Financial Happenings Blog
Monday, October 22 2007
In this week's edition of Monday's Money Minute, Scott Francis breaks down the connection between inflation and interest rates and the possible affect that tax cuts put on the level of inflation. Click here to be taken to the podcast.
Wednesday, October 17 2007
We have updated our Building Portfolios web page to reflect 5 year investment returns up to the end of September 2007 for our preferred style of investments offered by Dimensional Fund Advisors. The returns continue to reflect the premiums from investing in the small and value segments of both the Australian and international markets. They look as follows:
Australian Shares
Average Annual Returns:
|
|
5 Year Annual Return
to End September 2007 |
|
Dimensional - Australian Large Company Trust |
21.54% |
|
Dimensional - Australian Value Trust |
23.32% |
|
Dimensional - Australian Small Company Trust |
26.25% |
Growth of $10,000 Invested over the 5 years:
|
|
5 Year Annual Return
to End September 2007 |
|
Dimensional - Australian Large Company Trust |
$26,521 |
|
Dimensional - Australian Value Trust |
$28,521 |
|
Dimensional - Australian Small Company Trust |
$32,074 |
International Shares
Average Annual Returns:
|
|
5 Year Annual Return
to End September 2007 |
|
Dimensional - Global Large |
7.66% |
|
Dimensional - Global Value |
11.82% |
|
Dimensional - Global Small |
12.31% |
|
Dimensional - Emerging Markets |
24.14% |
Growth of $10,000 Invested over the 5 years:
|
|
5 Year Annual Return
to End September 2007 |
|
Dimensional - Global Large |
$14,463 |
|
Dimensional - Global Value |
$17,482 |
|
Dimensional - Global Small |
$17,869 |
|
Dimensional - Emerging Markets |
$29,482 |
Click here to be taken to the page.
Wednesday, October 17 2007
This week's Monday Money Minute looks at private equity investments. Scott Francis discusses what they are, why investors might use them in a portfolio, issues to be cautious of in using them and how to get exposure to these style of investments.
Click here to be taken to the relevant page on our website.
Wednesday, October 17 2007
The latest edition of The Financial Fortnight That Was has been emailed to subscribers. This edition looks at the problems of Active Management. If you would like to receive this free email service go to the Sign Up page found on our website.
Please read on for the latest market news for the fortnight concluding Monday 15th October.
Market News
Market Indices
Since our previous edition, Australian and global sharemarkets have had positive fortnights. The S&P ASX200 Index has risen 2.67% from the 1st to the 15th of October, up 18.86% for the calendar year so far. The S&P Global 1200, a measure of the global market, has risen by 0.95% over the same period, placing the index up 12.90% for the year.
Emerging markets saw continued strong growth with the MSCI Emerging Markets Index rising 5.46% for the fortnight and is now up 35.16% for the year so far.
Property trusts have had mixed performances over the past fortnight with the S&P ASX 200 Property Trust Index rising by 1.35%, to be up 1.75% for the year so far. The S&P/Citigroup Global Real Estate Investment Trust (REIT) Index, a measure of the global property market, however fell slightly, 0.14 % for the fortnight, and has fallen 2.04% this year so far.
Exchange Rates
As of 4pm the 15th October, the value of the Australian dollar had again risen over the past fortnight with the Aussie dollar up 2.43% against the US Dollar at .9057, up 14.46% for the year so far, and up 3.55% against the Trade Weighted Index at 71.7, now up 10.48% for the year so far. (The Trade Weighted Index measures The Australian dollar against a basket of foreign currencies.)
General News
The Australian Bureau of Statistics has released the Australian labour market statistics for September with the unemployment rate falling to 4.2%.
As you will all be aware, the country is now officially in election mode with the Prime Minister calling the election to be held on the 24th of November. During the next 6 weeks the government and opposition parties will be releasing policies that will have potential impacts on financial planning and investment strategies.
Tuesday, October 16 2007
Yesterday saw the election campaign start with tax cut promises from the Liberal party. So what are the details?
In 2008-09
- Low Income Tax free threshold due to the Low Income Tax Offset to rise from $11,000 to $14,000.
- Start of the 30% threshold to increase from $30,001 to $34,001.
- Start of the 40% threshold to increase to $80,001.
- Start of the 45% threshold to increase to $180,001 (as promised in the budget in May).
In 2009-10
- Low Income Tax free threshold due to the Low Income Tax Offset to rise from $14,000 to $15,000.
- Start of the 30% threshold to increase from $34,001 to $35,001.
- Second top marginal rate to be cut from 40% to 38%.
- Top marginal tax rate cut from 45% to 43%.
From July 1, 2010
- Low Income Tax free threshold due to the Low Income Tax Offset to rise from $15,000 to $16,000.
- Start of the 30% threshold to increase from $35,001 to $37,001.
- Second top marginal rate to be cut from 38% to 37%.
- Top marginal tax rate cut from 43% to 42%.
To put some dollar amounts to these changes the tax payable (including medicare levy) would be:
|
Annual Income |
2007-08 |
2008-09 |
2009-10 |
2010-11 |
Reduction (pa) |
As % of 07-08 tax |
|
$25,000 |
$3,225 |
$2,025 |
$1,875 |
$1,725 |
$1,500 |
46.51% |
|
$50,000 |
$10,350 |
$8,550 |
$8,250 |
$7,800 |
$2,550 |
24.64% |
|
$75,000 |
$18,225 |
$16,425 |
$16,125 |
$15,675 |
$2,550 |
13.99% |
|
$100,000 |
$28,600 |
$26,300 |
$25,600 |
$24,950 |
$3,650 |
12.76% |
Throughout the campaign we look forward to adding further commentary on any policy proposed by the major parties that will affect financial planning and investment strategies.
Regards,
Scott Keefer
Monday, October 15 2007
Scott Francis has written another article for Alan Kohler's Eureka Report. The article highlights that investing through index funds and ETFs, with a focus on growth areas, means working with the market, not against it.
The article points out the failures of active management based on reasearch including:
-
Actively managed funds have a strong tendency to underperform the average market return.
-
The buying and selling undertaken by personal investors destroys investment returns.
-
Analyst research does not seem to lead to above-average returns for investors.
-
Poor decision making by investors in determing when into and sell out of asset classes.
-
The tendency of investors to sell in falling markets and buy in strongly rising markets.
Scott concludes by identifying how investors can avoid these below average market returns. For the details please take a look at the article on our website. Click here.
Regards,
Scott Keefer
Tuesday, October 09 2007
Scott Francis this week discusses the poor peformance of the major managed funds with all but one fund beating the average market return. Well worth a listen for those who are using or are contemplating using actively managed funds to invest. To listen to Scott's analysis please click on the link that follows. Click here
Wednesday, October 03 2007
Alan Kohler's Eureka Report has published an extract from Scott Francis' new book - High Income Investing - How to be Relaxed and Comfortable. The extract looks at listed interest rate securities. Well worth a read if you currently invest in these type of securities or ar considering this option.
Regards,
Scott Keefer
Tuesday, October 02 2007
The latest edition of The Financial Fortnight That Was has been emailed to subscribers. This edition looks at Listed Investment Companies. If you would like to receive this free email service go to the Sign Up page found on our website.
Please read on for the latest market news for the fortnight concluding Monday 1st October.
Market News
Market Indices
Since our previous edition, Australian and global sharemarkets have had strong fortnights. The S&P ASX200 Index has risen 4.46% from the 17th September to the 1st of October, up 15.76% for the calendar year so far. The S&P Global 1200, a measure of the global market, on has risen by 6.43% over the same period, placing the index up 11.84% for the year.
Emerging markets saw even stronger growth with the MSCI Emerging Markets Index rising 8.64% for the fortnight and is now up 28.17% for the year so far.
Property trusts have had mixed performances over the past fortnight with the S&P ASX 200 Property Trust Index falling 0.32%, but is still in positive territory for the year so far up 0.40%. The S&P/Citigroup Global Real Estate Investment Trust (REIT) Index, a measure of the global property market, however rose 5.42% for the fortnight and has fallen 1.90% this year so far.
Exchange Rates
As of 4pm the 28th September (market was closed on the 1st of October), the value of the Australian dollar had again risen strongly over the past fortnight with the Aussie dollar up 4.60% against the US Dollar at .8827, up 11.55% for the year so far, and up 3.55% against the Trade Weighted Index at 70.0, now up 7.86% for the year so far. (The Trade Weighted Index measures The Australian dollar against a basket of foreign currencies.)
General News
The board of the Reserve Bank of Australia decided to maintain the official cash rate target at 6.50%.
Regards,
Scott Keefer
Tuesday, October 02 2007
This week's Monday's Money Minute looks at the performance of Listed Investment Companies on the ASX. Unfortunately what promises to be a good source of diversification for investors has not provided the results that investors would hope for. Click here to be taken to the podcast.
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