September Newsletter
In this edition:
Lonsec warns investors to buckle up
Value of Advice Report 2020
Australia to introduce Director Identification Numbers
How can I make my retirement dream a reality?
Extension to JobKeeper Payment
How spooked super fund members crystallised their losses
Financial literacy in the digital age
Winners and Losers from the Reporting Season
Lonsec warns investors to buckle up
The much-anticipated upcoming US presidential election is certainly contributing to market volatility. Historically, in the months leading up to US elections, markets have exhibited an increased level of volatility, and it is no different this time.
Markets are not political, but they are sensitive to uncertainly, so as we get closer to the election in November, we are likely to see the market gyrate. As to how markets will react to a Republican or Democratic win, history is not conclusive on this, however what has been observed is that in the lead up to an election, avoiding recessions and a positive stock market tend to assist re-election.
Read more…
Value of Advice Report 2020
Fidelity International has released their Value of Advice report for 2020. Data was collected from over 2,000 Australians at various stages of life and includes some interesting key findings. Over 65% of Australians say they worry about money at least monthly, whilst almost 90% agree that receiving financial advice gives them greater peace of mind and control over their situation.
The number one concern for Australians when dealing with a financial adviser is whether the adviser understands their personal needs and circumstances.
You can read the report at The Value of Advice.
Introducing Director Identification Numbers
In June 2020 the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 was passed into law, heralding the introduction of Director Identification Numbers for all directors of Australian companies.
The Director Identification Number (DIN) will be a unique identifier for each person who consents to be a director (currently more than 2.7 million people, according to the ABR). The person will keep that unique identifier permanently, even if they cease to be a director.
The DIN will commence after a new Commonwealth business registry scheme (which is included in the Act) is implemented – expected to be in 2022. There will be transitional arrangements for existing directors.
The DIN regime will assist regulators and external administrators when investigating illegal phoenixing activities by preventing the use of fake identities and will allow tracing of a director’s relationships with multiple companies.
The new law is also expected to improve data integrity and security, whilst reducing time and cost for administrators and liquidators, thereby improving the efficiency of corporate and insolvency processes.
Read more…
How can I make my retirement dream a reality?
Every person’s retirement expectations and needs are different. However, the Association of Superannuation Funds of Australia suggests some common themes.
Purpose: Those who are most content and happy in retirement have a well-defined purpose in the non-work phase of life.
Income: A comfortable retirement is approximately $60,000 per annum for a couple or $45,000 for a single person.
Debt: Most people aspire to be debt-free, which reduces stress and financial burden. In 2016, one-third of retirees still owed money on their mortgage and this figure appears to be increasing.
Top Tips:
Planning: Now is the time to start working towards becoming debt-free.
Clarity: Try to be clear and specific about what your retirement goals are.
Preparedness: Consider a ‘trial retirement’ by taking time off work for a couple of months to experiment with how you might fill your time in retirement.
Read the article…
Extension to JobKeeper Payment
Changes have been to the JobKeeper payment, which was originally due to end in September 2020.
Key points:
The JobKeeper Payment scheme has been extended until 28 March 2021.
From 28 September 2020
employers need to demonstrate that their actual GST turnover has fallen against a comparable period
tier 1 and tier 2 JobKeeper rates apply and are generally based on average hours worked by employees.
For the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 only, we are allowing employers until 31 October 2020 to meet the wage condition for all employees included in the JobKeeper scheme.
Employers do not need to re-enrol to claim payments in the first extension if they are already enrolled in JobKeeper. They just need to check their continuing eligibility and submit this information to us online from 1 October 2020.
Employers also need to tell us the payment tier they are claiming for each eligible employee or business participant in their November monthly business declaration.
How super members crystallised their losses
Thousands of superannuation fund members who reacted to the early market volatility generated by the COVID-19 pandemic by switching their superannuation investment options (or by pulling out the coveted $10,000) simply crystallised their losses, says Money Management.
Read the full article…
Why financial literacy should be taught in schools
The financial landscape has changed since we were at school… today young people literally hold the ability to apply for credit in their hands – via their smartphones. This can land them in trouble whether it be by ‘pay-day’ loans like Nimble or Wallet Wizard, buy-now pay-later providers like Afterpay or zipPay, a personal loan, or perhaps a credit card they can’t pay off in full.
Kieran Hall, Executive Advisor at Viridan, explains the importance of financial literacy in the digital age. Watch the video here (under 2 minutes)
Winners and Losers from the Reporting Season
As we reflect on the recent reporting season in Australia, results could best be described as mixed.
Reporting season winners came from the entire market capitalisation spectrum, however, in terms of share price performance, those outside the top 10 appear to have won more.
As an example, what the table in the article illustrates is that while CSL was a reporting season winner, its share price is only up 5.1% YTD while a much smaller company like JB Hi-Fi which was also a reporting season winner and has experienced a share price rise of over 35% so far this year.
Likewise, mega miner BHP earned more on the resurgence of the iron ore price, but its share price is down 3.1% YTD, meanwhile Fortescue Metals which has also benefited from the rise of the price of iron is up a whopping 76.5% YTD.
This highlights the importance of having more meaningful exposures beyond the mega caps, where growth is limited, to better capture the potential greater upside of companies outside the top 10.