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Australian Share market Update, February 9th, 2011

admin — Thu, 10 Feb 2011 00:21:59 +0000

The All Ordinaries index gained 12 points to end the day 0.2% higher at 4,995.1.

Commonwealth Bank of Australia (CBA) gained 2.1% to close at $55.07 after reporting first half cash NPAT of $3.3bn, up 13% on the pcp. CBA declared an interim dividend of $1.32/share (ff), 10% higher than 1H10. The ex-dividend date for the interim dividend is 14 February 2011.

Boral Limited (BLD) gained 8.9% to close at $5.14 after reporting a better than expect 1H11 profit after tax of $94m, up 28% on the pcp. BLD declared an interim dividend of 7.5cps, 7.1% higher than the pcp.

Major stock rises:

Boral Limited (BLD) $5.14 +8.90%
Stockland Group (SGP) $3.85 +3.77%
Bank of Queensland Limited (BOQ) $10.65 +2.50%
Seek Limited (SEK) $7.12 +2.15%
Commonwealth Bank of Australia (CBA) $55.07 +2.13%

Major stock falls:

SIMS Metal Management Limited (SGM) $18.69 -4.50%
Computershare Limited (CPU) $9.80 -3.83%
Macquarie Group (MQG) $39.75 -3.28%
WorleyParsons Limited (WOR) $28.80 -3.26%
Crown Limited (CWN) $8.62 -2.05%

If you do have any questions about this or would like to know more about us, please email me at admin@bronsonfs.com.au or give us a call on (07) 5577 8653

Please Note:

This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you need to consider (with or without the assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances. This information is provided for persons in Australia only and is not provided for the use of any person who is in any other country.

Australian Share market Update, February 7th, 2010

admin — Mon, 07 Feb 2011 22:45:48 +0000

The All Ordinaries index gained 5.5 points to end the day 0.1% higher at 4,964.3.

Myer Holdings Limited (MYR) ended the day 11.5% lower to close at $3.32 after downgrading its FY11 profit guidance. MYR now expects profit in fiscal 2011 to be up to 5% below the prior year.

AGL Energy Limited (AGK) gained 0.5% to close at $15.01 after reducing its FY11 profit forecast by between $30-35m, primarily due to extreme weather events around Australia. Despite the lower profit expectation, AGK plans to maintain its interim dividend of 29cps.

Major stock rises:

Seek Limited (SEK) $7.14 +3.33%
Asciano Limited (AIO) $1.69 +2.73%
Lynas Corporation Limited (LYC) $1.81 +2.54%
WorleyParsons Limited (WOR) $29.46 +2.01%
JB Hi-Fi Limited (JBH) $19.43 +1.83%

Major stock falls:

Myer Holdings Limited (MYR) $3.32 -11.47%
David Jones Limited (DJS) $4.53 -4.23%
Harvey Norman (HVN) $2.93 -3.62%
Aristocrat Leisure Limited (ALL) $2.90 -3.01%
Ansell Limited (ANN) $13.53 -1.96%

If you do have any questions about this or would like to know more about us, please email me at admin@bronsonfs.com.au or give us a call on (07) 5577 8653

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Australian Share Market Update, January 31, 2011

admin — Tue, 01 Feb 2011 03:46:39 +0000

The All Ordinaries index fell 22.5 points to end the day 0.4% lower at 4,850.

Austereo Group Limited (AEO) gained 10.6% to close at $2.09 after Southern Cross Media Group announced a takeover offer for the company, valuing the group at $707m. Under the terms of the offer, AEO shareholders will receive total consideration of $2.05/share (which will increase of $2.15 upon compulsory acquisition). AEO’s directors have recommended shareholders accept the offer, in the absence of a superior proposal.

Major stock rises:

Downer EDI (DOW) $3.85 +1.32%
Paladin Energy Limited (PDN) $4.89 +1.24%
National Australia Bank Limited (NAB) $24.66 +0.90%
Wesfarmers Limited (WES) $34.03 +0.83%
Newcrest Mining Limited (NCM) $36.98 +0.49%

Major stock falls:

Goodman Fielder (GFF) $1.26 -4.18%
Lynas Corporation Limited (LYC) $1.79 -2.71%
OneSteel Ltd (OST) $2.72 -2.51%
Macarthur Coal Limited (MCC) $12.48 -2.50%
Sonic Healthcare Limited (SHL) $11.94 -2.29%.

If you do have any questions about this or would like to know more about us, please email me at admin@bronsonfs.com.au or give us a call on (07) 5577 8653

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Aged Care and Family Communication

admin — Thu, 27 Jan 2011 02:38:49 +0000

This week we did some work with a family where the mother of the family, at the sprightly age of 90 has just decided to move into a residential aged care facility.

Sometimes called nursing homes, it’s not until you are faced with helping a person make the transition from independent living that you actually appreciate the complexities and mystery that surrounds what I think is one of the more complex areas of financial planning.

You see when a person makes the decision (or in some cases has it made for them) to move into a facility, the actions they take in that process can have a number of financial impacts. These depend on the level of care the person needs – whether a bond has to be paid, what daily fees etc will be paid.

This is an area that you really should talk to your financial planner about before embarking on this path. This is not what I wish to cover today.

One of the hardest things it seems to me is the decision for a person to go into aged care. What really hit home for me was that after 40 years plus living in the one house, this lady had two days to pack up her memories and make the shift from independent homeowner to aged care facility resident.

Leaving a house of possessions and memories and moving into a bedroom (the facility is new and quite nice, but still after 4o years in your own home….) can be a major shock to the system in itself.

But let’s get back to the 2 days issue. This decision was really a few years too late. There have been a lot of family arguments about the family house, who gets what and how it’s done. Brother is against brother and its all getting messy.

The solution – family communication. This is easier said than done, after all it’s just not right for a child to ask their parents about their financial situation, or is it.

This is a conversation all middle aged children need to have with their parents – who gets what, when the plug gets pulled and at stage of life do we make the move from independent living and on what terms and conditions. Ignore this conversation at your peril – it’s only a matter of time before you have to act.

Finally go hug your children, tell your parents you forgive them for your childhood (only kidding), life is fleeting and as this lady said to me, those 40 years have gone by so quickly and the decision to move had to be made so fast that they couldn’t say a proper goodbye to all their friends in the area.

Make sure you and yours don’t ever miss the chance to say goodbye.

If you do have any questions about this or would like to know more about us, please email me at admin@bronsonfs.com.au or give us a call on (07) 5577 8653

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Attitudes towards Superannuation

admin — Thu, 27 Jan 2011 02:34:56 +0000

Recently the Australian Institute of Superannuation Trustees (AIST) commissioned a report into attitudes on superannuation.

A list of the key findings and a thought or two are listed below:

35% of those surveyed thought paying off the house produced a much better return than superannuation;

Many Australians do see their house as a cashable asset they can sell to fund their retirement. The reality is that many of those who do downsize to fund their retirement expenses find that they cannot find a house or suburb of similar standing to that to which they had become accustomed – they end up having to reestablish themselves in a community they do not like.

41% of respondents thought the Age Pension would not exist when they retire;

If that is you I hope you have made provision for your retirement – even I think this will be the case – one day, just not sure when.

66% believe that the government would change the rules by the time they retired;

Many people tell me that they won’t invest into super because the government always changes the rules. Let’s look at a few of those changes – the Superannuation Guarantee levy – that’s good, Tax free after 60 – that s great, Preservation – makes sure it is there for its original purposes, The tax on contributions – can’t fathom the logic behind that – let’s hope that the changes that people think will happen relate to the contributions tax. It’s hard really to find fault with many of the changes – super really is super.

30% were worried that their fund would go broke and their nest egg will be gone;

So what are they doing about it? Diversification could probably help in this regard, as would paying a little attention to your investments.

30% said they knew nothing or very little about their superannuation;

Probably the same people who complain about government being involved in everything they do and then complaining that government needs to do something because they didn’t.

Only 6% were confident they would have enough to retire on;

And probably expect someone else to take responsibility for their inaction.

20% don’t know how much superannuation they have;

I really wonder what these people think will happen when they retire – this is really scary, we as individuals and adults need to be responsible for our own financial well being.

27% could not imagine the day they will stop work.

Me neither, but it’s going to happen one day – either we die, get made redundant or too sick to work, but everything ends one day.

I apologise if any of this seems harsh, but really our laissez faire attitude while endearing is a recipe for disaster especially when it comes to taking responsibility for our own retirements. It has been said many times that the average person will live about 20 years in retirement while their investments will live about 3 years – I hope you are not one of the people destined to a life of poverty after all those years of hard work.

If you do have any questions about this or would like to know more about us, please email me at admin@bronsonfs.com.au or give us a call on (07) 5577 8653

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Superannuation – Who has enough?

admin — Thu, 27 Jan 2011 02:32:16 +0000

A survey was released a year or so ago by AMP highlighting the shortfall Australians have in their superannuation savings with approximately 31% of all Australians being on average 11% behind in their savings needs.

While many will be quick to point out that we have recently seen a fairly significant fall in the value of global share markets, I think that we all need to look at ourselves and ask why this is the case – as I would contend that either I see more people unprepared for retirement than the average financial planner or that maybe these statistics understate the real issue.

What I find is that until a person is faced with their actual retirement date – be it as a result of retirement, illness or redundancy, most people just don’t care.

However tell a person that there is only 6 months left until they retire and all of a sudden they cannot stop thinking about how much (or little) they have put away. The reality is of course that by then it is just too late.

I was talking with a 36 year old male today who made the comment that retirement is so far away that he would rather use his super now. This of course gets me thinking what would you do with it now?

Spend it? Maybe, but I am not sure a new flat screen television will keep you fed when your income does not come in.

Invest it maybe? That’s a good idea, what would you invest in – shares, property, term deposits – the same thing your superannuation invests in – but without the taxation advantages.

If you take the time to look at your superannuation and realise that it is one of your most important investments you will ever have, you will see how if you do take the time to review your portfolio with your adviser on a regular basis that it is something you can be involved in and have an influence on.

If however you take the ostrich route and keep your head buried in the sand, then you will only have yourself to blame when you realise that you have just received your last pay cheque and financial oblivion is not too far away….

If you do have any questions about this or would like to know more about us, please email me at admin@bronsonfs.com.au or give us a call on (07) 5577 8653

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Retirement – Are you ready?

admin — Thu, 27 Jan 2011 02:23:07 +0000

It’s not hard to lose a couple of hours daydreaming about THE TRIP whether it be touring through Europe, or tripping round Australia caravanning under the stars surrounded by miles of emptiness. Most of us hope to do such a trip when we retire along with the hobbies and activities that so far have been pushed aside as we grapple with the mortgage and the school fees.

But how well prepared for retirement are you? It’s never too early to start planning so if you haven’t thought about your retirement yet, here are a couple of facts to get you thinking ….

Surprisingly Australians are one of the world’s greatest investors, beating the Americans, the French and the Swedes in the investment stakes. But we still fall short of the investment needed for a comfortable retirement. If you wanted to retire on a comfortable income equivalent to about $48,000 in today’s terms you need a lump sum of at least $600,000. How do you compare? The average super balance for those over 60 is about a third of what investors need to comfortably retire on. You may need to save more than you expect.

I’m not sure how the Americans, French and Swedes intend financing their retirement but for us Aussies, super is an excellent incentive to save. It provides great tax benefits and it’s also convenient because it’s compulsory and often done automatically by an employer. Super gives you access to a wide range of investments and as a long term investment, it has time to grow. A long term investment strategy also helps smooth the highs and lows that inevitably occur with any quality investment.

Retirement doesn’t happen overnight yet I am still amazed at how many people are financially unprepared for this major life event. For those aged 45 and above, on average 42 percent of their wealth is tied up in the family home with only 17 percent of their wealth held in super. Your home is a worthy asset, but bricks and mortar don’t pay the bills – that is unless you intend selling the family home. Take an active role in preparing for your future by creating an investment plan. Planning investment strategies to suit your circumstances will give you flexibility and choices in your retirement. It’s a good idea to do your homework but with so much information around … where do you start?

From our research we know most people want to learn more about investing and planning for their retirement. Almost one third of Australian use a financial planner, and 84% of those who saw their financial planner in the last 12 months said they were fairly confident they would have enough money to retire on. As a professional, it’s our job to keep abreast of investment information so we can advise you on setting your financial goals, superannuation, retirement planning, managing debt and much more.

So, if you haven’t had a chat to a financial planner about your future, now is as good a time as any to pick up the phone and make that appointment.

If you do have any questions about this or would like to know more about us, please email me at admin@bronsonfs.com.au or give us a call on (07) 5577 8653

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Self Managed Superannuation – Is it for You?

admin — Thu, 27 Jan 2011 01:20:06 +0000

Articles regularly appear the financial press about the growth in Self managed Superannuation funds (SMSFs) and the fact that many people do not understand the requirements placed on them by the legislation and indeed whether or not it is actually appropriate for an investor actually hold their superannuation funds in such a vehicle.

Now what must be stressed first and foremost before we go any further is that superannuation is not an investment – it is a legal structure for holding investments on behalf of the investor until the investor has reached retirement.

Therefore comments about how good an “investment” superannuation is actually reflect a lack of understanding by the commentator on the topic. The same investments that appear in a superannuation fund (whether it be retail, industry, wholesale or self managed) can basically be owned by an individual – shares, property cash and fixed interest investments.

What I see happen is that a person gets “advised” that a Self Managed Superannuation Fund is the best way to hold their assets for retirement. Now this might be the case and in all reality you should have a long discussion with your Financial Planner about the appropriateness of such a legal structure. You also need to look at the costs involved and whether you have the skills, interest and desire to manage the investment process along with all the other things you do with your life.

While there are many stories of people who have managed their SMSFs quite successfully and have actually been able to grow their funds better than if they were invested in another option, I put to you that there are far more who have gone nowhere and in fact have destroyed any chance of a comfortable retirement by taking on a job they cannot really do.

Let me share with you 4 stories about actual people who owned Self Managed Super Funds and could not understand why they did not make much money (please note that these people are not clients, but people who have passed through our practice over the past couple of years):

Case 1: Client was short of cash, had recently lost a court case so he took $50,000 out of his fund to pay his legal fees – there are so many breaches there that I shudder to think to how this fund could pass an audit.

Case 2: Client gets told by a mate that he should look after his own superannuation, as he will get better returns. End result client rolls over his $25,000 into an SMSF at a cost $3,500 to set up the fund, does nothing for 2 years and wonders why his superannuation goes nowhere. At the age of 50, this person has problems.

Case 3: Client sets up a Self Managed with $300,000. Puts the cash into a cheque account for 3 years. When I asked why, the client said he did not know where he should invest the money and could not be bothered learning about the stock market. Hello, don’t the words self managed mean anything to you?

Case 4: Another client set up a fund with about $80,000 and then proceeds to put all the funds into a wrap account. The wrap account has fees of about 1.6% of the balance and the client pays accounting fees of about $1,500 per annum. Why bother?

So before you get involved in the hype you really should talk to a Financial Planner who works in this area as I have not even touched on any of the other issues and obligations that you take on as a trustee. SMSFs – good for some, but maybe not for all.

Please note if you would like to learn more about Self Managed Superannuation, please send us an email to admin@bronsonfs.com.au and we will send you a copy of our e-book – Self Managed Superannuation – is it for you?

If you do have any questions about this or would like to know more about us, please email me at admin@bronsonfs.com.au or give us a call on (07) 5577 8653

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The transfer of wealth between generations (or not)

admin — Fri, 21 Jan 2011 04:44:21 +0000

You’ve probably seen those ads for retirement planning featuring retirees on Harley Davidsons saying “Retirement is payback time” or have seen the stickers on the caravans of the grey nomads that say “I’m spending my children’s inheritance.” Or even better, “Live long enough to be a burden on your children”.

We have probably all laughed at that and thought not in my family, I don’t need to plan for retirement, I will get what my parents or grandparents don’t spend. The 2004 Survey of Consumer Finances noted that 21% of people born after 1964 thought they would inherit some money someday. After all, most of them still have living parents or grandparents. I am not sure what the numbers are here in Australia, but I would expect them to be comparable.

So what’s the reality?

Well retirees have a lot of demands on their savings. Living costs, for one, are rising fast. At the same time, many people are not waiting until they die to help their children and grandchildren financially. Finaly the current market turmoil is seeing many people concerned about how long their retirement savings will actually last.

So for these reasons, I come up with 5 reasons why people born after 1964 (and this includes me), need to take accountability for their financial health and no rely on Mum and Dad bailing you out again

People who make it to 65 will live a lot longer. Modern medical advancements will simply keep us alive a lot longer. At age 65, the average male has a life expectancy of 18 years and an average female has a life expectancy of 21 years That’s a combined 39 years of living expenses for couples, and it isn’t easy or fun to scale back your standard of living.
Social Security will probably change. There is not too many people who think that the government will be paying out more in the future that it currently does now. With the talk about keeping people in the work force for even longer, there is even the chance that you may have to wait longer to qualify for a benefit.
Marriage Breakdowns. It is not unusual for a couple to divorce in retirement. After years of being together, they sometimes find in retirement that they have grown apart and simply want to go their own ways. As a result the family fortune is split sooner and between the living parents. Splitting up can be expensive in itself, and maintaining two households for decades afterward will often cost more than sharing a dwelling.
The desire to unlock a home’s equity to meet lifestyle and other costs. The good old reverse mortgage. The reality is that homeowners can tap into the equity in their home without the need to repay it until the house is sold at their death.
There is also the view that the transfer of wealth will increasingly happen while the older generations are still alive. People in the latter halves of their lives now find themselves school fees and university fees for grandchildren. Indeed we have seen people who have been helping their children and grandchildren out with home deposits and even simply bailing them out of mounting debts and a host of other financial calamities.

So that’s some reasons why waiting for the folks to pass it on may not be a smart idea. It may be that now is the time for you to work out an alternative plan just in case this one does not work for you after all.

If you do have any questions about this or would like to know more about us, please email me at admin@bronsonfs.com.au or give us a call on (07) 5577 8653

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The Cost of living – what does it mean for investors

admin — Fri, 21 Jan 2011 04:12:59 +0000

For the past 2 years we have heard how tough all people are finding it in the real world.

An article in the Financial Review on Saturday June 5 actually quantified price increases for the past decade – given my view that we are now post GFC more accountable for meeting our income needs in retirement and this actually made me a bit nervous – am I doing enough, are you doing enough, but look at the table below to see what has increased by how much over the past decade:

Item	10 year Increase
Fruit and Vegetables	60%
Milk	36%
Cheese	66%
Bread	49%
Beef and Veal	44%
Lamb and Mutton	109%
Beer	64%
National Electricity Prices	91%
*Wages*	*44%*

In the past 10 years, household indebtedness as a percentage of disposable income – what you owe divided by what you earn has grown from 90% to 156% – this is far greater than in the UK and the US – and they are supposed to be the basket cases – we better hope China does not slow down.

Interestingly, according to RP data, house prices have risen by 146% nationally in that time with Brisbane showing the highest gain of 185%. Melbourne rose by 153% and Sydney by only 83% – I think this could be the better than building a gate at the border to stop the southerners coming on – they simply won’t be able to buy a house here, actually none of us will, last person out, please turn off the overpriced electricity.

The latest Westpac ASFA Retirement Standard found that the aggregate cost for a couple living comfortably in retirement increased by 0.5 per cent in the September 2010 quarter to nearly $54,000 a year.

The September quarter showed that a couple looking to achieve a comfortable retirement would need to spend $53,729 a year, while those couples seeking a modest retirement lifestyle needed to spend $30,557 a year. Singles would have to spend $21,132 a year to support a modest retirement lifestyle, and $39,302 a year for a comfortable retirement lifestyle.

What this means for the average investor is that you really do need to ensure you discuss with your advisor the strategies you can employ to ensure that your portfolio manages to keep pace with inflation, capital growth needs to be an important part of your forward planning.

If you do have any questions about this or would like to know more about us, please email me at paul@bronsonfs.com.au or give us a call on (07) 5577 8653.

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