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Spring 2021 Your Personal Wealth Newsletter

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YOUR PERSONALWEALTHS P R I N G 2 0 2 1CONTINUED ON PAGE 3WELCOME TO THE SPRING EDITIONVaccination boost is coming 1Manage your money, manage your life 3VACCINATIONBOOST IS COMING!The vaccine rollout is gathering pace in most countries andglobal equity markets have staged a dramatic recovery from thelows of March 2020. Australian and US equity markets are withina percent or two of all-time highs. However, over the last fewmonths the rate of this increase has slowed as markets try tofigure out if high inflation, particularly in the US, is transitory orwill likely be sustained.On the positive side, global bond yields have remained low afterthe spike we saw earlier this year. While we’ve had largerotations in different sectors of equity markets, we have not hada pullback of even 5% in the US market in 2021.This has been agood effort from markets considering there is speculation thatthe US Fed will announce tapering at its September meeting, i.e.reducing its bond buying. The Australian dollar has been weak,touching 71 US cents. Some factors contributing to thisweakness were, the dramatic fall in the iron ore price, the RBAbeing perceived as more dovish than the US Fed, and markets Your guide to living a super life 2SMSF Trustee update - SuperStream changes 4becoming risk-averse as the Delta variantsweeps the globe. Markets are only nowrealising COVID is unlikely to beeliminated and current vaccines will loseeffectiveness over time.As we write this, a humanitarian disasteris playing out in Afghanistan. A Talibanspokesman has said that working womenshould not go to their offices because theydon’t know how to protect them. This isundoubtedly going to have majorrepercussions for the West as a whole andin investment markets.EconomyWhile the RBA upgraded Australian GDPgrowth forecast just a few months ago, ithas had to back track as a result of theDelta strain lockdowns. In August, it cutthe GDP growth forecast to 4.0% from4.75% for the year to 31 December 2021.There's now a strong possibility of twoquarters of negative GDP growth.What a difference three months can make, with much of theAustralian east coast recently experiencing lockdown andvaccination rates on the rise. Meanwhile the Australian stockexchange has seen recent record highs.With the recent Super guarantee increase to 10%, it may be anopportune time to look at strategies that suit your stage of life.We're proud to be part of the Lifespan community, with ourlicensee, Lifespan Financial Planning, recently announced aswinners of the 2021 CoreData Licensee of the Year.4.0% over 2021GDP forecast downgraded

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Retirement is something yourparents may be enjoying, butstarting small and early laysthe foundations for futurechoices.The key to life is living, notretiring. Even with the 1 July 2021 increaseto 10%, the superannuationguarantee cannot be relied uponto provide you a comfortableretirement. That said, noteveryone is ready to retire! A different way to look at super isthat planning ahead will allowmore choices later in life. Thisarticle highlights some possiblestrategies through the differentstages of your working life.There may come a time in your lifewhen you want, or need, tochange what you’ve been doing.To either stop working completely,or take a long holiday and workout what’s next. To be able to havethis choice, you'll need to planahead.As a rule of thumb, it’s suggestedto aim for a retirement income ofbetween 50% and 70% of pre-retirement salary/wages. Based onthis premise, it’s estimated youwill need to save around 15% ofyour income for 40 years. Theproblem here is that youremployer is only compelled toprovide superannuationcontributions for you at thecurrent rate of 10% of yourincome each year.How might this be achieved? You can start contributing to superearlier in your working life, raisethe combined rate of your supercontributions to 15% by makingpersonal contributions (keepingunder the annual limits of course),and take heed of the following tipsthroughout your working life.Young, single and independentMaximise your government co-contributions— potentially addthousands to your super.If appropriate, take outdisability insurance throughyour super fund. It is often thecheapest and most tax-effectiveway of providing cover.Choose an investment strategythat suits your long-term riskprofile.Your focus may be on repayingthe home loan, but don’t forgetyour super entirely.A mortgage and young childrenmean insurance is a toppriority. Taking out life anddisability insurance can be asound decision at this stage.Check eligibility for a tax offseton spouse superannuationcontributions and governmentco-contributions.Review your investmentstrategy and risk profile.A higher income and a smallermortgage open up theopportunity to boost yoursuper, but take care not toexceed contribution and TotalSuperannuation Balance limits.Find out if salary sacrifice orpersonal deductiblecontributions could boost yoursuper savings and reduce yourpersonal tax liability while youare working.A family and a mortgageThe ‘in between’ yearsReview your insurance coverand your investment riskprofile.With the mortgage nearly paidoff and children leaving home,you may have more money tocontribute to superannuation,but keep an eye on yourcontribution amounts and TotalSuperannuation Balance.Consider combining salarysacrifice with a transition toretirement pension if beneficial.Review your insurance cover asyou may not need that muchcover, and your investmentstrategy and risk profile.Start comprehensive retirementplanning, strategies to ease intoretirement, or perhaps a newcareer focus.You’ve made it. For retirees over60, lump sum withdrawals andpension payments are generallytax free!Review your investment risk.Keep enough growth in yourportfolio to help ensure yourmoney lasts as long as you do.Review your insurance needs.Stay active and enjoy life - orlaunch into your next career.Retirement may be loomingDown tools or start anewRemember, it’s never too late –or early - to start planning!Y O U R P E R S O N A L W E A L T HP A G E 2S P R I N G 2 0 2 1YOUR GUIDE TO LIVING A SUPER LIFE

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adult population fully vaccinatedby late this year.The consensus is US rate rises arestill a long way off; unless inflationis not transitory.Y O U R P E R S O N A L W E A L T HP A G E 3S P R I N G 2 0 2 1CONTINUED FROM PAGE 1The US CPI (inflation) increased by0.5% in July after rising 0.9% inJune. While the monthly paceslowed, the annual rate of 5.4%was the same annual rate as inJune. However, this was also thefirst time in 3 months it did notsignificantly exceed expectations.In contrast to the US, Australianinflation is quite well behaved.One of the reasons equity marketshave done so well is that price-to-earnings (PE) have re-rated higherbecause of very low interest rates.Equity valuations are still a risk,with the Global equity PE close to20x. The forward PE for the S&P500 was 21.4x on Aug 20, 2021(S&P 500 at 4,406). We’ve had agreat reporting season in the US...CONTINUED ON PAGE 4MANAGE YOUR MONEY,MANAGE YOUR LIFEAs professional financial advisers,we're often the first port of call forpeople seeking advice on investing.But that is just the tip of theiceberg. Being able to manage your moneycan contribute to a sense ofsecurity, better health, less stress,and perhaps above all, choice.We have the knowledge and skills tohelp you achieve your goals andobjectives by tailoring strategies toaddress your specific needs.The reason inflation is soimportant is that higherinflation will lead tohigher interest rates.OutlookMost geopolitical crises are a oneweek event, but we thinkAfghanistan is going to havemajor repercussions for years tocome. The manner of the US pullout, without informing its NATOallies, and abandoning its Afghaninterpreters, position the US as anuntrustworthy ally. Already theChinese Communist Partymouthpieces are taunting Taiwanabout their American friendsbeing there for them. In terms ofmarkets, the Chinese areindicating they want to deal withthe Taliban, in order to access theroughly $US1 to 3 trillion ofunexplored mineral deposits,including lithium, rare earths andcopper, materials critical tobattery production and thedefence industry.The RBA has stated for a whilethat there will be no rate hikebefore 2024 at the earliest,however, more recently it hasback-tracked, saying that anearlier rate hike is possible, giventhe strength in the economy. Ofcourse, this was before most ofAustralia was in lockdown. Withthe Australian economy needingmore support, the lockdowns canonly serve to extend the period oflower interest rates. The goodnews is that the vaccine rollout isgaining steam locally, and it’slikely we’ll have over 70% of the 0.5% CPI July increase 1.6% estimated 2021inflation 2.0% forecast inflationfor June 2023 5.4% US annual CPI rate We need to watch the US month tomonth inflation numbers and theircomposition. While used car pricesand travel costs have come backsomewhat, we do not wantinflation to persist in more ‘sticky'items such as wages and rents. 2/3rds fund managersbelieve current USinflation is transitory 15.8% US companies onaverage beatingexpectations 94.7% second quarter2021US EPS expected to beup from Q2 of 2020Comparisons get harder as we getfurther away from the 2020lockdowns. In the first quarter of2022 for example, EPS (earningsper share) are expected to be up5.5% from Q1 of 2021 (sourceRefinitiv). Also it’s very likely wehave passed peak EPS and GDPgrowth quarters in the US.In terms of allocations, negativereal interest rates continue tofavour growth assets over fixedinterest. While index levels are elevated,there is constant rotation betweensectors, which should provideopportunities for managers. Mostresource stocks for example aredown by over 15% in the lastmonth. We would not aggressivelyadd to positions right now, butsuggest investors maintain a mix ofgrowth and value styles, as the wildswings of the last year showed, it’svery hard to time these moves. 1.3% US 10 year bond yield 2.4% 10 year US inflationexpectations

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AFSL 229892 ABN 23 065 921 735 23, 25 Bligh Street, Sydney, NSW, 2000Tel. 02 9252 2000 Email: financial planner is an AR or CAR of Lifespan Financial Planning Disclaimer: The articles in this newsletter are of a general nature only and are not to be taken as recommendations as they might be unsuited to your specificcircumstances. The contents herein do not take into account the investment objectives, financial situation or particular needs of any person and should not be used as thebasis for making any financial or other decisions. Your Lifespan adviser or other professional advisers should be consulted prior to acting on this information. Thisdisclaimer is intended to exclude any liability for loss as a result of acting on the information or opinions expressed.S P R I N G 2 0 2 1Budgeting – reviewing your finances andidentifying opportunities to manage debt andsave money.Education – helping you to understand yourinvestments and other key financial matters,to build your knowledge and confidence.Risk management – guiding you onprotecting your family and your assets in theevent of illness, injury, disability or death.Retirement planning – helping you findanswers to the important questions such as;“how much money do I need to retire?”; “whatdo I need to do before I retire?” and “will I beable to retire comfortably now?”Estate planning – we work closely with otherprofessionals to show you how best tostructure your assets to benefit your estate.We can provide assistance and guidance on:Quite simply, we can help alleviate the worry andstress associated with your finances, leaving youwith more time to enjoy life. Let us know if there'ssomeone you know who could benefit fromchoice and financial peace of mind.CONTINUED FROM PAGE 3Funds from a non-SMSF super fund being part orfully rolled over into an SMSF.Super benefits in one SMSF being rolled intoanother SMSF. This could include adult childrenrolling funds out of a family SMSF into their ownSMSF, or business partners separating. (Note thatsuper received as part of a family law split is treateddifferently).Winding up an SMSF to transfer funds into a non-SMSF super fund.a non-SMSF will be unable to process a rolloverrequest to the SMSF.a rollover out of the SMSF may lead to penalties ofup to 20 penalty units (currently $4,400) beingimposed on each trustee of the SMSF.SuperStream is an electronic gateway for employers tomake superannuation contributions or rollover betweenfunds for employees. Payments and data aretransferred electronically, and in the case of SMSFs thisis done using an electronic service address (ESA).SuperStream is currently compulsory for fund transfersin the non-SMSF superannuation sector. The ATO has set a hard deadline of 1 October 2021for SMSF trustees to use SuperStream whentransferring money into or out of SMSF funds.Examples of when SuperStream will need to be usedafter 1 October 2021 include:It is important to note there is currently no requirementfor member contributions or contributions from relatedemployers to SMSFs to be made via SuperStream. Thereare currently no plans for this to change.These new rules mean more SMSFs will need an ESA. Toenable rollovers, new SMSFs should ensure they haveaccess to an appropriate ESA as soon as the fund isestablished, and for existing SMSFs, as soon as adecision to windup the fund is made. An ESA may beobtained from your software provider or SMSFmessaging providers.If an SMSF is not SuperStream ready by 1 October 2021:As an SMSF trustee, check your SMSF details are correctand current and if you have any questions about preparing for this change, contact our office today.SMSF TRUSTEE UPDATE -SUPERSTREAM CHANGES