Since you have received your 30th June 2009 superannuation statement, the market has rallied with the average ‘Balanced’ fund growing by more than 10% in just three months.
However, sharemarkets around the world (including Australia) have improved by some 50% since their March 2009 lows.
Many investment pundits are waiting for a market correction to gave the share market a breather before climbing to new ‘highs’ since March 2009.
The question is will the correction occur and if so when….at the time of writing the US Market has fallen around 8% of its recent highs and as we speak the Australian share market has fallen around 6% since threatening to hit 5,000 points (currently sitting at around 4,580 points)….
Is this start of a correction that will see the Australian market head towards 4,000 points or is this just a quick breather before scaling new heights to 5,000 and beyond leading into Christmas.
Christmas rally have been expected and have often occurred (except for the disaster of 2008 when there was no rally at all – in fact a nasty fall leading into Christmas).
Many investment analysts who analyse charts are talking about resistance points in the U.S. market (as measured by the Dow Jones Index) of 10,000 points. The U.S. share market has flirted with this level and briefly broken through it only to fall back towards 9,000 points.
The Australian share market has tried to get to 5,000 but hasn’t reached that milestone yet…in fact it has fallen to below 4,600 points after racing through 4,800 points and almost reaching 4,900 points in recent weeks.
The next 6 to 8 weeks will tell the story of 2009 with share markets either poised to re-commence their upward movement as they head towards breaking through their resistance levels (10,000 points in the U.S.; 5,000 points in the Australian market) or head south as uncertainty and fear begin to grip investors again and markets give back some of the recent whirwind gains.
By early 2010, we will have a good idea as to whether this has been a false dawn or the beginning of a new era of global growth and sustained investment returns for long suffering investors caught in the bear trap of 2008.
Watch this space…
The term “emerging markets” comes up often but many investors don’t really understand what it means. Following is a summary of an article written by Kaplan Professional that defines the term and provides some useful information to help you understand exactly what this type of investment is.
One way of defining ‘emerging markets’ is that it is those economies with a low to middle per capita income. The countries meeting this definition represent about 20% of the world economy, but contain 80% of the world’s population.
The four largest emerging market countries that have an increasingly important role in the world economy are Brazil, Russia, India and China — commonly known as ‘BRIC’.
The best opportunities may not always lie in the sharemarkets of these regions themselves, but in companies doing business with the developing nations, for example, mining companies BHP Billiton and Rio Tinto.
The Australian taxation system can be confusing. Over the next few editions of the KFS Newsletter, we will be explaining a few of the more common tax issues facing our clients, the first of which is Capital Gains Tax.
The extract below is taken from The Australian Tax Office website and is a good summary of how it works...
Capital Gains tax (CGT) is the tax you pay on a capital gain. It is not a separate tax, just part of your income tax. Selling assets such as real estate, shares or managed fund investments is the most common way you make a capital gain or loss. Managed funds also distribute capital gains that must be reported.
All assets you have acquired since capital gains tax came in (on 20th September 1985)- including options, rights and business goodwill- are subject to the CGT rules unless specifically excluded.
These and other exemptions, as well as rollovers and concessions may allow you to ignore, defer or reduce your capital gain or capital loss. The indexation and discount methods of working out your capital gain also reduce your capital gain in some situations.
CGT does not apply to depreciating assets you use solely for taxable purposes. Gains (or losses) made on these assets are treated as assessable income (or claimed as deductions). Such assets may include business equipment or fittings in a rental property. However, if you have used a depreciating asset for a non-taxable purpose (for example, used it for private purposes) the CGT rules apply.
If you are an Australian resident, CGT applies to your assets anywhere in the world. For foreign residents, CGT applies to taxable Australian property (or, for CGT events before 12 December 2006, to assets that have the necessary connection with Australia.
For more detailed information on CGT, refer to the Australian taxation Office website www.ato.gov.au or contact KFS.
Kouteris Financial Services (KFS) specialises in transition to retirement strategies for clients aged over 55 years of age. Over the last 2 and ½ years, we have worked with Bernie O’Donnell of KP O’Donnell and Associates and his wife Wendy to set up a transition to retirement strategy that will ensure his financial security over the years to come as well as some personal insurance cover.
While KFS can help you set up a financial plan to suit your needs, we also recommend that all our clients have an up to date will. If you don’t have a will already, you should speak to your solicitor and have one set up. If you don’t have a solicitor, KFS uses KP O’Donnell and Associates for all our business legal requirements.
As a special offer to all KFS clients, KP O’Donnell & Associates is offering the following service for Wills and Power of Attorney:
Standard Will for one person at $180
Standard Will for a couple at $260 for the two wills
To take advantage of this offer, simply call or e-mail Lisa O’Donnell at 02 9299 2927 or lawyers@kpodonnell.com.au and mention that you are a client of Kouteris Financial Services.
For more information on KP O’Donnell and Associates, visit their website www.kpodonnell.com.au.
*Kouteris Financial Services does not receive any fees that result from clients taking up this offer. All client information is strictly confidential and is not shared between KFS and KP O’Donnell and Associates unless requested in writing by the client.