19/02/14: Age Pension Bonus: Last chance to register

Move quickly, deadline approaching!

If you're still working, male, and you were aged 65 or over (or 63.5 or over if you're a female) before September 2009, then you need to read this article.

If you fall into this age group and you expect to receive the Age Pension when you do finally retire, then you need to be aware that the Pension Bonus Scheme (PBS) closed to new members from 20 September 2009. Assuming you fall into this specific age group, the good news is that you can still register for the Age Pension Bonus, but you will have to hurry because applications close 28 February 2014.

Background: The PBS is a scheme to encourage older Australians to defer taking the Age Pension. The scheme pays a tax-free bonus to eligible individuals who work beyond Age Pension age, provided that they qualify for the Age Pension when they eventually retire. The maximum payment available is around $47,000 when you defer claiming the Age Pension for five years or more, and you're eligible for the full Age Pension when you do claim your entitlements. If you're eligible for a part-pension, you may be entitled to a part-Pension Bonus.

According to Centrelink, you will be eligible for the Age Pension bonus if you satisfy the following conditions:

> reached Age Pension age before 20 September 2009 (age 65 for men, 63.5 for women).

> continue to work since reaching Age Pension age.

> have not yet claimed the Age Pension.

> register before 1 March 2014.

If you have already applied for the PBS, then the scheme continues to apply for you, subject to meeting the scheme's 'work test' condition.

Note: Your eligibility for the PBS runs from the time you register, rather than the time you reached Age Pension age.

If you think that you may be entitled for the PBS, we recommend that you immediately make an appointment with Centrelink to formally determine your eligibility. Westmount clients can call our office if in doubt - we'll perform a quick calculation based on your current circumstances - beats waiting in a queue! Rick Maggi (Westmount. Financial Solutions.)

23/01/14: Expect more...

The risk of a share market correction...

Since 1950 the average cyclical bull market in Australian shares lasted 48 months with a 126% gain. The current bull market has gone for 28 months with only a 37% gain. So where are we now in the cycle? Are we heading into a bear market already or is there more growth to come? Read on…  Where are we now?   Rick Maggi (Westmount. Financial Solutions.)

17/01/14: The Year Ahead

Westmount Clients Only

19/12/13: The Fed finally tapers

...and what it means for investors

Overnight the US Federal Reserve announced that it will begin carefully and slowly scaling back its massive stimulus program next month. It is the central bank's first step towards winding back the stimulus that has helped the US recover from its worst recession since the 1930s and a sign that the US economy is recovering.

In response, the US share market surged by almost 2% and at the time of writing, local markets are up by about 1.5%. Our local currency immediately dropped to 88.18 US cents but then quickly recovered to 89.45 US cents as investors digested the news. Most importantly, this should be viewed as good news. AMP Capital's Dr Shane Oliver discusses the implications for investors here. Rick Maggi (Westmount. Financial Solutions.)

18/12/13: Mid-Year Economic & Fiscal Outlook

Game on...

The Government's Mid-Year Economic & Fiscal Outlook (MYEFO), announced yesterday by Joe Hockey, included, among other things, changes and clarification on 92 tax and superannuation measures that were announced, but not legislated, by the previous Labor Government. Of the 92 measures, 34 will proceed, 3 will be amended and 55 will be scrapped. Read the changes here   Rick Maggi (Westmount. Financial Solutions.)

06/12/13: Holiday information

and don't forget to buckle-up…  click here

03/12/13: Interest rates still on hold

…get used to it

As widely expected, the Reserve Bank of Australia decided this afternoon to keep interest rates at the historic low of 2.5 per cent.

In a statement released today, RBA Governor Glenn Stevens says uncertainty remains about the strength of economic growth outside of Australia's mining sector. "There has been an improvement in indicators of household and business sentiment recently, but it is still unclear how persistent this will be," he said. The RBA is also concerned about the economic impact of the persistently high value of the Australian dollar.

While improving economic data has prompted some economists to predict the RBA will raise rates late next year, the general consensus is that interest rates will remain low for some time and this has several implications for investors…

1) Continued low returns from cash and term deposits will attract investors to other assets with better cash flows, such as corporate debt, real estate investment trusts, various shares and unlisted non-residential property.

2) Government bonds will continue to generate very low returns.

3) Generally easy global and Australian monetary conditions through next year will help underpin further good gains in growth assets like shares.

The RBA will make its next interest rate decision in February, but don't hold your breath!  Rick Maggi (Westmount. Financial Solutions.)

30/11/13: Deflation or rising inflation?

What is the risk?

AMP Capital's Dr Shane Oliver looks discusses the potential consequences of a deflationary spiral versus rising inflation on your hip-pocket. Enjoy. Read more here  Rick Maggi (Westmount. Financial Solutions.)

05/11/13: Interest rates steady

On hold for now...

As widely expected, the Reserve Bank of Australia decided to keep interest rates on hold this afternoon.

From an investment perspective, 6-12 month Term Deposit rates will remain around the 3.7% mark, no doubt encouraging more investors into higher-yielding, higher-risk assets such as shares and property.

While we remain very optimistic about 2014, particularly share markets, investors should avoid tinkering too much with the 'balance' of their superannuation, pension or investment portfolios, in the search for better yields in a low-interest environment. Rather than exposing portfolios to higher risk and upsetting carefully diversified portfolios in the hunt for income, investors should focus more on their portfolio's totalreturn - that is the combination of its income and capital growth.

Again, were excited about the prospects going forward, but taking a more 'holistic' view about investment returns will keep investors on track to achieving their long-term goals without taking unnecessary risks.

By the way, this is an opportune time for borrowers to take a closer look at their finance arrangements, so feel free to call us if you need an impartial second opinion. Rick Maggi (Westmount. Financial Solutions.)

24/10/13: Retail sales: Light at the end of the tunnel

Looking better...

Retail sales growth has been poor for four years now reflecting a combination of consumer caution, falling wealth, “excessive” interest rates, the strongly rising $A, surging electricity prices, slowing income growth and job insecurity. With some of these factors now fading or set to fade, retail sales growth is likely to pick-up a notch next year.

This should see growth pick up to around 4 to 5% pa from 2-3% over the past four years.  Read more here  Rick Maggi (Westmount. Financial Solutions.)

24/10/13: A new warning on SMSF spruikers

NRAS on ASIC's radar...

The corporate regulator has issued a warning about SMSF spruikers who are encouraging consumers to invest in residential property via the National Rental Affordability Scheme (NRAS).

“ASIC is aware that a number of SMSF promoters include misleading statements in their ads about the grants that may be available under NRAS,” said the regulator.

The NRAS offers property investors direct payments and tax offsets for building and leasing to moderate income earners at a rate that is 20 per cent below market value.

“ASIC has seen ads stating that consumers can use their superannuation to purchase a property using the scheme and receive ‘$100,000 tax free’,” said the statement.

The regulator said the advertisements do not provide balanced messages about the “features, benefits and risks” of investing in an NRAS property via an SMSF.

The advertisements fail to mention that the eligibility to participate in the scheme is subject to restrictions; there are fees associated with purchasing, tenanting and managing NRAS properties; to receive a total financial incentive of $100,000 consumers need to remain in the scheme for 10 years; consumers will be required to rent out the property at 20 per cent below market value to eligible tenants, said the Australian Securities and Investments Commission (ASIC).

The regulator noted that if consumers purchase an NRAS property through an ‘approved participant’ there is no requirement for the incentives to be passed on.

In addition, any contractual arrangements should be checked to ensure the relevant NRAS-approved participant will comply with all legislative requirements, said ASIC.

ASIC commissioner Greg Tanzer said consumers need to be cautious when approached with an offer that appears too good to be true.

“ASIC is focused on protecting consumers and where we see people recommending consumers invest using their SMSF, we want to ensure they are providing balanced messages that comply with the law,” he said.

“It is important that ads are clear, accurate and balanced, especially when consumers are looking for investments for their long-term retirement,” said Mr Tanzer.  Rick Maggi (Westmount. Financial Solutions.)

08/10/13: The US budget standoff

Here they go again...

With US Republicans and Democrats going head to head over budget and debt negotiations, the rest of the world looks on powerless and bemused. Beyond some of the media hysteria, in this article AMP Capital's Shane Oliver provides a balanced, sober look at the debt ceiling standoff and the likely outcome.  Read more here  Rick Maggi (Westmount. Financial Solutions.)

17/10/13: US budget crisis over

Back to work, no debt default

Earlier today, the US Congress agreed to end the partial government shutdown and raise the debt ceiling. Some positives...

1. While the run up to the 11th hour decision indicated that brinkmanship is alive and well in the US, the clear message is that at the end of the day the majority of US politicians will not let the US default on its debt servicing or broader spending commitments. As Winston Churchill once said "you can always rely on the American's to do the right thing - after they've tried everything else".

2. While the brinkmanship seen in the US on a semi-regular basis is not good for confidence, it is not all bad as it has let to a more balanced solution to US budget and debt problems than would have been the case if either side of politics had complete control.

3. The legislation for the temporary fix appears to include a rule that would allow the President to increase the debt ceiling unless Congress voted against it with a tow thirds majority in each chamber. Such an approach could allow the Republicans to vote against a debt ceiling increase in February but not stop it.

4. Finally, having been so badly burned over the last few weeks, Republicans may not be so willing to set off another Government shutdown and/or debt ceiling crisis early next year. Americans appear to have largely blamed them for the latest crisis and their favourable rating dropped to the lowest level in 20 years. With the mid-term Congressional elections coming up next year, they may not be prepared to risk a re-run or worse as it could mean they will lose control of the US House of Representatives. So another extreme showdown may end up being avoided next year.

With the worry list continuing to diminish, many believe that shares are likely to rally into year end with further gains next year, with some predicting that Australian shares could hit the 5500 mark by year end and 6000 by 30 June next year. While this may seem overly optimistic, an ASX at 6000 would still be about 13% below its all time high from 7 years earlier. Rick Maggi (Westmount. Financial Solutions.)

19/09/13: UPDATE: DecTaper?

The US Federal Reserve chooses to do nothing...

Last night, the US Federal Reserve decided that the US economy just isn't strong enough (yet) to begin tapering off its $85 billion per month bond buying program (ie printing money). At the time of writing, global markets have reacted predictably, pushing share markets to all time highs, and here in Australia to a five year high.

All eyes on November/December for the next instalment. In the meantime, enjoy the market bounce, but be careful out there. Rick Maggi (Westmount. Financial Solutions.)

17/09/13: Welcome to 'SepTaper'!

Is 'quantitative easing' coming to an end?

On Thursday our time, the US Federal Reserve will likely make a statement about their quantitative easing program. Most are expecting the US central bank to begin 'tapering off' bond purchases (or in layman's terms - printing money) between now and November. While no one expects anything too extreme, this signifies a change in approach and needs to be considered by investors. If you're wondering what this all means (it's a technical area), please call me personally. Read more here  Rick Maggi (Westmount. Financial Solutions.)

09/09/13: Change in the wind

Australia's new Government

A balanced commentary on the likely share market reaction to the Liberal/National election win on Saturday. Read commentary here  Rick Maggi (Westmount. Financial Solutions.)

01/09/13: The US fiscal cliff, debt ceiling and economic outlook.

Oliver's Insights for January 2013

This note looks at the deal to avert the US fiscal cliff along with its debt ceiling and broader economic outlook. Generally pretty positive for 2013 (easy reading). Enjoy! Rick Maggi. Read here

30/08/13: The impact of major events...

1988-2013

As the world moves toward a potential conflict with Syria, it's interesting to take a look back at how events have impacted on local and global share markets in the past. This graph, produced by Colonial First State, is an interesting one. Rick Maggi.   View graph here

15/08/13: Eurozone recession ends

Mission Accomplished?

While for many, the notion that the Eurozone recession has ended and that all is well may sound a little like GW's poorly timed 'mission accomplished' declaration. Skepticism aside, while Greece and Italy are still deteriorating and Spain is on the ropes, other parts of Europe, namely Germany, are on the comeback trail. Even former 'PIIG' nation, Portugal is turning things around. Rick Maggi. More here.

08/08/13: The Federal Election

Implication for investors...

In this article AMP Capital's Dr Shane Oliver takes a look at potential implications for investors as move towards and beyond the Federal Election. Interesting reading. Rick Maggi.  The Federal Election