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Navigating your way through a redundancy

Navigating your way through a redundancy

The Australian Bureau of Statistics announced a record 932,000 jobs were lost between the March and June 2020 quarters in the wake of COVID-19[1]. While the Government extended temporary economic assistance for most businesses until March 2021, it has gradually been phased back which may result in many businesses downsizing, winding up or becoming bankrupt. This means it’s possible that more jobs may be lost in the coming months.

 

If you are facing a possible redundancy at work due to the aftermath of COVID-19, or a company restructure, this is considered a significant life event that may impact your career, family, mental health and financial wellbeing. For those who are ready to retire, termination payments are likely to be a welcome windfall, but for those who don’t have retirement on the near horizon, you may find redundancy stressful, as it tends to happen during an economic downturn when it may be harder to find a new job.

The immediate issue to consider is whether you have enough money to tide things over until the next job comes along. If you are working with a Financial Adviser, then they will have a good idea of what your current financial position looks like, and how long you can manage without a job. They can also advise on different options to consider when it comes to a redundancy payout.

 

Your Financial Adviser can discuss:

  • How will redundancy payments be taxed?
  • What other employee entitlements will be lost?
  • Will lump sum payments impact on entitlements to social security and family assistance?
  • How will payments be used?

This is a great opportunity to make a real difference to your situation during a challenging time, and, if you are the employer, you may be able to support your employees to achieve a better outcome.

Genuine redundancy payment (GRP)

Payments on termination due to redundancy attract more generous tax concessions than if the employee resigns. If you are offered and accept a redundancy, it is worth knowing about the tax concessions and the conditions that must be met to be eligible.

A GRP must satisfy the following conditions:

  • The employee is dismissed because the employee’s position/role no longer exists
  • There is no arrangement between the employer (or another entity such as a company associated with the employer) and employee to rehire the employee after dismissal
  • Where the relationship between the employer and employee is non-arm’s length, the payment cannot be greater than the amount that would be reasonably expected if the relationship was at arm’s length
  • The dismissal occurs at the earlier of the following:
    • before the employee attains Age Pension age, or
    • before the employee attains the age, or completes a period of employment, when employment would have terminated.

If these conditions are not met, the employee is ineligible for the tax concessions that apply to GRPs. For example, where redundancy occurs on or after Age Pension age, the employee is not eligible for a tax-free GRP.

Payments on termination

Payments that may be received by an employee who is made redundant include:

  • salary and wages, overtime, bonuses and allowances
  • unused annual leave and long service leave
  • severance payments
  • a gratuity or ‘golden handshake’
  • genuine redundancy or early retirement scheme payments
  • non-genuine redundancy payments (eg redundancy occurs after employee reaches Age Pension age)
  • payments in lieu of notice
  • unused sick leave
  • unused rostered days off.

Taxation of payments

Payments on termination are categorised to determine how they are taxed. If you are offered a redundancy, you can plan ahead by asking your employer for an estimate of the payments you will receive, including withholding tax amounts. Your employer can provide you with an income statement at termination or you can obtain this from the Australian Taxation Office (ATO).

Payments eligible for concessional tax treatment attract tax offsets so that the tax paid does not exceed the concessional tax rate. Tax withheld by your employer reduces the final tax payable and if too much tax was withheld the excess is refunded to you.

Your Financial Adviser can help you identify and work out:

  • Payments for earned income
  • Tax on unused annual or long service leave
  • non-excluded employment termination payment (ETP), the tax-free genuine redundancy payment (GRP) and the excluded ETP.

Other considerations

As well as working out any payments, your Financial Adviser can discuss other financial and personal considerations, including:

  • How ongoing expenses can be met and for how long
  • Whether you intend to retire and if not, how long it may take to find another job
  • Other financial resources available to you
  • Eligibility for social security payments and/or Family Tax Benefits
  • Whether your employer has the flexibility to ‘time’ the redundancy and termination payments to assist with a better tax outcome
  • Whether deferring taxable income (for example deferring the sale of investments with capital gains implications) will have a favourable outcome
  • Your capacity to make personal deductible super contributions
  • What you would like to do if you do decide to retire, and what your retirement lifestyle will look like given your financial situation
  • If you decide to return to the workforce, whether your next job can pay a similar salary or if you take a pay cut in the current economic environment.

Conclusion

A redundancy may be beneficial if you’re ready to retire but stressful if you need to find a new job in a challenging economic environment. Some employers may be able to offer flexible payment arrangements on termination to facilitate a better tax outcome.

A Financial Adviser will discuss both the impact of a redundancy on your overall financial situation and how to achieve a favourable payment outcome.

[1] Labour Account Australia

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 | Navigating your way through a redundancy | 3
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Choosing a retirement lifestyle

Choosing a retirement lifestyle

If you are in, or nearing, the retirement phase of your lifestyle you might be considering whether you want to stay in your current accommodation, or look for something to suit your needs as they change over the coming years.

Choosing where and how you live is a big decision, and one with many cost implications. Will you sell the family home or retain it? Will you downsize to something more manageable? Can you build a granny flat on the back so you can live with family members? Is a retirement village going to offer the lifestyle you desire? Will you need to go into an aged care facility in the future?

Let’s work through a few of the options.

 

Staying put

If it is your strong desire to stay in your current accommodation you need to consider if it’s going to suit you as you age. Naturally your body and mind will slow down and you may even be diagnosed with dementia at some point. Consider if your current home is set up for that. If you live somewhere that has stairs, is steep or on a slope, has a slippery driveway, is dark and not well heated, then it may be uncomfortable for you to continue living there.

You could consider obtaining an assessment from an aged care occupational therapist who may suggest some modifications to make it more comfortable and appropriate as you age.

You could also consider if you have space for a granny flat on the block. If Council zoning laws allow it, you could put something purpose built on the block and invite family members to live in the main home and help care for you.

 

A retirement village

Retirement villages vary in size, facilities and cost but many older Australians consider a retirement village a great place to live because they offer a community-based environment of similarly aged and like-minded people. We all know getting older can be lonely, so a community that offers activities and excursions can help keep your mind and body active.

The village operator will maintain the external building and community garden areas for the residents, but it is still independent living.

The entry cost is set by the operator and specified in the contract. Usually a lump sum “purchase” but some villages may allow a rental arrangement. Depending on the terms of the contract, you may need to split any profits made on the unit when you leave (to go to an aged care facility or you die) and there may be a deferred management fee and refurbishment expense deducted from the refundable amount.

 

Residential aged care

In residential aged care you have a much smaller space to call your own – it may be a single room, or even a shared room. This is a much different experience to staying in your existing home, or moving into a retirement village, but the level of 24/7 care may necessitate it, so you should know your options and have a plan in place. Having a plan that you have discussed with your loved ones can help you feel more in control of your situation and the environment you are entering.

It’s important to understand all the fees in residential aged care, and what is refunded when you die. Generally aged care facilities will have a published price for entering the facility, and a daily accommodation payment that is put towards your daily care and meals. Some aged care facilities have additional services at an additional cost so if this is something you want, arrange a visit of a few facilities to understand what extra services, such as onsite hairdressing or a café, you can access.

A Financial Adviser looks at your specific circumstances, your current and desired lifestyle, and if you are eligible for any benefits or subsidies. They can also help facilitate conversations with family members and refer you to estate planning lawyers to help you understand any legal implications or considerations.

Choosing your retirement lifestyle will be heavily impacted by emotional and financial decisions so don’t rush into a decision without talking to your Financial Adviser and carefully considering your options.

 

If it’s time to consider your retirement lifestyle and accommodation needs, your Financial Adviser is willing and able to assist you and you can read more on the My Aged Care website.

Link: https://www.myagedcare.gov.au/

Disclaimer: This report has been prepared by the IOOF Research team for RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429. RI Advice Group Pty Ltd is a company within the IOOF group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This report is current as at the date of issue but may be superseded by future publications. The information in the report may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of RI Advice Group Pty Ltd. This report may be used on the express condition that you have obtained a copy of the RI Advice Group Pty Ltd Financial Services Guide (FSG) from the website. RI Advice Group Pty Ltd and/or its associated entities, directors and/or its employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this report, or may provide services to the companies referred to in this report. This report is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of RI Advice Group Pty. RI Advice Group Pty and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. This report has been prepared in good faith and with reasonable care. Neither RI Advice Group Pty nor any other person makes any representation or warranty, express or implied, as to the accuracy, reliability, reasonableness or completeness of the contents of this document (including any projections, forecasts, estimates, prospects and returns and any omissions from this document). To the maximum extent permitted by law RI Advice Group Pty, its related bodies corporate and their respective officers, employees, representatives and associates disclaim and exclude all liability for any loss or damage (whether foreseeable or not foreseeable) suffered or incurred by any person acting on any information (including any projections, forecasts, estimates, prospects and returns) provided in, or omitted from this report. General Advice Disclaimer: The information in this report is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this report, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before you acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance. For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process.
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Intergenerational Wealth Monthly Market Wrap May 2021

Global markets continue rising

  • Global shares rose 4% and 3.2% in hedged and unhedged terms, respectively. The rotation to stocks benefitting from a strong economic recovery faltered in April. Strong profit results for major US tech companies such as Google saw growth sectors such as technology outperform.
  • Australian shares underperformed global shares slightly, rising 3.5% in April. The leading sectors were technology (up 9.7%) and miners (up 6.8%). Energy (down 4.9%), Consumer Staples (down 2.6%) and Utilities (down 1.2%) were the only areas of the market to fall in April. Consumer Staples struggled as sentiment soured on Woolworths amidst slowing sales. Board turnover and scepticism over its demerger dragged on the AGL share price and the Utilities sector.
  • The Australian dollar (AUD) rose 0.8% against major currencies and 1.6% against the US dollar.
  • Fixed income returns improved as bond yields fell. Australian bonds benefitted from the RBA commitment to keeping rates lower until at least 2024. In the US, a similar commitment to keep rates low by the Federal Reserve also saw supported bond returns.

As the pandemic lingers

Globally

  • Coronavirus vaccine progress has proceeded in a welcome fashion. After initial logistical challenges, EU vaccinations are climbing, contributing to a decline in coronavirus cases.
  • The coronavirus pandemic has escalated in India sparking lockdowns and a national crisis with the death toll climbing at an alarming rate and sparking travel bans around the world including Australia.
  • The Global Composite PMI survey (a proxy for economic activity) rose to an eleven-year high in April suggesting the global economic recovery is continuing.

 

Locally

  • The RBA left interest rates unchanged in its May meeting at 0.1% and flagged staying at this level until 2024.
  • The unemployment rate fell to 5.6% in March, continuing to decline from its high of 7.5% in July thanks to continued strong jobs growth with job vacancies also rising. April figures should highlight how well the jobs market has handled the end of JobKeeper in March.
  • Australia’s vaccination program continues albeit at a slower pace with 2.6m doses administered as of early May.
  • Potential small outbreaks occurred in both Sydney and Perth triggering new restrictions but do not appear to be escalating at this juncture.

Major asset class performance

Asset classes1 month
%
1 year
%
5 years (p.a.) %
Australian shares3.5%30.8%10.3%
Global shares (hedged)4.0%40.6%13.8%
Global shares (unhedged)3.2%23.0%13.8%
Global small companies (unhedged)2.6%40.6%13.6%
Global emerging markets (unhedged)1.1%26.0%12.2%
Global listed property (hedged)5.7%29.1%4.9%
Cash0.0%0.1%1.4%
Australian fixed income0.6%-1.2%3.5%
International fixed income0.2%-0.1%3.3%
 

Source: Bloomberg & IOOF, 30 April 2021

 

Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD

Please note: Past performance is not indicative of future performance

 

 

Currency markets

Exchange ratesAt close on 30/41 month
change
%
1 year
change
%
USD/AUD0.771.6%18.5%
Euro/AUD0.64-1.0%7.9%
Yen/AUD84.30.3%20.8%
Trade weighted index64.40.8%11.4%
Source: Bloomberg & IOOF, 30 April 2021.

All foreign exchange rates are rounded to two decimal places where appropriate.

Please note: Past performance is not indicative of future performance.

Disclaimer: This report has been prepared by the IOOF Research team for RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429. RI Advice Group Pty Ltd is a company within the IOOF group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This report is current as at the date of issue but may be superseded by future publications. The information in the report may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of RI Advice Group Pty Ltd. This report may be used on the express condition that you have obtained a copy of the RI Advice Group Pty Ltd Financial Services Guide (FSG) from the website. RI Advice Group Pty Ltd and/or its associated entities, directors and/or its employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this report, or may provide services to the companies referred to in this report. This report is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of RI Advice Group Pty. RI Advice Group Pty and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. This report has been prepared in good faith and with reasonable care. Neither RI Advice Group Pty nor any other person makes any representation or warranty, express or implied, as to the accuracy, reliability, reasonableness or completeness of the contents of this document (including any projections, forecasts, estimates, prospects and returns and any omissions from this document). To the maximum extent permitted by law RI Advice Group Pty, its related bodies corporate and their respective officers, employees, representatives and associates disclaim and exclude all liability for any loss or damage (whether foreseeable or not foreseeable) suffered or incurred by any person acting on any information (including any projections, forecasts, estimates, prospects and returns) provided in, or omitted from this report. General Advice Disclaimer: The information in this report is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this report, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before you acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance. For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process.
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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 |
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Intergenerational Wealth Monthly Market Wrap April 2021

Global markets continue rising

  • Global shares rose 4.3% and 5.1% in hedged and unhedged terms, respectively. The rotation to stocks benefitting from a strong economic recovery persisted into March. Stocks with more exposure to economic growth such as the banking sector continued to rally, benefitting from the rise in growth expectations.
  • Australian shares underperformed global shares rising 2.4% in March. The market was led by strength from the consumer discretionary (up 6.9%), real estate (up 6.5%) and communication services (up 5.8%) sectors. The latter benefitted from the prospects of Telstra being broken up into several smaller companies to realise the business’ latent value to shareholders.
  • The Australian dollar (AUD) fell 0.9% against major currencies and 1.4% against the US dollar. Investors were attracted to the relative economic strength of US amid further coronavirus cases in Europe which saw them bid up US dollars (relative to other currencies including the AUD).
  • Fixed income returns were mixed as bond yields rose internationally but fell domestically. Australian bonds benefitted from the RBA commitment to keeping rates lower for a prolonged period and acceleration of its quantitative easing program.

 

As the pandemic lingers

Globally

  • Coronavirus case growth globally has accelerated predominantly in mainland Europe and emerging market countries such as Brazil. Europe remains plagued by a slower vaccine rollout than other developed countries such as the US with concerns over the AstraZeneca vaccine and ties to rare blood clots persisting.
  • The Global Composite PMI survey (a proxy for economic activity) rose to a near seven-year high in March suggesting the global economic recovery remains firmly underway.

 

Locally

  • The RBA left interest rates unchanged in its April meeting at 0.1% and flagged leaving rates unchanged until 2024.
  • The unemployment rate fell to 5.8% in February, continuing to decline from its high of 7.5% in July thanks to continued strong jobs growth with job vacancies also rising.

Australia’s vaccination program had a major setback with the effective rejection of the AstraZeneca. The Federal government has moved to secure supplies of the Pfizer vaccine with a further 20m secured (due in late 2021). Vaccine delays add to vulnerability to further coronavirus outbreaks should they occur.

 

Major asset class performance

Asset classes1 month
%
1 year
%
5 years (p.a.) %
Australian shares2.4%37.5%10.2%
Global shares (hedged)4.3%48.7%13.2%
Global shares (unhedged)5.1%23.5%13.7%
Global small companies (unhedged)3.5%45.3%13.8%
Global emerging markets (unhedged)0.1%27.3%12.3%
Global listed property (hedged)3.9%29.7%3.6%
Cash0.0%0.1%1.4%
Australian fixed income0.8%-1.8%3.5%
International fixed income-0.4%1.1%3.3%
 

Source: Bloomberg & IOOF, 31 March 2021

 

Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD

Please note: Past performance is not indicative of future performance.

 

Currency markets

Exchange ratesAt close on 31/31 month
change
%
1 year
change
%
USD/AUD0.76-1.4%23.9%
Euro/AUD0.651.5%16.5%
Yen/AUD84.12.4%27.5%
Trade weighted index63.9-0.9%16.8%
Disclaimer: This report has been prepared by the IOOF Research team for RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429. RI Advice Group Pty Ltd is a company within the IOOF group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This report is current as at the date of issue but may be superseded by future publications. The information in the report may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of RI Advice Group Pty Ltd. This report may be used on the express condition that you have obtained a copy of the RI Advice Group Pty Ltd Financial Services Guide (FSG) from the website. RI Advice Group Pty Ltd and/or its associated entities, directors and/or its employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this report, or may provide services to the companies referred to in this report. This report is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of RI Advice Group Pty. RI Advice Group Pty and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. This report has been prepared in good faith and with reasonable care. Neither RI Advice Group Pty nor any other person makes any representation or warranty, express or implied, as to the accuracy, reliability, reasonableness or completeness of the contents of this document (including any projections, forecasts, estimates, prospects and returns and any omissions from this document). To the maximum extent permitted by law RI Advice Group Pty, its related bodies corporate and their respective officers, employees, representatives and associates disclaim and exclude all liability for any loss or damage (whether foreseeable or not foreseeable) suffered or incurred by any person acting on any information (including any projections, forecasts, estimates, prospects and returns) provided in, or omitted from this report. General Advice Disclaimer: The information in this report is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this report, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before you acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance.
For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process.
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Financial tips that anyone can use

Financial tips that anyone can use

There are lots of tips when it comes to getting ahead, financial speaking. Most of them are really simple so if you are struggling to get on top of your finances and it is a burden you could live without, take a look at our suggestions, below, and make a commitment to just start with one. If that works, maybe you will be encouraged to tackle a few more.

 

Seek advice, listen and follow it

The importance of a good Financial Adviser

Sometimes we try and take on everything ourselves. Whilst it is great to have a can-do attitude, we cannot expect ourselves to be experts in everything, so luckily there are people who are experts in money who can help you on your financial journey. Financial Advisers understand money, they know how it works and they have the skills, tools and technology to make the complicated world of financial planning work for their clients – no matter what their age, income or financial goals.

If you want to get your finances into an achievable financial plan that helps you reach your financial goals sooner, talk to an expert, listen to their ideas, and commit to doing something about it. And don’t be afraid to ask questions throughout the process! If there is something you don’t understand, your Financial Adviser can keep working with you until you understand it, and feel comfortable.

 

Spend smart, save smarter

The importance of having a budget

If your finances take a sudden hit, are you prepared for that? Things such as losing your job, being asked to take a pay cut, taking time off work to be a stay-at-home parent or suffering an illness or injury can take you out of the workforce and reduce your income – which can be a shock if you are not good at budgeting.

A Financial Adviser can work on a realistic financial budget with you and discuss personal insurance options that may provide financial protection if you become ill or injured.

And remember, a budget is not just about telling you what you can and can’t spend money on, it’s a way of tracking your spending, understanding what you can cut back on, where you can take advantage of cheaper alternatives, how you can compare prices and learning what you can live without in order to reach a more desirable, long-term financial goal.

 

Financial planning is about exploring options

Diversifying your wealth creation strategies

There are many ways you can increase your wealth and it’s worth exploring all of them and considering whether or not they suit your individual situation, needs, values and goals. A Financial Adviser can help you explore different options such as shares, managed funds, bonds, superannuation and property, whilst keeping in mind your risk tolerance level and need for a certain level of income to pay your bills and put food on the table.

 

 Take the lead and stay in control

Don’t leave the important financial decisions to someone else, get involved!

If you share finances with a partner it is a good idea to make sure you are both informed and that you discuss any major financial decisions before making them. If the relationship breaks down, or one partner becomes ill or injured, then it is good to know the other partner in the relationship has a clear understanding of your financial position, goals and expenses.

If you are invested in financial products, make sure you understand those products, and if they meet your needs, goals and values. Some people only want to invest in ethical or sustainable products, so if this is important to you, make sure you discuss it with your Financial Adviser.

If you would like to discuss this article, or you have any questions or concerns about your financial plan, please get in touch with us. We would love to hear from you.

This editorial and the information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions 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. The views expressed in this publication are solely those of the author; they are not reflective or indicative of Licensee’s position, and are not to be attributed to the Licensee. They cannot be reproduced in any form without the express written consent of the author. RI Advice Group Pty Limited ABN 23 001 774 125, AFSL 238429.
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Helping your children, financially speaking

Helping your children, financially speaking

As a parent you probably have great expectations for your child. They will have everything you had and more! You will consider their every need and make the most of every opportunity to help them get ahead, right?

Whilst every parent wants their child to be healthy, happy and financially secure, figuring out how to get them there is another thing. Working with a financial adviser can help you understand options available to financially help your children, and teach them how to take control of their financial future once it is time for you to step out of the equation, and them to step up. Introducing these discussions as a family from early on means you can get help for your children that will serve them well into their future.

 

Savings
It’s never too early to start a good savings system. If your child gets pocket money for helping out around the family home, birthday money and other small contributions, you can help them divert some of this into savings and some into spending.

 

Superannuation
Once your child begins work they’ll be asked what super fund they want their employer to make compulsory contributions to. Starting working life with a super fund that charges low fees and delivers high returns will make a HUGE difference over their working lifetime. If your child understands what superannuation is and the power of it to build a nest egg, they are going to be much better off in the long run.

 

Investments
Many parents want to contribute to a savings or investment fund for their child, if they can afford to do so. A financial adviser can help you to understand the fees, costs and returns of a number of different investment options including investment bonds, trust funds and savings accounts.

 

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
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Why insurance matters

Why insurance matters

In a year that has seen so many unexpected events take place it is top of mind for most Australians now more than ever that life does not always go the way we plan, but having a plan in place if things do take an unexpected turn can mean that our health, lifestyle and family are better protected.

If you don’t currently have any type of personal insurance cover, or you have not reviewed it with your Financial Adviser for a while, now is a good time to do so.

Types of insurance

There are a few different types of insurance that you should consider, based on what matters to you and what you would most like protected if you were to suffer illness, injury, disablement or premature death. It’s best to discuss insurance options with your Financial Adviser as they can tell you what different types of insurance policies are available, what they cover, and how to structure them in your overall financial plan, based on your individual situation and goals.

The types of insurance policies you may discuss are:

  • Life insurance
  • Total and Permanent Disablement insurance
  • Income Protection insurance.

 

The benefits of an insurance policy

Family first

You and your loved ones count on your income to enjoy a certain standard of living, which is why insurance is particularly important if you have dependents. It means the people who matter most in your life are protected from financial hardship if you could no longer earn an income.

Less stress

Unforeseen illness, injury, permanent disability, and death – it is not nice to think about but it does happen. If it happened to your family it would probably be an extremely challenging time, wrought with emotional stress, and even grief. With personal insurance in place, the financial stress can be reduced, allowing you to focus on getting well, and rebuilding your life.

Financial security

Illness, injury and disablement do not come cheap. If you needed funds to recover from illness or injury would you have enough disposable income to cover medical bills whilst still paying your household expenses? Could you modify the home if need be? Would you want access to the best medical cover, treatments and rehabilitation options?

Insurance provides financial security so your life can continue with as much normalcy as possible, whilst you seek the best care available.

At a time when everything else seems out of control, it is good to know your financial security isn’t!

The difference a Financial Adviser can make

ASIC found that the “claim declined” rate was around 50% higher where the claimant went direct to the insurer than if they went through an adviser. In other words, you have a much greater chance of success with an adviser.[1]

A Financial Adviser looks at your specific circumstances, your lifestyle, goals and appetite to risk. Together you can discuss personal insurance policies, tapping into their expert knowledge and understanding of the requirements of insurance providers. You can also discuss options for holding insurance inside and outside of superannuation and, should you need to make a claim on a policy, your Financial Adviser can liaise with insurance companies and superannuation entities on your behalf.

If it’s time to consider a personal insurance policy, or you want to review your existing policy, a Financial Adviser is willing and able to assist you.

[1] ASIC: Life insurance claims: An industry review

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
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Intergenerational Wealth Monthly Market Wrap March 2021

Vaccinations continue climbing 

  • Global shares rose 2.7% and 1.6% in hedged and unhedged terms, respectively. The rotation to stocks benefitting from a strong economic recovery persisted into February. A rally in oil and other commodity prices boosted returns for energy and mining stocks.
  • Australian shares underperformed global shares rising 1.5% in February. The market was led by strength from the mining (up 7.2%), financial (up 4.5%) and energy (up 2%) sectors. Energy stocks rose in line with continued strength in oil prices as investors anticipated economic recovery (and higher oil demand) after vaccination rollout. Renewed interest in renewable technology and electric vehicles drove a bid for copper and nickel miners such as IGO Ltd (+9.5%).
  • The Australian dollar (AUD) rose 2.4% against major currencies and 0.8% against the US dollar.
  • Fixed income returns were negative as bond yields rose. Riskier corporate bonds outperformed as investor conviction in economic recovery intensified while government bonds were sold off with the Australian government bond index down 4% in February.

 

As economic momentum builds

Globally

  • Coronavirus case growth globally has slowed although we have seen upticks in Europe and emerging market countries. Europe has been plagued by a slower vaccine rollout than other developed countries such as the US and UK.
  • The Global Manufacturing PMI survey (a proxy for manufacturing sector strength) rose to a three-year high in February.

Locally

  • The RBA left interest rates on hold at 0.1% and announced a further $100bn in bond purchases at its February meeting. In its March meeting the RBA restated its expectation of leaving interest rates unchanged until at least 2024. Amidst the substantial fall in bonds it brought forward bond purchases to limit the scale of the selloff in longer-duration bonds (the 10-year bond recorded its largest monthly rise in over 25 years) and signalled its willingness to intervene further if required.
  • The unemployment rate fell to 6.4% in January, pleasingly continuing to decline from its high of 7.5% in July thanks to continued strong jobs growth and government stimulus spending.
  • Chinese bans on Australian coal and tariffs on wine imports persisted with Australian exporter Treasury Wine Estates (Penfolds producer) axing up to 60 roles in its China business in response.

Major asset class performance

Asset classes1 month
%
1 year
%
5 years (p.a.) %
Australian shares1.5%6.5%10.7%
Global shares (hedged)2.7%23.5%13.4%
Global shares (unhedged)1.6%7.8%12.3%
Global small companies (unhedged)3.9%18.3%13.2%
Global emerging markets (unhedged)-0.1%13.3%13.4%
Global listed property (hedged)3.8%-4.4%4.4%
Cash0.0%0.2%1.4%
Australian fixed income-3.6%-2.8%3.2%
International fixed income-1.6%-0.2%3.5%
 

Source: Bloomberg & IOOF, 28 February 2021

 

Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD

Please note: Past performance is not indicative of future performance

Currency marks

Exchange ratesAt close on 28/21 month
change
%
1 year
change
%
USD/AUD0.770.8%18.3%
Euro/AUD0.641.3%8.1%
Yen/AUD82.12.6%16.7%
Trade weighted index64.52.4%13.2%
Source: Bloomberg & IOOF, 28 February 2021. All foreign exchange rates are rounded to two decimal places where appropriate.

Please note: Past performance is not indicative of future performance

Disclaimer: This report has been prepared by the IOOF Research team for RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429. RI Advice Group Pty Ltd is a company within the IOOF group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This report is current as at the date of issue but may be superseded by future publications. The information in the report may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of RI Advice Group Pty Ltd. This report may be used on the express condition that you have obtained a copy of the RI Advice Group Pty Ltd Financial Services Guide (FSG) from the website. RI Advice Group Pty Ltd and/or its associated entities, directors and/or its employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this report, or may provide services to the companies referred to in this report. This report is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of RI Advice Group Pty. RI Advice Group Pty and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. This report has been prepared in good faith and with reasonable care. Neither RI Advice Group Pty nor any other person makes any representation or warranty, express or implied, as to the accuracy, reliability, reasonableness or completeness of the contents of this document (including any projections, forecasts, estimates, prospects and returns and any omissions from this document). To the maximum extent permitted by law RI Advice Group Pty, its related bodies corporate and their respective officers, employees, representatives and associates disclaim and exclude all liability for any loss or damage (whether foreseeable or not foreseeable) suffered or incurred by any person acting on any information (including any projections, forecasts, estimates, prospects and returns) provided in, or omitted from this report. General Advice Disclaimer: The information in this report is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this report, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before you acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance.
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