With the exception of Hobart, all capital cities experienced an uptick in prices over the last month. View here
For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.
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.
3 reasons to make your landlord rethink your lease...
You love your current office space but everywhere you turn, you’re hearing stories of how soft the office leasing market is in Perth. There are signboards all over the place and the super deals tenants are securing are approaching levels reserved for urban myths of old. You start getting excited because you can see yourself halving your rental expense overnight. And then you pull out your lease and your face drops; you’ve still got a few years left on your term.
The thing is, even if your lease expires in 2019, for example, you can still take advantage of the current market conditions.
The reason for this apparent paradox is that you can create a win-win outcome for both yourself and your landlord when you understand the factors that motivate them in the current market.
The first is that it costs the landlord more to find a new tenant than it does to keep you. This is because there is invariably a period during which a property remains vacant and this represents lost income for the landlord and additional expenses because they have to pay the building outgoings out of their own pocket. If that wasn’t bad enough for them, they also have to allow for generous incentives to lure new tenants and then pay the leasing agent’s fees on top. It can really add up, especially in the current market.
The second factor involves the outlook for the office leasing market in the medium term and whether your lease will expire in a stronger or softer market. If your lease expires during a period where everyone expects the market to be stronger then there is no motivation for your landlord to do anything now, because they’ll be able to get a better deal in a couple of years. But if your expiry is due to occur in a stagnant or softer market (the current consensus view for the next couple of years) then it’s in the landlord’s interest to do a deal now to protect themselves from this risk. In essence, the question here is whether the soft leasing market is projected past your lease expiry.
The third factor has to do with the impact of your lease term on the building’s Weighted Average Lease Expiry (WALE) which is a significant metric in the valuation of the property. The longer your unexpired term and the larger your floor area, the larger the impact you have on the building’s WALE and, by extension, on the building’s value. A healthy WALE that gets over the current softness is a good thing in an investment property and if you can contribute to this then your landlord will want to hear from you.
It all comes down to the numbers; if you can propose a solution that addresses the combined impact of the above factors then you are making things interesting for the landlord. At the same time, the proposal has to make sense for you too in terms of your business plan and growth prospects. If your solution ticks both boxes then you have a marriage made in heaven.
If you want a sanity check of your numbers – or just want to talk about the market – give me a call on 9261 6698 or email me at theo.smyrniotis@colliers.com
Alternatively, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.
16/03/16: Why Australian property won't crash
Stronger than feared profit results and reasonable economic data in Australia, which are consistent with a rebalancing of the economy away from mining, are among the factors steering Australia away from a recession. Shane Oliver discusses this, along with the risk of a property crash and Australia’s declining negative gearing numbers.
Australian property update – negative gearing numbers Declining tax claims due to negative gearing in Australia are largely a result of low interest rates relative to rental yields. In other words, the benefit of negative gearing has somewhat declined. There is a broader issue at play however, which is the political debate proposing to restrict negative gearing tax concessions to only new properties.
Are we heading for a property market crash? Australian housing is expensive relative to incomes and rents. And household debt ratios are high. So yes, there is a risk of a sharp drop in property prices at some point. However, this is unlikely unless we see much higher interest rates or a surge in unemployment in the context of a recession. The foresight of the Reserve Bank and what has so far been a successful rebalancing of the economy in the face of the mining downturn mean that both of these scenarios seem unlikely at present. We’re going to see a 5-10% fall in property prices at some point in the next few years but at this stage it’s unlikely that we’re going to see a property crash.
How have company profit results turned out? The latest round of profit results reported by Australian companies related to the December half of 2015 and given recent sharemarket falls, these results have proven to be better than feared. Although resourcing companies saw big falls in profits and cuts to dividends, this was not surprising. More importantly, the remainder of results were reasonably good and showed decent profit growth.
For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.
14/03/16: Turn your "shoulds" into "musts"
Good advice from Tony Robbins...
How many times have you told yourself what you “should” do?
I should lose weight. I should be more confident. I should earn more money. I should have a more passionate relationship.
People have an endless list of things they believe they should do or should follow through on. And these “shoulds” carry about the same weight as a New Year’s resolution — that is, if it happens, then that’s exciting. But if not, it won’t be too disappointing because you kind of knew it wasn’t really going to happen anyway.
But what happens when you decide something is an absolute “must?” What happens when you cut off any other possibility than you succeeding — when you decide that you are either going to find a way to make something happen or you’ll create the way yourself?
When you raise your standards and turn “should” into “must,” you are making an inner shift to take control over the quality of your life. Any area you are not getting what you want is because you haven’t raised your standards.
Take your relationship, for example. This is a direct reflection of your standards. Some people are in a relationship right now but they aren’t happy because their standard is that they must be in a relationship, not that they must have passion and excitement and pure joy and love. Others may not be in a relationship because their standard is that they must not be hurt.
If you want real change, you have to be willing to do your part. And it starts with asking yourself, honestly, who you are.
Are you a winner? Or are you always a step behind? Are you the life of the party? Or are you more reserved?
Answering this question and discovering what your true beliefs are about yourself is critical. Because this is your identity. And the fact is we are hard-wired to follow through on who we believe we are.
Consider someone who is trying to quit smoking. He may say to himself, “I’m going to do my best to stop smoking, but I’ve always been a smoker.” It doesn’t matter how hard he tries, if his identity is that he is a smoker, it’s futile. And the days until he is back smoking again are numbered. Because we act consistently with and ultimately become who we believe we are.
Most people, if they look at how they are living their lives today, will find that their identify is based on a set of standards and a set of beliefs they created 10, 20, 30 or more years ago. In fact, many of us made decisions when we were kids about what to believe, what we are capable of, and who we are as a person, and that became the glass ceiling that controls us. But are you the same person you were back then? Are you the same person you were even a year ago?
Eventually, most people simply stop trying to break through that glass ceiling. They chock it up to “that’s just the way it is in my life,” or tell themselves “that’s just who I am.” But ironically, when you do this, you are actually denying who you really are. You are living under a false identity that is based off of false beliefs you adopted some time in the past.
So how do you define yourself? And when did you start to believe that? How many years ago did you decide what you could and could not do in your life? Don’t you think it’s time to raise your standards, turn your “shoulds” into “musts” and give yourself a new identity?
The strongest force in the human personality is the need to stay consistent with how we define ourselves. And you may just find that by making these changes, you can make lasting change in your quality of life. - Tony Robbins
Subscribe to the Tony Robbins newsletter here.
For more information, 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