November 2024 Newsletter
In this edition, we take you through five building blocks for a great retirement, how to avoid traps regarding cash reserves, a deep dive into why scams occur and how to prepare against them, and a video summarising key market movements during October and November.
In the meantime, we hope you enjoy the read.
Vanguard’s newly released How Australia Retires 2025 report explores how Australians prepare for and experience retirement.
Based on a nationally representative survey of 1,800 Australians aged 18 and over conducted in February 2025, the research reveals a significant gap in sentiment between working and retired Australians. While 65% of retirees expressed positive feelings about retirement, only 43% of working Australians felt the same.
To better understand what drives confidence and optimism about retirement, the report identifies five key building blocks that, when taken together, are strongly associated with feeling more positive and prepared for life after work.
Financial literacy is about understanding and applying key financial concepts to make informed decisions.
Building your financial literacy can improve your financial confidence, lead to better decision making and set you up for a more secure future.
Here are three key concepts to understand when it comes to financial literacy:
Understanding how interest works is a cornerstone of financial literacy. Compound interest allows your savings or investments to grow over time, as you earn interest not just on your initial amount, but also on the interest that accumulates.
Inflation affects the purchasing power of your money over time. Even if your savings earn interest, rising prices can erode their value. Knowing how inflation works helps you make smarter decisions about where to keep your money and how to invest it.
Investing always involves some level of risk but understanding how to manage that risk is essential. Diversifying by spreading your investments across different assets or stocks can help reduce the impact of market volatility.
Retirement literacy refers to the knowledge and understanding of Australia’s retirement system, including superannuation rules and pension eligibility.
Here are two key aspects to retirement literacy:
Understanding the basics of superannuation, including rules around contributions and when you can access your super, is a great place to start.
The Age Pension is one of the pillars of Australia’s retirement system. It’s important to understand how it works and pension eligibility requirements.
Retirement planning is the process of preparing for life after your working years, ensuring you have the ability to support your desired lifestyle and goals.
It doesn’t need to be perfect. You can start the process by asking yourself:
People who feel confident about retirement are more likely to seek professional financial advice and have a sense of how much they can safely spend each year.
It is a continuous process that requires regular review and adjustment.
Voluntary contributions can be a powerful way to boost your retirement savings, and for some Australians, they may also offer tax benefits.
That said, it’s important to weigh up whether a voluntary contribution strategy is right for you and consider seeking professional advice – speak to us – or registered tax agent.
Here are three common ways to contribute more to your super:
With salary sacrifice contributions, you ‘sacrifice’ part of your before-tax salary and pay it directly to your super account. You benefit in two ways. First, it could help you grow your super faster over time. Second, you may be able to save tax – this is because you pay just 15% tax on the contribution, while your marginal tax rate could be up to 47% (including the 2% Medicare Levy).
You can make a personal after-tax contribution. They’re made from your after-tax income (often via BPAY), and as a result they generally don’t incur any additional tax when they’re paid into your super account, or when you withdraw them at or after your preservation age.
If you’ve made a personal after-tax contribution to your super, you may be eligible to claim a tax deduction for it. This allows you to treat the contribution as a concessional one, which means it’s taxed at 15% rather than your marginal tax rate and has the same after-tax outcome as if you had made a salary sacrifice contribution.
It’s important to understand the rules and contribution limits around concessional contributions to avoid exceeding caps.
Superannuation is the second-largest asset for many Australians after their homes. For some Australians, it’s their largest asset. Yet many don’t give it the attention it deserves.
Here are three ways to get more engaged with your super:
Super is a long-term investment so it’s not something you need to do daily or even weekly. But taking a few moments every six months to check your balance can help you stay informed and in control.
High super fees can significantly reduce your retirement savings. So, it’s worth comparing different funds to see if you can get a better deal. Remember that past performance is not a reliable indicator of future performance.
Each year, your super fund is required to send you a member benefit statement, usually around August or September for the financial year ending 30 June. Set aside 15 minutes to review it. It’s time well spent.
Contact us if you have any questions about your super.
Source: September 2025
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™
GENERAL ADVICE WARNING
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966).
The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”).
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.
Important Legal Notice – Offer not to persons outside Australia
The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws.
© 2025 Vanguard Investments Australia Ltd. All rights reserved.
Monthly data just released by the Australian Prudential Regulation Authority (APRA) shows households across the nation are now holding record levels of cash.
APRA’s data shows the amount of cash held in authorised deposit-taking institutions (ADI) such as banks and credit unions rose to $1.65 trillion by the end of August from the $1.57 trillion at the end of 2024 – an increase of $80 billion, or 5.10%, over just eight months.
Although the growth rate has not been quite as pronounced, the amount of cash being held by self managed superannuation funds has also been growing steadily this year, reaching a record $170.6 billion at the end of June from $168.8 billion at the end of 2024, according to Australian Tax Office data.
And, according to separate data from the Reserve Bank of Australia, the weighted average interest rate being paid on all term deposits up to $10,000 was 2.85% per annum at the end of August – which compares with 3.35% at the end of last year.
The same RBA data shows the weighted average rates paid on term deposits has been 1.89% since the start of 2020.
In Australia, as in many countries, cash is often viewed as a safe and reliable way to store wealth.
The Financial Claims Scheme (FCS), administered by APRA, is an Australian Government scheme that provides up to $250,000 in protection per deposit account holder with an Australian ADI in the event the financial institution fails.
That protection is important however, when it comes to investing for long-term growth, cash has delivered lower returns than other asset classes over time.
This is illustrated in the recently released 2025 Vanguard Index Chart, which shows cash returned an average of 4.1% per annum over the 30 years from July 1, 1995 to June 30, 2025 – the lowest return among all major asset classes.
This compared with an average annual return of 10.8% from U.S. shares, 9.3% from Australian shares, and 8.3% from international shares. Australian bonds returned an average of 5.5% per annum. Of course, it’s worth keeping in mind that past performance is not a reliable indicator of future results and markets can, and do, change from time to time.
One of the primary reasons cash is often considered a poor long-term investment is inflation. Inflation refers to the general increase in prices over time, which erodes the purchasing power of money.
For example, if you keep $10,000 in a savings account earning less than 2% and inflation runs at 3% per year, your money will buy less in the future than it does today. While your account balance remains the same, its real value decreases.
Holding cash can mean missing out on potential gains from other investments. This is known as opportunity cost.
Money kept in cash could be invested elsewhere, potentially earning higher returns. Over time the difference in growth can be significant, especially when compounding is taken into account.
While cash is useful for short-term needs and emergencies, it is not ideal for long-term financial goals such as retirement or saving to buy a home.
Investments that offer growth may be better suited for these objectives because they have the potential to outpace inflation and increase in value over time.
Despite its drawbacks, cash can play an important role in a diversified portfolio. It can provide liquidity for living costs and unexpected expenses, act as a buffer during market downturns, and help manage risk.
While it’s important to keep some cash on hand, investors should also consider other asset classes to achieve their financial goals and protect their purchasing power.
The income road ahead for many people needing to generate income from their savings may become increasingly challenging as interest rates continue to fall.
Source: October 2025
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™
GENERAL ADVICE WARNING
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966).
The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”).
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.
Important Legal Notice – Offer not to persons outside Australia
The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws.
© 2025 Vanguard Investments Australia Ltd. All rights reserved.
What do Tiger Woods, Ben Stiller, Australian pensioners and dating app users have in common? Despite being from different walks of life, they have all fallen prey to various scams.
In 2024, more than A$2.03 billion was lost to scams in Australia across 494,732 reported cases. Most of these scams were enabled by technology, with scammers contacting their victims either online or on the phone. However, about 600 of these scams happened in person.
All of us are vulnerable to being scammed – it’s rooted in who we are as human beings. If you think you’re immune, you are not. Police officers fall for scams. Even cyber security professionals fall for scams. So what hope is there for the rest of us?
What does help is to understand the underlying techniques online scammers rely on, so that you can better spot them. These psychological tactics are similar to those used in offline scams, street cons and social engineering in general. But they’re also reminiscent of techniques used in advertising, marketing and any other industry where the goal is to persuade you.
The goal of a scammer is to try and influence you to part with your money or other valuable possessions. They rely on classic persuasion and influence principles that take advantage of our psychology and other aspects in our lives.
The reason we pay attention to scammers in the first place is because they rely on the need and greed principle, promising us something we need or desire. In romance scams, that’s love. In investment scams, that’s money. It could also be a job or status.
Scammers may use the authority principle, such as pretending to be your boss and requesting you to transfer money, a scam known as business email compromise.
Or they may use the kindness principle to get you to donate to some bogus humanitarian cause in what are known as fake charity scams.
The principle underlying some of the most costly scams in Australia, such as impersonation, romance, and payment redirection scams is the distraction principle. This relies on us missing the scammers’ “sleight of hand” and clues as to their real intentions.
We are all social animals and believe in safety in numbers. Scammers know this and will use the herd or social proof principle to convince us that we are missing out on those hard to get concert tickets, for example.
An insidious form of a foot-in-the-door technique relies on the dishonesty principle. In this case, the scammers might entice you to install a VPN (which happens to be malware) to bypass your organisations’ firewalls or to provide use of your bank account for some international money transfer in money mule scams.
American psychologist Robert Cialdini has noted many of these principles are what salespeople use to get you into buying something you didn’t really want. They are also the principles that politicians, friends and family use to get you to agree to their requests. In other words, they’re not always a sign that you’re being scammed.
To identify a scam, ask yourself these three simple questions:
Rushing to pay for a holiday booking because the countdown timer indicates you have two minutes left relies on the same scarcity principle as when you transfer your savings into a once-in-a-lifetime investment opportunity. The former is a legitimate transaction, while the latter is an investment scam in which you lose.
Ultimately, the core problem is that every day, we are constantly exposed to such nudges – in the media, online, and in our daily interactions. Over time, it can become difficult to recognise when these nudges are used for negative ends (called “sludges”), and in scams.
Anything that makes us human can be exploited to influence us. Our perception, emotions, relationships, thinking and beliefs can be used to influence our behaviours.
All personality types are susceptible to persuasion, although their “Achilles’ heel” may vary. For example, people who are agreeable (cooperative, kind, compassionate) are generally found to be more susceptible to persuasion, which may make them more susceptible to scammers.
While not everyone will fall for common or generic scams, any of us can fall for a targeted and well-executed one. Demographics play a role in whom scammers choose to target to increase their success rates.
In Australia in 2024, elderly people were commonly targeted in investment and romance scams, while mothers lost thousands to “Hi Mum” scams where someone posing as a family member asks for money. Young people fell prey to threat-based scams. Men tended to lose money in investment scams, while women were more vulnerable to romance scams.
Importantly, overconfidence in our scam savviness can work against us. When we have high trust in our abilities, we tend to assess situations as less risky, taking mental shortcuts in decision-making. Such mental shortcuts can cause us to miss critical cues and red flags.
Different sectors in Australia are working together to warn us all about scams. The “Stop. Check. Protect” approach recommended by Scamwatch also provides very helpful tips to better protect yourself.
Remember today could be the day you get scammed. Prepare accordingly and stay vigilant.
Source: https://theconversation.com/youre-likely-not-as-immune-to-scams-as-you-think-heres-why-264687
Stay up to date with what’s happened in the Australian economy and markets over the past month.
Australia’s economy remained under pressure in October. Investors sharply pared back future rate-cut bets after inflation data came in higher than expected.
News of the higher-than-expected inflation numbers was followed by the biggest daily fall in the Australian share market in two months.
Wall Street ended the month subdued over suggestions of no further rate cuts expected this year but there was some optimism about US-China relations.
Click the video below to view our update.
Please get in touch if you’d like assistance with your personal financial situation.
