OnePath Pricing Update: Presented by Alex Lee

OnePath Pricing Update: Presented by Alex Lee

As a result of recent correspondence received from OnePath in relation to upcoming premium pricing increases on Income Protection and Total Permanent Disablement polices, we wanted to touch base and provide you with our summation of the update. These pricing increases will come into effect as of the 3rd of November 2020. Whilst you therefore may not be impacted immediately, it is important that we inform you of these changes. Our Senior Adviser Alex Lee has put together the below short video with our summary of the upcoming changes. In addition, please find below for your reference a further outline of some of the key points Alex mentions.

If you would like to arrange a time to speak with your Adviser regarding these changes, or for any other queries, please contact our office on 1300 856 765 or email clientconcierge@mcqueengroup.com.au.

Things To Check With Your Financial Adviser Before June 30 Rolls Around

Things To Check With Your Financial Adviser Before June 30 Rolls Around

With June 30 just around the corner, we want to ensure the run towards end of financial year is as smooth as possible for you. Below we have included a few things you might want to check with your Financial Adviser before June 30 rolls around.

Topping up your superannuation

Saving more in super can come with tax and other benefits this financial year – but that’s just the start. Once money is invested in super, earnings are taxed at a maximum rate of 15% – instead of your marginal tax rate, which may be up to 47%. This low tax rate can help you build your savings for retirement.

Some strategies to consider include:

1. Tax Deductible Super contributions

a) Maximising your concessional contribution cap of $25,000 is a great way to build super and claim the tax benefits along the way.

b) Furthermore, in July 2019, the Government introduced the ability for individuals to access unused concessional contributions cap from 1 July 2018 on a rolling five year basis provided your total superannuation balance is less than $500,000. If you missed the opportunity to maximise your cap last Financial Year, this could be a great opportunity to top up your superannuation even further and claim a larger tax deduction! It could also be useful if you anticipate that your income will be greater this Financial Year than in future.

2. Spouse Contribution

If your spouse has assessable income below $40,000 this Financial Year, you may be eligible to receive a tax offset of up to $540. This is a great way to boost your spouse’s superannuation balance whilst also paying less in tax.

3. Government Co-Contribution

If you earned less than $53,564 this Financial Year, you may be entitled to a government co-contribution for any after-tax contribution you make. Under certain criteria, a $1,000 contribution will be matched by a $500 co-contribution, which is a 50% return!

4. Non-Concessional Contribution

For the current Financial Year, you can contribute up to $100,000 as a non-concessional (or after-tax) contribution into super, with the ability to “bring forward” two years of non-concessional contributions and contribute $300,000 in one go. This is a great way to boost your superannuation balance and have more of your funds in a tax-effective environment.

Before you add to your super, keep in mind that you won’t be able to access the money until you meet certain conditions. Please speak with your Financial Adviser to determine the suitability of the above strategies for your situation.

Prepaying interest on your margin loan

If you have a margin loan in place now could be the time to prepay the interest on your loan and claim the interest as a tax deduction.

Paying more interest on a margin loan now, rather than later, is also a good strategy for those who know they probably won’t earn as much next financial year.

Donations of $2 or more are tax deductible

If you usually give to charity and haven’t yet, now is the time to consider if this is something you would like to do. Making your donation to a registered charity before June 30 will ensure that you can claim the tax deduction in your 2019-20 tax return.

Economic & Market Update: Coronavirus – by Chris Lioutas

Economic & Market Update: Coronavirus – by Chris Lioutas

Coronavirus, whilst significant in the short term, will pass in the next few months largely as a result of the significant action taken by the Chinese to contain the virus. Nearly all the deaths have occurred where the virus originated (Hubei), and the deaths have been largely the result of not seeking treatment and complications regarding a pre-existing condition.

Given the actions taken by governments to close down ports, borders, and limit air and sea transfers, this will have a material effect on economic growth and corporate earnings in the short term.

Markets will likely look through the weaker data considering investors have largely taken Coronavirus in their stride, and central banks can and will provide short support if required.

Markets have continued to push higher on a few reasons:

  1. Less political risk with Brexit and phase one trade deal completed
  2. Fourth Quarter corporate reporting season in the US coming through better than expected with upgrades to earnings expected for calendar year 2020
  3. Continued central bank support which will remain in place for this year, keep cash rates and bond yields low, and thus encouraging continued investment into growth assets
  4. US Presidential race looking increasingly likely President Trump gets a second term, which is positive for equity markets versus the alternative.

Absent Coronavirus being a lot worse than we suspect or a Democrat winning the US Presidential election, there’s not a whole lot standing in the way of another equity rally this year. The US economy looks strong enough but not too strong so as to encourage the US central bank to remove stimulus. Europe looks to have found a bottom from an economic perspective, with Germany the weakest link and seriously considering embarking on fiscal spending for the first time in a very long time, which may encourage other European governments to embark on their own fiscal stimulus. Japan looks likely to embark on fiscal stimulus this year as the government needs to counter the effect of GST increases over the last few years.

Other issues to watch out for include a significant slip in Chinese growth (unlikely at this stage given government and central bank support), a re-escalation of US-China trade war (ie. further tariffs), a re-escalation of US-Iran tensions in the Middle East (ie. higher oil price), a significant and permanent spike in inflation (which would cause central banks to remove stimulus).

Closer to home, the Aussie economy is looking for a bottom, but it looks likely there’s further to go, with the bushfires and the Coronavirus significantly impacting tourism. The RBA likely has at least 1 more rate cut in them if not 2 before they get to their lower bound of 0.25%. They’ve recently made comments that they think quantitative easing is off the table, but it’s very premature to be making comments like that, unless they know something we don’t. That could be significant government fiscal pulse in the May budget, which looks unlikely, but is something the economy desperately needs. Outside of that, the only positives in the economy right now are a recovery in the housing market, largely in Sydney and Melbourne, and a falling Aussie dollar which is helping from an export perspective.

Key messages remain as follows:

  1. Diversification is key – across asset classes, regions, sectors, and investment styles
  2. Selectivity – given the wide dispersion that exists in valuations between sectors, styles, and regions, being selective (active management) will be more important this year than it has been for a long time
  3. Rebalancing is important – the best discipline in investment markets goes counter to human behaviour and biases – ie. trimming winners and topping up losers. It has been shown to add 1-2% in additional return per annum
  4. Time in the market – timing the market remains an impossible task, and trying to time the market in the current environment is likely to result in significant opportunity cost considering central banks continue to provide a floor under equity markets.
Year in Review and Outlook for 2020

Year in Review and Outlook for 2020

by Chris Lioutas

Insight Investment Consultants

It’s fair to say that 2019 was a bittersweet year, characterised by some of the highest political and economic risks we’ve seen in some time with the backdrop of some of the best investment returns we’ve seen in the last decade. Whilst we’re always thankful for those sorts of returns, though never planned or expected, it was a pretty uncomfortable experience. When we look at the magnitude of those returns versus rising political and economic risks, it’s hard to fathom just how we got to where we are now. It’s fair to say 2019 was all about persistence and staying the course. Whilst this year could be more of the same, as we come back from time away with our loved ones, we think 2020 is likely to be all about discipline and risk awareness.

Highlights for the year include

  • Roaring asset price growth across the board, absent cash
  • Phase 1 US-China trade deal
  • US central bank acted appropriately by cutting rates and expanding their balance sheet
  • RBA acted appropriately by cutting rates and preparing for balance sheet expansion
  • Australian federal election result – positive for asset prices / investment markets
  • UK election result
  • Strong US labour market and retail spending
  • Inflation remaining low
  • Chinese government and central bank stimulus
  • A falling US dollar towards the back end of the year

Lowlights for the year include

  • US-China trade and technology war escalation
  • US trade tariffs on other countries
  • Brexit / UK politics debacle
  • US-Iran conflict
  • Tariff-induced weaker economic data globally
  • German economy on the brink of recession
  • Social unrest in Hong Kong, France, Chile, etc
  • US immigration policy
  • Rising Japan-South Korean tensions
  • Stronger US dollar impacting emerging markets
  • Continued Chinese economic growth slowdown
  • Weaker Australian economy

For the sake of brevity, these lists are not exhaustive.

The key takeouts from 2019 are that US-China relations will never be the same again and central banks remain effective (for now) in maintaining investor confidence in their ability to patch the mistakes made by populist leaders and the structural deficiencies caused by still too high debt levels and worsening demographics.

What will 2020 bring?

Time will tell.

From an economic perspective, we don’t believe recession is likely in 2020 but economic growth locally and globally will remain weak. Weak enough to force central banks to remain supportive, but not weak enough to see recession fears rise. Closer to home, we think the RBA will be forced to cut rates another two times, and will seriously consider expanding their balance sheet (money printing) in the second half of 2020.

From a political perspective, we don’t think 2020 is any cleaner than 2019, with less UK political risk now being cancelled out by increased US political risk leading into the presidential election in November. As it stands right now, President Trump looks likely to serve a second term, which is probably the most supportive outcome from an investment market perspective.

Three likely scenarios for 2020 from a market perspective:

1. More of the bumper returns from 2019 as political risks subside and economic data improves but not markedly so to end central banks’ current pace of stimulus; or

2. A more benign environment were markets are range-bound through the course of the year as political risks continue to spill-over into economic risks which forces central banks to act even further quell a spill-over into markets; or

3. A capitulation in market sentiment driven by rising political risks, causing economic risks to spike, resulting in a loss of confidence in central banks’ ability to control the narrative and hence large falls in investment markets.

Following recent “wins” regarding a phase 1 trade deal and a more stable UK political environment, higher probabilities can be assigned to scenarios 1 and 2 above. However, we and many others, aren’t yet willing to rule out scenario 3. The concern we have is that the probabilities of each scenario are likely to be moving beasts, and it’s even possible we get all three regimes throughout 2020.

The four things we will be monitoring very closely in 2020 are US-China relations, the US presidential race, US central bank policy, and company earnings.

Hopefully we get enough time to act accordingly to major changes in each, or maybe minor changes in each mean staying the course proves the winning strategy yet again. Absent that, those that are well diversified, selective, and disciplined will weather 2020 much better than those that chase returns / income with little regard for the risks involved.

12 Tips for Navigating the “Silly Season”

12 Tips for Navigating the “Silly Season”

If five golden rings and a whole menagerie of birds sounds like it might blow the budget this year, then perhaps the classic carol needs a rewrite. That’s why we’ve put together a list of hot tips to make the gift-giving season a breeze without scorching a hole in your hip pocket.

 

1. Make a list

Before you even step foot in your local shopping mall, make a comprehensive list. That goes for all the people you plan on giving presents to, as well as all the decorations and food supplies you’ll need. The more specific you are the better.

 

2. Check it twice and set your budget

Once the list is done check it again and cross off any unnecessary items. Then proceed to set a maximum cost against each item line. If you’re rigorous with this, you might even find your Christmas budget comes in at a surplus.

 

3. Shop around

Shopping around can save a lot of money. And these days its easier than ever as you can do most of the work online. The trick is that you need to start your research early and not leave all your shopping the last minute. There’s no point buying a bunch of gifts nobody even wants in a drastic credit card frenzy.

 

4. DIY

There’s nothing better than a home-made gift. It shows the receiver that you really care and they’re usually cheaper. Making home-made gifts can also be a really great way to bond with other family members if you do it as a group. It’s what we in finance call a ‘win-win’.

 

5. Shop with purpose…

Not only do you need a list when you shop. You also need a plan. It will inevitably take you more than one trip to the shops to get everything you need, so aim to buy the big things first. This way you’ll know what you have to play around with for the smaller ticket items. Inevitably some of these may not seem quite as important once the bigger ones are accounted for.

 

6. Don’t shop for yourself

Easier said than done we know. But try to avoid buying a whole bunch of stuff for yourself then having nothing left for your other purchases.

 

7. Track your spending

Tracking your spending as you shop is vital – and these days its easier than ever, with apps like The Christmas List, which helps budget and track your Christmas spend in real time.

 

8. Spread the Christmas cheer (volunteer or donate)

Remember the true spirit of Christmas by giving back to your community in some way. Either volunteer some time with a local charity or give some funds to a deserving cause. Some charities even allow you to purchase donations as gifts with cute little cards made up to explain what the money went towards.

 

9. Watch your Afterpay

Though Afterpay can be a great way to get what you want when you want it, it’s only helpful if you are diligent with your repayments. Christmas is a period famous for people going overboard and you don’t want to end up unable to pay it back on time and having to pay hefty interest.

 

10. Credit card spending

The same goes for credit card spending. Where possible aim to use money you already have. Last year Aussies put $30 billion on plastic to cover their Christmas spend and 27% of them were likely to still be paying it off 12 months later.

 

11. Reduce, reuse, recycle

At the end of the day we don’t need more stuff just for the sake of having it. So, when making your Christmas list, consider getting each person one meaningful item rather than ten little things that may just end up in the bin. You can also re-gift things you don’t like and recycle last year’s decorations and Christmas wrapping. It’ll save both money and the environment.

 

12. Be merry

Last of all don’t forget to have a good time. By planning your Christmas spend well in advance, it means you can enjoy the day that little bit more.

 

McQueen Financial Group is a corporate authorised representative of Total Financial Solutions Limited. AFSL No. 224 954, ABN 94 003 771 579. This information is of a general nature only and does not consider your investment objectives, financial situation or particular needs. You should not act on any information in this report without first consulting a professional investment adviser in order to ascertain whether the information and any investment decision is appropriate. This information is believed to be accurate however no warranty of accuracy or reliability is given in relation to any advice or information contained, and neither TFSA or its Representatives and officers, agents or employees of either of the aforementioned shall not be held liable for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence).

Stretching Your Travel Budget Further

Stretching Your Travel Budget Further

Many Australians will soon be jetting or sailing away on their annual overseas getaway. Unfortunately, the value of the Australian dollar has been falling against the US dollar, British pound, euro, yen and even the Indonesian rupiah. Here are some suggestions on how to maximise your travel budget and have a memorable holiday. 

Get the right cover

Taking out travel insurance is a sensible precaution, but you don’t want to pay more for it than necessary. Or pay for it, then discover it’s worthless.

Always read the fine print about limits, excesses and exclusions. As with all insurance, the more comprehensive the policy, the more it is likely to cost. If you’re motorcycling down Route 66, the expensive policy with greater coverage is probably a good investment. On the flip side, if you plan to laze away the days on a Fijian beach, you may be able to get away with a more basic policy.

While it’s convenient to arrange insurance via a travel agent, airline or credit card, it can pay to shop around for the best price and most relevant cover. Some credit cards come with free travel insurance but, be warned, the coverage is often modest.

And while your health, car or home insurer may also offer you a discount on travel insurance, it doesn’t necessarily mean you’re getting value for money. Thanks to comparison sites, it’s now easy to get quotes from a variety of insurers. So do shop around before making a final decision.

Go online

Travel agents have their uses but booking your own flights and accommodation can save hundreds, even thousands, of dollars.

Hotels are great if you want to keep things simple and stress-free. But if you’re travelling as a group or wanting to immerse yourself in the city outside the walls of a hotel, Airbnb may be a cheaper alternative that gives you your own space to relax.

Thanks to the internet, you may even be able to arrange an international home-swap although this can take time. The two most popular sites for this are lovehomeswap.com and homeexchange.com.

A warning though – the digital age isn’t all upside for holidaymakers. If you use your mobile while abroad, keep an eye on your data usage and phone calls, so you don’t return home to eye-watering international roaming charges. Consider buying a local SIM card once you reach your destination (it will have a pay-as-you-go option or a flat rate for a set period). And only use your phone when you have access to free Wi-Fi at hotels, cafes and airports.

Choose the best payment option

Most travel experts these days suggest you carry a ‘mixed wallet’ for overseas trips, with a combination of some or all the following:

  • Cash. You can exchange your Australian dollars for foreign currency before or after departure. Typically, the more conveniently located the money changer, the higher the commission. (This is why savvy travellers avoid changing money at airports.)
  • Pre-paid travel cards. These are available at places such as banks and post offices. You pay to deposit specific amounts of foreign currency onto the card. You can then use the card to make purchases and withdraw cash from ATMs in your destination country. ATM fees are lower than if you used your regular bank cards, but you are generally also charged fees for loading up the card, using it to buy something in a currency other than the one it’s loaded up with and deactivating the card.
  • Your Australian debit or credit card – the upside of using these is convenience. The downside is having to pay significant withdrawal fees, currency conversion fees, foreign transaction fees and cash advance fees.

Dodge the ‘tourist tax’

It’s also worth keeping in mind that you can save money and get a richer experience of the country you’re visiting by acting like a local rather than a tourist.

For instance, buy alcohol from a supermarket rather than ordering it on room service. Catch public transport and dine where the locals eat rather than at overpriced restaurants next to major attractions.

Watching your travel spending does not mean you have to compromise on fantastic experiences and with a little bit of planning, you can still enjoy your overseas trip without breaking the bank.

McQueen Financial Group is a corporate authorised representative of Total Financial Solutions Limited. AFSL No. 224 954, ABN 94 003 771 579. This information is of a general nature only and does not consider your investment objectives, financial situation or particular needs. You should not act on any information in this report without first consulting a professional investment adviser in order to ascertain whether the information and any investment decision is appropriate. This information is believed to be accurate however no warranty of accuracy or reliability is given in relation to any advice or information contained, and neither TFSA or its Representatives and officers, agents or employees of either of the aforementioned shall not be held liable for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence).