Shape Wealth Pty Ltd

14/03/2016

5 Basic Things Investors Should Do in 2016

1. My investment Objective - What are you trying to accomplish? Are you still a growth investor or should you take your foot off the gas a little and pare back your risk/return profile?

2. Portfolio Review - Meeting with your advisor regularly will help you stay informed and ensure you're up to date with your investments.

3. Examine Your Savings - The end game has everything to do with your ability to save now.

4. Control the Controllable - You can't predict market changes not even by watching the sensational daily programming that surrounds the financial world. Keep it simple and formulate a rules-based system for moving forward.

5. Disciplined Approach - This is important. Your eventual financial independence requires your participation.

These are the 5 basic things every investor should do in 2016 to review and reevaluate their financial picture.

14/03/2016

Term of the Day

Index Fund

An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.

Breaking It Down:
"Indexing" is a passive form of fund management that has been successful in outperforming most actively...

12/03/2016

Term of the Day

EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization

EBITDA - Earnings before interest, taxes, depreciation and amortization is an indicator of a company's financial performance which is calculated in the following manner:

EBITDA = Revenue - Expenses (excluding tax, interest, depreciation and amortization).

EBITDA is essentially net income with interest, taxes, depreciation, and amortization added back to it, and can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions.

If you're interested in learning how to calculate EBITDA using MS Excel we've got it covered.

11/03/2016

Term of the Day

Net Present Value - NPV

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of a projected investment or project.

The following is the formula for calculating NPV:

where

Ct = net cash inflow during the period t

Co = total initial investment costs

r = discount rate, and

t = number of time periods

10/03/2016

Term of the day

Return On Capital Employed (ROCE)

Return on capital employed (ROCE) is a financial ratio that measures a company's profitability and the efficiency with which its capital is employed. ROCE is calculated as:

ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed

“Capital Employed” as shown in the denominator is the sum of shareholders' equity and debt liabilities; it can be simplified as (Total Assets - Current Liabilities). Instead of using capital employed at an arbitrary point in time, analysts and investors often calculate ROCE based on “Average Capital Employed,” which takes the average of opening and closing capital employed for the time period.

A higher ROCE indicates more efficient use of capital. ROCE should be higher than the company's capital cost; otherwise it indicates that the company is not employing its capital effectively and is not generating shareholder value.

10/03/2016

The current bull market turns seven years old Wednesday. Since the S&P 500 opened at a measly 675.13 on March 9, 2009, the index has gained 193%. The past three weeks' rally aside, investors may be surprised to hear the word "bull" applied to the current market, since the last 18 months have seen the S&P rise only 0.5%. The index closed at 1,979.26 Tuesday, and is up 0.5% to 1,990.50 in pre-market trading.

The current bull market turns seven years old Wednesday, having declined to fall 20% or more since the S&P 500 opened at a measly 675.13 on March 9, 2009.

10/03/2016

Why now might be the time to hedge against some volatility?

“Why now may be the time to look abroad https://t.co/qV52jhXQcv”

09/03/2016

Term of the Day:

Yield To Maturity (YTM)

Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until the end of its lifetime. Yield to maturity is considered a long-term bond yield, but is expressed as an annual rate. In other words, it is the internal rate of return of an investment in a bond if the investor holds the bond until maturity and if all payments are made as scheduled.

08/03/2016

Term of the Day:

Capital Expenditure (CAPEX)

Capital expenditure, or CapEx, are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. It is often used to undertake new projects or investments by the firm. This type of outlay is also made by companies to maintain or increase the scope of their operations. These expenditures can include everything from repairing a roof to building, to purchasing a piece of equipment, or building a brand new factory.

14/09/2015

Myer dividend trap

At the end of August 2015, MYR had a historical gross yield of 14.8% making it look attractive to many funds and investors seeking high yield.

On 1 September MYR announced it will not pay a final dividend this fiscal year, and it would in fact be raising money from investors in the form of a dilutionary entitlement.

You need to actively analyse & rotate through investments looking for sustainable dividends and deliver high income.

Reducing exposure to high yield stocks that are identified as likely dividend traps avoids capital losses for investors. In comparison, 3 of the top 5 Australian equity ETF's by fund size* hold 3 or more of the companies identified as being dividend traps.

01/09/2015

While many people do view it as a casino, the stock market is actually a place where you can buy a small part of a real business. When markets are panicking, I find it soothing to take a little tour around some of the businesses you can buy on the stock market. I stroll down to Woolies. It seems like people are still doing their shopping. I take a drive on a toll road and the traffic is as bad as ever. It looks like the owner Transurban is still collecting toll revenue. People are still using their mobile phones, maybe Telstra is going to be OK? I usually come back content that the world is not actually coming to an end, despite what the newspaper headlines are telling me.

14/07/2015

[email protected]&l=7631079_HTML&u=488771781&mid=10833873&jb=0" rel="ugc" target="_blank">http://www.ampcapital.com.au/site-assets/articles/market-watch/2015/july/2-reasons-why-dividend-yield-matters?j=55910872&e=[email protected]&l=7631079_HTML&u=488771781&mid=10833873&jb=0

While there are a handful of actively managed equity income funds in the market, many are not optimally designed to meet the needs of a retiree. This article explores the role of equity income (through dividends) for those in or nearing retirement.