Paul's Insights: Forging ahead in 2020. The trick is to start small

The big news of 2019 has been the downward path of interest rates. For those of us with a home loan, there are exceptional deals to be had – including mortgage rates that start with a ‘2’. It’s worth checking the rate you’re currently paying to see how it shapes up against some of the cheapest loans on the market, many of which are offered by non-bank lenders.

While interest rates have plunged, Aussie shares have powered ahead. The ASX 200 has risen 18.78% this year (to mid-December), and if we include dividend income, the gains climb to 25.47%.

For anyone hoping to get a slice of sharemarket action in 2020, exchange traded funds (ETFs) are still a low cost way to achieve easy diversification even if you don’t have much upfront capital.

2019 saw the introduction of ‘Protecting Your Super’ reforms, making it easier for Australians to avoid having their super eroded by high fees and unnecessary life insurance premiums. That’s a good thing. But one of the best steps you can take to protect, and even boost your retirement savings, is to check that your super fund charges competitive fees.

A review of super by banking watchdog APRA confirmed that higher fees generally go hand-in-hand with lower net returns. That’s because the more you pay in fees, the harder your fund has to work to achieve investment returns that make up for the outflow in fees.

It’s the same with non-super investments. Research by InvestSMART shows that over a 30-year timeframe, investors paying 3% in ongoing fees can sacrifice more than half of what their portfolio would have been worth had they paid no fees at all.

The upshot is that focusing on lower fees in 2020, rather than paying for outperformance – which probably won’t materialise, makes it more likely you’ll enjoy a higher net gains.

Each year sees a fresh crop of money apps launched, and a new app from CommBank could potentially put cash back in your pocket in 2020.

Around $10 billion annually goes unclaimed on a whole raft of benefits from green slip refunds, energy rebates and toll relief through to various government-funded allowances. CommBank’s ‘Benefits finder’ app can help you track down any money you‘re entitled to from among 250 potential benefits. It could be worth a look.

I’d like to wish all my readers a safe and merry Christmas. Join me again in 2020 for more straightforward ideas to grow your wealth.

Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.