Categories
Super

Superannuation business has progressed and its future prospects

Key focus areas to look for funds

  • Risk and regulation — Ensuring a holistic, integrated approach to risk management, as well as bolstering basic governance frameworks.
  • The Commission’s proposals have legal and regulatory ramifications – Trustees and managers will be subjected to more regulatory scrutiny and enforcement.
  • Financial advice – The recommendations of the Royal Commission and the Productivity Commission have the potential to have a considerable impact on the provision and cost of financial advice.
  • Mergers and industry consolidation — In the coming year, merger announcements are projected to increase.
  • Tax – As many funds alter systems and processes in response to legal changes, the ATO is increasing its inspection in the form of expedited assurance reviews.
  • Increased technology and data investment — to support strategy and differentiation – comes at a time when mandated technology spending demands are increasing.
  • Trust and social licence – It’s critical to put a premium on reputation and involvement while also expressing values and purpose to members and stakeholders.
  • Fund experience and engagement – Funds that provide great individualised services are able to retain and acquire members. Responsible investment is a constant priority for funds as members and stakeholders interact with them.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Super

Market volatility and its effect on your super

You may learn more about the market and what’s going on right now by reading the information below. This may assist you in determining the impact it may have on your retirement savings.

Depending on how your super is invested, the value of your super can fluctuate on a daily basis. Each investment option’s value and performance are related to the underlying asset classes (types of investments such as shares, property, fixed interest, and so on) it invests in, which change in response to the performance of these assets and the market.

It’s a long-term investment to put money into super. Changing your asset allocation in response to short-term market swings is a big decision that depends on a lot of things, like your age, stage of life, and risk appetite. Before making any changes to your long-term investment strategy, you should obtain guidance.

If you’re still building up your super and won’t be retiring for a while, you might choose to stick with your existing investment strategy rather than trying to time the market. It’s vital to remember that your super’s performance is typically based on how much time you spend in the market, which might be thrown off if you try to “timing the market.”

Switching out of a growth asset class when its performance declines and back in when markets and unit prices rise, for example. It’s tough to predict when the market will peak and bottom, but adhering to your plan over time can put you in a better position to profit from growth while minimising losses. If you’re approaching or in retirement, on the other hand, it’s critical to keep focused on your long-term investing strategy.

When deciding on an investment strategy, it’s also vital to note the benefits of diversification (investing in several asset classes). Diversification reduces risk and mitigates the impact of a big market decline.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.               

Categories
Debt

RBA could take action on home debt, but it is not the governor’s role to set house price targets, according to Governor.

Lowe also questioned the government’s wage-hike plan in a speech at the Australian Farm Institute conference in Toowoomba,  noting that pay packets were not increasing even in places where the labour market was tight. With 115,200 people joining the workforce in the preceding month, Australia’s unemployment rate fell to 5.1 percent in May, returning to pre-pandemic levels.

The unemployment rate has dropped 0.4 percentage points to 5.1 percent, which is currently 0.2 percentage points lower than the 5.3 percent recorded in March 2020.

Lowe said the surge in household borrowing that has accompanied the boom remained on the bank’s radar as Australian house values soar across the country, particularly in regional areas.

Lowe’s warning comes as the government tries to enact new legislation that would reverse the Gillard administration’s responsible lending standards, which the Treasurer, Josh Frydenberg, has claimed are required to aid the country’s economic recovery. The government has set a target of lowering the unemployment figure to below 5%, claiming that once competition for jobs exceeds this level, wage hikes will certainly follow.

The cause for this, according to Lowe, is that businesses operate in a highly competitive environment, encouraging companies to escalators “non-wage methods” rather than paying more for workers when faced with labour shortages.

Source:  theguardian.com

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Debt

House prices are rising at an alarming rate, posing an economic threat.

The paper, Housing: Taming the Elephant in the Economy, summarises the views of 87 Australian economists and other housing sector professionals on the economic effects of rising home prices. The authors of the paper suggest that this exposes a “ticking economic time bomb” if interest rates rise.

Furthermore, housing prices, which have risen 10% in the year to April, are expected to grow up to 14% in the following year, significantly putting homeowners out of reach for many. Professor Duncan Maclennan, the report’s principal author, stated that the present real estate market is broken on all levels and poses an associated risk to the Australian economy. The report also stated that Australia’s housing system fails young people, who are increasingly being priced out of the market.

Australia’s housing policy has exacerbated income and wealth disparities while also causing severe economic volatility. This is stifling productivity and distorting Australia’s capital-investment patterns.

To improve the housing system, the paper advises a new national housing policy at the Commonwealth level, as well as a permanent housing committee as part of the national cabinet. It also suggests that housing stimulus initiatives be redirected to help the social renting sector.

The authors of the report also advocated for housing market stability to be included in the Reserve Bank of Australia’s legal obligations in order to help preserve a more reasonable market.

Source: news.com.au

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.