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Financial Planning Strategies for Your 30s: Maximizing Wealth with a Financial Planner in Melbourne

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SCAMWATCH

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Riding the AI wave to make your life easier

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Market movements and review video – December 2023

Stay up to date with what’s happened in markets and the Australian economy over the past month.

Consumer prices eased by more than expected in October. The news that inflation may have been tamed means interest rate rises may be behind us, for now.

Even the Organization for Economic Cooperation and Development (OECD) is optimistic about our economic recovery, predicting rate cuts from late 2024.

The ASX200 regained most of its October losses through November. Hopes the US may be ceasing its interest rate hikes impacted investor sentiment, as did the better than expected inflation figures locally.

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2022 Year in review

The year began on an optimistic note, as we finally began to emerge from Covid restrictions. Then Russia threw a curve ball that reverberated around the world and suddenly people who had never given a thought to the Reserve Bank were waiting with bated breath for its monthly interest rate announcements.

2022 was the year of rising interest rates to combat surging inflation, war in Ukraine and recession fears. These factors combined to create cost-of-living pressures for households and a downturn in share and bond markets.

Super funds also suffered their first calendar year loss since 2011. Ratings group Chant West estimates the median growth fund fell about 4 per cent last year.i While this is bad news for members, it’s worth remembering that super is a long-term investment, and that the median growth fund is still 11 per cent above its pre-Covid high of January 2020.ii

Australia key indices DecemberShare markets (% change) Year to December
2021202220212022
Economic growth4.6%*5.9%Australia All Ordinaries13.6%  -7.2%
RBA cash rate0.1%  3.1%US S&P 50027.0%-19.3%
Inflation (annual rate)3.5%^7.3%Euro Stoxx 5020.9%-11.7%
Unemployment4.2%#3.45%Shanghai Composite  4.8%-15.1%
Consumer confidence104.3  82.5Japan Nikkei 225  4.9%-10.9%

*Year to September, ^September quarter # November
Sources: RBA, ABS, Westpac Melbourne Institute, Trading Economics

The big picture

Even though investors have come to expect unpredictable markets, nobody could have predicted what unfolded in 2022.

Russia’s invasion of Ukraine in February triggered a series of unfortunate events for the global economy and investment markets. It disrupted energy and food supplies, pushing up prices and inflation.

Inflation sits around 7 to 11 per cent in most advanced countries, with Australia and the US at the low end of that range and the Euro area at the higher end.iii

As a result, central banks began aggressively lifting interest rates to dampen demand and prevent a price and wages spiral.

Rising inflation and interest rates

The Reserve Bank of Australia (RBA) lifted rates eight times, taking the target cash rate from 0.1 per cent in May to 3.1 per cent in December.iv This quickly flowed through to mortgage interest rates, putting a dampener on consumer sentiment.

Australia remains in a better position than most, with unemployment below 3.5 per cent and wages growth of 3.1 per cent running well behind inflation.v

Despite the geopolitical challenges, Australia’s economic growth increased to 5.9% in the September quartervi before contracting to an estimated 3 per cent by year’s end, in line with most of our trading partners.vii

Volatile share markets

Share investors endured a nail-biting year, as markets wrestled with rising interest rates, inflation, and the war in Ukraine.

Global shares plunged in October on interest rate and recession anxiety only to snap back late in the year on hopes that interest rates may be near their peak. The US market led the way down, finishing 19 per cent lower, due to its exposure to high-tech stocks and the Federal Reserve’s aggressive interest rate hikes. Chinese shares (down 15 per cent) also had a tough time as strict Covid lockdowns shut down much of its economy.

Australian shares performed well by comparison, down just 7 per cent, thanks to strong commodity prices and the Reserve Bank’s relatively moderate interest rate hikes.

Energy and utilities stocks were strong due to the impact of the war in Ukraine on oil and gas prices. On the flip side, the worst performers were information technology, real estate and consumer discretionary stocks as consumers reacted to cost-of-living pressures.

Property slowdown

After peaking in May, national home values fell sharply as the Reserve Bank began ratcheting up interest rates. The CoreLogic home value index fell 5.3% in 2022, the first calendar year decline since the global financial crisis of 2008.

As always though, price movements were not uniform. Sydney (-12 per cent), Melbourne (-8 per cent) and prestige capital city properties generally led the downturn. Bucking the trend, prices continued to edge higher in Adelaide (up 10 per cent), Perth (3.6 per cent), Darwin (4.3 per cent) and many regional areas.

Rental returns outpaced home prices, as high interest rates, demographic shifts and low vacancy rates pushed rents up 10.2 per cent in 2022. Gross yields recovered to pre-Covid levels, rising to 3.78 per cent in December on a combination of strong rental growth and falling housing values. However, it’s likely net yields fell as mortgage repayments increased.

Despite the downturn, CoreLogic reports housing values generally remain above pre-COVID levels. At the end of December, capital cities combined were still 11.7 per cent above their March 2020 levels, while regional markets were a massive 32.2 per cent higher.

Looking ahead

While the outlook for 2023 remains challenging, there are signs that inflation may have peaked and that central banks are nearing the end of their rate hikes.

Even so, the risk of recession is still high although less so in Australia where the RBA has been less aggressive in applying the interest rate brakes.

Issues for investors to watch out for in the year ahead are:

  • A protracted conflict in Ukraine
  • A new COVID wave in China which could further disrupt supply chains across the Australian economy, and
  • Steeper than expected falls in Australian housing prices which could lead to forced sales and dampen consumer spending.

If you would like to discuss your investment strategy in the light of prevailing economic conditions, don’t hesitate to get in touch.


Note: all share market figures are live prices as at 31 December 2022 sourced from: https://tradingeconomics.com/stocks.
All property figures are sourced from: https://www.corelogic.com.au/news-research/news/2022/corelogic-home-value-index-australian-housing-values-down-5.3-over-2022

https://www.chantwest.com.au/resources/another-strong-month-for-super-funds-as-recovery-continues/

ii As above

iii https://tradingeconomics.com/country-list/inflation-rate

iv https://www.rba.gov.au/statistics/cash-rate/

https://www.rba.gov.au/snapshots/economy-indicators-snapshot/

vi https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release

vii https://www.rba.gov.au/publications/smp/2022/nov/economic-outlook.html

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Market movements & review video – December 2022

Market movements & review video – December 2022
It’s December, summer is here and holidays are just around the corner. We take this opportunity to wish you and your family a happy festive season!
Stay up to date with what’s happened in the Australian economy and markets over the past month. The big story on the global economic front continues to be inflation, and how high interest rates will go to tame it. In Australia, Reserve Bank governor Philip Lowe is watching consumer spending,…
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Watch out for scams following Optus data breach

Customers warned to watch out for scams following Optus data breach

Source: https://www.accc.gov.au/media-release/customers-warned-to-watch-out-for-scams-following-optus-data-breach | 22 September 2022

ACCC Scamwatch is warning customers to protect their accounts and watch out for scams following Optus data breach.

Scamwatch is warning Optus customers to be on the look out for scams and take steps to secure their personal information following a cyber-attack.

A cyber-attack has resulted in the release of Optus customers’ personal information. If you are an Optus customer your name, date of birth, phone number, email addresses may have been released. For some customers identity document numbers such as driver’s licence or passport numbers could be in the hands of criminals. It is important to be aware that you be may be at risk of identity theft and take urgent action to prevent harm.

Optus customers should take immediate steps to secure all of their accounts, particularly their bank and financial accounts. You should also  monitor for unusual activity on your accounts and watch out for contact by scammers.

Steps you can take to protect your personal information include:

  • Secure your devices and monitor for unusual activity
  • Change your online account passwords and enable multi factor authentication for banking
  • Check your accounts for unusual activity such as items you haven’t purchased
  • Place limits on your accounts or ask you bank how you can secure your money
  • If you suspect fraud you can request a ban on your credit report.

More information about how to protect yourself is available on the OAIC website.

Check the Optus website(link is external) for information and contact Optus via the My Optus App or call 133 937.

Scammers may use your personal information to contact you by phone, text or email. Never click on links or provide personal or financial information to someone who contacts you out of the blue. Learn how to protect yourself from scams by visiting www.scamwatch.gov.au

If you are concerned that your identity has been compromised or you have been a victim of a scam contact your bank immediately and call IDCARE on 1800 595 160. IDCARE is Australia’s national identity and cyber support service, to get expert advice from a specialist identity and cyber security service. You can also report scams to Scamwatch www.scamwatch.gov.au and check cyber.gov.au for information about cyber security.

ACCC Infocentre:

Use this form to make a general enquiry.

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Six simple ways to protect your passwords

You use passwords to access your bank accounts, social media, email and more every day.

Passwords are the keys to our online identity. That’s why protecting them is so important.

Creating a strong password is the first step to protecting yourself online. This helps reduce the risk of unauthorised access by those willing to put in a bit of guesswork.

To help stay safe online, follow these password tips.

 

1. Make your passwords strong

Short and simple passwords might be easy for you to remember, but unfortunately they’re also easier for cyber criminals to crack.

Strong passwords have a minimum of 10 characters and a use mix of:

  • uppercase and lowercase letters
  • numbers
  • special characters like !, &, and *.

 

Use passphrases

You may like to consider using a passphrase instead of a traditional password.

Passphrases are considered more secure than regular passwords, and easier to remember too.

A passphrase is used in the same way as a password, but is a longer collection of words that is meaningful to you, but not to someone else.

For example, the passphrase ‘CloudHandWashJump7’ is 17 characters long and contains a range of different characters. This is more complex than the average password.

Having complex passwords is important to deter ‘brute force’ attacks, in which a computer program cycles through every possible combination of characters to guess a password. These automated attempts at guessing passwords are not slowed down by numbers or capital letters, but depend on how long a password is.

Depending on the systems you access, you may be limited to a defined number of characters.

 

2. Make passwords hard to guess

Could someone who knows you guess your passwords? For this reason, it’s best to avoid using personal information such as your children, partner or pets name, favourite football team or date of birth as your password.

When trying to hack into an online account, cyber criminals start with commonly found words and number combinations.

So it’s best to avoid using:

  • dictionary words
  • a keyboard pattern like qwerty
  • repeated characters like zzzz
  • personal information like your date of birth or pet’s name.

Security companies publish lists each year of the most common passwords exposed in data breaches. Read the list from 2020. Make sure you’re not using them, because it’s likely criminals will try these passwords first.

 

3. Create new, unique passwords

If you need to reset a password, don’t just change one part of it.

Instead of changing a number at the beginning or end, create something completely new you’ve never used before.

If your original exposed password had a ‘1’ at the end, an attacker would likely try ‘2’ next. That’s why it’s important to change the whole password.

Get into the practice of changing your password often, ideally every few months.

 

4. Don’t share passwords, ever.

Never share your password with someone, not even with someone you trust.

What about family and friends?

Regardless of whom you share it with, once you share your passwords you lose control of how it’s stored or how and when it’s used.

What if a business or company I know asks for my password?

Reputable companies won’t ask you to give them your password over the phone or via emails or SMS messages. This might be a warning sign of phishing or a scam; you can read more about phishing on our security alerts page.

NAB will never ask you for your password or PIN, either by email, SMS, over the phone or at a branch. We may ask you to provide a one-time code to verify yourself when you call our contact centre. These messages will clearly state that we will ask you for the code.

You may not be covered for fraud

One of your responsibilities as a NAB account owner and user of internet banking is to protect your password. Sharing your passwords or PINs may affect a claim for any money lost due to fraud.

 

5. Use different passwords for each of your online accounts

Using different passwords means that if one of your accounts is breached, criminals won’t have access to other accounts that use the same password.

Make each of your passwords for online logins unique. This will help protect you from attacks like ‘credential stuffing’.

Credential stuffing

Credential stuffing is an automated technique used by criminals. They test a user’s known username and password combinations across multiple online accounts.

As many people use the same credentials for multiple sites, it can give criminals easy access to multiple accounts.

This gives criminals an opportunity to gather more information about you, which they might use to impersonate you online to access accounts under your name.

For example, it’s not a good idea to use the same password for an online pizza delivery website and your business email. If the pizza delivery site is compromised, you don’t want someone to also have access to your business email account.

 

6. Store passwords safely

Writing passwords down is never recommended. You could lose them, or someone else could see them and use them.

Password management tools

There are programs and apps known as password managers that will store all your passwords in a secure vault.

A password manager only needs one strong password to access it and has extremely strong protection to make sure that only you can access it.

This means you only need to remember one password to have access to all your passwords.

Password safes can even generate and store new, complex passwords for you when you create new online accounts.

Don’t allow web browsers to store your NAB password

Some web browsers may display a pop-up message, asking whether you want the browser to remember your login details.

For the protection of your personal information, NAB recommends that you select ‘Never for this site’ if you see this message when using NAB Internet Banking.

For more information, check out the Australian Cyber Security Centre’s guide on creating secure passphrases.

 

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/about-us/security/online-safety-tips/protect-your-passwords

National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.

© 2022 National Australia Bank Limited (“NAB”). All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

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Budget update 2021 – 22 How will the Federal Budget affect you?

How will the Federal Budget affect you?

During this year’s Federal Budget announcement Treasurer Josh Frydenberg stated “Australia is back!”. The Budget proposes positive changes to superannuation, an extension of the low and middle income tax offsets and a boost to aged care services.

 

Summary

• We’ve summarised some of the key points from the Budget below but, remember, these are subject to the passing of legislation:
• From 1 July 2022, if you’re aged 67 to 74 you will not be required to meet the work test to make non-concessional contributions and salary sacrifice contributions to super
• From 1 July 2022, you can make downsizer super contributions if you’re age 60 and over (currently you need to be age 65 or over).
• From 1 July 2022, if you’re a first home buyer you can release up to $50,000 (up from $30,000) from your voluntary super contributions to help you buy your first home.
• The low and middle income tax offset is to extend to the 2021/22 financial year with a maximum offset of up to $1,080 for individuals or $2,160 for a couple.
• Additional support for elderly Australians requiring care either within the home or in a residential aged care facility.

Federal Budget Client Summary Flyer 2021_22

Now the Federal Budget has been handed down, it’s an ideal time to contact Intergenerational Wealth and work through any impacts and opportunities around your financial position.

This information is issued by RI Advice Group Pty Ltd (RI Advice), ABN 23 001 774 125, which holds Australian Financial Services Licence Number 238429 and is a summary of our understanding of the proposed Federal Budget 2021/22 changes announced on 11 May 2021. RI Advice is a company within the IOOF Group of companies, consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. The changes are subject to the passing of legislation and, accordingly, may not become law or may change. Please note that the information is based on our interpretation of the proposed changes as at the date of issue of this document. This is general advice and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should determine whether it meets your needs or seek advice from a financial planner or a registered tax agent. Examples are illustrative only and are subject to the assumptions and qualifications disclosed. If you wish to opt out of future communications, please contact us.
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Cash flow can make or break your business, so take time to safeguard it

Cash flow can make or break your business, so take time to safeguard it

According to a recent survey by research firm East & Partners for lender Scottish Pacific, nearly 80 per cent of owners of small and medium enterprises said cash flow issues caused them the most sleepless nights.[1]

So what might you do to improve your cash flow and sleep better at night? Here are five tips.

1. Build a cash reserve

Cash flow is the lifeblood of any business. To ensure that it makes, not breaks, your business, it’s important to build a robust cash reserve. This may help you meet your financial obligations in difficult times and allow you to take on opportunities to grow your business.

2. Separate business and personal money

By keeping business and personal expenses separate, you may better understand your business’s cash position. It may also ensure that you don’t use money meant for your business on personal expenses; for example, a holiday or your mortgage.

3. Get paid on time

If your business hasn’t been actively pursuing unpaid invoices, you may want to make it a practice – and have a strategy – to regularly chase up payment. Finding ways to encourage prompt payment, such as offering a discount to early payers, may help.

4. Control business costs

Controlling costs might help you to maintain a healthy cash flow. Experts suggest taking stock of your business expenses regularly to identify where you can cut costs without sacrificing growth. This may include reviewing your suppliers and negotiating better rates with them.

5. Protect your business

By taking out business expenses insurance and key person insurance, you may help ensure your business can meet its running costs if you or a key employee is too ill to work. Both insurance plans provide a monthly benefit if you or a key person in your business become incapacitated.

Work with a professional

Your professional financial adviser could tailor your insurance plans to your business’s cash flow protection needs, safeguarding what you’ve worked so hard to build.

[1] Scottish Pacific and East & Partners, October 2018, ‘SMEs flag higher revenue growth, but prospects could be dampened by declining property market and cash flow issues,’ accessible at: https://www.scottishpacific.com/media-releases/smes-flag-higher-revenue-growth-but-prospects-could-be-dampened-by-declining-property-market-and-cash-flow-issues
Disclaimer: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author.The information provided in this document, including any tax information, is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 RIarticlehub.com | Cash flow can make or break your business |