December capped off a very poor year for investors. 2011 started badly with natural disasters (severe floods in Queensland and nuclear disaster at the Fukushima power plant) however this was only a teaser for what was to follow with a European sovereign debt crisis and issues never before encountered (i.e. a common monetary policy with differing government fiscal policies).
Each month I seem to be writing the same thing.... more volatility due to European sovereign debt issues! Again the political posturing in Europe weighed on the performance of the Australian share market.
The share market has snapped a six month losing streak to post near record monthly gains in October. The All Ordinaries Index gained 7.1% to close the month at 4,360.50 points.
Global share markets were all significant stronger in October with the Dow Jones Index gaining 9.5%, the FTSE gaining 8.1%, the Nikkei 225 gaining 3.3% and the Hang Seng gaining 12.9%.
Last month I wrote about the cause of decline in share prices over the first half of 2011, and how we had ‘priced-in’ a significant financial crisis in Europe.
September was another poor month for the share market.
The All Ordinaries Index fell 6.9% to close the month at 4,070.10 points. The Australian share market has now fallen over 16% for the 2011 calendar year.
Global share markets were all significant weaker with the Dow Jones Index falling 6.0%, the FTSE falling 4.9%, the Nikkei 225 falling 2.8% and the Hang Seng falling 14.3%.
There are three key themes that have triggered such extreme market movements over recent months:
With the recent poor sharemarket performance it is only natural for investors to be fearful and think about switching assets away from shares into cash.
However, by moving now from shares into cash is shortsighted and doesn’t take into account the big picture and long-term benefits of investing in shares.
On a long-term basis, notwithstanding the recent poor performance, shares have proven to provide a growing income stream. Cash deposits only hold their value; therefore cash investors face a significant risk of inflation eroding their returns.
In general, there are two choices as to how to appoint a trustee to your super fund: Individual trustees; or Company trustee (with members acting as directors).
I am often asked by clients to outline the main differences between these two choices. There are benefits of both, and I have outlined below some issues you should consider when making a decision.
The ATO have released a draft ruling which addresses some major concerns surrounding the use of limited recourse borrowings by SMSFs. Essentially the following changes have been proposed to commence from 7th July 2010;
Of late it seems as though the media is asking the following questions more and more:
The July 2011 MLC Investment Insight magazine provides in depth look into the Australian property market and what lies ahead. The publication has been put together by Michael Karagianis an Investment Strategist with MLC Investment Management.
There has been a slowdown in the number of overseas pension transfers, most notably from the United Kingdom.
This is a reflection of poor and uncertain market conditions here and overseas in the last 18 months and the appreciating Australian dollar exchange rate deterring repatriation of funds to Australia.
A tax liability can arise in Australia on the repatriation of funds from an overseas pension fund, the tax payable generally based on the growth of the fund since the client first became an Australian tax resident to the transfer date.
The All Ordinaries Index fell 2.9% to close the month at 4,369.9 points, marking the fourth negative month in a row. Whilst August was another poor month, in a relative sense, the Australian sharemarket was somewhat insulated from the large falls experienced overseas.
Global sharemarkets were all significantly weaker in August with the Dow Jones Index falling 4.4%, the FTSE falling 7.2%, the Nikkei 225 falling 8.9% and the Hang Seng falling 8.5%.