June 2024 Newsletter
June 2024 @ Longreach Private Wealth
With Winter now officially underway, some might be heading north to warm up and others may lean into the cold on the snowfields. Whichever you choose, don't forget the approaching end of financial year.
A slight increase in the Consumer Price Index last month, to 3.6% from 3.5% in March, has led some economists to predict we'll be waiting longer for the first official interest rate cuts, perhaps until the end of next year, with little to no chance of a rate rise in the meantime. While inflation has been relatively stable over the past five months, this is the second monthly increase in a row. The biggest price increases were in the housing, food and beverages, alcohol and tobacco, and transport sectors. Retail spending continues to be weak. The 0.1% increase in turnover in April wasn't enough to make up for a 0.4% drop in March.
The higher-than-expected inflation figures saw Australian share prices take a tumble after reaching a welcome high mid-month. The ASX200 finished the month on a positive note, slightly higher for the month of May. In the US, troubles in the tech sector and a global bond sell-off saw small losses on the Dow, the Nasdaq and the S&P 500 while European markets in London, France and Germany also finished the month on a low.
A strong US dollar along with the uptick in Australia's inflation data saw the Aussie dollar fall from a mid-month peak of just over US67 cents.
Thank you for choosing us for your financial guidance. Remember, our team is always here to support you, so feel free to reach out with any questions or concerns you might have. We're also happy to extend our services to your loved ones, should they need financial advice.
Looking forward to our continued partnership and your financial success!
Peter, John, Sharon, Kirstin & Wendy
How to end the Financial Year on a High Note
As the financial year draws to a close, it's the perfect time to review your financial affairs and set the stage for a successful new financial year. By taking care of essential tasks and implementing strategic planning, you can position yourself for a smooth transition and a strong start for the year to come.
Topping up super
One important item for the To Do list is to top up your super with either concessional (pre-tax) or non-concessional (post-tax) contributions. For example, you could make a voluntary concessional contribution up to the limit allowed and then claim a tax deduction on your personal assessable income for it.
Consider making additional contributions to your own super account or your spouse's account, to take advantage of tax concessions.
If you have unused concessional cap amounts from the previous five years and a super balance less than $500,000 on June 30 the previous year, you may be eligible to make a catch-up (or carry-forward) contribution greater than the annual limit.
Maximising contributions not only helps you build your retirement savings but can also provide valuable tax benefits. But it's critical to be mindful of your caps and to ensure that you make any super contributions before the end of the financial year to meet the deadline.
Reviewing investments
Reviewing your investment portfolio is a valuable task at any time but particularly now.
For example, you could take a look for any capital gains or losses that could be used strategically to manage your tax liability.
Also, it is worth considering how your portfolio performed over the past 12 months against your goal of capital growth, income, or balance.
You may decide to readjust your goals or your investments to help steer performance in the right direction for the next 12 months.
Of course, if you're planning any changes, it's important to check in with us to ensure you're making informed decisions about your investments.
Paying expenses early
Another useful strategy at tax time can be to bring forward any deductible expenses or interest payments before 30 June to reduce your taxable income.
That could include incurring expenses on an investment property, prepaying interest on investment loans, making charitable donations, or claiming eligible work-related expenses.
Make sure you keep detailed records and receipts to support your deductions.
The ATO's myDeductions app is a great place to start for free record keeping and to assist you to be ready for tax time.
Setting up salary sacrifice
As you look ahead to the new financial year, consider whether a salary sacrifice arrangement might be right for you. Salary sacrifice allows you to divert a portion of your pre-tax salary directly into your superannuation, which effectively reduces your taxable income and boosts your retirement savings.
You will need to think carefully about your living expenses to work out the amount you can afford to contribute to your super, ensuring you do not exceed your concessional (before-tax) contributions cap of $27,500 (which will increase to $30,000 from 1 July 2024) to avoid paying any extra tax.
Your employer or payroll department can help you set up a salary sacrifice arrangement.
Checking your budget
This is a good time to revisit your financial goals and how you're tracking, and then put together a strong budget for the new financial year that will help get you further along the track.
Take the time to review your income and expenses and identify any areas where you can cut back spending or improve your income.
This exercise not only helps you understand your financial habits but also allows you to reallocate funds towards your goals, such as paying down debt, building an emergency fund, or increasing your investment contributions.
Consult with professionals
Don't forget to check in with your trusted advisers - financial advisers, accountants, or tax professionals - to make sure you are making the most of any opportunities for financial growth and maximising tax savings.
Taking advantage of our expert advice to review your current financial situation and goals, and check that you are making the best decisions for you can make a difference. It provides peace of mind, ensures that you are complying with any obligations and, importantly, puts you in the best position to achieve your financial goals.
Enjoy the now and Secure your Future
Managing your financial situation always involves tension between how you live your life now and preparing for your future - whatever that looks like.
The worry about not getting the balance right and making unnecessary sacrifices now - or not having enough money for the things you want to do in the future is a common and valid concern we hear when we talk to clients. You want to be living your best life now which means not living too frugally or worrying about your future. At the same time, you don't want the choices you are making now in how you live your life to impact or make impossible the wonderful life you envision for yourself down the track.
Balance whatever your stage of life
We all have financial goals - whether you are saving for your children's education, working towards that once in a lifetime round the world trip, freeing up finances for a gap year, or setting yourself up for a wonderful retirement. It's important to balance your 'now' with your 'future' when it comes to spending, saving, and investing to make sure you can achieve those goals. You don't want to regret your spending - or on the other hand live a frugal life and look back on opportunities you missed while you were squirrelling it away.
The tension between the 'now' and your 'future' with respect to your finances can be even more heightened when you have retired. It can be a strange adjustment suddenly not having a wage coming in and living off your savings, super and investments. It's common, and quite understandable, to worry about not having enough to last the distance, particularly given that a 65-year-old today may live well into their 90's and could spend up to three decades in retirement. No one wants to outlive their savings.
However, many retirees live unnecessarily frugal lives as evidenced by a 2020 Retirement Income Review which found that most people die with the bulk of their retirement wealth intact. Those that live frugally do so often not from necessity but because they don't have an understanding of their financial needs, including how these will change over time, and how much they can afford to spend.
How the balance changes over time
That balance is hard to hit. It is different for different people, and your approach to saving and spending will change at various stages of your life.
If you are paying off a difficult to maintain level of debt or in the final stages of scraping together a deposit for a home, making sacrifices now in the way you live life, your life might feel OK. Equally if you have spent much of your life building wealth, letting loose the reins a little and going on that cruise might be something you are extremely comfortable with.
Certainty now and confidence in the future
Whatever your stage of life, achieving the right balance comes from having an in-depth understanding of your financial situation now, and establishing and maintaining a personalised plan that takes into account all aspects of your financials - your earning capacity, level of debt, assets and very importantly, the life you want to live today and your goals for the future.
The importance of receiving support with financial planning is reinforced in a recent report which indicated advised Australians are significantly more likely to say they feel confident in achieving their financial goals (71%) compared with those who are not receiving support (55%).
The same proportion said that they were living well now, stating their finances allow them to "do the things I want and enjoy in life." And those receiving advice are also balancing the "now" with their future needs. Those accessing financial advice also indicated they were more likely to be financially prepared for retirement and have a higher savings balance.
This confidence that comes from receiving personalised advice also means being more prepared when people leave the workforce (and a wage) behind. Advised Australians are significantly more likely to feel very or reasonably prepared for retirement (76%), than those without advice (45%).
The key to achieving a balance between living your best life now and being financially secure in the future is knowledge. If we know that tomorrow is shaping up well for us, we may worry a little less today, feel a little less guilty when we spend today and be less likely to have regrets about spending - or about missing out - further down the track.
Farewell
It's hard to believe, but I'm finally retiring after many wonderful years in the financial services industry. Saying goodbye isn't easy. I wanted to let you know that I enjoyed our business relationship and appreciate the trust that you put in me, my team and my company.
I would like to thank you, our clients, very much for your support. It has been a pleasure to work with you all.
Please be assured that all your ongoing financial matters have been seamlessly transferred to Peter Dowling and Longreach Private Wealth will ensure your future planning will continue to run as smoothly as possible.
Thank you for your trust and all the best for your own future endeavours.
Warm regards, John Cameron
Congratulations and best wishes on your retirement
After 42 years in the financial services industry John is about to enjoy a well-deserved retirement.
John's expertise, thirst for knowledge and commitment to his clients has had a lasting impact on us all. Unlike most in our industry who simply "follow the herd", John has always adopted a critical and thoughtful approach, to cut through the noise and provide clients with clear advice. The longevity of the client relationships and trust is a testament to this. We look forward to building on this legacy.
It would also be remiss not to acknowledge the long-term staff relationships - Sharon and Kirstin who have worked with John for over 30 and 10 years respectively.
We wish John and Sue all the very best in this new chapter of their life.
Peter, Sharon, Kirstin & Wendy
Please Note:
The views expressed in this newsletter does not constitute advice in any way. If you would like advice on your current situation please contact us.