Coronavirus continues to cause havoc globally and in Australia – but here are five reasons for optimism

The attached note takes a look at the renewed rise in coronavirus cases globally and the outbreak in Australia and the implications for the economic recovery. The key points are as follows:

  • The news on coronavirus has been bleak again lately - with rising cases globally and the ongoing NSW lockdown.

  • However, there are five reasons for optimism: lockdowns still work against Delta (eg, in SA & Victoria where lockdowns were able to be relatively short because they started early and hard); vaccines are working; once lockdowns end economic activity rebounds quickly; the threat posed by Delta will keep fiscal & monetary policy easier for longer; and vaccinations are ramping up in Australia.

Read full article

Seven key charts for investors to watch - where are they now?

This note takes a look at seven charts we highlighted in January for investors to watch as being critical to the investment outlook this year. Put simply, where are they now? The key points are as follows:

  • While shares are at risk of a near term correction on the back of coronavirus and inflation concerns, the trend is likely to remain up against the backdrop of continuing economic recovery and low interest rates

  • Seven key global charts worth keeping an eye on by investors are: the trend in new coronavirus cases and deaths - particularly in the UK; global business conditions PMIs; unemployment & underemployment; global inflation; bond yields; the gap between earnings yields and bond yields; and the $US.

Click here to read more

2020/2021 Year in review

In the last 12 months, we've witnessed a period of extraordinary change yet despite the odds, markets are holding up incredibly well. Our investment experts from around the world share insights from their region and look and some of the opportunities and pitfalls facing investors in the new financial year.

To read through the full review, click here

Warning: Telstra bonds investment opportunities are fake

  • ASIC is alerting investors about fake Telstra Corporation Limited (Telstra) corporate bonds

  • Scammers are promoting Telstra bonds offered on the ASX to legitimise the existence of the fake bonds

  • Do not buy bonds from Telstra (or any other company) that are offered via email or as a recommendation from a comparison website – these are a scam.

Read here for more information

Five ways to turn down the noise and stay focussed as an investor

The note looks at the ever increasing level of noise around investing and how investors can manage it. The key points are as follows:

  • A surge in financial information and opinion along with our natural inclination to focus on bad news is arguably making us worse investors: more fearful & short term.

  • Five ways to help manage the noise and stay focussed as investors are: put the latest worry list in context; recognise that shares return more than cash in the long term because they can lose money in the short term; find a process to help filter noise; make a conscious effort not to check your investments so much; and look for opportunities that investor worries throw up.

Read more of the article here

Steps towards financial independence for women

Helen Baker AFP® discusses the importance of making financial advice more accessible to women to improve outcomes for their security and wellbeing.

In the World Economic Forum Global Gender Gap Report 2017, Australia ranked 35th. Many would consider this an achievement at first glance – 35 out of 200+ countries looks good on paper. To put this in perspective, Ireland and New Zealand ranked eighth and ninth respectively. Meanwhile many developing nations also outperformed Australia, including Rwanda (fourth), Nicaragua (sixth) and The Philippines (10th). So why is Australia lagging in closing the gender gap?

Read here to know more

2020-21 saw investment returns rebound - expect more modest but still good returns this financial year

The attached note reviews the investment performance of the last financial year for major asset classes and looks at the outlook for the current financial year. The key points are as follows:

  • 2020-21 saw investment returns rebound after the coronavirus hit depressed 2019-20 returns.

  • Key lessons for investors from 2020-21 were to: allow that share markets look ahead; timing markets is hard; don't fight central banks; and turn down the noise.

  • Over the next 12 months returns from a well-diversified portfolio are likely to be slower but still solid.

Read more

Supporting your kids, without sacrificing your own retirement

With careful planning, you can give a helping hand to your adult children financially, while still enjoying a comfortable retirement.

In the past, wealth was often passed on through an inheritance. But with our longer lifespans, and the higher cost of living (especially housing), the desire to help our kids while we’re alive and well is increasing.

If your children are young, you may have twenty or thirty years to save and invest on their behalf, while also saving for your own retirement. If this is the case, it pays to put a strategy in place early on.

For those nearing retirement age, or already retired, you may have a large lump sum you’d like to gift to one or more of your kids. Giving money is a wonderful thing to do, but it’s not always simple. It can have tax implications, and may affect your income support payments from Centrelink. On the other hand, gifting may enable you to increase your government pension payments or benefits, if done right.

So how can you help your children without compromising your own financial security and comfort in retirement?

To find out more, click here

Changes to ‘super size’ retirement savings

For the average Australian worker, legislated rises in superannuation will mean an extra $85,000 in their super account at retirement.

The Association of Superannuation Funds of Australia on Wednesday released a report on how the increases set to kick in from July 1 will “super-size” retirement balances.

Super balances are also set for a whopper year of double-digit gains, despite COVID-19 wobbles.

The rise in the superannuation guarantee rate to 10 per cent from next month represents an extra $19,000 in a worker’s nest egg at retirement.

With the rate set to rise in steps to 12 per cent by 2025, and many workers making voluntary contributions, the nation’s pool of retirement savings is tipped to swell to $5 trillion by the early 2030s.

“The key objective of super is to provide dignity in retirement,” ASFA deputy CEO Glen McCrea said.

The increase in the super guarantee to 12 per cent will also mean a rise in the number of Australian workers able to reach the industry’s “comfortable standard” at retirement of $545,000 for a single person.

Currently, only 25 per cent of Australians achieve a self-funded retirement.

“By 2050, that number is set to double as a result of the super system moving to 12 per cent, Mr McCrea said.

“It’s a significant shift which will underpin Australia’s fiscal sustainability by diminishing the reliance on the age pension.”

The independent Grattan Institute argues workers will pay for the increases through lower wages.

Some federal Liberal MPs want the superannuation system to be scrapped altogether, arguing it was set up by Labor to benefit unions.

Central banks heading towards the easing exits - five reasons for investors not to be too concerned

The attached note looks at the gradual shift towards the exits from ultra-easy monetary policy by major central banks and the implications for investment markets. The key points are as follows:

  • The gradual shift of central banks including the Fed and RBA towards an exit from monetary easing has caused some volatility in investment markets.

  • We continue to expect the first RBA rate hike to be in 2023, albeit there is a risk it could come in late 2022.

  • However, there are five reasons not to be too concerned: central banks are simply reflecting economic recovery; monetary policy remains easy; shares rose through the last Fed taper; share bull markets usually only end when monetary policy is tight; and it's normal in this phase of the investment cycle for returns to slow.

Read here to know more

Inflation Q&A - should we be worried about higher inflation?

The attached note takes a look at current concerns about rising inflation. The key points are as follows:  

  • Inflation will likely rise further in the months ahead due to base effects, bottlenecks & reopening but it’s likely to fall back again from later this year as these drivers fade.

  • Shares face short-term correction risks but as inflation settles the broad trend is likely to remain up.

Viewed in a very long-term context, we are likely now going through the bottoming of the 40-year decline in inflation that’s been in place since the early 1980s.

Read full article

The Australian economic recovery remained strong in the March quarter with GDP up 1.8% – seven reasons for optimism

The Australian economy continues to recovery strongly.

 This note looks at the outlook. The key points are as follows:

  • With growth of 1.8% in the March quarter, Australian GDP is now back above its pre pandemic level.

  • While uncertainties remain – including around the latest coronavirus outbreak in Victoria – there are seven reasons for optimism that the recovery will continue at a decent rate:

    • Vaccines

    • Global growth is ramping up

    • Consumer spending is well supported

    • Dwelling investment is likely to remain strong

    • Business investment is strengthening

    • Fiscal stimulus is continuing

    • Monetary policy remains ultra-easy

 To know more, click here.

The return of geopolitical risk? - what to watch over the remainder of 2021

The attached note takes a look at the importance of geopolitical risk for investment markets and key geopolitical risks to watch over the remainder of 2021.

The key points are as follows:  

  • Geopolitical issues generate much interest, but don't necessarily have a significant impact on markets.

  • But geopolitical risks are higher than prior to the GFC reflecting three big themes: a populist backlash against economic rationalist policies; the falling relative power of the US; and the polarising impact of social media.

  • After a lull following the transition to President Biden, key geopolitical issues to watch this year are: US and Australian tensions with China; Iran/Israel tensions; Russia and Ukraine; the German election; US tax hikes; and a possible early Australian election.

Read more about the article here

Shares have had a very strong rebound since March last year so where are we in the investment cycle?

With shares coming up to the one year anniversary of their pandemic lockdown driven lows on 23rd March 2020, the attached note takes a look at where we are in the cyclical bull market in shares and the broader investment. The key points are as follows:

  • The history of cyclical bull markets in shares suggests that the rebound since last March still has a way to go.

  • But it’s normal for the second 12 months of a cyclical bull market to see slower returns from shares.

  • While shares are vulnerable to a further correction triggered by the spike in bond yields, we are not seeing the sort of unambiguous overvaluation, economic overheating, monetary tightening and investor euphoria normally seen at cyclical tops.

Read more here

Market outlook Q&A – global recovery, vaccines, inflation, the risk of a share crash, Aust house prices and other issues

The attached note takes a look at the main questions investors commonly have regarding the investment outlook in a simple Q&A format.

Some of the key points are as follows:  

  • Global recovery is on track. Vaccines are working.

  • JobKeeper’s end won’t derail Australia’s recovery.

  • Inflation could become an issue in the medium term.

  • Shares are at risk of a correction but are supported by economic and earnings recovery.

Australian house prices are booming again but expect measures to slow it down in the months ahead.

Read full article here