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.
Calm the farm: US economic fears overblown
The Australian share market experienced losses of $100 billion over two days in early August because of fears of a US recession. But how likely is the economic threat really and, ultimately, will the markets care?
Compare the Pair: Super fund returns
Super fund returns for the year ended June 2024 have been released, with some surprising results. Market darlings, Australian Super and CBus have underperformed, while out-of-favour retail funds, AMP and Colonial First State topped the charts.
So, what’s behind the performance results and what can retiree investors learn from them?
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.
SKI club: Why it’s losing its members
Spending the Kids’ Inheritance (SKI). Every retiree jokes about it. But in our recent experience, Australian retirees are turning their minds to helping family members financially. They are more concerned about the impact of the rising cost of living on their families than themselves.
Waste not want not
Minimum pension drawdowns limits doubled on 1 July; are you ready?
Account based pensions are flexible retirement income streams. When you stop and think about it, there are very few restrictions on what you can do with them. If you are retired, you can access your money whenever you like, you can switch providers, you can choose how you invest, you can choose the level of income you desire and there is no maximum drawdown imposed.
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”.
Global banking turmoil and your super
It all started a couple of weeks ago with the collapse of mid-tier US institution Silicon Valley Bank. Soon another mid-tier bank in the US, Signature Bank, collapsed.
If you have been brave enough to look at your super balance in the past few days you will know that the share market has since fallen more than 5% and is now trading at four months lows. In that two weeks markets have fallen because the recent turmoil in banking has spooked investors who remember the pain of the Global Financial Crisis 13 years ago.
Bad Medicine
Bad medicine: Why the RBA is right to increase rates
In February the Reserve Bank of Australia (RBA) increased official interest rates again, this time another 25 basis points. The official interest rates are now 3.35% pa, up from 0.1% pa in May last year, an increase that is sure to be causing mortgage stress and rental increases amongst the most vulnerable.
But, as bad as high interest rates are, they are better than the alternative; high long-term inflation. That’s why the RBA is right to keep increasing interest rates.
Stay the course: Five things to remember during uncertain times
Stay the course: Five things to remember during uncertain times
It’s tough being an investor right now. It’s even harder to be a retiree investor because retirees are generally more conservative than their younger selves. Let’s face it, most of us are feeling significantly poorer than we were 12 months ago. With the US share market off 16 percent since the start of the year, house prices falling for six consecutive months, and with the cost of living rising at levels not seen for 30 years, it’s no wonder that retirees might be losing confidence.
But this is not the first economic slowdown we have seen and it’s not the first market correction. Here are the five most important things for retiree investors to remember during uncertain times.
Independence: The key to trustworthy advice
Last month Dixon Advisory, a once respected retirement specialist firm, collapsed into voluntary administration. In the end, it was overwhelmed by compensation claims and legal actions from 5,000 former clients who had sustained heavy losses from Dixon’s in-house products.
So, what went so wrong for Dixons? And what can we learn from their business model and the experience of their clients?
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’.
Economic update: Market ups and downs
The share market has started 2022 with a fizzle, falling more than 8%. It’s on the back of some concerning economic data. Inflation is higher than expected, which means interest rate increases this year now seem likely, and it appears omicron has dented business confidence.
So, what does this mean for retirees?
Madness of crowds
Recently industry fund Rest announced that it is considering investing its members’ money in cryptocurrency. We think that’s a bad idea. Here are our five reasons why.
Return of Inflation
Return of inflation
The news that inflation grew more than expected in the September quarter has spooked retirees and homebuyers equally. And rightly so; inflation is bad news for retirees who are trying to balance spending today, while being responsible for the future. And for homebuyers, the return of inflation may mean increasing interest rates and mortgage stress.
So, what has caused the inflation spike? And what will happen if prices continue to rise? More importantly, what can pre-retirees and retirees do now to protect themselves from inflation risk?
Hope is not an investment strategy
With local and International share markets at record highs, now might be the time to check in on your investments.
A rising tide lifts all boats
Most economists believe that 2021 will be a good year for Australian shares.
We have snapped back from the COVID recession, with economic growth of 3.3 per cent in the September quarter. There are several vaccines being rolled out globally in what is the biggest vaccination campaign in history. Across 51 countries, 2.44 million doses a day are currently being administered. Here in Australia, we are looking to start our domestic program next month.
The Value of Good Advice
A research report from CPA Australia, CoreData and the University of NSW has put a value on the benefits of financial advice to Australian society. The comprehensive study found that the value of advice is $24,716 per person per year.
Confidence in Retirement
Most of us worry about running out of money in retirement. Especially during uncertain economic times like these, when we start to wish we had started planning for retirement earlier.