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SUMMER 2021 YOUR PERSONAL WEALTH WELCOME TO THE SUMMER EDITION As we reach the close of 2021 it is important to reflect and appreciate the resilience demonstrated over the past couple of years and look forward with anticipation to 2022 Once again we re proud to be part of the Lifespan community with our licensee Lifespan Financial Planning recently announced as winners of the 2021 ifa Dealer Group of the Year We wish you your family and friends a wonderful festive season and we are looking forward to working with you again in 2022 Are we there yet 1 Enjoy the festive season without a BNPL hangover 3 New Year new habits 4 What s your most valuable asset 4 ARE WE THERE YET Global stock markets recorded new highs in August September before giving back most of the quarter s gains in late September Much of this slowdown was due to the impact of the Delta variant combined with economic data pointing to slowing rates of growth in the US and China including creditor issues with China s largest property developer Evergrande Markets were initially spooked by risks to the financial systems in China and elsewhere but have now concluded these can be managed This resulted in the US equity market having its first 5 pullback this year although markets have since bounced back The good news is growth in global developed markets appears to be stabilising supply constraint issues aside In Australia Delta has resulted in growth forecast being slashed for this year but markets have largely looked through this with lockdowns eased and vaccination rates for over 12s now over 80 The other major development was Australia s announced nuclear powered submarine deal with knock on effects for international relations The US Fed finally announced tapering of its quantitative easing QE program by 12bn a month beginning in November Fed Chair Jerome Powell was recommended for another 4 year term The big issue in markets has been persistently high inflation in the US with the annual CPI coming in at 6 2 in October Annual wholesale inflation has risen around 8 globally and around 13 in China Economy The Australian Consumer Price Index CPI rose by 0 8 in the September quarter and by 3 0 compared with a year earlier This was a fall from the 12 year high of 3 8 in the previous quarter Core inflation at 2 1 was ahead of expectations of 1 8 moving back into the RBA s 2 3 target band Australian GDP 2021 estimated 3 0 Australian GDP 2022 forecast 5 5 for 2021 for 2022 Source www rba gov au CONTINUED ON PAGE 2

SUMMER 2021 YOUR PERSONAL WEALTH TAS ACT VIC NSW QLD WA 99 0 139 2 171 6 SA 81 7 0 179 7 100 81 0 Average wages price increase in past 20 years Sept 2001 Sept 2021 200 Home Value Index 82 3 81 7 Wage Price Index 198 3 193 1 Average home values have grown in past 20 years Sept 2001 Sept 2021 300 84 4 The Chinese economy expanded 4 9 year on year in Q3 of 2021 easing sharply from 7 9 growth in the previous quarter Compared with Q2 China s economy grew by just 0 2 well below the market s 0 5 consensus Wondering why it feels like property prices are out of reach 20 year growth in Australian Wage Price Index private public sectors and CoreLogic Home Value Index HVI dwellings from September 2001 September 2021 209 1 4 9 annual Chinese economy expansion State by State Wage Price Growth vs House Price Growth 2001 2021 83 5 The U S economy expanded at a 6 7 annual rate in the second quarter from 6 3 in Q1 but this is the high mark for the economy s expansion this year A key factor was consumer spending which accounts for roughly 70 of economic activity This grew at a 12 annual rate the fastest expansion since a surge in Q3 last year The early estimate for Q3 GDP was an annual growth rate of 2 1 224 6 7 annual US economy expansion We believe that the taper or the unwinding of QE by 15bn a month maybe sped up so that it finishes earlier than June next year There are US mid term elections in November 2022 and the Fed would not like to raise rates so close to this date Given that we are approaching a US tightening cycle we would be cautious in increasing growth allocations right now We do not expect the Fed to be that aggressive but that will be determined by the monthly CPI numbers so we will be watching those readings as well as US longterm bond yields 82 3 3 months to 31 October 2021 Aust fixed interest 4 9 Aust large cap equities 0 5 Aust small cap equities 3 7 Industrials 4 9 Resources 15 9 Developed market global equities 1 1 Property has been a big driver of Chinese growth and is particularly relevant to Australian companies such as BHP and RIO as almost 30 of iron ore in China is used by the property sector With China cracking down on highly leveraged property companies the iron ore price has now fallen by over US 130 from the peak of US 230 per tonne This is fall is not all property related though China has been cutting steel production quotas to 2020 levels to lower carbon emissions There are now signs that China is softening its stance on property companies and easing steel quotas This plus indications of easing monetary conditions there has led to a rally in the iron stocks although they are still well down on levels of a few months ago The biggest issue in markets right now is high inflation particularly in the US The annual CPI was 6 2 in October and has now been above 5 for 6 months Inflation has now broadened out to most goods Apart from supply chain issues there are special factors in play The concern is that the US Fed is behind the curve and interest rates and bond yields will need to rise in order to get inflation under control As rates rise you would expect PE levels to fall from the current forward PE of over 21x for the S P 500 81 5 5 2 October unemployment rate Outlook The COVID 19 pandemic and the availability of vaccines remains key drivers of the economic outlook While this can be managed in developed countries it is likely to be a big issue in less developed countries and will serve to extend the pandemic and the issues of shortages of commodity and componentry 294 The RBA forecast had been for core inflation to not to be in the target band until mid 2023 and that cash rates would remain at record lows of 0 1 right out to 2024 While the cash rate is likely to be raised before 2024 the RBA has been strong in saying that rates will not rise in 2022 The RBA precondition for a rate rise is sustainable inflation of 2 to 3 which requires higher growth in wages which in turn requires an unemployment rate of 3 to 4 79 6 CONTINUED FROM PAGE 1 NT Source www corelogic com au PAGE 2

SUMMER 2021 HOW TO ENJOY THE FESTIVE SEASON WITHOUT A BUY NOW PAY LATER HANGOVER The Buy now Pay later BNPL trend has exploded Users of Afterpay alone exceeded 3 6 million across Australia and New Zealand as at 30 June 2021 an increase of 8 in one year With over 10 BNPL providers in Australia it s so popular banks are joining the party with 0 interest instalment options With Afterpay being rolled out at around 160 hospitality venues in Australia you can even buy your next round of drinks this way The idea is simple enough buy now and pay for it later over a few instalments Easy right Maybe not This time last year ASIC released a report into the growing BNPL sector found that some users of the service were experiencing financial hardship with around one in five users having missed a payment in the last 12 months and have even gone without meals or taken out an additional loan to pay their bills With Christmas just around the corner Afterpay and similar services are bound to be popular payment methods for all those gifts we need to buy After the couple of years we ve just had we may just spend a little more than usual realistically what you can afford to spend each fortnight before you start shopping Remember you re paying for your purchase over an eight week period Buy now pay later is a form of credit The concept of BNPL isn t a new one as this is also the basis of a credit card Afterpay may be more appealing as a payment method to some because there are no interest charges However there are some hefty late fees and a short payment window So make sure you have enough money to cover these expenses within that eight week time frame otherwise the extra charges add up fast Remember that the little things add up It s no surprise that our little purchases like that takeaway coffee or Uber eats snack really do add up over the long term From an Afterpay standpoint a 10 payment each fortnight doesn t seem like much But if you have half a dozen or more of these on the go at once you may not be thinking about the total amount Unlink your credit card The method of payment for BNPL can be a debit or credit card Consider avoiding the use of paying for items with your credit card On top of the interest fees you incur with a credit card you may also be hit with fees should you fail to make the initial repayments According to the ASIC report a huge 66 73 of users who use credit cards to make payment instalments also incurred credit charge interest charge interest charges for the Afterpay timeframe In 2021 Afterpay s bad debts currently total 195 million with the average amount outstanding being 200 which would equate to just under one million Australian and New Zealand consumers with Afterpay debts So before you click on that Buy Now Pay Later button take a moment to consider the full cost of what you re paying for and if it will bring Christmas cheer or a Christmas hangover Sources www statista com www smh com au www savings com au So how do we keep ourselves in line and avoid that Christmas spend blowout when it seems so easy to enjoy now and pay later Consider your budget Afterpay charges its instalments over four 2 week increments so it s easy to match to a weekly or fortnightly pay period Consider the usual expenses you have each pay period and work out YOUR PERSONAL WEALTH PAGE 3

SUMMER 2021 NEW YEAR NEW HABITS It s heading to that time of year again where we feel the urge to aim high and set new patterns for the New Year It s a great excuse to get rid of bad habits or establish new ones Do you know your priorities and goals for the year ahead Here are some useful hacks to help you make new habits that stick this new year Be realistic Set your goal too big and you may get frustrated with your lack of progress too small and you re more likely to procrastinate Set your goal just more than you think you can achieve Focus on one change at a time Create a schedule and set aside times to actively work on your goal Establishing good habits are essential to helping you achieve your goals Remember it takes on average 66 days for a new habit to stick Make it real Write it down on a card you carry with you and commit to achieving Tell a friend so you have someone in your corner to encourage and celebrate with Plan for success Plan ahead so you have systems in place to support the change you re trying to make Anticipate potential problems or roadblocks and brain storm solutions to cope with them if and when they pop up Plan small rewards to motivate you and reinforce your small successes initially after the first few days then weekly and monthly Perseverance is the key to success Failure doesn t stop you unless it s failure to keep trying Life happens and unexpected things crop up but remember every bit of progress counts Whatever your plans and goals for the coming year remember success is in your hands Wishing you all the very best for the festive season and every success for your New Year WHAT S YOUR MOST VALUABLE ASSET Would you say it s a your home b your superannuation or c your income It may surprise you to know that for most people the answer is c This is because if you lose the ability to earn an income you don t have the money to pay the bills and save for the future Financial security doesn t just mean accumulating wealth but also protecting it Many people insure their house and car but forget about protecting their income If you are sick or injured and cannot work you may have savings or sick leave from your employer to keep you afloat for a short time But after that Do you know someone who could benefit from talking to us about protecting their most valuable asset Please call us to discuss how we may be able to help AFSL 229892 ABN 23 065 921 735 lifespanfp com au Level 23 25 Bligh Street Sydney NSW 2000 Tel 02 9252 2000 Email advice lifespanfp com au Your 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 specific circumstances 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 the basis for making any financial or other decisions Your Lifespan adviser or other professional advisers should be consulted prior to acting on this information This disclaimer is intended to exclude any liability for loss as a result of acting on the information or opinions expressed