Harlan Marriott, Author at Newcastle Financial Planners & Financial Advisors

Frequently asked questions about superannuation

Harlan Marriott — Tue, 08 Jun 2021 23:24:59 +0000

If the ins and outs of superannuation leave you confused, the answers to these frequently asked questions will help you understand the basics.

How much do I need to retire?

According to the Association of Superannuation Funds of Australia (ASFA), a couple requires savings of $640,000 if they wish to enjoy a ‘comfortable’ lifestyle in retirement. For a single, the figure is $545,000.

Due to support from the age pension, a single or a couple can fund a ‘modest’ lifestyle with savings of just $70,000 at retirement.

How is my super taxed?

Broadly, contributions are categorised as either concessional or non-concessional.

Concessional contributions are contributions on which an employer or an individual has claimed a tax deduction.

Non-concessional contributions are made from after-tax income. They include many personal contributions and government co-contributions.

Concessional contributions are taxed at 15% within the superfund, with a tax offset available to low income earners. Non-concessional contributions are not taxed within the fund.

Investment earnings are taxed at 15% in the accumulation phase. Over age 60, earnings in the pension phase, and any payouts from the super fund, are tax-free.

How can I contribute to super?

If you are over 18, employed, and earn more than $450 per month your employer will contribute 9.5% of your ordinary time earnings to super. You can further boost your super by:

Asking your employer to make concessional salary sacrifice contributions from your pre-tax income.

Making personal contributions from your after-tax income. Subject to set limits you may be able to claim a tax deduction for these contributions in which case they will become concessional. If no tax deduction is claimed they will be non-concessional.

Low to middle income earners who make a personal non-concessional contribution may receive up to $500 as a government co-contribution.

If you contribute on behalf of a spouse who earns less than $37,000 a year, you can claim a tax offset of up to $540.

A special ‘downsizing’ contribution is available to over-65s who sell a home.

Age limits and work tests may apply to some types of contribution.

When can I access my super?

When you turn 65, even if still working.

When you reach preservation age (between 55 and 60 depending on date of birth) and have retired.

If you start a transition to retirement (TTR) income stream.

If you face severe financial hardship, specific medical conditions or under the first home super saver scheme.

Who can I leave my super to?

If your super fund allows binding death benefit nominations, you can elect to have your superannuation paid to your legal personal representative. The money will then be distributed as instructed by your Will. Alternatively, you can instruct your fund trustees to pay your death benefit to one or more of your ‘dependents’. Under superannuation law these are:

Your spouse (includes same-sex and de facto partners).

Children.

A financial dependent.

People you had an interdependency relationship with.

Without a binding nomination, your super fund’s trustees decide which dependents will receive the death benefit. They will be guided, but are not bound by, any non-binding nomination.

How do I make the most of my super?

Superannuation remains, for most people, the best vehicle within which to save for their retirement. However, it can be complicated and there are numerous rules to navigate.

That creates challenges, but it also generates opportunities, many of which can add thousands of dollars per year to your retirement income.

Ready to unearth those opportunities and make the most of your super? Now is the perfect time to talk to your financial adviser.

Please contact our financial advisors to discuss your superannuation and financial planning needs. Call (02) 4926 2300 or contact us.

Other Articles Of Interest:

https://leenanetempleton.com.au/unlocking-the-mysteries-of-your-super-statement/

https://leenanetempleton.com.au/super-in-your-60s-its-not-too-late/

https://leenanetempleton.com.au/newcastle/financial-planning/superannuation-planning/

The post Frequently asked questions about superannuation appeared first on Newcastle Financial Planners & Financial Advisors.

Investment Strategies For Your Super

Harlan Marriott — Tue, 04 May 2021 23:18:55 +0000

Your super returns may be doing ok, but could they be better?

Being actively involved in how and where your super is invested, could make a real difference to your retirement savings over the long-term.

If you are considering going down this route, there are some factors to think about such as your retirement goals, how long you have until you retire and the amount of risk you’re comfortable taking on.

For instance, if you’re close to retiring, you may want to avoid putting your super somewhere that’s too risky. Riskier investments tend to experience more ups and downs so time may help to ride them out.

This article considers four examples of investment strategies for your super.

The importance of diversification

Before we discuss the various investment strategies, it’s important to highlight the significance of diversification. Like any type of investment, spreading your super across different types of investment options, can help to build a strong portfolio and manage risk.

Why?

Because if you were to invest all of your super into one asset class such as property, your investment may suffer a loss if the property market was to fall in value. However, if you spread your money across multiple assets, you may have a different result.

Investment strategy type 1: Growth

If you don’t think you’ll be accessing your super for at least 10 years or more, a growth strategy may work for you as a longer timeframe may help an investment portfolio withstand volatility while aiming for returns.

A growth strategy that follows a higher risk, higher return approach tends to have a larger focus on assets that are exposed to capital appreciation. That is, investing in assets which are expected to grow at a higher rate than the industry or overall market.

For instance, this may involve an investment of around 70-85 per cent in shares or property with the rest in fixed interest and cash-based investments.

Historically, over any 20-year period, a growth strategy has delivered better returns than more conservative portfolios which would mainly be invested in fixed interest and cash. However, over a short-term period, you may experience significant losses as a result of market volatility.

Another key benefit of a growth strategy is that by making greater returns on your investment, your savings are more likely to keep up with the rising cost of living. This is arguably important because over time inflation may reduce the value of your retirement savings, which could make it difficult to maintain your standard of living when you’re retired.
Investment strategies for your super

Investment strategy type 2: Balanced

Similar to a growth strategy, if you aren’t planning to access your super anytime soon, opting for a balanced investment portfolio may be another option.

This strategy is aimed at balancing risk and return so your portfolio has enough risk to provide reasonable returns, but not enough to cause significant losses.

A balanced strategy typically involves investing around 60-70 per cent in shares or property, with the rest in fixed interest and cash-based investments.

Investment strategy type 3: Conservative

You may be considering how you could protect your capital if you want to access your super within 3-5 years.

A safe or conservative strategy follows a lower risk, lower return approach so it’s really about preserving the value of your investment portfolio. While there may be less risk of losing money, a downside could be that your returns may not
keep up with inflation.

For example, this could involve investing around 20-30 per cent of your super in shares and property, with the rest in fixed interest and cash-based investments.

Investment strategy type 4: Ethical and sustainable

You may choose not to invest in certain companies based on ethical grounds. For example, taking a stance against investing in firearms. This approach is called ethical or socially responsible investing.

There is also sustainable investing which goes beyond incorporating just ethical and social factors. That is, it approaches investing from an environmental and governance lens too. Some super funds now offer this, so if these factors are important to you, speak to your super fund for more details.

If you’re a self managed super fund (SMSF) trustee, there are a range of sustainable managed funds which you can tap into.

Review your investment approach

You may want to review your current investment approach with your super fund or SMSF to consider how it aligns with your goals and risk comfort.

For example, if you are looking to take an active role by directly investing your super in shares, exchange traded funds and managed funds, there are super products and platforms which enable you to do this.

Alternatively, a SMSF is an option that enables you to have more control over how your super is invested with the added bonus of being able to access more investment options such as direct property and commodities. You also have the ability to borrow within your super fund for investment. There are a
number of administration requirements however, as well as legislative requirements to adhere to.

You may want to consider speaking to a financial expert when determining which super product may be best for you.

This article was prepared by BT, a part of Westpac Banking Corporation ABN 33 007 457 141, AFSL and Australian Credit Licence 233714. This information is current as at 22 May 2019.

——————-

This article provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. It does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to these factors before acting on it. This information may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, no company in the Westpac Group accepts any responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material. BT cannot give tax advice. Any tax considerations outlined in this article are general statements, based on an interpretation of the current tax law, and do not constitute tax advice. The tax implications of investing in property, shares or superannuation can impact individual situations differently and you should seek specific advice from a registered tax agent or registered tax (financial adviser).

Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investment held in superannuation. The Government has set caps on the amount of money that you can add to superannuation each year on both a concessional and non-concessional tax basis. There will be tax consequences if you breach these caps. For more detail, speak with a financial adviser or visit the ATO website.

The post Investment Strategies For Your Super appeared first on Newcastle Financial Planners & Financial Advisors.

The rise of ethical investments

Harlan Marriott — Tue, 27 Apr 2021 03:53:30 +0000

In recent years, ethical investing or socially responsible investing (SRI) has become increasingly popular. Driven by the growth in demand for businesses that are profitable and ethical, along with regulatory frameworks to address challenges such as climate change and modern slavery, there has never been a better time to gain exposure to ethical investments.

What are ethical investments?

Ethical investments provide exposure to companies with strong environmental, social and corporate governance (ESG) structures and practices. The Responsible Investment Association of Australia estimates there is almost $1 trillion invested in ethical companies and strategies across the country, equating to 44 per cent of the entire $2.24 trillion managed by professional investors in Australia.

Depending on your risk appetite, there are a range of ways you can invest ethically. You can put capital into an actively or passively managed fund with a focus on ethical investments. Your super fund may also offer investment options that focus on ethical leadership and business practices.

How to pick stocks in ethical companies

The research and analysis process for buying stock in ethical companies is broadly no different from regular stock picking. Analysing the typical indicators of financial strength is essential, including earnings per share, the price-to-earnings ratio and dividend yield. You will, however, need to weigh up whether a company’s approach to ESG aligns with your beliefs around important issues. These issues are typically environmental, societal, and political.

How to get into ethical investing

To get into ethical investing, you may place some of your capital into a responsible investment fund which uses ESG and ethics criteria, along with financial performance, to determine which companies are invested into. It’s important to note that the screening criteria for responsible investing are different from those used in strict ethical funds. As a comparison, strict ethical funds screen out specific industries such as energy, mining, gambling, pornography and narcotics as a default. ESG investment funds differ by focusing on stakeholder engagement and shareholder activism to influence change in companies instead of simply divesting or eliminating the option of investing in particular organisations in the first instance.

Whether you put your money in a fund or decide to pick individual stocks to get started in ethical investing, you need to determine what you’ll look for in potential investments. You may look for companies that are carbon neutral, or those that have initiatives such as planting a certain number of trees each year. There are also more detailed criteria such as the company’s approach to manufacturing which you may assess in your research. You may also choose to invest in funds that are financial vehicles and loan money to, or invest in, ethical businesses.

Do your research to diversify your investments

Similar to diversifying your portfolio with a range of asset classes, you also need to do your research and thoroughly analyse any potential investments that will provide exposure to ethical companies. To ensure you balance risk effectively, speak to your financial adviser to assess the specific ethical investments that are suitable for your unique situation.

To discuss your investment strategy speak with one of our LT financial advisors.

Contact us

The post The rise of ethical investments appeared first on Newcastle Financial Planners & Financial Advisors.

What financial mistakes have you made?

Harlan Marriott — Thu, 18 Mar 2021 01:01:02 +0000

Have you made a big financial mistake in the past? One that cost you a lot of time and money to fix?

Financial stress can be a major trigger for a lot of people, it is a big burden to carry around, but not one you need to carry alone. Speaking to a professional Financial Adviser can set your mind at ease once you have a plan in place and a financial goal to build towards.

Financial stress
In a report conducted by ME Bank in 2018, they found that many Australian households struggled to afford the basics:

17% of households could not pay utilities on time
19% surveyed had turned to family or friends for help
15% surveyed had resorted to selling items to buy necessities
45% of households were digging into more than 30% of their disposable income to pay off the mortgage.

The value of financial advice can take many forms. It could be the knowledge a professional is looking at your situation objectively, the peace of mind you get when you have a plan in place, or it could be the financial benefits you gain.

A study by CoreData for Fidelity in 2019 revealed that 88.5% of Australians receiving advice believe it gave them
greater peace of mind, financially, and 86.2% of Australians receiving advice believe it gave them greater control over their financial situation.

Research by the Financial Services Council showed that people who received financial advice were almost $100,000 better off at retirement. That’s a big financial gain achieved by working with someone who provided advice and guidance around a retirement goal.

Many Financial Advisers will often tell you that it is not their clients with the highest income that are the wealthiest. The clients who get advice early in their life, work at it, and take a sensible approach are usually the wealthy – and happy – ones.

Don’t let a past mistake deter you from a future goal

You don’t need to be wealthy or privileged to receive financial advice. It is accessible to every day Australians who are motivated to get ahead. Leave your mistake in the past and talk to an adviser about your future today. Call LT today to meet with one of our financial advisors.

Sources: The ‘Better off with savings advice’, 16 February 2011, research shows that a 30 year old would save an additional $91,000, a 45 year old would save an additional $80,000 and a 60 year old would save $29,000 more than those without a financial adviser.
https://www.fidelity.com.au/insights/investment-articles/the-value-of-advice/
https://www.fasea.gov.au/continuingprofessional-development
https://www.abc.net.au/news/2018-08-06/tipping-point-as-mo

The post What financial mistakes have you made? appeared first on Newcastle Financial Planners & Financial Advisors.

Economic Update

Harlan Marriott — Mon, 08 Mar 2021 22:33:07 +0000

Global Economy
The countries that participate in the OECD include the USA, Australia, France, Germany and the UK amongst other developed economies. There are economic indicators for these countries that are designed to show us things such as the likely path of economic growth.

The Organisation for Economic Co-operation and Development (OECD) Composite Leading Indicator is one such measure.

Pleasingly, this indicator has returned to the high levels seen before the COVID-19 pandemic. It rose to 99.4 in December 2020, up from 98.9 in September.

Other leading indicators are also pointing towards continued economic recovery in the December quarter globally.

Growth expectations were further supported by:

A Democrat win in the US election with President Joe Biden looking likely to embark on more government spending in addition to a December 2020 bill that will provide further support for households and local and state governments.
Vaccine approvals and the rollout across much of the world. While it is still early days, further progress on distribution should curb the worst of the COVID-19 pandemic and see an earlier return to a pre-COVID-19 world.
A final deal between the UK and EU ended concerns of a disruptive UK exit from the EU that would have further weakened the region economically.
In the short term, rising COVID-19 cases are continuing to drag on both the health and economic situation across the world.
The USA and Europe are among the worst-hit with a more infectious strain in the UK making the situation worse.
Investors have been willing to look past this in anticipation that vaccinations will put the worst of the pandemic and its impacts behind us in 2021.

Australia
The bounce back in economic activity following the end of Victoria’s lockdown continued during the December quarter.

Small clusters of COVID-19 outbreaks in Sydney and Brisbane disrupted inter-state travel with borders closed once again in December and throughout the Christmas holiday. Measures taken to counteract these have not had a material effect on the economy to-date. However, momentum remains positive into 2021.

We saw continued strength in jobs growth with the unemployment rate falling to 6.8% in November. Job vacancies on online sites such as Seek are now exceeding pre-COVID-19 levels suggesting that jobs recovery will continue. Risks affecting the growth outlook for the economy include the ending of the JobKeeper and JobSeeker initiatives in March 2021 and tensions between China and Australian exporters.

Shares
The Australian share market performed strongly with a 13.6% rise in the benchmark for the S&P/ASX 200 Price Index. At a sector level, this benchmark was driven higher by the financials sector (banks and insurers) (up 26.2%) and the energy sector (up 21.8%). Online pokies and PayID go hand-in-hand in Australia. Experience seamless transactions by visiting payid-online-pokies.com .

The performance of deferred loans was better than expected for the major banks which supported the financials sector. Also, the anticipation of the COVID-19 vaccine rollout and the Australian Prudential Regulation Authority (APRA) approving the resumption of dividend payments for banks and insurers provided further tailwind for the sector.

Oil prices surged due to the anticipation of economic recovery which supported the strong rise in energy stocks. A similar situation occurred overseas where sectors that had performed poorly due to the COVID-19 pandemic saw surging investor support in anticipation of stronger global growth.

Fixed income and currencies
Bond prices fell, driving bond yields higher both here and overseas over the December quarter. Anticipation of a global recovery saw investors sell down bond holdings and seek riskier assets. Riskier, low grade corporate bonds saw strong performance as a result.

A similar story played out in currency markets. Countries with exposure to global growth through their exports such as Australia and Japan rose further while the US Dollar continued to falter as investors bet against it, in favour of ‘pro growth’ currencies like the Australian dollar and Japanese Yen.

Source: IOOF Research

Important Information: This report has been prepared by the IOOF Research team for Lonsdale Financial Group ABN 76 006 637 225 AFSL 246934 (“Lonsdale Financial Group”). Lonsdale Financial Group is a company within the IOOF group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This report is current as at the date of issue but may be superseded by future publications. The information in the report may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of Lonsdale Financial Group. This report may be used on the express condition that you have obtained a copy of the Lonsdale Financial Group Financial Services Guide (FSG) from the website www.lonsdale.com.au. Lonsdale Financial Group and/or its associated entities, directors and/or its employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this report or may provide services to the companies referred to in this report. This report is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of Lonsdale Financial Group. Lonsdale Financial Group and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. This report has been prepared in good faith and with reasonable care. Neither Lonsdale Financial Group nor any other person makes any representation or warranty, express or implied, as to the accuracy, reliability, reasonableness or completeness of the contents of this document (including any projections, forecasts, estimates, prospects and returns and any omissions from this document). To the maximum extent permitted by law Lonsdale Financial Group, its related bodies corporate and their respective officers, employees, representatives and associates disclaim and exclude all liability for any loss or damage (whether foreseeable or not foreseeable) suffered or incurred by any person acting on any information (including any projections, forecasts, estimates, prospects and returns) provided in, or omitted from this report. General Advice Disclaimer: The information in this report is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this report, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before you acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance. For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process.

The post Economic Update appeared first on Newcastle Financial Planners & Financial Advisors.

Starting Off Your Investment Journey

Harlan Marriott — Mon, 18 Jan 2021 01:23:05 +0000

Investing your money is a great way to grow your wealth, but it can be intimidating to someone who is starting fresh.

Investing is unique to each person because of the time and money everyone is willing to invest is different. Before you begin investing you should think about what sort of investing style you would like to adopt, how much money you can afford to invest, and your risk tolerance.

Investing style

There are two main investing styles that you can adopt. The style you choose will depend on the time and effort you’re willing to put in, and the sort of output you expect from your investment.

Passive investing: This is a hands-off approach that tends to focus on long term returns. The return from these investments will be stable and predictable.

Active investing: This is a lot more hands on. It requires you choosing and conducting the investments yourself. This will require a lot more of your time because you will need to continually be researching opportunities. The return from these investments, although risky, can be quite large.

As a beginner, the passive style might be more appealing till you can learn and understand the market well enough to invest more actively.

Budget

It isn’t necessary to invest a large sum of money, it is necessary however, that you are financially prepared to invest the amount of money you choose. You should be able to set aside an ‘emergency’ fund, aside from the money you are prepared to invest. This is because there will always be some sort of risk involved in your investment and you should not rely on quickly selling your investments to fund an emergency.

Risk tolerance

The risk involved in an investment is usually proportional to the expected returns (higher returns = high risk; low returns = low risk). You need to find a balance of risks and returns that works for you and the amount of money you are willing to lose. This balance might take some time, and at the start, you might choose to only invest in low risk investments.

It is definitely intimidating to start your investing journey, but outlining how much time, effort and money you are willing to commit will put you in a good position to kick start it!

To discuss your investment journey please speak with one of our financial advisors to discuss your current situation and needs. Contact us today.

The post Starting Off Your Investment Journey appeared first on Newcastle Financial Planners & Financial Advisors.

Strategies for long-term investing

Harlan Marriott — Sun, 13 Dec 2020 23:56:16 +0000

Given the inherent volatility of markets, it’s useful to remind ourselves of strategies we can utilise to meet investment goals. The fundamentals of portfolio construction can help position portfolios appropriately in times of crisis and volatility.

Exploit a long-run time horizon
Investors with a long horizon don’t need short-term liquidity, giving them an edge during market sell-offs. As markets fall, long-term investors have often generated excellent returns by buying quality distressed assets across major asset classes.

Additionally, if the market rewards illiquid assets with a higher risk premium, it makes sense to over-allocate to such assets, as it’s unlikely that they’ll need to sell during bouts of volatility. During financial and economic turmoil, investment horizons tend to shorten due to immediate cashflow needs or because of psychological factors. The last thing that any investor wants to do is sell an asset into a volatile and illiquid market.

The free lunch
Diversification is the rare free lunch available to investors: it can reduce portfolio volatility without reducing its return. A key challenge to achieving diversification is reducing the dominance of equity risk in a balanced portfolio. Even if diversification tends to fail in crises (as correlations spike across asset classes), it can still be useful in the long run. This matters more for long-term investors who face less liquidation pressure during market drawdowns.

Most portfolios have positive exposures to the equity market and to economic growth. This risk is difficult to diversify away, making those assets with a negative correlation to equities a valuable addition. Diversification however has limitations (one of which is the tendency for correlations to approach one during crises) and a strong risk management framework and avoidance of large drawdowns is key in generating good long-run compounded returns.

Risk-free is return-free
Risk-free assets like cash and government bonds no longer generate a positive inflation-adjusted yield and are returnfree. Long-run investors can position for ‘the portfolio rebalancing effect’ that is likely to dominate investment flows in the next decade.

Expected portfolio returns can be improved by increasing the weight of the most volatile asset class. The classic approach is to raise the weight of ‘high-risk, high-return’ equities and reduce the weight of ‘low-risk, low-return’ assets such as cash and government bonds. Taking more risk in this way, and getting rewarded for it, is an easy way to boost long-run returns for investors.

Minimising costs can come at a cost
Passive investing minimises trading costs. However, some costs are worth paying. For example, buying an index fund costs more than investing in a bank deposit, but the risk premium should make the cost worthwhile in the long run. In general, investors should allocate more to active products the less they believe in market efficiency. Minimising costs is not always smart; being cost effective and avoiding wasteful expense is.

The importance of being selective
Market outperformance – through the compounding of returns – can help investors achieve their financial goals. Excess returns can be an important driver of wealth creation, and actively managed funds offer the opportunity to outperform the market. Even seemingly small amounts of excess return can lead to significantly better outcomes.

Over the intermediate term, asset performance is often driven largely by cyclical factors tied to the state of the economy, such as corporate earnings, interest rates, and inflation. The business cycle, which encompasses the cyclical fluctuations in an economy over many months or a few years, can therefore be a critical determinant of market returns.

As volatility is ever-present in capital markets, protection in the form of safe-haven assets and portfolio diversification will be increasingly important for investors. However, today returns from defensive assets will likely be far less than historic averages. Due to central bank action, riskier asset classes like equities appear likely to attract increasing inflows over the coming decade. The traditional methods of portfolio construction – a long-run horizon, diversification, cost-control, and active investing – remain the best approach to generating sustainable long-run returns.

FOR MORE INFORMATION SPEAK WITH YOUR FINANCIAL ADVISOR

Source: Fidelity

Important Information
This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (‘Fidelity Australia’). Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity International. Prior to making an investment decision, retail investors should seek advice from their financial adviser. This document is intended as general information only. Please remember past performance is not a guide to the future. Investors should also obtain and consider the Product Disclosure Statements (‘PDS’) for the fund(s) mentioned in this document before making any decision about whether to acquire the product. The PDS is available on www.fidelity.com.au or can be obtained by contacting Fidelity Australia on 1800 119 270. This document has been prepared without taking into account your objectives, financial situation or needs. You should consider such matters before acting on the information contained in this document. This document may include general commentary on market activity, industry or sector trends or other broad-based economic or political conditions which should not be construed as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be construed as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity’s funds is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. References to ($)are in Australian dollars unless stated otherwise. Details of Fidelity Australia’s provision of financial services to retail clients are set out in our Financial Services Guide, a copy of which can be downloaded from our website. © 2020 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited. Source: Fidelity

The post Strategies for long-term investing appeared first on Newcastle Financial Planners & Financial Advisors.

Staying on track

Harlan Marriott — Mon, 09 Nov 2020 23:00:23 +0000

As human beings, we have a natural preference for things to stay as they are. It’s a tendency psychologists refer to as status quo bias. But in a world where change is a daily reality, sticking to the status quo could mean getting left behind.

Regularly checking in on your retirement plan is always a sensible strategy. Keeping track of your finances becomes even more important in times of economic uncertainty. Given the changes we’ve seen due to Coronavirus, now is a good time to take a look at your retirement income plan with fresh eyes. We’ve put together a list of resources to help you.

Put your assumptions to the test

Making sure your retirement income is secure is an essential ingredient to a comfortable retirement. But many Australians rely on incorrect assumptions when making decisions about their money.

Are you 100% sure you’ve got the facts?

Learn how to protect your income from poor share market performance

Recent events in global markets have put money in the spotlight for many retirees. According to the ABC’s Covid-19 Monitor ¹, over half of the Australians surveyed are ‘very’
or ‘extremely’ concerned about the economic impact of the Coronavirus. In fact, they’re more worried about the economic impact than their own personal health risk.

The first quarter of 2020 has seen significant falls in both domestic and global share markets, which may have left you feeling concerned about the impact on your retirement income. The good news is, there are steps you can take to feel more confident about your money.

We explain the risk of poor share market performance in retirement and explore options to help you protect your retirement income.

Flex your budgeting muscles and keep spending on track

Chances are your spending patterns have changed since 2020 began. Research² for the first quarter of 2020 showed that overall, household spending behaviours were more conservative as significantly more consumers cut back on non-essentials. While many Australians are spending more on items like food and groceries, spending on eating out, holidays and travel has obviously fallen.

With less temptations for spending, now could be a good time to revisit your budget. Have any of your expenses gone down recently? Have you found there are things you can do without? What things have been essential to your lifestyle and wellbeing?

Staying on top of your budget is key to spending confidently in retirement.

Find out if your retirement income will last for your lifetime

With longer lifespans and less certainty in world markets, making sure your money goes the distance is more important than ever. It’s no wonder that 84% of older Australians rated the desire for regular and constant income as very important³. But how do you make that happen?

Put your retirement income to the test and get results that show:

how long your retirement savings will last;
whether you’re eligible for the Age Pension or an increase in payments; and

how much annual income you could guarantee for life by adding a lifetime income stream to your retirement income plan.

Get help from the experts if you’re feeling uncertain

At times like this, it can be hard not to worry. In fact, we’re hard wired to pay greater attention to bad news which can create anxiety for even the most confident investors. Talking to a financial planning professional can ensure you’re following a strategy to achieve your goals for your retirement income.

Call LT and speak with one of our financial advisors to day on (02) 4926 2300.

1 https://www.abc.net.au/news/2020-04-28/coronavirus-data-feelingsopinions-covid-survey-numbers/12188608
2 https://business.nab.com.au/nab-consumer-anxietysurvey-q1-2020-39188/
3 https://nationalseniors.com.au/uploads/09172675CRP_ChallengerReport_
RetirementIncome_FN_0.pdf
4 https://www.psychologytoday.com/au/articles/200306/our-brainsnegative-bias

Source: Challenger

The post Staying on track appeared first on Newcastle Financial Planners & Financial Advisors.

Embracing the fear

Harlan Marriott — Mon, 05 Oct 2020 03:20:56 +0000

Sharemarkets are the most volatile they’ve been in the past 20 years. Increased uncertainty, fear, forced and panic selling, as well as reduced liquidity, are all contributing factors to currently elevated levels of volatility.

A simple measure using intraday price fluctuations can be used to understand the extent of the current volatility in the market. The graph below charts intraday volatility since 2000, with the average being 2.8%. In March 2020, the intraday volatility however, was greater than at any other time and significantly exceeded the peaks during the period of the Global Financial Crisis (GFC) between 2007 and 2009.

In March this year there were nine trading days with volatility above 10%, seven of them consecutive. During the GFC there were only four days in total with greater than 10% intraday volatility and no consecutive trading days. Recent volatility has far exceeded other extreme world events which are represented by the peaks in the chart below, including the September 2001 terrorist attacks, the collapse of Lehman Brothers during the GFC, Black Monday on 8 August 2011 (which followed the credit rating downgrade of US sovereign debt), the US and Chinese flash market crashes of 24 August 2015 and news on Donald Trump’s likely election victory on 9 November 2015.

Despite having fallen from its peaks, volatility currently remains about twice the average.

Don’t fear volatility. Embrace it

With elevated volatility, you could be forgiven for looking at this graph and wanting to run for the hills. But the reality is that volatility is your friend when investing for the long term – with the at times extreme fluctuations in price presenting excellent (long-term) buying opportunities.

The causes of the current bout of volatility are certainly different and it is unclear if they warrant the elevated levels of volatility we’ve seen relative to other cycles. But in each of the previous bouts of market volatility, significant opportunities were presented to long–term, patient investors. It is hard to believe that this will be any different today.

Looking for an investment strategy or need help from a financial planning professional? Call the LT team to see how we can help.

Source: Allan Gray

The post Embracing the fear appeared first on Newcastle Financial Planners & Financial Advisors.

Fight The Flight

Harlan Marriott — Sun, 20 Sep 2020 01:08:04 +0000

We all know the old saying ‘buy low, sell high’ – right?

As fundamental as this may seem, when the reality of a market crash sets in, we see behaviour move from rational to irrational as investors abandon their accumulated wisdom and succumb to the prevailing panic of the day. However, as is often the case with old sayings, they are fundamental truths, which are supported by theoretical study. In this case, panic-selling at the bottom of the market engages both sequencing risk and longevity risk. In time to come, books will be written about the investment markets we have all witnessed in the past few months, and scholars will complete PHDs on the underlying psychologies at play.

But what should we do in the moment?

It is absolutely important that investors avoid emotional, panicked decision making. Investors who panic sell run the risk of selling low and crystallising losses in their portfolios. Even now, as local and international markets have fallen precipitously, the fundamental tenets of good investment remain unchanged: Quality assets, quality structures and quality management.

Ask yourself the following questions:

Are the assets in my investment portfolio of high quality?
Will the assets in my investment portfolio survive this period of economic uncertainty?
Does my portfolio earn sufficient income without having to crystallise losses?
Have I assembled a trusted cohort of professionals: financial advisers, estate planners, insurance brokers and fund managers?
Do I have confidence they will act as conservative stewards of my wealth?

As we emerge from the coronavirus, the pace of economic rebound cannot be guaranteed. What we do know is that investors who take a measured, calm and rational approach to their investments throughout this period will likely fare much better than those who allow panic to drive their decision making.

As mentioned, one of the largest risks that face investor portfolios of retirees or those leading up to retirement is sequencing risk. In short, this refers to the risk that you incur capital losses at the point of retirement or during retirement. At that stage, you simply won’t have time to wait for long-time market trends to recover your losses. Further, your losses are likely to be exacerbated by the need to sell assets at their reduced value to meet living expenses.

Failure to manage sequencing risk ultimately leads to elevated longevity risk, which is the risk of running out of funds in your retirement, or out-living your savings. This is a fundamental issue as we live longer, and particularly in the face of the market upheaval we are currently experiencing.

Of course, you can expect significant pressure to rebalance portfolios right now. The tumult in markets recently will undoubtedly have affected your portfolios and shifted the goalposts you had set in your retirement planning. Your financial adviser will be working to establish the best means of generating your portfolio objectives without significantly increasing risk or sacrificing capital values.

Indeed, keep assessing your portfolio: Ensure you have a trusted team around you to navigate this period; align yourself with fund managers and assets that have strong track records across multiple cycles; and ensure your portfolio aligns with your risk appetite. Most importantly, take care not to make fundamental mistakes that may have a negative impact on your portfolio, or your lifestyle, for years to come.

To discuss your investment portfolio or financial advice needs please contact our LT financial advisors. T: (02) 4926 2300.

Source: Latrobe Financial

The post Fight The Flight appeared first on Newcastle Financial Planners & Financial Advisors.