Letters: Ethical investing, FBT, saving super

Readers ask about socially responsible investing, defend the super system despite recent criticisms and like the look of inflation-linked bonds.

Ethical investing

I have been reading the Eureka Report for some time now and was wondering if you ever do any research pieces on ethical or socially responsible investing as that is an area of interest to me?

R Palic

Editor’s response: This is certainly an area of interest to us here at Eureka, and while we haven’t run any pieces I could find recently, you may be interested to read this article from last year on ‘impact investing’ in our region.

FBT change question

Does anyone know if the changes [to fringe benefits] just announced apply to airline employees who received discounted travel?

ML

AOM board movements

I'd be interested to hear what The Speculator thinks of Australia Oriental Minerals (AOM). I see some new appointments to their board this month (eg Alexander Downer, David Bamfield) with directors buying shares.

LW

Healthscope notes

Could Elizabeth Moran please comment on whether there has been a change in the risk level of the notes HLNG since issue. At that time Elizabeth felt that there was a high risk level associated with their high yield. I bought them and they are now trading at a 10% premium. I was wondering whether it would be wise to sell some or all of them.

I Walters

Saving super

I feel that the only thing that Alan Kohler and Ian Verrender have achieved in their most recent article 'a cry to save our super' is further undermine a system that has already been irrevocably damaged in recent years by poorly researched articles and out of context opinions.

While I don’t disagree with the message in the article, it does little to remind people that it is a concessionally taxed environment and that adds significant value. The fees for managed investments within superannuation are no more expensive than for those outside of superannuation, so if you compared an investment in and out of superannuation at the highest marginal tax rate the outcome of the two investments would be significantly better within superannuation. The article just gives people reason not to invest in a legal; tax haven, and it’s important that we don’t discourage people, for the wrong reasons, from investing in superannuation. As the article rightly pointed out, you can do something about fees – you can, if motivated to do, so reduce your own costs by setting up an SMSF (there are other ways of reducing cost).

Suggestions that the system will not deliver on its promise are outdated, I think it’s a well-documented point and it’s a fact not because of fees or poor asset allocation (I doubt anyone would have supported the poor asset allocation piece in July of 2007 and will it be supported in the future, who says the Future Fund has it right?) but because the contribution rate was set too low.

Come on Alan, I am a keen supporter but please understand how much weight your words carry so don’t use them in an irresponsible manner.

MM

Alternative investments

Have you analysed the alternative products such as African land, palm oil, rice, carbon credits and the like offered by Capital Alternatives, and any other similar offerings... might be worth some investigation.

JM

Inflation impact

I liked Adam Carr's article on inflation.

I would like to see it followed by an article on options that we can take to reduce the impact of rising and high inflation.

Name withheld

Inflation linked bonds

Bonds commentary interesting and in line with what FIIG have been telling me. Accordingly I have purchased ILB for Sydney airport. It only pays a 4% coupon but the inflation linked component means that capital rises each year. Total return expected over time is about 7.5%. These ILBs are bottom drawer investments that protect capital. I have about 10% in bonds.

Property still remains outrageously high compared to international benchmarks and I think this has further to fall.

The interest rate prediction for Melbourne Cup day is probably why small cap high yield stocks continue to rise. I'm sure the rate rise is baked in. I still have plenty of cash firepower so am waiting for a pullback.

A Orr

Baby bonus or maternity leave?

With reference to the change in baby bonus from $5000 to $3000 as announced in the mid year review nothing was mentioned regarding the link to the maternity leave scheme. My eldest two daughters have both had children in the current financial year, for the eldest it was her second baby and for the younger her first baby but both had the choice of either being paid maternity leave or the baby bonus but not both. They both chose the maternity leave payments as although it was paid fortnightly as opposed to the baby bonus lump sum the total payment was higher for maternity leave.

Presumably this has not changed but I have not seen any reference to it in the media

C Wheatley

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