Look for help to get into the housing market

Governments across the country are offering incentives for first-home buyers. You just have to know where to look.

Buying your own home is the largest purchase most people will make in their lives.

However, a long run of low interest rates has fuelled spectacular dwelling price growth, record housing debt and phenomenal asset values, particularly in Sydney and Melbourne. According to the Reserve Bank of Australia, housing prices nationally have increased 7.25 per cent a year, on average, over the past 30 years.

In its Perceptions of Housing Affordability Report 2017, financial analysis and advisory firm CoreLogic says it now takes 1.5 years of household income to save for a 20 per cent deposit on a dwelling compared with 0.8 years 15 years ago.

Nevertheless, there are government incentives to help prospective first-home buyers.
This year’s Federal Budget, for example, proposes allowing individuals to make voluntary contributions to their superannuation to save for a deposit.

It is proposed that super contributions and earnings be taxed at 15 per cent, rather than higher marginal rates. Contributions would be limited to $30,000 per person in total and $15,000 per year and both members of a couple could take advantage of the scheme.

Currently, the NSW and Victorian governments are offer first-home buyers:

  • no stamp duty on all homes worth up to $650,000 in NSW and $600,000 in Victoria
  • stamp duty relief for homes worth up to $800,000 in NSW and $750,000 in Victoria
  • a $10,000 grant for builders of new homes worth up to $750,000 and purchasers of new homes worth up to $600,000 in NSW
  • no duty on lenders mortgage insurance in NSW

Most states have first-home buyer grants, and some are making it harder for foreign investors by increasing duties and land taxes and introducing other measures to reduce competition for first-home buyers.

Seek advice

There are many investment options that can help you build a deposit, but you don’t have to make financial decisions by yourself.

Talk to a Benchmark Consultants to develop a plan that’s tailored to you – Phone 08 9293 2922.

http://www.benchmarkconsultants.com.au

Benchmark Consultants Pty Ltd is a Corporate Authorised Representative 289570  of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429.

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An Age of Housing Complexity

Article in The West PicDid you read our article featured in The West Australian (Your Money section) on Monday 7 April about the Aged Care Reforms?

If not, then read it here:  An Age of Housing Complexity Article – The West 7 Apr 14 


 

Benchmark Consultants Pty Ltd is a Corporate Authorised Representative 289570 of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429

The information contained in this article is general in nature and does not constitute financial advice.  It is recommended you seek appropriate advice for your situation.  Contact Benchmark Consultants on 9293 2922 for further information or to make an appointment.

 

Benchmark nominated for a Community Spirit Award

Benchmark Consultants are proud to announce that we have been selected as a nominee in the 2013 Kalamunda Chamber of Commerce Business Excellence Awards, in award category: Community Spirit Award.

The winners of the award will be announced at a Gala Dinner to be held on Saturday 16th November 2013.

We are very excited to be nominated in the awards and will keep you informed of our progress.

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Property crash ahead? Aussie warning issued

Article By: MPA Online (http://www.mpamagazine.com.au/article/property-crash-ahead-aussie-warning-issued-173071.aspx)

Australia’s level of housing debt could prove to be a ticking time bomb, Standard & Poors has warned. What’s fuelling the agency’s fears? Pre-Cruise 2011 252

According to a Fairfax report, the latest Standard & Poors (S&P) report on Australia’s sovereign debt rating has issued concerns that the country’s high level of household debt could see the property market hit the rocks if economic conditions don’t continue to work in its favour.

The country’s level of unemployment, in particular, was singled out as a factor that could affect the housing market.

“The sustainability of high household debt levels has not been tested in an environment of high unemployment for a long time,” said the report.

“Australian house prices, relative to household incomes, are also elevated. While there has not been a build-up of aggregate excess supply, the housing market continues to appear somewhat vulnerable to a downturn, in our view.”

The overall picture of Australia’s economic health, however, remains cautiously optimistic according to S&P, and its fundamentals are expected to keep its AAA rating intact.

RBA offers hope

The RBA has offered some positive commentary on the property market, with governor Glenn Stevens stating in his opening statement to House of Representatives Standing Committee on Economics that “housing investment should strengthen given that several factors are supportive”.

“Interest rates are low, housing prices are tending to rise, gross rental yields have increased, population growth remains strong and is even picking up a little,” he added, noting, however that “admittedly, we are as yet very early in this phase”.

Stevens also noted that the share of household income devoted to interest payments has declined considerably.

“Indeed housing ‘affordability’ as conventionally measured, for purchasers, has improved a lot over the past two years,” he said.

New Opportunities for State Government Workers

GESB Financial Advice has been wound up as per the State Governments request.  As such, GESB members will now need to seek financial advice from another Financial Planner as GESB can only offer General Advice.

Recommendations from GESB say to seek advice from a Financial Adviser with an Australian Financial Services Licence.  Our recommendation is that you seek advice from a FPA Professional Practice.  A qualified Certified Financial Planner is the best option.  Benchmark Consultants can provide advice under these qualifications and more.

For any former GESB members who now find themselves without Financial Planning advice, please feel free to contact the Benchmark Consultants office on 9293 2922 to arrange an obligation free initial meeting.  We can help you get back on track, with over 25 years experience with government employees, you couldn’t be in better hands.

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The Next 25 Years

The Next 25 years in investment markets are predicted to be very different to the last 25 years.

The focus on using easily obtained borrowed funds to invest into property caused inflated valuations and price bubbles around the Western World, which contributed to the Global Recession. This was more prevalent in Europe and the USA.

Sovereign nations also spent more money than they were receiving in tax revenues to fund pensions, generous welfare and other government expenditure. This has meant that the debts have climbed, in many cases, to unsustainable levels. There are ageing populations in all parts of the world including Europe, China, Japan and to a lesser degree in the USA, Canada, Australia and the Third World. This will have a huge drain on Nations to keep up. Increasing costs to fund generous pensions, health care, pharmaceuticals and residential care accommodation is a problem for all countries.

So what has to happen? Exactly what is happening in Europe right now – a painful period of restructure and repair of the damage done in the last 25 years. Interest rates and inflation are now at uniquely historically low levels around the world. The Fixed Interest Bond investments have had great returns in recent years. However the future looks like they are likely to have poor returns in the near future.

Nichols Bratt from Lizard Asset Management who is based in New York, along with his investment team, manages the Zurich Global Thematic Fund. This week at an Adviser briefing in Perth, Nick spoke about how the Bond Market now looks very dangerous for investors in the near term, being the next 5 years. As economic growth picks up we will see rising inflation and interest rates.  The global market avoided a second recession in 2008, and had the central banks not acted as they did at the time, the result may have been much worse. Now this monetary easing (governments printing money) has left a legacy of cheap money and a lot of sovereign debt.

Equities (shares) now look very attractive around the world due to valuations and also because the income or yield investors are receiving are greater than compared to the Fixed Interest Bond market. Nick said that you have to go back to the 1940’s to see a similar time when this occurred and believes Bonds are currently grossly overvalued. Some investors are buying Bonds knowing they are getting negative yields (minus interest income) just to secure their capital.

Nick said the case for Equities over the next 3 to 5 years is very strong. There have been very few periods in history where equities have had negative growth over a rolling 10 year period. The last 10 years to 30 June 2012 the return was positive 4%pa. However, the 10 year average is 12%pa. Therefore the starting point arguably is now ideal for a strong equities growth over the next 5 to 10 years.

As I have mentioned in my other Blogs, most Fund Managers are now increasing diversification of investment portfolios to minimise volatility or risk and maintain liquidity. This is done by building portfolios around 8 to 12 big ideas such as what the Zurich Global Thematic Share fund is doing.  Nick Bratt said that these ideas are not highly correlated, as industry sectors tend to move together. Therefore being lowly correlated you are lowering investment risk further for investors.

The Zurich fund has 4 new themes Lizard Asset Management is looking to.

The first theme is US Renaissance. This is because of increased use of robotics and new advances in technology in manufacturing, making the USA companies more competitive compared to China and the rest of the developing world. This is particularly the case as rising labor rates in China are now occurring. The other important reason for the US Renaissance is the development of franking of shale oil which is producing natural gas. This will provide the US with cheap energy, thus moving away from coal and imported oil. The vast reserves will make the USA energy self-sufficient and a net exporter of energy. It is estimated that there are reserves in the USA to meet over 100 years of energy needs.

The second theme is the growth of the internet giants that have survived the tech bubble, including AMAZON with the increasing online shopping; GOOGLE for the search engine capability; VISA Card benefiting from online purchasing and another potential investment is FACEBOOK as a source of hundreds of millions of people’s personal information; but only if they work out how to monetarise this.

The third theme is secure streams of income from companies who are realising strong cash generation, such as industrial gases company Global French and company Air Liquid that has 22% world market share.

The fourth theme is companies who are strong in intellectual capital and can monetarise these ideas. Such as Monsanto who produce seeds and plants for food and other agriculture, and Pearson’s – a British education publication company.

Some continuing themes in the Zurich Global Thematic Fund that Nick Bratt spoke about were gold and precious metals. Sovereign governments who continue to print money are devaluing their currencies. Gold is a commodity that is holding its value, due to new resources being in scarce supply. The other theme is Japan and its equity market that is grossly undervalued. Somewhere in the vicinity of 65% to 70% of Japanese listed companies have more cash in the bank than what their market capitalisation is valued at on the sharemarket. Japanese companies are cashed up and in a very strong financial position. The huge Japanese sovereign debt, which is now over 200% of GDP, is largely owed to the Japanese people themselves in their pension funds and life companies and not foreign nationals or nations. So the sovereign risk for this debt is negated as the people own it themselves.

With the currently high Australian dollar, it is an excellent time for investing in overseas foreign investments, due to its current purchasing power. With the historically low valuation of equities internationally, the opportunities for investment is very good. By utilising the expertise of fund managers such as Lizard and managed funds such as the Zurich Global Thematic Share fund, investors get the benefits of investment diversification that produce lower risks and excellent investment growth prospects over the next 5 to 10 years.

As always, investment decisions involve a process of matching what is appropriate for the individual investor’s time frame, investment risk profile, objectives and personal circumstances. Engaging a Certified Financial Planner to provide advice in relation to your investment planning is the sensible approach to take.

 

If you are seeking Financial Advice from a adviser who runs their own Financial Planning Practice, and is not commission remunerated, then contact us at Benchmark Consultants on 92932922 for a complimentary initial meeting to discuss your needs.

Peter Stewart the Principal of Benchmark Consultants is a Certified Financial Planner. Benchmark Consultants has been accredited as a Professional Practice of the Financial Planning Association (FPA). Benchmark Consultants is a corporate representative #289570 of Australian Financial Services Ltd AFSL#297239

http://www.benchmarkconsultants.com.au

Phone: 08 9293 2922

Email: info@benchmarkconsultants.com.au

FP Week 2012

FP Week 2012

Making the time to manage your finances is extremely important. Whilst financial information is avaliable from many diferent sources such as banks, accountants, superannuation funds and more, seeing a Certified Financial Planner is more valuable than these other avenues combined.

Take this opportunity to speak to a Financial Planner.  Call Benchmark Consultants on 08 9293 2922.

Consumer Confusion about Superannuation Offers

With all the volatility over the past 5 years with the investment and financial markets, plus the constant criticism of the different Superannuation alternatives being blatantly broadcast on TV and in the press, it is understandable that everyday people are lacking in financial confidence.  It is important to understand that just because something is advertised in the media, does not make it the best choice for every person’s individual situation.  This is why it is important to get some professional advice on finance and investment, preferably from a Certified Financial Planner.

Consumer confusion is gaining momentum due to the current turf war occurring between peek industry bodies vying for membership. Bank and independently owned Financial Planning dealer groups are spruiking their offers. Accountants, financial brokers and real estate agents are promoting investment strategies. The majority of industry Super funds are largely run by Unions, having their biasness and the various Financial Planning Industry and Professional bodies are all arguing amongst themselves. No wonder we are all confused and consumers are selecting products not right for them.

The general feeling amongst everyday people at this point in time seems to be:

 “I wonder if I am positioned correctly for my retirement.”

“Do I have the correct structure for my investments?”

“Should I be in an Industry Super Fund, or a Public Offer Super Fund or set up my own Self-Managed Super Fund (SMSF)?”

Advice regarding Superannuation is becoming very competitive across the financial advice industry and other peak financial bodies.  The new Future of Financial Advice (FOFA) legislation has passed and is now Law. People claiming to give financial advice need firstly to be licensed and regulated though ASIC and they also must act in the best interest of their clients. Advisers who are not paid commission by the product providers, but paid a fee for advice and ongoing client services is the more certain way that the advice will be appropriate for the client’s needs and objectives.

If you are seeking Financial Advice from a adviser who runs their own Financial Planning Practice, and is not commission remunerated, then contact us at Benchmark Consultants on 92932922 for a complimentary initial meeting to discuss your needs.

Peter Stewart the Principal of Benchmark Consultants is a Certified Financial Planner. Benchmark Consultants has been accredited as a Professional Practice of the Financial Planning Association (FPA). Benchmark Consultants is a corporate representative #289570 of Australian Financial Services Ltd AFSL#297239

http://www.benchmarkconsultants.com.au

Phone: 08 9293 2922

Email: info@benchmarkconsultants.com.au

What Is Old, Is New Again …

What do Greece, Asia, South America and Russia have in common? The have all been through the same economic troubles at some point in their history.

This is not to say that what is currently happening in Greece and Europe is not unnerving and creating great worry amongst clients who are concerned about their retirement investments.

Investors must remain disciplined and have a diversified investment portfolio in quality assets including; shares, property, fixed interest and cash.  It is inflation which will cause a loss of capital when income is needed and your investments aren’t growing over the long term to keep apace.

If you have a diversified investment, with 70% to growth assets, there is a 32% chance that your savings will run out in 30 years.  If you had another diversified investment, with only 50% in growth assets, you increase your chances of running out of money over 30 years to 85%.  – Source:  Millman Research Report, May 2012

Studies undertaken in the US have shown that investors sticking to a long term disciplined and consistent approach to investing despite volatility made 11.8% where those driven by emotional decisions only achieved 4.3%.  – Source: Daybar Inc Experience of United States investors in equity mutual funds, compared to S&P 500 20 years to 2008

At this time investors should be looking at undervalued investments which demonstrates a good investment growth potential and produces good income returns.  Companies such as; BHP, National Bank, Woolworths, Woodside and Westfield, in other words, companies which are still likely to be around in ten, twenty, thirty years’ time.

It is important when investing for the long term that making emotional decisions based on short term market volatility and uncertainty, can have a disastrous impact on achieving your long term investment goals.  Take heed and think carefully before making any rash decisions based on current world economic woes.

INTERESTING FACT:  The average 60 year old now has at least another 30 years to live. – Source: Australian Life Tables 2006-08

If you really are concerned about your current portfolio for the long term, please feel free to contact us to discuss you investment strategy relative to your long-term goals and investment risk profile.

Call 92932922 or email info@benchmarkconsultants.com.au to make an appointment.