Some finance news that you can bring up at coffee: the average price for a kilo of Tencha, the leaves that are finely ground to create matcha, has increased 170% since May 2024 because of the popularity of the drink around the world.

It’s not going to get cheaper - matcha fields take five years to mature before they can be harvested, so farmers who have doubled down on the crop to meet international demand still have a few years before they can get it on the market.

Until then, it’s a pretty whisky game for diehards hoping to save a bit more cash.

A few weeks ago, we explained what the share market was. Since then, a few of you have asked about Exchange Traded Funds (ETFs). Let’s dive in.

Max has previously explained this in the form of you and a friend starting a coffee shop, and it’s stuck with me.

Let’s say you and your buddy each own 50% of the cafe. Of the two ‘shares’ that represent ownership, you each own one. Then, an investor comes along and says that if you split the two shares into three, they’ll give you a coffee machine for free. Fast forward through a lot of caffeine, and you might have issued enough shares and grown the business to the point that you could list it on the Australian Stock Exchange (ASX), so anyone can buy shares.

People buy shares to grow their money. If the company performs well, its shares become more valuable, and they can sell them for a higher price or get a share of profits (a dividend).

In the world of investing, there are two main approaches: active investing (picking individual companies) and passive investing (buying a slice of many companies at once). That second approach is where ETFs come in.

An ETF is like a basket that holds a variety of investments, usually shares. You can buy a slice of the basket, which gives you a little bit of everything in it, instead of selecting the investments one by one.

Here's a concrete example: The Vanguard Australian Shares Index ETF (VAS) owns shares in the 300 largest Australian companies. When you buy one VAS share (around $100), you're buying a tiny slice of banks, mining companies, utility companies, airlines, and medical companies. Jobs websites, wines, shopping centres, milk, fintech, and even a bit of Guzman - it’s all there.

If you put $1,000 into VAS, you're not betting on just one company. You're spreading that money across hundreds of companies. Some will rise, some will fall, but the hope is that the winners outweigh the losers over time.

An ETF is made: A company like Vanguard creates a basket based on a theme. They buy shares in the companies that fit their terms, then create units of this fund and list them on the ASX under ‘VAS’.

You buy a part of it: Let’s say you buy $1,000 of ETF units through your brokerage platform, just like individual shares. Your money is pooled with millions from other investors.

They manage it: The company uses this giant pool to make continuous adjustments. For VAS, this may involve buying shares in those 300 companies. If they’ve promised that you’re buying part of a basket of the 300 biggest companies, and a new company comes onto the scene, they’re going to have to use your money to buy shares in the latest hot thing, and sell the shares of the company in spot #301. They track all that for you.

You (hopefully) pick up some cash along the way: When companies pay dividends, VAS distributes them to you by bundling all the dividends together and paying you one lump sum.

They clip the ticket: As an example, Vanguard charges a management fee of 0.07% per year. With $1,000 invested, you'd pay $0.07 annually.

The pros:

The cons:

There are so, so many. Here’s just some of the ways ETFs are organised:

We can't give personal financial advice, but ETFs have become popular with Australian investors, particularly those who like simplicity and low fees.

If you're starting out and want stock market exposure without researching individual companies, ETFs could be a foundation to get the ball rolling.

One way to learn about an ETF is to search the name of the fund + “holdings”. This could lead you to a list of all the shares in the basket, giving you an idea of what you’re buying.

Remember, ETFs invest in shares, so your money can go up and down. Never invest money you can't afford to lose, and always do your research or speak to a qualified financial adviser.

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Earlier this month, the Australian Bureau of Statistics (ABS) released new figures showing the unemployment rate had risen to 4.3%, its highest rate since November 2021.

The new data dropped shortly after the Reserve Bank of Australia announced it wouldn't change the cash rate. Let's unpack what this all means.

The unemployment rate is the percentage of people who want a job but can't find one. It's one of the key ways we measure the health of our economy.

Here's how it works: The ABS surveys around 26,000 households every month, asking people about their work situation. They divide the working-age population (15 years and over) into three groups:

Employed: People who worked at least one paid hour in the previous week

Unemployed: People who don't have a job but are actively looking for work and available to start within four weeks

Not in the labour force: People who aren't working and aren't looking for work, like students, retirees, or stay-at-home parents

Then, there’s a relatively simple formula: unemployed people ÷ (employed + unemployed people) × 100.

When we say unemployment is 4.3%, it means that of every 100 people who want to work, about four can't find a job.

Employment is crucial for the health of the economy, both on an individual level and on a more collective view of economic growth. When more people have jobs, they spend more money, which helps businesses grow and creates more jobs. When unemployment rises, it can signal economic troubles. 

Treasurer Jim Chalmers blamed global factors, saying the rise is "the inevitable consequence of economic uncertainty and volatility around the world and the ongoing impact of higher interest rates."

Translation: changes in the global economy, like U.S. tariffs, are making businesses cautious about hiring, and the RBA's interest rates can make it more expensive for companies to borrow money to expand and create jobs.

The Opposition, on the other hand, argued the Government "promised to create secure jobs and strengthen the economy, but the reality is rising unemployment, falling hours worked and weak full-time job creation."

Both sides have a point. Global economic conditions do affect our job market. When our major trading partners like the U.S. or China experience instability or disruption, they may demand less of our exports, which can hurt employment. Government policies can also play a role in creating conditions for job growth, however.

The unemployment data has sparked debate about whether the RBA should cut interest rates to stimulate job creation.

The case for the RBA's approach: RBA Governor Michele Bullock argued that this unemployment rate isn't cause for alarm. She pointed out that the rate is still relatively low by historical standards — it averaged around 5.7% in the decade before COVID. Bullock suggested the economy is simply returning to more normal levels after the unusually tight job market of recent years.

The case against: Other economists, like those at The Australia Institute, argue the RBA has "failed Australians" by keeping rates too high for too long. They suggest rising unemployment indicates the RBA is being too harsh, seeking to push people out of jobs to keep inflation under control. 

If you're job hunting, this data could suggest the market has become more competitive. More unemployed Australians may need to consider roles, locations, or salaries they wouldn't have looked at 12 months ago.

If you're currently in work, it’s just a reminder that job security can change, and it’s always worth building up your savings and your skillset.

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