The Polyphony of Markets

Dimensional's Jim Parker discusses the importance of international diversification within investment portfolios. The article serves as a timely reminder to superannuation members, retirees, and investors to look beyond attempting to pick winners and, instead, focusing on the bigger picture - or "the effect of how all the parts fit together". Worth a read. The Polyphony of Markets

Does your investment portfolio have the right balance?

For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.

Budget SPECULATION RIFE

There will be added interest in the Federal Budget announcement next week (May 3rd) as it's likely to be the final major economic statement the Government makes before the election later this year, quite possibly July 2nd. With the opposition taking a strong stance on capital gains tax and negative gearing, we're looking at a focus this year on taxation. Corporate tax could be cut by up to 1.5% however, there is likely to be minimal, if any, relief in terms of personal income tax.

There may also be some changes to superannuation. Some potential changes might be reduced contribution caps, the concessional 15% tax on super contributions, an end to 'Transition to Retirement' pensions and taxes on superannuation pension payments.

Overall, the outlook is for minimal growth in government spending, with spending offset by savings elsewhere in the Budget.

Where sharemarkets are concerned, historically we have seen some sideways tracking in past election years, but there has been no evidence to date of a lasting impact caused by an election. In fact, Australian economic growth has actually been strong during election years since 1980.

We'll be watching the announcements closely next week and will keep our clients informed of any meaningful developments.

For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.

AUSSIE DOLLAR Up (for now)...

At the time of writing, the Australian Dollar is sitting on $US0.770, which begs the question - what on earth is driving it? Read more here

For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.

So what did we learn?

In this article, Don Stammer adds some much needed balance and clarity, first explaining what happened during the first ten weeks of January, and then moving on to some universal lessons we all need to remember during periods of uncertainty. Read more here

This article was recently published on the 'Cuffelinks' website, a free weekly newsletter for investors and advisers which I wholeheartedly recommend to anyone looking for an intelligent, impartial investment website. For more information, go to cuffelinks.com.au

Or alternatively, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.

11/03/16: Buffett's letter to investors

Once again Warren Buffett has presented a compelling long-term view of the growth potential of the US economy. In doing so he draws upon his long lifetime experience to explain that betting against the USA was and remains a foolish investment endeavor…

“For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs. America’s social security promises will be honoured and perhaps made more generous. And, yes, America’s kids will live far better than their parents did.”

The following few sentences, from his introduction, make some telling observations about the last 80 years and the future of the USA..

“It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve). As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do. That view is dead wrong: The babies being born in America today are the luckiest crop in history. American GDP per capita is now about $56,000. As I mentioned last year that – in real terms – is a staggering six times the amount in 1930, the year I was born, a leap far beyond the wildest dreams of my parents or their contemporaries. U.S. citizens are not intrinsically more intelligent today, nor do they work harder than did Americans in 1930. Rather, they work far more efficiently and thereby produce far more. This all-powerful trend is certain to continue: America’s economic magic remains alive and well.”

“Today’s politicians need not shed tears for tomorrow’s children. Indeed, most of today’s children are doing well. All families in my upper middle-class neighbourhood regularly enjoy a living standard better than that achieved by John D. Rockefeller Sr. at the time of my birth. His unparalleled fortune couldn’t buy what we now take for granted, whether the field is – to name just a few – transportation, entertainment, communication or medical services. Rockefeller certainly had power and fame; he could not, however, live as well as my neighbours now do. Though the pie to be shared by the next generation will be far larger than today’s, how it will be divided will remain fiercely contentious. Just as is now the case, there will be struggles for the increased output of goods and services between those people in their productive years and retirees, between the healthy and the infirm, between the inheritors and the Horatio Algers, between investors and workers and, in particular, between those with talents that are valued highly by the marketplace and the equally decent hard-working Americans who lack the skills the market prizes. Clashes of that sort have forever been with us – and will forever continue. Congress will be the battlefield; money and votes will be the weapons. Lobbying will remain a growth industry.”

Warren Buffett's logical and optimistic sentiments serve as a gentle reminder to investors, retirees and superannuation members alike that current economic or market conditions are not necessarily predictive. We are always in a 'cycle', and like all cycles (good or bad), they eventually must come to an end.

For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.

01/03/16: Will politics get in the way?

Probably ok, but worth keeping an eye on...

As if the worry list for investors isn't already long enough, politics is turning out to be a key issue for investors, retirees and superannuation members this year. Read more here

For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.

26/02/16: Some interesting facts about retirement...

Given the financial demands of everyday life, planning your retirement may be a relatively low priority. you may also think that you have plenty of time to plan. but before you put off planning for you retirement any longer, here are some key facts you should consider. Read more here

For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.

25/02/16: Aged Care: Plan ahead

If the need for residential aged care is nearing, following these five steps will help you make a smoother transition. Aged Care 5 Steps to Consider Aged Care, Plan Ahead For The Care You Want

For more information, contact Rick Maggi at Westmount Financial on 9382 8885.

22/02/16: Minimise risk in retirement...

...and sleep better.

Recent market declines have served as yet another reminder how quickly conditions can go pear-shaped.

Market volatility can be particularly stressful for retirees (and pre-retirees), who simply cannot afford to experience a sharp decline in their wealth, as they are less capable of returning to work to earn a salary in order to recover.

To make matters worse, retirees also face another set of risks - longevity (outliving their retirement funds) and inflation (the slow and steady loss of purchasing power).

So a fork in the road exists for retirees. While most would like to preserve (or even grow) their wealth steadily, many are, justifiably, unwilling to risk large declines in their portfolio in pursuit of higher returns. At the same time they are also acutely aware that persistently low returns (currently cash and term deposits) will significantly erode their retirement assets over time - a different kind of 'loss', but the same result nevertheless.

In our experience, the key to creating a successful, comfortable, low-stress retirement can essentially be boiled-down to finding the right investment mix and then staying within well-defined 'goal posts'. That's it.

By employing a number of key strategies to minimise portfolio risk in retirement, coupled with a deep understanding of your retirement goals, your personality and your values, an experienced Financial Advisor can create a retirement solution that get's the balance right, and keep's you informed and on track, so you can get on with enjoying your retirement.

For almost 40 years we've been helping people, just like you, achieve better outcomes. So if you're spending too much time wondering (or worrying) about the future direction of your retirement, don't panic, just call us for an initial discussion.

11/02/16: IS THIS A BEAR MARKET?

Fear of fear itself or something more fundamental?

AMP Capital's Dr Shane Oliver weighs in on the market meltdown and asks the tough questions. A must for retirees and investors looking for a calmer, mature assessment of the current climate. Read Here

02/02/16:Super or the mortgage?

Many people wait until their home loan is paid off before investing more in super. However, if you are currently making more than the minimum home loan repayments, you may be better off when you retire if you make additional super contributions instead. Super or Mortgage?

For more information, contact Rick Maggi at Westmount Financial on 9382 8885.

29/01/16: The super savings gap

While as a nation we collectively face a large retirement savings gap, there are a number of smart things you could consider doing to help make sure your future financial security isn't at risk. Read more here

For more information, contact Rick Maggi at Westmount Financial on 9382 8885.

22/12/15: LIFE Insurance: Counting the cost of a curve ball...

Here's a confronting question: what would you do if the main breadwinner in your household could no longer bring in an income? Do you have a Plan B? Most people don't. That's where insurance comes in. Insurance: Counting the cost of a curve ball

For more information, contact Rick Maggi at Westmount Financial on 9382 8885.

14/12/15: Retiring from a small business?

Selling a small business can be a challenging, complicated and uncertain time. So too can retiring. Combine the two and you have a situation where early planning and advice is critical. Retiring from Small Business

For more information, contact Rick Maggi at Westmount Financial on 9382 8885.

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

26/10/15: Offset Accounts: Better balance

...a better way to manage your mortgage

If you want to repay your mortgage quickly and still have easy access to your additional repayments, an offset account may be worth looking into. Read more here

For more information, contact Rick Maggi at Westmount Financial on 9382 8885.

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

03/09/15: Keys to de-stressing a mortgage

The causes of mortgage stress...

Don't sail out farther than you can row back. This Danish saying is sound advice for anyone thinking of borrowing to buy a home, particularly now that interest rates are low and house prices have risen sharply.

According to a paper for the Centre of Policy Development and University of Canberra, Australians have a tendency to be over-confident in our ability to repay loans. We also underestimate the likelihood of things potentially going wrong in our lives.

Have you ever heard yourself or someone else say "I'll be able to repay my loan, provided I keep my job, don't get sick and I'm not hit with any large unexpected bills"? Chances are you probably have. but things can and often do go wrong.

Read 'Destress your mortgage'

For more information, contact Rick Maggi at Westmount Financial on 9382 8885.

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

29/04/15: Where are we in the investment cycle?

Approaching a bubble?

It is now six years since the Global Financial Crisis ended. From their 2009 lows US shares are up 212%, global shares are up 159% and Australian shares are up 91% Despite this, there seem to be constant predictions of a new disaster. This note looks at where we are in the investment cycle. Read more here

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

27/03/15: $20 oil could be a reality

…if this happens...

Watch video here

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

18/01/15: Designing Your Future: Goal Setting

Are you ready?

Deep down, we all know that New Year's resolutions just don't work. Consider the empirical data…

* 25% of people abandon their resolutions after just one week. * 60% of people abandon them within 6 months. * The average person makes the same resolutions 10 times without success. * Even after a heart attack, only 14% of patients make any meaningful change around eating or exercise.

Clearly, change is really hard.

Resolutions don't work, but goal setting does, provided you do it in the right way. Here are a set of 4 practices for setting effective goals that do work…

1. Write your goals down. Written goals have huge power, but you've got to to get them down on paper to get the clarity you need. 2. Make your goals 'SMARTER'. This is an acronym - Specific, Measurable, Actionable, Realistic, Time-Bound, Exciting & Relevant. 3. Share your goals with others, but do it selectively. Share your goals with people who are supportive but will also hold you accountable. 4. Review your goals regularly (at least weekly) so they stay top of mind. Diarise your reviews - remember, if you don't stay focused on your goals, they're guaranteed to fall by the wayside.

Whether you are just starting out, building your wealth or looking to retirement, goal setting (not vague resolutions) should be part of your DNA. Written goals are essentially 'dreams with a deadline', so go on, put pen to paper, be specific, be descriptive, and have fun with it.

Rick Maggi Westmount Financial

12/01/15: 2015 Outlook

2 things you need to know…

The economic backdrop for the year ahead is likely to be fairly similar to what we saw in 2014; expect continued economic expansion but at a relatively modest and more uneven pace…

Globally • Growth is likely to remain around 3.5%; ranging from 1-1.5% in the Eurozone and Japan, 3.5% in the US and 7% in China. • Inflationary pressure is likely to remain fairly low and the overall monetary backdrop, despite a probable tightening by the US in the middle of the year, will remain fairly easy. We will likely see further easing in Europe, Japan and China.

For Australia • We should see growth move up to around 3% • Inflation is likely to remain benign • The Reserve Bank of Australia is projected to cut the cash rate to 2.25% early in the year with a 50% chance of another cut in the June quarter.

Rebalancing the economy As Australia transitions back to a more balanced economy, investors should try to avoid getting too gloomy. Yes, the mining sector is slowing down, but low interest rates and a falling Australian dollar is providing a great boost for non-mining parts of the Australian economy. For instance, we’re seeing a return to life for retail-related areas of the economy. Housing and construction has picked up, construction activity related to infrastructure continues, and the tourism, manufacturing and higher education sectors are showing signs of improvement.

Unemployment will eventually fall While economic growth is still not strong enough to lead to a fall in unemployment, we expect that the job market in 2015/16 will start to pick up as the stimulus to the economy from lower interest rates and the falling Australian dollar starts to feed through.

What does this mean for investors? It should mean another year of reasonable returns for diversified investors. But there are two key things that investors need to be mindful of: 1 What we saw in 2013 and in 2012 (returns of around 20%) out of shares is not sustainable over the long- term. Expect something more like 8-10%; 2 Every year experiences a lot of ‘noise’ and 2015 will be no different. This can be negative in terms of distracting you from your key investment strategy. Try and turn down the volume on the financial news and focus on maintaining a long-term investment strategy. (Dr Shane Oliver, AMP Capital)

Rick Maggi Westmount Financial