Crypto in 2025: What you need to know + How the superrich became super rich

Hi everyone,

Libby and I have snuck away to Far North Queensland for a bit of sun this week along with speaking at some superannuation conferences. It is such a beautiful place to visit.

In this week’s newsletter:

• The downside of falling interest rates.

• The boom at the first home buyer end of the property market.

• Investors ride the precious metals boom.

• Sharing financial information with children - The dos and don’ts.

• The state of crypto in 2025.

• How the superrich became wealthy.

The downside of falling interest rates

When the RBA cuts interest rates all the focus is on the impact on borrowers who benefit from lower repayments and higher borrowing capacity. But for savers, lower interest rates can be devastating.

According to data from the Reserve Bank, the return on most bank savings accounts is now around, or less than, zero after accounting for inflation. The average online savings account is paying interest of just 1.3 per cent, and the average bank term deposit rate is sitting at 2.85 per cent - down from 3.35 per cent in January 2025.

The RBA data also shows the average interest rate for online bank savings accounts was just 1.3 per cent in August, the lowest since October 2022 and down from 1.4 per cent. in July. For one-year bank term deposit, the interest rate in August 2025 was just 3.6 per cent (also the lowest since October 2022), while three-year term deposits paid just 2.95 per cent, the lowest since September 2022.

As you can see, savings and term deposit rates are currently pretty minuscule, so investors wanting income returns are looking for better options. Remember, higher returns can come with higher risk so always get good advice before looking at alternatives.

For example, fully franked dividends can be attractive to Australian investors because franking credits can reduce, or even refund, the tax owed by the recipient, making these shares more tax-efficient than unfranked or partially franked dividends.

Shares in the big four banks offer relatively high income levels, with fully-franked dividend yields ranging between 4.3 per cent and 5.1 per cent. BHP and Rio Tinto also offer relatively high dividend yields, with their fully-franked dividends paying between 4.7 per cent and 6.8 per cent.

The boom at the first home buyer end of the property market

Following on from comments about the ill-judged broadening of the federal government’s 5 per cent home deposit scheme, there is now clear evidence of how it is fuelling the property boom.

According to Ray White chief economist, Nerida Conisbee, Australia's most affordable housing is experiencing significantly stronger price growth than typical properties, with the bottom quartile of the market outperforming across most capital cities as government incentives and affordability constraints drive intense competition for entry-level homes.

Nationally, affordable houses (at the 25th percentile price point) are growing at 8.3 per cent annually, slightly ahead of the 8 per cent growth for typical properties. Meanwhile, affordable units are surging at 7.1 per cent - versus 6.3 per cent for the broader unit market.

However, the story varies dramatically across cities, with some markets showing substantial affordable premiums whilst others display no discernible difference.

Sydney leads the affordable house outperformance with cheap properties at $1.13 million and growing 7.2 per cent annually. That’s nearly a full percentage point ahead of typical Sydney houses at 6.3 per cent.

This reflects the intense competition among cashed-up buyers seeking the most affordable entry point into Australia's most expensive housing market.

Regional markets are showing even stronger affordability premiums, with affordable houses in regional Queensland surging 13.8 per cent annually, compared to 11.6 per cent for typical homes. Similar trends are evident in regional South Australia and Western Australia, where affordable houses are growing 2.0 and 1.6 percentage points faster, respectively, than their typical counterparts.

The outperformance of affordable housing coincides with an unprecedented expansion of first home buyer support schemes.

The federal government's decision to bring forward and significantly expand the First Home Buyer Guarantee scheme to October 2025 - three months ahead of schedule - has removed key barriers for entry-level buyers.

The expanded scheme eliminates income caps entirely and dramatically raises property price thresholds to $1.5 million in Sydney (from $900,000), $950,000 in Melbourne (from $800,000), and $1 million in Brisbane (from $700,000).

This allows first home buyers to purchase with just a 5 per cent deposit without paying lenders mortgage insurance, potentially saving tens of thousands of dollars in upfront costs. Treasury estimates suggest the uncapped scheme will issue an additional 20,000 guarantees in its first year, directly targeting the affordable segment where competition is most intense.

The department's modelling indicates this will add approximately 0.5 per cent to house prices over six years, though the immediate impact appears concentrated in the entry-level market. Beyond federal schemes, first home buyers benefit from various state-based incentives including stamp duty exemptions, grants, and shared equity programs.

These layered incentives create powerful demand drivers specifically targeting properties in the affordable tier.

Notably, Melbourne and Canberra stand out as exceptions to the affordable outperformance story.

Melbourne’s affordable houses are growing at 4.2 per cent annually, actually lagging behind typical Melbourne properties at 4.3 per cent - the only major city where this is occurring.

Similarly, Canberra’s affordable houses trail typical properties by 0.2 percentage points. For units, both cities show identical growth rates between affordable and typical properties, with no discernible premium for cheaper stock.

The limited stock of affordable housing in most markets is intensifying competition among entry-level buyers.

With median house prices now approaching $1 million nationally, the pool of sub-$800,000 properties has shrunk dramatically, concentrating demand among remaining affordable options.

Affordable units are outperforming even more strongly in the unit markets, with Perth leading the way - recording 16.5 per cent annual growth for affordable units compared to 14.5 per cent for typical apartments.

This trend appears likely to persist while government support remains targeted at first home buyers and affordable housing supply constraints continue.

The data suggests that while overall market conditions drive broad price movements, policy interventions and supply dynamics are creating increasingly divergent performance across price tiers. This has significant implications for housing affordability and market structure going forward.

A report from property research group Cotality found that under the old price caps for the 5 per cent deposit scheme, around a third of the 4,848 house and unit markets analysed nationally had a median value below the respective limits.

Under the expanded limits, this portion jumps to 63.1 per cent, including 51.6 per cent of house markets and 93.7 per cent of unit markets.

Adelaide saw the largest increase for houses, with 46.6 per cent of suburbs (130) now qualifying, up from just 2.9 per cent (8) previously. Brisbane saw the largest proportional increase for units, with 97.5 per cent of suburbs (153) now qualifying, up from just 36.9 per cent (58).

Property values in both these cities are already strong … now they’re set to get stronger.

Investors ride the precious metals boom

Australian investors are pouring record inflows into gold exchange traded funds (ETFs) listed on the ASX in 2025. Silver ETF inflows have also struck all-time highs.

According to Global X, investors have poured $660.3 million in net inflows into physical gold ETFs listed on the ASX in the year to 5 September. Of that, over half- or $369.1 million - has gone into Global X’s suite of gold ETFs. At the current pace, flows are on track to exceed the record 2020 year, which saw $982 million in net inflows into physical gold ETFs.

This year marks the strongest ever for silver, with $192.7 million in net inflows year-to-date into ASX-listed ETFs. This is well ahead of the highs of $80 million in 2020 and $67 million in 2024.

Global X expects gold and silver to keep climbing, attracting even more investors to ETFs, given expectations of lower interest rates in the US. Its year-end gold price target is US$4000 per ounce.

Silver’s performance hinges on two drivers - industrial demand and its relative value to gold.

With gold breaking out and interest rate cuts expected to buoy the economic outlook, silver has scope to outperform through the rest of the year, according to Global X.

Sharing financial information with children

Parenting today is a lot more open than previous generations, even when it comes to family finances.

From a “children should be seen but not heard” position of previous generations, modern parents today are a lot more democratic and transparent in the family decision making.

However, there's a fine line between involving children in so-called “adult decisions” to support their personal growth and shielding them to preserve a carefree, stress-free childhood.

Household finances are a classic example. In the past any discussion about money was seen as grubby, one of those taboo topics never to be discussed. It produced young adults ill prepared in simple matters of money management which often led to some very expensive mistakes.

My fear is that the pendulum may have now swung to the other extreme where children are too exposed to the strains of the family finances and risk growing up to fear money and making mistakes.

Naturally, how much you talk about money to your children depends on their age, but here are some financial areas I think kids should be exposed to (and the ones they shouldn’t):

What to share: 

• Setting goals - It’s great for children to see that you’re saving for something which benefits the whole family. Perhaps it’s a new car, family holiday or even putting aside some money for new clothes. Whatever your savings goal is, it’s a wonderful life message that you can’t have everything you want without a bit of planning and a little sacrifice. When you’re driving the kids around in the new family car or swimming in the pool on holiday, remind them of what it took to get there and how it was worth the planning.

• Paying bills - Libby and I always used to laugh at the outrage from our now-adult children when they read their first payslip and saw the amount of tax taken out. All of a sudden they realised who pays for the roads, schools and hospitals. Likewise, the first time we took them through our supermarket bill and compared it to their pocket money they understood that day-to-day items - often taken for granted - do have value and shouldn’t be wasted. We would also break down the cost of an item into how many hours they’d have to work at McDonalds (all our kids had part-time jobs at McDonalds) to pay for it. The message really sank in.

• Consumer choice - Drag them along shopping and show that consumers have choices. Teach them how big brand names are often more expensive but not necessarily better. That supermarket prices are usually more expensive at eye level on a shelf than above or below. Take them shopping and treat it like a field trip - and pass on all of your canny shopping tips.

• Everyday financial experiences - Go through your online banking with the children and explain what a financial institution does, the concept of earning interest and the difference between the range of accounts. The same with the credit card statement. Explain how a bit of plastic isn’t a money tree and it has to be paid back, often with interest. Whip out the debt card and explain the difference.

• Making charity donations - Libby and I would always talk as a family about the importance of making donations to charity (not the amount, but the organisations - so, what they do and why we support them). We wanted the kids to understand that everyone has a community responsibility to help others. We also insisted they donate a percentage of their pocket money to a charity of their choice.

What NOT to share:

• How much you earn - All a child wants to know is that you’re able to look after them. They want that security. Dollar amounts are often confusing and they have no concept of how much you need to earn to cover household expenses. If you are asked how much you get paid, it is better to avoid disclosing a figure and just say, “enough to make sure we’re okay”.

• Level of debt - A 25-year home loan is an incredibly scary prospect for any aged child. To them, a year is a long way off. So avoid talking numbers and whinging about how long it will take to pay off. Instead, explain the concept of debt and how to use it properly to acquire things which hopefully appreciate in value.

• Investments - Wait until children are studying commerce at high school or show an interest in investing before talking about it. It’s confusing enough of a subject for adults. When the time is right, don’t talk about dollar amounts but rather, why you bought some of your shares and what moves prices. Relate shares to companies and brands that children use everyday like retailers or clothing/technology brands. Then move on to explaining other investments and how they operate.

• Wills and life Insurance - Most children hate the thought of being alone, of losing Mum or Dad. So don’t even attempt to explain wills or life insurance until they’re old enough to cope emotionally with the prospect. Simply explain that whoever is your executor will look after them.

Talking to kids about financial hardship

Sometimes we don’t have a choice when it comes to protecting our kids from life’s hard times. If Mum or Dad lose their jobs and the family faces financial strain, you may need to talk to the kids about this. Remember to:

• Use simple language

• Assure them they’ll be okay.

• Explain how you’ll need to cut back on spending.

• Listen to their concerns.

• Give them plenty of hugs.

The state of crypto: What the market is really looking like in 2025

I don’t spend a lot of time banging on about cryptocurrency. It’s volatile, it’s hyped, it’s not a core wealth-builder for most people. Plus, crypto scammers have been stealing my image and making up fictitious comments supposedly from me endorsing investment in crypto currencies.

So let me be clear, I do not invest in crypto currencies or recommend anyone do so. Why? I put every investment through the filter of the world’s greatest investor Warren Buffett and ask:

Do I understand the business?

Bitcoins were invented by a mysterious computer genius, and are created or “mined” by super-computers which solve complex algorithms. They are then held in digital wallets and traded on markets using “blockchain” technology.

I have no idea what that means.

Is it run by people I admire and trust?

Mmm … no idea.

Cryptocurrencies started out on the “dark web” as the favoured currency of drug cartels and illegal arms dealers who wanted to hide their money.

Everything is basically anonymous. Bitcoin miners and investors are completely anonymous. Although there are now platforms where you can trade the more popular currencies, like CoinSpot, Etoro and Swyftx.

Does it have a sustainable competitive advantage?

Bitcoin was the first, and best known, of the cryptocurrencies. There are now a over 4,000 of them … Tether, Ethereum, Dash, Ripple, LiteCoin and Monero to name just a few.

Is it the right price?

Like all markets, the right price is what someone else is prepared to pay for it.

But this digital token has no underlying foundation of value, so it’s near impossible to work out whether it’s over- or under-valued. It seems to simply be based on demand and supply.

If yes to all the above then do the deal.

While I sort of understand how they work, I’d have to say the rest of the answers to the ‘Buffett investment filter’ are all a “no”.

But cryptocurrency is a big talking point again in 2025, so it makes sense to look at where the market stands right now - no spruiking, no tribalism. Just the facts you need to make a sensible call for your situation.

Crypto in 2025: 

Regulation is tightening – and institutions are back

After the chaos of exchange failures and ‘rug pulls’ a few years back, the crypto world has tried to grow up. Survivors have beefed up compliance, commissioned proof-of-reserves audits and lifted capital buffers. Regulation has also moved from hand-waving to rulebooks.

Europe’s MiCA framework is laying down clear standards for tokens and stablecoins, Hong Kong and Singapore now run licensing frameworks, plus the US has shifted to tougher enforcement but also a high-profile push to coordinate crypto policy out of Washington. That combination (guardrails plus legitimacy) has brought back the big end of town. More institutions now run crypto desks and pilot programs for tokenised assets.

Even the US President and the First Lady issued their own meme coins. They made hundreds of millions of dollars out of the deals … investors didn’t fare as well.

Crypto is a risky asset.

Prices are higher, products are broader

Prices tell the story. Bitcoin blasted through old highs earlier in the year on the back of heavy ETF inflows, then cooled as traders took profits and yields bobbed around.

Ethereum has enjoyed its own resurgence as more countries allow spot products and its network - now running on far less energy than in the past - anchors a lot of the plumbing behind decentralised finance. The overall market has broadened too, with tokenisation projects (bonds, real estate fractions and the like) bringing a more boring back-office flavour to what used to be an arena of pure speculation.

Central-bank digital currencies are part of the backdrop. They’re not the same thing as crypto, but the spread of digital euros and the ramp-up of China’s e-CNY are normalising digital wallets and instantaneous settlement. Such familiarity means it’s easier for mainstream users to experiment with stablecoins and, from there, sometimes venture even further into the market. Big brands are also putting blockchain to work in loyalty, ticketing and supply-chain verification. That’s not headline-grabbing stuff, but there’s a certain utility to it.

The core risks haven’t disappeared

None of this removes the risks. Volatility is still extreme and leverage is still a trap for new players. Plus, the sector hasn’t completely shaken off the reputational damage from 2022’s blow-ups. Scams and pump-and-dump schemes persist, usually dressed up in clever marketing. Regulation is clearer, but not uniform – a rule that applies to your broker in one jurisdiction probably won’t apply to the platform where your tokens actually sit.

So where does that leave everyday investors who want a snapshot - and maybe a small, disciplined allocation?

First, stick to what you understand, on platforms that are regulated where you live. If you want exposure without handling keys or wallets, local Exchange-Traded Funds are an easier entry point.

Second, cap your position size in a high-risk bucket you could afford to see swing wildly. Third, be meticulous about record-keeping and tax stuff. The ATO treats crypto disposals as capital-gains (or loss) events, so you need accurate cost bases and timestamps.

Finally? Never borrow to punt on this stuff. If you find yourself suddenly needing to get your money back, you’re already in too deep.

Quick cheat sheet for crypto in 2025:

• Bitcoin (BTC) is the oldest, most widely-held asset and the main beneficiary of ETF flows. Think ‘digital gold’ with high volatility.

• Ethereum (ETH) underpins a lot of smart-contract activity and has moved to a lower-energy model. Its investment case leans on network utility.

• Solana (SOL) is the high-throughput challenger that’s attracting lots of developers and retail buzz. It’s faster and cheaper, but comes with much higher execution risks.

My bottom line is unchanged

Crypto is risky but it seems it is here to stay and it’s maturing. Parts of it are even becoming useful. But it’s not a substitute for an emergency fund or holding a diversified mix of high-quality assets.

If you’re curious and disciplined? Then yes, a tiny allocation held through regulated channels can make sense. But if you’re chasing hot tips on social media or treating crypto as a shortcut to wealth? Then you’re playing a very old game with very modern marketing.

How the ultra rich made their money

I often suggest people identify a money mentor - that is, someone who has built a lot of wealth - and then study how they’ve done it.

So I found this graphic fascinating that shows how billionaires have made their money.

US business magazine Forbes found that nearly one in six billionaires (or 464 billionaires in 2025) made their money in finance and investment.

Tech is the second most common sector to find billionaires in (401 in 2025).

Food for thought. Have a great week, everyone.