GOODBYE EUROZONE?

The long running soap opera around whether the Eurozone will break up is now into its eighth year!

In 2015 all the focus was on the latest Greek tantrum and last year the big fear was that the populist/nationalist Brexit vote and Trump victory would lead to a surge in support for populist parties across Europe and drive a Eurozone break up.

There was no sign of this in Spanish and Austrian elections, but this will be put to the test again with elections this year in the Netherlands, France, Germany and maybe in Italy.

The fear is that a Eurozone break up will plunge the world’s third biggest economic region into recession and financial chaos, which would adversely affect the global economy and Australia. Such a fear may be exaggerated – the UK hardly imploded after Brexit – but that’s the worry. 

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07/05/15: 'Wealthier' retirees to take a hit

Age Pension eligibility tightens...

This morning, the Social Services Minister, Scott Morrison, announced a plan that targets wealthier retirees by reducing the threshold at which part pension cuts out.

Currently, couples can own $1.15 million in assets on top of their family home and still qualify for the part pension. However, starting in 2017, that threshold will be reduced to $823,000 for couples.

To help compensate, the assets test threshold (for the full pension) will be increased from $286,500 to $375,000 for couples who own their own home.

If passed, it is estimated that about 91,000 people will no longer qualify for the Age Pension, while another 235,000 will have their pension reduced.

While we anticipate a significant number of our clients being adversely impacted by this proposal, the bulk of retirees (across Australia) will either see no changes to their pensions, or will receive a small boost.

Thankfully, the Government also stated that the family home would not be included in the asset test, and that those affected by the tighter pension rules will be guaranteed access to the Commonwealth Seniors Health Card, which provides the same concessional access to pharmaceuticals as given to those on the pension.

I'll keep you posted of any further developments.

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

06/05/15: Treasurer vows no super tax changes

Encouraging news

As the Federal Budget moves ever closer (next Tuesday evening), the rumour mill is working overtime, so it was encouraging to get some clarity from Treasurer Joe Hockey this morning, with regard to possible tax changes on superannuation. Read more here

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

05/05/15: Interest rates cut

A record low...

Today the Reserve Bank of Australia (RBA) finally decided to take the plunge and reduce the cash rate by 25 basis points to 2.00%, a record low.

This wasn't a huge surprise as economists this morning were factoring in a 78% chance of a rate cut today. Interestingly, the RBA provided no outlook statement for interest rates going forward, so unless the Australian economy deteriorates significantly from here, this could be the last of the rate cuts. We'll see.

At the time of writing, the Australian share market was initially up 1.1%, however has since fallen into negative territory as the Australian dollar, surprisingly, went up in defiance of the interest rate cut.

While this is welcome news for borrowers, the decision will put more pressure on investors, particularly retirees, with significant cash/term deposit holdings - interest rates are low and will stay low for some time to come. If you need income, it's time to consider your options.

On a different matter, the Federal Budget will be announced next Tuesday night (12 May) and, as usual, the rumours have been flying fast and furious, from superannuation to negative gearing to pensions.

Our advice is to ignore the background noise. Typically, the lead up to every Federal Budget is a showcase of worse case scenarios and general fear mongering, coming from both side of politics, usually leading to fairly unspectacular, watered-down announcements on the night.

We'll distill the budget details into a simple, easy to understand report for our clients soon after budget night, once we've had a chance to thoroughly weigh-up the proposals on the table. More importantly, we'll contact you individually should there be anything important to discuss.

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

29/04/15: Where are we in the investment cycle?

Approaching a bubble?

It is now six years since the Global Financial Crisis ended. From their 2009 lows US shares are up 212%, global shares are up 159% and Australian shares are up 91% Despite this, there seem to be constant predictions of a new disaster. This note looks at where we are in the investment cycle. Read more here

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

10/04/15: Australian home prices and interest rates

Where are we headed?

The interplay between falling interest rates, the Australian dollar and housing demand is a complex one. While the RBA would dearly love to see our dollar fall, rising house prices, particularly in Sydney and Melbourne, isn't part of the script. So what happens if, as widely expected, interest rates are cut again in the coming months? Another interesting read from AMP's Dr Shane Oliver.Read more here

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

02/04/15: What is 'risk' in investing?

Comments from Dr Shane Oliver...

An interesting, common sense article about investment risk from AMP's Dr Shane Oliver. An easy read. Click here

Rick Maggi Westmount Financial Clear Focus. Better Solutions.