’s share price increased by around 80% to US$55.00. Currently, Barrick is back at around US$30 per share and we are still facing the COVID-19 pandemic. Could the risk of further market corrections be part of the reason behind Berkshire’s latest move?

Warren Buffett on gold

Warren Buffett doesn’t like gold. He never has. Consistently, he has expressed his opinion on the precious metal. 

Quite famously at a 1998 Harvard speech, the investor was quoted saying “[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head”.

Then during a CNBC interview in 2009, he said “It’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that”.

He has made numerous statements like this throughout the years. Buffett classifies gold as an ‘unproductive asset’. This means it does not produce anything itself. The only way for an investor to make money is to sell it at a higher price than they paid. Of course, in the functioning world, gold has various uses, the most obvious of which being in the jewellery industry. However, Buffett’s view is that the precious metal is simply ‘unproductive’.

ASX gold shares

The gold price is surging this year and looks to have further upside to come. Higher gold prices mean more profit for producers.

At home in Australia, we have a number of larger, well regarded gold producers. Investors looking to follow in Buffett’s footsteps can start by looking at the following three local producers.

Newcrest Mining Limited (ASX: NCM)

Newcrest Mining shares have been dropping recently after the company published its FY20 results. Newcrest is one of the worlds largest gold mining companies with multiple projects here in Australia. Despite the recent drop in value, the Newcrest share price is still up almost 70% from its March lows, which shows exceptional strength. I think the latest dip in the miner’s share price presents a buying opportunity. 

Northern Star Resources Ltd (ASX: NST)

Northern Star is one of Australia’s leading precious metals producers, with its operations concentrated in Western Australia. The company is involved in exploration, development, mining and processing of gold. It is a major player with a market capitalisation of just over $11 billion. The Northern Star share price has returned more than 32% to investors this year alone.

Evolution Mining Ltd (ASX: EVN)

Another major gold producer here at home is Evolution Mining. With recent strong earnings results, and full year profits totalling more than $400 million, Evolution is certainly worth considering for your portfolio. Returns wise, the Evolution share price is up a staggering 68% in 2020 alone!

Foolish takeaway

Warren Buffett is one of the most famous and successful investors of all time. Whenever he makes a decision, whether it’s a buy or a sell, the world takes notice. His investment decisions can cause what’s known as the ‘Buffett Effect’, which means that other investors will copy his movements. Although Buffett is usually not a fan of buying gold in and of itself, Barrick Gold is showing huge potential upside not seen since the GFC. Speculators might say that this means Buffett is hedging his portfolio in the case of a market correction. Whilst this is certainly the most obvious point of view, the gold price is still up more than 25% this year alone.

The simple facts are that with a consistently rising gold price, it makes sense to invest in gold producers as higher prices mean higher profits. Higher profits mean more growth. For those investors looking to follow in Buffett’s footsteps, we are fortunate to have access to some of world’s great gold producers right here in Australia. 

More reading

• Why Cochlear, Kogan, Megaport, & Northern Star shares are charging higher
• Buffett’s Berkshire Hathaway reveals some surprise moves
• Why the Saracen share price is shooting higher today
• 5 things to watch on the ASX 200 on Tuesday
• Warren Buffett is buying gold shares and top fundies assess ASX share price moves

glennleese has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short September 2020 $200 calls on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Ingenia Communities Group (ASX: INA) share price is currently trading 1.07% higher following the release of its FY20 results. 

Ingenia is a leading Australian property group that owns, operates and develops a growing portfolio of lifestyle and holiday communities across key urban and coastal markets.

FY20 results

Despite challenging conditions, revenue of $244.2 million was up 7% on the prior corresponding period (pcp). The group also reported record earnings before interest, tax and depreciation and amortisation (EBITDA) of $71.9 million, up 17% on pcp. 

Ingenia’s underlying earnings per share of 22.1 cents was up 5%. This exceeded analyst consensus estimates of 21.1 cents. The group attributes this rise to strong lifestyle and development performance, impacted by additional securities issued as a result of equity raised during the year.

Operating cash flow of $67.2 million was up 13%. 

Ingenia Communities has a strong balance sheet with capacity to fund growth. A successful $178 million equity raising in May supports the company’s growth plans. Additionally, it closed the year with a loan to value ratio (LVR) of 8.4% and gearing below 6%.

Net assets of the group increased 50% compared to the prior corresponding period with net asset value per security growing 9% to $2.90. 

The group benefitted from having access to the government’s Jobkeeper program. CEO Simon Own said:

Despite COVID-19 operating restrictions impacting the Lifestyle Development and Holidays segments, an increase in above ground margin per new home settlement, cost management and access to Jobkeeper mitigated the impact of mandated closures of the Group’s holiday parks and lower settlements on the result.

Ingenia Communities advised there is solid ongoing demand for communities as illustrated by average rents across its lifestyle communities increasing 3.6% on a like-for-like basis and Ingenia Gardens occupancy reaching a record high of 94.4%.

Outlook

Due to the coronavirus pandemic, no FY21 guidance was provided. 

CEO Simon Owen said:

While the business is well placed, we remain cautious about the outlook for the Group, given the unprecedented conditions and evolving response to the COVID-19 pandemic. Our focus remains the health and safety of our residents, guests and team and ensuring the business is well positioned for the future.

About the Ingenia Communities share price 

After the release of its results, the Ingenia Communities share price is currently trading at $4.72. In the past year, the Ingenia Communities share price has risen by 35.78%.

More reading

• Why I would buy CBA and this ASX dividend share for income
• Why Cochlear, Kogan, Megaport, & Northern Star shares are charging higher
• Westpac share price slides 4% after third quarter result
• Money3 share price sinks as COVID-19 squashes profits
• ASX 200 up 0.2%: Westpac cancels dividend, Treasury Wine hammered, Coles impresses

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Monadelphous Group Limited (ASX: MND) share price has surged more than 16% higher after the engineering company released its FY20 financial results today.

How did Monadelphous perform for FY20?

The Monadelphous share price lifted after the company announced a net profit of $36.5 million for FY20, a 28% drop from a year ago. The company also reported a 1% increase in revenue for the full-year of $1.65 billion.  

Monadelphous’ full-year report highlighted the performance of its maintenance and intratubal services division for FY20. The division recorded an annual revenue of $1.05 billion, up 5.1% on the year prior.

The company said the FY20 results reflected a significant increase in shutdowns and maintenance work across the resources sector. Monadelphous noted that the second half was markedly affected by the economic and social impacts of the COVID-19 pandemic.

As a result, Monadelphous will pay a reduced final dividend of 13 cents per share. This compares to 23 cents last year. Total dividends payable for the year are 35 cents, reflecting a 91% payout ratio from the company’s net profit after tax.

How has COVID-19 affected operations?

Monadelphous reported that restrictions induced by the pandemic had slowed potential new contracts. It estimated that 10% of annual revenue had been deferred into the future.

In addition, the company said customers had reduced non-essential work and delayed discretionary expenditure. The pandemic had also caused supply chain issues and delays in several construction projects.

What is the outlook for Monadelphous?

In its report, Monadelphous assured investors that the company was being proactive to ensure long-term sustainability. The company cited its prudent financial management and strong cash flow of $119.1 million for FY20. In addition, Monadelphous highlighted its strong cash balance of $208 million.

Despite the uncertain global economic outlook, Monadelphous expects the resources sector to provide a steady flow of opportunities. The company’s management assured shareholders that Monadelphous was entering the new financial year with a solid workload and was well-positioned to capitalise on future opportunities.

Foolish Takeaway

The Monadelphous share price has surged more than 16% higher to trade at $9.81 at the time of writing. 

More reading

• Worley share price jumps on contract win and is my key pick in the sector
• The latest ASX stocks to be hit by broker downgrades today
• Monadelphous share price plunges 10% on legal action from Rio Tinto
• ASX 200 up 0.1%: Big four banks tumble, Flight Centre sinks, SEEK cancels final dividend
• These were the worst performing ASX 200 shares in July

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and is edging higher in late morning trade. At the time of writing the benchmark index is up 0.1% to 6,084.1 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Tyro Payments Ltd (ASX: TYR) share price has fallen 3% to $3.31 after releasing its full year results. Although the payments company delivered a 15.1% increase in transaction value to a record $20.1 billion, it swung from first half positive EBITDA of $1.5 million to a full year EBITDA loss of $4.4 million. This was due to tough trading conditions in the second half because of the pandemic.

The Virtus Health Ltd (ASX: VRT) share price is down 5% to $3.04. This morning the fertility treatment company released its full year results and revealed reported EBITDA of $46.2 million. This was a 27.2% decline on the prior corresponding period. This was driven by the pandemic’s impact on IVF treatments. Management advised that the estimated gross profit impact from COVID-19 restrictions was $14.6 million.

The Webjet Limited (ASX: WEB) share price has dropped 2.5% to $3.40. Investors may be nervous ahead of the online travel agent’s full year results release on Thursday. Webjet is widely expected to post a big loss when it hands in its report card. Management’s commentary around trading conditions and its outlook will be watched carefully no doubt.

The Westpac Banking Corp (ASX: WBC) share price has fallen 3.5% to $16.97. This follows the release of the banking giant’s third quarter update this morning. Unaudited cash earnings for the quarter came in at $1.32 billion, which was higher than first half quarterly average of $497 million. The bank also revealed an impairment charge of $826 million and the cancellation of its interim dividend.

More reading

• Virtus share price falls 5% as earnings plummet
• Tyro Payments share price sinks on heavy FY 2020 loss
• ARB share price rallied to a two-year high on profit results and outlook
• 5 things to watch on the ASX 200 on Tuesday
• ASX shares to buy with $10,000 in August

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Virtus Health Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Virtus Health Ltd (ASX: VRT) share price has fallen 4.7% this morning after the IVF provider released its full year results. At the time of writing, the Virtus share price is trading at $3.03 after closing yesterday’s trade at $3.18. Virtus felt the impact of COVID-19 on demand for its services, seeing earnings per share fall 98.3%. Nonetheless it says trading activity has rebounded in July, providing confidence for FY21. 

What does Virtus Health do? 

Virtus Health is one of the largest reproductive services providers in the world. Operating in Australia, Ireland, and Denmark, with a growing presence in the United Kingdom and Singapore, Virtus Health provides a comprehensive range of fertility and IVF services. In Australia, the company operates seven day hospitals supporting its core IVF expertise and offers a range of general pathology services as well as specialist fertility and high-end genetic testing.

What did Virtus Health report? 

Virtus saw a 7.5% decline in revenue in FY20 which fell to $259 million. Lower IVF volumes resulted in a decrease in diagnostics revenue. Day hospitals were impacted by elective surgery restrictions and saw a decline in non-IVF procedure revenue. International revenues represented 19% of group revenues, with Danish and Irish revenue impacted by COVID-19 shutdowns. Nonetheless, the international business saw strong growth in fresh IVF cycles in June and July following the easing of restrictions in Europe. 

Reported group earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 27.2% to $46.2 million, from $63.5 million in FY19. This decline was driven by an estimated gross profit loss of ~$14.6 million from lost revenue due to COVID-19 impacts on activity. Non cash impairment charges of $25 million were recognised which contributed to a 94.4% fall in NPAT attributable to shareholders. Having regard to the uncertainty in the current environment,  the board chose not to declare a final dividend. Nonetheless, the deferred interim dividend of 12 cents per share will be paid in November. 

What’s next for the Virtus share price? 

Virtus Health has recently redefined its strategic direction, aiming to be the global leader in precision fertility. The company has been focused on optimising existing operations and developing virtual clinic technologies. This will enhance reach and reduce ‘bricks and mortar’ investment, driving significant efficiencies. Virtus says it is well positioned to manage any further disruption from COVID-19, with a continued focus on business development and margin improvement. Services have largely recommenced with COVID-19 highlighting the importance of family and IVF recognised as an essential service in the second wave in Victoria. The Virtus share price has risen 94% since its March low but is 35% lower in year-to-date trading. 

More reading

• Why Tyro, Virtus Health, Webjet, & Westpac shares are dropping lower

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Virtus Health Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The AMP Limited (ASX: AMP) share price dipped 4.17 % on Monday as questions arose over its defence of a top executive accused of serious sexual harassment.

Boe Pahari faced the allegations from a female subordinate in 2017. But he was promoted to the position of AMP Capital chief executive officer after the company found his offence was “low level”.

AMP had also defended the promotion, saying a financial penalty was sufficient and that Pahari had expressed remorse.

But Nine this week published explosive details of the allegations against Pahari, which seemed to contradict the company’s insistence that the harassment was on the lower end of the scale.

The details of the allegations included Pahari sending the employee on an unnecessary trip to London, saying she made him look like a “limp dick” when she refused his offer to buy her clothing, extending the hotel stay against her wishes and requesting they message each other on Whatsapp to avoid detection.

The $500,000 fine imposed on Pahari was reportedly the same amount AMP settled for with the employee, who departed the company.

Investors have called for AMP to stand down Pahari.

The Australian Council of Superannuation Investors (ACSI) is a lobby group that represents 38 asset owners and institutional investors, who collectively own 10% of every ASX200 company.

ACSI chief executive Louise Davidson told Nine that she couldn’t see how Pahari’s position is tenable.

“It concerns me particularly that the company has tried to downplay the seriousness of the [alleged] sexual harassment.”

The Motley Fool has contacted AMP and ACSI for comment.

ACSI reportedly has discussed the issue with AMP since the case first went public earlier this year.

But Davidson said the response from the company has been inadequate.

“It’s not clear to me what the next steps are aside from just sitting tight and hoping it goes away.”

And it seems many other investors feel the same way, selling off AMP’s shares en masse on Monday. The AMP share price closed at $1.50 yesterday, falling from $5.43 in March 2018. It has continued to slide today, falling another 1.54% to $1.47 at the time of writing.

Pahari’s behaviour wasn’t the only harassment scandal the finance giant has dealt with in recent times. 

AMP Australia chief executive Alex Wade resigned earlier this month after serving less than a year in the position. He faced accusations he sent photos of a sexual nature.

More reading

• Why today is a great day to add to your ASX share portfolio
• ASX 200 drops 0.7%, Telstra falls 7.7%
• Earnings: AMP share price soars despite $107 million drop in profits
• ASX down 0.55%: Telstra maintains its dividend, Treasury Wine shoots higher, AMP’s special dividend
• Why AMP, Premier Investments, QBE, & Treasury Wine shares are storming higher

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Before investing in ASX shares, new investors should make sure that their personal finances are in order. 

Why? Because time in the market is way more important than timing the market when it comes to creating life-changing wealth. 

The emergency fund for new investors

An emergency fund is a cash reserve that can be called upon for unexpected life events and circumstances. Ever lost your job? Been sick for an extended period? Had to buy a new car for work?

These are just a handful of examples of why an emergency fund is important. Life is complicated and messy – the exact opposite of how you want to be investing. The emergency fund will allow you to leave your ASX share portfolio alone when times get tough.

Why you don’t want to sell your ASX shares in an emergency

Emergencies are often aligned with the broader economy 

The best example of this is losing your job in a recession. 

During a recession, stock prices are naturally depressed as a result of both pessimism and poor financial performance. These are also reasons you could lose your job. So if you don’t have an emergency fund, you may need to sell your ASX shares to pay for the essentials like housing and food. In this case, you’re selling at depressed share prices. A double hit to your financial health. 

This is an even more critical point for people who receive or own shares in their employer. As ASX share investors, diversification is critical. Consider who is paying your salary when assessing your portfolio diversification.

ASX shares are a compounding machine

Looking at a chart of the S&P/ASX 200 Index (ASX: XJO), the trend is up and to the right. On average, the ASX share market provides a total return of approximately 9%. However, there are many years where the share market is up, or down more than that. 

Break it down even further and you can observe that a lot of the share market’s return is earned on a handful of extremely good days. Taking your money out of the share market, and missing out on these few days is extremely detrimental to your investing returns.

Many of you will own amazing stocks like Kogan.com Ltd (ASX: KGN) and Afterpay Ltd (ASX: APT). These fantastic ASX shares, like most of the market, saw a massive decline in value at the start of the year.

If you were forced to sell at the bottom of the market (on 23 March) you would’ve been selling at a discount of 21% and 77% respectively, from 20 February highs. Moreover, you’d have missed out on massive gains of 297% and 88% respectively, from the February highs (as if you had not sold).

Foolish bottom line

Over the long term high, quality ASX 200 stocks should continue to be a life-changing asset to own. However, one of the most important factors to beating the market is time.

Having your house in order before investing in the stock market will stop you from selling at the worst possible time. This maximises your chances of staying invested in stocks and reaping the rewards.

More reading

• ARB share price rallied to a two-year high on profit results and outlook
• Is the Beach Energy share price a buy?
• Nextdc and 2 other thriving ASX tech shares to buy
• Netwealth share price on watch as net profit surges 22%
• BHP share price on watch as final dividend slashed by 30%

Lloyd Prout has no position in any of the stocks mentioned and expresses his own opinions. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Tyro Payments Ltd (ASX: TYR) share price is sinking lower following the release of its full year results.

At the time of writing the payments company’s shares are down over 4% to $3.27.

How did Tyro perform in FY 2020?

It really was a tale of two halves for the payments company in FY 2020. A strong performance in the first half was undone very quickly in the second when the pandemic hit its customer base extremely hard.

The majority of Tyro’s merchants are small to medium sized enterprises (SMEs) operating in the hospitality, health, and retail verticals. Management notes that COVID-19 wreaked havoc on the plans and ambitions of many of these businesses and subsequently Tyro’s payment volumes.

For the 12 months ended 30 June, Tyro delivered a 15.1% increase in transaction value to a record $20.1 billion. This led to an 11% increase in total revenue to $210.7 million.

However, having delivered $1.5 million of earnings before interest, tax, depreciation, and amortisation (EBITDA) in the first half, it swung to an EBITDA loss of $4.4 million for the full year.

On the bottom line, the company recorded a statutory net loss after tax of $38.1 million, compared to a loss after tax of $18.4 million a year earlier. Though, this includes one-off costs associated with listing on the Australian share market in December.

On a pro forma basis, the company record a net loss before tax of $25.9 million. Compared to a pro forma net loss before tax of $19.1 million a year earlier.

Fortunately, the company has a strong balance sheet and is well-placed to weather the storm. It finished the period with $188.3 million in cash and financial investments available for its future growth.

Serious COVID-19 disruption.

Robbie Cooke, Tyro’s CEO and Managing Director, notes that its performance in FY 2020 was seriously disrupted by the pandemic.

He commented: “Like many of our merchants COVID-19 seriously disrupted our plans and ambitions for the year. In February we had been on track to deliver our Prospectus forecast, however by March we recognised the uncertainty COVID-19 posed and decided to withdraw our forecast.”

“We also took the unique step in March of providing weekly transaction value updates to provide full transparency as to our performance as we navigated the extreme uncertainty thrust upon our operation. I am pleased to say we will continue these updates at least until the end of calendar 2020,” he added.

Outlook.

Mr Cooke is cautiously optimistic on the future thanks to Tyro’s resilient business model.

He commented: “The COVID-19 challenge continues to feature with the second wave of the virus significantly impacting our Victorian merchants and the broader consumer sentiment across Australia. We remain on high alert as the risk of further outbreaks remains.”

“Whilst we are not immune to the pressures facing the Australia economy, we have a resilient business model and a determination to continue on our journey of building an ecosystem centred around payments, enhanced by value-adding features and products designed to attract new merchants and retain existing merchants.”

“We remain as convinced as ever as to the opportunity in front of us as we remain focused on our purpose of setting businesses free to get on with business by simplifying payments and banking,” he concluded.

Unsurprisingly, no guidance has been given for the year ahead.

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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 Tyro Payments. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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