Monthly Newsletter - March 2010

Editors Note

This edition includes an inspirational quote, a funny picture, a market commentary with the main index returns during February 2010 and a feature story. I encourage you to make comments.

The Australian, US and Asian (ex-Japan) sharemarkets performed positively over February reflecting a pickup in global economic growth.

Inspirational Quote

To do anything truly worth doing, I must not stand back shivering and thinking of the cold and danger, but jump in with gusto and scramble through as well as I can.

Og Mandino (Author and Speaker)

Funny Picture

This is what happened when the Cookie Monster first used the internet.... 

Market Commentary

The Australian, US and Asian (ex-Japan) sharemarkets performed positively over February reflecting a pickup in global economic growth. European shares retreated over the month as concerns over sovereign debt levels in Greece, Portugal, Italy and Ireland intensified. The US dollar has strengthened over the last three months with the Australian dollar having fallen from a high of 94 cents last year to just below 90 cents at the end of February.

Australian real estate trusts also regained ground over February as the outlook for company earnings and the local economy improved. 

Performance scorecard to 28 February 2010 

Indexes used: Australian shares: S&P/ASX 300 Index, Australian listed property: S&P/ASX 300 A-REIT Index, International shares: MSCI World ex-Australia Index (net dividends reinvested), Australian fixed interest: UBS Australian Composite Bond Index, International fixed interest: Barclays Capital Global Treasury Index (hedged into Australian dollars), Cash: UBS Australian Bank Bill Index.

The Reserve Bank of Australia (RBA) expects global growth to return to trend levels in 2010 and 2011. The International Monetary Fund revised its 2010 global growth forecasts upwards in January to 3.9%, expecting the key emerging Asian economies of China, India, Indonesia and Korea to lead the way. While in the US the housing market remains weak, employment has marginally improved and economic growth is strong. 

The most recent interim reporting season has been positive for most Australian companies. According to a recent AMP Capital report 49% of results reported were better than expected. "About 60% of companies saw profits increase from a year ago and after a 2-year slump, net profit after tax rose around 12% in the December half compared with the June half," the report stated.

Government bond yields in the US and Australia rose marginally over February. The RBA left interest rates on hold at 3.75% at their February meeting, deciding to wait for the impact of earlier rises to become evident before taking further action.

In his official statement RBA governor Glenn Stevens mentioned that interest rates were still lower than average and future rises were likely. "If economic conditions evolve broadly as expected, the Board considers it likely that monetary policy will, over time, need to be adjusted further in order to ensure that inflation remains consistent with the target over the medium term," he said. 

The RBA decided to increase rates by 25 basis points to 4% at their March meeting.

The Market Commentary has been sourced from Vanguard Investments Australia Ltd.

Feature Story - 10 Rules for Achieving Financial Freedom (Rule 10)

Follow all 10 rules and you will be on the way to achieving financial freedom.

Rule 10 - Reviewing your estate plan

Are you comfortable that the proceeds from your super and life insurance will go to the right people when you die? The beneficiaries you nominate for your superannuation fund are just an indication to the trustee who you would like your money to go to.

To ensure the money is paid to the right people, you need to make a binding death benefit nomination and have it witnessed by two people. If your superannuation fund does not offer binding death benefit nominations, find out where the money goes if the trustee cannot pay the nominated beneficiary.

You Will should carry a provision as to what happens to your superannuation fund benefits if it end up coming to your estate.

Estate planning is an important part of your financial plan and you shouldn't leave it until it's too late.

This concludes the series: 10 Rules for Achieving Financial Freedom.

Going forward, I will present a different feature story each month that I hope you will find interesting.

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Past Issues

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Important Information

The above information provides an overview or summary only and it shouldn’t be considered a comprehensive statement on any matter or relied upon as such. The above information doesn’t take into account your personal objectives, financial situation or needs. It’s important for you to consider these matters before making any financial decision and I recommend you seek help from a financial adviser.