Luke Mase - Financial Planner - Inovayt

Hi All, long time since my last post.

In the last few months i've had a few clients query whether we should exit the market due to volatility and re-enter once things settle down. Assuming you're invested for the long haul this can be a dangerous strategy given how difficult it is to time the market correctly.

The below graph paints a clear picture of 'time in the market' vs 'timing the market'. By simply missing the 5 best days over the last 27 years in the US market your compound annual return would be 1.8% per annum lower when compared to remaining invested throughout the entire period.

For further context, If you invested $100,000 at the start of this period, you would be approximately $304,421 better off by riding out volatility in the market!

Remember to always keep things in perspective and remember why you're investing!

As you are probably aware interest rate rises are imminent and likely to occur after the federal election.

Check out the below article for some simple tips to combat interest rate rises.

Strategies to combat mortgage interest-rate hikes Three simple strategies to enable existing homeowners to save a heap of cash on their home loan.

Have you gotten involved in the share market over the last few years and are now sitting on losses due to the recent market correction?

Odds are that if you hold shares you've experienced the unfortunate feeling of seeing the value of your portfolio decrease since the start of this year.

Whilst it's never pleasant, always remember to understand the risks and suggested timeframe before investing in anything. Shares can be volatile so it's always important to invest with a long term view and to not tie up funds that you might need in the short term.

If you're uncertain or stressed about what's happening in the market please feel free to reach out!

For anyone who is worried about losing pension/income support entitlements when they attain pension age check out the below graph.

I have a client who turns 66 and a half soon and will lose out on government assistance because her Super will begin to be assessed by Centrelink. Her key concern is that she currently relies on assistance and has no other source of income.

What she hasn't thought about is how she can utilise her Super savings to supplement/offset her loss of income support payments.

The below graph highlights this. Income support is represented in blue and doesn't kick in until the 5th year of the projection. What we can see is that as her Super account draws down her age pension entitlement increases.

This is a common mistake people make when trying to determine how much Super they need in the lead up to retirement. They don't take into account all relevant factors and how they will compliment each other.

As always if you have any queries please reach out!

Belated happy new year to everyone. Disappointing to find out the share market still has the ability to go down in 2022...

Thoughts from one of our senior advisers regarding the recent share market decline:

Since the start of the year the Australian share market has fallen 8.8%, the US share market has fallen 8.2%, and even the typically stable bond markets have been caught up in the chaos with the Australia Bonds falling almost 3%.

The cause of the falls is inflationary concerns and the fear of rising interest rates, although some commentators are saying its due to the ongoing impact of coronavirus, and this week the threat of Russia invading Ukraine has also shared the blame.

The fact is that for 18 months investment markets have had a really good run and are looking for a reason to sell off. Investment markets do not go up in a straight line. In the short term they are driven by fear and greed, and in the medium to long-term by growth in corporate profits. Greed has driven the market for the last 18 months, but it’s having a break while fear takes over for a little while.

Here is a chart of the US share market over the last 2 years that illustrates these points:

More data coming out about inexperienced investors getting burnt in the market in recent times.

Don't blindly follow what others are doing. Do your research and if in doubt consult a professional.

https://www.theage.com.au/money/investing/retail-investors-lose-in-pandemic-induced-sharemarket-gambling-20210923-p58u35.html

Retail investors lose in pandemic-induced sharemarket ‘gambling’ Many sharemarket investors who first traded during the pandemic have lost money.

Should I set up a SMSF? This is probably one of the most common questions I'm asked when discussing someone's Superannuation and retirement plan.

The ability to have greater control can sound appealing and not paying a Super fund fees also sounds great to most.

However, people generally aren't aware of the set up/ongoing costs or the compliance burden that is involved in running their own fund.

For some people they can be beneficial, however, it's always important to consider all of the pro's and con's before establishing one.

Check out the article below for some basic information on SMSF's.

https://www.savings.com.au/smsf/self-managed-super-funds

Self Managed Super Funds Pros and Cons Do the benefits of having a self-managed super fund outweigh the costs and risks?

Is your interest rate competitive when relative to the rest of the market?

Check out our blog on re-financing and the benefits associated with it!

https://www.inovayt.com.au/when-should-you-refinance-your-home-loan/

When Should You Refinance Your Home Loan? - Inovayt Life is full of constant changes, so it makes sense that your home loan is. If you're wondering if you should refinance your home, read this!

Organising a Will or Power of Attorney is often a difficult subject to approach.

Having a contingency plan is vital to ensure that your loved ones are protected/provided for in the event of something unexpected happening.

I share some thoughts on the subject in our blog.

https://www.inovayt.com.au/estate-planning-10-things-you-should-consider/

Estate Planning: 10 Things You Should Consider | Inovayt You may think estate planning is just a will, but it’s a lot more detailed and there are several aspects you need to consider.

Budgeting, it's definitely not an activity that many of us enjoy!

However, it plays a pivotal part in planning for your financial future and increases the chances of reaching your objectives over the long term.

Check out our blog with 5 budgeting tips.

https://www.inovayt.com.au/5-budgeting-tips-and-strategies-you-should-try/

5 Budgeting Tips and Strategies You Should Try | Inovayt With many budgeting tips and tricks available it can get confusing when trying to invest in a long-term strategy that works for you.

Exchange Traded Funds (ETF's) have established themselves as a very popular investment vehicle in recent years.

Some great information is contained in the article below.

Have you ever used ETF's? Feel free to leave a comment with your thoughts!

https://www.theage.com.au/money/investing/what-makes-a-good-exchange-traded-fund-20210813-p58il7.html

What makes a good exchange traded fund? There are differences in ETFs that can leave investors with less in their pockets. Here’s a quick guide on what to look for.

I speak to plenty of people about their retirement plan and for many people it's a very daunting subject.

See some simple tips in our blog and feel free to reach out with any questions!

https://www.inovayt.com.au/planning-for-your-retirement-in-4-steps/

Planning For Your Retirement in 4 Steps | Inovayt Planning for your retirement shouldn't be something you leave until you're in your 50s. The sooner you start planning, the more prepared you'll be.

Buying a property is a massive decision in our lives.

Check out some the key things to look for in our blog.

https://www.inovayt.com.au/the-hidden-costs-of-buying-a-property/

The Hidden Costs of Buying a Property | Inovayt We’ve put together a detailed guide on all the hidden costs of buying a property which you should be including in your budget.

Something I've been asked a lot recently is whether residential or commercial property investment is better.

Check out our blog for some great information!

https://www.inovayt.com.au/residential-vs-commercial-property/

Residential vs Commercial Property | Inovayt The age old residential vs commercial property debate is something worth considering when looking into purchasing your next investment property.

Is apartment investing a good idea?

Check out my thoughts in the blog below!

https://www.inovayt.com.au/apartment-investing-is-it-a-good-idea/

Apartment Investing – Is it a good idea? | Inovayt Apartment investing - a good idea or not? Buying property should never be a rash decision, if you are ready, it may be time to look into purchasing an investment property.

For everyone considering getting into the property market, the question of how much deposit do i need is a vital one.

Check out our blog for information on 20% deposit vs Lenders mortgage insurance.

https://www.inovayt.com.au/lmi-vs-20-per-cent-deposit-whats-the-opportunity-cost/

LMI vs 20 per cent Deposit – What's the Opportunity Cost? | Inovayt You also need to consider the opportunity cost of choosing to save a 20 per cent deposit or paying LMI now and getting into the market sooner.

Unless you've been living under a rock you've probably heard about cryptocurrency.

I shared some thoughts in the below blog recently.

https://www.inovayt.com.au/what-is-cryptocurrency-and-should-i-invest-in-it/

What is Cryptocurrency and Should I Invest in it? | Inovayt To many people, the ins and outs of crypto remain a mystery. To make it more difficult, there are many myths surrounding cryptocurrency.

Planning to start a family is a massive decision most people face.

It's also vital to consider the financial impact and to plan ahead to make sure that your family is secure.

Check out our blog explaining 5 things you should know about money and children.

https://www.inovayt.com.au/5-things-you-should-know-about-children-and-your-finances/

5 things You Should Know About Children and Your Finances | Inovayt From pre-baby costs such as medical care, baby furniture and cute clothes there are things to consider when it comes to children and your finances.

When purchasing any asset ownership is critically important.

Check out our blog on some of the key considerations regarding ownership.

https://www.inovayt.com.au/the-importance-of-ownership-structure-when-it-comes-to-investing/

The Importance of Ownership Structure When It Comes to Investing | Inovayt There' is little information or discussion around ownership structure or loan structure even though it's fundamental for property investors to consider these structures carefully.

Everyone can benefit from seeking the advice of a financial planner regardless of their current financial position or income.

When it comes to your finances, being proactive and planning is the best step you can take to ensure a stable and comfortable future.

In this article, we take you through five things you need to know about financial planning.

https://www.inovayt.com.au/5-things-you-need-to-know-about-financial-planning-including-costs/?fbclid=IwAR2734qm8w1nngcFYudFvFnqaXVoEoM1EKnX_9YXd6llp3K-MoRqXfUg-EE

5 Things You Need to Know About Financial Planning, Including Costs | Inovayt There are some key things you need to know about financial planning before choosing your planner, including what costs might be involved.

Hi All,

Just thought I would share another little win we had today.

I had a client who was referred in September last year for a Super review and for some retirement advice. She is 61, had $180k in her Super fund and was on permanent income protection claim until 65 due to being diagnosed with Parkinson’s. Her main concern was not having enough money once her income protection claim ends in 4 years.

Did some research on her Hesta Super account and turns out she had a Total & Permanent Disability policy worth $144k which she wasn’t even aware of. We lodged the claim in October and got confirmation today that $144k has been paid into her fund bringing her new Super balance to $332k.

Another example of people not knowing what they actually have within their Super funds and what they’re eligible for. In this instance it has brought great peace of mind to someone in a difficult time.

As always, reach out with any queries at all.

‘The information contained on this website is general in nature and is no way intended to be legal, financial or investment advice. The information provided is not intended to be taken as, or relied upon as financial advice or providing recommendations in relation to any financial product. You should seek independent financial advice from a licenced financial services advisor to check how this information relates to you and your circumstances. Inovayt Pty Ltd and Inovayt Wealth Pty Ltd does not accept any liability for injury, loss or damage incurred by the use or reliance on the information provided on this website.’.

One of the most common questions I get asked, particularly in the lead up to retirement is:

Should I pay down my mortgage or should I contribute more to Super?

Like most of these questions the answer is different for everyone. There are a range of factors that need to be considered (Age, interest rates, debt levels etc.) when determining what's right for you.

I've attached a good article from Canstar that breaks down some of these considerations.

As always, feel free to reach out with any questions.

https://www.canstar.com.au/superannuation/mortgage-vs-super/

Mortgage vs Super: Where Should You Put Your Money? | Canstar It’s an age old question – are you better off putting extra money into your home loan or super? We look at how the numbers stack up.

Age Care is something that most people will have to deal with at some point in their lives. One of the most common concerns I hear is that people are concerned that they won’t have enough to go into a care facility when the time comes.

The age care space is an extremely complex one from a cost/fee point of view. The general misconception is that you need a lot of money to enter age care. That if you don’t have the necessary funds you will be forced to find some other way of taking care of yourself.

I’ve attached an article from The Age below that sheds a bit of light on this issue:

https://www.theage.com.au/money/super-and-retirement/you-don-t-need-to-be-rich-to-enter-residential-aged-care-20210205-p56zx2.html

If you are unsure of how the system works, or if you are trying to plan for yourself or loved ones please feel free to get in touch.

Cheers

Luke

You don’t need to be rich to enter residential aged care While you would not be paying for it all, the costs are still being covered.

Hi All,

If you’ve been watching the news in the last week you’ve probably heard something about Gamestop shares on the New York Stock Exchange. A group on a Reddit online forum sparked a huge surge in the price and sent the market into a frenzy as the price shot up from under $20 just a month ago to a high of $469.42 on January 28 (Currently sitting at $193.75 in after-hours trading).

This post isn’t to go into the mechanics of how/why it happened, it’s to point out the potential danger involved in investing in highly speculative/volatile markets. Whilst the allure of big gains in a short amount of time can be tempting, you should always approach it with a high level of caution. Lots of investors can be left holding the bag when they buy at the ‘peak of the pump’ and are unable to sell when the price crashes down.

Don’t invest in something on a whim, don’t invest in areas you don’t understand, don’t invest more than you can afford to lose and don’t hesitate to reach out for professional advice if you’re unsure what the right move is.

Stay safe and reach out with any questions.

Luke

Have you ever been worried about mis-timing the market when looking to invest in shares? Something that lots of people worry about is buying in to a share and then seeing the price drop straight away.

Timing risk is something that always needs to be considered when investing, especially when the market is overheated and volatile.
This is where dollar cost averaging (DCA) can be a powerful tool. To put it simply, DCA is when you spread your buying over a period of time as opposed to investing the whole amount at once. For example:

If I have $50,000 I want to invest in CBA I could buy the entire amount as a single transaction at the current share price. If the share price then dips over the coming months it means that I could’ve purchased more units if I had waited longer to make my entry. Alternatively, I could purchase in $10,000 increments over a 5-month time frame. The DCA approach ensures that if the price fluctuates over the short term my average buy price will be smoothed out to reflect that.

If you want to learn more about DCA I’ve attached an article from Vanguard that goes into a bit more detail:

https://www.vanguard.com.au/personal/education-centre/en/insights-article/a-new-dawn-for-dollar-cost-averaging

As always, if you have any questions please reach out.
Luke

Research and Commentary vanguard Australia knowledge center

Happy New Year everyone! I hope everyone is ready for a big 2021.

I've been asked a lot about investing in the name of children recently. Lots of parents like to invest for their kids future but are unsure of how to achieve this or what the potential tax ramifications are.

Please find attached an article I wrote for Adviser Ratings a few years ago addressing this subject:

https://www.adviserratings.com.au/news/ask-an-adviser-purchasing-equities-in-your-childs-name/

Before making an investment in your child's name you should always ensure that you understand the process. Please feel free to reach out with any queries at all.

Cheers

Luke

Ask an Adviser - Purchasing Equities In Your Childs Name: Adviser Ratings Adviser Luke Mase responds to a parent who wants to know about purchasing equities in the name of their child. Wouldn’t it be great if all parents were this thoughtful!

For anyone with a home loan who is unsure how to make the most of your savings please read the below article.

Offset accounts are a simple example of how structuring can be vital in debt reduction and lead to having more funds to utilise when building wealth.

When was the last time you reviewed your mortgage?

https://www.theage.com.au/money/borrowing/how-to-save-85-000-on-your-mortgage-for-free-20201002-p561fk.html

How to save $85,000 on your mortgage – for free Money held in a mortgage offset account is netted straight off your outstanding loan balance.

I've been asked a bit about this one lately so thought I would share some important info. People that are over 65 years old that are looking to downsize their home may be eligible to make a Downsizer contribution into their Super fund.

There is a set criteria which is listed in the link below. Essentially you might be eligible if you are:

*Over the age of 65
*Have been living in your primary residence for at least 10 years
*Have not previously made a downsizer contribution

If you meet the criteria you can make a contribution of up to $300,000 per person (Depending on the sale price of your house) into your Super regardless of whether you are still working or not and regardless of your Super balance. This contribution must be made within 90 days of settlement.

This can be an extremely valuable strategy as people over 65 are typically limited when it comes to making additional contributions to their Super.

If you want to know more please get in touch!

https://lnkd.in/gHer4GN.

Downsizing contributions into superannuation From 1 July 2018, individuals 65 years old or older may be eligible to make a downsizer contribution into their superannuation of up to $300,000 from the proceeds of selling their home.

In the last 12 months the US economy has been smashed, GDP has plummeted, unemployment rates have doubled compared to February and they have the highest amount of deaths due to COVID compared to any other country. Throw in an upcoming election and escalating racial tension to top it all off and a sensible person would assume that their share market has been decimated as well. Makes sense right? Wrong!!

Below is a graph over the last 12 months for the NASDAQ index (Major US share index). Over the last 12 months it is up approximately 34%. It has not only recovered from the COVID hit but it has steamed ahead to all time highs.

The last week has seen a 10% decrease. Is this the beginning of a more dramatic correction? Who knows, it seems that it's basically impossible to pick it at this point.

The key takeaway for me is that you shouldn't simply follow the herd and 'chase' a rising market. Do your research, try and understand why things are happening and be patient.