Five great charts on investing for income (or cash flow)

Shane Oliver, Head of Investment Strategy and Chief Economist.

The attached note looks at five great charts on investing for income (or cash flow). The key points are as follows:

  • The collapse in interest rates has made it harder for many relying on interest on bank deposits for income.

  • These five great charts help illuminate key aspects of investing for income (or cash flow): there are alternatives to bank deposits for income; the gap between yields on different assets provides a guide to relative value; shares can provide stronger growth in income with less volatility than bank deposits; a high and sustainable income yield from an investment provides security; and yield is a guide to future returns.

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How to plan for travel in retirement

For many, retirement is the perfect time to explore the world. For World Financial Planning Day 2019, we talked to Nathan Nash CFP® about how he’s helping clients #planwell2livewell by getting the balance right between travel goals and everyday living expenses.

The key points are as follow:

  • Looking at all the numbers

  • Flexible income options

  • Do away with debt

  • Get set for travel

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Going solo in retirement

With divorce rates rising among couples aged 55+, more people could find themselves going it alone in retirement. We explore the pros and cons for your lifestyle and finances and speak to Dianne Kemp about her experience of planning for retirement after divorce.

The key points are as follow :

  • The financial impact of divorce

  • Retirement, then divorce

  • The pros and cons of independence

  • Making the most of a settlement

  • Navigating changes and opportunities

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Will the world slip up on oil again? – after oil prices spike as attacks disrupt Saudi production

Shane Oliver, Head of Investment Strategy and Chief Economist.

The attached note takes a look at the risk posed to the global and Australian economies from the spike in oil prices. Key points are as follows:

  • Oil prices have risen over the last few days reflecting drone attacks that impact 6% of world oil supply.

  • The choke point for global growth from higher oil prices is normally a doubling in prices. We are a long way from that just yet. Key to watch will be how long the supply disruption lasts, whether there are more attacks and retaliation from Saudi Arabia and the US.

  • A significant spike in Australian petrol prices would pose a further threat to consumer spending and growth in Australia, adding to pressure on the RBA to ease further.

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Volatility: 10 key messages for investors

The attached note takes a look at the 10 key messages to help investors steer their portfolios through volatile times. The key points are as follows:

  1. Volatility is a normal part of long-term investing

  2. Over the long term, equity risk is usually rewarded

  3. Market corrections can create attractive opportunities

  4. Avoid stopping and starting investments

  5. The benefits of regular investing stack up

  6. Diversification of investments helps to smooth returns

  7. Invest in quality, dividend-paying stocks for regular income

  8. Reinvest income to increase total returns

  9. Don’t be swayed by sweeping sentiment

  10. Active investment can be a very successful strategy

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Australian house prices back from the abyss - seven things you need to know about the Australian property market

Shane Oliver, Head of Investment Strategy and Chief Economist.

The attached note takes a look at the outlook for the Australian residential property market. The key points are as follows:

  • The Australian housing market remains far more complicated than optimists & doomsters portray it to be.

  • Yes, it's expensive and heavily indebted but talk of mortgage stress is overstated & it's been undersupplied.

  • The combination of rate cuts, the election and a modest regulatory relaxation have helped turn property prices back up, but the upswing is likely to be constrained.

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Estate planning – when should I start?

Money & Life bring you expert insights from Chris Morcom CFP®, Director of Hewison Private Wealth and Bernie O’Sullivan, Principal at Bernie O’Sullivan Lawyers on why an estate plan is so important and when you should make a start on yours.

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The wallet challenge – savings and budget checklist

Budgeting and savings might sound very basic, but many people find it difficult to get these fundamentals right, or don’t have these in place at all. Here are some tips to help you get started, and on the right track to building your personal wealth.

The key points are :

  • Have a plan

  • Learn to budget

  • Be smarter about your costs

  • Become more disciplined

  • Better manage your debts

  • Get advice

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Nine reasons why recession remains unlikely in Australia

Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist, AMP Capital.

The attached note looks at the risk of recession in Australia. The key points are as follows:

  • Australian growth is likely to remain weak over the next year. Expect further monetary & fiscal stimulus.

  • However, while the risks have gone up, recession remains unlikely: tax cuts should help growth in the current half year; the threat from falling property prices has receded; infrastructure spending is booming; the low $A is helping growth; the drag from falling mining investment is over; the current account is in surplus; there is scope for extra fiscal stimulus; population growth remains strong; and cyclical spending is low.

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Negative rates, QE & other measures the RBA may deploy – why? will it work? what would it mean for investors?

Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist, AMP Capital.

This article talks about the negative rates, QE & other measures the RBA may deploy :

The key points are as follow :

  • The RBA is likely to first exhaust conventional easing by cutting the cash rate to 0.5% by year end before deploying unconventional measures beyond forward guidance which is already being used.

  • Unconventional monetary policy measures could help the economy, but negative interest rates are unlikely and quantitative easing would be most effective and fairest if combined with fiscal stimulus.

  • For investors it means low interest rates for even longer.

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Craig James's Economic Update

CommSec

Attached is Craig James’s economic update, taking into account Australia’s resilience through challenging times, giving a quick snapshot into how the Australian economy is currently tracking.

The presentation touches on:

  • Inflation, unemployment and interest rates

  • Spending, wages and prices

  • The gig economy

  • First home buyers market

  • Interest rates and the dollar

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Building an emergency fund

ASIC’s MoneySmart

An emergency fund (also known as a rainy day fund or savings buffer) gives you some breathing space to deal with life's ups and downs. You can use this money if something unexpected happens to you or your family, like your car needs major repairs, or you need to buy a new washing machine.

The key points are as follows:

  • What is an emergency fund?

  • Start small to build your savings

  • Automate your savings

  • Ways to save everyday

  • When to use your emergency fund

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Money and children

Money & Life

There are many resources available to help you talk about money with kids. And yet, the FPA’s Share the Dream report has found that many parents still find it challenging — they do not know how to talk to their children about money, what they should be saying, and when.

What’s more, our accelerated, invisible–money world is making it harder for children to grasp its value. Generation Alpha (children aged between 4 and 8) and Generation Zed (ages 9 to 18) are the first to be born into an always-on, multi-screen world that prizes instant gratification. Immersed in social media from an early age, their identity can easily become attached to brands and “buying stuff” long before they learn how their parents make ends meet.

According to our Share the Dream survey, nearly 65% of parents believe their children’s generation will be financially worse off than their own.

Having money conversations with your kids can make a positive difference to their financial future. But where to start? Attached is an ebook from Money & Life about navigating this tough conversation with your kids as they grow up.

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Escalating US-China trade war – triggering (another) correction in share markets

Shane Oliver, AMP

After a third round of talks made little progress last week, the US/China trade war has escalated badly with tit for tat moves on an almost daily basis by each side. This has seen share markets fall sharply with US, global and Australian shares down about 5-6% from recent highs and safe haven assets like bonds and gold benefiting on the back of worries about the global growth outlook. This note looks at the key issues.

The key points are as follows:

  • The trade war between the US and China is escalating, posing a rising threat to global growth

  • Although we remain of the view that a deal will be reached, the risk has increased

  • Share markets may need to fall further in the short term to remind both sides of the need for a deal and get them talking again

  • However, we regard the fall in share markets as another correction rather than the start of a major bear market

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How much will I get back from my taxes?

Money & Life

The Australian Taxation Office (ATO) refunds billions of dollars to over three quarters of all taxpayers annually, but it takes a little effort to ensure you get as much tax back as you can. But while Australian taxpayers receive on average around $2,5001 in tax refunds annually, there’s no guarantee two people earning the same income, will receive the same tax refund.

The key points are as follow :

  • Getting your financial house in order

  • The key variables

  • Super, investment costs or other items 

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2018-19 saw a rough ride for investors, but it turned out okay.

The past financial year saw a roller coaster ride for investors. Share markets plunged into Christmas only to rebound over the last six months. This note reviews the last financial year and takes a look at the investment outlook for 2019-20.

Key Points

  • 2018-19 saw solid returns for diversified investors, helped by a sharp rise in share markets in the last six months & solid returns from most assets, except cash.

  • Key lessons for investors from the last financial year were to: turn down the noise around investment markets, maintain a well-diversified portfolio; and cash continues to provide low returns.

  • A pick-up in global growth, renewed monetary easing, an absence of significant economic excess globally and okay equity valuations should support returns over the year ahead. But they are likely to be constrained with bouts of volatility as the US trade conflict impacts and risk remains around the Australian property market.

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Time is running out, will your super be affected on 1 July?

Get ready, there are changes coming to superannuation on 1 July that’s likely to affect three million Aussies – are you one of them?

The chances are you will be, if either your employer or you haven’t contributed to your super account for the last 16 months or more. If that’s you, then the changes mean that any insurance cover currently in place within your inactive super accounts will be switched off. Put simply, you lose your insurance coverage.

Your available options:

  1. If your super account is active and is regularly receiving contributions, either by you or your employer, then the good news is that your insurance won’t be affected by these changes. So, relax, there’s nothing to worry about. It’s business as usual.

  2. If your super account has been inactive for 16 months or more, then you have two options:

    • You can choose to keep your insurance but you will need to contact your super fund before 1 July and let them know. Your fund will probably ask you to formalise your request by putting it in writing, either via completing a form on the fund’s website, responding to a text message or sending an email; or

    • Simply let your insurance cover lapse on your inactive super account. Once you’ve made this decision, you don’t have to do anything.

Do you need insurance?

Choosing whether to have insurance or not through your super is very much a personal decision. There are a number of factors you need to consider like:

  • how much debt do I have;

  • how do I service that debt due to illness, incapacity or death;

  • how much does my family need to maintain their lifestyle; and

  • what conditions are covered, or not, by the policies I am considering.

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Insurance through super

This article explains what types of life insurance you can get through your super and the pros and cons of this type of insurance.

The key point are as follow ":

  • What types of life insurance are offered by super funds?

  • Why get life insurance through your super?

  • How to check the insurance you have through super

  • Claiming on insurance through super

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