For more than 2.1 million Aussies, the federal government’s COVID-19 support payments offered a lifeline through the latest pandemic lockdowns. Now they’re being wound back as vaccination rates increase. If your income has been affected, here are some tips and resources to help you manage the transition.
Central banks – including the RBA and Fed – gradually removing monetary stimulus is more good news than bad
The key points are as follows:
The march of central banks towards removing monetary stimulus is continuing with the RBA bringing forward its guidance regarding the first rate hike and the Fed set to commence tapering. We expect both to start raising rates later next year.
The shift towards monetary tightening signals slower more constrained share market returns – but the trend should remain up as the impact of monetary tightening is offset by economic recovery & higher profits, monetary policy is still easy and will be for a while & bull markets usually only end when monetary policy is tight.
Compound interest is like magic - and it's an investor's best friend
The attached note looks at the recent pull back in investment markets and renewed uncertainty regarding the outlook. The key points are as follows:
Compound interest is an investor's best friend.
The higher the return, the greater the investment contribution and the longer the period the more it works.
To make the most of it, ensure an adequate exposure to growth assets, contribute early and often to your investment portfolio and find a way to avoid being thrown off by the investment cycle.
Central banks - including the RBA and Fed - gradually removing monetary stimulus is more good news than bad
The attached note looks at the recent pull back in investment markets and renewed uncertainty regarding the outlook. The key points are as follows:
The march of central banks towards removing monetary stimulus is continuing with the RBA bringing forward its guidance regarding the first rate hike and the Fed set to commence tapering. We expect both to start raising rates later next year.
The shift towards monetary tightening signals slower more constrained share market returns - but the trend should remain up as the impact of monetary tightening is offset by economic recovery & higher profits, monetary policy is still easy and will be for a while & bull markets usually only end when monetary policy is tight.
Rising bond yields complicate the COVID recovery
Investment returns have defied initial expectations set in the early stages of the Covid pandemic, but where to from here? Which asset classes offer the best opportunities?
RBA signals the end of ultra-cheap money. Here’s what it will mean
The Melbourne Cup day RBA meeting confirms the cessation of the 'yield control' strategy that's been in place since July. What might this signal for interest rates in the near term?
Click here to know more
What’s the truth about stagflation?
Stagflation occurs when economic growth slows (stagnation) and prices rise (inflation), and while this scenario has been evident for a while now, is it really the same as the last time, over 40 years ago?
How scammers get you to invest? Reduce your chance of getting caught
Be suspicious of anyone that offers you easy money. Scammers are skilled at convincing you that the investment is real, the returns are high and the risks are low. But there's always a catch.
Science and medicine appear to be getting the upper hand of coronavirus - implications for investors
There are increasing signs that science and medicine are getting the upper hand against coronavirus: new global cases are in decline; vaccines are working; half the global population and 73% of Australians have had at least one vaccine dose; and there are more treatments for coronavirus.
Key to watch will be whether hospitalisations in response to any resurgence in cases remains subdued.
Coronavirus coming under better control means a continuation of the economic recovery and supply constraints starting to come under control both of which are positive for shares, although the latter will take time.
The worry list for shares - how worrying are they?
The attached note looks at the recent pull back in investment markets and renewed uncertainty regarding the outlook. The key points are as follows:
It's still too early to say that the pull back in share markets is over. Some of the worries around US fiscal policy and politics, China, global supply constraints and central banks likely have further to run and could see the correction go further.
Historically the main driver of whether we see a correction or a mild bear market, as opposed to a major bear market, is whether we see a recession. While it may take time, ultimately, we see the current worries being resolved in a way that does not severely threaten global or Australian growth.
So, we continue to see the broader trend in global and Australian shares remaining up once the correction runs its course.
Planting the seeds of wealth in Spring
As we emerge from the cold of Winter, Springtime often inspires us to relish in the sunshine and enjoy a spot of gardening to reap the rewards of the season. Our finances can also benefit from the same kind of attention.
9 ways to position the business of today for tomorrow
David Gonski is one of Australia's most-respected business leaders and Chancellor of UNSW. In this talk to the Australian Graduate School of Management, he describes nine lessons for long-term business success.
Know more of Gonski’s future-proofing insights here
Why do investors earn less than the funds they invest in?
Investors with a consistent investment approach which avoids chasing performance should reap rewards over time. A recent US study reveals a persistent gap between reported returns and what investors actually receive.
Financial Planning Week 2021
Financial Planning Association of Australia
Live your today, plan your tomorrow
A financial plan gives you the confidence to get through today and prepare for the future, no matter what life throws at you.
Celebrating the 21st Financial Planning Week in Australia from 4 – 9 October 2021, joining forces with global celebrations of World Financial Planning Day on Wednesday 6 October and World Investor Week from 4 – 9 October.
NEW RESEARCH
What are the money and life issues Australians are facing 18 months since the COVID-19 pandemic started? How has this period of time impacted people’s finances?
The FPA has commissioned research, FPA Money & Life Tracker: Freedom edition, to determine the impact of COVID-19 and the consequent lockdowns on Australians’ work income, financial habits and outlook.
Here are some interesting insights from this year’s research report FPA Money & Life Tracker: Freedom edition:
The top financial goals of Australians over the next 12 months are:
Hit a savings goal – 52.4%
Pay for a holiday – 44.4%
Pay off mortgage – 32.4%
Start investing – 16%
For Australians who see a financial planner
11% increased contact with their financial planner in response to the pandemic
6.5% are embracing digital platforms to receive financial advice
Interestingly, the top three changes Australians made in response to the pandemic include:
Being more frugal about lifestyle choices – 44.7%
Increasing savings – 43.9%
Focused on paying down debts as a priority – 41.3%
This year’s research follows on from FPA’s 2020 Money & Life Tracker: COVID edition, a report which revealed the financial concerns of Australians, their experience of money-related stress and changes in financial behaviour they’d made in response to the financial consequences of the first year of the pandemic.
Why is Australian housing so expensive and what can be done to improve housing affordability?
The attached note looks at the recent pull back in investment markets and renewed uncertainty regarding the outlook. The key points are as follows:
The key drivers of poor housing affordability and high household debt levels in Australia have been low rates and poor housing supply.
Macro prudential controls to slow home lending now look imminent. But this is just a cyclical measure.
More fundamental measures to improve housing affordability need to focus on boosting housing supply and decentralising away from major cities.
How to get help with your bills during COVID-19
If you’re one of thousands of people who has lost income due to COVID-19, you might be finding it hard to pay your bills. Here are some tips to help you get back on track.
As COVID-19 lockdowns continue across much of eastern Australia, many people have once again found themselves out of work. Those working in service industries, and casual workers in particular, are doing it tough, and your cash reserves may be getting low.
If you’re feeling the pressure of mounting bills, it can be very stressful. But there is help at hand. Depending on your situation, you could be eligible for government financial support. And, you can always negotiate an arrangement with your suppliers that lets you hang onto your cash while you weather the COVID-19 pandemic.
How geared equity funds can offer an alternative to home buying for Australian investors
Residential property and geared funds are quite similar in terms of the leverage required to invest. We discuss how geared Australian funds can offer diversification to a portfolio.
Five reasons why the Australian dollar is likely to resume its upswing over the next 12 months
The attached note looks at the outlook for the Australian dollar and what it means for investors. The key points are as follows:
Since its February high of around $US0.80 the $A the $A has fallen on the back of global growth concerns, a slowdown in China and the Delta outbreak in Australia.
However, there is good reason to expect the $A to resume its rising trend: sentiment towards the $A is negative; global growth is likely to remain strong; commodities look to have entered a new super cycle; Australia has a large current account surplus; and Australia is likely to see strong growth next year.
There is a case for Australian based investors to tilt a bit to hedged global investments but while maintaining a still decent exposure to foreign currency given the diversification benefits it provides.
See full article here
New MLC eBooks
MLC just released these eBooks that may help you in case you are leaving your employer due to redundancy, in getting the care you need or in planning your estate. You can check the following links below.
Protect yourself from super scams — How to spot one and where to report it
If someone offers to withdraw your super or move it to a self-managed super fund (SMSF) so you can access the money, it's probably a scam.
Learn how to spot a superannuation scam, and where to report it.