Stock Pick

  • Should you invest in super or your ASX share portfolio?

    depositing coin into piggy bank for super, invest in super

    It’s an age-old question for Aussie investors – should I invest in super or in my ASX share portfolio? Let’s take a quick look at some of the pros and cons of investing inside and outside of super in 2020.

    Why you should invest in super

    One big benefit the superannuation system has going for it over and above investing in shares is that it’s tax-advantaged. Superannuation contributions are taxed at just 15% which can result in considerable tax savings for the average Aussie.

    The lowest tax rate, starting at $18,201 in taxable income, is 19%. The rates then increase as you ascend the various tax brackets up to a sizeable 45% at the very top of the tree. So, as you can see, particularly if you’re in a higher tax bracket, it makes sense to invest in super. Your super account has the potential to help you to reduce your tax and increase your after-tax returns.

    As well as the tax benefits, superannuation has another key advantage – size. Industry super funds have billions of dollars in assets under management which means they can invest in asset classes that aren’t available in your ASX share portfolio. Some examples include hedge funds, private equity, commercial real estate and infrastructure projects.

    So while buying Nextdc Ltd (ASX: NXT) shares could boost your wealth, you could potentially think even bigger if you invest in your super.

    But having an ASX share portfolio is important

    Despite its benefits, there are drawbacks to super. For one, it can’t be accessed until you hit preservation age which is currently between 55 and 60, depending on the year you were born. On top of this, there is exposure to regulatory risk if you choose to invest in super. For example, the government could easily make changes to the super system in the coming years in order to raise tax revenues.

    Personally, I think there needs to be a balance between investing in super and ASX shares. Super is a great, long-term investment but a diversified ASX share portfolio can also pay dividends (literally!). That means investing in large-cap shares like CSL Limited (ASX: CSL) today could be just the ticket to a safe and comfortable retirement in the years to come.

    Foolish takeaway

    Whether you choose to invest in super or your ASX share portfolio, putting your hard-earned cash away for the long-term is the key to building wealth. This means diversified investments and consistent savings should pay off, however you choose to invest.

    If you’re after the next long-term buy, here’s one ASX growth share you do not want to miss!

    One “All In” ASX Buy Alert, that could be one of our greatest discoveries

    Investing expert Scott Phillips has just named what he believes is the #1 Top “Buy Alert” after stumbling upon a little-owned opportunity he believes could be one of the greatest discoveries of his 25 years as a professional investor.

    This under-the-radar ASX recommendation is virtually unknown among individual investors, and no wonder.

    What it offers is an utterly unique strategy to position yourself to potentially profit alongside some of the world’s biggest and most powerful tech companies.

    Potential returns of 1X, 2X and even 3X are all in play. Best of all, you could hold onto this little-known equity for DECADES to come

    Simply click here to see how you can find out the name of this ‘all in’ buy alert… before the next stock market rally.

    Find out the name of Scott’s ‘All in’ Buy Alert

    Returns as of 6/5/2020

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    Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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.

    The post Should you invest in super or your ASX share portfolio? appeared first on Motley Fool Australia.

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  • 2 quality ASX dividend shares for retirement income

    Retire Wealthy

    Are you currently in, or maybe nearing, retirement and looking for a way to get some extra income from shares?

    I believe that investing in ASX shares that pay high dividends is a much better alternative than keeping your money in a savings account or term deposit, where the interest you earn barely covers inflation.

    High dividend-paying ASX shares have got a lot of negative press lately, as some companies historically viewed as strong and consistent dividend payers, such as Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking GrpLtd (ASX: ANZ), reduced or deferred their next dividend payment.

    However, it is important to remember that the coronavirus crisis is (hopefully) a once in a lifetime event, and the economy and markets are likely to begin to return to normal later this year or next year. Also, companies in some sectors are likely to see minimal or no impact on their ability to pay dividends this year.

    With that in mind, here are my 2 top picks right now, both of which pay attractive dividends and appear to be less impacted by the pandemic.

    Macquarie Group Ltd (ASX: MQG)

    Unlike Australia’s big 4 local retail banks – Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac and ANZ – investment bank Macquarie has a much more diverse business model and doesn’t have as much exposure to the residential property market and local economy.

    Macquarie recently reported an 8% decline in net profit for FY20, however, I believe this is quite a good result considering the unprecedented challenges that the local and global economy is now facing.

    Macquarie recently declared a $1.80 per share final dividend, bringing its full-year FY20 dividend to a total of $4.30 per share. This was a 25% reduction on FY19’s dividend but is still equivalent to an attractive 4.09% yield on current prices.

    Wesfarmers Ltd (ASX: WES)

    Wesfarmers has strong product and sector diversification across a broad range of divisions. I believe this places it in a strong position to ride out the challenges posed by the coronavirus pandemic.

    Wesfarmers has operations in segments like general merchandise, home improvement, and office supplies, as well as other segments such as industrial and chemicals. In particular, its Bunnings business has grown strongly over the past decade, evolving into one of Australia’s largest and most successful retailers.

    In a recent market update, Wesfarmers noted that its retail businesses continue to perform well. The group is upgrading its online sales offerings to support the unprecedented increase in demand for a range of online products, such as office supplies.

    On current prices, Wesfarmers shares are offering a trailing dividend yield of 4.04%, which grosses up to 5.77% with full franking.

    For another top ASX share with strong income prospects, don’t miss the report below.

    NEW: Expert names top dividend stock for 2020 (free report)

    When our resident dividend expert Edward Vesely has a stock tip, it can pay to listen. After all, he’s the investing genius that runs Motley Fool Dividend Investor, the newsletter service that has picked huge winners like Dicker Data (+92%), SDI Limited (+53%) and National Storage (+35%).*

    Edward has just named what he believes is the number one ASX dividend stock to buy for 2020.

    This fully franked “under the radar” company is currently trading more than 24% below its all time high and paying a 6.7% grossed up dividend

    The name of this dividend dynamo and the full investment case is revealed in this brand new free report.

    But you will have to hurry — history has shown it can pay dividends to get in early to some of Edward’s stock picks, and this dividend stock is already on the move.

    See the top dividend stock for 2020

    *Returns as of 7/4/20

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    Motley Fool contributor Phil Harpur owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, and Westpac Banking. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of Wesfarmers 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.

    The post 2 quality ASX dividend shares for retirement income appeared first on Motley Fool Australia.

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  • Wells Fargo Has Lost $220 Billion in Market Value Under Fed Cap

    Wells Fargo Has Lost $220 Billion in Market Value Under Fed Cap(Bloomberg) — Don’t let anyone tell you regulators haven’t punished Wells Fargo & Co. — or at least its shareholders.The scandal-ridden bank has lost $220 billion in stock-market value since the Federal Reserve imposed an unprecedented cap on the firm’s assets in early 2018, crimping its ability to add customers and loans. The constraints are biting harder this year as corporate clients draw down credit lines, which pushes up assets and leaves Wells Fargo even less room to seize opportunities.Shares of the bank touched a 10-year low this week as analysts raised alarms that shrinking profits make its current dividend less sustainable. While the coronavirus pandemic has taken a toll on bank stocks across the U.S., Wells Fargo’s drop is the steepest among its main peers this year. And since the Fed imposed its cap, the bank’s market capitalization has fallen much more, valuing the firm at $96 billion by Friday’s close of trading.A series of scandals that began erupting in 2016 prompted the Fed to limit Wells Fargo’s growth until lapses are addressed. The bank’s leaders initially said they believed they could meet the requirements of the order by the end of 2018. After regulators later expressed frustration with the pace of reform, the firm installed a new chief executive officer, Charlie Scharf, in October. He’s declined to give guidance on timing, but has cautioned that there’s still much work to do.The bank was granted a small reprieve in April when the Fed announced it would “temporarily and narrowly” modify the restriction to let Wells Fargo expand lending to small businesses under U.S. programs intended to blunt the impact of the pandemic.But the firm is still broadly constrained. As the economic slump spurs a “flight to safety,” many banks have soaked up a flood of deposits that they’ve used to increase assets. Wells Fargo hasn’t seen the same benefit.A growing chorus of analysts and investors are predicting Wells Fargo will have to reduce its dividend this year. The firm has offered the highest dividend yield of the largest U.S. banks in the last 12 months.“Wells Fargo was unable to earn enough in the first quarter to cover the company’s dividend payment in the quarter, and this has raised fears that WFC may need to cut the dividend to a more sustainable level in the future,” KBW analyst Brian Kleinhanzl wrote in a note to clients Wednesday.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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