acd financial
sleep well at night
Welcome to the Autumn 2014 edition of the ACD Financial newsletter
> Practice News
> The Importance of Planning Ahead
> ACD’s Investment Corner
> Warren Buffett Words of Wisdom
> Fit As A Fiddle
> Advised Pre Retirees More Confident
> Did You Know?
> Date For Your Diary
Practice News
Adviser News
Andrew
The Harding family had a brilliant summer
holiday with a week at Hartley farm horse riding, playing
tennis, bushwalking and relaxing. We also headed north to
Hat Head and Bellingen, where we spent the days surfing,
snorkelling, fishing, reading, laying on the beach and
visiting water wholes. The country side around Hat Head
and Bellingen is beautiful. The kids have settled back into
school. Zara has joined Daisy at Loreto, Kirribilli and both
had a tremendous start to the year. Felix is now in year 5
with a fabulous teacher. He has been attending 4 to 5
swimming squad sessions per week and he is very pleased
to be representing the school at zone.
Guy With the Amon family scattered to the ends of the
earth and one at home chauffeuring me to school every
day, I thought I would be able to relax a bit … but no.
My mother has not been well lately and we have made the
difficult decision to move her to a high care nursing home.
Fortunately it is not too far from where we now live and
work. I am truly beginning to understand now the issues
and responsibilities of such a move. Thank goodness we
had powers of attorney + guardianship in place before now.
Steve (Chandler) Our family had a great time staying in
Lake Conjola (south coast) over the Christmas break.
There were tame kangaroos that liked being stroked much
to the delight of my children. We managed a steep climb up
to Pigeon House mountain and while my 2 year old son
insisted on walking I had to carry my 8 year daughter part
of the way up and down. No seconds guesses who is the
heavier, but the view from the top was worth it. We are in
the market for a pop-up camper trailer so for those
experienced
grey
nomad caravan owners
any tips would be
appreciated.
Steve
(Christie)
Stephen and his wife
TJ are feeling a little
sleep deprived since
the arrival of their
Labrador puppy Sophia
in
late
January.
Stephen taught a short
finance
course
at
Tsinghua University in
China in February,
while TJ is busy settling
in all the returning
students at Sancta
ACD News Autumn 2014
Sophia college, University of Sydney. In the meantime,
Stephen is getting more and more involved in the ACD
business, helping new clients come on board and assisting
existing clients of the firm as required."
The Importance of Planning Ahead
What is a Power of Attorney?
A Power of Attorney is a legal document appointing one or
more persons of your choice to be able to manage your
money and financial affairs and to deal with your assets.
This person is known as your Attorney.
The powers of an Attorney include operating bank
accounts; using your money to pay your living and medical
expenses; selling your assets and signing contracts and
other legally binding documents on your behalf.
If you wish you may specify in the Power of Attorney any
limitations that you wish to place on your Attorney's
authority.
An Enduring Power of Attorney means the authority
granted under the Power of Attorney remains in place if
your become mentally incapacitated
What Is An Appointment of Enduring Guardianship?
An Appointment of Enduring Guardian is a legal document
appointing one or more persons to make personal and
lifestyle decisions for you in the event that you do not have
the capacity to make these decisions for yourself.
Your Enduring Guardian has the power to decide where
you live; what health care you receive; decide on other
personal services and give consent on your behalf for
medical and dental treatment.
Who Should I Appoint as my Attorney and/or Guardian?
A person must be over the age of 18 to act as your
Attorney and/or Guardian.
Choose your Attorney and/or Guardian carefully. It must be
someone who you can trust to act in your best interests and
you must be satisfied that they understand and will follow
your wishes.
You are able to appoint more than 1 person to act as your
Attorney and/or Guardian. If you do, choose people who
can cooperate and work together in your best interests.
What Happens If I Do Not Appoint an Attorney and
Enduring Guardian?
If these appointments are not in place and you were in a
condition which prevented you from making decisions for
yourself, then there may be no-one with legal authority to
manage your financial affairs and make decisions about
your personal welfare.
Someone (usually next of kin) will need to make an
application to the Guardianship Tribunal to be granted the
power to handle your affairs. This process may be costly
and time consuming and may not appoint to you the person
you want to handle your affairs.
acd financial
sleep well at night
ACD’s Investment Corner
Things started to turn around in
February, with the Australian
S&P/ASX 200 Index up almost
5% for the month. The market
appears to have responded to
some stronger than expected
company
earnings
announcements
and
economic data.
At the time of writing the Australian share market is
relatively unchanged since the beginning of March as
investors absorb economic data from around the world and
consider valuations in light of the strong performance of
markets in February.
Here at ACD our view is that asset prices are fairly but
fully priced, reflecting the improving economic
fundamentals both here and around the world. Global
growth is likely to be supportive of investments: the US
economy continues to show signs of strength, while here in
Australia the housing construction industry is likely to be
supported by strong population growth fuelled primarily by
immigration.
Economic reform in Japan looks positive and China
continues to reform its economy - although Chinese
economic growth is unlikely to be as frantic as during the
past decade, we think this is a good thing and that China
will continue to grow in a way that continues to
support Australian exports, in particular our high quality
iron ore and agricultural products.
So what to do? … We think investors should maintain their
strategic weights in the core asset classes, perhaps taking
some money off the table if (as expected) asset prices rise
beyond fundamental levels as more cash, which has been
sitting on the sidelines, comes into the market now that the
economic world is starting to look more robust.
If valuations look extreme at some time in the future it may
be appropriate to go underweight strategic weights, but we
do not think that time has yet come. Your ACD adviser will
advise you what changes we think should be made to your
portfolio, if any, as the year unfolds.
Van Eyk Ratings
The start of 2014 has been somewhat unsettling for
investors: during January the Australian share market
declined over 3%, although still outperforming
international markets, including the Japanese Nikkei 225
(down almost 8.5%), the Hong Kong Hang Seng Index
(down almost 5.5%) and the US S&P500 Index (down over
3.5%).
ACD News Autumn 2014
Manager
van Eyk
Ausbil Microcap Australian Equity
Comment
A
Upgraded
Antares Investors High Growth
Shares Fund
BB
Ratings
from B
Perpetual Concentrated
Australian Equity Fund
A
upgrade
Equity
Vanguard Diversified Index Funds
Not rated
Bentham
Wholesale
Income Fund
A
Not
manager
active
Global
Pimco EQT Wholesale Australian
Focus
AA
Ratings
from A
upgrade
EQT SGH Wholesale Property
Income Fund
Endorsed
Rating provided by
SQM Research
Walter Scott Global Equity Fund
A
Platinum International Fund
A
UBS Cash Fund
Not rated
Schroders Credit Securities Fund
BB
acd financial
sleep well at night
AA high confidence; A confidence; BB identifiable strengths; B lack of
identifiable strengths; H hold, fund manager undergoing significant
change; FW fund watch, significant problems.
Source:
http://www.eluvia.com.au/content/apps/assetlibrary/MjIyMzI3NDI50/vaneyks-research-process.pdf
ACD Performance
The ACD investment performance graphs and tables reflect
the 1, 3 and 5 year periods to 28 February 2014 for a
sample of clients.
The above performance tables and graphs aim to
demonstrate that over the medium to longer term, our
diversified portfolio of fund managers has delivered value,
after fees, for those clients invested in the portfolio over the
relevant periods.
About the data The benchmark return is based on a Retail Unit Trust
Diversified (RUTD) index. The Morningstar Index is an average of the
returns from all the funds in a RUTD Category but does not include
advice fees.
The total rate of return ('RoR') for each underlying account has been
calculated based on earnings before ongoing fees and expenses.
The net rate of return for each underlying account has been
calculated based on earnings after ongoing fees and expenses. This
includes adviser fees and administration fees for the wrap service.
Data is produced from a sample of between 8 and 12 clients in each
of the ACD portfolios with an equally weighted mean of the returns
used. RoR on your investment may be different. Some clients within
each grouping may have slightly different assets allocations,
particularly if some are in pension phase and some are in
accumulation phase.
Warren Buffett Words of Wisdom
Warren Buffett says if you want to learn how to make
money from the stock market you should look at how he
made some money with two small real estate investments.
In an excerpt published by
Fortune, from his upcoming
annual letter to Berkshire
Hathaway
shareholders,
Buffett writes about his
purchase of a Nebraska
farm and his investment in
a retail property near
New York University in
Manhattan.
In both cases, he bought when prices were unusually low
after bubbles had burst.
In both cases he had no particular expertise.
And most importantly, in both cases he invested because
he thought the assets would be increasingly profitable, not
because he expected to sell at a higher price.
"With my two small investments, I thought only of what the
properties would produce and cared not at all about their
daily valuations. Games are won by players who focus on
the playing field—not by those whose eyes are glued to the
scoreboard."
He warns against "letting the capricious and irrational
behavior" of stock prices make an investor "behave
irrationally as well."
ACD News Autumn 2014
In addition, Buffett argues, "Forming macro opinions or
listening to the macro or market predictions of others is a
waste of time."
When he bought the properties in
1986 and 1993, economic projections
didn't matter to him. "I can't
remember what the headlines or
pundits were saying at the time.
Whatever the chatter, corn would
keep growing in Nebraska and
students would flock to NYU."
As for not needing expertise, Buffett
recommends a low-cost S&P 500
index fund for nonprofessionals, to
"own a cross section of businesses
that in aggregate are bound to do well."
He also urges timid or beginning investors against going
into stocks "at a time of extreme exuberance" and
becoming "disillusioned when paper losses occur."
"The antidote to that kind of mistiming is for an investor to
accumulate shares over a long period and never sell when
the news is bad and stocks are well off
their highs."
His bottom line fundamental advice:
"Ignore the chatter, keep your costs
minimal, and invest in stocks as you
would in a farm."
Source: http://www.cnbc.com/id/101440326 24 February 2014
Read more:
Berkshire Hathaway 15 Biggest Stock
Holdings (http://www.cnbc.com/id/33608379).
Fit As A Fiddle
"Fit as a fiddle!" How did we get this phrase?
Fiddles typically refer to stringed musical instruments, such
as the violin. As with most musical instruments, violins
require frequent cleaning and maintainence to remain in
good condition.
For example, violin
strings must be
replaced if they
are broken, tiny
pegs need to be
kept
tightened,
and the bridge
should
be
positioned properly
for optimal sound
output.
Additionally, to prevent dust buildup, the violin needs to be
cleaned every so often. This all contributes to the
instrument's health; it keeps the instrument in a playable
condition. One might even describe the violin as being
healthy, or fit.
Thus, because musical tools are often kept in a state of
good health, it would appear that a person's health began
being directly compared with that of their instruments.
Source:
Fiddle.html
http://www.knowyourphrase.com/phrase-meanings/Fit-as-a-
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sleep well at night
Advised Pre Retirees More Confident
About Retirement
Advised pre-retirees are more confident than non-andvised
that they will achieve the level of wealth they require in
retirement, CoreData research found.
The CoreData 2014 Post-retirement Report found that
65.1% of pre-retirees that do not seek professional advice
believe it's unlikely that they will achieve the level of wealth
they need in retirement.
But 48.2% of advised pre-retirees say they are likely or
highly likely to achieve the level of wealth needed in
retirement.
At the same time, unadvised pre-retirees are considerably
less likely to have made regular contributions to their
superfund.
As many as 30.4% of them made contributions over the last
year, while the number increased to 43.4% in the case of
advised pre-retirees.
Advice within super funds is the most valuable service to
59.5% of pre and post-retirees, whether their fund currently
offiers financial advice or not.
This is followed by financial counselling, with 55% of
respondents saying it is the most important service a super
fund can offer.
However, only 13% of those currently using a financial
adviser do it inside their super fund as a primary source of
advice.
The reserch found that reliance on the age pension is set to
increase, with pre-retirees anticipating drawing a median
25% of their income in retirement from the age pension, far
higher than the 7% currently drawn by post-retirees.
The CoreData report represents the findings from online
research conducted between the 16 January 2014 and 3
February 2014. A total sample of 997 respondents that are
over 45 years of age was used as the basis of this report.
Baby boomer parents may be four times as wealthy as their
kids, but no one should assume that their wealth will be
passed on.
National Centre for Social + Economic Modelling
researcher Marcia Keegan says that, contrary to popular
belief, only a minority of boomer households own
shares or investment properties that could be passed
on.
Many have superannuation balances and own their own
home, but longevity and more active lifestyles mean much
of their retirement savings will be spent.
According to Melbourne Institute’s Household, Income and
Labour Dynamics in Australia (HILDA) Survey, the mean
inheritance
peaked
at
$109,285 in 2006.
Ten per cent of baby boomers
may have median net wealth
after the home and super of
$684,000 but another 10 per
cent actually owe money.
Funding
their
own
retirement is a bigger issue
for many baby boomers
than what they are going to
leave their kids, says ING Direct chief operating officer
Anne Myers.
In its latest Wellbeing Index, ING Direct found only about
1/4 of all households were confident their super would
provide a comfortable retirement. One in five people with
assets outside super expected to be selling those
assets, including downsizing the family home, to fund their
retirement. Source: excerpt from The Financial Review 1 September
2012,
full
article
http://www.afr.com/p/personal_finance/smart_money/inheritance_baby_bo
omers_leave_slim_OryNX0LRrAjUUu1HtJiIwM
Source: Financial Standard 10 March 2014 Volume 12 Number 04
magazine, Laura Millan. www.financialstandard.com.au
Date For Your Diary
Did You Know?
ACD Financial Winter Forum
A Will is a legal document that sets
out who you want to receive your
assets when you die. Making a Will
is the only way you can ensure your
assets will be distributed according
to your wishes when you die.
Studies show that at least 45% of
Australians do not have a valid Will.
If you die without a Will your estate will be distributed
according to a pre-determined formula and, if your only
living relatives are more distant than cousins, your estate
will pass to the government. Source: NSW Trustee & Guardian 20
The Pointy End of Making Money from Shares
Guest Speaker: Antares Equities
February 2014 http://www.tag.nsw.gov.au/wills-faqs.html
Location:
Bayview Golf Club
1825a Pittwater Road, Mona Vale
Date:
Friday 6 June 2014
Time:
12.30pm till 2.30pm
RSVP to [email protected] by 29 May 2014
The information in this newsletter is of a general nature only. No
account has been taken of the investment objectives,
financial situation or particular needs of any particular person.
ACD Financial Pty Ltd ABN 21 118 533 645
Authorised Representative of Providence Wealth Advisory Group Pty Ltd AFSL 245643
E [email protected]
E [email protected] E [email protected] E [email protected]
Suite 11 Ground Floor 20 Bungan St Mona Vale NSW 2103
Suite 702 55 Hunter Street Sydney NSW 2000
PO Box 1387 Mona Vale NSW 1660 T 02 9997 7477 F 02 9997 7644 W www.acdfinancial.com.au
ACD News Autumn 2014
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