Your personal investing strategy
At Morgans, we take a personalised approach to help you achieve your investment goals. We understand that investing is not a one-size-fits-all endeavour, and we are here to tailor our services and products to your specific needs and preferences.
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Our investment philosophy
Getting started is an important step, and we want to ensure that we have a deep understanding of where you stand when it comes to investing. We consider four foundational aspects.
Income Investing
Income investing
Income investing is a strategy focused on generating a reliable and steady stream of passive income. Investors pursuing this style often choose assets such as dividend-paying stocks, real estate investment trusts (REITs), and high-yield bonds. The primary goal is to accumulate regular cash flow from these investments, providing a consistent source of income. This approach appeals to those seeking financial stability and regular returns, making it a popular choice for retirees or anyone looking to supplement their income through strategic investment choices.
Capital growth
Capital growth investing is a strategy centered on increasing the value of an investment portfolio over time. Investors pursuing this style typically allocate funds to assets with the potential for substantial appreciation in value, such as growth stocks or emerging market opportunities. The focus is on long-term capital appreciation, with the goal of building wealth and achieving significant returns.
While capital growth investing involves a higher level of risk, it appeals to those with a longer investment horizon and a willingness to withstand market fluctuations in pursuit of higher overall portfolio value over time.
Capital security
Capital security investing prioritises the preservation of invested capital and minimising the risk of loss. Investors adopting this strategy tend to allocate funds to low-risk assets such as government bonds, high-quality corporate bonds, or other stable securities. The primary objective is to safeguard the initial investment, even if it means accepting lower returns compared to riskier investments.
Capital security is particularly attractive to conservative investors or those nearing retirement who prioritise protecting their wealth and are more risk-averse. This approach provides a sense of financial stability and security, albeit with potentially lower returns compared to higher-risk investment strategies.
Risk / return
Risk/return investing involves a balanced approach to investment strategy, carefully weighing potential risks against anticipated returns. Investors pursuing this style seek to enhance their portfolio performance by selecting a mix of assets that align with their risk tolerance and financial goals. This strategy acknowledges that higher potential returns often come with increased risk and vice versa.
Balancing the risk-return profile allows investors to tailor their portfolios to match their individual preferences, whether they are comfortable with more volatility in pursuit of higher returns or prefer a more conservative approach with lower risk and stable, albeit potentially more modest, returns. This versatile strategy enables investors to align their portfolios with their specific risk preferences and financial objectives.
News & insights
Australia’s households could face higher electricity costs and rising inflation in 2025. With electricity subsidies ending and energy supply constraints persisting, the Reserve Bank of Australia (RBA) may be forced to lift interest rates. Here’s what you need to know.
Key Summaries
- Retail electricity subsidies worth $9 billion per year are being phased out.
- Retail electricity prices are expected to rise sharply in 2025.
- Inflation could accelerate to 4% or more in the second half of the year.
- RBA may then need to make three 25-basis-point rate hikes.
- The cost of renewable energy is not just the cost of wind and solar,
natural gas is also needed to stabilise renewable energy.
Why Are Electricity Prices Rising?
The government’s decision to remove $9 billion in electricity subsidies will expose households to the true cost of power. Over the past two years, wholesale electricity generation costs have surged by 23%, driven by supply constraints and reduced capacity in New South Wales.
How Will This Impact Inflation?
Electricity prices feed directly into the Consumer Price Index (CPI) with a lag of around two quarters. As subsidies end, retail prices will rise, pushing inflation higher, especially in the second half of 2025. Businesses will face increased costs and pass these on to consumers.
Interest Rates: RBA’s Likely Response
Higher inflation means the RBA will need to act. While some banks forecast small rate hikes early in the year, Morgans expects three 25-basis-point increases in the second half of 2025. This could significantly impact mortgage holders and borrowing costs.
The Role of Renewable Energy and Gas Pricing
Despite claims that renewables are the cheapest energy source, electricity prices remain high because consumers need power 100% of the time. The marginal cost of electricity is set by natural gas, which stabilises supply when renewables cannot meet demand. Global gas prices, influenced by events such as the war in Ukraine, ultimately determine the cost of electricity in Australia.
FAQs
Why are electricity prices increasing in Australia?
Because subsidies are ending and generation costs have risen by 23% over the last two years.
How will this affect inflation?
Consumer prices could rise by 4% in the second half of 2025 as higher energy costs flow through the economy.
Will interest rates go up?
Yes, the RBA may raise rates three times in the second half of 2025 to curb inflation.
Are renewables making electricity cheaper?
Not necessarily. Prices are influenced by natural gas, which sets the marginal cost of supply.
What does this mean for households?
Expect higher power bills and increased mortgage costs if rates rise.
Australia faces a challenging year ahead with rising electricity costs, accelerating inflation, and likely interest rate hikes. Planning ahead is essential for households and investors.
Want to discuss how this impacts your portfolio?
DISCLAIMER: Information is of a general nature only. Before making any financial decisions, you should consult with an experienced professional to obtain advice specific to your circumstances.
Federal Reserve Interest Rate Outlook: What Investors Need to Know
The Federal Reserve’s latest projections reveal a surprisingly moderate outlook for inflation and interest rates. Despite tariff concerns earlier this year, the Fed expects inflation to remain subdued and rates to decline gradually. Here’s what this means for markets and investors.
Key Takeaways
- Fed forecasts interest rates around 3.4%, aligning with market expectations.
- Inflation impact from tariffs is far lower than predicted.
- Core inflation expected to fall to 2.5% next year and reach target levels by 2028.
- Growth outlook remains positive with no recession in sight.
- A benign economic environment could support U.S. equities.
What the Fed’s Latest Projections Tell Us
Every quarter, the Federal Reserve releases its Summary of Economic Projections (SEP), which includes forecasts from the Federal Open Market Committee and regional Fed banks. These projections carry significant weight because they reflect the collective view of some of the most influential economists in the U.S.
Table 1. Economic projections of Federal Reserve Board members and Federal Reserve Bank presidents, under their individual assumptions of projected appropriate monetary policy, December 2025
Interest Rate Outlook: Gradual Declines Ahead
Our model estimated the equilibrium Fed funds rate at 3.35%, and the Fed’s own forecast is close at 3.4%. This suggests rate cuts are likely in the near term, with further declines to 3.1% in subsequent years. For investors, this signals a stable environment for borrowing and equity markets.
Inflation: Lower Than Expected Despite Tariffs
Earlier predictions suggested tariffs could push inflation up by 1.6%, but the actual impact has been minimal. Headline inflation is projected at 2.9%, and core inflation at 3%, well below initial fears. The Fed expects core inflation to fall to 2.5% next year, then to 2% over the longer term.
Growth Outlook: No Recession on the Horizon
Despite global uncertainties, the Fed anticipates steady growth: 1.7% this year, 2.3% next year, and 2% thereafter. This benign outlook, combined with easing inflation, suggests a supportive environment for U.S. equities.
FAQs
Q1: Why is the Fed cutting rates?
To maintain economic stability and support growth amid moderating inflation.
Q2: How will lower rates affect investors?
Lower rates typically reduce borrowing costs and can boost equity markets.
Q3: Are tariffs still a risk for inflation?
Current data shows tariffs had a smaller impact than expected, thanks to strong service-sector productivity.
Q4: Is a U.S. recession likely?
The Fed’s projections show no signs of recession in the near term.
Q5: What is the Fed’s inflation target?
The Fed aims for 2% core inflation, which it expects to achieve within a few years.
The Federal Reserve’s outlook points to a stable economic environment with easing inflation and gradual rate cuts. For investors, this could mean continued opportunities in equities and fixed income. Want to learn more about how these trends affect your portfolio?
Investment Watch is a quarterly publication produced by Morgans that delves into key insights for equity and economic strategy.
This publication covers
Economics - 'The Australian economy: a landscape of challenge and opportunity'
Asset Allocation - 'Structural shifts demand a portfolio rethink'
Equity Strategy - 'Diversification is key'
Banks - 'Fundamentals don't justify share price strength'
Industrials - 'Prepared for the uptick'
Travel - 'Selective opportunities'
Resources and Energy - 'Steady China and tight supply'
Consumer discretionary - 'Recovery underway'
Healthcare - 'Attractive, but with limited opportunities'
Infrastructure - 'Rising cost of capital but resilient operations'
Property - 'Structural tailwinds building'
It’s hard to believe that 2025 is already drawing to a close. As we enter the holiday season, we want to take a moment to express our deepest gratitude for your continued support and trust. This trust is the very foundation of everything we do. This time of year is a chance to reflect on the significant progress we’ve made. The entire team at Morgans is incredibly proud of the efforts and achievements from the past twelve months that reinforce our commitment to providing you with top-tier advice and opportunities. These achievements mean that Morgans continues to provide top-line advice and investment opportunities that benefit clients across our national branch network.
Morgans clients receive exclusive insights such as access to our latest Investment Watch publication. Contact us today to begin your journey with Morgans.
Stockbroking FAQs
Our professional advisers craft a bespoke investment strategy tailored to your financial objectives and risk profile. Reach out via our website or visit a local branch to find out more about our award-winning research, exclusive ASX opportunities. Contact us to find out more.
Morgans empowers investors with tailored stockbroking guidance and education. Our advisers provide personalised portfolios, access to top-tier research, and clear explanations of stock market fundamentals, risk levels, and investment strategies.
Easily find a Morgans financial adviser using our online branch locator tool. With 56 offices across every Australian state and territory, our advisers deliver customised investment advice tailored to your needs. Enter your postcode or suburb to connect with a local professional. Find an adviser near you.
For over 40 years, Morgans has built trust through customise financial solutions. Our clients gain access to ASX investment opportunities and benefit from award-winning research.
Our financial advisers take a client-centric approach, deeply understanding your investment goals, risk tolerance, and life stage. Using our extensive ASX research and national network, we create tailored investment strategies to foster long-term financial success and enduring partnerships.
Morgans’ research team provides in-depth analysis of key ASX sectors, including banking, industrials, resources, energy, technology, consumer discretionary, telecommunications, travel, and property. Our insights cover over 200 ASX-listed companies, highlighting growth opportunities and market trends. See our full list of our companies under coverage.
Morgans’ Chief Economist, Michael Knox, delivers insights on critical factors like interest rates, tax policies, and global economic trends impacting the ASX. Recognised by the AFR as a top-ten forecaster in 2023 (6th Best Economic Forecaster, 7th Best Cash Rate Forecaster), his reports keep clients up to date on economic activity. View our latest articles here.
