Oct 232006

Unpredictable National Party Senator, Barnaby Joyce seems to be moonlighting on his constituents. He appears to be sidelining as a financial advisor.

Barnaby wants to be very, very careful that he’s not sprung giving advice when, as far as I know, he may well not be licenced to do so. Whether he is or not, his current role of Senatorial representative would tend to forbid his indulging in a second occupation anyway.
Barnaby’s transgressions aside, from my perspective as someone with many, many years experience in the finance game, I’d be extremely wary of any investment which purports to offer as many incentives as the Telstra T3 sale does. There’s an old saw often quoted in the finance-investment industry.

“The greater the rate, the greater the risk”

Given the supposed benefits of T3, how much would a small ‘Mums-and-Dads’ investor need to be able to invest? Guaranteed 14% investment return, yes, but only for the first twelve months. Discounted $2.00/share purchase offer, but is T3 really guaranteed to come anywhere near the benefit 14% return in subsequent years? Highly doubtful.
As a part of a highly diversified portfolio which didn’t concentrate on any one type of industry investment, T3 might appears to be a sound long-term investment, however, given past historical performances and current angst between government & utility, the investment would need to be in the tens of thousands, unrelied upon as an income generator but a capital improver. Hopefully.
Given that the current and future governments will continue to have influence of the remaining shares in Telstra, via the Future Fund, it’s unlikely that speculative private investors can expect any respectable short-term returns.
Would I buy into T3 if I had – say, $50,000? No way! There are better, more stable long-term investments out there.

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