Implication for investors...
In this article AMP Capital's Dr Shane Oliver takes a look at potential implications for investors as move towards and beyond the Federal Election. Interesting reading. Rick Maggi. The Federal Election
26/07/13: The Vanguard Index Chart 2012-13 (Westmount Clients Only)
Some eye candy...
Every year Vanguard releases it's 'Vanguard Index Chart' and it's always worth a look. The chart illustrates what the value of $10,000 invested twenty years ago might be worth today had you invested in various sectors such as Australian shares, commercial property, cash etc. Along the twenty-year journey you see the impact of important events (both positive and negative) such as 9/11, US subprime and the Japanese Tsunami on markets and the value of the original investment. Vanguard also includes a second graph, called 'the power of diversification' which shows the performance of each sector in percentage terms, every year, for the last twenty years.
Seeing visual proof of market volatility (all of them), each having their day in the sun, followed by less than happy times, serves as a potent reminder of the importance of diversification and patience. We can all do with some gentle encouragement, especially during tougher, challenging times, so I like to keep this chart on my wall! Rick Maggi. View charts here
26/07/13: New normal, old story
'Outside the Flags' by Dimensional VP, Jim Parker
"Low returns are shaping as the new normal" That was the headline in The Australian Financial Review in early July 2012 in anticipation of another grim year on global equity markets for Australian investors. How did that forecast turn out? Rick Maggi Read more here
25/07/13: Investment outlook after a strong financial year
Dr Shane Oliver...
The last financial year saw returns of over 20% from Australian and global shares, so what's in store for 2013/14? Rick Maggi Read more here
22/07/13: SMSFs: Where the ATO is looking
How does your SMSF fund measure up?
The tax office - in its role as regulator of self-managed super - stripped 132 SMSFs in 2012-13 of their prized complying status for committing serious breaches of superannuation law. This is the toughest action that the ATO can take against a wayward SMSF. And it typically affects the savings of all the fund's members.
The market value of SMSFs declared non-complying is taxed at the top marginal rate, less any non-concessional (after-tax or undeducted) contributions. This could remove almost half a fund's assets.
And the ATO prevented 180 proposed new funds from entering the system. (As part of its compliance work, the tax office examines whether a fund has been established for "genuine" superannuation purposes. Sometimes funds are setup as means to extract savings from the super system before the members are legally entitled to the money.)
The ATO's Compliance in focus 2013-14 publication - released over the past week - reveals how the regulator will scrutinise the activities of SMSFs over the coming 12 months.
The annual compliance program can serve not only as a warning of where the tax office is looking but as a reminder of areas where your self-managed fund could possible improve.
During 2013-14, the ATO intends to particularly focus its SMSF attention on:
1) Prohibited loans. (SMSFs are prohibited from making loans to fund members and their relatives or providing other financial assistance to them.)
2) Funds with a history of non-compliance, including failure to lodge annual returns on time. The ATO is also keeping an extremely close watch on the compliance of new SMSFs.
3) Incorrect reporting of tax-exempt pension income. (The tax-exempt treatment of pension assets is a valuable tax break that some SMSFs incorrectly claim.)
4) Tax losses. (The ATO wants to ensure that funds are correctly calculating any claimed losses.)
5) Related-party transactions. (Generally, an SMSF is barred under the in-house asset rules in superannuation law from leasing or having investments with related parties involving assets that are worth more than 5 per cent of a fund's total market value. Business property is among the few exceptions to the rule.)
6) Non-arm's length transactions. (Self-managed funds are required to invest on a commercial, arm's length basis, including transactions involving related parties.)
How does your fund measure up in regard to these areas of ATO focus? Rick Maggi.
12/07/13: Second guessing
A commentary from Dimensional's Jim Parker...
Markets have had a rocky time lately. Is this something to worry about? Rick Maggi Read here
02/07/13: Happy New Year!
New Financial Year. Fresh Start.
Want to be kept informed in real-time? Tired of stale, irrelevant websites and blogs? Subscribe to our free updates here. Happy New Year! Rick Maggi & Staff.
27/06/12: Super Tip #8: Government co-contribution
Get your cash reward...
As we're now approaching June 30th, its important to do some planning to maximise your strategy. This is a summary of the Government's 'co-contribution' scheme, which was spared in the recent May Federal Budget. Rick Maggi Read more here
24/06/13: The Fed, Interest Rates and Bonds
Market Update...
Recent market falls and noise around the US Federal Reserve's potential moves going forward has been rattling investors. The following is a candid and easy to understand article on the subject from AMP Capital's Dr Shane Oliver. Rick Maggi. Read more here
13/06/13: Jumping off the Currency Cart
Why should it matter to you as an investor?
In this brief article, Dimensional's Jim Parker comments on currency speculators and just how spectacularly wrong most individual and professional investors get it. A good read. Rick Maggi. Jumping Off the Currency Cart
06/06/13: Recent market losses
Sell in May and go away, or something more sinister?
Recent share market falls have taken some of the lustre from the stellar gains we've witnessed over the last year, although investment returns remain extraordinary to date. So is the perennial "sell in May and go away" behind the recent market correction or is there more to it than that? The following is an easy to understand three-minute video commentary (just released) from AMP Capital's Dr Shane Oliver that should help to calm the nerves... Rick Maggi. Watch Video
13/05/13: Smart EOFY 2013 Strategies
12 End of Financial Year strategies to consider...
With the end of the financial year fast approaching, now is a great time to take advantage of various superannuation, insurance and tax strategies to reduce costs, save tax and streamline your finances.
Below is a useful guide to help you get there, but if you have any doubts or concerns, please contact us or discuss your personal circumstances with your financial adviser or tax specialist before taking action. Rick Maggi. Read Smart EOFY Guide
07/05/13: The Aussie dollar - is the best really behind it?
Where to from here?
Has the Australian dollar peaked? What can we expect going forward? What can you do to take advantage? Rick Maggi. Read more here
07/05/13: Alert: Cash rate cut by 25 basis points
The comfort and safety of Term Deposits is a double-edged sword...
The Reserve Bank of Australia has just reduced the cash rate by 0.25% to 2.75% effective 8 May 2013. The RBA's Media Release is below. This action is in response to a slowing Australian economy (unemployment is rising, retail and government spending is falling, mining is sluggish, and taxes are set to rise).
Leading brokers are now predicting that our cash rate is headed to 2% and billionaire investor George Soros is betting that the Australian dollar will fall. Against this backdrop, interest rates are likely to continue their drift downwards, which is bad news for term deposit investors, and will probably encourage more Australians back into higher dividend yielding shares, much like the recent American experience (US markets are now trading about 4% above their all-time highs, primarily on the back of very low interest rates).
As the Australian market remains 23% below pre-GFC levels, it is quite conceivable that our markets will get a boost from falling interest rates, provided the global picture doesn't deteriorate. Rick Maggi. RBA Statement