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But not Elon Musk. If Hollywood gossip claims Musk as the model for Tony Stark, the genius engineer played by Robert Downey Jr in the Iron Man movies, it is easy to see why. If he succeeds with even half his plans, he will have made a more profound impact on the world than any living polician. Originally from South Africa, he studied economics and physics at the University of Pennsylvania before moving to California to be part of the Internet boom. He founded Zip2, a company that provided maps and business directories to online newspapers. It was a great success with Compaq buying Zip2 in 1999 for $307 million. Musk made $22 million and poured it into his next start-up venture that would become PayPal. He walked away with $180 million aſter eBay acquired PayPal for $1.5 billion in 2002. Musk then started SpaceX with $100 million, Tesla with $70 million and invested $10 million into SolarCity. These Elon Musk companies would make things from scratch and rethink much that the aero-space, automove, and solar industries had accepted as convenon. SpaceX “The revoluonary breakthrough will come with rockets that are fully and rapidly reusable. We will never conquer Mars unless we do that. It’ll be too expensive. The American colonies would never have been pioneered if the ships that crossed the ocean hadn’t been reusable” – Elon Musk Elon Musk founded SpaceX, in 2002 with the intenon of building spacecraſt for commercial space travel with the ulmate goal of enabling people to live on other planets. It is the only private company ever to return a spacecraſt from low-Earth orbit, which it first accomplished in December 2010. The company made history again in May 2012 when its Dragon spacecraſt aached to the Internaonal Space Staon, exchanged cargo payloads and returned safely to Earth – a technically challenging feat previously Disrupve visionary and real life Iron Man Elon Musk Stratagem December 2015 accomplished only by governments. Since then Dragon has delivered cargo to and from the space staon mulple mes, providing regular cargo resupply missions for NASA. Under a $1.6 billion contract with NASA, SpaceX will fly numerous cargo resupply missions to the ISS. Dragon was designed from the outset to carry astronauts and now, under a $440 million agreement with NASA, SpaceX is making modificaons to make Dragon crew-ready. SpaceX is the world’s fastest-growing provider of launch services. Profitable and cash-flow posive, the company has nearly 50 launches on its manifest, represenng close to $5 billion in contracts. These include commercial satellite launches as well as NASA missions. Currently under development is the Falcon Heavy, which will be the world’s most powerful rocket by a factor of two. All the while, SpaceX connues to work toward one of its key goals – developing reusable rockets, a feat that will transform space exploraon by delivering highly reliable vehicles at radically reduced costs. The cost of a rocket is about $60 million and the cost of the propellant is only about $300,000 per mission. According to Elon Musk, SpaceX should be able to land a rocket for re-use within a year. With SpaceX, Musk is baling the giants of the U.S. military- industrial complex as well as naons – most notably Russia and China. SpaceX has been tesng reusable rockets that can carry payloads to space and land back on Earth, on their launch pads, with precision. If the company can perfect this technology, it will deal a crimpling blow to all of its competors. Connued Page 2. Most people would have quit while sll ahead aſter their first three rocket launches failed.

December 2015 - Intralink...Tesla Motors was founded in 2003 by Elon Musk to prove that electric cars could be better than petrol-powered cars. With instant torque, incredible power,

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Page 1: December 2015 - Intralink...Tesla Motors was founded in 2003 by Elon Musk to prove that electric cars could be better than petrol-powered cars. With instant torque, incredible power,

But not Elon Musk. If Hollywood gossip claims Musk as the model for Tony Stark, the genius engineer played by Robert Downey Jr in the Iron Man movies, it is easy to see why. If he succeeds with even half his plans, he will have made a more profound impact on the world than any living politician.

Originally from South Africa, he studied economics and physics at the University of Pennsylvania before moving to California to be part of the Internet boom. He founded Zip2, a company that provided maps and business directories to online newspapers. It was a great success with Compaq buying Zip2 in 1999 for $307 million. Musk made $22 million and poured it into his next start-up venture that would become PayPal. He walked away with $180 million after eBay acquired PayPal for $1.5 billion in 2002.

Musk then started SpaceX with $100 million, Tesla with $70 million and invested $10 million into SolarCity. These Elon Musk companies would make things from scratch and rethink much that the aero-space, automotive, and solar industries had accepted as convention.

SpaceX “The revolutionary breakthrough will come with rockets that are fully and rapidly reusable. We will never conquer Mars unless we do that. It’ll be too expensive. The American colonies would never have been pioneered if the ships that crossed the ocean hadn’t been reusable” – Elon Musk

Elon Musk founded SpaceX, in 2002 with the intention of building spacecraft for commercial space travel with the ultimate goal of enabling people to live on other planets. It is the only private company ever to return a spacecraft from low-Earth orbit, which it first accomplished in December 2010. The company made history again in May 2012 when its Dragon spacecraft attached to the International Space Station, exchanged cargo payloads and returned safely to Earth – a technically challenging feat previously

Disruptive visionary and real life Iron Man Elon Musk

StratagemDecember 2015

accomplished only by governments. Since then Dragon has delivered cargo to and from the space station multiple times, providing regular cargo resupply missions for NASA.

Under a $1.6 billion contract with NASA, SpaceX will fly numerous cargo resupply missions to the ISS. Dragon was designed from the outset to carry astronauts and now, under a $440 million agreement with NASA, SpaceX is making modifications to make Dragon crew-ready. SpaceX is the world’s fastest-growing provider of launch services. Profitable and cash-flow positive, the company has nearly 50 launches on its manifest, representing close to $5 billion in contracts. These include commercial satellite launches as well as NASA missions.

Currently under development is the Falcon Heavy, which will be the world’s most powerful rocket by a factor of two. All the while, SpaceX continues to work toward one of its key goals – developing reusable rockets, a feat that will transform space exploration by delivering highly reliable vehicles at radically reduced costs. The cost of a rocket is about $60 million and the cost of the propellant is only about $300,000 per mission. According to Elon Musk, SpaceX should be able to land a rocket for re-use within a year.

With SpaceX, Musk is battling the giants of the U.S. military-industrial complex as well as nations – most notably Russia and China. SpaceX has been testing reusable rockets that can carry payloads to space and land back on Earth, on their launch pads, with precision. If the company can perfect this technology, it will deal a crimpling blow to all of its competitors. Continued Page 2.

Most people would have quit while still ahead after their first three rocket launches failed.

Page 2: December 2015 - Intralink...Tesla Motors was founded in 2003 by Elon Musk to prove that electric cars could be better than petrol-powered cars. With instant torque, incredible power,

Tesla

“Yeah, well I think anyone who likes fast cars will love the Tesla. And it has fantastic handling by the way. I mean this car will crush a Porsche on the track, just crush it. So if you like fast cars, you’ll love this car. And then oh, by the way, it happens to be electric and it’s twice the efficiency of a Prius” – Elon Musk

Tesla Motors was founded in 2003 by Elon Musk to prove that electric cars could be better than petrol-powered cars. With instant torque, incredible power, and zero emissions, Tesla’s products would be cars without compromise.

Tesla’s engineers first designed a powertrain for a sports car built around an AC induction motor, patented in 1888 by Nikola Tesla, the inventor who inspired the company’s name. The resulting Tesla Roadster was launched in 2008. Accelerating from 0 to 100 kmh in 3.7 seconds and achieving a range of 392 kilometres per charge of its lithium ion battery, the Roadster set a new standard for electric mobility. Tesla would sell more than 2,400 Roadsters, now on the road in more than 30 countries.

In 2012, Tesla launched Model S, the world’s first premium electric sedan. 100 percent electric with room for seven passengers and 1,800 litres of storage, Model S provides the comfort and utility of a family sedan with sports car acceleration: 0 to 100 kmh in about five seconds. Its flat battery pack is integrated into the chassis giving the car a low centre of gravity for outstanding handling while driving 400 kilometres per charge.

Now with more than 50,000 vehicles on the road worldwide, Tesla launched the Model X in 2015, a crossover vehicle featuring exhilarating acceleration, falcon wing doors, and room for three rows of seating.

Tesla owners enjoy the benefit of charging at home so they never have to visit a petrol station. For long distance journeys, Tesla’s Supercharger network provides convenient and free access to high speed charging, replenishing half a charge in 20 minutes. Superchargers now connect popular routes in North America, Europe, and Asia Pacific.

Tesla only sells their cars on the Web and in Apple-like galleries located in high-end shopping centres. This direct sales model stands as a major affront to car dealers used to haggling with their customers and making their profits from maintenance on cars.

To reduce the costs of lithium ion battery packs, Tesla and key strategic partners including Panasonic have begun construction of a gigafactory in Nevada that will facilitate the production of a mass-market affordable vehicle, Model 3.

The gigafactory will also produce the “Powerwall” battery packs. Powerwall is a home battery to power your house that charges using electricity generated from solar panels or the utility grid when rates are low. Automated, compact and simple to install, Powerwall offers independence from the utility grid and the security of an emergency backup.

Tesla is not just an automaker, but also a technology and design company with a focus on energy innovation.

Hyperloop

Musk is driven to make innovative ideas a reality. In August 2013, he released a concept for a new form of transportation called the “Hyperloop,” an invention for commuting between major cities while severely cutting travel times. Ideally resistant to weather and powered by renewable energy, the Hyperloop would propel passengers in pods through a network of low-pressure tubes at speeds up to 1200 kmh.

Musk’s concept has drawn some scepticism, however he is encouraging development of his idea. In June 2015, he announced a competition for teams to submit their designs for a Hyperloop pod prototype, with participants getting the chance to test their creations on a track at the SpaceX facility in June 2016.

During a quarterly earnings announcement in early 2015, Musk mentioned that he thinks Tesla could eventually be as valuable as Apple with a market value of US$700 billion. Telsa’s current market value is about US$27 billion. Elon Musk is, and has always been, a man on a quest.

However, it’s better to look at cash flow in more dynamic terms. It really refers to the swirl of money out of and into your business. High growth businesses with slow paying customers face a potential risk unless they manage cash flow well. Remember, if you’re not getting paid, your clients are treating you like a bank that offers interest-free loans.

Receivables - For debtor payments consider:

• Having standard payment terms across the business

• Making your payment terms clear at point of sale

• Sending reminder messages to late payers

• Giving your customers a wide range of convenient payment options, such as credit card, BPAY®, direct debit or cheque, as well as phone, online or in person payments

As well as ensuring prompt payment by debtors, you also need to think about your own outgoing payments. Not all payments can be deferred, but you should take full advantage of any delayed payment terms offered.Payables - For creditor payments consider:• Training staff to pay invoices when they are due, not when

they arrive• How much control your payment method gives you. If you

use cleared funds to pay your suppliers, for example via BPAY®, you are in control of when the cash leaves your bank account. This is not the same for cheques as you don’t know when they will be cashed, while direct debit puts the control in someone else’s hands

Having the right people, practices and technology in place will greatly increase your chance of success.

Avoid cash flow problems in your small businessManaging cash flow is a key contributing factor to business success. Small to medium enterprises (SMEs) often think of cash flow as the amount of cash in the bank.

Page 3: December 2015 - Intralink...Tesla Motors was founded in 2003 by Elon Musk to prove that electric cars could be better than petrol-powered cars. With instant torque, incredible power,

Education funding optionsAt this time one often starts thinking about next years school and school fees. Research estimates that when you add the cost of tuition, sports and dance classes, together with the fact that the average child now stays at home until 24 – the real cost incurred by Aussie parents of raising their kids is around $1,030,000.

Education takes the biggest chunk with private school fees rising quicker than inflation. Fees at most schools rise 5 to 8 per cent annually, when inflation is about 3 per cent a year. Fees at the most expensive schools are fast approaching $40,000 for the final year. And the total costs, of course, are more than just the tuition fees.

With one in three kids now going to (costly) private schools, and even public schools requiring parents to provide expensive books and learning materials – how can the average family prepare?

Apart from paying off the mortgage, providing for the children’s education is the number one goal of Australian families. Yet in these days of record personal debt and negative savings, few families are adequately prepared. We see a few key areas to focus on:

Savings target

Simply start saving when your child is born. With the aim of sending your child to a private secondary school with annual fees of $25,000 a year, parents need to save serious money each month. The earlier you start the better to benefit with compounding interest.

Education bonds & Insurance bonds

Suitable for: Both parents on a marginal tax rate of 32.5% and above (taxable income of more than $37,000) and children are relatively young. Education bonds are particularly suitable for university fees.

The main advantage of insurance and education bonds is that they are generally tax paid at the company rate (30%), provided you invest for at least 10 years and you don’t contribute more than 125% than you contributed the previous year. For this reason, if you wish to use these to pay for school fees you will need to start your plan while your children are still young.

Education bonds offer additional tax advantages over insurance bonds as the tax paid is refunded on benefits used to pay for education expenses. However, they are best suited to university fees, as the earnings on investments are paid directly to the nominated child, which means any benefits paid above $416 to a child below 18 will be taxed at 66%.

Managed funds, shares, term deposits, children’s savings accounts

Suitable for: One or both parents has a marginal tax rate below 32.5% (taxable income $37,000 or less). Managed funds with high exposure to growth assets are more suitable for families with younger children.

Managed funds, shares, term deposits and children’s savings accounts can be very tax effective for families when they are in the name of a parent with a taxable income of $37,000 or

less. The advantage of this strategy is simplicity (generally) and the flexibility to recommend a full range of investment options to construct a portfolio to suit your individual investment preferences.

Children’s savings accounts sometimes offer very high rates of interest but also often come with restrictions on contributions and withdrawals. The investment is also in the child’s name so unearned income between $417 and $1,307, if above $1,307 then it attracts 47% from the first dollar of income.

Mortgage redraw

Suitable for: Most beneficial when both parents have higher marginal tax rates. Suitable for families with children of all ages and at all levels of education.

This strategy involves making additional payments to your mortgage and then using a redraw facility or offset account to pay for education expenses. This will generally give an equivalent after-tax return of more than 5.5% with today’s interest rates, which is particularly powerful for clients on the highest marginal rate (equivalent before tax return of 10.3%). However, this strategy should only be used by clients that have the discipline to stick to their plan.

Specialised strategies

Suitable for: These strategies can be tailored to the specific needs of older parents, grandparents and high net worth families.

Aside from the above strategies, there are more specialised strategies you could consider. For instance, high net worth individuals may want to use a family trust to distribute income most tax effectively.

Older parents and young grandparents may consider using a transition to retirement strategy. They can save for the education through additional concessional contributions to super in the years leading up to the children or grandchildren starting school or university. Fees could then be paid using additional income from a transition to retirement pension (assuming the parent or grandparent has reached preservation age).

Page 4: December 2015 - Intralink...Tesla Motors was founded in 2003 by Elon Musk to prove that electric cars could be better than petrol-powered cars. With instant torque, incredible power,

Some traditional retirement income strategies that focus on protecting retirees from capital risk have caused many senior Australians to be left short by indulging only in limited asset classes, such as term deposits and annuities.

Using limited asset classes, as well as popular balanced fund options, included equity exposures that do not prioritise income returns, may not deliver the best overall long term outcomes. Intralink takes a multi-asset approach to retiree income to deliver a more consistent and predictable outcome.

Many retirees considered term deposits and annuities a reliable option for protecting their capital, but these products have suffered significant reduction in income over the past seven years that dwarf any potential loss from investing in equities.

Instead of taking an approach based solely on a single asset class, retirees should consider balancing their asset allocation between three building blocks – equity income, real assets and fixed income – to ensure adequate capital preservation, income generation and inflation protection.

Intralink takes a multi-faceted retirement approachAustralians nearing retirement need to reconsider the traditional elements used to construct their superannuation portfolios in order to avoid longevity risk.

Further, in order to achieve inflation-like growth in an income stream, an asset allocation of about 50 per cent growth and 50 per cent defensive is now required. An asset allocation of 100 per cent defensive will not protect your purchasing power over a 20-year horizon.

Fixed income provides low capital volatility, real assets such as Australian real estate investment trusts and infrastructure offer income protection, and equities deliver significant upside potential for income growth.

By using dynamic asset allocation across these asset classes, retirees can receive income that preserves their capital by providing long-term growth in income and high yields relative to more traditional retiree asset classes such as term deposits.

It is important that retirees focus on achieving this mix of asset classes in order to create a more robust and sustainable portfolio that can survive persistently low interest rates.

At Intralink we build personalised investment portfolios that suit retiree needs by focusing on generating sustainable income growth through a multi-asset approach to better meet the longevity risk challenge that all baby boomer retirees face.

Intralink Wealth Management Pty Ltd AFSL 330737 ABN 76 117 065 335Level 14 470 Collins Street Melbourne Victoria 3000Phone (03) 9629 1100 [email protected] www.intralink.com.au

Looking forward to working with you in 2016!

With the end of 2015 upon us, we would like to offer our sincere thanks for your ongoing loyalty and support. We trust that you and your family have a safe and relaxed holiday and a happy and healthy start to the New Year.