Retirement Planning News

Australians are now living longer lives than they have ever been. This is fantastic, but it also poses a number of difficulties. To be able to respond to the changes in your lifestyle along the road, you need to have the correct approach in place.

Read our insights to keep up to date with the latest news, trends and changes related to retirement planning.

April 2022 Investment Review: Share markets decline as interest rates rise further

Talking points

  • After bouncing back in March, share prices declined over April.
  • Australian equity investors were cushioned from the severity of global equity markets by outperformance from the Australian market and the depreciation in the $A.
  • Bond yields continued to move higher as high inflation persisted.



International Equities



Global share markets responded negatively to further interest rate increases over April. As was the case earlier in 2022, higher interest rates disproportionally impacted “growth” orientated equities. Those companies reliant on earnings growth in future years (rather than current earnings) typically have their valuations more heavily influenced when interest rates rise. Inflation combined with some lower than expected profit results from growth companies (e.g. Netflix) last month created a significant fall in “growth” styled equities. With the United States having considerable exposure to growth sectors, such as Information Technology, the US underperformed the broader global average, with the S&P 500 Index dropping 8.5%. Losses in other developed markets were less significant. The UK once again moved against the trend, rising by 1.0% as it continued to benefit from increased oil and energy prices.  

Share markets in emerging economies outperformed those in developed economies last month, with the MSCI Emerging Market Index declining 3.5% in local currency terms. There were positive returns in oil exporting regions, with Middle Eastern markets producing solid results. However, Chinese share prices continued to decline with the ongoing COVID related lockdowns in major cities, generating considerable uncertainty over the near term outlook for economic growth and company earnings.  

Global infrastructure and property sectors again performed better than equities overall. With cashflows in these sectors often closely linked to inflation, support for property and infrastructure assets has been relatively strong over recent months.


Australian Equities

Losses on the Australian equity market were less than the global average last month, as has been the pattern for most of the past quarter. The ASX200 index outperformed global equities by 15.6% in the 3 months to April. Relatively low exposure to “growth” styled equities and high exposure to resources & energy are two key contributors to this outperformance.

Australian energy stocks continued to advance last month, supported by a further 4.4% increase in the global oil price. However, there was some reversal of the recent appreciation in resource stocks, with the sector falling in value by 4.2% over April. This weakening was at least partially attributable to a 7.2% fall in the iron ore price, which is likely to have been impacted by the uncertainty over the Chinese growth outlook. As was the case globally, Information Technology stocks recorded a large decline, with the sector falling by 10.4%. Losses in the sector over the past year are now 22%.

More defensively positioned sectors increased in value over April. Utilities were the strongest, rising by 9.3%. A 12.4% jump in AGL’s share price made a significant contribution to the Utility sector’s performance. AGL is currently proposing a demerger of its energy retailing and electricity generation businesses, while the ongoing prospect of a takeover of the company could also be providing share price support. Outside of utilities, other defensive sectors such as Consumer Staples, Property Trusts, and Healthcare posted positive returns.


Fixed Interest & Currencies

The pattern of higher inflation leading to higher interest rates continued over April. In Australia, evidence of the uplift in inflation was provided in the release of the March quarter Consumer Price Index data, which showed the latest inflation rate to be 5.1%. This was followed by the decision of the Reserve Bank to lift the cash interest rate from 0.1% to 0.35%, which is consistent with the recent trend set by central banks across the globe. With inflation continuing to exceed expectations, bond yields have moved steadily higher. Last month, US 10-year Treasury Bond yields jumped from 2.32% to 2.89%. Despite having lower cash and shorter-term yields than the US, Australian longer-term interest rates remained above US equivalents, with the Australian 10-year government bond yield rising from 2.84% to 3.12% over April. As has been the case over each of the first 4 months of 2022, rising bond yields led to negative returns for fixed interest investors.


With the further increase in US interest rates, there was strong support for the $ US last month. As a result, the $A declined from US 74.8 cents to US 71.5 cents. This deprecation helped soften the impact of falling US equity valuations for Australian investors with unhedged exposures. The $A was, however, stronger against both the Euro (up 1.2%) and the Japanese Yen (up 1.9%) over April.



The magnitude of the change in bond yields over recent months appears to have moved beyond market consensus on the likely path of cash interest rate movements. Bond yields are higher than is implied by most economist forecasts of future cash rates. The relatively sudden removal of central bank bond buying (through their quantitative easing programs) may have led to a shortfall in bond demand, thereby creating a price fall (yield increase) beyond the fundamental or logical valuation. If this is the case, then a premium is currently available in bond yields, which should ultimately be rewarding for investors. 

What does this mean for fixed interest investors? Opportunities to take on more duration (interest rate term) exposure in fixed interest portfolios should now be considered. The short to medium term section of the yield curve appears particularly attractive (3-year government bonds in Australia are now yielding 3.0%), with yields above the most reasonable estimates of inflation averages for the equivalent period. Investing to take advantage of this duration premium appears to be a more robust strategy than holding large amounts of cash or taking on too much credit exposure at this time.

Whilst the rise in interest rates may have provided more conviction around the most appropriate approach to fixed interest, the outlook for equities is less clear. Rising interest rates have definitely been a major factor behind the weakness in equity markets this calendar year. However, if bond yields have “overshot” fundamentals (as implied above), then perhaps the risks to equities from this point forward should be considered lower as further increases in bond yield become less likely.

There are, however, other contributors to equity market risk outside of the interest rate factor. Although the economic backdrop remains reasonable with solid employment and household spending prevailing, profit margins have come under increasing pressure in recent months as input costs, particularly labour, are forced higher. Not all companies can pass on higher costs in full, and previously expected earnings growth forecasts could be challenged.

Notwithstanding the increase in risks associated with company earnings, equity prices have already materially declined over recent months, reducing the potential for further decline. Global equity valuations are now 12.1% below the level recorded at the close of 2021. Far more significant declines have been recorded in Asian equities, global smaller companies and sectors such as Information Technology, which may now be offering compelling value when compared with the broader global equity asset class.

If you have any questions or want to discuss your investment strategy then please book at chat with me.



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Strategies ahead of the end of the financial year

The say that the days are long, but the years fly by. Well, as June 30 fast approaches I am inclined to agree based on how quick this financial year has gone.

Not to worry, there is still time to implement some strategies in the final weeks of the 2022 Financial Year. Below are some of the superannuation and investment strategies that could have an impact on personal finances. Get proactive to ensure you are across these.


Tax-loss harvesting

With market volatility spiking in recent months, it is critical to lift the hood of your investment portfolio to assess individual investments’ capital gains/loss status. While your overall portfolio may be positive, there could be opportunities to exit positions where your investment conviction has changed, and importantly, the sale will trigger a capital loss.

Being proactive ensures you do not waste a crisis and can be tax-effective whilst also recalibrating your portfolio for the current conditions. The benefit of this is that capital losses can be used to offset capital gains, either this financial year or be carried forward into future financial years.

Ideally, you would want to start this process sooner rather than later, as, from experience, tax-loss harvesting tends to peak late into the financial year. This can cause extra weakness in investment values which have suffered in the preceding 12 months. You want to get ahead of the herd.

If you move from growth assets to growth assets, your broader investment strategy may not be materially impacted. It may allow you to improve your overall portfolio mix based on new information available.


Concessional superannuation contributions

Many investors may have capital gains implications from solid investment returns in the first half of the financial year, and concessional superannuation contributions are a simple way to reduce this.

It is common for there to be a disparity between spouses’ super balances, which presents an opportunity to reduce tax and make progress in getting more balance between accounts. Important not to fixate on the current financial year but to think long term concerning the balance transfer cap (currently $1.7m). If it is likely, that one spouse will exceed this level and the other fall short, annual super contribution strategies for both spouses should be front of mind.

Consider utilising carry forward contributions where one member of the couple has a total superannuation balance below $500,000 as at 30 June 2021. They can carry forward any unused concessional contributions cap amounts accrued from 2018/19 to 2020/21 to increase their concessional cap in 2021/22. This may be particularly useful where a large asset has been sold, such as an investment property. If you are unsure what you have available to contribute, chat with your adviser or check your myGov account.


Non-concessional superannuation contributions

If concessional contributions are not appropriate for your circumstances, or you have maxed out that cap then consider non-concessional contributions (after-tax) with your surplus savings.

If your Total Superannuation Balance is below $1.48m, you may be eligible to make non-concessional contributions of up to $330,000 in a single financial year or over a 3-year period using ‘bring-forward’ provisions.

With recently passed legislation, retirees who previously could not make contributions based on their age should review their eligibility. Under current rules, you need to be less than 67 on 1st July of a financial year to be eligible to use the bring-forward rule. From 1 July 2022, you may be able to access the bring-forward rule if you’re aged less than 75 on the prior 1 July. Other eligibility rules will continue to apply, such as the total super balance limits, so make sure you understand your eligibility before making any contributions.


Pension Minimums to Remain Halved for the 2022/23 Financial Year

The Government has announced that the 50% reduction in pension minimums requirements will be extended for the 2022/2023 financial year. These measures have been in place since the 2019/20 financial year, and the extension provides an opportunity for individuals to preserve their tax-free pension balance. This is a big win for self-funded retirees, who may have other assets to draw upon to support their lifestyle in less tax-effective structures.

The simple approach to this opportunity is to assess whether you require any more than the reduced minimum pension requirement to support your lifestyle. If not, then it may be beneficial to retain your funds within the tax-free pension environment—allowing them to continue compounding. Important to remember that the reduced minimums are an option and not a mandatory reduction to your payments.


How can we help?

If you aren’t quote sure how to implement the above strategies or whether they would benefit your personal situation then please get in touch and book a chat with one of our advisers.

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2022-23 Federal Budget summary

Treasurer Josh Frydenberg handed down the 2022-23 Federal Budget and as expected in an election year, delivered a big spending Budget with the focus on cost of living support and defence.

We have been busy detailing and summarising what we feel are the key measures announced from a financial planning perspective. For our ongoing service package clients, your adviser will be in contact to provide guidance on changes which impact your strategy.



Extension of the temporary reduction in superannuation minimum drawdown rates

The Government has extended the 50 per cent reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products for a further year to 30 June 2023. The minimum drawdown requirements determine the minimum amount of a pension that a retiree has to draw from their superannuation in order to qualify for tax concessions.

Given ongoing volatility, this change will allow retirees to avoid selling assets to satisfy the minimum drawdown requirements.


Individuals and trusts

Cost of living tax offset

The Government will increase the low and middle income tax offset (LMITO) for the 2021-22 income year. LMITO is targeted at low- and middle-income earners that are most susceptible to cost of living pressures.

The LMITO for the 2021-22 income year will be paid from 1 July 2022 when Australians submit their tax returns for the 2021-22 income year. This proposal will increase the LMITO by $420 for the 2021-22 income year.


Paid parental leave

The Government is investing $346.1 million over five years, from 2021-22 to introduce Enhanced Paid Parental Leave (PPL), which is fairer and provides full flexibility for eligible working families. These changes will increase families’ choice to decide how best to manage work and care. Eligibility for the scheme is also being expanded.


Affordable Housing and Home Ownership

The Government will increase the number of guarantees under the Home Guarantee Scheme to 50,000 per year for 3 years from 2022-23 and then 35,000 a year ongoing to support homebuyers to purchase a home with a lower deposit. The guarantees will be allocated to provide:

  • 35,000 guarantees per year ongoing for the First Home Guarantee (formerly the First Home Loan Deposit Scheme)
  • 5,000 places per year to 30 June 2025 for the Family Home Guarantee
  • 10,000 places per year to 30 June 2025 for a new Regional Home Guarantee that will support eligible citizens and permanent residents who have not owned a home for 5 years to purchase a new home in a regional location with a minimum 5 per cent deposit.


Addressing Cost of Living Pressures – temporary reduction in fuel excise

Global oil prices have risen significantly since the Russian invasion of Ukraine. The Government will help reduce the burden of higher fuel prices at home by halving the excise and excise-equivalent customs duty rate that applies to petrol and diesel for 6 months. The excise and excise-equivalent customs duty rates for all other fuel and petroleum-based products, except aviation fuels, will also be reduced by 50 per cent for 6 months. The Government is responding in a temporary, targeted and responsible way to reduce cost of living pressures experienced by Australian households and small businesses.

The measure will commence from 12.01am on 30 March 2022 and will remain in place for 6 months, ending at 11.59pm on 28 September 2022. Under the measure, existing policy settings for fuel excise and excise-equivalent customs duty, including indexation in August, will continue but on the basis of the halved rates. At the conclusion of the 6 month period the excise and excise-equivalent customs duty rates will then revert to previous rates, including indexation that would have occurred on those rates during the 6 month period.

The rate of excise and excise-equivalent customs duty currently applying to petrol and diesel is 44.2 cents per litre. This measure will halve the rate on petrol and diesel to 22.1 cents per litre from 30 March 2022, with the price faced by consumers expected to be reduced by a larger magnitude given GST will be levied on the lower excise rate.

The Australian Competition and Consumer Commission will monitor the price behaviour of retailers to ensure that the lower excise rate is fully passed on to Australians.


Digitalising trust income reporting and processing

The Government will digitalise trust and beneficiary income reporting and processing by allowing all trust tax return filers the option to lodge income tax returns electronically, increasing pre-filling and automating ATO assurance processes.

The measure will commence from 1 July 2024, subject to advice from software providers about their capacity to deliver.



Small Business – skills and training boost

The Government is introducing a skills and training boost to support small businesses to train and upskill their employees. The boost will apply to eligible expenditures incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2024.

Small businesses (with an aggregated annual turnover of less than $50 million) will be able to deduct an additional 20 per cent of expenditure incurred on external training courses provided to their employees. The external training courses will need to be provided to employees in Australia or online and delivered by entities registered in Australia.


Small Business – technology investment boost

The Government is introducing a technology investment boost to support digital adoption by small businesses. The boost will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2023.

Small businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20 per cent of the cost incurred on business expenses and depreciating assets that support their digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services.

An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost.

The boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2023 will be included in the income year in which the expenditure is incurred.


Social security

Cost of Living Payment

The Government will provide $1.5 billion in 2021-22 to provide a $250 economic support payment to help eligible recipients with higher cost of living pressures. The payment will be made in April 2022 to eligible recipients of the following payments and to concession card holders:

  • Age Pension
  • Disability Support Pension
  • Parenting Payment
  • Carer Payment
  • Carer Allowance (if not in receipt of a primary income support payment)
  • Jobseeker Payment
  • Youth Allowance
  • Austudy and Abstudy Living Allowance
  • Double Orphan Pension
  • Special Benefit
  • Farm Household Allowance
  • Pensioner Concession Card (PCC) holders
  • Commonwealth Seniors Health Card holders
  • eligible Veterans’ Affairs payment recipients and Veteran Gold Card holders.

The payments are exempt from taxation and will not count as income support for the purposes of any income support payment. A person can only receive one economic support payment, even if they are eligible under 2 or more of the categories outlined above. The payment will only be available to Australian residents.


How can we help?

If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2022-23 Federal Budget, please feel free to book a chat with your adviser.


Until next time.



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Superannuation changes from 1 July 2022 that you need to know

A Bill implementing the Government’s key 2021-22 Federal Budget super changes recently passed parliament and received Royal Assent.

Outlined below is a brief explanation of some of the key changes and how you could benefit. 

Whether you’re thinking about retirement, have already retired, or even looking to purchase your first home, there is likely to be value in reviewing your circumstances and understanding how these super changes could benefit you. 

If you are unsure or want to chat about how these superannuation changes impact you, please make time to chat with your adviser.


Superannuation contribution key changes

Individuals aged 67-74 will have increased opportunity to contribute to super with the following changes:

  • the removal of the work test for personal (after-tax) contributions and salary sacrifice contributions, and
  • an increase to the amount of after-tax contributions that can be made within a single financial year.


Removal of work test

Currently, the work test requires you to undertake work for at least 40 hours in a consecutive 30 day period in the financial year a super contribution is made. Alternatively, you may be eligible to apply the work test exemption. 

This requirement is removed from 1 July 2022 for individuals aged 67-74 if making personal after-tax contributions and salary sacrifice contributions. The removal of the work test may make it easier for you to make contributions.

It is important to note that the work test (or work test exemption) still applies if you make a personal contribution and wish to claim a tax deduction.

Other eligibility requirements to make contributions continue to apply, such as total super balance limits and contribution caps. See for more details.


Increasing limits on after-tax contributions

Caps apply to limit the total contributions that you can make to super. The current annual non-concessional contributions (NCC) cap is $110,000. NCCs include:

  • personal contributions for which you don’t claim a tax deduction
  • spouse contributions, and
  • certain amounts you may transfer from an overseas super fund.

If you meet certain requirements, you may be eligible to ‘bring-forward’ NCCs from future financial years to make even larger contributions. This is known as the ‘bring-forward rule’. If you’re eligible, you may be able to contribute up to $330,000 either in a single financial year, or over a three year period. 

Currently, you need to be less than 67 on 1 July of a financial year to be eligible to use the bring-forward rule. From 1 July 2022, you may be able to access the bring-forward rule if you’re aged less than 75 on the prior 1 July. Other eligibility rules will continue to apply, such as the total super balance limits.

The following table summaries the maximum NCCs that can be contributed in 2022/23 based on your total super balance as at 30 June 2022:


NOTE: Contribution caps apply to both concessional and non-concessional contributions. Care should be taken to avoid breaching your cap as additional tax and penalties may apply. For further information visit or get in touch with us.


Downsizer contribution changes

Downsizer contributions allow eligible individuals to contribute some or all of the proceeds of the sale of their home, without impacting other contribution caps. Unlike NCCs, downsizer contributions do not have a total super balance limit, or an upper age limit. This means it could be a great, final way to boost super for those who don’t meet other eligibility rules to contribute, or where the NCC cap has been earmarked for other purposes.


What’s changing?

From 1 July 2022, the eligibility age is reducing from 65 to 60. The age reduction increases the number of individuals who may be eligible to make a downsizer contribution and boost their retirement savings.


What’s the limit?

Provided certain other conditions are met, it may be possible to contribute up to $300,000 per person (or $600,000 per couple) from the proceeds of selling your home.

Downsizer contributions won’t count towards your concessional or non-concessional contribution caps.

You’ll need to make the contribution within 90 days of settlement of your sale, and you need to complete the required forms to notify your fund that you’re making a downsizer contribution, no later than the time your contribution is made. You must have reached the eligibility age at the time of contributing.


How can this benefit you?

Aside from super being a concessionally taxed investment, there are a number of other ways a downsizer contribution could benefit you. 

Funds in super accumulation phase are an exempt asset for social security purposes while you are under your Age Pension age. This could help increase or maintain your or your spouse’s entitlement to a pension or other benefit. Also, making a downsizer contribution together with an NCC could help you contribute even more of your home sale proceeds into the concessionally taxed super environment. 

Other eligibility rules and requirements apply. Before you contribute it is important to seek advice and if you are unsure then please get in touch with us.


Changes to the First Home Super Saver Scheme (FHSSS)

The First Home Super Saver Scheme (FHSSS) allows you to make voluntary contributions of up to $15,000 per year within your concessional and NCC caps and you can later withdraw an amount of those voluntary contributions plus earnings (calculated at a set rate by the ATO on the amount you withdraw. 

The maximum amount of voluntary contributions that you can withdraw increases from $30,000 to $50,000 from 1 July 2022. This boosts the amount that can be accessed from super and directed to buying your first home.


How can this benefit you?

As the scheme allows the withdrawal of voluntary contributions, consideration must be given to not only whether using super is the right approach for you but the type of contribution you will make. For example, salary sacrifice amounts (if an employee), personal deductible contributions or non-concessional (after-tax) contributions).

There is a range of criteria to withdraw your super under this scheme as well as ensuring the funds are used to purchase your first home which is outlined on the ATO website


Superannuation guarantee eligibility changes

Superannuation Guarantee (SG) requires employer to pay a minimum level of super support for eligible employees. One criteria for an employee to be eligible is based on that employee’s monthly earnings being at least $450 per month. However, this threshold is abolished from 1 July 2022. 

 allowing all eligible employees to receive SG paid into their super fund.

This measure primarily assists low-income earners to have employer contributions paid to super boosting their retirement savings. SG contributions count towards your concessional contribution cap and should be taken into consideration when determining any other contributions made.

Business owners should review their processes to ensure that SG is paid for all eligible employees. Penalties may apply if SG is unpaid or paid late. 



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February 2022 Investment Review: Volatility spikes in response to invasion of Ukraine

Talking points:

  • In a month of high day to day volatility, global equities moved lower in response to the invasion of Ukraine by Russia.
  • Australian equities moved against the worldwide trend, finishing the month higher.
  • Bond yields continued to rise as the military conflict heightened inflationary pressures.



International Equities



Unsurprisingly, the Russia-Ukraine conflict over February heavily impacted European share markets. Germany (down 6.5%) and France (down 4.7%) both performed below the global market average decline of 2.8%. The United States also experienced a significant 3.0% fall, with ongoing weakness in the higher growth sectors (particularly Information Technology) adding to the market decline.

In contrast, markets with substantial commodity exposure outperformed. Supplies of oil, gas, wheat and various other base metals and rare earths are expected to be heavily impacted by the Russian invasion of Ukraine. Commodity prices jumped significantly as a result. Oil prices were nearly 9% higher over the month and have now risen 27% so far this calendar year.

New Zealand, Canada, Norway and the United Kingdom were all examples of markets that benefited from the higher commodity prices and avoided equity market decline. The Japanese market was another to outperform, with the fall in the Nikkei Index restricted to 1.8%. In periods of heightened uncertainty, the Japanese market and currency are often viewed as “safe haven” assets and can outperform as a result.

Emerging markets also had mixed results over the month. Prior to the market being closed in late February, the Russian market had dropped 36% during the month. With MSCI and other index providers announcing that Russian listed stocks will be excluded from global and regional indexes, further selling pressure is expected should the Russian market re-open.

Other Eastern European markets also performed poorly over February, with an average decline of 11.7% (excluding Russia). However, elsewhere the jump in commodity prices supported emerging equity markets, with the Middle East and Latin America particular beneficiaries.

After a large decline in January, the Chinese share market stabilised somewhat in February with a flat result, although Hong Kong reversed its January increase with the Heng Seng Index falling 4.6%.


Australian Equities


The Australian equity market outperformed global averages significantly, with higher commodity prices being the key driver. The energy sector jumped 8.6%, with resources more broadly being 6.4% higher. Iron ore prices consolidated their gains from January, which supported the larger resource stocks of BHP (up 5.4%) and Rio Tinto (up 5.9%). However, larger price gains in other commodities saw some smaller mining companies, such as South 32 (up 24.9%), perform particularly well.

In addition to the resource rally, there was also a continuation of the dominant trend in January that saw more defensive “Value” stocks outperform higher “Growth” orientated stocks. One of the explanations for this trend was the ongoing rise in inflationary pressure (stemming from higher commodity prices) and the related increase in bond yields. These higher yields reduce the attractiveness of stocks reliant on earnings growth in future years. As a result, the Information Technology sector was once again the weakest performer with a decline of 6.6%.

More cyclical consumer stocks were impacted by concerns over the potential impact of the military conflict on global growth and consumer sentiment. The Consumer Discretionary sector dropped 5.0%. In contrast, more defensive sectors including Property Trusts (up 1.4%), Utilities (up 3.4%), Consumer Staples (up 5.6%) and Financials (up 3.0%) all performed well.

Despite the strong gains from some small resource companies, smaller companies continued to lag larger companies over February. The ASX Small Ordinaries Index was flat over the month. With an annual gain of 5%, smaller companies have lagged the broader market by 5% over the past year.



Fixed Interest & Currencies



With the jump in commodity prices adding further inflationary pressure across the global economy, there was additional upward pressure on interest rates last month. Some of the rise in global bond yields was, however, tempered later in the month due to the possibility that an extended conflict in Ukraine would reduce the magnitude of policy tightening by central banks. As a result, the rise in the U.S. 10 year Treasury Bond yield was limited to just 0.04%, with the yield finishing the month at 1.83%.

Australian yields increased by more, however, possibility due to expectations that Australia would be less negatively impacted by the military conflict. Australian 10-year government bond yields jumped from 1.88% to 2.13%.




Stronger commodity prices and higher bond yields contributed to a rise in the $A last month. Partially reversing the depreciation in January, the $A rose from US 70.1 cents to US 71.8 cents.



The outbreak of war in Ukraine has both tragic human outcomes as well as significant global economic impacts. For those specific countries, companies and commodities directly impacted, the effects are clear and potentially long lasting. However, from an overall macro-economic and global share market perspective, the consequences are less apparent. Clearly uncertainties and risks have been heightened and the fall in global share market values over recent weeks is an appropriate response to that heightening of risks. Past experience, however, does suggest there is a tendency for equity markets to recover post an initial sell-off, well before any underlying geopolitical event has been resolved. This may reflect the reality that military conflicts don’t necessarily have negative implications for longer term company earnings at the aggregate level.

For Australian investors, the geographical isolation from the military conflict, together with the high resource and energy exposure of our economy, creates the potential for at least relative outperformance from the local market.

Concurrent with the risks stemming from the war in Ukraine, investors also need to consider the ongoing implications of rising inflation and interest rates – with inflation risks ballooning further as a result of the conflict. Although central banks may be more cautious around lifting interest rates in an environment of heightened uncertainty, any relaxation of a tightening regime could further entrench inflation and then ingrain higher interest rates into the medium term.

Despite the significance of events of recent weeks, our portfolio positioning preferences have changed little. Within the fixed interest asset class, the ongoing prospect of higher interest rates remains, and duration positions should be held relatively short to avoid the prospect of capital loss on bonds.

Although risks have increased, equity exposures should be maintained near neutral levels for investors who have the tolerance to hold exposure to these risks. On balance, risks and return prospects within Australian equities have improved relative to broader global equities given events of recent weeks. As such, a slight bias towards Australian equities may be warranted. Consistent with this improved relative positioning of Australia, high commodity prices and potentially increased latitude for interest rates to rise could add support for the $A. Although high commodity prices (and high iron ore prices in particular) could correct downwards at any time, short term recent upward momentum in the $A may have further to run, and some additional currency hedging could be considered over this period.

Should you have any questions or want to discuss your investment strategy then please book at chat with me.


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How vital are fees when choosing a super fund?

I’m not sure about you, but I don’t go to the cheapest hairdresser, I’ve been burnt before. On the other side, I also don’t pay thousands of dollars for my haircut either (although, maybe in Melbourne at the moment, I may have to in order to get a booking now that lockdown is over). I go somewhere where I feel the cost is reasonable, and I am happy with the outcome. With most things in life, the price is important but what should usually be most important is the value you get from that cost. This is the same way that you should be thinking about your investments and your superannuation.


Doesn’t lower fee’s mean more money in my super?

This is often a way in which people think, and it’s not necessarily wrong. Lower fees can often mean more money come retirement, but it’s not that simple. We need to look at the total return. If you’re paying 1% less in fee’s that can be great, but not if the more expensive investment outperforms the cheap one by 1.5%.

The most discussed cheap super option is the HostPlus Indexed Balanced Option. This fund’s popularity and investment are primarily due to the barefoot investor. Whilst this investment is cheap with investment fees of 0.06%. However, this is not the only factor we should consider when choosing it for our superannuation.

We first need to make sure that it’s appropriate for our risk profile. That means do we have the tolerance for the volatility that the growth assets within the fund will bring, or potentially, is this balanced fund below our risk tolerance and therefore, we may be missing out on long term returns by sitting below our risk profile. For instance, if you are a growth investor and chose the Indexed Balanced Option instead of the Shares Plus option, which is arguably more in line with the risk profile of a growth investor, you would have saved 0.93% in fees each year. That, however, only tells you part of the story as the Indexed Balanced Option over the last ten years averaged a 9.2% return whilst the Shares Plus Option averaged 10.64% for the same period. So we are leaving you potentially 0.51% worse off each year.

This also doesn’t mean that we hunt the best performing fund as historical returns don’t always correlate to future returns. However, investing in a manager with a proven track record is usually a good idea. The main point of this is that fees and fees alone should not be the basis on which you invest your super. Outside of fees and investments, other factors should be considered when choosing your superannuation.


What other factors should I consider?

As we’ve discussed above, fees and returns are significant, but other things need to be considered when deciding how we will invest our retirement savings. One of the more pressing issues with a lot of investors is not only the allocation of my investments in terms of how much I have allocated towards growth and defensive assets but also how my money is invested. Ethical and sustainable investing is becoming very popular as more and more people become concerned about the threat of climate change and other pressing social issues. If you are passionate about protecting the environment, then usually you would want your investments to reflect that and whilst most of them are getting better, not every super fund has an appropriate ESG option available to invest in. When looking at ethical and sustainable investing, what one person might consider being ethical and sustainable, another may not. So, it becomes crucial to see how those funds are invested in ensuring that they align with your wishes.

Another critical thing to think about when looking at what superfund option is best for you is what insurance options are available out there. This becomes especially important if you have insurance already within your current fund. You may not be able to get those insurances somewhere else due to medical issues you have had since getting those insurances. This becomes crucial to think about as once insurances are gone; they can be hard to get back. This is a necessary mindset to get into when looking at changing super funds as well, don’t look only to what you will gain but also to what you may be losing.

Other things that may be important when looking at your superannuation can be factors as simple as login access and how good the customer service is. However, the main point of this blog is to illustrate that there are many different reasons for choosing a particular super fund and investments. It’s all about choosing the best option for you, not necessarily what works for someone else or not for the simple reason of fees alone.

As always, if you have any questions, feel free to email me at


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What are the 8 dimensions of wellbeing?


When you think about wellbeing, you often think about your physical health. Are you exercising enough, eating well and keeping healthy habits? But, in reality, it is so much more than that.  

Your wellbeing is a conscious and deliberate process of making choices that help us to live our best life. A life full of purpose, satisfying work and play, joyful relationships, a healthy body and mind, financial confidence and ultimately happiness. 

According to research, a person’s wellbeing can be measured against eight dimensions of wellness: physical, spiritual, social, emotional, intellectual, occupations, environmental and financial.  

Each dimension means something different to everyone. Understanding what it means to you can help you uncover what you value in life, where your strengths are and what you might need to work on. 


The Physical Wellness Dimension involves things that keep us active and healthy. Our physical wellbeing is so important to our mental health, longevity and ensuring we live our best lives. This doesn’t mean we must all be athletes. But it does mean building good physical health habits, having a healthy diet, exercising regularly, and having the appropriate health care for our needs. The more we are in tune with our bodies and what they need, the less likely we will be to become reliant on the healthcare system or even our families and loved ones. 


The Intellectual Wellness Dimension involves things that keep our brains active and our intellect expanding. It’s about mastering new skills, learning new things or helping to educate others. Having the time and resources to keep your mind active and supporting your loved ones can help you live a long life. 


The Spiritual Wellness Dimension is a broad concept that represents one’s personal beliefs and values and involves having meaning, purpose, and a sense of balance and peace. It includes being able to volunteer your time to support causes that mean something to you and help others to live a more purposeful life. 


The Emotional Wellness Dimension involves the ability to express feelings, adjust to emotional challenges, cope with life’s stressors, and enjoy life. It includes building and nurturing relationships to strengthen our support networks and ensure we have the resources to spend time and money on those we love and the things we enjoy in life. 


The Financial Wellness Dimensions addresses your financial wellbeing. It covers your income, debt, savings and investments as well as your financial literacy. It also means having the resources to support and protect those you love. To live your best life, you need to be confident in your current financial situation or your future financial prospects.  


The Occupational Wellness Dimension involves aligning your work to what you value in life. Ensuring that you pursue work that has meaning and purpose and reflects your values, interests and beliefs. Living your best life means work shouldn’t feel like work. 


The Social Wellness Dimension involves having healthy relationships with friends, family and the community. Living your best life means living a life where you participate with others you care about and have the time to do so. 


The Environmental Wellness Dimension involves living in an environment that promotes positive wellbeing. Such as preserving areas where we can live, learn and work, providing pleasant, stimulating environments that support our wellbeing and offer the natural places and spaces to promote learning, contemplation and relaxation. We need to create the right environments to help us live our best lives now and into the future, for both ourselves and our loved ones.  

Our financial advice process will help you to uncover which areas of wellbeing are most important to you and how close you are to living a life aligned with those areas of wellbeing.  

Our advisers will then work with you to set goals and shape strategies to make sure you are on the right path to living your best life. A life full of purpose, satisfying work and play, joyful relationships, a healthy body and mind, financial confidence and ultimately happiness. 

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Why values matter

We all have values that we live by. They are the motivational drivers that help us determine what’s important in life. They give meaning to the things we do. They are individual to us, guide our behaviour, and allow us to feel fulfilment in life. 

But we’re not always consciously aware of what our values are. In fact, many of us rarely spend time stopping, thinking, and considering our values. 

Not knowing what we truly value in life can lead us to make bad decisions, inconsistent with what we want to achieve in life. It can cause us to escape into bad habits or look for quick wins to uplift ourselves. 

It’s easy to dismiss values too. We focus on what our society, culture or community values instead and try to meet these expectations. We don’t spend the time to articulate what our top five values are. And, it takes a lot of effort to know and accept what you value. This will often lead to decisions being made that don’t lead us to live our best life. We hit key turning points in our lives and do what society or others expect us to do. Not what we want to do for ourselves or those we love.  

For example, many of us from a young age are encouraged to save for our retirement. We spend the majority of our lives working hard so that we can do all the things we want when we retire. In fact, this is drilled into us so much that we are saving more than we need for retirement, with many people leaving their retirement savings untouched or spend down only a little.  

There’s a school of thought that suggests saving makes us feel happy and fulfilled. However, this is just a mask for what behavioural economics calls loss aversion, the observation that human beings experience losses asymmetrically more severely than equivalent gains. This overwhelming fear of loss leads us to make bad decisions, behave irrationally and, ultimately, give lawyers the job of bequeathing our assets to those we love. 

Understanding our values can help us make better decisions. In the above example, it can help us reduce our fear of loss and turn it into a positive gain, by giving our money meaning and spending it on something that is truly important to us. Our values help us define what success looks like for ourselves. And when we begin to live a life that meets our success criteria, we feel more fulfilled and happy – even if it means spending the savings we’ve spent years to create.


Values matter 

So, values matter to all of us. They are our guiding principles or guardrails that can keep us on track to living our best life. And, when we achieve our goals we feel a sense of meaning and purpose. We feel good about ourselves and driven to continue to live a life full of purpose. 

But defining what you value is hard. There are so many words to choose from. You’re often too busy to stop and wonder what really matters. This is where we come in. 

Using a framework based on the eight dimensions of wellbeing, we can help you to uncover what you value in life. We work with you to determine a set of household values then set goals and tasks to help you live a life more aligned with your values. We also keep you accountable, helping you to make decisions that take you closer to achieving your goals. And, we measure how you’re going and help you see the successes and failures, so that we can continue to make the best choices for both now and in the future. 



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Inflation: Structural or not? from Lonsec CIO

Insights from research house, Lonsec Chief Investment Officer (CIO)

Inflation continues to be on everyone’s lips. The debate as to whether inflation is transitory or structural in nature is gaining momentum as the US recorded an annual rate of inflation of 6.2%, the highest rate in three decades. What is interesting is that we are observing a growing divergence between what is driving inflation in different countries, which is making the debate between structural and transitory inflation more nuanced.

There is no doubt that supply shortages related to COVID-19 have been putting upward pressure in input costs for many companies around the world. In recent company meetings conducted by Lonsec, rising input costs were a common theme for many companies across a broad range of industries. These pressures should ease as supply chains reopen and as we emerge out of the pandemic, which is consistent with the transitory narrative.

From an Australian perspective, wage growth continues to be sanguine. Apart from certain industries such as hospitality, where staff shortages are pushing wages up, with some restaurants indicating that dishwashers are asking for $90 per hour due to staff shortages. Wage growth, or the lack of, has been a key focus for the RBA and while wage growth remains low, the prospect of a rise in structural inflation is lower than other countries.

In the US the situation is different where we have observed core inflation rise, where inflation has not just been the result of rising energy prices. We are seeing evidence of wage growth driven by labour shortfalls and a reduction in productivity. It will be interesting to see how the US responds to the rise in inflation. One plausible scenario is that the US will seek to import deflation through appreciation of their currency. From an Australian perspective, this would put downward pressure on the Australian dollar and furthermore see US inflation effectively exported offshore.

While we are cautious on the prospect of inflation our base case is not one of out-of-control inflation. From a portfolio perspective, we continue to hold assets with underlying holdings where income streams are linked to inflation. This is particularly relevant for retirees where real income is important. This includes real assets such as listed infrastructure. More broadly while we remain pro-risk assets, the environment is becoming more challenging. We are observing more divergence in returns within asset classes which we think will make bottom-up investment selection an increasing contributor to returns in coming years.


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July 2021 investment review – Chinese concerns lead to patchy equity market results

Talking points for July 2021

  • Share market returns were inconsistent across major markets in July, with a significant sell-off recorded in China. 
  • The Australian market was led higher by resource stocks in anticipation of strong earnings announcements and higher dividends.
  • Bond markets remained unconcerned about rising inflation, with yields drifting lower again.


International Equities

A better-than-expected earnings reporting season in the United States provided a renewed source of confidence for investors who pushed the US S&P 500 Index further into record territory with a 2.4% gain. 

Other major markets were more subdued. Although the UK and Germany had flat results, other European markets were mainly positive. There is now considerable focus on the UK as it provides a potential blueprint for the full reopening of economies with high COVID vaccination rates. 

Although there has been a lift in COVID infections across developed economies over recent weeks, this doesn’t appear to have had a major impact on share markets. Japan is the exception where a marked rise in case numbers coincided with a sharp decrease in the Nikkei Index of 5.2% last month. 

Renewed government regulatory action significantly impacted returns in China (down 7.3%) and Hong Kong (down 9.6%). Chinese authorities announced significant reforms to the education sector, effectively banning profit making enterprises from school curriculum related education. The changes are believed to address concerns over the heavy use of these services in China, creating inequality and higher costs for families raising children. These costs are viewed as one of the reasons China has been unable to significantly increase its birth rate despite authorities abandoning the ‘one child’ policy due to concerns over the ageing of the population. The education reforms follow increased regulatory activity impacting listed businesses in China, particularly in the Information Technology sector. 


Australian Equities


Gains on the Australian market were marginally behind the global average, with the S&P ASX 200 Index advancing 1.1%. The resource sector (up 6.6%) was a material contributor to this rise, with investors encouraged by the likelihood that end of year earnings results would confirm that continued high commodity prices lifted both the size of profits and dividends from the sector. While the majority of commodity prices continued to rise over July, there was a pullback in the price of iron ore (down 9.9% in $ US terms) due to expectations of reduced volume demanded from China.

The more domestically focussed cyclical stocks were impacted by COVID related lockdowns, with the consumer discretionary sector falling 0.5% and financials slipping 1.4%. Conversely, defensive sectors performed better, with both healthcare and consumer staples rising. It was also a positive month for utilities, with some merger and acquisition activity suggesting that lagging listed valuations were becoming attractive to private and institutional buyers.

Following a large jump of 13.4% in June, the Information Technology sector continued to exhibit high volatility, with the sector falling 6.9% in July. In annual terms, the rise of the Technology sector of 24% is now below the overall market increase of 29%.


Fixed Interest & Currencies


Although not changing its cash rate target, the Australian Reserve Bank did announce a slight adjustment to its monetary policy settings last month. The change is related to the size of the bond purchase program that is associated with the central bank’s quantitative easing initiative. Previously, the RBA had been purchasing approximately $5 billion in government bonds per week in the 5-year to 10-year maturity range, intending to manage interest rates lower across the yield curve. This purchase program is now expected to be reduced to $4 billion per week. The change reflects an acknowledgement that the economic recovery has been faster than expected. 

However, despite this change and the confirmation that annual inflation had jumped from 1.1% to 3.8% in the June quarter, longer term bond yields continued to drift lower, with the 10-year yield falling from 1.49% to 1.14%. 

Similarly, in the US, where annual inflation has now surpassed 5%, the 10-year Treasury yield fell from 1.45% to 1.24%. The bond market’s assessment is clearly that inflationary spikes are temporary and that monetary policy will remain loose for an extended period. The downward movement in yields over recent weeks may also indicate bond markets having more concern about the impact of the ongoing COVID crisis than is apparent in equity markets. 

The downward trend in the Australian currency also continued last month. Weaker iron ore prices and the fact that Australian bond yields fell by more than US equivalents contributed to a 1.8% drop in the $A to $US 73.8 cents. There was a similar decline in the $A against the Euro. The weaker currency was positive for investors holding global assets on an unhedged basis, with the $A value of foreign currency domiciled investments appreciating as a result.  



In some respects, the direction of market movements prevailing over July mirrored the dominant trend of recent months. Falling bonds yields associated with positive economic and earnings data made equities even more attractive than they were in the prior month. However, beneath the surface there are signs of a change in the pattern of equity market growth.

Firstly, the appetite for more defensively positioned equities less reliant on cyclical earnings growth appears to be mounting. The cause of this could reflect the view that the upswing in the earnings cycle is starting to plateau. However, it may also be associated with the persistence of COVID infection rates and the possibility that COVID related restrictions will be a constraint on economic growth for some time to come. Locally, takeover bids for Sydney Airports and Spark Infrastructure demonstrate that listed valuations for defensive and infrastructure styled assets are attractive, having not being bid up over the past year to anywhere near the same extent as more cyclical and “growth” styled equities. The combination of earnings being boosted by materially positive inflation with the maintenance of interest rates being held artificially low, creates a unique situation for property & infrastructure styled assets in particular. The “real” or physical nature of the asset allows for ownership in geared structures that can exploit the differential between interest rates and the inflation linked cash flow growth these assets are likely to produce.

Secondly, the equity market rally is appearing to become narrower in scope. In July, for example, 5 of the 11 industrial sectors on the Australian market posted negative results. Geographically, Japan, China and some European markets also declined over the month. This is despite a material fall in longer term bond yields, that all else being equal, should have supported a general lifting of equity market valuations. 

Based on this, a more cautious approach to equity market exposures may be warranted, with an increased focus on defensively positioned assets able to maintain some earnings growth despite a possible deceleration in the broader economic cycle linked growth rate. 



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