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How Composting Has Gone High-Tech

Compost

Humans have composted food for about as long as they have grown it. But in a world increasingly obsessed with tidy convenience, many view the chore of converting food waste into fertiliser for plants and gardens much as they do tending to kombucha scoby or committing to cloth diapers for their infants: too time-consuming, too “granola” and too plain icky.

Composting has “been perceived as this very stinky project that takes a bunch of time and only makes sense if you have a big backyard,” said Friday Apaliski, a San Francisco “sustainability concierge” who works with clients to make their homes more green. She believes that people “are starting to understand how truly phenomenal composting is.”

Composting has ‘been perceived as this very stinky project that takes a bunch of time and only makes sense if you have a big backyard,’ said Friday Apaliski.

Indeed, new composting technology has emerged that makes the process easier, faster and more stylish. Some composting systems are now small enough to live on your kitchen’s countertop and sufficiently attractive that you won’t mind looking at them day after day.

And with houseplant ownership skyrocketing (compost is just as good for Instagramable succulents as for an old-time vegetable garden) and a growing desire to reduce methane-producing food waste, more Americans are trying the ancient practice out for themselves. Between 2014 and 2019, according to the 2019 Composting in America report, the number of American communities offering composting programs increased 65%. This summer, Vermont became the first state in the nation to make composting mandatory.

If you’re going to do it, why not do it as pleasantly as possible? Here, our four favourite new products that use sharp design and cutting-edge technology to speed up, shrink down or even glamorize composting at home.

For Lazy Gardeners

Anyone looking to turn food scraps into fertilizer has typically had to house the refuse in rudimentary backyard containers and use their own forearm strength to intermittently aerate it with a shovel. New age tumblers like the Envirocycle do most of the aerating for you: You need only spin the drum manually a few times a week. Stored outside, the device is fully enclosed—keeping funky smells in and curious critters out. The company offers a 64-litre version of its classic 132-litre tumbler designed to fit on a patio or balcony. It promises to produce usable compost for your pandemic victory garden in a month. (US$210, envirocycle.com)

For Odor-Averse Urbanites

PHOTO: F. MARTIN RAMIN/THE WALL STREET JOURNAL

Once, environmentalists looking to keep their kitchens smelling fresh had no good option but to stuff their scraps in the freezer or bring them immediately to the collection pile outside, even on inconveniently freezing January nights. These days, tabletop bins like Bamboozle’s are designed to accommodate charcoal filters under the lid that oust odours through adsorption. The Bamboozle’s handle also makes it a good way to transport waste to a nearby community garden or compost collection site if you lack the space or ambition to make plant food yourself. (US$40, bamboozlehome.com)

For the Worm-Curious

PHOTO: F. MARTIN RAMIN/THE WALL STREET JOURNAL

Vermicomposting (that is, worm-assisted composting) can speed up the tedious process, but “pretty” is not something you’d call red wigglers, or the tiered plastic vermicomposting structures they typically live in. Uncommon Goods’ sculptural Living Composter, however, gives hardworking worms chicer digs. Just drop peelings and sawdust soil mix into the countertop device’s opening and the worms-in-residence (order yours from Uncle Jim’s, from US$28, unclejimswormfarm.com) will get busy processing about 1 kilogram of food a week into nourishment for houseplant babies. (US$200, uncommongoods.com)

For Impatient Gearheads

PHOTO: F. MARTIN RAMIN/THE WALL STREET JOURNAL

Microorganisms take weeks to do their work. High-tech machines like Vitamix’s Foodcycler, meanwhile, require only hours. While not technically a composter (the definition requires “natural” decay), the microwave-sized device can turn a wider than normal range of organic material into “recycled food compound” in no more than the 8 hours you’ll be asleep in bed. You can add in dairy, meat scraps and even some bones. But be warned: the Vitamix has a relatively tiny capacity of only 2.5 litres, and is less environmentally friendly than methods that don’t require electricity to work. (uS$350, vitamix.com)

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A Dollar Is A Dollar Is A Dollar. Except in Our Minds.

Money On The Mind

Do you care if an assistant at the chemist gives you change in one $10 note or two $5 notes?

Are you more reluctant to spend hard-earned dollars than windfall dollars?

Do you distinguish the “income” dollars paid as dividends on your stock from the “capital” dollars of the value of the stock itself?

Rational investors answer “no” to each of the three questions. After all, money is money, and rational investors can easily distinguish between the substance of money and its form. Hard-earned dollars and capital dollars are no greener than windfall dollars and income dollars.

Normal investors, however, are likely to answer “no” to the first question, but many are sure to answer “yes” to the second and third questions.

All of us are normal investors. For us, the form of money does make a difference. A dollar may be a dollar may be a dollar. But not in our minds.

Sometimes, such normal thinking helps us in our financial lives. But sometimes it hurts us. And understanding the difference between the two—that is, knowing when we’re being smart, even if not rational, and when we’re being neither smart nor rational—can make us better savers, spenders and investors.

Here are some examples of our normal thinking, and when it hurts and helps us:

Framing money into pots

We regularly divide our paychecks into pots. Sometimes they are tangible pots, such as checking accounts or glass jars. Sometimes they are virtual pots, such as Excel sheets or mental pots in our minds. We mark each pot with a label such as rent, food, entertainment, Christmas gifts or emergency funds, and refrain from dipping into pots other than designated ones.

Of course, none of this is rational. Rent dollars aren’t any greener than entertainment dollars. Rationally, they should all be in one pot labelled “money.”

Yet this practice is smart when it makes budgeting easier and prevents bounced checks and disappointed children on Christmas morning. For example, one couple I read about maintained a joint account and two sets of checking and savings accounts—one for daily expenses, such as groceries, and the other for larger expenses, such as taxes. The wife was responsible for paying daily expenses from one account and the husband was responsible for paying larger expenses from the other. The idea was to make sure they always had enough for both groceries and taxes.

Rational? No. Smart? Yes.

Of course, refraining from dipping into pots other than designated ones requires self-control. Yet this is difficult when we face temptation, such as using money in the emergency pot for entertainment. One smart way to bolster self-control is to place obstacles in the way of pots other than designated ones.

For example, one woman who contacted me put her money in a bank that is an hour’s drive away, and cut the bank’s ATM card.

Similarly, the government places obstacles to dipping into retirement pots by generally imposing a 10% penalty on withdrawals from defined-contribution retirement saving accounts on those younger than 59½.

Again, none of this is rational. A dollar is a dollar is a dollar. But thinking about the form of those dollars can make us financially healthier.

Except not always. Sometimes self-control is too strong rather than too weak, preventing reasonable dips into ample capital pots. That’s especially true for retirees who have plenty of money, but have spent a lifetime cultivating a saving mantra: Never dip into the capital pot. Now at the very time when they should be doing just that to enjoy life, they can’t bring themselves to do it. They continue to spend only the income they derive from their savings, and their lives are more constrained as a result.

Rational? No. Smart? No.

Distinguishing hard-earned money from windfall money

Easy come, easy go.

We regularly distinguish money earned with much effort, such as salary, from windfall money obtained with little or no effort, such as gifts. We tend to place hard-earned money in one mental pot and windfall money in another, and we spend windfall money more easily than we spend hard-earned money.

That distinction also affects our willingness to take risk. In one set of experiments, people were divided into two groups, hard-work earners and windfall receivers. People in the hard-work group received an amount of money for completing work requiring physical effort—peeling 25 potatoes or making nine envelopes within 30 minutes. People in the windfall-receiver group received the same amount of money as a gift, with no work requirement. Subsequently, people in the hard-work group made less-risky and less-impulsive choices than people in the windfall group.

Rationally, of course, it makes no difference whether somebody receives money from a windfall or hard work. It may also not be smart if it leads recipients of windfalls—whether bonuses, bequests or lottery winning—to fritter away these windfalls on meaningless purchases or risky investments. Then again, it could be smart if you’re a person who is not spending as much as you should because of an unwillingness to tap money from a large account. If thinking differently about “extra” money makes you more likely to spend what you can afford, go for it.

Tripped up by the ‘money illusion’

Money illusion refers to the failure to distinguish dollars framed as “nominal” from dollars framed as “real”—that is, after inflation. For example, a 2% increase in a nominal annual salary, say from $100,000 to $102,000 is a 1% decrease in the real annual salary when the annual inflation rate is 3%.

Rational investors are immune to the money illusion, but many normal investors are not. And that is not to the benefit of the normal investor.

We see the distortions caused by money illusion in the current concern about the low yields of bonds. For example, the average nominal yield on 3-month Treasury bills during the first nine months of 2020 was a meager 0.42%. The real yield is even lower, a negative 0.98%, because the rate of inflation during the period was 1.40%. Indeed, inflation has exceeded Treasury-bill yields in most years since 2002.

Yet there was less concern in 1979 when the nominal yield on 3-month T-bills was 10.07% and the rate of inflation was 12.26%, implying a negative 2.19% real yield. This is because many normal investors are misled by the money illusion, comparing the low 0.42% nominal yield of 2020 to the high 10.07% in 1979, while neglecting to note that the real yield in 2020, while negative, is higher than in 1979.

Moreover, 1979 investors paid higher taxes on a 10.07% yield than 2020 investors pay on 0.42%. Investors tend to overlook this 2020 tax balm.

Framing money in nominal terms is easier than in real terms because it does not require knowledge of inflation rates and how to use them to convert nominal dollars into real ones. Yet such framing is not smart when it misleads us to act as spendthrifts when high inflation pushes nominal interest rates up, and as misers when low inflation presses nominal interest rates down.

Spending company-paid dividends but not ‘homemade’ dividends

Investors holding shares of a company have two ways to derive money from these shares. Say you need $1000. You can receive a $1000 company-paid dividend. Or you can create a $1000 homemade dividend by selling $1000 of shares.

Rational investors would prefer homemade dividends to company-paid dividends because they can time homemade dividends when it is best for them, whereas timing of company-paid dividends is in the hands of the company. Also, taxes on homemade dividends are likely lower than on company-paid dividends. Homemade dividends do involve transaction fees as investors sell shares, but these fees are now pretty close to zero.

Many normal investors, however, prefer company-paid dividends to homemade dividends.

That can be both smart and not so smart.

Normal investors have two distinct mental pots: “income” and “capital.” Company-paid dividends, like wages, belong in the income pot. Shares, like other savings, belong in the capital pot. The self-control rule many people live by is to “spend income but don’t dip into capital.”

Thinking of the money as being in two distinct pots is smart when self-control is too weak to protect savings from excessive spending. A $1,000 company-paid dividend places a definite limit on the amount that can be spent, whereas a $1,000 homemade dividend opens the door to selling and spending, say, $2,000 of shares when a tempting vacation overpowers weak self-control.

Still, dividing money this way can backfire. To understand why, consider that an anticipated pain of regret is another reason for preferring company-paid dividends to homemade dividends. Imagine that you received $1,000 as a company-paid dividend and used it to buy a TV set. Compare it to creating a $1000 homemade dividend by selling shares to buy a TV, only to find that the price of shares zoomed soon after you sold them. The pain of regret is likely greater with homemade dividends because you bear responsibility for selling shares when you did, whereas you don’t bear responsibility for the company paying dividends when it did.

But the pain of selling stock—and then watching the price rise—should not be determining which form of money we “prefer” when we need $1,000. Stock prices do not zoom after we sell shares just because we sold shares. It’s just bad luck.

Avoiding selling stock and waiting for dividends because of the fear of regret may be what a normal investor would do. But it isn’t rational. And it probably isn’t smart.

Preferring ‘bond ladders’ to bond mutual funds

A bond ladder is composed of bonds of a range of maturities. For example, a $10,000 bond ladder can be built by allocating $1,000 to each of 10 Treasury bonds with maturities ranging from one to 10 years. The alternative is to place the $10,000 into a Treasury bond mutual fund.

In substance, a bond ladder is a “homemade” bond mutual fund with average maturity equal to that of a corresponding bond mutual fund. The value of a bond ladder declines when interest rates increase, as much as the value of a corresponding mutual fund. Therefore, rational investors are, at best, indifferent between the two if their costs are the same (more on that in a minute).

Many normal investors, however, prefer bond ladders because they can manage them in ways that reduce regret.

Imagine that you hold a bond ladder with 10 bonds with maturities ranging from one year to 10 years. You bought each of them at their $1,000 face value. Nine months pass, and you need $1000 to buy a TV set. Meanwhile, however, interest rates increased such that the prices of all 10 bonds are now lower than $1,000. If you sell the one-year bond you’ll receive, say, $995. Adding $5 to the $995 will not squeeze your budget too much, but realizing a $5 loss inflicts the pain of regret. A bond ladder gives you the option to wait three months until the one-year bond matures and receive $1,000, avoiding the pain of regret.

Bond mutual funds do not afford this waiting option. You cannot be assured that you’ll be able to avoid realizing a loss, no matter how long you wait.

None of it makes a difference to rational investors, because they know that a “paper loss” is no different from a “realized loss.” Sure, delaying realized losses may keep regret at bay, but it has no financial benefits. Indeed, rational investors prefer to realize losses, whether in a ladder or mutual fund, because realized losses become tax deductions, yielding them extra money. And waiting three months (or however long) to get the money you need means you won’t be enjoying whatever you need to use that money for.

What’s more, rational investors would ask themselves: Why build a Rube Goldberg bond ladder, when low-cost index bond mutual funds are simpler and likely cheaper, don’t require homemade construction, and don’t have the extra trouble of monitoring and replacing bonds that reach maturity with new bonds?

In other words, it is normal to try to avoid the pain of regret, but such avoidance can be costly.

Normal? Yes. Smart? No.

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Future Returns: How Impact Investors Balance Objectives

Future Investments

Impact investors aim to achieve specific, positive social or environmental goals such as creating more affordable housing, or reducing reliance on fossil fuels, but they do so to earn market returns too, while weighing other standard investment considerations such as risk and liquidity.

That’s a key finding of “Impact Investing Decision-Making: Insights on Financial Performance,” a report published last week by the Global Impact Investing Network (GIIN) that assesses investor attitudes toward financial performance based on outstanding studies by outside firms and an analysis of financial performance that was gleaned from its annual survey of impact investors.

“What’s important here, and what we’re delighted about, is that financial performance is an important consideration for impact investors, but they are really looking at it taking into account a number of considerations,” says Dean Hand, director of research at the GIIN.

To weigh impact alongside performance is not unusual in the sense that traditional market investors also weigh a number of things. Risk and return, for instance, are factors commonly taken into consideration in balance with one another.

To invest in an emerging market company might lead to higher returns than a similar investment in a U.S. firm, but it’s riskier, bearing a higher potential of falling apart, so investors have to decide how much risk they are willing to stomach to get the returns they want.

The GIIN’s survey results have shown that impact investors generally get the balance they are seeking—nearly 88% in the most recent survey say that their portfolios meet or exceed their expectations for returns.

But when investors care about creating a positive social or environmental impact, they also weigh traditional investment considerations, such as liquidity—do they need their investment cash back soon or can they wait? If the latter, an investor may be more willing to invest in a private equity fund with a longer time horizon, and a different set of impact outcomes than might be available via a green bond, for instance.

If they are a more conservative investor, too, not willing to shoulder a lot of risk—a highly rated green bond may be just the thing.

The Importance of Manager Selection

The GIIN’s report looked at how impact investments in private markets have performed, culling data from available research by groups such as Cambridge Associates and Symbiotics as well as its own investor survey.

Private-equity impact investments, for instance, can deliver high returns, outperforming the S&P 500 index by 15%, according to a study by the International Finance Corp., although a University of California study found the median impact fund had an internal rate of return (IRR) of 6.4% compared with 7.4% for the median “impact-agnostic” fund.

And results can vary widely. The GIIN’s survey data showed that the top 10% of private-equity portfolios in emerging markets had realized returns of more than 29% while the bottom 10% had returns below 6%.

As a result, the GIIN finds that fund manager selection matters, not just in terms of quality, Hand says, but in helping the investor understand “whether or not they are achieving what they want both in terms of financial performance and impact performance.”

Investors also have to ask the right questions, Hand says. For example, it’s important to ask questions like: What specific impact results a manager is getting? How are those results measured? How do you convey this information to investors?

Where these have been successful, particularly in impact investing, is where the AO and AM work together to derive what results they are looking for, what their objectives are, and how they are going to report on those results.

“Good asset-owner and asset-manager relationships are built on a close working relationship,” Hand says. “Where these have been successful, particularly in impact investing, is where the asset owner and asset manager work together to derive what results they are looking for, what their objectives are, and how they are going to report on those results.”

Performance in Private Debt, Real Assets

According to the report, private debt funds focused on impact have tended to provide low-risk returns, as most investors expect, while delivering stability as well as diversification to impact portfolios.

The GIIN survey data showed average returns for impact debt funds ranged from 8% for developed market funds to 11% for emerging market funds, while Symbiotics data found a weighted average yield of 7.6% for fixed-income impact funds, the report said.

Investing in real assets, such as real estate and timberland, can lead to good returns, but the results vary widely depending on the time horizon as well as the type of investment, the report found. Investors surveyed by the GIIN reported returns ranging from 8% to 23%—again, pointing to the need for investors to select the right asset managers.

Case Studies

To give a sense of how experienced impact investors balance all these factors, the report offers examples from five experienced impact investors.

IDP Foundation, a private nonprofit focused on access to education and poverty alleviation, invests for impact from its endowment as well as through program-related investments. The foundation cares about achieving high impact but also competitive, market-rate financial returns.

The GIIN looked at five major factors the foundation weighs before deciding on an investment: financial return objectives, impact objectives, financial risk, impact risk, resource capacity, and liquidity constraints.

It turns out IDP considers its financial return and impact objectives to be “very important,” while financial risk—or the volatility of expected returns—and impact risk are “important.” The foundation’s resource capacity is less important, as it leans on a consulting firm as an advisor, and screen service to make sure it doesn’t invest in anything that violates its impact goals.

“What we hope by these spotlights is that it will give investors an idea of how those things are actually playing out so they can match that in their own decision making,” Hand says.

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Oil Producers Are Curbing Supplies. Expect The Oil Rally To Continue

Increased global demand, together with recent supply cuts, could spark a more than 20% rally in oil prices this year, experts say.

“We expect prices to peak at $65 and remain in the range $55 to $65,” says Art Hogan, chief market strategist at National Securities Corp. in New York.Futures contracts for light sweet crude were recently fetching $53 a barrel on the Commodities Mercantile Exchange.

Traders wanting to profit from the potential rally should consider buying June-dated futures contracts for light sweet crude on the CME. Alternatively, they could try purchasing the Invesco DB Oil exchange-traded fund (ticker: DBO), which holds a basket of crude oil futures. The fund has gained 7.5% this year through Jan. 11. It lost 21% in 2020, according to Morningstar.

This year crude has already rallied about 9%, due in part to an unexpectedly bullish move by OPEC+ (the Organization of the Petroleum Exporting Countries plus Russia) earlier this month.

The world’s second-largest producer, Saudi Arabia, surprised the world by announcing it would cut production in February and March by one million barrels a day (bpd). That move more than offset a combined 75,000 bpd increase for the same period by Russia and Kazakhstan.

Overall, the OPEC+ cut should help put a floor under prices, especially given that the member states will probably stick to their quotas. “We don’t see material risk to the group’s [OPEC’s] cohesion,” Barclays said in a recent report. Historically, OPEC members have often failed to stick to their production quotas, making price stability an issue.

Meanwhile, demand from China is higher than pre-pandemic levels. In the third and fourth quarters of 2020, the country consumed 13.7 million and 14 million bpd, respectively. That compares to an average of 13.3 million in 2019, according to OPEC.

Traders will likely bet on a rebound in demand for the rest of the world as Covid-19 vaccines allow people to return to business as usual. “My sense is that as we get back to a more normal society, we get a massive surge in people wanting to go flying and do things they could do before the pandemic,” says Jon Rigby, an oil analyst at UBS London. Such a scenario would mean an increase in oil demand, with air and land travel resulting in higher fuel consumption.

Oil prices will get an additional boost from a softer dollar. “My general view is that we won’t have a stronger dollar,” says Steve Hanke, professor of applied economics at Johns Hopkins University. “Automatically, a little bit weaker dollar will add a little bit of strength to the oil price.” Oil gets priced in dollars, which means that in general, when the dollar weakens, crude prices tend to rally.

A price rally will likely be tempered by increasing supply from shale producers in North America, says Hogan of National Securities. While the Biden administration will likely reduce drilling on federal lands, there is still a lot of potential supply ready to tap when crude prices approach $60. “There is plenty for us in the next two years to increase our supply with hydraulic fracking,” he says.

Buying any commodity futures contract is a risky endeavour, and oil futures are no exception. The price of crude is subject to influences by national governments, geopolitical upheaval, and changes in the global economy. All these can result in significant price volatility.

Despite that, the odds looked stacked in favour of a rally in crude prices over the next few months. “We see prices going higher, if not meaningfully higher,” says Daryl Jones, director of research at Hedgeye Risk Management.

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Ten Global Consumer Trends For 2021

10 Trends

Many of the new habits consumers formed during the coronavirus pandemic are here to stay, market researcher Euromonitor International predicts.

In 2021 consumers will be demanding, anxious, and creative in dealing with change, Euromonitor forecasts in its annual trend report. People will expect increased activism from brands they use, new options for digital services in their daily lives, and more help in achieving mental and physical wellness.

Though some of this year’s trends are directly related to Covid-19—like heightened safety concerns and demand for more open-air spaces—these shifts will continue after the pandemic wanes, says Alison Angus, Euromonitor’s head of lifestyle research. “These changes happened so quickly and have quickly manifested for the long term,” she says.

Euromonitor, a global market-research firm based in London, has released its forecasts since 2010. Last year, just three months after publishing its January 2020 predictions, it revised its expectations to reflect dramatic shifts in consumer behaviour spurred by the pandemic, flagging new trends like the home’s transformation into a multifunctional refuge used for work, school, leisure and exercise. It also noted the pause of other trends like previously rising privacy concerns.

Its forecasts haven’t always come true, at least so far: Euromonitor’s 2018 prediction that DNA-informed personalized nutrition and skin-care products would quickly accelerate didn’t come to pass because such regimens remain too onerous, Ms Angus says. Last year’s expected boom in demand for reusable products also didn’t materialize amid consumers’ sanitary concerns during the pandemic. “Sustainability really took a hit last year,” Ms Angus says. “But I think consumers are reverting back to it.”

Here are some of Euromonitor’s predictions for this year’s big global consumer trends:

More Brand Activism

Consumers paid closer attention to companies’ actions during the covid-19-fueled lockdowns and will take social and environmental issues more seriously after the pandemic ends, Euromonitor says. People will increasingly demand that companies protect the health and well-being of their workforce, help local communities, and promote ambitious sustainability goals. During the pandemic, “all of a sudden the air cleared, wildlife came out to play and everything was so much nicer,” says Ms Angus. “It’s made consumers realise that actually we want this greener, cleaner climate.”

Spontaneity and Convenience

People miss the spontaneous activities and impulse purchases of their pre-pandemic life—running errands, attending social events, dining out—and they want digital commerce to offer a similar experience, the market researcher says. (It also noted that younger consumers prefer digital interactions while 68% of consumers over the age of 60 prefer speaking with human customer-service representatives.) “We really want that on-the-go coffee, that walk and stop for lunch somewhere, that flexibility and ease,” says Ms Angus. “Companies have to find alternative ways to enable that spontaneity in some form.”

Open Air

Even after the pandemic, people’s desire for outdoor spaces for work, events and recreation will remain strong, Euromonitor says. “Businesses need to create their own outdoor oasis,” the report says. “Adaptation might become more complicated and costly depending on the weather, but open-air structures and heating and illumination systems will pay off due to heightened demand for safe venues and the aesthetic that could continue attracting consumers.”

Physical and Digital Worlds

Video calls, connected appliances, smart phones, and technology such as augmented reality have helped consumers stay virtually connected during the pandemic despite being physically separated. Time spent straddling physical and digital worlds is what Euromonitor calls “phygital reality”—a hybrid where consumers seamlessly live, work, shop and play both in person and online. Offering new ways for consumers to combine digital and physical capabilities—say, personal-shopping appointments via video conferencing—will be necessary for businesses to boost sales (and collect data on their customers). Consumers quickly embraced “phygital reality” in the pandemic, but its use will remain long after, Ms Angus says. “Our kids don’t even think about whether something has technology or not, they just expect even a stuffed toy to have interactive technology,” she says. “As those generations become older, it becomes the new normal.”

New Schedules

Staying home more has pushed consumers to be more creative with their time and more deliberate in organizing their daily schedules as they juggle their work, family, and personal lives. So much multitasking means that consumers now expect businesses to offer more flexibility, too. Euromonitor predicts that consumers will demand a 24-hour service culture. “As more and more consumers try to cram more into their day, they’re trying to get time back through services and products that help them do it,” says Ms Angus.

 

Revenge Spending

Many people are distrusting of leadership and government, and bias and misinformation are feeding a crisis of confidence, Euromonitor says. That’s driving some consumers to rebel by placing their own needs and wants first. Lockdowns world-wide have led some to “revenge shopping,” or splurging, after being homebound for months, as well as seeking out illegal parties and online gambling, Euromonitor says. Affordable luxuries like alcoholic drinks, indulgent packaged food and video games are also on the rise. “Revenge spending is evident among those who can afford it or have saved money from being homebound and not going out,” says Ms Angus. “These consumers are spending on indulgences for themselves or their homes in order to make them feel better.”

Thoughtful Frugality

In contrast to those who want to splurge, another group of shoppers is suffering financial hardships from job losses and economic instability that is forcing thrifty spending behaviour, Ms Angus says. Some consumers will identify with both trends, she says, trading down on some items in order to be able to spend more on others, like affordable luxuries and experiences that boost their physical and mental well-being during this crisis. This “trading down to trade up” is an accelerating trend during the pandemic. “Thrifty yet restless consumers are reviewing and adjusting their spending to support diverse and contradictory needs,” says Ms Angus.

Safety Obsession

Safety is the new wellness movement, according to Euromonitor. Frequent hand-washing and wearing masks have become widely normalized habits, and contactless payments became more common as people shy away from handling unclean cash. “Consumers will be more fearful going forward about any future health concern,” says Ms Angus. “I think we will care a lot about safety for a long time.”

Greater Self-Awareness

The global pandemic forced consumers to reconfigure their lives and test their mental resilience amid health risks, economic hardship and isolation. Now they are reassessing their priorities, identities and work-life balance, Euromonitor says. Targeting these consumers includes offering access to goods and services that promote self-improvement and lifestyle balance. Global sales of educational, hobby-related toys and games, musical instruments, sports equipment and nostalgic comforts like childhood snacks are expected to rise.

Working From Home Evolves

The trend of working from home was already on the rise before the pandemic, but last year’s social-distancing measures made it a reality for many overnight. When the pandemic lifts, many people are expected to continue working from home, at least some of the time, for the long term. This shift affects many aspects of daily life, from technology spending to eating habits to clothing choices. Loss of commutes and office workplaces limit spending on coffee runs, lunch breaks and socializing with colleagues after work. Though workwear and beauty routines have become more casual, food and beverage purchases could become more high-end as people try to create restaurant-quality meals at home, Euromonitor forecasts.

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A Workout For Your Mental Health

Workout Your Mental Health

Stressed out? Grumpy? Tired all the time?

You need a mental-fitness regimen.

For months, therapists have reported a significant increase in clients who are anxious, worried or depressed over current events—the Covid-19 pandemic, economic woes, civil unrest. And while they can teach coping skills, such as emotion regulation, to help deal with the stress, they say it’s also important for people to proactively take steps to be mentally healthy, just as they would if they wanted to be physically fit. “If you wait until a major stressor hits to try and bolster your mental health, it’s like trying to inflate your life raft while you are already drowning at sea,” says Wendy Troxel, a clinical psychologist and senior behavioural and social scientist at Rand Corp.

Many people turn to talk therapy, exercise, meditation and a healthy diet to do this. Shirlee Hoffman, a 75-year-old retired marketing consultant in Chicago, limits her news consumption to about five minutes a day. Erin Wiley, 50, a licensed psychotherapist in Toledo, Ohio, uses an app to track the things for which she is grateful. Rhonda Steele, 62, a special-education teacher in Sellersburg, Ind., prays and reads devotions. Dwight Oxley, 84, a retired physician in Wichita, Kan., reads and plays the piano. Rachel Glyn, 66, a retired aesthetician in Philadelphia, tries to do as many things as possible for others. Michael Schauch, 40, an investment portfolio manager in Squamish, British Columbia, rock climbs—he says the view gives him perspective. Stedman Stevens, 62, the CEO of an aviation technology company in Wilmington, N.C., takes 15 minutes each afternoon to sit alone without distractions. “I listen to what my mind shows me,” he says. “This restores my mental strength.”

What steps should you include in your mental-fitness regimen? Here is advice from the experts.

Make sleep non-negotiable

Most adults need 7-8 hours of quality sleep. “Following a consistent sleep-wake schedule sends a powerful signal to the brain that the world is safe and secure, which can help reduce anxiety and foster resilience,” says Rand’s Dr Troxel, author of “Sharing the Covers: Every Couple’s Guide to Better Sleep.” She suggests setting a consistent wake-up time, counting backward to determine when to go to bed, and creating a relaxing wind-down routine, starting an hour before bedtime. Take a bath, read a book, turn down the lights and the thermostat. (18-20 degrees is ideal.) Disconnect from technology to minimize your exposure to distressing news and light.

Set a routine

Get up at the same time each day. Get dressed! Create a morning ritual—many people write in a journal or set an intention for the day, although just drinking coffee in the same chair works. (I drink a large glass of water first thing, then a cup of coffee, and play with my dog.) Eat meals and exercise at set times. This helps create a sense of predictability in a world that feels out of control.

Calm your mind

You can’t cope with stress well if your brain is on high alert at all times, says Carolyn Daitch, a psychologist in Farmington Hills, Mich., and co-author of “The Road to Calm Workbook.” She recommends beginning the day with 15-20 minutes of yoga, meditation or prayer, then scheduling four “mini interventions” during the day—a two-minute breathing exercise or other quick tension-releasing technique. (One of her favourites: Make a tight fist with one hand, imagine it holding all the tension in your body for 10 seconds, release it.) She says to think of these practices as a “stress inoculation.”

Watch your language

The words we use to talk to ourselves colour our outlook. So try to replace “hot” language with “cooler” language, suggests Patricia Deldin, a professor of psychology and psychiatry at the University of Michigan, Ann Arbor. (“This is a challenge but I can handle it,” not “I’m overwhelmed.”) And stop “shoulding” yourself. (“I would like to…” not “I should.”) “A simple language change can influence our feelings and, subsequently, our actions,” says Dr Deldin, who is CEO of Mood Lifters, a mental-wellness program.

Practice compassion

Research shows self-compassionate people are happier, more optimistic, more motivated and more resilient. Yet, too often, we are mean to ourselves. Treat yourself with kindness and understanding. Start by acknowledging when something is painful. (Dr Daitch recommends putting your hand on your heart and saying: “This isn’t easy.”) Then talk to yourself as you would to your best friend. And remind yourself that everyone goes through difficult times. This diminishes your stress reaction and connects you to other people.

Move your body

Research shows that aerobic exercise reduces fatigue and tension, and improves alertness, concentration, sleep, mood, and self-esteem, according to Dr Deldin. And studies show that exercise in nature has even more benefits: It reduces the body’s stress response, lowers cortisol levels and blood pressure, and it gives you a sense of awe, which boosts mood. Dr Deldin recommends 30 minutes of moderate exercise a day, which can be broken up into small periods. (Even five minutes of exercise begins to decrease anxiety, she says.)

Create a media diet

There’s too much negative news these days. Decide how much you will consume—think of this as a “news calorie count”—and stick with it. Set aside blocks of time to turn off your phone. Purge negative people from your social media feed. Look for positive streams to follow or articles to read. (My feeds are largely about sailing, scuba diving, gardening or baking.)

Choose extracurricular activities wisely

Research shows that pleasant activities, ones that give you a sense of purpose (such as volunteering), and ones that make you feel accomplished or masterful (such as learning a language) improve mental health. So pick up a new hobby, practice an instrument, work on improving at a sport. “The ability to exert control over something provides a sense of self-satisfaction and contentment,” says Brad Stulberg, an executive coach in Asheville, N.C., and author of “Peak Performance.” “And progress nourishes the soul.”

Cultivate supportive relationships

People with strong relationships are emotionally healthier. So make a commitment to connect regularly with friends and family. Set a goal to reach out to one person a day. Ask about the other person and discuss something other than the day’s awful news. And be open about how you are, because vulnerability can be bonding.

Be grateful

Especially for your loved ones. And let them know. Everyone is feeling challenged right now. When I’m annoyed with someone in my life, I think of at least five things I love about the person. Often, I’m surprised that my list goes on and on. I’m smiling before I’m done counting.

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When Some Investors Look at Stocks They See Dollars, Not Shares

Purchasing a piece of Apple or Tesla once meant calculating how many shares you could afford to buy. That no longer matters. Now you can pay whatever you’re willing to spend, even if that amounts to pocket change.

Thinking primarily about dollars instead of shares represents a dramatic shift in the world of personal finance, posing new opportunities and risks for investors. The practice is gaining momentum thanks to the widespread adoption of fractional trading—which allows investors to purchase slivers of traditional shares—as well as an industry push to reduce online trading fees to zero.

These twin developments made it easier and more cost-effective for new investors to wager as little as $1 on stocks. The volatility of the coronavirus pandemic then turbocharged these bets as market leaders like Apple Inc. and Tesla Inc. soared into the hundreds or thousands of dollars. The S&P 500, meanwhile, is up 73% since its intraday low point in March 2020.

The lineup of wealth managers catering to dollar-focused investors is spreading from upstart online brokerages that rely on flashy apps to industry stalwarts that have longstanding bricks-and-mortar offices around the U.S. One of those giants, Fidelity Investments, launched a service early in 2020 called Stocks by the Slice allowing investors to purchase fractional shares for the first time. When Stocks by the Slice launched last February, 75% of the buy trades from investors using the service were in dollars on average. This month Fidelity now says that figure is closer to 85%.

In the future “retail investors will be thinking 100% in dollars, not in shares,” said Scott Ignall, head of Fidelity’s retail brokerage business. “Clients no longer need to use a calculator to figure out how many shares of stock they want to buy.”

Advocates say the dollar-first approach is helping democratise access to the stock market and open the wealth management industry to a new wave of investors. There are also dangers. Some say the strategy could encourage risky speculation that some analysts and academics warn will end with individuals losing money. Thinking in dollars, some worry, will distance new investors from their investments or inhibit their greater understanding of market moves.

“If you give people a smaller sandbox to make mistakes, they’ll still make mistakes,” says Larry Harris, former chief economist for the Securities and Exchange Commission and professor of finance at the University of Southern California’s Marshall School of Business. “But also when you make mistakes, you can learn at a lesser cost.”

The ability to pay micro amounts and hold fractional shares when purchasing stocks isn’t necessarily new. Investors have long paid little for penny stocks and small-cap stocks, while others have been able to amass portions of shares through dividend-reinvestment plans. What is new is the ability to freely trade partial shares during market hours. Brokers like Fidelity and Robinhood Markets Inc. can now execute fractional orders immediately, much as they execute ordinary orders to trade stocks or exchange-traded funds.

“Surely, people had to think in dollars before,” Mr Harris said. “Now, they just don’t feel the constraints.”

That is the case for James Evans, a 29-year-old bar and night club manager in Manchester, England. When the pandemic hit Manchester, he was furloughed with more time on his hands to think about his personal investing strategy.

Mr Evans uses Trading212, a London-based trading app, to “build his own ETF,” as he puts it, with fractional buys. He said thinking in dollars gives him more freedom to diversify his portfolio and establish a stronger position.

“This has given me a lot more time to look at what I’m doing, as opposed to just kind of winging it,” he said. “The pandemic has kind of helped that, just in a weird way.”

Robinhood, which was founded in 2013, is one of the biggest beneficiaries of this shift. Its free app now has 13 million users with a median age of 31. Investors can start investing for as little as $1, but the most commonly-traded amount on Robinhood’s recurring investment feature—which makes investments in dollars—is $10 every week.

Account holders “want to not do the math,” said Madhu Muthukumar, head of product at Robinhood.

Robinhood’s recurring investments option allows users to put a set amount of money toward given investments on a weekly or monthly basis. The company says the feature was in response to users who aren’t day traders but wanted an investment option they could build into their otherwise low-tech financial lives.

Larger rivals are now embracing the same approach. Last June Charles Schwab Corp. launched a fractional-trading program called “Stock Slices” that had nearly 190,000 accounts as of December. Schwab estimates the average Stock Slices user is younger than its average brokerage customer. Their average buy order is $275, according to Schwab, still well below the going stock price of companies like Tesla and Netflix Inc.

“We’re seeing growth across all kinds of clients, but we have seen a lot of growth in our younger user base,” said Fidelity’s Mr. Ignall. “We do think that this new way of investing has definitely contributed to that growth.”

For Mr Evans, the 29-year-old nightclub manager, thinking in dollars as opposed to shares demystifies the process. He employs dollar-cost averaging, a strategy that invests the same amounts of money at regular frequencies over time, to build his portfolio. This strategy makes it easier for novice investors to set up their investments with the amount of money they want to spend—and it is also often the only option available to younger, newer players who don’t have lots of money to invest in the market.

“Especially when you’re dollar cost averaging, it’s a lot harder with whole shares, because if the whole share is quite a lot, you have to make your dollar-cost averaging more spread out,” Mr. Evans said. “If you can’t do fractionals, you have to just buy one share, which could be, you know, $100. Then you have to make sure you time it so that it fits your investing time frame.”

But as Mr Harris points out, all investors should be thinking about dollars in some capacity. Stock prices can go up and down depending on the total value of a company’s equity or the amount of shares left to buy.

Ultimately, Mr Harris said, the best way to purchase stocks is a personal decision for many investors: “Do you feel richer owning the number of shares you own or the dollars you own?”

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Lilyfield’s Latest Lavish Residence Hits The Market

Lilyfield

Located in one of Lilyfield’s most sought-after streets, 18 Chapel Street presents a bold new residence.  Designed by Simon Vaughan Architects and interiors by MXM Design Studio – and built by award-winning boutique building team, Micrah Projects – the new development brings high-end luxury across a dual-level floor plan.

The 4-bedroom, 3-bathroom, with lock-up garage residence sees imported Spanish porcelain tiling underfoot (with underfloor heating on the ground floor), high ceilings, galleries of glass and architectural skylights creating an airy light-filled space.

Further, the interiors – styled by Coloured Pencil – see a lavish kitchen as the centrepiece of the home, fitted with Manhattan marble benchtop and island, Zip hot water unit and integrated refrigerator with an outlook to the garden.

Elsewhere, the home sees flexible, fluid living courtesy of the architectural curves of the living and dining space fitted with a showcase fireplace. A separate family room offers built-in cabinetry and a comfortable space to retreat.

The residence is replete with four luxury bedroom suites all fitted with built-in robes while a study offers a built-in desk with brass inlays and LED strip lighting.

The master bedroom boasts ‘his’ and ‘hers’ robes, built-in bedside tables and a timber panelled feature wall. Here, the master also holds an ensuite, arriving with Manhattan marble – coordinating with the kitchen – and underfloor heating.

The other bathrooms follow suit with the same marble adornments and underfloor heating.

Outside, an expansive covered rear alfresco terrace sees a custom Cedar built-in barbeque and preparation area ideal for entertaining. In addition to the above, a central courtyard with established garden and spotted gum hardwood timber decking is also offered with great connection to the indoor spaces. It also doubles as a garage.

The residence is nearby to the bay and parklands, weekend markets, bus and light rail to Sydney CBD.

The listing is with Cobden & Hayson’s Ben Southwell (+61 407 896 212) and is set for auction on 13 February 2021 on-site. Price guide $3.3m.

ch.com.au

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Tech That Will Change Your Life In 2021

A pandemic that ravaged the world and accelerated the digital transformation of, well, everything? Not even the best of futurists or Magic 8 ball-shaking psychics could have predicted the year that was 2020. And yet while we may have missed the biggest news, our predictions for what would occur in the tech world held up decently. (OK, fine, we didn’t think Quibi would die that quickly.)

Now, 2020 has become the lens through which all our 2021 predictions are glimpsed. As we continue to live in a pandemic-fighting world, innovators will aim tech solutions at our personal and professional lives, from at-home streaming movie debuts to an overdue evolutionary leap of the laptop. But we will also strive to reach a new normal, and you’ll see technology helping us there, too, from new hybrid work practices to high-tech masks. And accompanying each new product or service: yet another monthly subscription fee.

Now that we’ve rung in the new year, here’s what to look for.

Pandemic-Inspired Innovation

Masks, webcams and sanitisers for our bodies… and our gadgets. The pandemic sparked a reliance on things our 2019 selves couldn’t ever have imagined. With marketers keen to capitalize on the new interest (and anxiety), 2021 will likely be full of new gizmos that boldly promise to improve it all.

One key area: better webcams for our constant video calling. Samsung has already announced that its forthcoming Galaxy smartphone, expected in early 2021, will improve video recording and calling. We anticipate laptop makers will do the same and finally ditch their crappy, low-resolution webcams.

Portable versions of UV sanitisers for cleaning your phones and gadgets are on the way to keep in your car or your pocket. Another thing we may eventually never leave home without? High-tech masks. Expect a range of built-in features: Bluetooth and microphones (see Maskfone), a fan-powered wearable air purifier (see LG PuriCare), a mask with a UV LED (see the UV Mask). Look for air-quality sensors, contact-tracing assistance and more.

You may even end up wearing a social-distancing sweater. SimpliSafe, a home-security company, made a version that sounds an alarm when someone comes within 6 feet of you. Intended as a fun prototype, the sweater sold out immediately.

 

 

Laptops Arm Up

Suddenly, laptops aren’t the most boring gadget in the world. Our reliance on them for at-home work and school spurred demand the category hadn’t seen in years. (“Children, let me tell you about the Great Chromebook Shortage of 2020.”) Then, in November, Apple released a MacBook Air and MacBook Pro that ditched Intel inside for Apple’s own M1 chips. The result? Machines that have never been so quiet and cool, and lasted so long on one charge.

The move from chips based on Intel’s x86 architecture to ones based on lower-powered Arm technology, like the ones inside phones, is setting the entire computing industry on a new course. Lenovo, Acer and Microsoft have begun releasing Windows or Chrome OS laptops with chips from Qualcomm, whose processors power the most popular Android phones. This will only accelerate in the coming year, with nearly every major Windows PC maker working with Qualcomm on laptops and some models even gaining 5G, said Qualcomm President Cristiano Amon.

Apple, which plans to transition its entire Mac lineup to its own processors by 2022, is also expected to release a long-anticipated new iMac, among other things. And it won’t come as a surprise when more tech giants, including Amazon and Microsoft, embrace their own custom chips in everything from laptops to servers to wearables.

 

 

Hollywood at Home

Many of this year’s top films are hitting living rooms at the same time as theatres. Yep, that means watching “Dune” opening weekend in your PJs. (Woohoo!)

In April, Universal Pictures made “Trolls World Tour” an online rental as theatres closed. Unexpectedly, it broke digital records, racking up US$100 million through platforms such as Apple TV. Then Disney made a big bet on “Mulan,” launching the title on the company’s Disney+ streaming service for an additional $30 a pop. Following the Christmas release of “Wonder Woman 1984” to all HBO Max subscribers (with no extra fees), WarnerMedia plans to release its entire 2021 slate on the online platform.

Netflix has long adhered to this model, and now Hollywood is catching on, more out of necessity than out of desire. AMC reported attendance is down 85% year over year and Regal Cinemas, the second-largest theatre chain in the U.S., closed all of its locations nationwide.

The director of “Dune,” slated for an HBO Max debut in the fall, wrote a scathing op-ed about how streaming alone can’t sustain the film industry. Yet the studios’ digitally minded parent companies, including Comcast, AT&T and Disney, might disagree, finding themselves in possession of the primary distribution channel for their content—and the valuable proprietary viewer data that comes with it.

 

 

Reality: Assisted, Not Augmented

When will Apple release a pair of smart glasses? Probably not 2021. And while Google made a big step in this category this summer by acquiring North, a pioneer in projection glasses, it cancelled the second version of North’s glasses as it plots its future. It’s actually Facebook that declared it will launch smart glasses in 2021—and they’ll be Ray Bans.

Facebook Chief Executive Mark Zuckerberg said in September these glasses will be “the next step on the road to augmented reality.” They won’t feature virtual objects that appear to interact with the real world. AR headsets like Microsoft’s HoloLens might deliver an immersive experience, but they’re still expensive and cumbersome.

“Assisted reality” glasses—which project text, images and even video feeds into a person’s field of view—are of more value now, says Brian Ballard, CEO of remote-expertise company Upskill. Businesses have found utility in remote video conferencing that hovers in workers’ field of view, or turn-by-turn directions they don’t have to look down to follow.

 

 

More Remote Workouts… and Doctor Visits

At-home health is here to stay. Downloads of health and fitness apps grew by 46% world-wide in the first half of 2020, according to MoEngage, a marketing research firm.

Connected fitness equipment, once considered a pricey extravagance, turned into a no-brainer as gyms closed. Peloton, which makes smart spin bikes and treadmills, said it tripled its revenue in the quarter ending in September. Lululemon Athletica acquired Mirror, a wall-mounted panel that streams fitness classes, in June.

Doctor checkups are changing, too. Hospitals used phone, interactive video and messaging to minimise contact with coronavirus patients, after fast-tracking new telemedicine systems. In March, federal authorities loosened health privacy regulation to allow health-care providers to facilitate visits over FaceTime, Facebook Messenger, Zoom or Skype.

PlushCare, a virtual primary care provider, saw a 460% increase in patient signups this year. Ryan McQuaid, the company’s CEO, doesn’t think the bump is a short-term response to a crisis, citing the time-consuming nature of in-person visits. “On average, Americans spend over 20 minutes in the waiting room alone,” he said.

 

 

E-commerce ≠ Amazon

The pandemic packed 10 years of consumer e-commerce adoption into a single quarter, and forced every company that wasn’t Amazon—especially those with large retail footprints—to scramble to offer consumers new and better ways to shop from home.

Target saw an explosion in kerbside pickup from online orders, while warehouse retailer Costco reported unprecedented growth in e-commerce. Walmart launched a Prime-like membership program called Walmart+, and rapidly added features to keep up the competition. (Walmart recently eliminated order minimums and shipping fees on Walmart.com orders, and provides no-fee delivery on grocery carts totalling US$35 or more.) Shopify, which powers payments for many small businesses online, expanded its own network of fulfilment centres so those businesses could get goods to customers more quickly and efficiently, without turning to Amazon.

Now that fast, free shipping is table stakes and retailers recognize they won’t see the foot traffic they counted on pre-pandemic, consumers finally get an online version of an old retail staple: comparison shopping. In 2021, Amazon’s value proposition—that if it isn’t always the least expensive way to shop, it’s at least the most convenient—will be tested. Meanwhile, its market power—along with Google’s, Facebook’s and Apple’s—will continue to be the focus of regulatory scrutiny.

 

 

Death by Subscription

Everything now has some sort of subscription attached to it. Your 600 video streaming apps, your grocery-delivery service, your cloud storage, certainly, but also your workout bike? Your to-do list app? Your dog food? Everything as a Service (EaaS), as we like to call it, is only going to continue. More things you once bought as a one-time payment will be offered instead as a recurring payment. And expect new sorts of service-focused offerings, too—especially tied to your hardware purchases. If Apple’s Fitness+—a new digital workout subscription that requires an Apple Watch—is successful, Apple and other hardware makers will likely attach more services to their products.

Those subscriptions you’re already paying for will continue to rise. Companies argue you need to pay more so they can add more content and features. In June, YouTube TV raised its cable-like bundle by US$15. In October, Netflix raised its most popular streaming plan from US$12.99 to US$13.99. In November, Google eliminated its free Google Photos storage tier. And Disney announced that in March, the monthly price of Disney+ will go from $6.99 to $7.99.

 

 

Return of the Trust Fall

While remote work has many advantages, building trust between employees isn’t one of them. Online, there is no water cooler, no nearby coffee shop for informal brainstorms, no place to grab a drink after work. But companies whose employees worked remotely long before the pandemic already had a solution: the off-site retreat.

Buffer, a fully remote company, gets its entire, globe-spanning team together at least once a year. Dozens of other companies whose employees work mostly or entirely at home do the same thing, which has led to a cottage industry of firms that will plan these retreats for you.

One reason companies have embraced remote work is that it makes employees happier, but another is that it saves companies money on office space. In 2021, expect to see many of the millions of employees who have permanently shifted to remote or hybrid work piling into party buses, doing group yoga and seeking inner peace in the presence of their bosses—for far less than the cost of the rent on the offices they left behind.

 

 

EV, American Style

Look, electric vehicles are cool, but few bear any resemblance to good old Detroit steel. That changes in 2021 with the anticipated arrival of some green beasts.

This summer, startup Rivian expects to ship the already-sold-out launch editions of its first-generation R1T pickup and R1S SUV, machines with ranges of over 300 miles and price tags starting around $70,000.

Then there’s the GMC Hummer EV pickup, due in the fall from General Motors. Reservations are already full for the $112,595-and-up Edition 1, which is billed to have a range of over 350 miles and can do zero-to-60 in about 3 seconds. Lower-tier trims will be available in subsequent years, though true to form, the prices will stay on the big side.

Ford expects to have its own battery-powered monster, the F-150 Electric, on sale in mid-2022. Back in pre-pandemic times, the company filmed a prototype towing over a million pounds. And sometime in late 2021 or early 2022, we might even see Tesla’s Cybertruck.

Those may be the biggest consumer vehicles coming to market, but they’re not the only ones working to up the EV’s average size. This past year brought battery-powered SUVs from the likes of Toyota, Audi and Jaguar, and the trend will continue: In 2021, more than half of the battery-electric and plug-in hybrid options on the U.S. market will be SUVs—82 models total, as opposed to 66 passenger-car models, according to forecasts by AlixPartners, a global consulting firm.

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Some Banks Want To Consign Credit Card Interest To History

Credit Cards

Interest charges have been one of the defining features of credit cards for decades and so when an employee at a big Australian bank suggested getting rid of them, he was taking a risk.

“He said, ‘Well, what about a no-interest credit card?’ ” said Rachel Slade, personal banking group executive at National Australia Bank Ltd., recalling a feedback session at one of the lender’s Melbourne offices. “And everyone’s like, ‘What? That’s not how a credit card works.’ ”

Worried about dwindling credit-card usage during the coronavirus pandemic and the rapid rise of startups like Australia’s Afterpay Ltd. and Sweden’s Klarna Bank AB that allow consumers to pay for goods in instalments, some banks are rethinking what has been one of their most lucrative businesses.

National Australia Bank, known locally as NAB, launched a no-interest credit card in September. Users get a fixed line of credit and the bank levies a monthly fee, which is refunded if the customer maintains a zero balance and doesn’t use the card. Commonwealth Bank of Australia, the country’s largest lender by market value, also unveiled a no-interest card last year.

The experiment isn’t being replicated in the U.S. where most credit-card issuers charge interest when cardholders carry balances. But if they prove to be successful, Australian banks’ no-interest cards could drive change in other markets.

Fees on the cards offered by NAB and CBA vary according to credit limits. For example, a balance of $1000 Australian dollars on CBA’s no-interest card could accrue nearly $484 in fees over 40 months if there is an outstanding balance each month. The same balance on the NAB card repaid at that product’s minimum rate would cost about $292 over 29 months.

In both cases, that is more than the interest accrued by a customer making the same repayments on a regular card with a 16.6% annual percentage rate, the typical rate in Australia. And like with other cards, customers are required to make minimum monthly repayments on any outstanding balances.

Still, the banks are betting that consumers will like the products for their simplicity. No-interest cards are designed to give customers more control over their spending via a product that is easy to understand, said Angus Sullivan, CBA’s group executive of retail banking services.

According to Australia’s central bank, the country’s credit and charge card balances fell by almost 34% in the two years through October to the equivalent of $21.17 billion. More than 60% of the decline came in March and October last year as the pandemic pushed Australia’s economy into recession.

Over the same period, debit-card transactions locally grew by 4.7% in number and by 5.6% in value, to hit more than the equivalent of nearly $33 billion.

Some analysts view the no-interest cards as a salvo in an intensifying battle for share of the payments market between banks with large credit-card businesses and buy now, pay later providers like Afterpay and Zip Co.

In Australia, buy-now-pay-later services don’t need to verify income or check existing debts held by users, which makes it easier for consumers to gain access to those products than a traditional credit card.

According to their most recent half-yearly filings, Afterpay and Zip respectively count 14% and 9% of Australia and New Zealand’s combined adult populations as customers. The average age of the 3.3 million Australians and New Zealanders using Afterpay at the end of June was 35 and 33, respectively.

Ms Slade said NAB’s no-interest card aims to attract younger customers who don’t necessarily have strong ties to the bank, illustrating a broad concern among traditional lenders that they are losing out in the battle for millennials.

In the three months since launch, the StraightUp card was among NAB’s three most popular credit cards among new applicants. Demand was strongest among customers under 40 years old, the bank said.

Tom Beadle, an analyst at UBS Group AG, said it is unlikely that no-interest credit cards in Australia will be a material threat to the buy now, pay later sector. This is because the consumer still needs to pay for the cards through upfront fees of up to $22 a month.

In contrast, buy now, pay later services often charge no interest and are generally free to users who make payments on time. A survey published by UBS in October found that most buy now, pay later users valued the payment method because it helped them to budget and they considered it convenient.

“The whole beauty of Afterpay is that it’s just really simple: It’s free,” Mr Beadle said. “People just want simplicity, and Afterpay have absolutely nailed that.”

Afterpay and Zip have made no secret that they intend to challenge credit-card providers. In August, Zip said the credit card industry was fundamentally broken, citing high revolving interest, confusing terms, a lack of trust and an absence of brand loyalty that had accelerated a structural decline in usage.

Four years after its debut on Australia’s stock market with a market value of $149 million, Afterpay is now worth US$32.7 billion. Afterpay and Zip are also expanding in the U.S., recording a combined A$7.4 billion Australian dollars in transactions on their networks in the six months through June.

Still, the UBS survey, based on 1,000 respondents, found a “not insignificant proportion” of users appear to regard buy now, pay later as a line of credit. Some 25% of users said they couldn’t afford a product with their existing savings, while 12% said they couldn’t get approval for a credit card.

Australia’s experience could offer lessons to the U.S., where lenders are also seeing a decline in credit-card usage and growth in debit-card usage, although it will take time before banks can be sure no-interest cards are popular.

Credit reporting firm Experian PLC said that U.S. consumer credit card debt in 2020 contracted for the first time in eight years. After hitting a record high of US$829 billion in 2019, balances decreased by 9% in the past year.

At Visa Inc. and Mastercard Inc., U.S. debit-card dollar payment and purchase volume collectively rose 23% year-over-year in the quarter ended in September, more than double the pre-Covid-19 growth rate; the same measure for credit cards was down 8%.

Some American credit-card issuers are seeking to slow the buy now, pay later industry’s growth in other ways. Late last year, Capital One Financial Corp. stopped their cards from being used to make Afterpay purchases and payments, the Australian company said.