RI Toowoomba & Ipswich ISSUE

03 SEPT 2016

Jeff ’s Jottings

In a continuing trend for

the year, August saw the

Reserve Bank o f

Australia lowering the

interest rate to 1.50%;

the lowest ever recorded.

We often hear about the

positive consequences to

borrowers but what about

investors? Our article on

page 4 is valuable

reading whatever your

stage in life.

RI Toowoomba has

f a r e w e l l e d H u g h

Robinson, one of our

Financial Advisers, as he

b e g i n s h i s n e x t

adventure in retirement.

We thank him for his

commitment to the best

interests of his clients

over the last 6 years and

extend our best wishes

to him and his wife Liz for

the future.

Kind regards,

Managing Director and

Senior Financial Adviser

RI Toowoomba & Ipswich

Economic Overview

Market Highlights

Share markets bounced strongly

despite the rise in geopolitical events.

Bond yields remained well supported

by central bank policies.

Slowdown in US growth disappointed

expectations for a second quarter

rebound.

Edging Higher

In July share markets shrugged off the

volatility which followed geopolitical events

including Brexit and the failed coup in

Turkey. The US share market (S&P 500

index) reached a record high of 2175 as

investor risk appetite returned.

All this occurred in a month where the

economic environment was generally soft,

led by disappointing growth in the US. The

US economy grew at an annualised rate of

1.2%, well below the market consensus of

2.6%.

Despite a strong lift in personal consumption,

which rose at an annualised pace of 4.3%,

private domestic investment and inventories

dragged growth lower. The US Federal

Reserve (Fed) also opted to keep rates on

hold as a slowdown in economic momentum

justified a more cautious stance towards

tightening monetary conditions.

Elsewhere in Europe, growth drivers

continued to show a pace of gradual

expansion with second quarter GDP for the

region at 1.6%. In the UK, confidence

deteriorated as the consequences of Brexit

point to a slowdown in economic momentum.

Across in Japan, economic data remained

soft as indicators of inflation continued to

slide back. This prompted the government to

announce further fiscal stimulus - ¥28 trillion

over the next several years.

In China, credit growth remained strong,

continuing to provide support to the industrial

sector of the economy. Second quarter GDP

growth of 6.7% (year on year) exceeded

market expectations as government policies

took effect. That said, the economy is

continuing to progress towards allowing

consumption and service sectors to hold a

greater share of growth. The government

remains committed to cutting excess

capacity in materials production.

In Australia, the dataflow was generally

softer as measures of consumer sentiment,

building approvals and credit slowed. The

prospects of a hung parliament eased when

it became clear the Turnbull government

could form an absolute majority.

Weaker inflation pressures followed the

release of second quarter core measures of

inflation which showed it to be rising at an

annual pace of 1.5%, well below the RBA’s

target band of 2-3%. This prompted the RBA

to cut interest rates by 0.25% in August in a

bid to restore inflation and support underlying

growth, especially at a time when the

housing market appears to be easing.

Shares

Share markets responded well to the

improved risk environment and continued

central bank support. Continued on page 2

In this Issue

Economic Overview P.1

Hugh Robinson Retires P.2

Insuring Your Biggest Asset P.3

Utilising Lower Interest Rates P.4

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. RI Advice Group Pty Ltd strongly suggests that no person should act specifically on the basis of the information in this dFrom time to time we may send you informative updates and

details of the range of services we can provide. If you no longer wish to receive this information please contact our office to opt out. Please note that there is certain information that we must send to you as part of our contractual arrangements or we are required to send to you by law.

647 Ruthven Street, TOOWOOMBA QLD 4350 | PO Box 1615, TOOWOOMBA QLD 4350 | 07 4639 3733 | enquiries@ritoowoomba.com.au

Visit us on the web: www.ritoowoomba.com.au | Find us on Facebook: RI Toowoomba and Ipswich This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. RI Advice Group Pty Ltd strongly suggests that no person should act specifically on the basis of the

information in this document, but should obtain appropriate professional advice based on their own personal circumstances including a personal financial advice from a licensed financial adviser.

RI Advice Group Pty Ltd | ABN 23 001 774 125 | AFSL 238429

Utilising Lower Interest Rates

While lower interest rates are great for those with mortgages, it does not suit everyone and can make

things a lot more difficult for those needing income in retirement.

Here we look at how you can make the most of the current low interest rate environment, whatever your stage in life and

financial goals.

If you are an accumulator focussed on paying down debt and building wealth

With interest rates now at record lows, paying down your mortgage as quickly as possible is an excellent way to pay off your

debt. Keeping your repayments the same when rates go down, or even paying a bit extra each month, means you pay off

more of your principal, which helps you to build up a buffer when interest rates inevitably rise.

Changing your payment frequency to weekly, instead of monthly, will also help you to use the magic of compounding to pay off

your mortgage more quickly.

This is an excellent strategy for all homeowners to consider, but speak to your financial adviser and mortgage broker before

you make any big decisions, just to check your intentions will have the desired result.

If you are a pre-retiree looking forward to a worry-free lifestyle

With interest rates expected to stay low for some time, having an appropriate retirement plan in place as early as possible is a

good idea for all pre-retirees.

This allows you to concentrate on the things you can control – such as increasing your contributions to super, paying off your

mortgage or reducing your spending – all of which can help make a big difference to your income and expenses in retirement.

You may also need to adjust how you view risk, through increasing your allocation to growth assets, in order to give yourself a

chance to generate enough income for a comfortable retirement.

Your financial adviser can talk you through this strategy and other options you have for putting everything in place for your

retirement.

If you are retired and managing a careful budget

Low interest rates mean that cash investments and term deposits are now returning less than what many have received in the

past. Retirees should look at other income options, one of which is high interest cash accounts. These offer up to 1 per cent

more interest than cash investments and term deposits, which can make a difference to your retirement income.

However, it’s important to look at these carefully, as some require a minimum monthly deposit, or have a higher interest rate

initially, that tapers off to a lower interest rate once the new customer ‘honeymoon’ period ends.

Depending on your risk profile, other investments that could help increase retirement income in the current market you could

consider are a diversified bond fund, given bond yields are rising, or perhaps quality, high-dividend paying Australian shares.

Planning is key

With interest rates not expected to rise in the near term, it’s important that you start planning now to help you pay down debt

and grow your wealth.

According to the Association of Superannuation Funds of Australia1, you would need $729,000 at a return of 6 per cent over 20

years to generate $60,000 in income each year. Based on a return of 2 per cent, this figure rises to $1 million.

A qualified financial adviser can help you to design an appropriate financial plan to help you make the most of what you have

in this low interest rate environment, whatever your stage in life.

If you have any questions or concerns, please take the opportunity to speak with your Financial Adviser on 07 4639 3733.

Source: 1 http://www.superannuation.asn.au/

Jeff English

Become our

Facebook fan before

31 October 2016 for

your chance to

WIN A $50 COLES/MYER

GIFT CARD

Simply search Facebook

for “RI Toowoomba and

Ipswich” and Like our

page for your chance to

win. Not a client, no

p r o b l e m ! T h e

competition is open to all

Australian residents.

OUR PEOPLE

We recently welcomed

May Keene to the Client

R e l a t i o n s a n d

Administrative Team at

RI Toowoomba. We are

already enjoying her

friendly personality and

we are confident that you

will too.

Are You Insuring Your Biggest Asset?

With the majority of Australians still dangerously underinsured, is it time you

reviewed your cover?

Tim is a clean-living 53-year-old who exercises regularly, doesn’t smoke, enjoys a healthy diet

and only indulges his love of good wine at the weekend.

Yet things changed suddenly for Tim last year when he awoke one night to find he couldn’t

breathe. His wife called for an ambulance and he was rushed to hospital, where he was taken

into life-saving surgery following a heart attack.

After waking from his operation, Tim was in deep shock. While he knew there was a family

history of heart disease, he had gone to great lengths to prevent the onset of the illness and

had not properly thought through how his family would cope without him.

During his recovery, Tim reviewed the life insurance component of his super and discovered

that in the event of his death his family would receive just $300,000, which would barely pay

off their mortgage. He had not taken into account daily living expenses, car loans, his

daughters’ school fees, his wife’s low income or their inadequate savings.

Fortunately for Tim his story is a positive one. Now in better health and back at work, he has

spoken to a financial adviser and taken out additional life insurance, albeit at a significant

premium following his heart attack. He and his adviser are also looking into critical illness

cover, which would pay out a lump sum should he suffer another sudden illness.

In Australia, Tim’s story is not uncommon. In fact, surveys have shown Australia has much

lower levels of insurance than other developed nations including the US and UK1. The

required level of life insurance is now about $680,000, while the typical default cover is about

$258,000 – a significant gap2.

Could your loved ones make ends meet if you were unable to work or died? Here are some of

the things you should consider:

Mortgage or rent costs

Daily living expenses – food, bills, transport

Childcare, school and university fees

Medical expenses

Other expenses – house repair costs

Are you adequately covered? We can assist by discussing your personal circumstances and

assessing your current insurance cover.

Source: 1 Lloyd’s Global Underinsurance Report 2016

2 Rice Warner Underinsurance Research Report 2014

CAMBRIDGE

UNIVERSITY

WORKSHOP

In our June quarter

N e w s l e t t e r , w e

announced that RI

T o o w o o m b a w e r e

recognised with the

highly regarded Platinum

Award for 2015. As a

result Jeff English

qualified to attend a

business workshop at

Cambridge University,

UK, at the end of May.

Workshop sessions

focused on business

development, reaffirming

a high standard of

professionalism in an

o f t e n c h a l l e n g i n g

industry. Sessions

included developing

psychological safety and

trust, building high

pe r f o rm in g t eam s ,

awareness of one’s own

impact on others and

emotional intelligence

and perception. Jeff has

returned with refreshed

insights that he can

model both with clients

and within our team.

These development

opportunities are one of

the keys to ensuring the

RI Toowoomba team

remain leaders amongst

our peers.

Hugh Robinson Announces Retirement

Continued from Page 1

Global developed share markets were up

4.1% in US dollar (USD) terms. European

shares were up 5.1% in local currency terms

as concerns of Brexit contagion were eased

by the prospect of possible intervention by

the European Central Bank. That said,

concerns of an undercapitalised Italian

banking sector still highlight some risk factors

in the region.

The UK market (FTSE index) rose by 3.4%

as a depreciation of the British Pound (GBP)

favoured companies with offshore earnings.

In the US, a solid reporting season resulted

in most companies beating guidance which

took the US market to new highs.

In Japan, the market rose 6.2% on

increasing prospects for the Bank of Japan to

announce further economic support. The

Australian share market outperformed other

developed markets, up 6.4% in the month as

a strengthening in bulk commodity prices

including iron ore and thermal coal drove the

resources sector sharply higher.

Emerging market shares were up 4.7% in

USD terms supported by the Fed remaining

on hold for longer. An improvement in

sentiment also resulted in a return of

investment flows back towards this region.

Commodity producing countries like Brazil

and South Africa continued to benefit from

higher bulk commodity prices.

Bonds

Bond yields generally remained low as

central banks continued to favour monetary

easing over tightening. A lower growth

outlook, and with it inflation, has been priced

into the lower yield dynamic. US 10-year

bonds fell 0.2% to 1.45%. Core European

longer-term bond yields continued to fall as

many markets recorded negative yields.

Global fixed income returned 0.7%.

Australian fixed income performed in line

with global bonds this month as expectations

of further monetary easing resulted in a

strong return of 0.7%.

Currencies

The ‘risk on’ environment generally saw a

softening in the USD against most major

currencies, particularly as the Fed showed

their preference to keep rates on hold for

longer. Emerging market currencies

continued to find support in this environment.

The Australian dollar (AUD) rose by 2.0%

which hurt returns from unhedged

investments. The New Zealand Dollar (NZD)

was up 0.9% following a bounce in milk

prices.

Source: ANZ Wealth Chief Investment Office, ‘Market Watch

July 2016’ <onepath.com.au> 15 August 2016.

OnePath Funds Management Limited (OFM) ABN 21 003 002

800 AFSL 238342. OFM is a wholly owned subsidiary of

Australia and New Zealand Banking Group Limited (ANZ)

ABN 11 005 357 522 but is not a bank.

It is with warm wishes that we announce the retirement of Hugh Robinson in August.

Having worked in the financial services industry since 1988, Hugh has been a respected

Financial Adviser in the RI Toowoomba office for the past 6 years. We have all benefited

from his life experiences, astute nature and calming presence. Hugh will be missed by

clients and colleagues alike.

We know that you will join us in expressing our appreciation to Hugh who deserves to

enjoy his retirement years.

Jeff English (left) congratulates Hugh Robinson

(right) on his retirement announcement.

The RI Toowoomba Team honoured Hugh’s contributions by enjoying

lunch together, along with Hugh’s wife Liz.