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HOW MUCH WILL YOUR CHILD’S EDUCATION COST?

INFORMING

GENERATIONS

Your child’s education is an important investment in their future. But getting it right takes careful planning, which means you need a true understanding of the costs involved.

As every parent knows, a quality education is one of the most important foundations you can provide for your child. But the costs of schooling can really add up over the years – and it’s not just fees; there are plenty of other extras you’ll need to cover as well. And of course, if you have more than one child, then all the expenses will be multiplied.

So how much can you expect to shell out for each child’s education – and are there ways to plan ahead so you can reduce the strain on your household finances?

What to expect

The cost of a child’s schooling in Australia varies widely between metropolitan and regional areas, and depends on whether you opt for a private or public education. But even if you send your child to a government school, there are still plenty of expenses that you’ll need to be ready for – like uniforms, books, supplies and after-school activities.

In a major capital like Melbourne or Sydney, the cost to educate a child born in 2016 from preschool to Year 12 could cost anywhere from around $73,000 to well over $500,000.1

That means a family with two children attending private school could end up spending above $1 million for their kids’ primary and secondary education. And while cities like Adelaide and Perth are substantially cheaper, the projected costs still range from around $55,000 up to almost $400,000.1

How to prepare

As with any investment, you should plan carefully for your child’s education. Everyone’s circumstances and choices are different, so take the time to research and calculate how much you’re likely to pay over the course of your child’s school years. That way you can start budgeting as soon as possible. If you’re lucky, you might have parents who are willing to chip in for their grandchildren’s education – but if not, don’t worry. Here are three things you can do now to help cover your family’s education costs without sacrificing your lifestyle.

1 Create a savings plan

By putting aside a little bit of money on a regular basis, you can grow your savings so you’ll have money to put towards your child’s schooling. A simple way to do this is to set up an automatic transfer from your pay cheque into an everyday cash savings account. Once you get started, you will notice the interest compounding over time. As you get into the habit of saving, you’ll find it becomes easier to manage your short term expenses like school fees and uniforms.

2 Invest your savings

While a savings plan is great, with education costs often rising faster than inflation, your cash savings may not grow over time by enough to meet your future education costs. Given education costs can be long term in nature (if you start saving early enough) this may allow you to consider non cash investments. By taking some risk with your capital via your regular savings plan and investing into a term deposit, investment bond or a managed fund, you can help fund longer term education costs, based on the anticipated growth and earnings from these investments. So it’s worth speaking to your financial adviser about the best investment vehicle for your situation.

 3 Pay down your mortgage

It can be tough keeping up with school fees and other costs when you still have a major financial burden hanging over you. That’s why it’s a good idea to start paying off as much of your home loan as possible before you child starts school, so you’re in a better financial position to manage their ongoing education costs when the time comes.

Even if your child is already in school, it’s never too late for your financial adviser to help you get your finances on track and plan for the remainder of their education.

1 Australian Scholarships Group, ASG Planning for Education Index, 2016.

12 Months And Counting

So, you’re one year out from retirement – congratulations! Here are five steps you can take now to ensure you’re ready.

The last year before retirement can be filled with excitement and expectation, and often a few nerves. While leaving the workforce for good may be a dream come true, it can also feel a little daunting.

According to Professor Lynne Parkinson, gerontologist and Editor-in-Chief of the Australasian Journal on Ageing, “Days are very long when you don’t work, so you don’t want to have nothing to do,” Parkinson says. “A successful retirement usually means you’re busier than ever.”

To start retirement confidently, it’s a good idea to use the final 12 months of work to make a detailed plan of what you might do in retirement – to ensure you stay mentally, physically and socially active on a daily basis.

“If a retiree has interests that can fill their day, that is what matters,” Lynne said. “A happy retirement means staying connected and active by having a plan.” Here’s how to do it in 5 simple steps.

1. Set your retirement goals
While one retiree wants to expand their social circle, another might want to nurture current friendships. Some might want to head overseas while others will be keen to stay as close as possible to their grandchildren.

“Success is about discovering what you want to do as an individual,” Lynne said. “For example, if you’re shy you can focus on an interest close to home such as gardening.”

The bottom line is – don’t make a plan around what others expect, but instead make it absolutely unique to you.

2. Expand your hobbies
What’s the one thing you’ve never had enough time to do but you’ve always been passionate about? It might be a hobby like golf, fishing or cooking – or maybe you want to discover more about your family tree.

Or perhaps, you wish to give back to the community through volunteer work or advocating for an environmental or social cause.

“There is plentiful evidence that if you’re an active, healthy person, then volunteering is very good for you,” Lynne said.

3. Make travel plans
Retirement is a wonderful opportunity to get out and explore the world. By planning ahead, you can look forward to new adventures.

“A lot of people travel once they retire – it’s the Australian dream,” Lynne said.

And the best part is, it doesn’t need to be expensive. There are plenty of options to suit your retirement budget.

“You can buy a little van and take a trip around Australia, if that’s what makes you happy,” Lynne commented.

4. Learn something new
“As you get older you tend to sleep less, so there are more hours to fill,” Lynne observed.

After leaving work, you may find yourself with endless time up your sleeve. So why not make the most of it by gaining new skills and knowledge?

Whether it’s an informal language course or a part-time series leading to a new qualification, there are plenty of choices available at local community colleges or with a private teacher.

5. Make a strong financial plan
Your financial adviser can help prepare you financially for your move to retirement – from understanding your superannuation options to making the most of your Centrelink benefits.

They can also help you work out a retirement budget that enables you to reach your lifestyle goals and enjoy the retirement you deserve. And, with the 12-month countdown to retirement ticking, now is the perfect time to start planning.

 

IMPORTANT INFORMATION
This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a Financial Adviser before making a financial decision. This document has been prepared by Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138, (Financial Wisdom) a wholly-owned, nonguaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Financial Wisdom Advisers are authorised representatives of Financial Wisdom. Information in this document is based on current regulatory requirements and laws, as at 10 December 2017, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Financial Wisdom, its related entities, agents and employees for any loss arising from reliance on this document.

This document has been prepared by Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138, (Financial Wisdom) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Mark Giles of Complete Financial Solutions (WA) – Financial Planning (ABN26 050 157 938) is an authorised representative of Financial Wisdom Limited (ABN) 70 006 646 108 AFSL 231138). Information in this document is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Financial Wisdom, its related entities, agents and employees for any loss arising from reliance on this document. This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. Taxation considerations are general and based on present taxation laws and their interpretation and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.

Colonial First State – Market Summary December 2018

Taken from the CBA Global Markets Research report, ‘December Month in Review’; first published on 2 January 2019.

Summary: Financial Markets in December

  • Money markets now pricing an RBA cut
  • A strong risk off tone saw large rallies (falls in yields) in US and Australian bonds. There was widening in credit spreads.
  • Falling underlying yields ensured credit finished the month with largely positive total returns.
  • The US Dow Jones fell by 8.7 percent and the S&P 500 was down 9.2 per cent in December– their worst December performances since 1931 and biggest monthly losses since February 2009.

The dominant story of markets in December was the significant risk-off move – most obvious was the collapse in US equity prices. The US S&P Accumulation index was down 9.03% in December and that was after a strong recovery late in the month. (The intra-month result was as bad as -15% on 27 December.)

The Australian equity market outperformed massively by only falling 0.12% (accumulation) or 0.37%.

US bond markets reflected the risk-off tone and rallied strongly with yields falling.

On the FX side the risk-off move resulted in a 3.44% fall in the AUD against both the USD and an even larger fall of 4.11% on a trade-weighted basis.

The overall performance of commodities was relatively good (one reason that the materials sector could rise 5.29%) but oil prices fell sharply. Oil closed December at $US45.41 a barrel, down 10.84% on the month (and 40.6% from the peak in October).

Money Markets (Cash)

Market pricing for a move in cash rates by the Reserve Bank of Australia shifted course in December, as measured by Overnight Indexed Swap (OIS) rate. It’s only small, but for most of December the OIS rates were pricing a small risk of a rate cut and by month end the priced expectation of a rate cut had risen to 40%. In November there was a 60% chance of a rate hike priced. At end-December there was a 40% chance of a rate cut.

The move was noteworthy that the market was pricing a risk of a rate cut despite the RBA insisting that they felt it was likely that the next move in rates was higher. The Australian data was on the weaker side in December, but not particularly poor. The weakest print was the GDP, which had been expected to rise 0.6% on the quarter but only managed 0.3%. That saw the annual rate fall to 2.8%. The labour force result was better, though not across the board. There were +37.0K jobs created but split as – 6.4K full time and +43.4K part time. The unemployment rate ticked up to 5.1% on the back of an increase in the participation rate to 65.7%.

Australian and Global Fixed Interest

December was again a volatile month in markets.

While underlying economic developments were fairly typical, the US equity markets had two appalling weeks and one solid recovery very late in the month. Volatility was the order of the day, but the deterioration in sentiment was marked too. US bonds rallied each time there was a wobble in equity markets but have not sold-off far (if at all) in the late equity recovery.

There has also been major flattening pressure at some points.

The US 2Y yield closed the month at 2.52% which was a rally (fall in yields) of 29bp. The US 10Y closed the month at 2.725% which was a rally (fall in yields) of 29.5bp. The US curve finished the month unchanged, but had flattened abruptly mid-month (from 20bp to 10bp), only to recover back late in the month as the 2Y rallied to steepen the curve.

The second of the two large risk-off weeks appeared to be triggered (or at least worsened) by the FOMC’s decision to raise interest rates on December 20.

The market behaved as if there were widespread fears the FOMC was making a policy mistake. The bond yields rallied (fell) on a rate rise that was only 75% priced.

The local market had to contend with a weak GDP result (only +0.3% compared to 0.6% expected) and a mixed labour force (+37K but a rise in unemployment to 5.1%). At the same time, the fall in house prices continues in multiple data series.

Australian rates have also rallied (yields fallen) and yield curve flattened. The 3Y physical bond has rallied 23.75bp to 1.8275%, while the 10Y physical has rallied 27.75bp to 2.3350%.

As well as the financial volatility there were still ongoing developments of a geopolitical nature that added to the movement in markets.

In Europe, UK Prime Minister May has failed to pass her Brexit legislation through parliament (yet). She survived a leadership challenge, but it seems very hard, at this point, to see how she can pass the deal she has made with the EU through the UK parliament. The other European story was the disagreement between the Italians and the EU about the Italian deficit. Negotiations were progressing well at month-end, but there was definite agreement yet.

In a side-meeting at the G20 Presidents Trump and Xi agreed a 90 day cease-fire in the US China trade war. The Chinese have also deemphasised some of the elements of the Made in China 2025 policy that were causing the most consternation in the US. However, the overall stability of the Trump Presidency remained in question throughout the month as the potential Government Shutdown dominated news. The potential became the actual and the Government shut on 21 December. At month-end, there was no clear sign of the Government re-opening.

The Democrats take control of the House on 3 January following last November’s election.

The Federal MYEFO on December 17 showed a significant fall in the budget deficit of $9bn and an improved trajectory across the forward estimates.

Chart 1: Australian vs US 10Y bond yield

Source: Bloomberg, CBA

Chart 2 – Main Australian Yields

Source: Bloomberg, CBA

Global Credit Markets (Cash)
The December G20 meeting ended on a positive note with China agreeing to purchase a substantial amount of products from the US in exchange for the US not to increase tariffs in January. Yet there is a general lack of confidence that a meaningful deal will be reached by the end of the agreed 90 day ceasefire period. The arrest of Huawei CEO on US criminal charges was seen by markets as a signal that the US will not back down easily from its campaign against Chinese tech firms seeking global dominance.

US non-farm payrolls expanded by only 155,000 in November vs consensus of 198,000, but growth in average hourly earnings met expectations of 3.1% YoY. Despite weak data and market jitters, the Fed hiked rates at the December FOMC meeting and signalled another two hikes in 2019. A deadlock over funding for the wall on the US/Mexico border led to a partial shutdown of the US Federal government with the second half of the month witnessing heightened market volatility with VIX spiking at 36%.

Offshore credit spreads continued to widen, although US$ spreads across Financials and Non- Financials were the standout underperformer, +18 bps wider on the month. EUR Financials and Non-Financials were +1 bps and +3 bps respectively wider. A$ credit spreads continued to feel widening pressure from offshore, +5 – 6 bps across Non-Financials and Financials. Liquidity was subdued because of the holiday season, which exacerbated widening pressures.

Equity Markets
In 2018, global sharemarkets recorded their worst annual performance since the Global Financial Crisis. The US Dow Jones (-5.6 per cent), S&P500 (-6.5 per cent) and Nasdaq (-3.9 per cent) indexes all fell. In Europe, Germany’s Dax (-18.3 per cent) and the UK FTSE (-12.5 per cent) bourses tumbled. In Asia, Japan’s Nikkei fell by 12.1 per cent and the Australian ASX200 index was down 6.9 per cent – its worst year since 2011 – led lower by Telecom (-17.4 per cent) and Banks (-15.5 per cent) shares.

Global equities commenced December positively after US President Donald Trump and Chinese President Xi Jinping agreed to a trade war truce at the G20 summit in Buenos Aires. However, investors quickly became pessimistic that a broader trade agreement would be secured in the 90-day period beginning January 1. Such a broader agreement is necessary to stop President Trump’s threat to raise tariffs on US$200 billion worth of Chinese goods from 10 per cent to 25 per cent. And the arrest of Huawei’s chief financial officer Meng Wanzhou in Canada on allegations that she violated US sanctions against Iran lowered market expectations for a trade deal even further. US sharemarkets were down by as much as 4.9 per cent in the first week of December, but the Aussie ASX200 index was up by 0.3 per cent.

In the second week of December concerns over the lingering US-China trade dispute, weaker Chinese economic activity data and continued flattening of the US Treasury yield curve (often considered a US recession indicator) dampened market sentiment. Reports that China was considering removing US car tariffs, watering down its ‘Made in China 2025’ plan and restarting US soybeans purchases, failed to sway sceptical investors. US sharemarkets fell by up to 1.3 per cent. However, the London FTSE lifted by 1.0 per cent as British Prime Minister Theresa May survived a leadership challenge over her proposed Brexit deal.

The sell-off in global shares intensified during the third week of December. US shares fell by up to 8.4 per cent, led lower by the technology-focused Nasdaq index. And the US S&P500 index posted its worst weekly performance since August 2011, down by 7.1 per cent. The US Federal Reserve’s interest rate hike, the looming US government shutdown over budget funding and weaker US company earnings forecasts dragged shares lower. The European Commission reached a deal with Italy over the 2019 budget. And China’s annual Economic Work Conference signalled additional fiscal and monetary stimulus in 2019. But Germany’s Dax (down 2.1 per cent), Japan’s Nikkei (down 5.7 per cent), the UK FTSE (down 1.8 per cent) and the ASX200 (down 2.4 per cent) all fell.

There were more declines for global sharemarkets ahead of the Christmas holiday period as the US government was partially shutdown. US shares fell on Christmas Eve as investors were rattled after US Treasury Secretary Steven Mnuchin announced that he had called US bank heads in attempt to shore up confidence in the US financial system. US President Trump also tweeted that the US Federal Reserve was “raising interest rates too fast”, increasing investor concerns that Federal Reserve chair Jerome Powell could potentially be fired. The S&P500 index fell by 2.7 per cent, dipping within a couple points of a bear-market correction. Japan’s Nikkei index fell by 5 per cent on Christmas Day.

US sharemarkets, however, posted their biggest post-Christmas Day rally ever and best day in nearly a decade with the Dow Jones up by 1,086 points on Boxing Day – its largest one-day gain in history. The S&P500 (up 5.0 per cent) and the Nasdaq (up 5.8 per cent) both lifted by the most since March 2009. The S&P500 retailing index rose by 7.4 per cent after data released by Mastercard showed that holiday sales were the best in six years. Amazon shares rose 9.5 per cent after it sold a record number of items. The Dow rose by 449 points in its final three trading sessions of the year.

In December, the US Dow Jones fell by 8.7 percent and the S&P 500 was down 9.2 per cent – their worst December performances since 1931 and biggest monthly losses since February 2009. The US Nasdaq Composite declined by 9.5 per cent. In Asia, Japan’s Nikkei fell by 10.5 per cent, but the Australian ASX200 fell by just 0.4 per cent. In Europe, both the German Dax (-6.2 per cent) and the London FTSE (-3.6 per cent) declined.

For the December quarter, the US S&P 500 and Nasdaq dropped 14.0 per cent and 17.5 per cent, respectively, their worst quarterly performances since the fourth quarter of 2008. The Dow Jones recorded its worst period since the first quarter of 2009, falling 11.8 percent. The ASX200 was down by 9.0 per cent.

In December, seven of Australia’s 22 subindustry sectors posted gains. The Materials sector rose most (up 5.3 per cent) from the Pharmaceutical & Biotech sector (up 3.9 per cent). But the Media sector fell by 10.9 per cent and Automobile & Components fell by 9.6 per cent. The ASX50 index was up by 0.3 per cent, while the Small Ordinaries fell by 4.5 per cent. Smaller companies were the worst performer in 2018, with the Small Ordinaries down by 11.3 per cent.

Chart 3- Smaller Companies underperformed: Rolling performance: percentage change, Annual 2018

Source: IRESS, CommSec

 

This document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State).

The information, opinions, and commentary contained in this document have been sourced from Global Markets Research, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. Global Markets Research has given Colonial First State its permission to reproduce its information, opinions, and commentary contained in this document.

This information was first made available to CBA clients on 2 January 2018 in a CBA Global Markets Research report publication titled, ‘December Month in Review’.

Colonial First State is a wholly owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124, AFS Licence 234945 (the Bank). Colonial First State is the issuer of super, pension and investment products. The Bank and its subsidiaries do not guarantee the performance of Colonial First State’s products or the repayment of capital from any investments.

While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including Colonial First State, Global Markets Research, or any member of the Bank group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information.

This document provides information for the adviser only and is not to be handed on to any investor. This document has been prepared for general information purposes only and is intended to provide a summary of the subject matter covered. It does not purport to be comprehensive or to give advice. The views expressed are the views of Global Markets Research at the time of writing and may change over time. This document does not constitute an offer, invitation, investment recommendation or inducement to distribute or purchase securities, shares, units, other interests, or to enter into an investment agreement.

Past performance is no indication of future performance. Stocks mentioned are for illustrative purposes only and are not recommendations to you to buy sell or hold these stocks.

This document cannot be used or copied in whole or part without Colonial First State’s express written consent.

Copyright © Commonwealth Bank of Australia 2018.

Want more information?
Please speak with your financial adviser Mark Giles Mark Giles of Complete Financial Solutions (WA) – Financial Planning (ABN26 050 157 938) is an authorised representative of Financial Wisdom Limited (ABN) 70 006 646 108 AFSL 231138). Alternatively visit our website at completefinsol.com.au or contact Colonial First State Investments Limited at colonialfirststate.com.au or phone 13 13 36. © Colonial First State Investments Limited ABN 98 002 348 352 AFS Licence 232468. This document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) based on its understanding of current regulatory requirements and laws as at 6 October 2016. This document is not advice and provides information only. It does not take into account your individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement available from the product issuer carefully and assess whether the information is appropriate for you and consider talking to a financial adviser before making an investment decision.

For Financial Success, Try to Avoid These Traps

Many aspects of financial success are about putting good habits in place early and avoiding traps that can damage your dollar value. Here are our top five traps to avoid.

1. Make minimum repayments
Whether we’re talking about high-interest debt such as credit cards or longer-term investment debt such as mortgages, making the minimum repayment is good, but not always great. On credit card debt you can end up paying interest of 20% or more, potentially adding thousands of dollars annually to your repayments. Even small increases in your regular mortgage repayments can cut years off the loan and save tens of thousands of dollars in interest along the way.

2. Leak money to businesses
Many businesses are now moving to a subscription or regular repayment model, whether it is for software, TV services or holiday packages, because it seems cheaper and causes less financial pain in the short term. Those businesses become wealthy over time and you do not. Being aware of these regular outgoings, living a leaner lifestyle and plugging these financial leaks can be the equivalent of adding several percentage points to your investment interest.

3. Spend your redraw/equity
Paying extra into your mortgage is an exceptionally good habit. Constantly redrawing the available funds, or borrowing on the equity for non-investment purposes, is not. Keeping all of your savings within your mortgage, or in an offset account, will likely save a considerable amount of interest over time. But be sure to set yourself a budget or savings goal to reap the full benefit of your discipline.

4. Lack familiarity with your finances
We are all guilty at some stage of being less familiar than we should be with the investment mix of our super fund, or the interest rate on our mortgage. But checking in with your finances on a regular basis – monthly, bi-annually or yearly – is a simple way to check things are moving in the right direction and to take action if they are not. This process should always involve all stakeholders, particularly both members of a couple.

5. Prioritise spending rather than investing
All great plans begin with a goal. Wealth planning usually begins with a retirement lifestyle goal. A strategy is then set to achieve that goal – perhaps the diversified investment of $100 every week for the next 20 years – and that becomes the absolute priority. Households often prioritise and plan for holidays, new cars, furniture updates and wide-screen TVs. The fact that a plan is in place means they will likely have those things. But such purchases should only be allowed after the real priority has been taken care of.

 

IMPORTANT INFORMATION
This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a Financial Adviser before making a financial decision. This document has been prepared by Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138, (Financial Wisdom) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Financial Wisdom Advisers are authorised representatives of Financial Wisdom. Information in this document is based on current regulatory requirements and laws, as at 17 January 2018, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Financial Wisdom, its related entities, agents and employees for any loss arising from reliance on this document. This document has been prepared by Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138, (Financial Wisdom) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Mark Giles of Complete Financial Solutions (WA) – Financial Planning (ABN26 050 157 938) is an authorised representative of Financial Wisdom Limited (ABN) 70 006 646 108 AFSL 231138). Information in this document is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Financial Wisdom, its related entities, agents and employees for any loss arising from reliance on this document. This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. Taxation considerations are general and based on present taxation laws and their interpretation and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.

Colonial First State – Market Summary October 2018

Taken from the CBA Global Markets Research report, ‘October Month in Review’; first published 1 November 2018

Summary: Financial Markets in October

  • There was a sharp sell-off in global shares in October.
  • US Bond markets sold-off (yields rose) early inthe month, but rallied back (yields fell) in therisk-off tone late in the month. Australianbond yields fell on the month.
  • In credit markets, A$ cash credit was resilientto offshore widening.
  • Australia’s trade-weighted index eased by0.5% in October. AUD was mixed against thecross rates.
  • In commodity markets, iron ore and cokingcoal prices rose in October.

There was a large fall in equities this month and the risk-off tone from that move dominated bond markets. The US SPX accumulation was down 6.84% while the Australian version lost 6.05%. The falls were widespread, with the financial sector losing 5.96% and the materials index lost 5.18%.

The risk-off tone caused rallies (yields fell) in bond markets.

In an unusual occurrence there has been rises in commodity prices (other than oil) and falls in the AUD.

Offshore credit spreads succumbed to widening pressure with US$ and EUR Corporate spreads both widened over the month. A$ spreads across both corporates and financials however held firm.

Money Markets (Cash)
The pressure in short term funding markets eased slightly in September but remain very highly elevated compared to normal levels.

Once again, the RBA remains completely on hold.

The Australian data this month was a continuation of themes that have been clear for a while now. The Labour Force result on 18 October was fairly strong, with a fall in the unemployment rate to 5.0%. There was a small rise in jobs of +5.6K, but a large fall in the participation rate to 65.4%.

However the October 31 CPI confirmed that the RBA is on their hands for a good period yet. The headline CPI rose only 0.4% on the quarter and 1.9% on the year, while the underlying CPI recorded 0.35% on the quarter and 1.75% on the year.

The difficult month in equity markets was felt in bond markets (see below) but largely didn’t affect the Australian money market.

Australian and Global Fixed Interest
The US bond market actually sold-off over October (yields rose). Although the latter part of the month was full of doom and gloom in equity markets and a major bond rally (yields falling), there had been a strong sell-off in the first week of October. Overall, US yields finished marginally higher, with the US 2Y selling-off 4bp to 2.865 and the US 10Y sold-off 9bp to 3.14%.

The Australian market didn’t match the early sell-off in the US, so when the late-month rally got going the Australian yields have rallied overall on the month. The Australian 3Y and 10Y both fell to 1.99% and 2.63% respectively.

Not surprisingly, the Aus-US 10Y spread has continued to invert consistently and had reached -50bp at month-end (a 12bp inversion over the month).

For most of the month the bond markets were volatile, but largely at the whim of equity markets. The US S&P fell 6.9% over the month with a worse performance avoided thanks to a mild recovery in the last couple of days. The peak-to-trough loss was 11.4% between October 4 and October 30 (intraday).

The cause of the correction in US equities isn’tentirely clear but is an amalgam of the following factors. In the US, the equity correction came after a major run-up in prices. The market has a growing fear that the FOMC will over-tighten and trigger a reversal of the US economy. The USChina Trade war has been simmering along in the background. Finally, the US mid-terms have been identified as a concern given the hyperpartisan US political situation.

The global political situation continues to throw up market relevant stories. The global shift toward populism intensified in October with Brazil electing right-wing candidate Jair Bolsonaro and German Chancellor Merkel announcing she will not contest the next election. Brexit is closing in on the end-game with no clear resolution yet.

Global Credit Markets (Cash)
October has always been a ‘black cat’ month for equity markets with many a crash through history occurring in the month that contains Halloween. October 2018 was not different. There was no new news flow per se, or any specific catalyst to trigger the sell-off, rather it was a culmination of themes and events coming together, causing investors to universally question the validity of valuations. Themes remain Brexit uncertainty, US vs China trade war, Italian fiscal policy, fear of Fed policy error, and upcoming US elections. The month was dominated by heightened volatility and a minicorrection across global stock markets, which saw key indices down 8% – 10%.

Offshore credit spreads succumbed to widening pressure with US$ and EUR Corporate spreads both +14 bps wider on the month. Financials offshore also widened some +7 bps and +13 bps across US$ and EUR respectively. Unlike the last equity volatility inspired spread widening in March earlier this year, this correction didn’t come with a steady stream of primary activity. A saving grace that muffled spread widening pressure. A$ spreads across both corporates and financials however held firm, remaining resolutely unchanged over the month (plus or minus half a basis point).

Two thirds of US Q3’18 reporting season is behind us as at the end of October, with 65% S&P 500 companies now reported. Aggregate sales growth has reached just over 8.0% YoY, while aggregate earnings growth is north of 23.0% YoY. Most sectors at this stage are exhibiting solid sales and earnings growth momentum, however there is some doubt on growth sustainability without further stimulus – a contributor to recent market malaise.

Equity Markets
Global shares were sold down in October as investors reacted negatively to ongoing US-China trade tensions, rising US interest rates, slowing global growth and worse-than-expected September quarter earnings results of some US technology giants, prompting a reassessment of asset values.

Global sharemarkets began the month on the back foot. The new US-Mexico-Canada trade agreement was overshadowed by rising global bond yields. The US 10-year Treasury yield hit a 7-year high at 3.25 per cent during trading onOctober 5. The yield lifted by 17 basis points inthe first week of October after US FederalReserve Chairman Jerome Powell signalled thatUS interest rates “may go past neutral” – thepoint at which the rate neither helps nor hurtseconomic growth.

US economic data releases were mostly positive. The US unemployment rate fell to a 48-year low of 3.7 per cent and annual average hourly earnings rose by 2.8 per cent in September, supporting market expectations for a rate hike in December. Global sharemarkets generally fell by 1-3 per cent in the first week of October, ledlower by the US Nasdaq (-3.2 per cent) onchipmaker cybersecurity concerns.

In the second week of October, risk sentiment deteriorated after the IMF downgraded its global growth forecasts for the first time in two years due to intensifying US-China trade tensions. And investors continued to fret about the impact of rising borrowing costs on economic activity and company profits. High-flying technology shares came under acute selling pressure after investors appeared to scale-back their expectations for continuing double-digit revenue growth in 2019.

Over the second week of October, US shares fell by 3.7-4.2 per cent. The Dow Jones lost 1,378 points and the Nasdaq fell by 409 points on October 10-11. Germany’s DAX index was the worst performer, down by 4.9 per cent. The Japanese Nikkei (down 4.6 per cent), London FTSE (down 4.4 per cent) and Australia’s ASX200 (down 4.7 per cent) indexes all declined.

During the third week of October, US investors focused on corporate earnings results. The Dow Jones surged by 548 points on October 16 after banks Morgan Stanley and Goldman Sachs’ profits beat market expectations. Health care companies Johnson & Johnson and UnitedHealth also posted better-than-expected earnings.

Global share markets finished the week broadly flat, but the Nasdaq fell 0.6 per cent and the ASX200 was up 0.6 per cent.

Global shares continued to fall in the final week of October following the release of the weakest annual Chinese economic growth data in 9½ years in the September quarter (6.5 per cent). But annualised US economic growth remained strong, up by 3.5 per cent in the September quarter.

Sharemarket volatility increased amid mixed US earnings results. Over the week, global shares fell by 1.6-4.6 per cent. The ASX200 was the worst performer falling to its lowest level in 12 months on October 25. The Nasdaq fell by 329 points on October 24 – its biggest decline since November 24 2008.

To-date, almost half (48 per cent) of the companies in the US S&P 500 have reported earnings for the third quarter. Of these companies, 77 per cent have reported actual Earnings per Share above the mean estimate, which is above the five-year average of 71 per cent, according to FactSet.

In October, the US Dow Jones fell by 5.1 percent and the S&P 500 lost 6.9 per cent – its biggest monthly fall since September 2011. And the US Nasdaq Composite posted its worst monthly pullback since November 2008, down by 9.2 per cent. In Asia, Japan’s Nikkei fell by 9.1 per cent and the Australian ASX200 fell by 6.1 per cent – the biggest monthly drop since August 2015. In Europe, the German Dax fell by 6.5 per cent and the London FTSE declined by 5.1 per cent.

All 22 sub-industry sectors in Australia fell in October. Media fell by the most (down 16.2 per cent) from Auto & Components (down 12.1 per cent). Transportation was the best performer (down 2.5 per cent). The Small Ordinaries underperformed, down by 9.7 per cent.

Australian Dollar
Australia’s trade-weighted index eased by 0.5% in October. AUD was mixed against the cross rates.

AUD/USD dropped by about 2 US cents in the first week of October. More evidence the RBA is in no rush to raise the cash rate weighed on AUD. In its post-meeting statement, the RBA highlighted that “credit conditions are tighter than they have been for some time”. Softer global economic activity also weighed on AUD/USD. The global manufacturing PMI fell to near a two-year low in September. And the IMF cut its global GDP growth outlook in its October World Economic Outlook.

Also weighing on AUD was increased volatility in emerging market asset prices. The Australia-US two year interest rate spread decreased heavily to 90bps in early October, the most negative since October 1997.

AUD/USD consolidated in the middle of October before mounting a modest recovery. Firmer commodity prices helped AUD. Iron ore swaps increased almost continuously in October from $US68 per ton at the start of the month to $US73 per ton by the end of October. But capping the recovery in AUD were falls in global equity markets.

Commodities
Commodity prices finished mostly lower in October as demand concerns escalated on the back of falling global equity markets and rising US China trade tensions. A strengthening US dollar also weighed on commodity prices. Iron ore, coking coal and gold were notable exceptions.

Iron ore prices rose significantly through October as rising steel prices encouraged steel mills to purchase the steel making ingredient. Mills also looked towards medium grade ores (62% Fe) as
higher grade ores (65% Fe) proved too expensive. Steel prices lifted on the back of actual and proposed cuts to steel output as policymakers look to ensure cleaner air. Steel mills in northern China are facing potential output restrictions from 1 October 2018 to 31 March 2019. While the restrictions are expected to be more severe and widespread than last year, authorities have chosen to be more selective in their capacity cuts. Mills, for instance, that have met environmental standards should be exempt from any curtailments. In any case, iron ore prices will likely be supported over the next few months, like they were when the cuts were enacted last year.

Stronger steel prices prompted coking coal prices higher too, but to a lesser extent than iron ore.

The lift in the gold price was a surprise last month as it occurred alongside a rise in the US dollar. Over the last year, the strengthening US dollar has proven the most accurate predictor of falling gold prices. We think safe haven demand, triggered mostly by falling equity markets, helped keep gold prices supported more than otherwise.

Oil prices declined over 10% in October as demand concerns combined with oversupply fears. Compliance with an accord to sideline 1.8% of global supply amongst OPEC and allies fell to its lowest level in September. That is expected to only have worsened in October. Saudi Arabia and Russia have led production higher, in hopes of offsetting lower production in Iran, Venezuela and Angola. US production also looked stronger than expected, with rising US crude oil stockpiles signalling oversupply.

In the agriculture commodity space:
• Wool prices, continue to fall in October, by about 7%, but still leaves prices at very high levels;
• Cattle prices jumped 10% because rainfall in some dry weather stoked some optimism about more feed being available; and
• And, in the largest move, sugar prices jumped 27% as the worst fears of a heavily oversupplied market receded and investors exited their hefty short futures positions.

Australian house prices
Taken from the CBA Global Markets Research report, ‘CoreLogic Dwelling Prices – October 2018’; first published 1 November 2018.

Dwelling prices in the eight capital cities fell by 0.6% in October. Prices have fallen for 12 straight months and are down 4.6% from their peak.

The falls were driven by Sydney (-0.7%), Melbourne (-0.7%) and Perth (-0.8%) (see table 2). Prices were flat or higher in the other capital cities. Hobart was the standout with prices up 0.9% in the month and 9.7% over the year. Sydney dwelling prices are now down 8.2% from their peak in mid-2017. This takes prices back to where they were in late 2016. Prices in Melbourne are down 4.9% from the peak in November 2017, taking prices back to early 2017 levels.

An interesting feature of the latest dwelling price decline is that prices are falling much faster at the top end of the market. Prices for the most expensive quarter of properties are down 6.9% from their peak late last year. Prices in the middle quartile are down 1.7% from their peak in April and the prices for the least expensive quartile are down just 0.9%. An increase in first home buyer activity is supporting the lower end of the market. The fact that cheaper property prices are falling less than the most expensive is a positive for consumer spending. Households in cheaper properties tend to have lower incomes and their spending is more sensitive to dwelling price falls.

Sales volumes have dropped off sharply since late last year. Sydney sales volumes are back at levels last seen in the early 1990s. This is weighing on state government stamp duty revenues. The auction clearance rate has fallen sharply too and is currently just under 50%.

The RBA don’t seem too concerned about the falls in dwelling prices so far. The falls are occurring alongside a favourable backdrop of above trend global growth and a falling unemployment rate. In a speech earlier this week, Assistant Governor Michele Bullock suggested that steady falls in dwelling prices over a year or more, as we are currently experiencing, is preferable to a short and sharp drop. So far households are taking things in their stride and we haven’t seen signs of a pullback in spending.

In terms of monetary policy, below target inflation and falling dwelling prices mean that the RBA is in no hurry to raise interest rates. CBA economists don’t expect a rate rise until November 2019.

 

 

This document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State). The information, opinions, and commentary contained in this document have been sourced from Global Markets Research, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. Global Markets Research has given Colonial First State its permission to reproduce its information, opinions, and commentary contained in this document. This information was first made available to CBA clients on 1 November 2018 in a CBA Global Markets Research report publication titled, ‘October Month in Review’. Colonial First State is a wholly owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124, AFS Licence 234945 (the Bank). Colonial First State is the issuer of super, pension and investment products. The Bank and its subsidiaries do not guarantee the performance of Colonial First State’s products or the repayment of capital from any investments. While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including Colonial First State, Global Markets Research, or any member of the Bank group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information. This document provides information for the adviser only and is not to be handed on to any investor. This document has been prepared for general information purposes only and is intended to provide a summary of the subject matter covered. It does not purport to be comprehensive or to give advice. The views expressed are the views of Global Markets Research at the time of writing and may change over time. This document does not constitute an offer, invitation, investment recommendation or inducement to distribute or purchase securities, shares, units, other interests, or to enter into an investment agreement. Past performance is no indication of future performance. Stocks mentioned are for illustrative purposes only and are not recommendations to you to buy sell or hold these stocks. This document cannot be used or copied in whole or part without Colonial First State’s express written consent. Copyright © Commonwealth Bank of Australia 2018.

Want more information? Please speak with your financial adviser Mark Giles Mark Giles of Complete Financial Solutions (WA) – Financial Planning (ABN26 050 157 938) is an authorised representative of Financial Wisdom Limited (ABN) 70 006 646 108 AFSL 231138). Alternatively visit our website at completefinsol.com.au or contact Colonial First State Investments Limited at colonialfirststate.com.au or phone 13 13 36. © Colonial First State Investments Limited ABN 98 002 348 352 AFS Licence 232468. This document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) based on its understanding of current regulatory requirements and laws as at 6 October 2016. This document is not advice and provides information only. It does not take into account your individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement available from the product issuer carefully and assess whether the information is appropriate for you and consider talking to a financial adviser before making an investment decision.

How to Avoid a Financial Binge and Starve

Here are our five tips for breaking bad financial habits this holiday season… and keeping your finances on track all year round.

Like the old tune says, ‘it’s the most wonderful time of year’ – but for many of us, it’s also the most expensive. Over one-third of Australians reach for their credit card around Christmas time, racking up an average debt of $1,666.1 So how can you avoid a financial hangover when the New Year rolls around? The best way to break the pattern of a financial binge and starve is to form good spending and saving habits throughout the year. So if you’re already worried about the strain on your wallet this silly season, here are five ways to get your finances in shape for 2019.

1 Plan for the year ahead
While it may seem daunting to think about your next 12 months’ worth of spending, it can help you get a clearer picture of when the most expensive periods will be. That way, you can start preparing for them in advance. You may already have a weekly or monthly budget in place to keep track of your day-to-day cash flow. But if you look at your expenses for the next year, you can start planning for one-off costs like your car registration, insurance premiums or education fees.

2 Save first, spend second
Once you have a big-picture view of your upcoming expenses, you can set up a regular savings plan. Many of us are in the habit of putting aside whatever is left from each pay cheque after we spend, which means we often end up with very little in our savings account. The trick is to reverse this mindset and put aside some savings before you start spending. The easiest way is to set up a regular direct debit from your everyday bank account, scheduled for each payday. With a fixed amount automatically transferred to your savings account, you’ll be able to grow your balance without even having to think about it.

3 Budget for major purchases
If you’ve set your sights on a big-ticket item like a car or an overseas trip, it’s important to be realistic about how much it will set you back. It’s always a good idea to overestimate the cost, so you don’t get caught short. At best, you’ll end up with a little cash left over to add to your savings. And of course, make sure you shop around before buying so you can get the best deal. By figuring out the cost well ahead of your purchase date, you can then work backwards to calculate how much you need to save until then. You could even open up a separate account for your one-off goal so you can keep track of your progress and avoid the temptation to dip into those savings.

4 Be careful with your credit card
If you don’t keep a close eye on your spending, the urge to splurge on your credit card can kick in. Before you know it, you could end up in a debt cycle where you’re repaying interest upon interest. In fact, almost one in five Aussie consumers are behind in their credit card payments, so it’s best to avoid becoming a statistic. Instead of splashing out on each purchase that takes your fancy, it makes financial sense to wait until you’ve saved enough cash to pay for it outright. If that’s not possible, you might look into alternative payment options. For instance, some retailers may let you pay in instalments or enter a rent-to-own agreement.

5 Find ways to cut back
The key to keeping your finances on track is to prioritise your spending. This is especially important during the expensive periods like Christmas – and if you’re a generous gift-giver, you’ll need to tighten your belt in other areas so you don’t blow your budget. Take a look at your regular spending and think about how you can trim it. For example, if you put your daily coffee habit on hold for the month of December, you could end up with around $100 more in your pocket to spend on presents. Or, perhaps there’s an upcoming expense that can wait until January, like the pricey haircut you’ve been planning. And remember, when it comes to getting your finances under control, your financial adviser can help you create a budget and savings plan that works for you all year round.

ONLINE TOOLS TO SIMPLIFY YOUR FINANCIAL LIFE

Technology makes our lives easier in so many ways, so why not use it to improve your financial wellbeing?

There’s no doubt that the internet has revolutionised the way we live, work and play –with many of us now also doing our shopping, banking and even our socialising online. The web is also a rich source of financial information, and plenty of sites offer clever apps and tools that can make it easier to manage your finances. Here are some of our top picks.

Retirement planning
Wondering how much money you’ll need to enjoy a comfortable retirement? ASIC’s MoneySmart website has you covered, with their online Retirement Planner and Superannuation Calculator.

In the Retirement Planner, you can set a retirement age then work out what your retirement income will be from super and the Age Pension, based on your current super balance and contributions. You can even see how your retirement savings will be impacted if you decide to take a career break. Using the Superannuation Calculator, you can then estimate how much further your super could grow if you top it up through salary sacrificing or by making after-tax contributions. There are also a variety of retirement planning apps that you can download to your smartphone or tablet. One example is RetirePlan, which allows you to get a complete picture of your future retirement income. You can also compare different scenarios to see how your nest egg will be impacted if, for instance, you or your partner retire earlier or give your super an extra boost.

Budgeting and saving
If you need help drawing up a household budget, the MoneySmart website offers a handy Budget Planner. With this easy-to-use tool, you can break down your family’s expenses into different categories like utilities, groceries, entertainment and transport. You can then compare your spending against your income to see if you’re on track or if you need to make some cuts. When you’re ready, you can print out your budget summary and maybe stick it on your fridge, so you can check your progress throughout the year. To keep an eye on your spending while you’re out and about, you could try out popular apps like You Need A Budget. This app allow you to synchronise all your bank account and credit card balances with your bills and other expenses so you can see exactly where your money’s going.

MoneySmart also has two great apps – TrackMySpend and TrackMyGoals – that can help you prioritise your expenses, set spending limits and create realistic savings goals.

Property
Whether you’re looking to buy, rent or invest, searching for the perfect property has never been easier. From the convenience of your desktop, phone or tablet, you can now get real-time property market data from sites like realestate.com.au and Domain. With industry listings and insights at your fingertips, you can find houses and apartments in your preferred suburb or region. You can even filter your search results by price, property features, the number of bedrooms and bathrooms, and nearby amenities such as schools or parks. They also have tools to help you work out how much you can borrow, calculate your upfront costs and estimate a repayment plan for your home loan.

Tax
Hate tax time? The Australian Taxation Office has introduced an app to take the headache out of EOFY. With myDeductions you can keep track of your income records and tax deductions as an employee or sole trader, as well as storing photos of all your invoices and receipts. If you’re a business owner, apps like Expensify and Squirrel Street can help you stay on top of your business expenses – from scanning and archiving receipts to generating expense reports. There are also plenty of apps like Mileage Logbook by Driversnote and Travel Logs that make it easy to log and track your work-related vehicle use and mileage.

Investing
Online share-trading platforms have been around for a while, but many of them now have their own apps. SelfWealth users can buy and sell shares directly from their smartphone or tablet, while Stocklight and Simply Wall St allow you to find, research and monitor investment opportunities in just a few clicks. Raiz is an innovative micro-investing app that automatically rounds up your credit card purchases to the nearest dollar and deposits the difference into your investment account. And with the rise of bitcoin, new apps like CoinBase and CoinJar enable crypto-investors to create a digital currency portfolio and trade bitcoin online, with added security to ensure your investment is safe from hackers.

Get the right advice
While online tools and apps are great, remember that your financial adviser is the best resource available to you. Your adviser understands your unique circumstances and can tailor your financial plan to make sure you stay on track towards achieving your lifestyle goals.

To find out more, visit moneysmart.gov.au or ato.gov.au. Other apps discussed in this article are currently available at the time of publishing through the App Store or Google Play. They do not take account of your individual objectives, financial situation or needs. You will need to review the content and relevance of these apps to ensure they are appropriate for you and your circumstances.

Q&As
Answers to some common questions we have recently been asked.

Q: I’ve read that I can’t put any more money into my super once my balance reaches $1.6 million. Does this include the part of my balance that I’ve already used to start an account based pension?

A: While you can still make pre-tax contributions (for example, salary sacrifice), you can no longer make any after tax contributions to your superannuation during a financial year if your ‘total superannuation balance’ just before the start of the financial year is $1.6 million or more.

Your total superannuation balance is measured every 30 June and is the combined value of all of your superannuation accounts, including superannuation accounts in growth / accumulation phase and superannuation income streams (pensions or annuities).

The 30 June account balance of any account based income stream is included in your total superannuation balance (this will be different from the amount used to start your account based income stream).

The amounts of other types of superannuation income streams that do not have an account balance (e.g. annuities and defined benefits), that are included in your total superannuation balance, are determined in different ways. Your financial adviser can assist you in calculating your total superannuation balance.

Note: Additional rules must be met to make contributions to super. To make most voluntary contributions to super you must also be:

  • under age 65, or
  • aged 65 to 74 and meet a work test.

In addition, spouse contributions can no longer be made on your behalf once you reach age 70, regardless of your work status.

Q: I am 45 years old and have a super balance of $150,000. I’ve recently left work to care for my ill mother, and while I’ll receive some income from Centrelink, I’m concerned about missing out on super contributions during this time. I’ve read about a recent change allowing me to catch up on contributions when I return to work – can you explain this new rule?

A: A ‘concessional contributions cap’ of $25,000 applies each financial year to pre-tax contributions (which include an employer’s compulsory Super Guarantee, salary sacrifice, or personal tax-deductible contributions).

Recognising that people in situations like yours effectively miss out on a number of years’ worth of concessional contributions, the Government recently changed the rules to allow eligible people to carry forward unused concessional contributions cap amounts and use them in a future financial year. Access to these unused cap amounts can apply from 1 July 2019 and will be limited to those individuals with a total superannuation balance of less than $500,000 and to unused amounts from the previous five financial years (starting from 1 July 2018).

For you, this change means that when you return to work in the future, you may be able to then make use of any unused cap amounts accrued from 1 July 2018. By making pre-tax contributions that exceed the $25,000 cap by the amount of your unused cap amounts, in one or more years after you have returned to work, you can boost your retirement savings. For example, if you had no superannuation contributions between 1 July 2018 and 30 June 2019, you could make an additional $25,000 of concessional contributions (on top of your usual limits) any time from 1 July 2019 to 30 June 2024.

 

IMPORTANT INFORMATION
This document has been prepared by Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138, (Financial Wisdom) a wholly-owned, non‑guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Financial Wisdom advisers are authorised representatives of Financial Wisdom. Information in this document is based on current regulatory requirements and laws, as at 11 October 2018, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Financial Wisdom, its related entities, agents and employees for any loss arising from reliance on this document. This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. The Q&As in this publication are hypothetical scenarios and for illustrative purposes only. Taxation considerations are general and based on present taxation laws, rulings and their interpretation and may be subject to change. Financial Wisdom is registered with the Tax Practitioners Board as a Registered Tax (Financial) Adviser. However your authorised representative may not be a Registered Tax Agent. Consequently, tax considerations are general in nature and do not include an assessment of your overall tax position. You should seek tax advice from a Registered Tax Agent. Should you wish to opt out of receiving direct marketing material from your adviser, please notify your adviser by email, phone or in writing. This document has been prepared by Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138, (Financial Wisdom) a wholly-owned, non‑guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Mark Giles of Complete Financial Solutions (WA) – Financial Planning (ABN26 050 157 938) is an authorised representative of Financial Wisdom Limited (ABN) 70 006 646 108 AFSL 231138). Information in this document is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Financial Wisdom, its related entities, agents and employees for any loss arising from reliance on this document. This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. Taxation considerations are general and based on present taxation laws and their interpretation and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.