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2019 – THE YEAR AHEAD

2019 – THE YEAR AHEAD

EXPECT ANOTHER YEAR LIKE 2018. SHARE-MARKETS TO PEAK EARLY IN THE YEAR.   Though we will certainly send out our thoughts for the year ahead in mid-January as normal, we thought there was enough going on to justify sending out a short note to you all to provide some context and insight on a few key areas.   Australian Investment Market Context As we stand today (Dec 18th), the Australian share-market looks set to record its first NEGATIVE year since 2011.   The ASX200 is down -4.5% year-to-date including dividends (over -8% in price alone), and this is broadly comparable to the S&P500 which is down a similar amount, however the fall in the Australian Dollar means that Australian equities have still underperformed their foreign peer group by between 5% and 8%.   The ASX200 is down -12.5% from its highs in late August.   The Australian Financial sector, which includes all banks, insurers and advisory groups has fallen over -12.5% year-to-date including payment of all dividends.   Whilst there might be little reason for widespread optimism, in Australia at least, we feel that the share-market is within sight of its lows given forward valuations are bouncing around near 6-year lows.   Australian bond indices, which incorporate all government, semi-government and corporate bond issuance, have risen +3.8% in the year-to-date.   This year is a reminder that all portfolios should ensure they are well-balanced, diversified, and in light of our current view, cautiously positioned.   Almost all of Prime’s recommended portfolios (from high-growth to conservative) have returned approximately +3% in the 12 months until the end of November, well...
Make this year a financially healthy one

Make this year a financially healthy one

With a focus on the New Year, this article consists of a short guide to planning ahead for the year to come. It highlights financial activities each quarter of the year and recommends professional guidance.   Another year is over – how was it for you? Did you achieve everything you’d hoped? Are you better or worse off financially than you were this time last year? With a new year in front of you, what can you do to make the most of every moment? We’ve put together a short guide to get you started and plan for the year ahead, a quarter at a time. January to March Make a start by turning wishes into goals. Some might be long-term like becoming debt-free, saving a home deposit, or retiring in a few years’ time. What can you do this year to support those goals? Write it all down and give it a name – something you can own. At the same time, don’t forget living for now. Prepare a month-by-month budget that makes room for the fun times – holidays and celebrations – as well as covering the necessities. Anticipate spikes in your spending. Do your car, home and life insurance premiums all seem to fall due at the same time putting pressure on your cash flow? Investigate monthly premium payments or spreading renewal dates across the year. Use this first quarter to bed down the budgeting habit and track your actual spending against your plan. At the end of March, do a quick review of your progress so far and make adjustments if necessary. April to June...
2018 Year End

2018 Year End

IT’s THE END OF THE YEAR TIME FOR SOME INVESTMENT PORTFOLIO HOUSEKEEPING   Though we will certainly send out our thoughts for the year ahead in mid-January as normal, we thought there was enough going on to justify sending out a short note to you all to provide some context and insight on a few key areas.   Australian Investment Market Context As we stand today (Dec 18th), the Australian share-market looks set to record its first NEGATIVE year since 2011.   The ASX200 is down -4.5% year-to-date including dividends (over -8% in price alone), and this is broadly comparable to the S&P500 which is down a similar amount, however the fall in the Australian Dollar means that Australian equities have still underperformed their foreign peer group by between 5% and 8%.   The ASX200 is down -12.5% from its highs in late August.   The Australian Financial sector, which includes all banks, insurers and advisory groups has fallen over -12.5% year-to-date including payment of all dividends.   Whilst there might be little reason for widespread optimism, in Australia at least, we feel that the share-market is within sight of its lows given forward valuations are bouncing around near 6-year lows.   Australian bond indices, which incorporate all government, semi-government and corporate bond issuance, have risen +3.8% in the year-to-date.   This year is a reminder that all portfolios should ensure they are well-balanced, diversified, and in light of our current view, cautiously positioned.   Almost all of Prime’s recommended portfolios (from high-growth to conservative) have returned approximately +3% in the 12 months until the end of November, well...

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...