Retirement is a period most people eagerly anticipate. It’s that wonderful stage of life when you can finally unwind and spend your time as you please. You can even spend retirement focusing on the businesses you’ve been planning and have put off for so long.
Understanding cash flow can be the difference between a solid long-term investment and a costly mistake. So do your research – and get good advice before you buy.
Whenever there is a disaster here or overseas, Australians rush to donate their time, household goods and cash. However, we still lag other countries when it comes to giving money.
Data source: Bloomberg & Financial Express. Returns greater than one year are annualised.
Commentary regarding equity indices below references performance without including the effects of currency (unless specifically stated).
The ASX 200 finished December up 7.3% with all 11 sectors posting positive returns. The December ‘Santa Rally’ rang true again, with market sentiment being supported by the indications from the US Federal Reserve that interest rates have peaked. Locally, the monthly returns transpired despite the release of weak data across several economic indicators. Investors also see potential for rate cuts from central banks in 2024, and these factors contributed to the monthly return.
Leading the pack were Property (+11.5%), Health Care (+9.1%), and Materials (+8.8%) while Utilities (+2.5%) and Energy (+3.4%) finished less favourably. Property had double digit returns for the second consecutive month, as investors gave the sector buoyancy following the Fed’s dovish tone. Robust gains in the price of iron ore and other commodities were beneficial for Materials shares.
Over the year, Information Technology (+31.3%) was the top performing sector, leveraging off the advances in A.I. technology. Other sectors that finished the calendar year with robust returns were Consumer Discretionary (+22.3%), Property (+17.6%), Communications (+16.6%) and Materials (16.2%). Given the late run, at the conclusion of 2023 the ASX 200 was up 12.4%, marking a strong rebound after the negative return in 2022.
Global equity markets rallied into the end of the year on easing inflation data. Developed markets continued to outperform emerging markets returning 1.8% (MSCI World Ex-Australia Index (AUD)) versus a 1.0% return according to the MSCI Emerging Markets Index (AUD). The CSI 300 Index lost 1.8% (in local currency terms) in December due to investor concern on lack of stimulus from the Chinese government.
US markets continued to gain as the FOMC meeting suggested three interest rate cuts in 2024, sending the S&P500 up 4.5% (in local currency terms), while the Nasdaq rose 5.6% in December, marking a 44.6% increase for 2023 (in local currency terms).
The S&P/ASX 200 A-REIT Accumulation index finished the year strongly during December, with the index finishing 11.5% higher. Global real estate equities (represented by the FTSE EPR/NAREIT Developed Ex Australia Index (AUD Hedged)) also performed well, advancing 8.4% for the month. Australian infrastructure continued its positive trend through December, with the S&P/ASX Infrastructure Index TR advancing 4.4%% for the month and 11.3% for the calendar year.
December was relatively muted on the M&A front across the A-REIT sector. Some activity included Charter Hall Retail REIT (ASX: CQR) contracting to sell $225.5mn of shopping centre assets, with the focus on maintaining balance sheet strength. In broader news Cromwell Property Group (ASX: CMW) announced new CFO, Michelle Dance, who was promoted internally. Dexus (ASX: DXS) announced their new CEO Ross Du Vernet who has been a member of the executive team since he joined in 2012.
The Australian residential property market experienced an increase of +0.4% Month on Month (as represented by CoreLogic’s five capital city aggregate). Perth was the biggest riser (+1.5%), followed by Adelaide (+1.3%) and Brisbane (+1%). In contrast, Melbourne (-0.3%) was the only city to deliver negative returns in December. CoreLogic’s five capital city aggregate returned +9.7% for the calendar year in 2023.
In a move reflecting its cautionary approach towards inflation, the RBA kept the cash rate on hold at 4.35%. This pause comes after a rate hike last month and a period of assessment on inflation’s trajectory, which has shown signs of moderation, particularly in the goods sector. Despite this, the RBA acknowledges the inflation risks associated with the tight labour market and rising housing prices, emphasising its commitment to reining in inflation to target levels.
Australian bond markets reacted with restraint to the RBA’s decision. The 2-Year Bond yield edged down by 40bps, while the 10-Year yield fell by 45bps, as investors digested the mixed signals of a steady cash rate against potential inflation concerns.
In global markets, US Treasury yields continued to decline amidst softer inflation data, with the 2- and 10-Year both falling by 45bps. The Bank of England (BoE) held interest rates steady for the third consecutive meeting, as CPI dropped to 3.9%, the lowest in over two years. UK 2- and 10-Year Gilt yields declined by 62ps and 64bps respectively, suggesting market confidence in central bank policies to manage inflation.
As widely expected, the RBA kept interest rates on hold at its final meeting for the year. The accompanying statement carried a less hawkish tone than other recent commentary, noting that inflation was continuing to moderate and that the expected trajectory remained consistent with RBA targets.
November’s inflation indicator came in at 4.3%, the lowest rate since January 2022 and below the anticipated. 4.4%. The most significant price rises were housing (+6.6%), food and non-alcoholic beverages (+4.6%) and insurance and financial services (+8.8).
The Westpac-Melbourne Institute Index of Consumer Sentiment rose to 82.1 in December but remains at pessimistic levels due cost of living and interest rate pressures. Retail sales rose 2% in November, well above the anticipated 1.2%, largely due to Black Friday sales.
The unemployment rate was steady at 3.9% in December, matching market forecasts. While the rate was steady, a softening of the labour market is underway with the economy shedding 106,600 full times roles, the largest drop since May 2020.
Composite PMI increased to 46.9 in December, but private sector activity remains subdued in both manufacturing output and services activity. The NAB business confidence index dropped to -9 in November, the lowest level outside the COVID period since 2012, with sentiment deteriorating in most industries.
The trade surplus increased to $11.44 billion in November, well above forecasts of $7.5 billion.
Following signs of easing inflation, the US Federal Reserve kept interest rates steady at its final meeting for the year, but indicated a clear willingness to reduce them in 2024. An updated “dot plot” trajectory of Fed policymaker estimates for future interest rates showed a median expectation for US cash rates to reach 4.50-4.75% by the end of next year, representing three cuts of 0.25% each, with a further four cuts anticipated in 2025.
Annual headline CPI inflation slowed to +3.1% in November, as falling fuel prices offset increases in rent. Core inflation, which excludes food and energy, also decelerated to an annualised +4.0%. Meanwhile, the PPI slowed to an annual rate of +2.5% through to November, down from +2.8% the previous month.
The economy added 216,000 jobs in December, above the market forecasts of 170,000, with the unemployment rate steady at 3.7%.
Consumer sentiment rose to 69.4 in December amid substantial improvements in outlook on inflation. Retail sales came in at 0.6% in December, the largest increase in three months and ahead of the anticipated 0.4% rise and the 0.3% increase in the prior month.
Composite PMI rose marginally to 50.9, primarily driven by the continued growth in the service sector.
The trade deficit narrowed to US$63.2 billion in November, below the forecast US$65 billion.
The ECB maintained interest rates at 4.5% for the third month in a row in an effort to combat high inflation. The bank project inflation to average 5.4% in 2023, coming down to 2.7% in 2024. Annual inflation rose to 2.9% in December, just below the expected 3.0%.
PPI fell 0.3% in November, with the annual rate dropping to 8.8% as energy costs continued to fall, but at a slower rate than in previous months.
The unemployment rate fell to 6.4% on November, slightly below, market expectations of 6.5%. Consumer confidence rose to -15.0 in December, the highest level since February 2022 reflecting improved assessments of the general economic situation and easing inflation.
Retail sales fell 0.3% in November, matching market expectations. Annual retails sales fell by 1.1%, underscoring the impact of the ECB’s aggressive rate tightening.
The Composite PMI came in at 47.6 in December, with both services and manufacturing output declining.
The Bank of England voted by a majority of 6-3 to uphold the cash rate at a 15-year high of 5.25% during its December meeting. This aligns with policymakers’ efforts to combat inflation, even in the face of a deteriorating economic landscape.
Annual inflation unexpectedly rose to 4% in December from a nearly two-year low of 3.9% in November, and above forecasts of 3.8%. It is the first increase in inflation rate in ten months, with the biggest upward contribution coming from prices of alcohol and tobacco (12.9% vs 10.2%), mainly due to a rise in tobacco duty.
PPI fell 0.6% in December, against market expectations of -0.2%, with the annual rate rising 0.1%.
Consumer confidence rose to -22 in December, as Britons became less pessimistic about their future financial situation amid easing inflationary pressures. Retail sales increased 1.3% in November, ahead of the expected 0.4%. Annual sales grew 0.1%, well ahead of the anticipated -1.3% and marks the first increase in retail activity in 19 months.
China’s GDP grew at an annualised rate of 5.2% for the December quarter, slightly below market expectations. Of particular concern for the local mining sector was the sharp fall in Chinese steel production to 67.4mt in December 2023, the lowest rate in 6 years and a 13% drop from the prior December. The latest data caused spot iron ore pricing to fall around 3% as investors downgraded their expectations for Chinese demand in 2024. The Australian dollar also weakened, falling back toward US$0.65 after beginning this year at US$0.68.
Other data released at the same time showed that the population declined for a second year in a row as birth rates declined at an accelerating pace. Coupled with persistently high youth unemployment (at around 14.9%), the shrinking population will have a long term effect on growth.
The unemployment rate rose to 5.1% in December. Consumer prices fell by 0.3% in December, continuing a deflation streak started in October. PPI was down 2.7% in December, above estimates of a 2.6% drop, and having declined for 15 consecutive months.
Composite PMI rose to 52.6 in December, as both services and manufacturing activity increased. This is the 12th straight month of growth in private sector activity.
Retail sales increase 0.3% in December with annual sales increasing 7.4%, missing the market consensus of 8.0%.
The Bank of Japan kept interest rates steady at 0.1% and maintained a 0% target for its 10-year bond yield set under its yield curve control policy, as expected. Policy makers continue to wait for more indications that wages are improving enough to stoke inflation.
Economic growth has fallen by 2.9% per cent since this time last year, driven by sluggish consumer demand because of 18 months of real wage decreases.
The unemployment rate was unchanged at 2.5% in November, matching market expectations.
The consumer confidence index rose to 37.2 in December with sentiment increasing in all components. Retail sales grew 1% in November, with the annual rate rising 5.3%, above the anticipated 5.0%.
December saw Composite PMI rise to 50.0, with faster service sector growth offsetting a further reduction in manufacturing production.
The Australian dollar (AUD) appreciated over the month of December, closing 1.8% higher in trade weighted terms to 62.6, appreciating against the US Dollar (USD), Pound Sterling (GBP) and Euro (EUR) whilst depreciating against the Japanese Yen (JPY).
The AUD strengthened against the USD in December for the second consecutive month, supported by improved market sentiment in Australia and weakness in the USD. The major difference in outlook is driven by the evolution of interest rate expectations. Against other currencies, the AUD performed moderately, experiencing its first monthly decline against the Japanese yen since August amid speculation regarding a potential shift in the Bank of Japan’s monetary policy.
Relative to the AUD, the JPY led the pack in December, appreciating by 1.9%. Conversely, the USD was the laggard of the month, depreciating in relative terms by 3.1% against the AUD. Year-on-year, the AUD remains behind the GBP, EUR, and USD by -5%, -3.1% and -0.1% respectively, whilst ahead of the JPY by 7.5%.
With the New Year now here, it’s crucial to shift our focus towards estate planning. Often underestimated, this financial aspect tends to take a backseat in the lives of many Australians. It’s perceived as a task for the distant future or something that can be postponed indefinitely.
It is often said that ‘Time and tide wait for no one.’ Therefore, to achieve success in life, one needs to develop a deep appreciation for time.
Anyone can benefit from time management — whether in school, the office or life in general. You can realise your career goals, boost productivity, reduce stress, and experience better work-life balance by knowing how to manage your time.
In this post, we’ll talk about effective time management. We’ll discuss the importance of time management and the many benefits it provides.
Time management refers to the practice of organising and planning how you can split your time between specific tasks and objectives. Effective time management ensures you devote the appropriate amount of time to certain activities to achieve your goals for the day, week, month or year.
Individuals applying time management typically assign specific time slots to activities based on their importance or relevance. And since time is finite, the goal of time management is to make the most of one’s available time.
To realise the value or importance of time management, one must be aware of the consequences of failing to use time effectively.
When we understand the value of time management and plan to apply it, we become more effective at work and in life. We can even transform our lives and the world around us by working toward developing effective time management skills.
Below are other benefits of time management:
If you want to know how to improve time management and implement it right away, here are some effective techniques so you can start experiencing the benefits of using your 24 hours a day wisely.
These strategies do not require special tools or devices to implement.
What you need is the commitment and discipline to make better use of your time so you can stress less, achieve more, and live a full, well-balanced life.
View Jacqui’s website profile here or connect with her on LinkedIn here.
To have the impact we intend for our clients, as a team, we must continuously work on ways to manage our time effectively. I frequently engage with our team, discussing strategies to elevate our collaborative efforts while prioritising our client’s time. These principles are not limited to the workplace but can be seamlessly integrated into our daily lives, fostering a deep respect for both our time and that of our clients. I trust that this article has offered valuable insights on how you can optimise your time management each day.
Jacqui Sherlock – CEO
Original article: Feedsy
Investing, a realm filled with potential opportunities and pitfalls, demands careful consideration to navigate successfully. Each misstep along the way can serve as a valuable lesson, contributing to a more refined and robust investment strategy. Here are 20 crucial investment mistakes to be aware of, each of which plays a pivotal role in shaping a sound investment approach.
To avoid these common pitfalls, investors should seek financial advice, prioritise rational decision-making, and focus on long-term objectives. Financial goals, current income, spending habits, market conditions, and expected returns should guide portfolio construction. This approach helps investors steer clear of short-term market volatility and underscores the importance of consistent, long-term investments in wealth accumulation.
Designing and managing your investment portfolio can be complex; with our experience and understanding, we can help tailor an overall investment plan to suit your long-term goals. Reach out to our financial advice team for strategic investment advice here.
This information does not take into account the objectives, financial situation or needs of any person. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation or needs.
(Feedsy Exclusive)
Data source: Bloomberg & Financial Express. Returns greater than one year are annualised.
Commentary regarding equity indices below references performance without including the effects of currency (unless specifically stated)
The ASX 200 was up 5.0% for the month of November, halting the three-month slide in returns. Eight of 11 sectors finished positively; the three strongest being Health Care (+11.7%), Property (+11.0%), and Information Technology (I.T.) (+7.4%), while Energy (- 7.4%) and Utilities (-6.0%) were laggards. The month began with a rate hike by the RBA and fears of further increases. However, markets were supported by indications of inflation slowing at a decent pace, finishing the month with the strongest return for the index since January. The Health Care sector was driven by a strong month for three major constituents: CSL, ResMed and Cochlear. Meanwhile, despite the RBA’s decision early in the month, the rate-sensitive Property and I.T. sectors were the beneficiaries of the ease in inflation as investors piled back into those sectors.
Energy stocks were hit by the significant drop in oil prices over the month, partly due to the Chinese economy continuing its struggles. Meanwhile, Utilities were impacted, predominantly by one stock, Origin Energy, as the unpredictable takeover bid of the company saw its shares fall almost 10%. In all, the ASX 200 finished November by clawing back some of the losses seen in the previous three months.
Global equity markets gained in November, rebounding from October lows. Developed markets outperformed emerging market counterparts returning 4.4% (MSCI World Ex-Australia Index (AUD)) versus a 3.1% return according to the MSCI Emerging Markets Index (AUD).
The S&P500 finished up 9.1% and the Nasdaq up 10.8% (in local currency terms) as the Federal Reserve shows signs of ending rate hikes. European markets also gained on easing inflation data, the DAX gaining 9.5% (in local currency terms) over the month.
Chinese markets performed poorly, as China’s economy continued to contract and artificially lowered iron ore prices fail to bolster the economy. The Hang Seng Index and CSI 300 Index lost -0.2% and -2.1% for the month (in local currency terms), as China’s largest property giant EverGrande continues to face collapse, dragging the Real estate Sector lower in China.
The S&P/ASX 200 A-REIT Accumulation index advanced during November, with the index finishing the month 11.0% higher. Global real estate equities (represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged)) also finished strong, advancing 9.0% for the month. Australian infrastructure also performed well during November, with the S&P/ASX Infrastructure Index TR advancing 1.6% for the month and up 6.6% YTD.
The Australian residential property market experienced an increase by +0.6% Month on Month (as represented by CoreLogic’s five capital city aggregate). Perth was the biggest riser (+1.9%), followed by Brisbane (+1.3%) and Adelaide (+1.2%). In contrast, Melbourne (-0.1%) was the only city to deliver negative returns in November.
After four months of rate hike respite, the RBA has lifted the official cash rate by 25 basis points to 4.35% following latest inflation data and economic indicators. This marks the highest cash rate level since 2011, and the RBA will continue to monitor the balance between the strong labour market and slowing household sector. Over the course of the month, bond yields fell steadily with Australian 2 and 10-Year Bond yields falling by 35bps and 52bps respectively. The Australian bond market, as measured by the Bloomberg AusBond Composite 0+ Yr Index, rose 2.97%.
The RBA raised the cash rate by 0.25% to 4.35% on Melbourne Cup Day, the first rate hike under new governor Michele Bullock. The tone of commentary accompanying the bank’s decision suggested a lower chance of further monetary tightening and investment markets are now pricing in a 20% chance of rate cuts by the end of 2024.
October’s inflation indicator came in at 4.9%, with the most significant rises coming from housing, food, and transport. 3Q23 GDP fell short of expectations, growing only +0.2% over the June quarter (compared to +0.4% forecast). In annual terms GDP expanded 2.1%, in line with the prior quarter and ahead of market expectations of 1.8%.
The Westpac-Melbourne Institute Index of Consumer Sentiment fell 2.6% to 79.9 in November, returning to deeply pessimistic levels as the RBA’s rate rise has put renewed pressure on family finances. Retail sales fell 0.2% in October, the first decline since June as consumers pulled back on some discretionary spending and awaited Black Friday sales. In contrast, annual sales increased 1.2%.
The unemployment rate increased to 3.7% in October, aligning with the market expectations. The Wage Price Index grew 1.3% in quarterly terms in the third quarter, meeting expectations. The reading was the highest quarterly growth in the 26-year history of the index. On an annual basis, growth rose to 4% vs 3.6% rise last quarter.
Composite PMI fell again in November to 46.2, largely driven by a sharp decline in services output. The NAB business confidence index fell to -2 in October with falls in most industries. The trade surplus came in at $7.13 billion in October, below market forecasts of $7.5 billion.
During November there was further evidence of inflation easing across the world, making it more likely that the next move for central bank interest rates is down. German CPI gains slowed to +2.3% in November, while Spain’s inflation rate fell to an annualised rate of +3.2%, both below expectations.
The Hamas/Israel war entered its second month and combined with the ongoing Russia-Ukraine war provides significant headwinds for the global economy. Aside from the catastrophic human toll, these wars could affect the US and European economies via lower regional trade, tighter financial conditions, higher energy prices and lower consumer confidence.
The Federal Reserve kept rates at 5.5% at its November meeting, reflecting the twin focus of returning inflation to the 2% target while avoiding excessive monetary tightening. Policymakers emphasised that any additional policy tightening would consider the cumulative impact of previous interest rate hikes, the time lags associated with how monetary policy influences economic activity and inflation, and developments in both the economy and financial markets.
Annual inflation fell to 3.2% in October, below market expectations of 3.3%, as energy costs dropped 4.5% and food, housing and used car costs rose at a softer pace. PPI fell 0.5% month-over-month in October, the most since April 2020 and against market expectations for a 0.1% increase.
The economy added 199,000 jobs in November, above the anticipated 180,000, with the unemployment rate falling to 3.7%. While the economy added more jobs than expected in November, it is the second month in a row that new jobs were well below the average of 240,000 jobs per month for the past year, suggesting that the labour market is slowing.
In November consumer sentiment fell to 60.4, missing estimates for 64 and largely driven by high interest rates and persistent inflation fears. Retail sales in October fell 0.1% over the month, ahead of expectations for a 0.3% drop but a slowdown from September’s upwardly revised 0.9% rise. The annual rate increased 3.75%.
The S&P Global Composite PMI was steady at 50.7 in November as services activity showed a small uptick in the rate of growth. The trade deficit for October came in at US$64.31 billion, above the forecast US$64.2 billion.
There was no meeting of the ECB in November, so interest rates remained at 4.5%. Annual inflation fell to 2.4% in November, well below the expected 2.7%.
PPI rose 0.2% in October, with the annual rate dropping by 9.4% as energy costs continued to fall, but at a slower rate than in previous months. Unemployment was unchanged at 6.5% in October, matching market expectations.
Consumer confidence rose to -16.9 in November reflecting improved assessments of the general economic situation and lower than expected inflation. Retail sales grew 0.1% in October, falling short of market expectations of a 0.2% rise as consumer demand remained subdued due to persistent high inflation and elevated borrowing costs. The Composite PMI rose to 47.1 in November but still represents a deterioration in economic conditions with input costs rising sharply and employment declined for the first time in three years.
Inflation for October came in at 4.6%, down from 6.7% in both September and ahead of expectations of 4.8%. This fall is due in part to the reduction in energy prices following a decision by the UK energy market authority to lower the cap on household bills.
PPI fell to 0.1% in October in line with expectations, with the annual rate falling 0.6%, below the estimated 1% fall.
Consumer confidence rose to -24 in October, ahead of the anticipated -28 even as ongoing cost of living concerns continued to impact. Retail sales dropped 0.3% in October, well below the expected 0.3% rise as consumers are spending their money more cautiously. Annual sales fell 2.7%, more than the expected -1.5%.
Further disappointing economic data was released from China, with deflation of -0.2% in the headline CPI for the year to October. PPI was down 2.6%, having now declined for 13 consecutive months. Chinese exports contracted 6.4%, much worse than expected, and the country recorded its first ever quarterly deficit in Foreign Direct Investment as offshore companies withdrew capital.
Composite PMI rose to 51.6 in November, the steepest pace of growth since August as both services and manufacturing activity increased. Retail sales increase 0.1% in October with annual sales increasing 7.6%, above the expected 7.0%
The unemployment rate remained at 5.0% in October.
The Japanese economy shrank 0.7% in 3Q23. It was the first GDP contraction since 3Q22, amid elevated cost pressure and mounting global headwinds. CPI accelerated modestly to +2.9% in October and has now been above the Bank of Japan’s 2% target for 19 consecutive months. The country’s annual wage negotiations, due to begin in February, are expected to provide a further boost to Japan’s inflation, with large trade unions aiming for member pay rises of at least 5%. Further evidence of sustainably above-target inflation may provide the BOJ with sufficient justification to withdraw its monetary stimulus measures, which have so far kept cash interest rates negative and Japanese 10-year government bond yields below 1.0%.
The unemployment rate fell to 2.5% in October, below market expectations.
The consumer confidence index rose to 36.1 in November, with sentiment increasing in most components. Retail sales fell 1.6% in October, with the annual rate rising 4.2%, well short of the forecast 5.9%. Although the lowest figure for ten months, retails sales continue to recover from the pandemic induced slump.
Composite PMI dropped to 49.6 in November, the first contraction since December 2022, as a drop in manufacturing offset the growth in services activity.
The Australian dollar (AUD) appreciated over the month of November, closing 2.2% higher in trade weighted terms to 61.5, appreciating against all four referenced currencies in this update.
During the month, the volatility between the AUD and US Dollar (USD) stabilised, with the key factor behind the AUD’s rebound being the widespread weakening of the USD. This trend was largely influenced by the mid-month US Consumer Price Index (CPI) release, revealing a 0.1% downside surprise in the core (excluding food and energy) measure. This outcome boosted confidence that the Federal Reserve has concluded its current tightening cycle, increasing the likelihood of rate cuts in the first half of 2024.
Relative to the AUD, the Pound Sterling (GBP) depreciated the least during the month, closing 0.3% lower. The laggard of the month was the USD, depreciating in relative terms against the AUD by 4.2%. Year-on-year, the AUD remains behind the GBP, Euro (EUR) and USD by -6.9%, -6.8% and -1.6% respectively, whilst ahead of the Japanese Yen (JPY) by 4.7%.
Many people assume there is no tax payable on super benefits received after someone passes away, but that’s not always the case.
