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Oliver's Insights - Falling inflation - What does it mean for investors?

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Key points:

  • Inflation is in retreat thanks to improved supply and cooling demand. A further fall is likely this year.

  • Australian inflation remains relatively high - but this mainly reflects lags rather than a more inflation prone economy.

  • Profit gouging or wages were not the cause of high inflation.

  • The main risks relate to the conflict in the Middle East escalating and adding to supply costs; a surprise rebound in economic activity & sticky services inflation; and floods; the port dispute and poor productivity in Australia.

  • Lower inflation should be positive for investors via lower interest rates, although this benefit may come with a lag.

  • The world is now a bit more inflation prone so don’t expect a return to near zero interest rates anytime soon.

Read full article here.

The Types, Pros, and Cons of Ethical Investing

The investment technique known as ethical investing prioritises the investor’s moral, religious and social ideals over financial gain. The reason for this is that a growing number of investors have begun to demand social responsibility from the companies they invest in, primarily because of the rise in dubious and unlawful investment arrangements.

Ethical investing entails fair labour practices, the production of healthy and beneficial goods and services, and abstaining from unethical business activities.

Investors who want to utilise their money to support good causes should consider ethical investment. Those who are interested in this type of venture have several options to choose from.

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Achieving Your New Year Goals: A Realistic Approach

New Year’s resolutions are a time-honoured tradition where people aim to make positive changes in their lives as the calendar flips to January 1st. While setting goals is easy, the real challenge lies in sticking to them throughout the year. Here’s a guide to not only choosing your resolutions wisely but also ensuring that you stay committed to them.

Read full article

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Oliver's Insights - 2023 saw the return of Goldilocks, but what's in store for 2024 for investors?

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Key points:

  • The five key themes for 2023 were: better than feared growth; disinflation; peak interest rates (probably in Australia too); lots of geopolitical threats but not as bad as feared; and AI hit the big time. This boosted shares and helped bonds with solid superannuation fund returns.

  • 2024 is likely to see positive returns helped by falling rates but they are likely to be more constrained given likely volatility associated with the high risk of a recession.

  • Expect the RBA cash rate to fall to 3.6%, the ASX 200 to rise to 7500 and balanced super funds to return around 5.3%.

  • Australian residential property prices will likely see falls as high rates resume their impact after prices rose in 2023.

  • Things to keep an eye on: Inflation; interest rates; recession risk; China risks; US politics; and the Australian consumer.

Read full article here.

2023 Value of an Adviser

SUMMARY:

In a complex world that keeps posing challenges to investors, advisers continue to add value that enables their clients to attain their long-term financial goals.

The spectre of a global recession and rising inflation have created an environment of extreme caution in 2023, just three years after a global pandemic swept through markets to test investors’ fortitude.

In this environment, Australians have relied on their advisers heavily to navigate both the practical and emotional aspects of investing. It is a relationship that proved fruitful not just in periods when markets fell, but also when assets rose to buoy portfolio gains.

Of course, financial advice encompasses much more than investing. It requires in-depth knowledge of taxation and social security, plus the understanding of human behaviour that’s necessary to support people making life decisions.

Advisers proved more than up to the task over the past year.

Russell Investments' annual analysis shows the value of an adviser in Australia is approximately 5.9% in 2023.

This is substantially higher than the typical adviser fee paid by clients and a validation of the holistic service that advisers provide to clients. It is a function of their ability to help clients adapt as markets, regulations, and their own circumstances change.

Read full report here.

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Oliver's Insights - The RBA leaves rates on hold - have we finally reached the top?

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Key points:

  • At its December meeting the RBA left rates on hold but retained a tightening bias with still hawkish commentary.

  • Our concern remains that the RBA has tightened more than necessary with a high risk of recession next year.

  • The risk of another hike rate - which if it occurs would most likely be at the next meeting in February after December quarter inflation date - remains high at around 40%.

  • However, our base case is that the RBA has reached the top and we see it cutting rates in second half of 2024.

Read full article here.

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Oliver's insights - nine key things for successful investing

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Key points

- Successful investing is not always easy and can be stressful. Even in good times. For this reason, it’s useful for investors to keep a key set of things in mind.

- The nine key things are: make the most of compound interest; don’t get thrown off by the cycle; invest for the long term; diversify; turn down the noise; buy low and sell high; beware of the crowd; focus on investments offering a sustainable cash flow; and seek advice.

- These are very important in times like the present when uncertainty around inflation, interest rates, economic activity and geopolitics is high.

Click here to read the full article.

Why Financial Security is Paramount for a Satisfying Retirement

Retirement is often idealised as a carefree chapter in life, where one can indulge in long-postponed hobbies, travel, and quality time with loved ones. However, the idyllic vision of retirement is predicated on a foundation of financial stability. Without it, retirement can become a period of stress and uncertainty, rather than relaxation and enjoyment.

The Comprehensive Benefits of Financial Preparedness:

  1. Peace of Mind

  2. Upholding Lifestyle Standards

  3. Healthcare Costs Management

  4. Family Stress Reduction

  5. Longevity and Inflation Preparedness

Read the full article here.

Understand if a Self Managed Super Fund (SMSF) is right for you.

A self-managed super fund (SMSF) is a private superannuation fund that individuals in Australia can manage themselves. These funds differ from industry and retail super funds, as they offer more control over investment choices and insurance options. However, managing an SMSF comes with significant responsibilities and risks.

The appeal of having control over your superannuation can be enticing, but it entails substantial work and potential pitfalls. It’s crucial to consider the following risks and responsibilities before setting up an SMSF:

  • Losses without Compensation: Unlike retail and industry funds, SMSFs lack access to special compensation schemes or the Australian Financial Complaints Authority (AFCA) in case of theft or fraud-related losses.

  • Personal Liability: All members of an SMSF, even if they receive professional assistance or another member makes decisions, are personally liable for the fund’s actions.

  • Investment Returns: The returns on your investments may not meet your expectations, and you are solely responsible for managing and optimizing the fund’s investments.

  • Changing Circumstances: You must manage the fund even if your personal circumstances change, such as losing your job.

  • Member Events: Events like relationship breakdowns between members, the death of a member, or a member’s illness can negatively impact your SMSF.

  • Insurance Considerations: Transitioning from an industry or retail super fund to an SMSF may result in a loss of insurance coverage, which should be carefully considered.

Click here to read full article.

Top 5 reasons to have legal representation

Most people don’t think they need a lawyer until they find themselves in a situation where legal advice is crucial. However, upon closer examination, there are numerous instances in life where seeking the expertise of a lawyer can make all the difference between resolving a problem successfully and suffering a loss. Let’s explore the top five reasons why having a lawyer to advise you is essential.

5 reasons:

Ensuring Legally Binding Outcomes

Knowing Your Rights and Entitlements

Saving Money in the Long Run

Avoiding Penalties and Fines

Having Reliable Legal Representation

Click here to read full article.

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Oliver’s insights Australian home prices up on supply shortfall, but at risk from high rates

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The big surprise in the Australian housing market last year was how quickly home prices fell with RBA rate hikes. But the big surprise this year is how they rebounded when most including myself were looking for further falls. October CoreLogic data showed another 0.9% rise in national home prices, leaving them just 0.5% below their April 2022 record.

Key points

– Australian home prices rose again in October, with the supply shortfall on the back of record immigration dominating. Prices are now on track for a 9% gain this year.

– While the supply shortfall is likely to continue there is a high risk that the impact of high interest rates will start to get the upper hand next year particularly if the RBA hikes again and unemployment rises by more than expected.

– Price gains are expected to slow to 5% next year, but the risk of another leg down in prices next year is high.

Please click here to read full article.

Budget-Friendly Home Renovation Ideas

We can’t really fault you for getting all worked up, as there’s nothing quite as exciting as embarking on a home renovation project to refresh the look of your space. However, some home renovations can get notoriously expensive and time-consuming, depending on the extent of the work required.

Here are five budget-friendly home renovation ideas you can start doing today.

1. Get new kitchen countertops

2. Paint your walls white

3. Install new lighting fixtures

4. Update your flooring

5. Replace old faucets, fixtures and fittings

Click here to read full article.

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Oliver's Insights - Five constraints on medium term investment returns

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Key points

- Five megatrends suggest higher medium term inflation pressures & lower economic growth than pre-pandemic.

- These are: a move away from economic rationalist policies; the reversal of globalisation; rising geopolitical tensions; climate change and decarbonisation; as well as slowing and aging populations. A productivity boost from artificial intelligence should provide some partial offset though.

- But taken together this will likely constrain medium term superannuation returns, potentially to around 5.5% pa.


Click here to read full article.

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Oliver's Insights - The threat of higher oil and petrol prices flowing from the war in Israel

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Key points:

  • The war in Israel has added to the upside risks to oil prices and downside risks to shares in the near term.

  • If Iran stays out of conflict & a major supply disruption is avoided the impact on shares should ultimately be minimal.

  • If alternatively, oil prices do have a renewed surge it’s more likely to be deflationary as it will act as a “tax on spending”. So central banks, including the RBA, should look through it.

  • The rise in petrol prices has already added $12 a week to the average household fuel bill in Australia since May.

Read full article here.

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Oliver's Insights - 1987 vs now - Rising bond yields (& war in Israel) and the risks for shares

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Key points:

  • The rise in bond yields has left shares offering a low risk premium over bonds leaving them at risk of more softness.

  • The conflict in Israel has added to the risk, although the threat should be minimal if Iran is not drawn in avoiding a severe impact on oil supplies.

  • These are parallels with the run up in bond yields prior to the 1987 crash but relative valuations are less threatening.

  • Still falling inflation should take pressure off central banks next year, which should in turn be positive for shares.

Read full article here.

4 Important Questions to Ask Your General Insurance Adviser

Due to the wide variety of general insurance policies, you can find a policy for each of your needs. However, the wide variety can also confuse, especially if you are a newbie in insurance matters.

Luckily, you can get the guidance you need from your general insurance adviser.

Ask these questions to get the information you need when comparing available options.

1. What Type of General Insurance Can You Advise Me to Buy?

2. How Can I Protect My Interests When Buying Insurance?

3. Does My Insurance Policy Cover Exclusions?

4. Can I Make Changes to My Policy in the Future?

Click here to read the full article.