Latest News from Newealth

15 May 2024

Australian Federal Budget 2024

The Federal Treasurer Jim Chalmers has handed down his third Budget with no significant changes to what had already previously been announced.

It is all about increased spending and that will cause the budget falling back into a deficit. However the Federal Treasure is telling us that all this increased spending will not fuel inflation.

This is nonsense, without increase productivity, increased spending is fuel for inflation and high inflation can only mean increased interest rates.

It is important to remember that these Budget announcements are currently proposals and will still need to be legislated.

Click to read.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

 

10 May 2024

Up to a 50% guaranteed return

The Federal Government Co-contribution was introduced from 1 July 2003 as an initiative to encourage 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 2024, the Federal Government will add an additional sum provided that you are earning less than $58,445 this financial year.

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

If your total
annual
income is:

…and you make
personal contributions of:

…then the maximum Government
co-contribution is:

$43,445 or less

$1,000

$500

$46,445

$800

$400

$49,445

$600

$300

$52,445

$400

$200

$55,445

$200

$100

$58,445 or more

$0

$0

 

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.

Yes, there are always additional eligibility conditions and if you have family, friends or colleagues that want financial advice please ask them to contact us and we will work out how best to help.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

 

 

3 May 2024

Friday Tidbit

Much has been said about the importance of China to Australia but how long can the China growth story continue for our resource sector?

All industrialising nations eventually reach peak steel intensity which is when a nations steel consumption per capita begins to fall because the majority of the infrastructure has been built.

For the United States it was reached in the 1970’s when steel consumption averaged 637kg per capita.

For Australia, China appears to have reached peak steel intensity in the last few years as fixed asset investment (FAI) in property materially reduces. This will negatively impact commodity prices, our terms of trade and the Australian dollar.

Click for two speed economy in China.

It is not all bad news.

The Emerging Markets (which include Brazil, Russia, China, India, Mexico, South Africa, Indonesia, Philippines, Poland, South Korea, Thailand, Malaysia, Chile, Colombia, Argentina, Czech Republic, Hungry, Morocco, Peru, Taiwan, Vietnam and others) are at 35 year lows against the United States dollar which signals buying opportunities in emerging markets.

Click for Emerging Markets low.

What does all this mean?

Be smart, follow Benjamin Graham’s value investing principles, remain invested according to your appetite for volatility and let the professionals help you take advantage of these opportunities.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

 

15 Apr 2024

Market Metrics: Inflation

Financial experts never seem to know what is going on right now but in hindsight they are perfect.

For example, the United States was forecast to go into recession in 2022 after the Russian invasion of Ukraine which resulted in supply shocks and rapid global interest rate rises but the United States did not fall into recession.

Again, the United States was forecast to have a recession in 2023 but it did not happen.

Why because no one had worked out that the insane printing of money by Governments during COVID-19 period had left consumers with excess savings. This excess has now been depleted expect for Australia.

Click for excess savings charts.

Our point is that financial experts almost never know what is going on in the present.

Markets have been forecasting (and are still forecasting) that inflation has peaked, that it will fall and consequently interest rates will be cut in 2024.

For goods inflation we agree however not for services inflation.

Wages increases are high and showing no signed of reduction in the short term which means that inflation (the sum of goods plus services) will remain high and that means no interest rate cuts in 2024. In fact, interest rates are more likely to increase in 2024.

Click for services inflation charts.

If correct and interest rates do increase in 2024 then it will again mean a correction/crash for assets prices.

What action does one take?

None, just follow Benjamin Graham’s value investing principles and remain invested according to your appetite for volatility and look to buy more quality assets when prices fall.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

 

10 Apr 2024

2024 US Presidential Election: Biden vs Trump

We keep being asked the question, what happens if Trump wins?

Donald Trump brought chaos and disorder to the Office of the President of the United States and will likely again if elected again.

Attached is a matrix of potential winners and losers of Biden versus Trump and a reminder that the US Federal Reserve has changed interest rates in every Presidential Election year since 1980 except for 2012.

Meaning that although the US Federal Reserve is expected to reduce interest rates in 2024, they could still end up increasing rates instead.

Click for Biden vs Trump.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

 

4 Apr 2024

Low hanging fruit: Superannuation

Many of you a are too young to remember but I was there advising on the 1st July 1992 when the Superannuation Guarantee (SG) began.

Today superannuation holds $3.5 trillion in assets and by 2048 it is forecast to grow to $13.6 trillion.

Click for charts.

Why does it continue to multiply? Because it is financially gorgeous.

Just imagine, you can invest in this thing called superannuation and only be charged a maximum tax rate of 15% on earning compared to the top 45% marginal rate for individuals.

And then when you begin drawing an income the tax rate drops again to 0% on everything- capital gains, distributions and withdrawals.

It does not get much better than this.

Apart from tax free capital gains on the primary residence in Australia there is no other legal way to reduce tax on earnings to 0% and that is the reason for so many restrictions on superannuation.

The math’s however is simple, we each get a $1.9m cap (meaning $3.8m for couples) and the Federal Government will not force you to take advantage of this low hanging fruit.

The best part is that you do not have to get on a ladder, you do not have to climb a tree, just reach up and take advantage of this opportunity.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

 

20 Mar 2024

Decarbonisation: Climate Change

The United Nations Framework Convention on Climate Change (UNFCCC) estimates that US$125 trillion in investment is needed to achieve net-zero on a global scale by 2050.

Why are they planning this spending?

Because scientific report after scientific report keeps warning on climate change.

For example, the WMO (World Meteorological Organisation) has just published that 2023 was the warmest year on record, global sea level have reached record high, Antarctica sea ice reduced further 1 million square kilometers from previous recorded low and increased extreme weather is threatening food security.

Click to read.

Pollution caused by humanity is at the the heart of this problem and the subsequent spending of US$125 trillion to achieve net-zero by 2050 will present enourmous investment opportunities.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

 

14 Mar 2024

Cryptocurrency: Bitcoin

The printing of vast quantiles of money (issuing I-owe-you paper called notes, bills, bonds) by Central banks around the World has been the key driver behind Bitcoin and associated cryptocurrencies but remember that Bitcoin price relies on The Greater Fool Theory.

The Greater Fool Theory is where a purchaser/investor buys an item/asset in the belief that the next purchaser/investor will buy it from them at a higher price.

That fact about Bitcoin is that only 21 million can be mined in total and so far 19.6 million have been collected which makes it rare and as long as there is a group who want to trade in this limited edition rarity (think of it as a collator’s item) there will be a price.

Once there is no longer a group that wants to trade in this collector’s item the price will evaporate.

Don’t know how cryptocurrency will end but we do know what Benjamin Graham taught and that was to not speculate. Instead remain invested according to your appetite for volatility and when fear and panic take hold, react by buying more quality assets at discounted prices.

Click to read.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

 

5 Mar 2024

Australian Residential Property: 12 year low

Residential property prices (especially Sydney and Melbourne) just keep increasing and everyone without property keeps complaining.

If the Federal Government wants to stop steep rises in residential property prices and steep rises in rents then it will need to either cut immigration immediately or streamline the building of more residential property which is currently at a 12 year low.

Building more residential property (increasing supply) is preferable because it brings economic benefits but it takes years to deliver supply of new residential property.

Click to read.

Ongoing reduction in residential property supply is not good because humans need shelter to live.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

 

20 Feb 2024

The Age of AI has begun: The convergence

There have been moments in history when everything changed.

Right now we are living in one of these moments.

Software is consuming the World’ and this software is bringing everything together into a technological convergence that is and will continue to drive economic growth by creating trillions of dollars of sales revenue.

Click for chart.

This is being called the start of the 4th era in computing, Artificial Intelligence.

If you are not a Newealth client and want to take advantage of the convergence then please contact us.

 

Share this archive
Top