If you study any formal course in finance it won’t be long before you are faced with the concept of “time value of money”.  What it means is that there is a cost to the delay in receiving money, and so we say that “a dollar received today is worth more than a dollar received in the future”.

There are two reasons why it is better to receive a dollar today than a dollar in the future.  First, if you receive a dollar today, then you can invest it and get an additional return.  Second, there is always a risk that you will receive less than promised, or nothing at all.

For more numerate readers, that you might consider accepting 97 cents now, rather than $1.00 in a year time.  If with certainty, you could earn 3 cents in interest over the year, then (taxes aside) you would be just as well off taking the 97 cents now, as waiting a year for your $1.00.  If you could pay off a loan, say a credit card, with the money received now, you might be as well off taking 85 cents now, rather than wait a year and pay credit card interest.  Essentially, the more risk you might not receive the money in the future, and the greater the return you can gain from investing the money now, the less you would be prepared to accept now.

So in finance, time has a clear monetary value and as touched on above, the methods of working out that value are well-established.  But what about other ways of putting value on time?

Applying the time value of money concept, it’s quite clear that getting something signed off or delays in finishing a project can be costly.  That’s probably obvious when considering large constructions – delays in finishing a big hotel (for example) mean there is a lot of money sitting around earning nothing – but it applies just as much to day to day activities that we all undertake at work.

When the tax office stuffs you around, when the local council continues to vacillate over an approval, when legislative changes or indecision prevents you from making a choice, all of these things create risk and delay.  They stall the receipt of revenue, they create project risk and the burn time you could be spending on other things.  Sometimes these delays and problems are so bad that they involve employing additional people.  Overall, the delays themselves make it more expensive to do business.

Perhaps the monetary side of that is obvious, but there are personal and social costs too.  Not building an efficient road network or a high speed rail link between Sydney and Melbourne steals people’s time.  Small amounts each trip perhaps, but over one’s life, time that adds up – time that could be spent with the family, time spent fishing or at golf, time spent blowing the froth off a few with good friends.  Perhaps that sounds trite, but I put it to you that those people who create delay, who don’t do their jobs well, who don’t care, who give you the run-around, who are attending to their personal stuff while charging you, who go on strike during your holidays, these people are stealing your life.

In an era where for many of us work is demanding, and responsibilities of all types high, it’s time we started to take a stand on time-thieves.  It’s time business recovered some of the ability to select and fire employees, to insist that Government departments and officers are held accountable, simply to enforce the social contract implied through employment and regulation.  Failure to do this means business operators will have to change more and more for producing the same goods and services, and those that cannot will simply drop out.

That’s what you can look forward to if the current combination of individualism, workplace bias, and allergic reaction to productivity improvements is not addressed.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before acting on anything in this article you should consider its appropriateness to you, having regard to your objectives, financial situation and needs.

I’m looking to shed some light on insurance claims and hopefully shatter some illusions that insurance companies never pay claims.  We’ve all heard at least one horror story about an insurance company not paying a claim.  The most recent you may recall is the CommInsure scandal as reported by Four Corners in March 2016.  The story reported that claimants had suffered a trauma event, illness or injury and somehow did not meet the required definition to receive payment.

A recent independent study, across the main 13 insurance companies in 2015, shows they paid almost 90,000 claims totalling $6.9 billion.  These figures are up from 75,000 claims, totalling $4.9 billion in 2014.  This is a staggering increase in just one year, and it has been consistently rising in recent times.

Additionally, the insurance Big 5 stood up to their devastating reputation yet again in 2015 as leading causes for claims across all types of life insurance.  The Big 5 include: cancer, heart disease, mental health (e.g. stress, depression, anxiety), musculoskeletal (e.g. Osteoporosis, broken bones, torn ligaments) and neurological (e.g. Alzheimer’s disease, Multiple Sclerosis, dementia).

This year alone I have assisted with six new claims and one ongoing claim.  That’s one per month on average.  Six of these claims fell into the Big 5 category.  It’s so gratifying to know that these clients and their families are covered should the unexpected occur and their insurers have fulfilled their promises by paying the claims.

Something to contemplate when considering your own situation, how many of those 90,000 claimants do you think expected to claim?  How do you think their dependants would have fared if they didn’t receive the claim proceeds?  How will your dependants fare if you’re not insured?

To make sure you don’t become the next horror story, be sure to follow these three tips:

1. Don’t give insurance companies a reason to not pay a claim – be truthful on your application form and disclose all pre-existing conditions.
2. Consider taking out a level premium option – this means your premium will be the same price year-to-year, only increasing with CPI. By doing so, you will be able to hold the policy longer when your risk of claiming increases.
3. Speak to an adviser – in most cases where an insurance company has not paid a claim the claimant has not had an adviser. An adviser will be able to assist you in making the right choices when considering life insurance.

If you or anyone you know have any questions regarding their own situation and are considering taking out or making changes to life insurance, please contact us know.  It would be unfortunate to see you make the same mistakes others have made before you.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before acting on anything in this article you should consider its appropriateness to you, having regard to your objectives, financial situation and needs.

Due to a curiosity for all things medical (and ongoing professional development requirements!), I recently attended a seminar in relation to underwriting and claims. Part of the presentation focused on diabetes which is becoming more prevalent in Australia, and is of increasing concern for life insurers from both an underwriting and claims perspective.

The facts:

With approximately 1.2 million people currently diagnosed with either Type 1 or Type 2 Diabetes, and an estimated 500,000 others who are undiagnosed with Type 2 diabetes, this chronic condition is becoming one of Australia’s greatest health issues.

Type 1 diabetes (known as insulin dependent diabetes mellitus or juvenile diabetes) is an autoimmune condition which is typically diagnosed under the age of 30, but can occur at any age.  Type 1 diabetes is often linked to family history and requires lifelong insulin replacement, usually via injections.  Insulin is a hormone produced by the pancreas which converts the glucose from food, and turns it into energy.  Type 1 diabetics create little or no insulin of their own, due to damage to the cells in the pancreas that produce insulin.

Type 2 diabetes (non-insulin dependent diabetes mellitus or adult-onset diabetes) is usually caused by genetic or lifestyle factors, and is a progressive condition whereby the sufferer develops resistance to the effects of insulin, and/or gradually loses the ability to produce enough insulin in the pancreas.  Type 2 diabetes represents up to 90% of all cases, and usually diagnosed over the age of 45, but is increasingly being diagnosed in children, teenagers and younger adults.

In Australia, 280 people per day will develop diabetes which is around 1 in every 5 minutes!

The impacts:

• The estimated annual cost of diabetes in Australia is $14.6 billion.
• 40% of Type 1 sufferers will develop serious kidney problems leading to kidney failure prior to age 50.
• Diabetic Retinopathy damages the blood vessels in the eyes and is the leading cause of blindness in adults.
• Diabetic Nephropathy damages the filtering units in the kidneys and is the leading cause of renal failure.
• Diabetics have a 2 to 4-fold increase in the risk of stroke or death caused by cardiovascular events.
• 8/10 diabetics will die from cardiovascular failure.
• Diabetes can lead to damage to the peripheral nervous system in the feet and hands known as diabetic neuropathy.
• High blood sugar can damage and weaken blood vessels in the limbs causing them to narrow and reduce the circulation of blood around the body, resulting in the death and decay of tissue. The only treatment is available is amputation of the affected body part.

Diabetes and insurance

Due to the long-term complications of diabetes, obtaining personal insurance cover when the illness is an existing condition, or there is a strong family history, can be difficult.  An underwriter may decline the application, excluding the illness, or increase the premiums for the cover.

The increasing presence of diabetes in Australia highlights the need for adequate personal cover.  Many of the insurers offer benefits under their Trauma policies for the diagnosis and complications arising from Type 1 and Type 2 diabetes.

If you would like to learn more about our life insurance services, please contact us today. One of our friendly advisers would love to speak with you.

With interest rates at historical lows, investors now have to work extra hard to achieve a decent return on their money. But don’t forget that it is the after-tax return that counts – which is why investors with money invested in Australian shares can benefit from gaining an understanding of the Dividend Imputation System and how Franking Credits work.

Dividend imputation was introduced in July 1987, one of a number of tax reforms by the Hawke/Keating Government. Prior to that shareholders suffered double taxation on their dividends. That is, first the companies paid tax on any profits they had made, then the shareholders were taxed again at their marginal tax rate when they received these tax-paid profits in the form of dividends. This double taxation was overcome through the introduction of the Dividend Imputation System.

The word “impute” means to “give credit for” and this is exactly what the imputation system does. It allows shareholders to receive credit for the tax already paid by the company at the 30% company tax rate, and pay tax only on the difference between that and their own tax rate. This means for an individual on the top marginal tax rate of 49% (including Medicare & Budget Repair Levy) will only pay the difference which is 19%.

Since 2000, provisions have been made to receive franking credits back as a tax refund where the tax rate is less than the company rate. Therefore, for a super fund in pension phase, where the tax rate is nil, the full franking credit will be refunded by the tax office.

Let’s take a look at this concept in more detail by using an example.

The Beauty of Franking Credits

Company XYZ Holdings Pty Ltd makes a profit from its business activities of $10,000 which is fully taxable. It pays tax at the current company tax rate of 30% which equates to tax paid of $3,000, leaving a $7,000 after-tax profit. The company can either reinvest some or all of this money back into the business or pay out some or all to shareholders as a dividend. In this example, XYZ Holdings Pty Ltd decides to pay out all profits to shareholders.

If there are 10 equal shareholders, each receives an after-tax dividend of $700, with a $300 franking credit attached (the tax paid by the company). Since the profits associated with the dividends have been fully taxed, the after-tax dividends are said to be 100% franked or fully franked.

The grossed-up dividend amount is $1,000 ($700 plus the $300 franking credit) and is included in the shareholder’s assessable income. Tax is then payable at the shareholder’s applicable marginal tax rate. The tax paid by the company (franking credit) is then used to offset the shareholders tax payable.

The table below shows the effects of taxation by comparing 5 individuals, all on different individual and superannuation tax rates:

*The above rate does not include the Temporary Budget Repair Levy; which is payable at a rate of 2% for taxable incomes over $180,000 to 30/06/2017.

Individuals 1, 2 and super fund members in accumulation or pension phase all receive tax refunds due to the tax rates being less than the company tax rate of 30%. The higher income earners, individuals 3, 4 and 5 have to pay tax on their $1,000 dividends but they have both reduced the tax payable due to the franking credits.

If you are interested in learning more, please contact us today. One of our friendly advisers would be delighted to speak with you.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before acting on anything in this article you should consider its appropriateness to you, having regard to your objectives, financial situation and needs.

Being in business can be overwhelming, however, if you get help and advice along the way it can save you time, stress and contribute towards your success in the future.

DO YOU NEED TO:

• Register for an ABN?
• Claim GST?
• Lodge a BAS?
• Have a payroll?
• Have an inventory?
• Use Eftpos facilities?
• Use cash or accrual basis?

New business owners will be faced with the above questions and much more, these questions will also help in the decision of which accounting software to use.

Cash or accrual?  Income and expenses are recognised at the time they are received or paid when using cash.  Accrual means income and expenses are recognised when the transaction occurs even if the cash hasn’t gone into or out of the bank yet.

TIPS:

• Keep invoices and receipts easily accessible, for example, labelled folders.  There are apps available so they can be stored in phones now.
• Keep all bank statements, stock records, compliance and government correspondence and anything of monetary value for record keeping.
• Allocate time weekly to keep these records up to date otherwise, it can overwhelm you.
• Have an understanding of GST, income tax, payroll tax and BAS and be aware of reporting dates for ATO payments and instalments.
• Keep all records for a minimum of 5 years.

If this is at all confusing, find a bookkeeper to help you. Make sure to shop around and find a bookkeeper who suits you and your business. Look for someone who will listen to you, and make sure they are reliable, independent, honest, accurate, skilled and understands your business needs (HINT: Bookkeepers love chocolate).

If you would like to learn more about our bookkeeping services, contact us today.

Whether we are talking about commercial activities, government, leisure pursuits or just day-to-day living the use of jargon is very evident. That is, specialised language concerned with a particular subject. The financial services sector abounds with terminology relevant to its activities and products and it can help the user of these services to sometimes simply go back to basics to make sure everyone understands what is meant by certain words or terms.

An oft-used phrase is “managed fund”. The product providers keenly push the potential benefits of their managed funds. For instance: easy diversification; expert money management; invest for income, growth or both; convenient regular savings plan. These benefits are fine, however, this marketing stuff does not explain how a managed fund works. Let’s lift the lid on the operation of managed funds and make sure we understand what is going on.

There are a variety of different styles and tax structures for managed funds. In later articles we will cover how entitlement to income and capital growth from the investments are handled, how superannuation funds and insurance bonds differ from managed funds that distribute their taxable income to investors, explain the differences between unlisted and listed managed funds and also how “active” funds contrast with “passive” funds. For now, let’s focus on plain vanilla unlisted managed funds where the investor is responsible for any tax on investment earnings.

These managed funds operate as unit trusts, a well-established and cunningly effective way of dealing with pools of money for collective investment where new participants in the pool can easily join and departing participants can be paid out without disrupting things for the other participants. The participants in these structures are called “unitholders”.
When a new unitholder joins (or an existing unitholder invests more money in the pool) new units are issued by the fund manager. When an existing unitholder leaves, their units are redeemed by the fund manager. So, new units could be issued and existing units redeemed every day impacting the number of units on issue. The price at which new units are issued or existing units redeemed is where the effectiveness of this structure comes in.

The fund manager would value the investments held in the collective pool, typically every day where prices are readily available. These investments could include cash deposits, interest-bearing securities and listed shares. Physical properties are valued less frequently. So, the total value of the collective investment pool is calculated (let’s say this is $100,000,000) then the number of units on issue is sourced (let’s say this is 25,000,000 units). Dividing the value of the pool by the number of units on issue gives the worth of each unit (in this example $4-00 per unit). If no new units were issued nor existing units redeemed and the underlying value of the investments in the pool increased the next day to $100,500,000 then each of the 25,000,000 units would have an underlying value of $4-02. In practice the numbers would not be neat and round as shown here.

So, if new units are to be issued the underlying worth of each unit might be $4-00; many unit trusts would charge a small premium for issuing new units, so the actual issue price might be $4-01. A new investment of $25,000 would receive 6,234 units at $4-01 each. If existing units are to be redeemed the underlying worth of each unit would also be $4-00; many unit trusts charge a small amount for redeeming existing units, so the actual redemption price might be $3-99. A redemption of 5,000 units would receive proceeds of $19,950 at $3-99 each unit. The “buy/sell” difference between the issue price, redemption price and unit price is retained by the fund and is designed to avoid continuing unitholders being negatively impacted by transaction costs incurred when new units are issued or existing units redeemed.

So, unit trusts are a simple and effective way to administer pools of investments where new participants can join and existing participants leave with minimum fuss.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before acting on anything in this article you should consider its appropriateness to you, having regard to your objectives, financial situation and needs. If you would like more tailored advice, please contact us today. One of our friendly advisers would be delighted to speak with you.

We all knew it was coming; how many 80 something-year-olds are still working full time? Even still, when Bob announced his retirement it was a surprise. The general feel in the office was that of sadness, but also excitement for Bob. He has worked so hard his whole life and now he is finally retiring and can enjoy life.

Once the date was set and plans put into motion regarding his replacement, I was tasked with writing a “little something” regarding Bob’s departure and the Rookie replacement. To say I have procrastinated is an understatement; need help with scanning, sure I’ve got time for that. Ran out of milk, don’t worry I’ll go get it, wouldn’t want a coffee riot on our hands.  The truth is it’s very difficult to convey in words how much Bob means to the company. He has been working for this organisation for over a decade and him leaving feels like the ending of an era.

In every way, Bob is a true gentleman. He is so generous with his time and knowledge; always willing to lend a hand to the lost little lambs (such as myself) that approach his desk. There doesn’t seem to be anything that can ruffle his feathers; he’s seen and done it all. Bob has such an ease and calmness about him that will be sorely missed.

Bob and his wife Brenda have plans to move to a little unit in Wellington Point. It will be quite an adjustment considering they currently own a farm on the outskirts of town.  But from what I’ve been told, Bobs did his homework and the retirement village has a reputable Water Aerobics instructor. He is also looking forward to dominating the green in Lawn Bowls.

I’m quite excited about the opportunity I’ve been given and the new role I’m stepping into. I think the thing I’m looking forward to the most is the afternoon naps when it all just gets a bit too much. Although, I’ve been told that when Bob does it, it’s endearing. However, if I try to have a sneaky kip on the job, no one will hesitate to kick my chair and wake me up.

In all seriousness, I don’t think anybody could ever replace Bob, but I will do my best to fill the very big shoes I’ve been left with.

Jodie Thompson is an integral part of administrative and the daily behind the scenes operations at The Investment Collective. 

Having just welcomed our second child into the world and with the new financial year upon us, it has certainly been a time of reflection about new beginnings and what lies ahead for the future. The seemingly endless routine of getting up during the night and changing nappies, dream feeds and rocking your precious little ones back to sleep gives you an abundance of time (where most normal people are actually sleeping) to think and reflect on where you are and what you want to achieve.

Being a first-time parent was daunting enough and came with all sorts of challenges my wife and I were still adapting our lives around before finding out we were expecting our second child. Having our second child so close together came as a totally unexpected, yet welcome surprise. But what had we gotten ourselves into having two daughters under the magical age of two?

Like all parents, I imagine that we want the very best for our children that we can possibly provide. However, having someone completely and utterly dependent upon you to tend to their every need, was one of the most daunting aspects of Fatherhood for me personally, yet it was also something that I embraced. Being the sole income earner supporting our little family only highlighted the importance of ensuring we had adequate insurance coverage in place to ensure our family would not be financially burdened in the event of anything happening to either parent.

The birth of both children will forever be etched into my memory as some of the greatest experiences of my life. Hearing their first cries as they entered the world will be sounds that I will never forget. Holding them both for the first time and seeing how tiny and fragile they were is also something that will stay with me forever.

The age difference between our girls is 17 months. I was an only child growing up and my wife has a twin sister, so she always knew the benefit of having a sibling growing up and it was something she wanted for our first child. With the closeness in age of our girls, here’s hoping they will be lifelong friends, with a few heated disagreements thrown in along the way.

With all the sleepless nights and challenges that come from being a new father, the rewards certainly far outweigh any of the negatives. Seeing them learn new skills each and every day and interact with each other brings a smile to my face whenever I think about them. It is funny as human beings, we tend to forget or block out the bad memories of all the sleep deprivation and only remember all the good memories.

Having become a father has made me appreciate all the sacrifices my own parents have made for me in order to allow me the best opportunities possible. I look forward to making many sacrifices for my own children to ensure that the cycle can continue.

I’ve been a financial adviser for about 17 years, and have met with quite literally hundreds of clients. I’ve always found it fascinating to learn how people think and act in respect of their wealth. The conversations I have with clients tend to have common themes.

The financial planning process itself is pretty straightforward. At the initial meeting, I aim to understand the client; their current situation, objectives and preferences. After all, it’s all about them. Thereafter, I prepare recommendations in respect of appropriate strategies, structures and investments that will help increase the chances of them achieving their objectives.

As such, for me, it’s the interaction with clients that I find interesting. Listening to a client, and confirming back to them my understanding of their objectives and preferences is, of course, paramount in this process. This process can be straightforward or lengthy, as many clients are unclear as to exactly what their objectives are, and what they may need to do in order to achieve them.

My discussions with clients often come down to the same following points:

1. Spend less than you earn
2. Invest surplus income in quality assets that generate income
3. Review your investment portfolio on a regular basis
4. Structure your financial affairs as simply as possible, but no simpler
5. And when it comes to the investments themselves:
   • I don’t, and can’t, promise to ‘shoot out the lights’ on investment returns (Quite frankly, if I could do that on a consistent long term basis I wouldn’t need a day job!)
   • Risk, or the volatility in the value of your investments, always, ALWAYS, equals return
   • A risk is not necessarily a bad thing or something to be avoided (If you avoid all risk that the value of your investments would decline, all you’d be left with are bank deposits paying 1.75% per year.

So don’t avoid all risks, however, make sure that you understand the risks and receive an appropriate level of compensation for assuming them.

My aim is always to place my client in a position from which to make an informed decision. The decision is always theirs to make. I’m simply looking to provide constructive input to assist them.

If you would like to learn more about our services, please contact us today. One of our friendly advisers would be delighted to speak with you.

Two years ago Analysts/Consulting Owen Evans presented a seminar for clients entitled Fun with Vertical Fiscal imbalances.  A core message was that Australian Governments had effectively no clue as to the extent revenues would fall as a result of the mining boom, and that we were in for a lengthy period of declining living standards.  The response, Owen said, was that government would increasingly be confined to short terms and instability would become the norm.  Let’s look at some facts that have emerged since then.

By a relatively large majority, UK voters elected via referendum to leave the EU. This was clearly a surprise to most commentators and markets, with Sterling and global equities markets getting thrashed on the day, the PM announcing his resignation (to take place by October) and roughly half the Labour Party front bench resigning. Watching it live was like watching lemmings jump into the sea below, a feeling exacerbated when the most interesting commentator turned out to be Lindsay Lohan.  Here are a few observations:

The short-term economic implications for the UK and Europe are clearly negative. The longer-term implications are also negative but may not be overtly visible. One must presume that global GDP growth falls very slightly over the next two years because of this. One also must conclude that interest rates are likely to stay lower for longer; and,

The direct impact on Australia and Australian listed companies is likely to be imperceptible. But there may be a small bias in favour of domestic-related businesses as opposed to exporters and interest rate sensitive stocks.  There is certainly no reason to think that Brexit will hasten a global economic recovery and for that reason, there is no rush to return to investing in mining and resources related industries.

The Brexit debacle was immediately followed by Australian voters demonstrating a significant swing toward a union leader from a Government roundly rejected by voters in 2013.  Preferring heart over head, Australia will probably end up with a hung parliament and a Senate controlled by individuals who variously want to ban live cattle exports (thereby effectively killing the NT economy), subsidise Tasmanian electricity generation and reintroduce financial transactions taxes, reintroduce tariffs that will increase the price of goods for everyone, and based on petitions of just 200,000 people, introduce rolling referendums to decide laws.  If you think that is kooky, consider that by the end of the year a boorish reality TV star could be the next US President;

These seemingly outcomes are both seemingly bizarre and based on a well-honed ignorance of what matters.

Western prosperity since 1946 has been based to a large degree on growth in trade, personal freedom and mobility, and increasing economic integration. The days of having three different electricity outlet types in the UK and 35 in Europe have been coming to an end. Brexit is a vote against trade, against mobility and against integration. In effect, 17m Britons voted for an immediate pay cut.  It seems unlikely that they would have done that, if they understood the impact.  The fact that two of the main proponents of Brexit have now stood down, suggests a total lack of belief in the BS they were peddling.

First, this is an unexpected outcome and following issues with US polling during the primaries it calls into question the capacity of western leaders to understand what exactly it is their constituents want or expect from Government.  Instead of making and delivering on policy Governments are deliberately pandering to interest groups/issues, because:

1. there is no point in trying to convince rusted-on supporters and;
2. because of the mistrust and pressures linked to a decline in living standards, we are living in a time where people are relying on their feelings for guidance, rather than education or logic.
3. Add to this the internet which is enabling democracy by popular engagement, with the consequence that many people have plenty to say, but not much knowledge about what they are saying.
4. Across the west we have an ageing population increasingly fearful of the impact of immigration.  It is borne of a nationalistic fervour and a desire to build barriers against all manner of perceived threats (but immigration in particular). 

A basic tenet of economics is that what is good for the population is not necessarily good for the individual.  Combined with the inability to measure voting intentions accurately combined with a willingness to vote against perceived self-interest (even if it is the general interest) suggests that unusual political outcomes may have become standard.  As a result of these factors, the gridlock that hampers decision making in many Governments is set to become more serious.

As we have said countless times in Client newsletters, we have entered a time of extended volatility and uncertainty and we are experienced in managing that.  This experience is critical when the main alternative to investing in markets is to put your money in the bank.  Interest rates of below 2 percent are about a third of the income generating capacity of most of the portfolios we build.  The choice to put your money in the bank ensures you lock in very low-interest rates, and that you are eating into an increased amount of your savings, just for day to day expenses.

In terms of the market outlook, Brexit will likely see markets unstable for a while.  But they were already unstable, and the portfolios we have built for clients have shown good results in withstanding that.  As we have said in Client newsletters, interest rates are unlikely to increase anytime soon, and in general that is good for the portfolios we build.

Given the trade advantages of the EU, we will be amazed if the long term outcome is not that the UK struck a deal with the EU such that most if not all of the primary economic advantages were retained, but that the UK exerted more control over its borders.  In this context, its worth noting that Norway subscribes to almost all of the EU rules, thereby retaining trade benefits, but without being a member (of course, it gets no say on how those rules are formed).

Overall, our view is that we are in for a very long period of sub-trend global growth and this will continue to result in global economic and social instability.  For many years there will be no free kicks and the rewards will go to those who can look beyond the emotion.  We believe that is the most valuable service that we can offer clients.

Originally published in our July 2016 newsletter, read more recent newsletters here.