The Latest News and Views from Ascent Wealth Management

Hi Everyone,

Welcome to the latest News and Views, we hope the year is going well. For us the short weeks we are travelling through at the moment, are really taking their toll; but we persevere!

Markets have been relatively stable, having seemingly "priced in" the geopolitical tensions around Syria and North Korea. Our latest research from 360, opens our news this week and provides some insights into what is driving our markets. Overall though we have had a pretty good start to the year.

Talk has been building again about the government allowing people to access their super accumulation early, to fund a deposit for their home. It is understandable in an environment where deposits required are getting larger and larger to be looking at alternate sources of funding. Early access to super will solve a problem now, but as Robin Bowerman from Vanguard highlights, it may create much bigger problems later on.

Our daily work here is to help people build wealth for when they finish work, and helping people use their wealth efficiently after they retire; largely the experiences in our client group have been positive. In a broader sense, Australia is a pretty good place to be retired; our next article highlights that we enjoy one of the best retirement lifestyles in the world- though it may not feel that way some time, so please read and take heart !

Retirement for those born after 2000 is shaping to be vastly different than the experience of our current retirees. There will be an increasing level of self sufficiency required; a need to fund most of the retirement lifestlye, with Social Security to be only a safety net. It is not surprising that investment fundamentals 101, now come into sharper focus. This month, I have included a discussion on the benefits of Dollar Cost Averaging (investing regularly and "averaging out" the impact of high and low costs of purchasing market investments). This is the start to a conversation that will continue to grow in importance over the years.

Of course regular saving provides an important safety net for people as they traverse their financial journey. We examine next how the occurrence of life's "ups and downs" combine with perceptions of risk to potentially heighten the impact of these ups and downs; the importance of advice in keeping a "cool head" as these challenges are faced cannot be understated.

LEARNING ABOUT MONEY

This month, I'm pleased to announce that Ascent Wealth Management has entered into a partnership with local secondary school, Clairvaux Mackillop College to sponsor the financial literacy element of their Citizenship programme Ways and Means. Having teenage children, I've come to understand that there is a real difficulty for these young people in becoming financially capable before entering study or the workforce. This can sometimes have dire consequences with many having difficulties with credit and having a number of false starts with budgeting and other finance. Why is this?

Research by the Australian Securities and Investment Commission indicates that “people don’t always know what they don’t know. Studies show a significant mismatch between what people say they know and what they do know” (p. 15). This is probably not surprising when we consider the complexity of the financial world. This is particularly appropriate among school students.

How do we currently build our knowledge? From where do we get our information?

ASIC’s research (p. 29) indicates that the top five delivery channels for receiving financial information were:

● the internet (38%)
● books on finance (15%)
● newspaper or magazine articles (14%)
● television/radio advertising (8%); and
● personal face-to-face contact (7%).

Is it therefore surprising that we do not know as much as we think we know. The most effective way to learn is through face-to-face interaction yet it is the least used option. While there is convenience and flexibility through the more popular channels, how reliable is the information provided here, what biases sit behind those channels and is it educationally developmental. There is much to consider from such research. How do you want your children to learn financial life skills?

Reference: http://www.financialliteracy.gov.au/media/218312/national-financial-literacy-strategy.pdf Provided courtesy of The Wealth Academy

Lastly, thanks to all that have sponsored me for the upcoming MS Brisse to the Bay bike ride. My total so far is just over $1,000; a really good start! If you'd like to help, here's a link to the fundraising page-

All the best, please don't hesitate to call if you want to discuss any of the above.

Steve

ThreeSixty Research Market Update - April 2017

Highlights:

In March, global equity markets were quite mixed. US shares and bonds traded sideways as Donald Trump’s promise to repeal of the Affordable Care Act failed to gain congressional support, which has called into question whether his other policies, such as tax reform, can also be approved.
On equity markets the Dow Jones Industrial Average equity index fell 0.6% in the US over the month while shares in Europe rose 3.5% and Australian shares returned 3.3%.
US consumer sentiment indicators rose to their highest levels in 16 years and business surveys have also remained at high levels reflecting optimism about future growth.
Chinese activity indicators suggest that economic conditions continue to improve and the economy is being supported by robust global demand.
Australian economic data softened a little in the past month with a fall in retail sales and a rise in unemployment as well as softer business conditions. However, the economy continues to perform relatively well, supported by higher commodity prices and strong housing construction activity.

If you have any questions regarding this report or would like to discuss your portfolio, please contact me directly.

Read full April market update report >>