6 ETFs for the ultra-long-term

SPEAKER_1 (0:01)

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The best part of Waking Up?

SPEAKER_2 (0:31)

A full cup of Folgers Coffee and music on full blast.

Owen Raszkiewicz (1:00)

Hey there, here's a quick note. This podcast contains general financial information only. That means it's not specific to you, your needs, goals, or financial objectives. So don't act on the information until you've spoken to your financial planner. You'll find our full disclosure, disclaimer, and link to our financial services guide in the show notes.

Hello everyone, and welcome to this episode of The Australian Investors Podcast. We've got a jam-packed episode today. We've got questions.

We've got talk of China and America. The government's come out with the intergenerational report. And I've got James Phelan, co-head of advice from Rask Advice, on the line with me. James, how are you doing man, man?

James Phelan (1:40)

I don't know very well Owen, how are you?

Owen Raszkiewicz (1:42)

I'm pretty good. I'm pretty good. We are talking ETFs today. I gave you a game that I wanted you to play with myself and everyone today. And then I broke the rules of said game. And you're going to pick three ETFs. I'm going to pick three ETFs. And the rules of the game were pretty straightforward. You have to pick an ETF for 2026, an ETF for 2036, and an ETF for 2046 But they couldn't be index ETFs. Now, my ETFs, debatable if they are index ETFs. So we're going to cover all that and a bunch of questions that were sent in advance in a little bit.

I maybe wanted to start off with like what's been happening with your week? Have you come across anything interesting that you've read?

Just generally checking in.

James Phelan (2:35)

Yeah, week, pretty standard week, but the intergenerational report was big talking point in the media and a bit of a chat about it among our group. And yeah, a few interesting, but maybe concerning kind of trends through the report. I don't know how much you can rely on them on a long term basis because things change so quickly. But yeah, it's not all sunshine and rainbows.

Owen Raszkiewicz (3:02)

Yeah, I guess maybe I might follow up on that. What was the thing that maybe was most interesting to you from it? Because it came out earlier this week.

James Phelan (3:12)

Yeah, I'm thinking some of the key points around the aging Australia probably stood out to me a lot. So the reliance on age pension is dropping significantly, which is due to superannuation taking over. So that's a really positive thing that other kind of OECD nations aren't seeing.

They're finding that their pension systems aren't funded as well as what Australia's is.

Owen Raszkiewicz (3:42)

Yeah, because we obviously booted this off in the 1990s, and that really kind of puts us in stead for where we are now. The actual full report is at least 325 pages, because that's where the last appendix is, or appendices is. So it's 352 pages long, or you can do the short fact sheet version. My number one takeaway was similar to yours. I mean, I've probably got two big takeaways, but my number one takeaway was the birthrate in Australia, which is forecast to drop from where it is now to below 1.4 children per adult woman.

That's really important to understand, because the sustainable rate for our country is 2.1. So you need 2.1 kids per woman, and we're going to get 1.36 off the top of my head over the forecast period. Yeah, forecast can be wrong. But the other thing, and just to echo what you just said about the age thing, this is the big thing, is just how like wrong these can be. So there was a thing that I spoke about yesterday on the Australian Finance Podcast, which is that they've effectively come out and said, this is from Treasury, I can't remember where it is in this fact sheet.

But they effectively came out and said that, here it is. So Australia's population will age more quickly and grow more slowly than it was projected in the 2023 report, primarily due to lower fertility rates.

Australia should age at the same pace as it did three years ago because of how time works. But I guess the big one is that fewer kids is then going to bring up the average age considerably. And they go on to say the number of Australians age 85 and over is expected to triple in the next 40 years, driving increased demand for healthcare and aged care. I mean, in our three ETFs, neither of us picked an aged care related ETF or a healthcare related ETF, because you did tell me your three ETFs off air. We probably should have picked that, right? Probably should have picked that.