This year we will have a greater focus on your hopes and dreams. This will include reviewing your financial plan, which is a living document. We will re-visit your goals and discuss where you are now but more importantly where you want to be in the future and provide greater discipline around your financial goals.
This may include:
- Set a small number of big goals that mean something to you.
- Break down your goals into manageable pieces.
- Frequently review your plan.
We look forward to this discussion at your next review however if there is anything you wish to discuss with us immediately please do not hesitate to contact us.
Did you Know
When contributing to Super you are subject to certain cap limits. These are outlined below:
Non-concessional (after tax contribution) – $150,000 cap limit
Non-concessional 3 year bring forward (under 65 during financial year) – $450,000 cap limit
Concessional (under 60)* – $25,000 cap limit
Concessional (60 or over)*- $35,000 cap limit
*Concessional contributions are before-tax contributions that can include employer contributions, contributions made under a salary sacrifice arrangement and tax-deductible contributions by an individual. You, or your employer, generally receive some type of tax advantage when a concessional contribution is made to a super fund.
From the 2014/2015 year onwards, individuals aged 50 years and over will also be able to take advantage of the special concessional cap of $35,000.
Future of Financial Advice
The previous Government introduced a wide range of reforms under the FOFA program. One of the main requirements was for Financial Planners to send an annual Fee Disclosure Statement (FDS) to their clients outlining the services offered, the services taken up and the annual fee for this. The fees you pay can be switched off at any time.
The current Federal Government has now introduced amendments to this that require an FDS to be sent only to new clients. We at Carrington Financial Services will continue to send annual FDS’s to all clients, linked to a service package, articulating the service and value we offer. We welcome any discussion around this.
Interest Rate Update
The Reserve Bank of Australia has indicated further cuts in official interest rates are still a possibility. We saw no movement at the latest February meeting and this will remain whilst unemployment remains under control and inflation does not pose a risk. If inflation rises dramatically we could see a possible rate hike however we do not see this happening this year. The RBA will continually monitor this, for the time being rates will remain historically low.
The Australian economy has continued to meander at the start of 2014. Whilst we now have a new government there are still a number of core issues affecting our economy. Questions abound about how we transition from a mining and resources boom to an environment where labour productivity has slowed and the impact of a high Australian dollar has reduced the competitiveness of export and manufacturing sectors.
On a positive note, we have seen a turnaround in residential house prices, assisted by the low interest rates.
The US data continues to be relatively positive however the Federal Reserve’s quantative easing (the tapering announcements) has a short term negative impact on markets. Longer term once this uncertainty is removed we expect to see markets react more appropriately. The UK economy is starting to build momentum, whilst there are still challengers in the Euro Zone, there is some strong performance in Germany.
Emerging markets have their challenges ahead as investors look towards the growth opportunities in the developed markets; the Asia Pacific region is still in line for solid growth. China, which is expecting 7% growth faces its own challenges with its reforms signalling a commitment to change, however these will face headwinds. Domestic consumption is critical as well as exports and private-sector key to future growth.
Overall, financial markets will continue to gyrate around the macro backdrop as the global economic recovery evolves. In this context, we remain of the view that taking a more selective approach to investing with a focus on managing downside risk (as much as possible) remains the right strategic approach in 2014. We continue to actively manage your asset allocation and will be looking towards some changes in March or April this year in line with current research.
If you have any questions please do not hesitate to contact our office.