News & Resources

Chasing the Inflation Dragon

After spending last year fretting about the damage to economic growth from the global financial crisis, many investors are now worrying that policymakers’ medicine may prove too effective.

The fear is that the stimulus injected by central banks, via interest rate cuts, and by governments, via additional spending and tax reductions, will create an intractable inflationary spiral that will force interest rates sharply higher and erode the value of fixed income assets. (more…)

Benchmarks outperform actively managed funds

Standard and Poor’s (S&P) index versus active funds scorecard for the investment market has showed that benchmarks have outperformed a majority of actively managed funds and bonds over five years.

The ASX200 index has outperformed two-thirds of active Australian equity funds over the last five years, while the ASX200 has outperformed approximately half of active funds over the year to date.

The survey also found that the ASX Small Ordinaries index outperformed more than half of all active small-cap funds in the last five years, and 60 per cent of the actively managed funds over the last year.

The benchmark index for global equity outperformed more than 76 per cent of active global funds over five years.

The UBS composite bond index has outperformed more than 97 per cent of actively managed bond funds over the last five years, but only 25 per cent within the last year.

“Australian equity funds operate within a very efficient and heavily researched segment of the market, which is intensified by the fact that the Australian market is very top-heavy, with the top 20 stocks comprising 67 per cent of the market index,” said director of S&P index services Simon Karaban.

Source: Money Management

Should you go with bonds? Or are shares offering enough of a risk premium?

What is “equity risk premium”, or ERP, and is it enough? In this article we’ll explore both these questions, plus have a look at three factors that create confusion around the ERP concept, and why the prospective return differential that shares offer over bonds today is far more attractive than it was at the height of the last bull market in 2007. (more…)

The Real Pressie Club

Instead of buying into the excess of modern gift giving this year (after all, who needs “extra bric-a-brac”?!), have your celebration but put gift money towards helping children in care.

Kris Kringles, birthdays, anniversaries, (second) weddings, overcoming serious illness … whether it’s celebrating life’s milestones or team building, it gives us a sense of achievement. (more…)

‘It’s the bottom’ says the Fed with ‘level’ words

With the change of just one word, the US Federal Reserve has called a quiet end to the recession, while in Australia, it seems to be all hands on “deal deck”.

Is it over? Are we there yet? Can we breathe a sigh of relief? According to economics commentator Alan Kohler of Business Spectator, “yes”. (more…)

Personal bookkeeping services

If you are concerned about “just where” your money goes, and would like a greater understanding of how much you spend on what, then Summerhill Financial Services’ new Personal Bookkeeping Services are for you. But rather than being a “big stick”, the knowledge will give you greater understanding, and, therefore control, allowing you to make more informed decisions about spending and saving. (more…)

NSW intestacy laws changing

We all know that making a valid Will means our estate will be handled the way we want, plus is optimised for our loved ones ­- yet nearly half of us don’t have one. Law changes in NSW that might see everything go to an estranged spouse, could, however, be the impetus to change that.

Intestacy law in New South Wales will change from March 2010, part of bringing succession laws across Australia into line. States that haven’t followed suit, soon will. (more…)

Worried about the ‘worry list’? It’s better than you thought

Shares have just topped two consecutive years of big losses. Such a slide has resulted in a long “worry list” for shares and other growth-oriented assets – indebted consumers, inflation off the back of ballooning budget deficits and central banks pumping money, worrying demographic trends, and so on.

Some investors are pessimistic: the temptation being to assume just more of the same. However, as we’ll see, the “worry list” might not be so worrying after all. (more…)

Handling insurance in uncertain times

“Times are a bit tough right now, so we’re cutting back on the non-essentials. I’m thinking of dropping my life insurance – because I hope I don’t need it! – and picking it up again when times are better.”

While it’s tempting to think of life insurance as a “non-essential”, it’s not. If you think you can’t afford the premiums, look at it this way: you are so reliant on the income you do have, that you need to sustain it! That means, your life insurance premiums are essential, not discretionary spending.

Having life insurance doesn’t mean you’re going to use it; but if the worst does befall you, your family’s future won’t crumble. (more…)

House prices are rising — why? And what will happen now?

At 6%, Australian house prices didn’t dip nearly as far as those in the USA and UK (32% and 19%, respectively) and already prices are rising again. So what happens now? And how does housing compare with other investments?

Despite fears of the big declines we’ve seen in the USA and UK, Australian house prices did not plunge dramatically - indeed the average drop remained well in single figures.

Yet, after “only” falling 6% from their early 2008 peak to the March quarter (a big enough drop for those trying to sell), house prices have begun to recovering, with Australian Bureau of Statistics’ data showing average gains of 4.2% in the June quarter, confirming rises already seen in private-sector surveys. (more…)