Matt states that Greece & Spain will default

Yes Matt is a fund manager of 2.3Billion who occasionally leaves his four simultaneous computer screens to appear on business TV or face financial advisers.

There was plenty to take out of his presentation but as always we are interested in the future & so some notes working backwards from his answers is a way to summarise his case.

I.e. the last 30 years is no guide to the next 10 years.

So expect less capital gains & focus on risk & income.

·         Earnings growth of companies to be below average

·         Asia to be the global growth driver

·         Interest rates to rise

·         The main driver of returns to be income growth

·         Lowest risk debt is corporate & not government

·         Preferred risk hedge is income producing assets & not US bonds

·         Asset exposure to emphasis quality & not growth

·         The Australian $ will remain above parity.

Currently the markets [share]have priced in all the bad news & are the lowest in 20 years.

Matt did have some great slides which included comparing returns of the 5 major asset classes over various periods. [which we have for you to view]

The key point out of those & hence wealth creating was reinvesting the income back into the class & allowing compound interest to work. This had a dramatic long term impact.

And the winner was  over any 20 year period ,you guessed it, shares with a multiple of 160 times original as they are exposed to the real economy. [Property was 44times & cash 25 times].

Matt also showed a slide comparing previous similar cycles & where we are on the current one.

As Peter Q has also shown us we are ‘grinding’ towards the big upswing in the markets.

The markets are going to be dominated by long term trends according to Matt. i.e.

·         hard commodities down as we see this week although we are a ‘gold fondler’.

·         Emergence of income investing as a source of wealth creation

·         Downward earnings & valuations in advanced economies.

·         An evolution in risk return dynamics

Matt comments ‘that it wont be the smartest or fittest investor that benefits from the new environment but the investor that who is most adaptable to change’.

We had PIMCO [huge global bond manager] asking ‘ Will action follow words in Europe?

They suggested 6 key areas that Europe needs to focus on and

This is a challenging list, especially for the next few weeks; and it requires the type of political leadership and coordination that, hitherto, has tended to elude the eurozone.

When we read that SMSP trustees are putting their retirement funds into residential houses or Australian property & cash we understand that anything else is too hard.

However as Matt clearly showed its income that creates wealth & the net rental return from such property is 1% from all the observations we have made. Matt mentioned an income  fund that was returning 7% & there are plenty of such income funds.

 Debbie told us the worst  decision & experience she made was a rental property. We  as a baby boomer are well aware that contempories are retiring & finding the negative cashflow from such properties too much. They are selling which isn’t helping the housing market as we know.

We observe today on our Linkedin sites that an ex colleague is selling houses in USA. An ex Coalition leader has a trust for similar. Greece & Spain maybe buys after their default. These maybe better options but who is going to look after them for you?

Although  the bus driver asked us if we had a seniors card on returning from Matt’s talk we have the same challenges as we expect to Bat as long as our late ‘Auntie’ Freda i.e. to 95. Wealth creation is a challenge & evolutionary & for those who live & breathe the markets.

Of course getting  to age 95 needs Brilliant health & at 95 we might need Aged Care advice.

 We have solutions for both challenges.

As the European meddlers return from holidays &the looming ‘fiscal cliff’ & as the Volatility index VIX is very low then as Richie says D for defence could be the best strategy for the short term.

However Cash or rental property won’t  achieve the 1,000,000 Capital we need outside the house.

 Mark suggested that they could do better budgeting. When he also pays 35,000 in taxx then there must be a better way as high incomes also need tuning.

You are welcome to call on 07 3848 1088 or email or visit our websites  as we have helped tune finances for 28 years. We do have  for you to view Matt’s presentation but we admit we are not Matt.

 

John McAuliffe

 

 

If your Mum had to move into an aged care facility today then what is the solution?

If your Mum had to move into an aged care facility today then what is the solution?

 Yes it generally or frequently happens before you are ready.  The instinctive reaction to sell the house may not be the only solution to the funding requirement.

 Norman  advised us whilst watching the AB win that ‘the RE agent cost 18,000’. I.e. not selling the home is a big saving itself.

Questions that you might ask yourself include.

·         How will the accommodation bond or charge be funded?

·         How much are the ongoing costs & how will they be funded?

·         Is the family home to be retained or sold.

o   [We were advised by Garry many years ago that ‘the best place to buy a property was thru the Public Trustee’ as the children wanted their share fast & were quite prepared to drop the price]

·         Can the family home be rented out?

·         Are investments to be sold ?

·         Is a reverse mortgage appropriate?

·         Can the family contribute to the Costs?

·         Is it important to keep the pension benefits & are there strategies to keep the benefit?

·         What are the tax implications when moving into aged care?

·         How important is it to preserve  current assets?

·         Has a will & Powers of Attorney been established & maybe reviewed.

·         Has a superannuation or pension death benefit nomination been established or reviewed?

·         Are there strategies for funding care now & in the future?

Yes over one  million older Australians are currently in some form of aged Care or support each year & this number is only growing bigger.

These costs can be very high when moving into & residing in an aged care facility & it is smart & wise to

·         Minimise these costs

·         Maximise social security benefits

·         Minimise taxx

·         Choose suitable investments

·         Plan for the distribution of their estate

As there were landmark changes proposed on 20^th Aril 2012 & to be implemented on 1^st July 2014 then you need to be very aware of the solution to your problem.

If you wish to know which of the 10 core strategies maybe the relevant solution to your problem

Then we welcome your call on 07 3848 1088 or email  or contact us through our website as we might save you that $18,000.

Our aim is for you to be at least better off with our advice than if you were to DYI.

 John McAuliffe

Lets taxx the gold medal winners because we can

Lets taxx the gold medal winners because we can

Yes we read in W/E Australian 4/08/12 that “Athletes could be required to pay up to $US9000

 ($ 8565) in taxx for each gold medal”.

The USA might be close to 14 trillion in debt but surely that suggestion is bankrupt but it is an indication of what governments are willing & able to do.

What scares us the most is in superannuation regulations & how hard it is to get your own money out of there.

The concept of superannuation when we first advised [& sold]in 1984  was that you couldn’t get it out & thus it would be there when you needed it. Fair enough & ideally that is still the simple concept today.

However the devil is in the detail that has been generated since then.

E.g.  ATO bans tax breaks for kids who stay at home | The Australian 31/07/12

We have had occasions when clients due to challenges such as floods or the pink slip or cashflow have asked how they can access their super. Good luck we say unless you suffer from ‘Severe Financial hardship’

In general there are Two tests

1.       Written evidence from a government department or agency stating continuous income support for at least 26 weeks

                And unable to meet reasonable & immediate family living expenses.  [APRA has produced guidelines for this subjective test].

2.       Otherwise a person has reached preservation age [from 55 to 65 depending if you are not gainfully employed] PLUS Written evidence from a government department or agency stating continuous income support for at least 39 weeks .

There are other ways

·         such as a lost & lazy smaller than $200 in  a lost & lazy super account which is better than visiting a payday lender

·         or even Unrestricted non preserved UNP amounts which is as it says

·         departing temporary residents

·         compassionate grounds

·         temporary incapacity

As Mark wrote we ‘because we can’

The government has legislated that they WILL take super monies if temporary workers or public servants or lost individuals left their super lost & unloved for more than 5 years.

Every person we meet we meet cannot waste money as much as the government. Yes sure advisers have tracked down a billion + in lost super for clients & the ATO has a tool to help you do so yourself.

However as another Big Brother advt said ‘ be alert & be alarmed’.

We would be remiss if we were not to mention the taxx on death benefits from your super.

Its fine if the payment is to your spouse but as link above suggests even your hard to move on family member may not be a dependant.  The taxx on super benefits could be as high as 30% + Medicare.

Would this help your grandchildren?

Your estate could be increased with your cover outside super. Dont you expect to expire after you retire?

Be alert & alarmed & advice is wise.

We also read in the W/E Australian 4/08/12 where Industry funds management suggests super funds could be used to fund infrastructure. This has been suggested before . Surely they should be used for your retirement & not some government pork barreling as we frequently witness in ‘independent’ electorates.

Be alert & alarmed & advice is wise.

We are suggesting in general that contributing to super more than legislated  may NOT be in your own best interest. As we have said before ‘Daughters tell fibs & the big boys tell lies’.

What if as is suggested  a Call to lift super age to ease pension pressure | to age 62. What if ill health occurs?

Let’s not forget that the government has your TFN & knows where your super & other monies are. If it doesn’t then the taxx rate you pay in your super is close to 50%. Because they can.

An alternative strategy  PCMS*is to build a portfolio outside super for all the reasons that you may need it. The income from it could be used to switch your mortgage into deductible debt so that the taxx man subsidizes your interest payments.  Of course you need to qualify for this strategy PCMS* such has being able to save $10+ per day & have the right risk profile.

The gold medal table at least suggests that Australia  is behind even Korea  or NZL.  I.e. lets not always believe our own press.

As every person has a different financial  challenge then checking out our menu on our website & dining Monday to Saturday is a great way to have confidence in your financial future.

You are Welcome to call on 07 3848 1088 or email as Treasury isn’t going to make life easy for you.

Strategies & concepts to move you financially forward are Not found online.

John  McAuliffe

If you have been to Taipei 101 then you have been up there in the clouds.

If you have been to Taipei 101 then you have been up there in the clouds.

Yes Taipei 101 is  right up there in the clouds as it is the 2^nd highest building in the world despite being on the volcanic rim of fire.

As we are now storing our information in the cloud then Taipei 101 has other symbolism.

It was also explained by 101%  exceeds 100% & that is the expectations that the Taiwanese have for themselves.

 As 1 & 0 are the two digits used in computing it was also very relevant in the always connected, always on 21^st century.

Although we have travelled to various places such as Malawi, Mandalay, Marrakesh & Moscow,  Taiwan & Taipei is where the 21^st century will be centred.

This is why the family we visited & he hails from Narrabri is now making their home in Taipei. The family after 8 months are comfortable & winning scholarships in Mandarin.

We note on our return  in the W E Australian that a former & this week suggested by two Labour journalists a future PM was writing on China & the internal debates happening there at present. 

How do we handle China?

Another article mentioned Taiwan 4 times. If there is to be a challenging & flashpoint moment it will be over Taiwan & being aware of its significance is important for our future.

So what do we learn from Taiwan.

It has built up large gold reserves which represent Money.

I.e. we read today that Taiwan holds 422 tonnes of Gold & is ranked 13^th for such reserves. Fascinatingly we note that Australia doesn’t rank in the top 100 such gold holding countries. Maybe it ranks in the Warren Buffett camp & is not a ‘gold fondler’.

We understand that a certain Labour PM  who ‘touched’ the Queen flogged it off. What price did he get? Whose has the real wealth?. Why isn’t Australia purchasing gold? Is it because its debts & interest bills are too high. There is no insurance & as Young said ‘if you can’t afford the insurance you can’t afford the trip’.

How come Australia does not have real savings when it is the lucky country.

Where is Taiwan & how come when it has 22M on an island which is smaller that Tasmania.  

We observed 5 flights of fighter jets take off within 15 minutes as we watched the honour guard at the soldiers' memorial. Would that be more than the RAAF has & can the RAAF afford such regular flights?

Yes Taiwan might be known for its tea [which was brought in by Japan which occupied it for 50 years] but that is only enjoyed in the tea ceremony.

We learnt that Taiwan is where the Democratic forces ended up after Mao Ts Tung. Taiwan has done  a ‘ Dunkirk’ & turned a defeat into a victory. Mao reportedly said that it might take 100 years to reclaim Taiwan. We were advised that 5M mainland Chinese will visit there in 2012 & whom no doubt Australia would be keen to visit here.

The National Museum is the 3^rd largest museum in the world as Chinese history was ‘escorted’ from the mainland during the retreat to safeguard the treasuries from Mao Ts Tung’s destruction.  

We understand that it costs only 20M in Taiwan to monitor compliance on the 10% GST. Why because all receipts go in to a monthly lottery.

Now the ATO has spent a billion on tracking software & employs 20,950 to grab your earnings. Why don’t they tell us what they know to help us complete our taxx returns.

Why is it that Canberra has 3 suburbs in the top 10 expensive suburbs.

Maybe your taxx is being used to subsidise the car industry & is that what you want?

This all should be discussed over a tea ceremony. You are welcome to do so & to read your tea leaves so as to help you financially achieve your goals & to enjoy those canal trips or museum visits later.

That is easier when no debt & minimising taxx & planning for the financial journey. Let’s have ‘the taxx man subsidise your debt’.

 It is twice argued today that China is a ‘sell’  as government figures are a fudge, there is a huge RE bubble & hence bank debts are scary. What does that mean to your portfolio?

We made great use of the Metro in Taipei & the Metro map helped us see the major attractions. We all need a financial map.

As the Taiwanese  protects the downside with gold or fighters so every plan has insurances.

You are welcome to call on 07 3848 1088 or email or visit our websites for some Taiwanese tea.

John McAuliffe

If you are in the worried & concerned 62% then how do you improve your financial position?

 

We read this report & trust you are not in these categories.

“Household savings may be at a 20-year high, but the nation's attitudes towards their personal finances indicate several areas that financial advisers can focus on to grow their client base.

According to the latest Dun & Bradstreet’s Consumer Credit Expectations Survey, almost a third of Australians believe that the current economic conditions are refocusing their attention towards saving.

Aussies in the 50 to 64-year-old age bracket, in particular, could do with some expert financial advice: The survey found that 62% of 50 to 64-year-olds are worried about their personal financial health.

Other key findings that indicate the state of the nation’s finances included:

§  Fifty-nine per cent of consumers are concerned about their current financial situation, 21 per cent of which are very concerned about personal finances.

§  Eighteen per cent of consumers have no savings, while a further 31 per cent would survive on savings for no longer than a month following loss of full-time employment.

§  Thirty-seven per cent of consumers anticipate a positive impact on household finances from further interest rate reductions.

§  Thirty-seven per cent anticipate difficulty meeting existing credit commitments.

§  Sixty-nine per cent of low-income households are concerned about their financial situation.

§  Twenty-five per cent of low-income households have no savings, a further 34 per cent would survive no longer than a month following termination of full-time employment.

§  Twenty-eight per cent of 50-64 year-olds expect to use a credit card for an otherwise unaffordable purchase, while 33 per cent anticipate difficulty meeting existing credit commitments.

§  Forty per cent of low income households expect to use a credit card for an otherwise unaffordable purchase, with 41% anticipating difficulty meeting existing credit commitments.

Source: Dun & Bradstreet Consumer Credit Expectations Survey September Quarter 2012

“Our latest research clearly demonstrates that consumers are worried about their financial position,” said Dun & Bradstreet director Adam Siddique.

“This is partly symptomatic of lingering pessimism from the global financial crisis however, for certain demographics it reflects the reality that households are living hand-to-mouth; with very little savings buffer should unforeseen circumstances occur. So while national household savings levels are at a 20-year high, it is clear that not all consumers are in a position to put money aside.

“For the older demographic, concern over finances in part reflects the ongoing fallout from the global financial crisis and its impact on superannuation.

“Ten to 15 years ago consumers were more comfortable living with a lower savings to debt ratio. However, continued global economic uncertainty is weighing on Australian households and dissuading discretionary spending, credit usage and significant investments such as buying a property.”

See the full report here.”

This is a very scary position to be in.

If you want to meet & discuss & lunch how to improve your current financial position then you are welcome Monday to Saturday.

Just maybe you need to action a strategy so that you are in a better position in 3 years time.

You are welcome to call 3848 1088  or email or visit our websites

 John McAuliffe

Who wins, the big continent or the little towns?

Or the big guys or the little guys!

Isn’t that the debate at the moment. We have the big governments attempting to shore up the big banks who have lost out to the little guys who were tempted into big debts on the little houses. Often known as monuments to ego.

Peter informs Campbell that Queensland has a big 92 Billion debt & hence why Campbell missed the Red Queen’s gab fest’.

We note that Spain is now just above junk status even after 100B help  & that the next one i.e. Italy has to borrow 4billion this week. Hence the big guys are need support from an even bigger body & is the European continent big enough & will enough to make the big moves required.

As a stockbroker on J Parrot’s show said two weeks ago they need to write a big cheque which no doubt will bounce down the road probably to the US Fed. Increasing their Fed bank overdraft has never been a problem as they don’t have any other option until we end at the fiscal cliff.

It was certainly a very insightful documentary on Four Corners this week which traced back to the start of the Euro zone. We can certainly admire their wholesome  idealism with the objective of no more wars. Yes we did play Happy Families last millennium but how many families have communication breakdowns over time. How many break up & don’t talk to each other again?

We read of Italians driving across the border with their household silver to keep some of their own from big government. It been done many times before but usually through the stealth of inflation.

We also viewed another documentary on SBS on Towns & this particular town was Totnes in Devon, birthplace of a new environmental vision for the future. It was also the birthplace of England 1100 years ago. There was a business which was the global expert in ocean going rowing boats as the owner had rowed over both the Atlantic & Indian oceans.  The really interesting  fact was that it did have its own ‘currency’ 1100 years ago & today also has its own tradeable currency within town limits. Even more interesting is the fact that there are 350 similar towns in the UK that also use their own currency. We suppose Bartercard might fill a similar niche here.

So we are witnessing the breakdown of the big boys to the little guys. We heard a speech in Chicago  in 1986 titled ‘Elephants don’t Bite’ & the theme was it’s the small details that count & can come back to haunt us. The small details of limits on government spending were exceeded & glossed over or the rules amended by the rule makers & as always prevention is better than cure.

Doug Casey writes on Phyles - Casey Research where groups of the like minded meet. We read also of P2P which is Peer to Peer business. All the little guys don’t need the big guys & are adjusting to do so. Examples are TaskRabbit & Couchsurfing.org & RelayRides .

The uncertainty in markets means that individual tailoring of your super portfolios has been necessary & appreciated. As Albert commented ‘if the facts change then the answers change’. However that requires the effort to contact us & sit around the table.

Our car needs to be serviced every 6 months & as we are reminded today the service costs but the alternative of no service is more costly. Erik our dentist wants us to see him every 6 months.

We have been helping clients recently in small individual ways.

We reminded clients who live close of their 13,000 taxx refund mainly because of having most of their mortgage deductible. We are in the process of converting their deck, bathroom & kitchen renovations  into deductible debt over the next year. If you could built wealth outside big government super rules & minimise the taxx grab then why wouldn’t you.

If as was discussed on a contempory’s of mine  programme last night that for a lifestyle of 55K p.a. in retirement you need 850K then a radical approach is required. It was also suggested that if you live too long then you will run out of money which means portfolios should be tailored for you.

We have reviewed insurance covers as in a blink they may be needed. Don’t bet on Workcover. When Henry & Deborah meet us they found they saved 840p.a. & were able to cover both their mortgage & the debt on the rental property. They would be wise to sell their rental house as their own mortgage is too big for age 61.

Tom & Alison were telling us of their Antarctica travel plans in 2015 & brought us a quart [yes & a cleanskin & we may tell you when we meet] of the best red we have enjoyed. We intend to research that vineyard in the next school holidays.

Here to help the little guy you to  survive & thrive. This needs meeting  as ‘if we were to meet in three years time & do look back over the three years what do we need to do to make you feel happy with your financial & personal progress.’ We are not short of small ideas to help you & for you to make incremental progress. A financial tune up is today’s theme.

We do have an excellent 27 page article on gold as that should be a percentage  of your portfolio in our opinion. The percentage varies from 0 to 15% in most cases. You are welcome to contact us for this PDF.

If  1 in 10 will drop their medical insurance then is there a wise & smart alternative? Yes.

If you are interested in meeting for lunch Monday to Saturday here then contact us on 07 3848 1088 or email or our websites.

John McAuliffe