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Changes to the Superannuation Contribution Caps

    Changes to the superannuation contributions caps Changes from 1 July 2017 affect how much you can contribute to your superannuation account without exceeding the contribution caps, as well as the tax payable on certain contributions, and eligibility for some tax benefits. We’d like to help you make the most of your super changes, by helping you understand what is changing and to make sure your retirement savings are still on track. Annual before-tax (concessional) contribution caps Before-tax (Concessional) contributions include contributions that your employer makes on your behalf, salary sacrifice contributions and personal contributions for which you claim a tax deduction. The annual caps which apply to the amount of before-tax (concessional) contributions you can make to super have changed. These include employer contributions, salary sacrifice contributions, and personal contributions for which you claim a tax deduction. From 1 July 2017, this limit is $25,000 for everyone, regardless of age. Carry forward concessional contributions From 1 July 2018, you will be able to carry forward any unused before-tax (concessional) contribution cap amounts, if your total super balance is less than $500,000. Total super balance includes all monies you have in the accumulation and retirement phase of super, less any structured settlement amounts. You must also be under 65 at any time in the financial year in which the contributions are made. Amounts ‘carried forward’ which have not been used after five years will expire. The 2019-20 financial year is the first year you will be able to use any unused concessional contribution cap amounts. Here’s an example of how this carry forward rule works: As at 30...

20170721 – Portfolio Activity

20170721 – Portfolio Update from Michael Cooper on Vimeo. Despite two positive potential catalysts this week, the Australian share market has maintained the sideways trading pattern that has prevailed since the middle of May. Early this week a much anticipated announcement came when the Australian Prudential Regulation Authority defined what it means for our banks to be ”unquestionably strong”, a phrase taken from the final report of the Financial System Inquiry. The banks have been building their capital for several years and are already quite close to the increased capital ratio set out by APRA, well ahead of the January 2020 deadline. This benign outcome saw the banking sector rally by more than 5% across Wednesday and Thursday’s trading. We also had labour market data released this week and saw a continuation of the strong recent trend in jobs growth, particularly in full time jobs. An uptick in the participation rate meant that the unemployment rate remained steady at 5.6%, though importantly the underemployment rate drifted lower to 8.4%. This is an encouraging sign for the health of the Australian economy, though as we have mentioned before it will be especially welcome to see strength in employment data translate into improvements in wages data. ASSET ALLOCATION & INVESTMENT COMMITTEE With the sideways move described above the forecast returns for Australian Equities have remained relatively steady over the last several months. As a result the committee has affirmed the active overweight to this asset class at our meeting this week. We are however making a subtle adjustment within the constituent investments which will see a reduction in the Financials ETF...

20170707 – Portfolio Activity

The leaders of 20 nations have gathered this week in Hamburg, Germany in what Bloomberg is calling the G19 plus Donald Trump, pointedly referring to ”America’s new unwillingness to cooperate with the world on vital international issues.” There can be no clearer rejection of the Trump administration’s isolationist stance than the preliminary free trade agreement reached between the European Union and Japan. The deal announced this week will eliminate tariffs, expand markets for services and boost regulatory cooperation. It must also be said that it shows the priorities of the EU as Brexit negotiations begin in earnest, and the weak position from which the United Kingdom is required to negotiate their exit from the common market. Reserve Bank Governor Philip Lowe delivered a decidedly neutral statement when announcing the bank’s decision to leave interest rates at 1.5% this week. Whilst the decision was entirely expected, some had anticipated that the bank may signal a subtle shift towards a tightening bias in due course. The absence of that language led to a sharp fall in the Australian dollar as expectations were adjusted. The consensus is still that the next rate move will be upwards, as data continues to confirm that the economy is on a sound footing. This week trade data showed a strong rebound in activity, supporting the view that the Q2 GDP result will do likewise. CORRELATED INVESTMENTS The flexibility to correlate non-model investments within asset classes is a feature of the Individually Managed Account portfolio structure. As an example, often this means we accommodate an investor’s existing shareholding and manage asset allocation and sector exposures around that...

20170630 – Portfolio Activity EOFY

European Central Bank President Mario Draghi gave an important speech this week in which he referenced the continuing economic recovery in Europe. Market participants took a clear signal that the era of extraordinary monetary policy support would not continue indefinitely. This led to some significant moves in bonds and a sharp increase in the Euro exchange rate. Whilst these short-term moves have been quite pronounced, Draghi made clear that ”global uncertainties remain elevated,” and as a result the bank will exercise prudence in adjusting the policy stance whilst ”accompanying the recovery.” Activity in equity markets has also been a little more turbulent than the recent past, however after rallying by nearly 2% mid-week, indications are that the ASX200 will give back some of that gain on Friday and close about flat for the week. With a longer term perspective, and as we close the financial year, the ASX200 index has provided a very solid total return of 15% over the last year. Importantly, the recently beleaguered Financials sector has in fact led the overall market higher over the same period, notching up a total return of nearly 22% since July 2016. ASSET ALLOCATION & INVESTMENT COMMITTEE At our meeting this week the committee affirmed the current active asset allocation stance. Within the defensive Income Securities asset class we are implementing the recent decision to use a new investment grade corporate bond exchange traded fund (PLUS), with portfolios having recently received the proceeds from the redeemed ANZ investment (ANZHA). Westpac have also announced the redemption of their similar investment (WBCHA), and we will redeploy these funds in the same manner...

20170623 – Portfolio Activity

20170623 – Portfolio Update from Michael Cooper on Vimeo. In another volatile week of trading, the ASX200 has fallen more than a 1% after failing to break through 5800 on the upside early in the week. Financials have been in the spotlight as the Senate passed the bank bill levy unchanged and Moody’s downgraded credit ratings of all Australian banks. Importantly this step to include the big four banks had previously been omitted when S&P announced their downgrade last month. Moody’s noted that their downgrade was largely due to housing debt risks. The RBA minutes released on Tuesday also noted they are carefully monitoring the housing and labour markets, given concern over house prices, household debt and a lack of wage growth. This is nothing new and was not unexpected, the minutes went on to highlight that the RBA still has a 3% growth target for the future. Overseas summer has officially started in the US this week and the fourth of July holiday will see the beginning of ”driving season”. Even with inventories expected to decline through this period oil has continued to fall and is now in a technical bear market having declined more than 10% over the past few weeks. IMPLEMENTATION TIMEFRAME As mentioned earlier we have had another volatile week for Australian Equities which underlines the uncertainty of short term market movements. It is for this reason that we generally manage initial implementation on new accounts over a number of months, whilst taking guidance from your Adviser. We observe market conditions and a variety of metrics across the range of asset classes to ensure we...