Should You Be Moving Your Super To Cash?

Should You Be Moving Your Super To Cash?

Should You Be Moving Your Super To Cash?

cyber-security-laptop

Amid all this world uncertainty and market volatility, should you be moving your funds into cash and get out of these markets?

If, for whatever reason, you moved your funds into cash in January, well done. However for those who remained invested in the markets, you would have likely seen a significant drop in your super balance over the last month.

You may be asking yourself – should I get out now or play the long game?

According to a report in the Sydney Morning Herald, many older members have been moving their funds to cash over the last few weeks with the average age of switchers being 49 years of age.

For most people, this switch would be a mistake. By making this switch, you are locking in the losses you have incurred in the last month. While the market may keep falling in the short term and justify your decision, history has shown us that markets do recover and by being invested in cash, you will miss out on this recovery.

Further, with cash rates at all-time lows, the returns received on cash are not enough to keep up with rising prices and as such, you are increasing your exposure to longevity risk – the risk that you will outlive your money.

Now this is not to say that there isn’t a place for switching to a lower risk investment option for those approaching retirement. However, these switches should be discussed with a trusted financial adviser with a long term view, and rather than a panicked reaction to the financial markets.

If you have moved your money to cash with the intention of ‘buying the bottom’, while your intentions may be good, executing this ‘plan’ is much harder said than done.

No one knows where the bottom is. If you buy too early and the market continues to fall, do you panic sell again and lock in more losses? Alternatively, if you buy too late, you may have missed the upside from buying the bottom and don’t recover the losses you initially locked in when you moved to cash.

Investing, whether in super or not is a long term thing. Trying to play the market in times like this is extremely difficult and adds unnecessary risk.

Instead of moving to cash, locking in losses and trying to buy the bottom, perhaps use this recent downturn as an opportunity to add more to your investment and buy shares while they are cheaper and continue to invest for the long term.

If you would like to discuss your own personal investments, please feel free to call our Financial Planning team on (03) 5833 3000.

Need more help or information?

Click the link below to contact us at Plus 1.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

plus-1-logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

PM Announces $130bn JobKeeper Package

PM Announces $130bn JobKeeper Package

COVID-19 Update

cyber-security-laptop

New Stimulus measures have been announced for those affected by Covid 19, in order to keep employees in jobs and for businesses to stay afloat.

PM announces $130bn JobKeeper Package

The government has announced a wage subsidy package which will include a $1,500 per fortnight per employee “job keeper” allowance.

The aim of the package is to enable businesses to keep their workers on their payroll through the coronavirus pandemic.

It is applicable to full and part-time workers, sole traders and casuals (who have been with their employers for 12 months or more) and those who have been stood down since 1 March.

Businesses and not-for-profits will be eligible if they experience a downturn in revenue of 30 per cent or more, or 50 per cent for businesses with annual earnings of over $1 billion.

The program will commence on Monday, 30 March, with the first payments to be received by eligible businesses in the first week of May, as monthly arrears from the Australian Taxation Office.

For further information please view the government fact sheet.

Grants Available

A $10,000 grant is available through Business Victoria, to small businesses who employ staff and have been subject to closure. The grant can be applied for online and can be used to:

  • Meet business costs, including utilities, salaries, rent.
  • Seek financial, legal or other advice.
  • Develop the business through marketing and communications activities.
  • For supporting activities related to the operation of the business.

Small businesses are eligible if they:

Please refer to the link for further information – Business Support Fund.

Need more help or information?

Click the link below to contact us at Plus 1.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

plus-1-logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

Coronavirus Stimulus Packages

Coronavirus Stimulus Packages

Coronavirus Stimulus Packages

cyber-security-laptop

Please see below a summary of the major stimulus packages designed to keep businesses in business, and Australians in jobs. 

Individuals

People who are aged 22 or over and under Age Pension qualification age, who are unable to attend work because they have been diagnosed with Coronavirus or who are in isolation may qualify for Sickness Allowance or Youth Allowance (or JobSeeker Payment from 20 March 2020) if they do not have any employee leave entitlements, such as sick leave, and they meet general eligibility requirements in respect of residency and income and asset tests.
Young people under the age of 22 who meet the above calculations will also be able to access Youth Allowance.

Anyone who was entitled to the below on 12th March 2020 will receive a one-off lump sum payment of $750.00 – if your family tax benefit is paid in a lump sum you will receive this at the end of the year when you get your lump sum payment.

  • Age Pension
  • Disability Support Pension
  • Carer Payment
  • Parenting Payment
  • Wife Pension
  • Widow B Pension
  • ABSTUDY (Living Allowance)
  • Austudy
  • Bereavement Allowance
  • Newstart Allowance
  • Youth Allowance
  • Partner Allowance
  • Sickness Allowance
  • Special Benefit
  • Widow Allowance
  • Family Tax Benefit, including Double Orphan Pension
  • Carer Allowance
  • Pensioner Concession Card holders
  • Commonwealth Seniors Health Card holders
  • Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er) Pension; and Veteran Payment
  • Veteran Gold Card holders
  • Farm Household Allowance

Check individuals fact sheet here  

Businesses

$150,000 immediate asset write off increase

  • Businesses with a turnover of less than $500 Million will have access to this concession for assets purchased between 12th March – 30th June, 2020
  • All assets under $150,000 will be immediately written off

Tax Free cash flow assistance boost for employers

  • Businesses with a turnover of less than $50 Million that employ workers will be eligible for a credit between $2,000 – $25,000 on their activity statement account from 28th April, 2020 upon lodgement of the March, April, May and June, 2020 activity statements
  • Businesses will receive a 50% credit of PAYG Withheld up to a maximum benefit of $25,000
  • The payment for monthly PAYG lodgers will be calculated at three times the rate (150%) to provide a similar treatment for quarterly lodgers (examples in fact sheet)
  • Eligible businesses will receive a minimum of $2,000, even if they are not required to withhold tax

Businesses who employ apprentices and/or trainees

  • If a business employs an apprentice/trainee on or before 1st March, 2020 and has fewer than 20 full time employees they will be eligible
  • Eligible employers can apply for a wage subsidy of 50% of the apprentice/trainees wages paid for the period 1st January – 30th September, 2020
  • Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter)
  • Employers can register for the subsidy from early April and final claims for payment must be lodged by 31st December, 2020

Check the Instant Asset Write-Off fact sheet here or the business cash flow assistance fact sheet here

To apply please contact the Australian Apprenticeship Support Network (AASN) provider (employers would have to be in contact with one to employ their apprentice)

Additional Business Assistance for those Impacted by COVID-19

  • Deferring by up to four months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise
  • Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
  • Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
  • Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
  • Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.

For further information: https://www.ato.gov.au/Media-centre/Media-releases/Support-measures-to-assist-those-affected-by-COVID-19/

Need more help or information?

Click the link below to contact us at Plus 1.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

plus-1-logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

Market Insights – 10/03/2020

Market Insights – 10/03/2020

Market Insights

10th March 2020

Top Stocks

CODE PRICE MOVEMENT   CODE PRICE MOVEMENT
CBA $69.15 -13.62%   NAB $20.14 -18.13%
BHP $27.55 -16.74%   TLS $3.48 3.57%
WBC $19.52 -16.01%   WES $37.89 -4.80%
RIO $80.77 -6.78%   CSL $295.96 -0.89%
ANZ $20.27 -16.96%   WOW $37.47 -0.69%

Market and Exchange Rates

MAJOR FOREIGN MARKETS

 

AUSTRALIAN DOLLAR IS BUYING

All Ords

5,822.40

-7.40%

 

US Dollar

0.6583

Dow Jones

23,851.02

-7.79%

 

Euro

0.5751

FTSE-100

5,965.77

-7.69%

 

GB

0.5016

Nikkei 

19,698.76

-5.07%

 

Yen

67.2680

Commodities

Oil (WTI)

41.370

-9.65%

Gold

1,675.800

0.20%

Iron Ore

90.120

-1.04%

Major Market Announcements

– Wall Street suffered its biggest one-day loss since the 2008 financial crisis on Monday and recession worries loomed large as tumbling oil prices and ongoing coronavirus fears prompted investor panic on the anniversary of the U.S. stock market’s longest-ever bull run.

– The continued spread of COVID-19 across the world has administered a shock to the global economy, with material impacts already felt on both the supply and demand side. Yet while central banks and governments appear ready to take further measures, it is not yet clear whether they will be enough to counteract market headwinds.

– As if there wasn’t enough global uncertainty already, a likely price war has broken out over the price of oil. The OPEC+ alliance between Saudi Arabia and Russia to prop up oil prices collapsed over the weekend, with both countries expected to ramp up production in a stunning reversal of policy. Brent crude futures, which had traded as high as $US65 a barrel as recently as January, plunged from $US45 a barrel on Friday to around US$32 at 1451 AEDT on Monday. The ASX energy sector had plummeted 19 per cent, more than twice the dive of any other sector.

Market Update

The Australian share market has lost almost $140 billion in Monday’s trade, amid the economic fallout from the coronavirus and an oil price war.

At the same time, the Australian dollar briefly tumbled to just above 63 US cents — the lowest level since the global financial crisis — in what currency strategists have called a “flash crash”.

Overall, it has been the worst day of trade since October 2008, when the GFC took a turn for the worse, and the rout is hammering share portfolios and superannuation balances.

The share market tumbled more than 5 per cent in early trade but plummeted again over lunchtime.

But stocks tumbled further at the close with the ASX 200 index losing 7.3 per cent or 456 points to close at 5,761.

That is a paper loss on Monday of $137 billion, with $413 billion lost since the market’s record high on February 20 of 7,197.

The All Ordinaries index plummeted by 7.4 per cent or 465 points to end at 5,822.

What A Long Weekend

THREE DAYS CAN SOMETIMES BE A LONG TIME

A DEADLY COMBINATION – OIL WAR and CORONAVIRUS

Well as if we did not have enough going on around the World with the Coronavirus effects on share markets. Over the weekend the pure uncertainty of what the future holds was added to what might be determined an Oil “war” with up to a 30% drop in oil prices around the globe and hence a big flow on to oil company share prices and a flow on to other companies.

Essentially, what happened is that Russia did not want to reduce production of oil as suggested by the governing body OPEC in preparation for an expected drop in demand in light of the Coronavirus. This destabilised the energy market and Saudi Arabia decided to cut its oil prices. The market reacted.

On Monday, Australian markets fell in the order of 7% and America did likely last night (our time) on top of the recent turmoil.

With the risk of repeating what we wrote about at the end of February. Please see below updated figures for the 9 days since.

Always looking not less than one year to keep things in perspective – Clients asset holdings within portfolios in typical Diversified (70% growth assets) could be expected to be approximately still slightly up or slightly down (depending on their exact asset mix) where they were at the end of February 2019. Until recently it had been a great year and some markets definitely got ahead of themselves. For clients who are more defensive with say 50% in Growth Assets then as of now they should be still up slightly, again depending on their exact mix of assets.

Overall, we believe the big issue is still the Coronavirus and once we get any sort of positive news whether decline in numbers worldwide, containment is working or of course scientists have a proven vaccine available for mass production we know that markets will react positively both quickly and significantly.

At Plus 1 Group we are available at any time to discuss issues of this nature with due regard to your investments or financial planning generally.

All Ordinaries (XAO) 5 Day Chart

Disclaimer: The advice provided is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Where quoted, past performance is not indicative of future performance.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

Plus 1 Group logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

CPA Logo
Professional Standards Legislation logo
Platinum Xero Partner
MYOB logo
Quickbooks logo

Sentinel Wealth Unit Trust T/As Plus 1 Wealth Advisors (ABN:11 408 695 672) is an Authorised Representative of Sentinel Wealth Managers Pty Ltd
(ABN: 73 108 328 294) AFS Licence 322211 | Financial Services Guide

Market Insights – 10/03/2020

Market Insights – 02/03/2020

Market Insights

2nd March 2020

Top Stocks

CODE

PRICE

MOVEMENT

 

CODE

PRICE

MOVEMENT

CBA

$81.78

-6.65%

 

NAB

$25.10

-7.28%

BHP

$33.60

-11.42%

 

TLS

$3.43

-7.80%

WBC

$23.64

-7.84%

 

WES

$40.65

-8.28%

RIO

$87.27

-10.49%

 

CSL

$309.44

-7.08%

ANZ

$24.83

-7.83%

 

WOW

$38.80

-9.15%

Market and Exchange Rates

MAJOR FOREIGN MARKETS

 

AUSTRALIAN DOLLAR IS BUYING

All Ords

7,230.40

-0.34%

 

US Dollar

0.6595

Dow Jones

28,992.41

-0.78%

 

Euro

0.6091

FTSE-100

7,403.92

-0.44%

 

GB

0.5091

Nikkei 

23,386.74

-0.39%

 

Yen

73.4393

Commodities

Oil (WTI)

45.210

-2.33%

Gold

1,587.300

-3.21%

Iron Ore

86.580

-0.14%

Major Market Announcements

– Vermont Senator Bernie Sanders may be surging in the polls ahead of Super Tuesday, but some on Wall Street have made their own conclusions on what November will bring: four more years of President Donald Trump.

– The uncertainty surrounding the containment of the coronavirus and how the US markets will again react will have Australian investors “twitchy” when the sharemarket reopens on Monday. AMP Capital’s chief economist, Shane Oliver, forecast a dip on the ASX200 index of about 1 per cent following a slight fall in the futures over the weekend.

– Federal stimulus measures worth up to tens of billions of dollars are needed economists say as they warn more Australian companies are likely to announce profit warnings due to coronavirus.

– Flight Centre has slashed its full-year profit guidance amid the worsening impact of the coronavirus outbreak on the travel sector and as its first-half profit plunged. 

– Jetstar workers have agreed to a pay deal following strike action that forced the Australian budget airline to ground dozens of flights. The agreement comes after a year-long industrial battle for ground crew that led to a fresh round of strikes last month, forcing the airline to ground 48 flights across Australia.

Market Update

The Australian sharemarket has suffered its worst day in over four years, closing the day at a six-month low amid a growing panic the coronavirus outbreak will trigger a global recession.

The S&P-ASX 200 index finished on Friday down 216.7 points, or 3.25 per cent, at 6441.2, while the all ordinaries index plummeted 225.9 points, or 3.35 per cent, to 6511.5.

For the week, the ASX 200 lost 697.8 points, or 9.77 per cent, for its second-worst string of losses, exceeded only by a 15.65 per cent dive in October 2008 during the global financial crisis.

Since hitting an all-time high of 7197.2 last Thursday, it has declined for six-straight days, losing 756 points, or 10.5 per cent.

That means it is now in official correction territory, having suffered a drop of more than 10 per cent from a recent highs.

Friday’s 3.25 per cent dive was the worst since a 3.8 per cent, or 195-point drop on September 29, 2015.

“Today felt like panic selling,” said Pepperstone head of research Chris Weston.

“Whether this was a capitulation or there is more to it, this felt different“ from the substantial declines earlier in the week, Mr Weston said.

“The rug got pulled from the market today. The ferocity of the selling isn’t something we have seen for a long long time,” he said.

Every sector was down at least one per cent and most fell over three, with the tech sector the worst hit, down 4.71 per cent as Afterpay plummeted 9.1 per cent to a one-month low $33.17.

The mining sector suffered the second-biggest losses, falling a collective 4.67 per cent as mining giant BHP dropped 4.5 per cent to a one-year low of $33.60, Rio Tinto fell 3.5 per cent to a five-month low of $87.27 and Fortescue Metals declined 6.4 per cent to a more than two-month low of $10.08.

Gold miners were not immune from the carnage, with NewcrestNorthern Star and Saracen all plunging between 8.0 and 9.8 per cent.

Woolworths dropped 3.5 per cent to $38.80 and Wesfarmers dropped 2.9 per cent to $40.65.

Among the big banks, Commonwealth and NAB both dropped 3.1 per cent, to $81.78 and $25.10, respectively, while ANZ dropped 2.7 per cent to $24.83 and Westpac fell 2.8 per cent to $23.64.

Harvey Norman was the biggest ASX200 loser, falling 14.1 per cent to a nine-month low of $3.71 after announcing its first-half profit had been hit by bushfires as stores in regional areas closed temporarily.

Just 14 companies among the ASX300 gained on Friday, while another six were flat.

The Aussie dollar meanwhile was dropped further, hitting an 11-year low of US65.16¢, having declined 1.6 per cent against the greenback this week and 7 per cent so far this year.

The Aussie was buying US65.22¢, down from US65.50¢ at the market close on Thursday.

Looking forward, IG market analyst Kyle Rodda said that markets were most concerned about the spread of the coronavirus in the world’s largest economy, the US, following the infection of a California woman this week.

Mr Rodda said there was a good chance there could be more coronavirus cases in reported in the US over the weekend, while Chinese factory data set to be released on Saturday (Australia time) would deliver the first good read on how the outbreak had affected the world’s second-biggest economy.

“It’s going to set up an interesting Monday morning, when trading conditions become a little thin — especially if the news flow delivers a few shockers,” he wrote in a note.

Last Week’s Upheaval In Share Markets Around The World

WE HAVE VOLATILITY AS THE ORDER OF THE DAY

Firstly, it is important to once again stress that when investing in shares the price we pay for a better return than cash based investments is the RISK that capital values will fluctuate (both upwardly and downwardly). Nothing new here.

The last week was a GOOD REMINDER that what can come about (from an unexpected left field) that might affect markets. Who would have thought that before Christmas 2019 the headlines of the day in early 2020 would be:

*World Health Threat
*New Virus spreads around the World
*Pandemic
*Ships Quarantined
*Travel thwarted
*People Isolated

It is a little bit like – one of those things we say like anything can happen and probably will.

Last week there were strong indications that the coronavirus spread outside China is widening.  Hence MARKETS REACT. Again, nothing new there.

None of us know where this will all go and how far reaching. Of course, we would all hope and pray such disease will not be a Spanish Flu in World War 1 times where 50 million people worldwide died. At that time Australia was one of the very few countries not affected due to our geographic location. As we all know this time the whole World is a lot closer with advances in travel etc.

Share markets over 20 to 30 plus years have provided returns of approximately 10% to 12% per annum (income and capital growth). If we want to limit the higher downs in the market (and ups for that matter) then we can do this by diversity of investments, time in the market and regular investing into the market. But any exposure to growth assets will always come with VOLATILITY sometimes which can be extreme.

Looking Back Exactly One Year from Friday 28 February 2020

As we always say NEVER LOOK LESS THAN 1 YEAR and generally take a 7 year plus view in shares.

Keeping things in perspective the Australian Share market (Capital Growth alone, and Combined Dividends and Capital Growth) and US Share Market (S&P 500) over the year ending 29 Feb 2020 has performed as follows including highlighting the recent dip:

The coming weeks will be interesting indeed.

At Plus1 we are available at any time to discuss issues of this nature with due regard to your investments or financial planning generally.

All Ordinaries (XAO) 5 Day Chart

Disclaimer: The advice provided is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Where quoted, past performance is not indicative of future performance.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

Plus 1 Group logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

CPA Logo
Professional Standards Legislation logo
Platinum Xero Partner
MYOB logo
Quickbooks logo

Sentinel Wealth Unit Trust T/As Plus 1 Wealth Advisors (ABN:11 408 695 672) is an Authorised Representative of Sentinel Wealth Managers Pty Ltd
(ABN: 73 108 328 294) AFS Licence 322211 | Financial Services Guide