May 2024 Newsletter
In this edition, we look at how we navigate the US elections, whether a retirement village best suits you, and a short video summarising the market movements across the October-November period.
If you are interested in discussing the topics raised in this month’s newsletter, please don’t hesitate to contact us.
In the meantime, we hope you enjoy the read.
All the best,
The Wealthy Me Team
You may be wondering how the election of Donald Trump might impact your investment portfolio. Before we dig into this week’s events, we would like to assure you that it is business-as-usual from our side.
Often the biggest risk in situations like this is reacting impulsively to the fears stoked by headlines in the media. But we would like to remind you that politics and investing are two distinctly different areas, and we will continue to manage your portfolios to ensure they are diversified and robust.
Donald Trump has won the Presidency and the Senate, which on paper gives him a clear mandate to enact his fiscal and monetary policies. The House of Representatives remains up for grabs which may curb his ability to deliver on all his plans – depending on how the outcome lands.
The market reaction in the immediate aftermath of the election is commensurate with Trump’s key policies of anti-immigration and protectionism. The US dollar has rallied as investors price in the possibility of trade tariffs. US government bond yields have risen (meaning prices have fallen) driven by a higher probability of inflation as the US labour force shrinks.
However, we are mindful that there is huge uncertainty surrounding the actual policies President Trump might get behind and these moves may reverse.
We will continue to monitor proceedings and will keep you informed if anything material ensues. Regarding your portfolio, it is for circumstances like this where taking a diversified approach to managing money is instrumental for mitigating risk.
Your portfolios hold assets like financial stocks and broad equities that should perform well if inflation rises and growth backdrop consolidates. There are also positions like defensive equities and government bonds that should appreciate if the global economy loses momentum.
At the same time, the portfolios have avoided going “all in” on any potential outcome. Instead, your portfolios are robust and constructed so that they might be expected to perform well over the long run, come what may.
1. In the face of political uncertainty, it is normal to question whether you should sell, hold or buy. To our eye, the answer is simple: manage risks, stay informed, and most importantly, stay true to your goals and objectives.
2. Any turbulence in markets may create great opportunities to purchase assets that will add meaningfully to returns in the future.
We hope you find this perspective helpful and we’ll keep you updated as events evolve. As it stands, we want you to know we’re carefully monitoring proceedings, and we are here to help with any questions you may have.
The retirement living sector is growing rapidly in Australia as the population ages and demand increases for a spot in a retirement village.
For many people, the idea of having someone on site to help with property and garden maintenance is enough for them to make what can be a major change later in life. For others it is about the ready-made community and the easy access to social activities and a network of friends. And, as developers seek to entice younger and younger residents, they are dialling up the luxury and add-ons.
The type of accommodation varies widely between villages from apartments, villas and houses. Some retirement villages have a resort-style feel with a range of onsite amenities on offer including swimming pools, fitness centres, cinemas and cafes and there are often different dining and cleaning options available for residents.
Research released last year by the Property Council of Australia shows that retirement village residents are 41 per cent happier; 19 per cent less likely to require hospitalisation after only nine months; 15 per cent more physically active; five times more socially active; twice as likely to catch up with family or friends and have reduced levels of depression and loneliness.i
One important factor that sets retirement villages apart from residential aged care facilities is that retirement village living is considered independent living, generally without medical or personal care available through the village itself.
Some residential retirement complexes include both independent living homes and aged care facilities. This set up can make the transition to aged care, if needed, less stressful especially if one member of a couple needs greater care.
However, the two operations are regulated quite separately under different laws and there are no guarantees that you can move smoothly from one to another when you want to.
Unlike assisted living or residential aged care, retirement villages are not regulated by the Federal Government but are governed under state and territory retirement villages acts. As such, the rules can vary between jurisdictions and villages.
Buying into a retirement village can be a significant expense, making it important to understand the legal implications and ensure you carry out a thorough check to see if it is affordable.
In most cases you don’t own the village residence. A common arrangement is for a lease or loan type arrangement, where residents buy the right to occupy a home within the village for a specific period.
The level of fees and how they are set is a private commercial arrangement and not governed by any laws. The costs could be roughly what would be incurred if you owned your home. As well as an upfront price, there could be ongoing maintenance fees and deferred management fees, which reduce the amount you receive when you leave the village.
Knowing your rights and obligations, as well as the initial costs and ongoing fees and expenses are key considerations to a successful transition.
Financial and legal advice is highly recommended to ensure clear understanding of the purchase arrangements and contracts. Their level of complexity is not to be underestimated.
It is most people’s aim to remain living independently in their own home for as long as possible.
For people living in retirement villages, this could mean accessing government subsidised home care services – for example, through the existing Home Care Packages Program. Depending on a person’s health, these services could include cleaning and domestic assistance as well as personal care, such as assistance with showering or the delivery of pre-cooked meals.
Following the introduction of recent reforms, a new Aged Care Act aims to increase the subsidies for services and equipment to assist people staying at home.
A new Support at Home Program will replace the Home Care Packages Program from 1 July 2025. The Commonwealth Home Support Program will transition after 1 July 2027.
The reforms also include significant changes to the funding arrangements for residential aged care.
For both home care and residential aged care, the focus will be increasing the quality of services and the rights of individuals, while at the same time looking for greater contributions from people accessing the services.
Retirement villages are largely lifestyle considerations, but you also need to consider your current and future care needs to ensure that the village you choose will remain suitable for at least the medium term.
Contact us to discuss your plans for retirement.
i Seniors’ housing focus required as population ages | Property Council Australia
Stay up to date with what’s happened in the Australian economy and markets over the past month.
Welcome news on the inflation front in October pointed to the Reserve Bank of Australia (RBA) holding steady on rates this month.
The latest quarterly inflation figures show inflation has slowed to its lowest level since the height of the pandemic and now sits within the RBA’s target range at 2.8%.
Global share markets softened in the final two weeks of October, reflecting economic and geopolitical uncertainly.
The S&P/ASX 200 closed slightly down over the month of October, after again reaching record highs mid-month.
With the US election on the horizon there is much speculation about what that will mean for markets and the economy, both in the US and Australia.
Click the video below to view our update.
Please get in touch if you’d like assistance with your personal financial situation.
