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By InvestSMART · 18 Jan 2012

By InvestSMART ·
18 Jan 2012

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Well, at least it's a new way of tackling the country's underinsurance problem. MLC's animated online Life Stages tool shows the events that can occur in six key stages of life - as young independents, professionals, a young family, a mature family, pre-retirees and retirees - along with the questions you should be asking and the available solutions. Check it out at mlc.com.au.

Young switch on to super

Who says young people aren't interested in their super?

The Australian Taxation Office's recent statistical overview of self-managed super funds found 11 per cent of new members were under 35 in the June 2010 quarter.

OK, that's still not high but the Self-Managed Super Fund Professionals' Association of Australia reckons the GFC experience is prompting younger Australians to make super a higher priority than previous generations.

"Younger Australians are becoming increasingly knowledgeable about, and interested in, the performance, management and control of their superannuation savings," chief executive Andrea Slattery says.

Precious savings

Thinking about gold or other precious metals as a safe haven? There's more to it than just squirreling away a few ingots, according to the latest CMC Markets Precious Metals Pulse.

While precious metals can be a prudent defensive play, CMC chief market analyst Ric Spooner says investors need to understand each metal's cycles and actively manage their exposure to make the most of their investment.

He says low international interest rates, countries such as China buying gold as a way to diversify their exposure to US dollars and the growing wealth of traditional gold-owning nations, such as India and China, all bode well for precious metals this year.

But buying at a reasonable value is critical. An investor who bought gold near the peak of the market in 1980, for example, would still be behind in real terms.

Spooner says Australian investors should also consider the implications of changes in exchange rates and understand that gold prices often move in different directions to silver and platinum. As a general rule, silver and platinum are likely to outperform when the outlook for industrial production and economic growth is improving, while the reverse is true of gold.

ETF action afoot

Get set for a swath of new Exchange Traded Funds (ETFs) to hit the market now that the Australian Securities Exchange has changed its rules to allow the listing of fixed-interest ETFs.

With bonds coming back in favour for security-conscious investors, issuers think the time is right to offer retail investors low-cost exposure in this area.

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Frequently Asked Questions about this Article…

What is the MLC Life Stages tool and how can it help with underinsurance?

MLC's animated online Life Stages tool walks you through six key life stages (young independents, professionals, young family, mature family, pre-retirees and retirees), highlights events that can occur in each stage, suggests questions to ask, and shows available insurance solutions. It's designed to help everyday investors and families recognise insurance gaps and make more informed decisions about protection.

Are younger Australians getting more interested in their superannuation (super)?

Yes. The Australian Taxation Office reported that 11% of new members to self-managed super funds (SMSFs) were under 35 in the June 2010 quarter, and the SMSF Professionals' Association says the GFC has prompted younger Australians to pay more attention to super, its performance and management.

What does the ATO data on SMSF membership tell investors about trends in retirement savings?

ATO statistics show a growing, if still modest, share of younger members entering SMSFs — 11% of new SMSF members were under 35 in the June 2010 quarter. That suggests younger investors are increasingly interested in controlling and monitoring their superannuation savings, according to industry groups.

Should everyday investors consider precious metals like gold, silver and platinum?

Precious metals can be a prudent defensive play, but they require understanding of each metal's cycle and active management of exposure. CMC Markets’ Ric Spooner notes factors supporting metals this year include low international interest rates, nations like China buying gold to diversify from US dollars, and rising wealth in traditional gold-owning countries. However, buying at a reasonable value and knowing the differences between metals is important.

How do gold, silver and platinum typically behave differently and what should investors watch for?

According to the article, gold often behaves as a safe-haven asset and may outperform when economic growth is weak, while silver and platinum tend to do better when industrial production and economic growth are improving. Investors should also consider exchange-rate movements, because currencies can affect Australian investors' returns in precious metals.

Is now a good time to buy gold for long-term returns?

The article stresses that timing and valuation matter. Ric Spooner warns that buying gold at a market peak can leave you behind in real terms (for example, gold bought near the 1980 peak underperformed in real terms). Everyday investors should focus on purchasing at reasonable values and actively managing exposure rather than assuming gold is automatically a long-term winner.

What is the ASX rule change on ETFs and what does it mean for fixed-interest ETFs?

The Australian Securities Exchange changed its rules to allow listing of fixed-interest ETFs. That opens the door for a wave of new ETFs offering retail investors low-cost, exchange-traded exposure to bonds and other fixed-income instruments, which previously faced listing constraints.

How might bonds and fixed-interest ETFs fit into a security-conscious investor's portfolio?

With bonds coming back into favour for investors seeking security, issuers believe fixed-interest ETFs can provide a low-cost, accessible way for retail investors to gain bond exposure. For security-conscious investors, these ETFs offer diversification and potentially lower volatility compared with equities—though investors should still understand the underlying bond risks and ETF structures.