Gambling or Investing?
There is an interesting article in the Courier Mail yesterday*, Number crunchers from the University of NSW have analysed Melbourne Cup results from the past two decades and discovered a trifecta bet – predicting the first three places in the race – that would have given a better return than saving at a bank.
If punters followed the formula over 20 years, they would have outlaid $75,966 and received a total return of $116,851 – a profit of almost 54 per cent.
If investors invested their outlay into the ASX 200 over the same period the capital growth even with the September 11 crash, and more recently the Global Financial Crisis would be almost 175 per cent. This does not take into account the dividends paid from the companies such as Telstra, CBA or Coles Myer over the period.
We agree having a flutter on Melbourne Cup day is apart of our culture, but remember its just a flutter. As Peter Thornhill pointed out at the seminar earlier in the year, investing is a long term approach, not 3 minutes 20 seconds.
If you plan to bet big over the Spring Carnival, have a think what that money, if placed into your investments will do over the long term.
Also remember the Reserve Bank Board’s decision on interest rates will be released not some 45 mins before the start of the race. We are expecting an interest rate rise of 0.25% in November and again in December. As we currently are experiencing the lowest interest rates in a generation a rate rise is be expected.
This weekend I’ve been invited to attend a conference in Tasmania with 50 other financial planners from around Australia, where we’ll be discussing the direction of the economy for the next twelve months with Peter Switzer, leading business and financial commentator.
I’m also having discussions with Ross Barnwell, Executive Director of Distribution for ING, Richard Klipin, CEO of Association of Financial Advisers and Rob Pedersen, Risk Committee member for Financial Planning Association. It will be interesting to see their view on economic outlook and the direction of financial planning in Australia.
I look forward to posting what I learn from this weekend.
Paul
Information contained in this document is General Advice and does not take into account any person's particular financial objectives, situation or particular needs. Before making a financial decision based on this advice you should consider, with or without the assistance of a financial adviser, whether it is appropriate to your particular financial needs, objectives and circumstances.
*http://www.news.com.au/couriermail/story/0,23739,26274466-952,00.html
