Oliver's Insights - Seven lasting impacts from the COVID pandemic

It’s four years since the COVID lockdowns started. The pandemic ended when it morphed into the less deadly Omicron variant in late 2021, but just as sound can reverberate around a room the effects of the pandemic continue to reverberate in economies. Putting aside the long-term health impacts this note looks at 7 key lasting economic impacts.

Key points:

  • Seven key lasting impacts from the Coronavirus pandemic are: “bigger” government; tighter labour markets; reduced globalisation and increased geopolitical tensions; higher inflation; worse housing affordability; working from home; and a faster embrace of technology.

  • On balance these make for a more fragmented and volatile world for investment returns. But it’s not all negative.

Read full article here.

Oliver's Insights – Bitcoin to infinity and beyond... again!

  • Bitcoin has made it to new record highs, helped recently by the advent of ETFs that invest directly into it.

  • While blockchain technology has promise, the use case for Bitcoin is hard to determine making it impossible to value.

  • Bitcoin could have lots more upside if it displaces gold as an independent of government “asset”, but this depends on having faith new buyers will come & pay ever higher prices.

  • The key for investors is to recognise that: it’s highly volatile; very speculative; a poor diversifier; & there’s no free lunch.

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Oliver's Insights - 21 great investment quotes

Investing can be scary and confusing at times. But the basic principles of successful investing are timeless and quotes from experts help illuminate these. This note revisits a series on insightful quotes on investing I first started a decade ago.

Key points:

  • The aim of investing

  • The investment process

  • The investment market

  • Investment cycles and contrarian investing

  • Risk

  • Debt

  • Investor pessimism

  • The right mindset for an investor

Read full article here.

Oliver's Insights - Seven key charts for investors to watch - Where are they now?

Key points:

  • Shares have made it to record highs this year but after strong gains are a bit vulnerable to a near term pull back.

  • However, we remain upbeat on a 12-month view as falling inflation allows rate cuts and hopefully recession is avoided.

  • Seven key charts worth keeping an eye on: global business conditions PMIs; inflation; unemployment and underemployment; inflation expectations; earnings revisions; the gap between earnings yields and bond yields; and the US dollar. so far, most look ok.

Read full article here.

Get More From Your Super

ASIC recently reviewed the superannuation sector and found super funds and financial advisers could do more to monitor investments in super and communicate with members and clients about how their super is performing.

Key points:

  • How your super is invested

  • Investments in super impact your future lifestyle

  • Make the most of your super

Read the full article here.

Oliver's Insights - Falling inflation - What does it mean for investors?

Key points:

  • Inflation is in retreat thanks to improved supply and cooling demand. A further fall is likely this year.

  • Australian inflation remains relatively high - but this mainly reflects lags rather than a more inflation prone economy.

  • Profit gouging or wages were not the cause of high inflation.

  • The main risks relate to the conflict in the Middle East escalating and adding to supply costs; a surprise rebound in economic activity & sticky services inflation; and floods; the port dispute and poor productivity in Australia.

  • Lower inflation should be positive for investors via lower interest rates, although this benefit may come with a lag.

  • The world is now a bit more inflation prone so don’t expect a return to near zero interest rates anytime soon.

Read full article here.

The Types, Pros, and Cons of Ethical Investing

The investment technique known as ethical investing prioritises the investor’s moral, religious and social ideals over financial gain. The reason for this is that a growing number of investors have begun to demand social responsibility from the companies they invest in, primarily because of the rise in dubious and unlawful investment arrangements.

Ethical investing entails fair labour practices, the production of healthy and beneficial goods and services, and abstaining from unethical business activities.

Investors who want to utilise their money to support good causes should consider ethical investment. Those who are interested in this type of venture have several options to choose from.

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Achieving Your New Year Goals: A Realistic Approach

New Year’s resolutions are a time-honoured tradition where people aim to make positive changes in their lives as the calendar flips to January 1st. While setting goals is easy, the real challenge lies in sticking to them throughout the year. Here’s a guide to not only choosing your resolutions wisely but also ensuring that you stay committed to them.

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Oliver's Insights - 2023 saw the return of Goldilocks, but what's in store for 2024 for investors?

Key points:

  • The five key themes for 2023 were: better than feared growth; disinflation; peak interest rates (probably in Australia too); lots of geopolitical threats but not as bad as feared; and AI hit the big time. This boosted shares and helped bonds with solid superannuation fund returns.

  • 2024 is likely to see positive returns helped by falling rates but they are likely to be more constrained given likely volatility associated with the high risk of a recession.

  • Expect the RBA cash rate to fall to 3.6%, the ASX 200 to rise to 7500 and balanced super funds to return around 5.3%.

  • Australian residential property prices will likely see falls as high rates resume their impact after prices rose in 2023.

  • Things to keep an eye on: Inflation; interest rates; recession risk; China risks; US politics; and the Australian consumer.

Read full article here.

2023 Value of an Adviser

SUMMARY:

In a complex world that keeps posing challenges to investors, advisers continue to add value that enables their clients to attain their long-term financial goals.

The spectre of a global recession and rising inflation have created an environment of extreme caution in 2023, just three years after a global pandemic swept through markets to test investors’ fortitude.

In this environment, Australians have relied on their advisers heavily to navigate both the practical and emotional aspects of investing. It is a relationship that proved fruitful not just in periods when markets fell, but also when assets rose to buoy portfolio gains.

Of course, financial advice encompasses much more than investing. It requires in-depth knowledge of taxation and social security, plus the understanding of human behaviour that’s necessary to support people making life decisions.

Advisers proved more than up to the task over the past year.

Russell Investments' annual analysis shows the value of an adviser in Australia is approximately 5.9% in 2023.

This is substantially higher than the typical adviser fee paid by clients and a validation of the holistic service that advisers provide to clients. It is a function of their ability to help clients adapt as markets, regulations, and their own circumstances change.

Read full report here.

Oliver's Insights - The RBA leaves rates on hold - have we finally reached the top?

Key points:

  • At its December meeting the RBA left rates on hold but retained a tightening bias with still hawkish commentary.

  • Our concern remains that the RBA has tightened more than necessary with a high risk of recession next year.

  • The risk of another hike rate - which if it occurs would most likely be at the next meeting in February after December quarter inflation date - remains high at around 40%.

  • However, our base case is that the RBA has reached the top and we see it cutting rates in second half of 2024.

Read full article here.

Oliver's insights - nine key things for successful investing

Key points

- Successful investing is not always easy and can be stressful. Even in good times. For this reason, it’s useful for investors to keep a key set of things in mind.

- The nine key things are: make the most of compound interest; don’t get thrown off by the cycle; invest for the long term; diversify; turn down the noise; buy low and sell high; beware of the crowd; focus on investments offering a sustainable cash flow; and seek advice.

- These are very important in times like the present when uncertainty around inflation, interest rates, economic activity and geopolitics is high.

Click here to read the full article.

Why Financial Security is Paramount for a Satisfying Retirement

Retirement is often idealised as a carefree chapter in life, where one can indulge in long-postponed hobbies, travel, and quality time with loved ones. However, the idyllic vision of retirement is predicated on a foundation of financial stability. Without it, retirement can become a period of stress and uncertainty, rather than relaxation and enjoyment.

The Comprehensive Benefits of Financial Preparedness:

  1. Peace of Mind

  2. Upholding Lifestyle Standards

  3. Healthcare Costs Management

  4. Family Stress Reduction

  5. Longevity and Inflation Preparedness

Read the full article here.

Understand if a Self Managed Super Fund (SMSF) is right for you.

A self-managed super fund (SMSF) is a private superannuation fund that individuals in Australia can manage themselves. These funds differ from industry and retail super funds, as they offer more control over investment choices and insurance options. However, managing an SMSF comes with significant responsibilities and risks.

The appeal of having control over your superannuation can be enticing, but it entails substantial work and potential pitfalls. It’s crucial to consider the following risks and responsibilities before setting up an SMSF:

  • Losses without Compensation: Unlike retail and industry funds, SMSFs lack access to special compensation schemes or the Australian Financial Complaints Authority (AFCA) in case of theft or fraud-related losses.

  • Personal Liability: All members of an SMSF, even if they receive professional assistance or another member makes decisions, are personally liable for the fund’s actions.

  • Investment Returns: The returns on your investments may not meet your expectations, and you are solely responsible for managing and optimizing the fund’s investments.

  • Changing Circumstances: You must manage the fund even if your personal circumstances change, such as losing your job.

  • Member Events: Events like relationship breakdowns between members, the death of a member, or a member’s illness can negatively impact your SMSF.

  • Insurance Considerations: Transitioning from an industry or retail super fund to an SMSF may result in a loss of insurance coverage, which should be carefully considered.

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