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Super funds set to deliver again in 2020

Super members have good reason to be optimistic about what 2020 might deliver to their balances but they should not expect the same fat returns as last year, a research house says.

SuperRatings says 2019 was the best year for superannuation funds since 2013, with the median balanced option returning 13.8 per cent.

Despite a December sell off in local shares, funds entered the new year in a strong position, it said.

“We’re anticipating a solid year for super in 2020, but the key challenge for funds will be the low return environment,” SuperRatings executive director Kirby Rappell said.

“Even with the possibility of a pickup in economic growth, yields are extremely low and it’s getting harder to find opportunities in the market.”

He said it will be more challenging fundamentally than in 2019 because company earnings growth was slowing, and Australian consumers are under pressure.

“That doesn’t mean it will be a bad year, but super members should not expect to bank another 13 per cent.”

For people already retired, pensions performed well in 2019.

The median balanced option returned an estimated 14.9 per cent over 2019, compared to 18.2 per cent for the growth option and 8.0 per cent for the capital stable option.

There were a number of mergers in 2019 and SuperRatings expects more in 2020 as funds come together to achieve greater scale.

Disclosure Statement: ClearView Financial Advice Pty Ltd ABN 89 133 593 012 AFSL No. 331367 | Matrix Planning Solutions Limited ABN 45 087 470 200 AFSL & ACL No. 238256. Head Office: Level 14, 20 Bond St, Sydney NSW 2000 General Advice Warning: This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication. You should read the Product Disclosure Statement (PDS) before making a decision about a product.

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Retail spending climbs 2.4 pct in June

July 22, 2020

Derek Rose

(Australian Associated Press)

Retail sales in Australia rose a solid 2.4 per cent in June, as people flocked to reopened cafes and restaurants and spent more on clothing in the first full month of trade since the lockdowns ended.

Turnover for the month rose to $29.7 billion and was up 8.2 per cent from a year ago, according to preliminary figures released by the Australian Bureau of Statistics on Wednesday.

The overall rise in June comes on top of a huge 16.9 per cent jump in May, which followed a record 17.7 per cent fall in April.

“Households seem to be transitioning to a ‘new normal’ of spending, where elevated retail spending replaces expenditure on travel and entertainment,” ANZ economists Adelaide Timbrell and Catherine Birch wrote in a research note.

Cafe, restaurant, and takeaway food service spending jumped more than 20 per cent for the second consecutive month but was still 17 per cent below the level in June 2019.

Clothing, footwear, and personal accessory spending gained 19 per cent, but remained six per cent lower from a year ago.

Food retailing rose 0.9 per cent, as a rise in supermarkets and grocery stores spending was offset by a fall in liquor retailing, the ABS said.

There was some evidence of stockpiling at the very end of June, particularly in Victoria, which has reimposed lockdowns in parts of the state.

St George Banking Group chief economist Besa Deda says the figures are encouraging, as retail spending represents a large part of economic growth.

But she cautioned that “the recovery that is underway is fragile, it is vulnerable to further shocks, and that’s related to consumer confidence.”

There might be further falls in July as pent-up demand subsides, but overall household good spending was well above pre-COVID levels, Sarah Hunter, chief economist for BIS Oxford Economics, said.

Household goods retailing fell in June but remains 23 per cent above June 2019 levels, the ABS data showed.

This confirms that consumers are substituting spending on services – particularly travel – towards retail goods.

“Looking ahead, overall spending is likely to remain elevated in the very near term, with households likely to continue to substitute retail goods for services (conversely, spending in cafes and restaurants will remain subdued),” Ms Hunter wrote in research note.

But the longer term will be more challenging, with the tapering of the JobKeeper and JobSeeker schemes expected to weigh on household spending from October, she added.

Job losses recently materialising in the construction and professional services sectors are also likely to be a drag on retail spending, Ms Hunter said.

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Making super and investment decisions: Four tips during COVID-19 and beyond

Money Smart (ASIC)

During these uncertain times, you might be nervous about your investments. It’s important to consider your long-term goals and make well-informed decisions.

Here are some steps to take with your super or investments in shares to ride out ups and downs in the investment markets.

1. Avoid focusing on market volatility

When investment markets are volatile, it can be a good time to review your investment strategy. But don’t make any rash decisions based on recent market falls.

Some investors panic when markets fall and decide to convert all their investments to cash. However, this means you lock in your losses and you miss out on any investment market recovery. Markets typically recover over the long-term.

Diversification across a broad range of asset classes is the best defence to ride out the ups and downs in the markets at any time.

Super in an uncertain investment market

If you’re concerned about your super balance taking a hit, remember super is a long-term investment. Over time it will recover from the ups and downs in investment markets.

If you’re close (5 years or less) to retirement, understand your retirement income options, take your time and avoid hasty decisions.

Consider getting financial information and guidance from:

2. Don’t try to time the market

It’s not a good idea to sell shares or other investments based on daily headlines.

Even the most skilled and experienced investors have difficulty predicting the best time to buy and sell. You might sell your investments only for markets to recover soon after.

Holding onto your investments, even during downturns, can be an effective strategy if your financial goals and situation haven’t changed.

3. Review your financial goals

Unexpected events can impact your financial goals.

Talk it over with your family, consider your long-term goals and only make well-informed decisions

If you’ve become unemployed, for example, you might need to cash out some of your investments for short-term expenses. Only do this if you have no savings to draw on and have explored all other options such government support and applying for financial hardship.

If you do have to draw on your investments, only cash out some of them, if you can. That way you can minimise your losses and still have some money invested when the market begins to recover.

If you’re using a financial adviser, now is a good time to ask them to review your financial plan.

4. Beware of investment scams

Beware of cold-calls and unsolicited investment offers and the promise of big returns. If it sounds too good to be true, it usually is.

Making hasty decisions, like panic selling or buying shares, can make you more vulnerable to investment scams.

Scammers exploit fear with fake investment offers promising to recover your losses.

Disclosure Statement: ClearView Financial Advice Pty Ltd ABN 89 133 593 012 AFSL No. 331367 | Matrix Planning Solutions Limited ABN 45 087 470 200 AFSL & ACL No. 238256. Head Office: Level 14, 20 Bond St, Sydney NSW 2000 General Advice Warning: This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication. You should read the Product Disclosure Statement (PDS) before making a decision about a product.