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

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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

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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

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When did the coronavirus outbreak start?

The Chinese Government alerted the World Health Organisation (WHO) of several unusual pneumonia cases in Wuhan on 31 December 2019. In early January, the WHO announced that they had identified a new strain of coronavirus — 2019-nCoV. At the time of this article’s publication, there are over 80,000 confirmed cases and almost 3,000 deaths worldwide.

How do epidemics and pandemics affect industries?

The biggest impact on many industries in an epidemic or pandemic is supply chain delays. Industries rely on specific regions to source parts and products. Using the coronavirus outbreak and assembly lines for technology products, as an example, people in assembly lines typically work in close quarters. To contain the outbreak, factories in China have delayed restarting production after the Lunar New Year break. One smartphone factory, Foxconn, is expecting a 12% decrease in production as a result.

Tourism is another key industry effected by epidemics and pandemics. In Australia, measures to contain coronavirus, including halting incoming flights from China will have significant impacts on the tourism and education industries. An economist at ANZ expects Australia’s economic growth to decline by 0.5% in the first quarter due to fewer tourists visiting Australia and a delayed start to the academic year for international students.

How are individual businesses effected by epidemics and pandemics?

Businesses within the sectors most impacted by epidemics and pandemics experience the effects of an outbreak first. In Australia, for example, travel booking company Webjet experienced a 10% slump in its share price in late-January following the coronavirus outbreak. Other companies such as JB Hi-Fi and Harvey Norman have said their supply of electronics could be disrupted.

Small and medium businesses can often be the hardest hit. Businesses such as restaurants and retailers in tourist hotspots and tourism services companies will be among the hardest hit in Australia over the coming months.

How long does it take for markets to recover after an epidemic?

Market recovery following an epidemic is dependent on a range of factors. Following the SARS outbreak, for example, the Chinese Government deployed fiscal stimulus to aid in economic recovery. At the time of the SARS outbreak (first quarter of 2003), China’s economic growth was 11.1%. By the second quarter, the country’s economic growth fell to 9.1%. As the outbreak was contained, and fiscal stimulus was deployed, China’s economic growth recovered to 10% by the third quarter of 2003. Looking at other markets, the S&P500 posted a gain of 14.59% following the first confirmed case of SARS. The index posted a gain of 20.76% a year after the outbreak.

How will an epidemic or pandemic impact my investments?

The economy has changed since the SARS outbreak. China is now a much larger part of the global economy, accounting for around 17% of global GDP, compared to 4% in 2003, so the economic impacts of coronavirus may be more pronounced. The best thing investors can do right now is exercise caution and make sure their portfolios are defensively positioned.

To discuss how your investments may be impacted by coronavirus speak to your LT financial adviser. Your financial adviser can help you protect your wealth by implementing suitable  strategies to minimise the impacts of these events on your portfolio.

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If your SMSF has a property and a tenant in financial distress, you may be able to provide your tenant with rental relief under an agreed commercial arrangement. This may even be the case when the tenant is a related party or yourself.

Ordinarily, charging a tenant a price that is less than market value in an SMSF is usually a breach of superannuation laws. However, the ATO have provided guidance which allows SMSF landlords to provide for a reduction in or waiver of rent because of the financial impacts of the COVID-19.

For the 2019–20 and 2020–21 financial years, the ATO will not take action where an SMSF gives a tenant – who may also be a related party – a temporary rent reduction during this period.

What do you need to do?

There are some important things you should ensure are in place when you are providing a rent reduction to a tenant, especially when this is a related party.

• Ensure the relief only applies to rent.
  • Any relief offered to a tenant can only relate to the rent component of the lease agreement. The ATO concession does not extend to other lease incentives.

• Ensure that the reduction in rent is only temporary.
  • This means it should have an agreed period of time or agreed date where the rent is reviewed in light of the economic circumstances.

• The financial difficulty faced by the tenant is linked to the financial impacts of COVID-19.
  • Any negotiated rent relief will need to be measured against the COVID-19 financial impact suffered by your tenant.

• Clear arrangements which detail the amount of discount, waiver or deferral of the rent.
  • In evidencing that the rent relief is reasonable, it would be best practice if it is consistent with an approach taken by an arm’s length landlord.

• Ensure you have proper documentation which allows your independent auditor to be satisfied that the temporary rent relief satisfies all of the above.
  • This may take the form of a signed minute, renewed lease agreement or anything deemed appropriate to amend the terms of the lease temporarily.
  • Even if you are both the tenant and landlord, the above should all be documented.

These are extraordinary times and the ATO is providing this guidance to allow SMSF trustees to be flexible and agile.

If trustees act in good faith in implementing a reasonable and measured reduction in rent because of the impacts of COVID-19 they should not fall foul of the law.

How can we help?

If you need assistance providing rental relief or whether this is the right action for you and your specific circumstances, please feel free to give me a call so that we can discuss in more detail. Alternatively, you can refer to the SMSF Association’s trustee education platform, SMSF Connect.

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Some people may think that a financial advisor’s role is to forecast the direction of the share market from month to month and invest clients’ money accordingly.

This is not the reality, of course. Investments are only one small part of what your financial advisor can provide for you. Some of the key areas that we may be able to assist you with are as follows.

Knowledge is power

Consider for a moment the amount of newsprint, websites and broadcast time dedicated to financial topics these days. Australians seem to have an insatiable appetite for understanding finances.

Whether it's the latest share market activity, economic news or the constantly changing tax and superannuation rules, we can answer your burning questions and save you the hassle of finding it yourself.

Money and time

Sometimes the benefit you receive from a financial advisor can be spelt out in dollar terms. It might be the income tax you have saved by re-structuring your salary, or a new concession from the Australian Tax Office (ATO) or Centrelink that you didn't know you could get.

If you agree that time is money, then think about the time we save you when you make important decisions. If you had to do it all yourself, how would you choose the best super fund, investment options, or insurance cover? How frustrated would you be stuck on the phone trying to get regular information from government departments?

With all this confronting you, it's no wonder that many important financial decisions stay in the "too-hard basket". Remember, we deal with these things every day. We are in an ideal position to explain everything you need to know, and to simplify your options.

Personalised advice, every step of the way

The finance section of your newspaper probably includes a regular "advice" or "Q & A" column. By law, these columns must warn readers that the advice does not take into account your personal situation or needs and you should consider its appropriateness before acting.

In setting your financial strategy, we don’t use this "general advice warning" because we have taken the time to get to know you and your circumstances. This means that everything recommended to you—the investment portfolio, super contribution strategies, savings plans and insurance advice—is tailored to your personal needs, goals, and tolerance to risk.

As the years go by, some of your financial strategies will need adjusting due to changes in the broader environment or something closer to home. Whatever the case, we are there to help you make the most of the good times and the bad.

And meeting us for a review doesn't always mean major changes, but at least you'll know that you're on the right track – and you’re not alone.

Disclaimer

If you would like to meet one of our advisors to discuss your financial position and to see what a financial advisor's role is and how we can help you then please do not hesitate to contact our office.
Call Leenane Templeton on (02) 4926 2300 or email us.
 

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Good reasons to build savings

It pays to sweat the small stuff

Make a commitment

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Speak with specialist investment advisor, Andrew Frith for strategies to ensure your assets within your will are “Court Proof”.  Visit a financial advisor today
For your financial planning and self managed super fund experts.

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Lenders use credit scores to determine who qualifies for a loan, at what interest rate and what credit limits should apply.
Credit scoring is not limited to banks. Other organisations, such as mobile phone companies, insurance companies, employers, landlords and government departments employ the same techniques.

In the current environment, a declined credit score result can severely affect your chances of obtaining the finance you are seeking.
Two years ago, it would have been rare for a customer’s application for finance to have been rejected solely on the basis that you failed the credit score. Although many clients’ initial applications were ‘system declined’, we were able to have this system-generated decision regularly overridden (where there were aspects of a client’s application that warranted this).

Here are some legitimate fundamental steps that you can take to help maximise your credit score.

• Provide licence number when you have one
• Show all addresses for period required (2 years or 3 years)
• Show all employment details for required period including address, phone numbers etc
• Show bank account details (even if there is not much money in them as this can affect credit score if not listed)
• List all phone numbers even if you are not home during the day
• Include all assets including super and shares
• Excessive enquiries on a credit report can also affect your scoring.

Although this may sound simple, try not to leave any area on an application blank as they are included for a reason which can affect the score.

Visit a Newcastle Financial Advisor and speak with a Financial expert if you have any queries about ensuring your Credit Rating.

Source: Lonsdale Finance Choice

Call Leenane Templeton Today

T: 1300 587 673

W: www.self-managedsuperfund.com.au

W: www.leenanetempleton.com.au

Offices in:  Newcastle, Sydney, Brisbane

Disclaimer – The information contained in this document is based on information believed to be accurate and reliable at the time of production/publication.  Any illustrations of past performance do not imply similar performance in the future.  To the extent permissible by law, neither we nor any of our related entities, employees, or directors gives any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting on the basis of information contained in this document.   This information is of a general nature only. It is not intended as personal advice or as an investment recommendation, and does not take into account the particular investment objectives, financial situation and needs of a particular investor.  Before making an investment decision you should read the product disclosure statement of any financial product referred to in this communication and speak with your financial planner to assess whether the advice is appropriate to your particular investment objectives, financial situation and needs.

The post Steps To Help Maximise Your Credit Score appeared first on Newcastle Financial Planners & Financial Advisors.

What would you do if you became critically ill and could not work?

Life insurance cover gives you and your family the protection you need from any unforeseen event that ultimately results in your death. But what would happen if you become critically ill and could no longer work and provide a regular income to cover your lifestyle and expenses?

Many Australians have adequate insurance in place for material possessions such as motor cars, and their home and its contents, but many still steer away from insuring the most precious thing in the world – themselves and their family.

We can be overly optimistic about our health and have the ‘she’ll be right’ attitude that falling seriously ill won’t happen to us. The reality is illness does not discriminate and it can happen at any time and to any one. In fact, it is a risk not to have adequate protection in place.

Many of us consider our material assets to be our greatest assets, but the reality is that it would be difficult to hold on to these if we didn't have our health and a consistent reliable income. The facts are:

• around 3.67 million Australians are affected yearly by heart, stroke and vascular diseases
• 50,000 Australians have a heart attack every year and a stroke occurs every 12 minutes
• one in three men and one in four women will be diagnosed with a malignant cancer before age 75
• the average age of diagnosis of the most common chronic nervous system condition, Multiple Sclerosis is 30 (87% are of working age)
• just under 50% of Australians with arthritis-associated disability are aged 15 to 54

A sobering health check
 

With critical illness insurance, you can insure yourself against a range of illnesses – such as cancer or a stroke. The amount of cover you need depends on a range of factors such as age, income and debt levels. It can pay a lump sum amount or a fixed monthly amount if a specified critical illness is suffered. Its aim is to protect your lifestyle and assets in the event you suffer a critical illness and are unable to earn a regular income. This can help you remove large debts such as your mortgage and unforseen medical expenses that ordinary health insurance doesn’t cover.

Seek critical illness insurance advice
 

If you recognise that you are underinsured or are not covered at all, don’t wait until it’s too late. Make a commitment to you and your family and act today by talking to one of our financial advisors. We can help you find the right types of cover for your needs and set your cover at the most appropriate level.

1. Heart Foundation, Australian Facts 2004: Heart, Strokes and Vascular diseases 2004.
2. Cancer Council: (www.cancer.org.au), Cancer in Australia: an overview, 2008 Australian Institute of Health and Welfare (published December 2008).
3. MS Australia (2005) MS The Mystery Disease. Sydney: MS Australia 2009 Media Kit.
4. Australia’s Health 2008, Australian Institute of Health and Welfare, June 2008.

Source: Aviva Australia, 2010. 

For further information about ensuring your finances are in place speak with your Newcastle Financial Advisor

Disclaimer

The information contained in this document is based on information believed to be accurate and reliable at the time of publication.  Any illustrations of past performance do not imply similar performance in the future.

To the extent permissible by law, neither we nor any of our related entities, employees, or directors gives any representation or warranty as to the reliability, accuracy or completeness of the information,  or accepts any responsibility for any person acting, or refraining from acting, on the basis of information contained in this communication.

This information is of a general nature only.  It is not intended as personal advice or as investment recommendation, and does not take into account the particular investment objectives, financial situation and needs of a particular investor.  Before making an investment decision you should read the product disclosure statement of any financial product referred to in this newsletter and speak with your financial planner to assess whether the advice is appropriate to your particular investment objectives. financial situation and needs.

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