Why We Are Nervous About The S&P 500 And Overseas Markets

Why We Are Nervous About The S&P 500 And Overseas Markets

Investments
This isn’t a discussion around the quality of the underlying companies, their ability to make profits or the strength of their balance sheet. This is a discussion of how far can you stretch the rubber band before it breaks and snaps back to bite your hand for being too greedy and looking for that extra inch. The reality is the S&P 500 (and broadly global indices) have performed well. Fuelled by the easy cash being thrown from so many Central Banks helicopters we’ve seen the S&P 500 hit new highs. What’s missing is the fact that sales of the underlying companies haven’t followed suit. The S&P 500 Aggregate Price/Earnings Ratio The P/E ratio of the S&P 500 companies is at 26. It spiked higher than that only three times over…
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A $20,000 Head Start For First Home Buyers

A $20,000 Head Start For First Home Buyers

Investments
From 1st July 2016, the Queensland State Governments First Home Owner's Construction Grant (FHOCG) has been boosted to $20,000 (from $15,000). This increase lasts for 12 months only before it reverts back to $15,000. Some conditions do apply, this is the Queensland State Government we are talking about! A 'new home' that entitles the buyer to the First Home Owners' Grant is a house, unit or townhouse that: Has not been previously occupied as a place of residence Has not been previously sold as a place of residence or Is a substantially renovated home (renovation in which all, or most, of the structural and/or non-structural components of a building are removed or replaced). Other eligibility for the Queensland First Home Owners' Grant: The buyer cannot be a company or a…
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Kogan Versus The Share Market

Kogan Versus The Share Market

Investments, Shares
Online retailer Kogan (ASX code: KGN) listed on July 7 for $1.80. It is reported that the IPO was 4 times oversubscribed. That means one of two things: those who wanted a piece of the action wanted a lot of the shares on offer; or there were just lots of investors wanting a bit. The price since listing tells us it was the first. Fewer investors wanting big chunks and I’d wager a lot of those were expecting the “Kogan” brand to drive investor activity in the secondary market (ie; buying it the share market after it listed). So, 24 hours after listing why is it down 17%? The reality is in…. well, the reality. Kogan for all it’s growth and market penetration will turn a EBITDA of just $2.9m…
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May 2016 Interest Rate Decision

May 2016 Interest Rate Decision

Business, Investments
Earlier this week, the quarterly CPI figure was released and it was ground breaking. For the first time since the RBA has made its focus keeping inflation between 2 & 3%, the quarterly figure turned negative. That means, deflation could be upon us but that’s not the point of this discussion. Rather, our focus is on the RBA’s next move. Now the first question is “why is inflation so low?” Some simple answers include: • Low wage growth • Supermarkets cutting prices to keep market share • Lower commodity prices – heck I saw diesel priced at $0.99/l only 3 weeks ago (it’s risen since then sadly) While the $A has in the last 2 months seen a gradual rise back to $0.76US, that’s still not close to those heady…
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A Rough Start To The Year… Seven Reasons Not To Get Too Concerned Though

A Rough Start To The Year… Seven Reasons Not To Get Too Concerned Though

Investments, Shares
• Financial markets have started the year on a rough note as last year’s worries about China and global growth in the face of US monetary tightening continue. • This could drive more short term weakness. However, in the absence of US/global recession, which still seems unlikely, it’s hard to see a GFC style bear market. • The key for investors is to recognise that shares offer a higher return potential after sharp falls, selling after big declines just locks in a loss and that dividend income from a well-diversified portfolio is little affected by share market volatility. Introduction 2016 has started much where 2015 left off with basically the same worries driving another bout of share market falls. Geopolitical concerns have played a role but the main issues are…
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US Federal Reserve Raises Interest Rates

US Federal Reserve Raises Interest Rates

Investments
The most telegraphed US rate rise in history is expected to provoke bigger moves on financial markets than what’s been seen so far. The federal funds rate today rose a quarter of a percentage point to a range between 0.25 per cent and 0.5 per cent. The Australian dollar’s reaction to the US Federal Reserve’s first rate hike in almost a decade was fairly muted, while the local share market rallied. But Commonwealth Bank of Australia economists predict a stronger response to play out over the next few days. “We haven’t yet seen the full reaction, partly because a lot of market participants around the globe were closed for business given the time zones,” CBA chief economist Michael Blythe said. CBA’s head of international economics Richard Grace said the biggest…
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What The Australia-China FTA Means For Small Businesses

What The Australia-China FTA Means For Small Businesses

Business, Investments
Agriculture, services and tourism are expected to be the big beneficiaries of the free trade agreement between Australia and China. The new deal, which has been 10 years in the making, will pave the way for easier trade between the two countries. Now that a declaration of intent has been signed, both countries will now take steps to bring the agreement into force during 2015. Agriculture will fares the best in the new FTA, with tariffs on dairy products, wine and beef to be reduced in the next four to 11 years. Other sectors to benefit include processed food, tourism and travel services, manufacturing, construction and engineering, architecture and urban planning and employment services. University of New South Wales economics professor Tim Harcourt toldSmartCompany SMEs will benefit the most from…
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5 Ways To Save On Your Life Insurance

5 Ways To Save On Your Life Insurance

Investments
Loyalty Many insurers offer additional benefits depending on your length of time as a customer. Over time, these can add up. Multi-life discounts Some insurers off a discount where you and your partner/spouse obtain insurance through them. You can also get large “workplace discounts” if a group of employees of the same business get insurance together through the same insurer. Check out of inflation The automatic CPI increase each year is optional. You can opt-out of this at any time. Pay through a platform Some insurers offer a discount if you pay for your insurance through one of their investment or superannuation products. In some instances, this could save you up to 10%! Review it every year! Insurance requirements are fluid and can change over time. Your needs will be…
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The Investment Landscape Has Changed

The Investment Landscape Has Changed

Investments
Have you heard the disturbing news around investment lending and the changes that are happening every week? Lenders are punishing investors with an investment loan due to APRA intervention requiring certain lenders to rein in their investment lending portfolios. Many lenders have increased their interest rates for investment lending, and /or reduced the maximum lend to 80%, with one lender actually exiting the investment lending arena. If you thought getting an investment loan was tough before, it is about to get tougher and can be more expensive than home owner lending. However the rates you are currently paying even with the increases is still far lower than in recent years. Now we don’t have a magic wand, but we can still investigate options for you to find a product and…
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Don’t Want Your SMSF Paying Tax At 45%

Don’t Want Your SMSF Paying Tax At 45%

Investments, Superannuation
Do you know your role and responsibilities as a Trustee of a Self-Managed Superannuation Fund (SMSF)? Ultimately YOU, the Trustee, are responsible for the judicious management of your SMSF. Previously the incentive to maintain your complying SMSF status was to ensure the fund maintain its favourable concessional tax treatment, however now, added to that are penalties that flow through under the ATO’s penalty regime.  The penalty regime became law from 1 July 2014. For example, if you fail to keep adequate records the minor penalty is $1,700? Are you aware that as a Trustee you may have to pay $10,200 to the ATO if you borrow money from or your Self-Managed Superannuation Fund (SMSF) lends money to a relative? Consequences of non-compliance 1. A change in taxation rates of the fund…
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