After the long Indian summer, winter is finally here. It's time to light the fire and settle in for long winter nights or rug up and head for the snow. The political heat should also begin to die down a little after the release of the May Budget, giving us all time to digest what it means for us and the nation. June is also tax time so we've included some last-minute tips to help you reduce your tax bill and boost the value of your savings and investments.
May 2017 - Federal Budget
After three years of budgets that focused on debt and deficit, jobs and growth, Treasurer Scott Morrison has delivered a budget makeover. For the first budget of the Coalition's second term in office he has tried to strike a balance between positive measures to promote economic activity such as increased spending on infrastructure and housing and offet this with spending cuts to recurrent spending on welfare, universities and elsewhere.
After a summer of extreme weather,
from record heat waves to snow in the high country, many of us will be looking
forward to the more forgiving temperatures of Autumn. It's a great time to get outdoors
and be active before winter sets in.
It's hard to believe it's February already, with the nation back at work and kids back at school after the summer holidays. In this months snapshot we look at the new pension asset test rules and the importance of reviewing all sources of income before making any rash decisions.
By now, retirees will know the impact, if any, of the tightening of the pension assets test that came into force on January 1. Many retirees who previously qualified for a part Age Pension are worse off, prompting suggestions in some quarters for retirees to dispose of assets so they continue to qualify. But is this wise in the long run?
It's January 2017 and the start of a new year. The sights and sounds of the Australian summer are everywhere, with test cricket, the Australian Open, surf, sand and cicadas. While 2016 may seem like a distant memory, December was a big month on the economic front.
It's generally contended that financial markets hate surprises. And from Brexit to Trump and a stunning rebound in commodity prices in between, 2016 was certainly a year of surprises. Yet, surprisingly, markets finished the year with a positive burst of energy. In this month's snapshot, we look at the year that was, what it meant for your portfolio and what's in store for the year ahead.
Summer's here and the countdown to Christmas begins in earnest. After such an eventful year on the global political and economic front, investors will no doubt be looking forward sometime out to relax with family and friends. The biggest upset in November, and possibly the entire year, was Donald Trump's surprise US Presidential election victory, so we've included an analysis of what this means for Australians as the first article in our Summer newsletter. As we approach the season of giving, we also look at the gifting rules that apply to retirees who give their children or grandchildren a financial helping hand.
This month's snapshot looks at entered aged care and the implications of proposed changes to both the Aged Pension and aged care sectors Entering aged care involves some difficult financial decisions at a time when families are often under emotional strain. From the start of 2017, these decisions are likely to be even more complex. One of the biggest changes is to the way the family home is assessed under the Age Pension means test.
super reform package announced by the Turnbull Government in the May Budget and
taken to the July election has been watered down slightly. Despite this, the
final reform package announced in September is far reaching. Investors with
significant super holdings may need to revisit their strategy before the new
rules come into effect from July 1 next year. In this snapshot, we detail the
proposed changes and who will be affected.
Ethical investing has been in the news recently for all the right reasons. A survey of the sector over the past decade shows that investing with a conscience can also make financial sense, so we're sharing the research with you in our Spring newsletter.
'Resilient' is perhaps the best way to sum up Australian's economic performance over the past 12 months. That was the word used by Standard and Poor's director of sovereign ratings, Craig Michaels, when confirming Australia's AAA credit rating in mid-June.
After a long spell of milder weather, winter is finally here, but the upcoming federal election will be providing plenty of heat for the next few weeks at least. With significant changes to superannuation, business tax and negative gearing in the offing, the outcome of this election could also have a material impact on the investment strategies of many Australians.
The surprisingly wide-ranging changes to superannuation announced in the May federal budget are covered in the lead article of our Winter newsletter.
May 2016 - Federal Budget
First it was the debt and deficit budget, last year we were encouraged to 'have a go'; Budget 2016 is all about 'jobs and growth'. With a federal election due to be called as early as this week, Treasurer Scott Morrison has delivered a budget that aims to strike a balance between positive measures to stimulate economic activity and prudent measures to wind back superannuation tax concessions and tax avoidance by multinational corporations.
On the whole he has succeeded, but the people will have a chance to deliver their verdict at the ballot box as early as July 2.
After a sizzling end to summer, we can now look forward to some cooler weather. Financial markets have had a volatile summer, and nowhere has this been more apparent than in the oil price. So in the first article of our Autumn newsletter we look at the causes and effects of falling oil prices.
Happy New Year! As January gets underway, many Australians are making resolutions and setting goals for the year ahead. Hopefully, some of those goals are financial. While goal-setting is an important part of any financial plan, many people overlook the need to plan for the unexpected. In this snapshot we highlight the importance of having a financial safety net, from building an emergency fund to plugging any gaps in your personal insurance cover.
December is here and as the temperature rises the countdown to the Christmas break begins. But it appears at least one Australian is determined to 'chill'. When Reserve Bank governor Glenn Stevens was asked recently about the possibility of an interest rate cut he said: "We've got Christmas, we should just chill out …come back … and see what the data says." The markets took that as a no, for December at least.
Mortgage interest rates are still at or near their historic lows in Australia but there are signs that the next move will be up. The big four banks have already lifted their standard variable home loan rates and, while it is difficult to predict future interest rate movements, it pays to be prepared. In this newsletter we provide you with some practical strategies to help minimise the impact of any future rate rises.
It's November and that can mean only one thing – all eyes
turn to Flemington for the race that stops the nation. But financial markets
will keep one eye on their screens for the Reserve Bank of Australia's monthly
decision on interest rates.
Volatility has been the name of the game on global
investment markets in 2015, with prices for shares and other assets swinging
wildly from one moment to the next. It's
no wonder some investors decide it's too risky to go back into the water. But
is volatility the same as risk? In this month's snapshot we examine the
difference. We also look at the different types of risk in the market and how
you can not only manage risk but profit from it.
October is here and it promises to be a month of thrills and spills for footy fans, from the AFL and NRL finals to the Rugby World Cup. While excitement builds on the field, local investors could be forgiven for wishing they lived in less interesting times.
Spring is here and not a moment too soon! As the weather warms up it's the signal to pack away your winter woolies, get back into the garden or start a new fitness program and start planning your summary holidays. It has been hard to avoid the media coverage of recent events on global stock markets...
recent popping of China's sharemarket bubble made news headlines around the
world. After climbing 150 per cent in the year to June, prices collapsed 30 per
cent in the space of four weeks. The fact that this happened while global
markets were already spooked by the possibility of a Greek exit from the
Eurozone just added to investors' worries. In this snapshot we examine the
causes of China's recent sharemarket turmoil and what it means for Australian
Australian and overseas investors have been pushing up house prices in Sydney and Melbourne sparking talk of a property bubble. The Governor of the Reserve Bank says the Sydney property market is crazy, adding to the national debate about housing affordability, especially for first home buyers. While only parts of the country are in a bubble territory, some of the solutions being suggested have the potential to affect all property investors, wherever they live.
Winter is here, the perfect time to rug up and plan a mid-year break to the snow or to warmer climates. But before you head off, June is also the month to take advantage of any last minute opportunities to reduce your tax bill before the end of the financial year so check out our tax tips in our first article.
Given that the end of the financial year is fast approaching, if you've been thinking about income protection insurance, this is the time to act. Not only will it protect your most important asset – your ability to earn an income – but you may be able to pre-pay 12 months' premiums in June and claim a tax deduction.
After criticism that his first budget was too tough and unfair, Treasurer Joe Hockey has used his second budget to restore the confidence of ordinary Australians and shift the focus to jobs, growth and opportunity.
We Australians like to think we live in the Lucky Country, but do the hard economic numbers stack up? The recent Intergenerational Report warned that radical changes are needed if Australia hopes to put its budget on a sustainable footing in the decades ahead. In this snapshot we weigh up Australia's economic performance and find plenty to smile about.
Summer is over and the days should begin to cool down now
that autumn is here.
We hope you enjoy our March articles, the first of which
looks at deflation. Low interest rates and discounting of petrol and household items
are good for consumers. But falling prices can lead to deflation, with
implications for the global economy and investors.
We also examine the price of gold which is staging a
comeback as investors seek safe havens from global economic uncertainty and
currency fluctuations. Falling oil prices have also cut the cost of gold mining
operations, adding fresh lustre to Australian gold stocks.
Local investors with well-diversified portfolios had plenty to be pleased about in 2014. Global shares and bonds and Australian residential property were star performers in a year that was full of surprises. The size of the fall in commodity prices took the market by surprise, as did the continued strength in the bond market.
In this snapshot we review the year that was and look ahead to the issues with the potential to impact portfolios in 2015.
A new year is already underway and chances are you have already made a few resolutions – like starting that health kick. But what about your financial health? In this snapshot we hope to provide you with some simple tips to boost your wealth, beginning with a long hard look at what you want to achieve in 2015 and beyond.
The Australian dollar has fallen a long way since its high of US$1.10 back in 2011 and analysts predict it could have further to fall. That's good news for the local economy as it makes our exports more competitive. In this snapshot we look at some of the likely sharemarket winners and losers and how investors can protect themselves against currency fluctuations.
The iron ore price has taken a dive this year and so have the share prices of Australia's biggest producers, BHP Billiton, Rio Tinto and Fortescue Metals Group. So why are our big miners ramping up production and flooding the market with cut-price iron ore? In this snapshot we examine the reasons behind the iron ore price war and the potential opportunities for patient investors.
Superannuation has been in the news lately, along with talk about Australia being a country that rewards lifters, not leaners. After the recent government decision to postpone increases in compulsory superannuation, Australians will certainly have to do more of the heavy lifting to build their retirement nest egg.
That's because the planned increase in the compulsory Superannuation Guarantee from the current 9.5 per cent of gross salary to 12 per cent has been delayed by six years to 2015-26. In this snapshot we focus on strategies that will put you in the driver's seat and help you achieve the retirement lifestyle you deserve.
Armed conflicts in oil producing regions of the Middle East and Ukraine have dominated the news all year, along with fears about disruption to oil and gas supplies. In the past, this has meant just one thing for consumers - higher prices at the petrol pumps. But not this time, in fact petrol prices have been falling. We take a look at the shift taking place in the global oil market as new sources of supply from shale oil and other alternatives lessen our dependence on traditional suppliers.
Winter is setting in and another financial year has drawn to a close. There is no better time to rug up, take stock of your finances and make plans for the year ahead.
As our end of financial year economic review reveals, it is hard not to reach the conclusion that the Australian economy is in good shape. The mining investment boom has morphed into a mining production boom, while a surge in residential construction is helping to lift activity in the non-mining economy.
High frequency trading has been getting a lot of media attention lately, following the publication of Michael Lewis's latest book, Flash Boys. In it, he explains how traders are using high-speed computers to get a jump on ordinary investors in financial markets. While it is important for investors to understand what the trend means for them, it is also important to recognise that the fundamentals of successful long-term investing have not changed.
Federal Budget Analysis 2014
In our Federal Budget analysis we summarise the key features announced last night. As widely anticipated, this year's budget contained spending cuts, tax hikes and other measures to counteract the long-term effects of an ageing population. Treasurer Joe Hockey said that all Australians would be asked to help with the heavy lifting, and he delivered on his promise.
It's as if every second "Gen Y" kid these days owns or wants to own some Bitcoins. So what's all the hype about this high-risk, volatile Bitcoin so called "investment" that provides no dividends? Are they the "new" gold? While the mainstream media might love a new concept to excite it's readers, no one can argue Bitcoins remain high risk and need to be well understood.
There has been a lot of press lately about the US federal Reserve's decision to reduce quantitative easing (others known as "tapering" the printing money). After talking to some of our clients, we realised many people often don't understand what this actually means.
It is a really interesting issue because the concept of printing money occurred in Germany after First World War, but the end result compared to today, could not have been more different..
While investors had many reasons to be fearful at the start of 2013 with the backdrop of the US fiscal cliff, Eurozone debt crisis and a China slowdown, sharemarkets delivered some of the best investment returns in years.
As well as reviewing last year's performance, this February Snapshot also looks at what to expect from the world's major markets in 2014.
Trying to balance the credit card and determining exactly where the money was spent is a reflective ritual many of us go through at this time of the year. It's no surprise online shopping will fair more significantly this year compared to last year.
In our January snapshot, with strong sales forecasts for the holiday season by traditional retailers, we look at whether online sales represent the big threat we're led to believe.
There has been much speculation as to when the US Central Bank will start to scale back its stimulus program.
Our October snapshot looks at the implications for world markets, particularly developing countries, as the tide of global investment sentiment turns.
As the easy money flows out of developing countries, the need for structural reforms can no longer be ignored. That's not to say that investors should avoid the developing world entirely, but discrimination is becoming increasingly important.
Our September snapshot looks at how you may be affected by Australia's low interest rates. Depending on your circumstances, low rates may be welcome news or they may present challenges.
Back in the late 1980s interest rates were a whopping 17 per cent. While this was a difficult time for home owners, investors were earning nearly 19 per cent from money in the bank.Since its recent high in April of US$1.05, the Aussie dollar plunged almost 15% over the next three months to below US90c.
Our August snapshot looks at the reasons for the dollar's swift decline: improving economic conditions in other countries including the United States and Japan, the most recent interest rate cut by the Reserve Bank in May, and most importantly, the continued slowing of growth in China.
Recent changes in the US and in China have led to significant movements in both sharemarket prices and the value of the Australian Dollar. This has occurred at the end of a 12 month period in which our unemployment levels have consistently stayed below most other developed nations. Inflation has not been a problem and interest rates are at an all time low. This July economic review explores both what has happened in the previous months and what the year ahead may hold.
Please call us if you would like to discuss the themes raised in this article.
Our June snapshot looks at the far-reaching economic impact of recent discoveries of vast resources of shale oil and gas.
Not that many years ago the world was very concerned about future availability of energy sources. The good news is that shale oil and gas discoveries in China, the US and Australia are predicted to lessen the world's reliance on foreign oil. Some economists are even predicting that shale gas will boost US economic growth by 0.5 per cent a year over the next five years and eventually may make it energy independent. As consumers of energy and investors in the sector through our super funds, this is an important area for all of us. We hope this snapshot gives you some insight into the recent developments.
Our April snapshot looks at the opportunity cost of not being invested in equities. With gains on the Aussie sharemarket beginning to look attractive, we analyse Australia's listed companies and dig beneath the headline sharemarket returns.
We also compare the income returns of someone invested in bank bills versus the Australian sharemarket since stocks began their upward trend in early June 2012.
When investing in equities volatility will always be a risk factor, however recent experience and near-term indicators show the opportunity cost of completely avoiding equities may mean missing out on potentially attractive gains.
We hope you find this article thought provoking and that it provides you with some helpful analysis of the sharemarket.
Our March snapshot looks at the world of ethical investing. The good news is investing in this way no longer amounts to a moral victory at the expense of first-rate investment performance. With socially responsible business models gaining government and consumer attention, we look at what's considered an ethical investment and why ethics, social responsibility and sustainability are integral to doing business in the 21st century. We hope this snapshot provides some insight into responsible investing, an area that is growing in importance.
As well as reviewing last year's performance, the February snapshot also looks at what to expect from the world's major markets in 2013. We hope our analysis gives you insight on where the economy and sharemarket are heading. Please call us if you would like to talk about how they relate to your strategy in the coming year.
Our January snapshot looks at the secret of making successful new year's resolutions, which can help get your finances in better shape for the coming year. We have prepared a list of small changes that could help you achieve big outcomes. Included are strategies such as how to achieve mortgage savings by making fortnightly rather than monthly repayments, the value of paying off your 'bad' debt first, simple ways to save more and tips for business owners on the benefits of early payment discounts.
Our December snapshot looks at recent figures out of China, which indicate that a recovery is on the way. When the Chinese economy began to slow earlier this year, the media was quick to declare the mining boom dead. Thankfully for the Australian economy, this declaration seems to have been exaggerated with China managing to avoid the 'hard landing' many commentators were predicting. Instead, China reported a 20 per cent increase in infrastructure spending this year, an increase in retail sales and improved industrial production.
Our November snapshot looks at Australians' love affair with property and weighs up the pros and cons of investing in it. With the spring selling season well underway, we review recent falls in property prices and uncover some of the myths about investing in residential property. We compare returns from shares and property and review what makes a successful property investment.
Our October snapshot examines the upwards trend of the Australian sharemarket since the start of the year. For some weeks now, media commentary has alluded to a cautious change in market sentiment. While no-one knows for sure when markets will turn, we do know there is no signal to tell us when to start buying shares. We look at the key investor issues and review how sharemarkets behave relative to the economy.
Our September snapshot looks at an apparent contradiction: while figures show the Australian economy outperforming most of its major trading partners, many consumers and investors have felt pessimistic. Seeking an explanation, we look at some major adjustments happening within the local economy caused by a persistently high dollar, and we take an interesting look at the personal face of economic change using two case studies. Structural adjustment in the economy, which is always happening, can mean distress for individuals and families. But it also leads to innovation and opportunity, and gives the economy the stamina it needs for the future.
Late last month David Jones received a mysterious takeover bid from an unknown British outfit EB Private Equity. On making the news public, David Jones stock and its investors went on a roller coaster ride, which ended swiftly once the bogus bid had been withdrawn. Speculators who bought David Jones at the height of the buying frenzy were left battered and bruised. This episode serves as a timely reminder of the importance of sticking to your long-term investment plan and not being distracted by market 'noise'. Understanding the difference between a company's share price and the value of its business means you can focus on the true value of a company and its potential fit with your own long-term strategy.
Recent strong economic figures surprised Australian commentators and investors expecting gloomy news. There is no denying our economy is in good shape compared with other western industrialised nations, even if those figures aren't repeated in coming months. However, this strength is not reflected in the share market where banking and sovereign debt issues in the Eurozone, hesitant growth in the US, and a slowing Chinese economy have meant volatility over the past year.
Turmoil in Greece and unresolved issues with Europe's banks, debt levels, and future economic growth continue to unnerve share markets globally. In this June snapshot we examine the possibility of a Greek exit from the Eurozone and what impact that might have. Greece may not be a significant direct trading partner for Australia, but a Greek withdrawal would have consequences for world trade, and we look at how that might affect Australian investors.
Most of us talk about rising prices for life's essentials like housing, petrol, gas and electricity, food and clothing. Our impression may be that the cost of living is constantly rising. The April snapshot looks at some recent research which suggests that, when higher wages and better quality goods and services are considered, the cost of living may have actually fallen over the past 20 or 30 years. We look at how we are changing the way we spend our money, and where household cost pressures remain.
Behind recent headlines about job redundancies in industries as diverse as manufacturing and financial services, lie both the human stories and the adjustments taking place within the local and global economies. In our March snapshot we take a closer look to examine how the Australian economy has adjusted in the past, the importance of change and innovation in building a stronger Australian economy, and the skills and training that jobs will require in the future.
2011 Year in Review. Some years drift by without incident, but 2011 was not one of them. The year began with natural disasters in Brisbane, Christchurch and Fukushima, continued with the toppling of dictators across the Middle East, and culminated with European debt levels at crisis point. All of this grim news had an impact on share markets during the year. The US market was a strong performer as signs of growth and future earnings began to emerge while the market in China, the world's boom economy, slumped
with worries about slow downs and recession in Europe, a major export market for China.
Lower interest rates might provide some welcome relief for home buyers and existing home loan customers in 2012, but they are not such good news for people dependent on income from their investments nor an indicator of a confident, growing economy. The Reserve Bank (RBA) cut interest rates by 25 basis points, or one quarter of a per cent, in both November and December last year, taking the official cash rate to 4.25 per cent. The majority of mortgage lenders followed suit, bringing home loan interest rates down to their lowest level in more than two years.
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