Latest News from Newealth

Friday Tidbit: Lessons for Life and Business

• Posted by Dejan Pekic BCom DipFP CFP GAICD

Marcus Aurelius (121 to 180 AD) was an ancient Roman Emperor and a student of Stoic philosophy believed that we should all apply these simple principles.

1. “Be tolerant with others and strict with yourself.”
2. “The impediment to action advances action. What stands in the way becomes the way.”
3. “Waste no more time arguing what a good man should be. Be one.”
4. “You shouldn’t give circumstances the power to rouse anger, for they don’t care at all.”
5. “Just that you do the right thing. The rest doesn’t matter.”

Click to read.

Words definitely to live by. Enjoy your weekend.

Harvard Business Review: Economic Impact COVID-19

• Posted by Dejan Pekic BCom DipFP CFP GAICD

This HBR Video provides a good explanation of the difference between a V, U and L shaped economic recovery.

Monday, March 23rd still officially marks the low for the collapse in growth asset prices but this does not mean that economic downturn (likely recession) is over given that we are only at the beginning of a period of heavy job losses.

Click to watch.

There is no doubt that the asset price increases since the 23rd March have been good news for clients who have taken advantage of this market crash and if you are an Active client that has questions, please call me on 02 9267 2322.

Unemployment: Jobs???

• Posted by Dejan Pekic BCom DipFP CFP GAICD

There is not hiding it, the numbers are not good, expected but still bad and getting worse.

Australia had just over 13 million employees by mid-March 2020 and the data points to 780,000 workers having lost their job due to COVID-19 restrictions which have shut down pubs, clubs, gyms, cinemas, beauty salons and required workers to stay at home.

These social distancing restrictions are likely to push Australian unemployment from the current 6.2% back up to the 11.2% high in 1992 before business activity begins to return back to a new type of normal.

Click for chart.

Back in the 1991 recession there was great panic with assets prices dropping for residential property, for listed companies and interest rates being pushed up to new highs by a Reserve Bank of Australia Cash Rate rising to 17.5% in January 1990.

It was financial chaos.

What was the lesson for investors?

It will pass, remain invested according to your appetite for volatility and when fear and panic take hold, take advantage by buying more quality assets at discounted prices.

Electric Vehicles: 1 million miles

• Posted by Dejan Pekic BCom DipFP CFP GAICD

In November 2006 we sent out our first eUpdate on electric vehicles which are now commonly known as EV.

You can feel it, he (Elon Musk, CEO Tesla) is almost there with a low cost electric vehicle battery designed that will be able to last for a 1 million miles or 1.6 million kilometres.

The plan, once Telsa has the battery in production is to roll it out with the Model 3 (pictured above).

Imagine, the electric motor has been around since 1835 and it has taken over 100 years for it to be on the cusp of finally replacing the mass produced internal combustion engine.

This will mark one of the great turning points in human history.

Click to read.

Market Metrics: MSCI World Index Sectors

• Posted by Dejan Pekic BCom DipFP CFP GAICD

It is still too early to call but the 23rd March 2020 might just have marked the bottom for the collapse in growth asset prices due to COVID-19.

The sectors that comprise the MSCI World Index (Morgan Stanley Capital International) include Energy, Financials, Industrials, Real Estate, Utilities, Materials, Consumer Discretionary, Telecommunication, Consumer Staples, Information Technology and Health Care and they have all bounced up significantly.

Click for chart.

This does not mean that economic downturn (most likely a World recession) is over, we are only at the beginning of a period of heavy job losses but the worst of the collapse in growth asset prices maybe all over.

The current results are good news for all those clients who have taken advantage of this market crash and if you are an Active client that has questions, please call me on 02 9267 2322.

The Worlds Wealthiest Individuals: Ultra-High Net Worth

• Posted by Dejan Pekic BCom DipFP CFP GAICD

The United States of America is both a spectacularly wealthy nation and people.

The proof, it has 240,575 Ultra-High Net Worth (UHNW) individuals which is more than both Asia and Europe combined.

You will meet the definition of UHNW if you have over US$30m (AU$46m) in assets including your primary residence. Interestingly, the usual definition excludes personal assets such as the primary residence.

By comparison, Australia has 3,796 UHNW individuals.

Click for charts.

Friday Tidbit: Mega Trends post COVID-19

• Posted by Dejan Pekic BCom DipFP CFP GAICD

Many of these Mega Trends are well known and well documented.

The question rather is whether this Portfolio Managers expectation will come to pass based on these Mega Trends because much of this was previously predicted for post 2008 Global Financial Crisis and yet in the past 12 years prior to COVID-19, listed companies have delivered and significantly in terms of profit and return.

Our professional guess for why it is so difficult to work out what is going on is that no one Portfolio Manager really understands the future impact of AI (artificial intelligence) and by extension how software will consume the World.

Enjoy the thinking exercise.

Click for charts.

Up to a 50% guaranteed return: Superannuation Co-contribution for 30 June 2020

• Posted by Dejan Pekic BCom DipFP CFP GAICD

The Federal Government Co-contribution was introduced from 1 July 2003 as an initiative to encourage low to middle income earners to save for their retirement within superannuation.

If you make a contribution of up to $1,000 into your superannuation account before 30 June 2020, the Federal Government will add an additional sum provided that you are earning less than $53,564 this financial year.

The table below shows you how much the Federal Government will contribute for various amounts.

WARNING, this does not constitute Personal Advice. To discuss if this is an appropriate strategy for your given circumstances please do not hesitate to contact us directly.