THE THREAT OF WAR: IMPLICATIONS

The following note from Dr Shane Oliver of AMP Capital takes a look at the risks around war with North Korea. The key points are as follows:

  • Tensions with North Korea have clearly increased causing volatility in share markets.
  • The risk of war with North Korea has grown but a diplomatic solution remains most likely although there could still be more volatility before this is finally achieved.
  • Historically, shares have been adversely affected initially on the uncertainty of wars (or threatened wars) with a potential significant economic impact, but have tended to rally well before the conflict is over. 

Read more here

Income Protection - Stay Ready

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'Income Protection' - in the world of investing and financial planning, this is never a thrilling topic of conversation. I don't how many times I've seen client's eyes begin to glaze over whenever I've broached the subject of income protection, or life insurance for that matter.

And yet we all know, at gut level, that protecting your capacity to generate income (so you can pay the bills!) is a fundamental part of any investment or retirement strategy. Brutally put, if you're still in the process of building your wealth, without income, there's a pretty good chance that your goals and dreams will suffer a major, soul-destroying setback.

In other words if you have an earned income, you should protect it before doing anything else, including investing. As painful as insurance can be (I get it), income protection is just one of those absolute 'must-haves'.

Self-employed people in particular can be among the most vulnerable when it comes to sickness and injury, due to little or no access to paid leave - a situation that can deteriorate quickly. But employees also need to look beyond their accumulated sick leave or in-built superannuation based insurances as these rarely do the job properly. It's a little like insuring yourself for every second or third day - not exactly the peace of mind you were looking for!

I think Will Smith's classic quote applies here - "if you stay ready, you won't have to get ready".

So please, if you're not sure about your insurances, or you're about to embark on an investment or retirement strategy (i.e. invest in property, shares, super or a business) you should get face-to-face advice from a Financial Planner (like us), or an insurance specialist, and get your cover right the first time - you only have one shot at it.

Ok, enough said, time to step-off my soapbox.:)

Rick Maggi

QUARTERLY HOUSING REPORT

June 2017 marked the fifth anniversary of the current housing market growth phase. Over the second quarter of 2017, combined capital city dwelling values had increased by 0.8% which was their slowest quarterly growth rate since December 2015. The June quarter has historically shown seasonal weakness, however, despite a slower rate of growth over the quarter, the combined capital cities still recorded value growth of 9.6% over the past 12 months. With values continuing to rise, the total value of residential property nationally was estimated at $7.1 trillion at the end of the quarter.

Read Core Logic's Report Here.

The $A: THIS IS NOT 2007!

Contrary to our expectations, the Australian dollar has recently broken out of the $US0.72 to $US0.78 range of the last 15 months or so on the upside and spiked above $US0.80, its highest in over two years.

So what gives? Why has the $A broken higher? Is it an Australian dollar or US dollar story? What will be the impact on the economy? Is it on its way to parity again or will the downtrend resume?  Read more here.

Rates On Hold

Despite being under pressure from tepid economic growth, weak inflation and a surging Australian dollar, the Reserve Bank has left interest rates unchanged at its August board meeting.

The stance was all but universally expected, given RBA governor Philip Lowe made it clear last week that rates would not be moving for a considerable period of time.

The market had priced in a zero possibility of a rate change into its calculations.

The RBA last changed settings in August 2016, when it cut the official cash rate by 25 basis points to the current historic low of 1.5 per cent.

ESG GAINING IN POPULARITY

According to the Global Sustainable Investment Alliance, over $22 trillion of assets were managed under responsible investment strategies globally in 2016, up 25% from 2014.

The rise of ESG (environmental, social and governance) investing can be attributed to a number of factors, such as generational change (Millennials and Generation X increasingly taking over from Baby Boomers in positions of influence), shifting energy sources (like renewable energy), climate change finally becoming a reality, and public-private collaborations. The list goes on.

Make no mistake, ethical/socially responsible/sustainable investing is not a vanity project or a niche thing. These days you can help out the planet by getting your money out of fossil fuels, or give the human race a break by divesting from weapons or tobacco, and still make a nice return.

For more information call us on 9382 8885.

Rick Maggi

5 GREAT INVESTMENT CHARTS

Investing is often seen as complicated. And this has been made worse over the years by the increasing complexity in terms of investment products and choices, regulations and rules around investing, the role of the information revolution and social media in amplifying the noise around investment markets and the expanding ways available to access various investments.

But at its core, the basic principles of successful investing are simple. And one way to demonstrate that is in charts or pictures – after all, a picture tells a thousand words.

This note looks at five charts I find useful in understanding investing. Check back soon as another 5 charts are coming your way.

Read on here.

2016/17 Review

The past financial year turned out far better for investors than had been feared a year ago. This was despite a lengthy list of things to worry about: starting with the Brexit vote and a messy election outcome in Australia both just before the financial year started; concerns about global growth, profits and deflation a year ago; Donald Trump being elected President in the US with some predicting a debilitating global trade war as a result; various elections across Europe feared to see populists gain power; the US Federal Reserve resuming interest rate hikes; North Korea stepping up its missile tests; China moving to put the brakes on its economy amidst ever present concern about its debt levels; and messy growth in Australia along with perennial fears of a property crash and banking crisis.

Predictions of some sort of global financial crisis in 2016 were all the rage. But the last financial year provided a classic reminder to investors to turn down the noise on all the events swirling around investment markets and associated predictions of disaster, and how, when the crowd is negative, things can surprise for the better. But will returns remain reasonable? After reviewing the returns of the last financial year, this note looks at the investment outlook for the 2017-18 financial year.

Read more here