AUTUMN 2013
Money Works Financial Planning Pty Ltd MARCH 2013
Are We Heading In The Right Direction? There have been many changes in the finan-
when I say that you will be in the same finan-
cial world in the last decade, from the GFC to cial situation in the next 12 months if you the legislative changes (FOFA, Future of Fidon’t save. If you do accept this advice, you nancial Advice) now coming into effect, which will start to see amazing changes. will have major implications of giving financial Invest: The old adage ‘money makes money’ advice (as mentioned on page 3). Not to and I believe their this no better time than mention the changing landscape with Europe now to invest. Remember that there is only still struggling and the impending ‘fiscal cliff’
two ways to make money, you work for it or it
America is still faced with. If you are still wait- works you. ing for something to happen before you inBudget: Let’s be honest, if you don’t have a vest or reinvest or start to save, then you are budget, you don’t have a plan. We all need to missing the boat. A mentor and business budget, this way we know where our hard coach of ours puts it this way
earn dollars are going.
“How old is your street directory? If you are still
Seek Professional Advice: Most people I talk to outside my business, ie non clients
using one that is 5,6,7 or 8 years old, or even older? Every year a new street directory is made available, why? Because the landscape has changed, the addition of new streets, highways and byways. So the best way to move between two points is different now.”
Inside This Issue:
This relates to the changes in the financial Are We Heading In The Right Direction?
1
By Chris Harris
Australia stock market outlook& forecast for 2013 Greg Atkinson
2
Home prices up 1.3% in 2013 Craig James, Chief Economist, CommSec January 22, 2013
3
world how? Simply put, do you really think that the opportunities you seek, such as
The truth is that most people fail because of wrong information, trembling with fear still
areas for wealth creation. So shift your focus to the following in the next 12 months to ensure financial growth.
3
Money Works & Adelaide Book Works Luncheon
4
take massive commissions. Well let me help you here because the industry has changed massively. The Government has brought in a new legislation to cut commissions, to encourage a fee for service, to make you (the
client) more aware of how, when and what capital growth in today’s market are the same type of service you will receive. Most importantly it is all about you AND the advice given as 2010, 2009 or even 2008? The answer, its called BEST INTEREST (applicable as of No Way.
and because this is the way of ‘the old street directory.’ I believe that there are four major
FOFA—Changes to Fees and Commissions
seem to think that financial advisers/planners will ‘sell’ them something and charge fees or
July 1 2013) , which means ‘A person providing personal advice to a retail client will be required to advice in the best interests of the retail client”. As Lao-tzu once said “If you don’t change your direction, you may end up where you’re heading.”
Savings, Invest, Budget and Seek Professional Advice
Wishing you as always, Great Financial
Let’s look at each of these and why.
Success,
Save: A part of what you earn is yours to keep. Save a minimum of 10% of your total
Chris Harris
income and pay yourself first. Believe me
Money Works Financial Planning Pty Ltd
Page 2
Australia stock market outlook& forecast for 2013 Once again it is time to dust off the crystal ball, stick a finger in the air and toss some chicken bones over my shoulder in a vain attempt to forecast what the Australia stock market will do in 2013. Last year the ASX All ordinaries and S&P/ ASX 200 posted respectable gains, but will they do so again this year? Let’s start off with reviewing my call for 2012 which was outlined in Australia Stock market outlook& forecast for 2012 which was posted in January of that year. In a nutshell, I expected the All Ords/ASX 200 to end 2012 somewhere between 4800-5200 and although stocks did post a solid rally from the middle of the year, both finished below the 4700 level. So I got the direction right (up) but… I was too bullish. Perhaps I can give myself 5 out 10? However my anticipation that the housing market and consumer spending would be weak did prove to be correct so I am relatively pleased that at least I was able to spot some trends. This year I don’t expect the stock market to surge upwards despite the help it will get from lower interest rates and stimulus spending in China& Japan. The Baltic Dry Index is still in a slump, oil& gas prices don’t suggest a global economic recovery has taken hold and prices for commodities like iron ore will remain subdued. Also it appears much the official economic data we see coming out of China has been “adjusted” for public consumption so I reckon it is prudent to be prepared for some nasty shocks during the year. In addition the Eurozone is basically in a recession, the U.S. economy isn’t doing much better plus emerging economies like India and Brazil may find the going a bit rough in 2013.
been focused on for a few years now. This means I am forecasting that the ASX All Ordinaries and S&P/ASX 200 will rise less in percentage terms in 2013 than they did in 2012 or in more specific terms, finish the year around 810% higher. Not a bad annual return, but let’s not forget the Australian stock market is still way below the pre GFC he when the All Ords/ASX 200 both peaked above 6500! Ah…those were the days my friends! So in short, although I still have concerns about the global economy and believe the Australia economy will struggle this year I still expect the stock market to rise mainly because the market overall, still looks a touch oversold to me from a long term perspective. The sky is not falling in, the global economy is not imploding and we can still use paper money, but the hangover from the GFC is still with us and it’s going to take some more time for the markets to adjust and heal. In regards to the wider Australian economy I expect the housing market to remain weak in 2013, the RBA to cut rates at least one more time and consumer spending to remain subdued. As for gold—well I don’t reckon it will break through $2000 USD this year and I still believe it’s at bubble-level prices. Getting into gold before the GFC would have been a great move, getting into gold now to me seems like asking for trouble. I’m sure some smart and lucky traders will make plenty of money from gold, but I don’t want to be caught in the rush for the exit when the mass selling begins. Finally please remember that making a forecast is essentially a planning exercise and that my aim at this stage is to simply try and spot the trends rather than predict precisely where the market will finish at the end of the year.
So I am less bullish about the Australian stock market now at the start of 2013 than I was at the start of 2012 Written by Greg Atkinson despite the lift it should get if (when?) there is a change of government. However I still feel the market is trading lower than it should be so I expect it to finish the year in a Declaimer: Please note past performance is not an range of between 4800-5200—which is a range I have indicator of future performance.
Money Works Financial Planning Pty Ltd
Page 3
Home prices up 1.3% in 2013 Craig James, Chief Economist, CommSec January 22, 2013 Australia's property market surged ahead in the first few weeks of 2013, with home prices up more than one per cent since the start of January. The RP Data-Rismark daily home value index for Australia's five largest capital cities was up 1.3 per cent on Tuesday, compared to January 1, and up 1.7 per cent compared to a year ago. CommSec chief economist Craig James said the index showed house prices were at their highest point since November 2011. Mr James said the figures showed recent interest rate cuts and signs of improvement in the global economy had provided a boost for the housing market.
percentage points in cuts since November 2011.
Perth has been the strongest performer so far, with prices up 2.4 per cent this year and up more than three per cent compared to January 2012.
"The rate cut delivered in December certainly seems to be adding momentum to buying activity and thus Sydney has also seen strong price prices," Mr James said. growth, with the average price rising 1.7 per cent since January 1 and al"In addition, the more settled condimost 3.5 per cent compared to last tions on overseas financial markets year. and the gains on the domestic and global share market have provided However, Melbourne's housing marconfidence to budding home buyers." ket started the year comparatively weak; home prices are up 0.4 per But he warned the resurgence of the cent so far this month but are still 0.6 housing market, following a weak per cent lower than a year ago. couple of years, may put further interest rate cuts off the table. Source: Smart line report with Permission from David Stoeckel, a "If demand for homes continues to lift Smartline Advisor and Business over January, pushing up prices, the Associate of Money Works F/P Reserve Bank will shelve any plans to cut rates," he said.
The Reserve Bank of Australia cut the cash rate a quarter of a percent"In fact the improvement in global age point to three per cent in Decem- financial markets over the past few ber and has delivered 1.75 weeks already points to the Reserve Bank leaving rate settings steady."
Declaimer: Please note past performance is not an indicator of future performance.
FOFA—Changes to Fees and Commissions I constantly find this business (Financial Planning) ex-
existing fee proposition in an effort to make it more attrac-
tremely interesting, as I am consistently learning more tive to you. In some cases there will be a slight increase and more every day. Whether it be in relation to offering a to take care of increased cost of providing our service as better service to you our valued client, how fund managers add value to their particular investment, or how the new FOFA (Future of Financial Advice) regime will affect my business.
a result of the new changes to the industry; however we are also reviewing our service offering to you. You’re probably asking yourselves, why am I going through this again? The answer is I would like your feed-
Last year I wrote about FOFA and how it represents the
back; I want to know your thoughts of our services pro-
new reforms being brought in to regulate the industry, initially by the Honorable Bill Shorten MP and has now
vided to you and how we can improve them. Please drop me a line via return email
been taken over by the new Financial Service and Super- admin@moneyworkspl.com.au , naturally any ideas and annuation minister the Honorable Chris Bowen MP. The comments will be kept in the strictest confidence. reforms have been introduced and will be mandatory by July 1st 2013, to improve trust and confidence for Australian investors in the Financial Planning Sector. With the new changes becoming mandatory as of the 1st of July 2013 we have been hearing a lot about the changes to fee structures and have decided to review our
Hope you enjoy this autumn edition and I look forward to hearing from you. Chris Harris
Like us on Facebook
135 FULLARTON ROAD ROSE PARK SA 5067 PO BOX 241 KENT TOWN SA 5071 PH: 08 8304 8088 FAX: 08 8431 8211 EMAIL:- admin@moneyworkspl.com.au
As many of our clients have their own successful small businesses, we will be advertising on behalf of our clients in each of our quarterly newsletters. See W ebsite If you would like us to for det you ca ails on n obtain how display your business your fe e copy details in our next issue, please contact Emma on (08) 8304 8088 or email admin@moneyworkspl.com.au
The information provided in this newsletter is of a general nature only and does not constitute financial advice or a recommendation. You should obtain and consider a Product Disclosure Statement (PDS) before making any decision to acquire a product. Please seek expert advice from a qualified and experienced Financial Planner or accountant or other professional, prior to making a decision on your financial situation. Detailed information on our services and fees is provided in our Financial Services Guide, which is provided prior
The views and opinions expressed within this newsletter are those of the author and do not necessarily reflect those of Millennium3 Financial Services Pty Ltd. Money Works Financial Planning Pty Ltd is a Corporate Authorised
Representative of Millennium3 Financial Services Pty Ltd ABN 61094529987 AFSL 244252 Unit 7, 50 Borthwick Ave
If you like the work we do for you, the greatest compliment that you can give us, is to recommend Money Works Financial
UPCOMING EVENTS WEALTH CREATION
CLIENT APPRECIATION
SUCCESSION PLANNING
WORKSHOP
NIGHT
WORKSHOP
Date: 11th April 2013
Date: 21st May 2013
Date: 4th June 2013
Venue: Arkaba Hotel
Venue: Arkaba Hotel
Venue: Arkaba Hotel
Time: 12:00 pm, lunch included
Time: 6:00 pm, light dinner included.
Time: 12:00 pm, lunch included
Come along and see Maureen Bell of
We will have a very special guest
Dino Dirosa from DiRosa Lawyers
Freedom Business Management speak about “Debtor Freedom, how to
speaker Mr. Ashleigh Moore, a Cancer survivor who has shown the true
will explain the importance of having a Succession Plan, after all you got
free up your cash flow and reduce your debts.
meaning of courage through the wonderful life he has lead, hear his amaz-
yourself into business how are you going to get yourself out of it ?
For further enquiries please call the office on (08) 8304 8088 as spaces are limited
ing story which can be a source of inspiration to us all. For further enquiries please call the office on (08) 8304 8088 as spaces are limited
For further enquiries please call the office on (08) 8304 8088 as spaces are limited