Is the share market over valued?
The Australian share market reached new highs last week, even though projected profits of most companies are subdued. So, is the Australian share market over valued? And, if it is, what can retirees do to guard themselves against investment losses?
Money can buy happiness (but usually doesn’t)
The relationship between money and happiness is complex. Beyond a certain level of wealth, there is no evidence that happiness increases with wealth. And often the reverse is true; our happiness can decrease as we get richer.
Granted, for the poor, every extra dollar counts. More money provides for life’s necessities, relieves financial stress and increases life satisfaction.
Wealth paradox
But for those with average or higher than average incomes, the nexus between happiness and increasing wealth breaks. For those households with enough to satisfy basic needs, more money does not deliver happiness and it can increase financial stress.
Cbus: A relic from the past
When it rains, it pours. The construction industry super fund has recently been in the news about its poor performance. Now there are revelations of corruption with secret deals involving lucrative contracts and links to criminals and bikie organisations.
What the future holds
It’s a shame money doesn’t buy happiness, because from a financial perspective the future looks bright.
Treasury released its latest intergenerational report this month and it makes for fascinating reading. With the luxury of a 40-year outlook, the report lifts above the distraction of day-to-day noise. Instead, it analyses the macrotrends that will drive the economy and the retirement income system in the long-term.
Man in the Mirror: How community will transform financial planning
A tourist is travelling through Ireland. He stops a local and asked for directions to Dublin. The local earnestly responds: “Well, Sir, if I was going to Dublin, I wouldn’t want to be starting from here”.
The importance of strong returns for retirees
When it comes to money, what’s most important to us changes over time. When we’re younger, and starting a family, perhaps taking out a mortgage, life insurance is the most important thing. When we get to midlife, super contributions become more important, loading money into super and taking advantage of the mathematics of compound interest.
But when we come to retirement, investment returns become most important. That’s because the period around retirement is when our super balances are at their highest. It’s what finance nerds call the ‘portfolio size effect’.