Skip to main content
#
A Clear Direction
rss feedour twitterour facebook page linkdin
home
Financial Advisor Brisbane - AdviserScott Keefer - A Clear DirectionBuilding Investment PortfoliosPortfolio Management ServiceUpdated ContentContact Us - Brisbane Financial Planning
A Clear Direction Financial Planning logo

 Financial Happenings Blog 
Wednesday, October 31 2007

The latest edition of The Financial Fortnight That Was has been emailed to subscribers.  This edition looks at the role of exchange rates in investment decisions.  If you would like to receive this free email service go to the Sign Up page found on our website.

Please read on for the latest market news for the fortnight concluding Monday 29th October.

Market News

 

Market Indices

Since our previous edition, Australian and global sharemarkets have both had positive fortnights.  The S&P ASX200 Index has risen 0.79% from the 15th to the 29th of October, up 19.79% for the calendar year so far.  The S&P Global 1200, a measure of the global market, has risen by 0.71% over the same period, placing the index up 13.70% for the year.

 

Emerging markets saw continued strong growth with the MSCI Emerging Markets Index rising 2.72% for the fortnight and is now up 38.84% for the year so far.

 

Property trusts have moved downwards over the past fortnight with the S&P ASX 200 Property Trust Index falling by 0.54%, to be up 1.20% for the year so far.  The S&P/Citigroup Global Real Estate Investment Trust (REIT) Index, a measure of the global property market, also fell 2.84 % for the fortnight, and has fallen 4.82% this year so far.

 

Exchange Rates

As of 4pm the 29th October, the value of the Australian dollar had again risen over the past fortnight with the Aussie dollar up 2.04% against the US Dollar at .9242, up 16.8% for the year so far, and up 0.98% against the Trade Weighted Index at 72.4, now up 11.56% for the year so far.  (The Trade Weighted Index measures The Australian dollar against a basket of foreign currencies.)

 

General News

The Australian Bureau of Statistics has released the Consumer Price Index data for the September quarter.  The data shows the headline inflation rate at 1.9% for the year with the core or underlying inflation rate sitting at 2.9%.  For more analysis of this data please refer to the following blog entry.

 

Posted by: Scott Keefer AT 06:46 pm   |  Permalink   |  Email
Friday, October 26 2007

Another policy announced this week should provided some benefits to pensioners, self funded retirees, people with disabilities and their carers.  The Liberal Party have announced the following details:

 

  • An increase as of March 2008 in the Utilities Allowance paid to those in receipt of income support to meet basic household bills like power and gas from $107.20 to $500 a year for a single and $500 for a couple.
  • Utilities allowance extended to Carer Payment recipients and Disability Support Pensioners.
  • Seniors Concession Allowance to be increased to $500 from June 2008.  This will particularly benefit self funded retirees who do not receive the Age Pension.

Regards,

Scott Keefer

Posted by: Scott Keefer AT 03:41 am   |  Permalink   |  Email
Thursday, October 25 2007

As promised in our blog last week, we intend to provide details of policies announced during the election that affect financial planning strategies for the future.  Last Friday the Australian Labor Party announced their tax plans for the future.  The details of their plan are as follows:

 

In 2008-09

  • Low Income Tax free threshold due to the Low Income Tax Offset to rise from $11,000 to $14,000.
  • Start of the 30% threshold to increase from $30,001 to $34,001.
  • Start of the 40% threshold to increase to $80,001.
  • Start of the 45% threshold to increase to $180,001 (as promised in the budget in May).

 

In 2009-10

  • Low Income Tax free threshold due to the Low Income Tax Offset to rise from $14,000 to $15,000.
  • Start of the 30% threshold to increase from $34,001 to $35,001.
  • Second top marginal rate to be cut from 40% to 38%.

 

From July 1, 2010

  • Low Income Tax free threshold due to the Low Income Tax Offset to rise from $15,000 to $16,000.
  • Start of the 30% threshold to increase from $35,001 to $37,001.
  • Second top marginal rate to be cut from 38% to 37%.

 

The major difference from the Liberal Party policy is that the top marginal tax rate for those earning more than $180,000 will not be reduced from 45% to 42% over 2009 - 2011.

 

The Labor policy also announced  an Education Tax Refund to be funded by not reducing the top marginal tax rate.  All families who receive Family Tax Benefit (Part A) will be eligible for:

                     A 50 % refund every year for up to $750 of education expenses for each child attending primary school (maximum $375 per child, per year).

                     A 50 % refund every year for up to $1,500 of education expenses for each child attending secondary school (maximum $750 per child, per year).

 

Families would submit their application for this refund as part of their annual tax return.

 

Regards,

Scott Keefer

Posted by: Scott Keefer AT 03:29 am   |  Permalink   |  Email
Wednesday, October 24 2007

The Australian Bureau of Statistics (ABS) today released the September quarter Consumer Price Index data.  These statistics attempt to measure the inflation in prices in the economy.  The results show that the cost of the basket of goods used to measure price levels in the Australian economy has risen by 0.7% for the quarter and 1.9% for the year.  These are known as the Headline figures.

 

Breaking down this data, the ABS recorded the following significant movements in prices for the quarter.

Increases:

  • fruit (+9.6%),
  • vegetables (+7.9%),
  • deposit and loan facilities (+2.2%),
  • rents (+1.6%),
  • other financial services (+2.3%),
  • house purchase (+1.0%),
  • electricity (+4.3%),
  • overseas holiday travel and accommodation (+4.2%),
  • property rates and charges (+4.5%),
  • water and sewerage (+5.5%),
  • domestic holiday travel and accommodation (+1.8%) and
  • other motoring charges (+2.6%)

 

Decreases:

  • child care (-33.4%), - as a result of the change in eligibility criteria for Child Care Tax Rebates
  • automotive fuel (-3.7%),
  • pharmaceuticals (-4.5%),
  • audio, visual and computing equipment (-2.5%) and
  • furniture (-1.5%)

 

However, the Reserve Bank of Australia's separate Consumer Price Measure, referred to as the core figures, showed inflation for the quarter at 0.9% and 2.9% for the year.  The Reserve Bank will look carefully at this data in deciding whether to raise, or lower, interest rates at the next board meeting on Melbourne Cup day - Tuesday 6th November.  With inflation at the higher end of the 2 to 3% rate targeted by the Reserve Bank many forecasters are predicting a lifting of the official interest rate.  This is clearly shown by the futures market who have priced in a 75% chance of a 0.25% increase to 6.75%.

 

There is bound to be a deal of nervousness when the decision is announced at 9.30am on Wednesday 7th.

 

Regards,

Scott Keefer

(To be taken to the Australian Bureau of Statistics data click here)

Posted by: Scott Keefer AT 03:00 am   |  Permalink   |  Email
Monday, October 22 2007

In this week's edition of Monday's Money Minute, Scott Francis breaks down the connection between inflation and interest rates and the possible affect that tax cuts put on the level of inflation.  Click here to be taken to the podcast.

Posted by: Scott Keefer AT 01:58 am   |  Permalink   |  Email
Wednesday, October 17 2007

We have updated our Building Portfolios web page to reflect 5 year investment returns up to the end of September 2007 for our preferred style of investments offered by Dimensional Fund Advisors.  The returns continue to reflect the premiums from investing in the small and value segments of both the Australian and international markets.  They look as follows:

Australian Shares

Average Annual Returns:

 

 

5 Year Annual Return

to End September 2007

Dimensional - Australian Large Company Trust

21.54%

Dimensional - Australian Value Trust

23.32%

Dimensional - Australian Small Company Trust

26.25%

 

Growth of $10,000 Invested over the 5 years:

 

 

5 Year Annual Return

to End September 2007

Dimensional - Australian Large Company Trust

$26,521

Dimensional - Australian Value Trust

$28,521

Dimensional - Australian Small Company Trust

$32,074

International Shares

 

Average Annual Returns:

 

 

5 Year Annual Return

to End September 2007

Dimensional - Global Large

7.66%

Dimensional - Global Value

11.82%

Dimensional - Global Small

12.31%

Dimensional - Emerging Markets

24.14%

 

Growth of $10,000 Invested over the 5 years:

 

 

5 Year Annual Return

to End September 2007

Dimensional - Global Large

$14,463

Dimensional - Global Value

$17,482

Dimensional - Global Small

$17,869

Dimensional - Emerging Markets

$29,482

 

Click here to be taken to the page.

Posted by: Scott Keefer AT 07:10 pm   |  Permalink   |  Email
Wednesday, October 17 2007

This week's Monday Money Minute looks at private equity investments.  Scott Francis discusses  what they are, why investors might use them in a portfolio, issues to be cautious of in using them and how to get exposure to these style of investments.

Click here to be taken to the relevant page on our website.

Posted by: Scott Keefer AT 03:05 am   |  Permalink   |  Email
Wednesday, October 17 2007

The latest edition of The Financial Fortnight That Was has been emailed to subscribers.  This edition looks at the problems of Active Management.  If you would like to receive this free email service go to the Sign Up page found on our website.

Please read on for the latest market news for the fortnight concluding Monday 15th October.

Market News

 

Market Indices

Since our previous edition, Australian and global sharemarkets have had positive fortnights.  The S&P ASX200 Index has risen 2.67% from the 1st to the 15th of October, up 18.86% for the calendar year so far.  The S&P Global 1200, a measure of the global market, has risen by 0.95% over the same period, placing the index up 12.90% for the year.

 

Emerging markets saw continued strong growth with the MSCI Emerging Markets Index rising 5.46% for the fortnight and is now up 35.16% for the year so far.

 

Property trusts have had mixed performances over the past fortnight with the S&P ASX 200 Property Trust Index rising by 1.35%, to be up 1.75% for the year so far.  The S&P/Citigroup Global Real Estate Investment Trust (REIT) Index, a measure of the global property market, however fell slightly, 0.14 % for the fortnight, and has fallen 2.04% this year so far.

 

Exchange Rates

As of 4pm the 15th October, the value of the Australian dollar had again risen over the past fortnight with the Aussie dollar up 2.43% against the US Dollar at .9057, up 14.46% for the year so far, and up 3.55% against the Trade Weighted Index at 71.7, now up 10.48% for the year so far.  (The Trade Weighted Index measures The Australian dollar against a basket of foreign currencies.)

 

General News

The Australian Bureau of Statistics has released the Australian labour market statistics for September with the unemployment rate falling to 4.2%.

 

As you will all be aware, the country is now officially in election mode with the Prime Minister calling the election to be held on the 24th of November.  During the next 6 weeks the government and opposition parties will be releasing policies that will have potential impacts on financial planning and investment strategies.

 

Posted by: Scott Keefer AT 02:31 am   |  Permalink   |  Email
Tuesday, October 16 2007

Yesterday saw the election campaign start with tax cut promises from the Liberal party.  So what are the details?

 

In 2008-09

  • Low Income Tax free threshold due to the Low Income Tax Offset to rise from $11,000 to $14,000.
  • Start of the 30% threshold to increase from $30,001 to $34,001.
  • Start of the 40% threshold to increase to $80,001.
  • Start of the 45% threshold to increase to $180,001 (as promised in the budget in May).

 

In 2009-10

  • Low Income Tax free threshold due to the Low Income Tax Offset to rise from $14,000 to $15,000.
  • Start of the 30% threshold to increase from $34,001 to $35,001.
  • Second top marginal rate to be cut from 40% to 38%.
  • Top marginal tax rate cut from 45% to 43%.

 

From July 1, 2010

  • Low Income Tax free threshold due to the Low Income Tax Offset to rise from $15,000 to $16,000.
  • Start of the 30% threshold to increase from $35,001 to $37,001.
  • Second top marginal rate to be cut from 38% to 37%.
  • Top marginal tax rate cut from 43% to 42%.

 

To put some dollar amounts to these changes the tax payable (including medicare levy) would be:

 

Annual Income

2007-08

2008-09

2009-10

2010-11

Reduction (pa)

As % of 07-08 tax

$25,000

$3,225

$2,025

$1,875

$1,725

$1,500

46.51%

$50,000

$10,350

$8,550

$8,250

$7,800

$2,550

24.64%

$75,000

$18,225

$16,425

$16,125

$15,675

$2,550

13.99%

$100,000

$28,600

$26,300

$25,600

$24,950

$3,650

12.76%

 

Throughout the campaign we look forward to adding further commentary on any policy proposed by the major parties that will affect financial planning and investment strategies.

 

Regards,

Scott Keefer

Posted by: Scott Keefer AT 07:23 am   |  Permalink   |  Email
Monday, October 15 2007

Scott Francis has written another article for Alan Kohler's Eureka Report.  The article highlights that investing through index funds and ETFs, with a focus on growth areas, means working with the market, not against it.

The article points out the failures of active management based on reasearch including:

  • Actively managed funds have a strong tendency to underperform the average market return.
  • The buying and selling undertaken by personal investors destroys investment returns.
  • Analyst research does not seem to lead to above-average returns for investors.
  • Poor decision making by investors in determing when into and sell out of asset classes.
  • The tendency of investors to sell in falling markets and buy in strongly rising markets.

Scott concludes by identifying how investors can avoid these below average market returns.  For the details please take a look at the article on our website.  Click here.

Regards,
Scott Keefer

Posted by: Scott Keefer AT 05:36 am   |  Permalink   |  Email
Tuesday, October 09 2007

Scott Francis this week discusses the poor peformance of the major managed funds with all but one fund beating the average market return.  Well worth a listen for those who are using or are contemplating using actively managed funds to invest.  To listen to Scott's analysis please click on the link that follows.  Click here

Posted by: Scott Keefer AT 08:16 pm   |  Permalink   |  Email
Wednesday, October 03 2007

Alan Kohler's Eureka Report has published an extract from Scott Francis' new book - High Income Investing - How to be Relaxed and Comfortable.  The extract looks at listed interest rate securities.  Well worth a read if you currently invest in these type of securities or ar considering this option.

Regards,
Scott Keefer

Posted by: Scott Keefer AT 08:20 pm   |  Permalink   |  Email
Tuesday, October 02 2007

The latest edition of The Financial Fortnight That Was has been emailed to subscribers.  This edition looks at Listed Investment Companies.  If you would like to receive this free email service go to the Sign Up page found on our website.

Please read on for the latest market news for the fortnight concluding Monday 1st October.

Market News

 

Market Indices

Since our previous edition, Australian and global sharemarkets have had strong fortnights.  The S&P ASX200 Index has risen 4.46% from the 17th September to the 1st of October, up 15.76% for the calendar year so far.  The S&P Global 1200, a measure of the global market, on has risen by 6.43% over the same period, placing the index up 11.84% for the year.

 

Emerging markets saw even stronger growth with the MSCI Emerging Markets Index rising 8.64% for the fortnight and is now up 28.17% for the year so far.

 

Property trusts have had mixed performances over the past fortnight with the S&P ASX 200 Property Trust Index falling 0.32%, but is still in positive territory for the year so far up 0.40%.  The S&P/Citigroup Global Real Estate Investment Trust (REIT) Index, a measure of the global property market, however rose 5.42% for the fortnight and has fallen 1.90% this year so far.

 

Exchange Rates

As of 4pm the 28th September (market was closed on the 1st of October), the value of the Australian dollar had again risen strongly over the past fortnight with the Aussie dollar up 4.60% against the US Dollar at .8827, up 11.55% for the year so far, and up 3.55% against the Trade Weighted Index at 70.0, now up 7.86% for the year so far.  (The Trade Weighted Index measures The Australian dollar against a basket of foreign currencies.)

 

General News

The board of the Reserve Bank of Australia decided to maintain the official cash rate target at 6.50%.

 

Regards,

Scott Keefer

Posted by: Scott Keefer AT 11:52 pm   |  Permalink   |  Email
Tuesday, October 02 2007
This week's Monday's Money Minute looks at the performance of Listed Investment Companies on the ASX.  Unfortunately what promises to be a good source of diversification for investors has not provided the results that investors would hope for.  Click here  to be taken to the podcast.
Posted by: Scott Keefer AT 11:48 pm   |  Permalink   |  Email
Twitter
Facebook
LinkedIn
Email
 
Scott Francis' articles in the Eureka Report 
Request for Information 
If you have questions, or would like more information, please go to our Contact page and leave your name and contact information.

Plan Well, Invest Well, Live Well! Financial advice providing a clear direction

A Clear Direction Financial Planning and Portfolio Management ABN 85 147 572 870

Level 19
10 Eagle Street
Brisbane QLD Australia
Ph: (07) 3303 0269
Email: scottk@acleardirection.com.au

Authorised Representative (398444) and Credit Representative (403292) of FYG Planners Pty Ltd AFSL/ACL 224 543.

ASIC - Financial Advisers Register

All content of this website is copyright © A Clear Direction Financial Planning Pty Ltd, 2017

FYG Planners Pty Ltd & A Clear Direction Financial Planning Privacy Policy