Dear Sir/Madam,


Spring has sprung! Warmer weather, longer daylight hours and new shoots in our gardens. It's a great time to look forward to new opportunities. That certainly has been the case for our property market which has sprung into action literally on the first day of Spring on 1 September. I know around our area, open homes are seeing almost record numbers of visitors as people look to come out of the property cave after two years in hibernation. It's still early days but the signs of recovery are promising.

 

Things are not so rosy on the economic front though. As you have seen, interest rates are still coming down and we expect them to fall even further. Governments drop interest rates to try and stimulate growth when economies are contracting. That's what's happening here and around the world at the moment. You may have seen news articles about the arrival of the inverted yield curve. A really boring and technical topic but one that economists often point to as the strongest indicator of a coming recession. It has got to such a crazy point now that some regions such as Europe and Japan now have government bonds delivering a negative price which is almost unheard of. Why someone would give $100 to a government for the promise of only receiving $95 back in 5 or 10 years from now is not logical. That's what's happening. Negative interest rates are not new, but it is rare and happening again.

 

Normally falling interest rates are being lowered due to economic weakness. This can lead to contracting profits for companies and more fear around stockmarkets but there is an interesting anomaly happening in the market which is maintaining a degree of growth of the world stock and property markets. Interest rates are now below the cost of inflation in Australia. So even through many people in retirement want to live off their cash deposits returns, the rate is so low that they cannot afford to live like they have historically been able to when rates were higher. As a result, investors are forced to take on more risk and look for other investments that give them the opportunity for higher returns to fund their lifestyle. This has seen investors pouring into the stock markets and buying shares which is pushing up share prices even though economically the world looks pretty precariously balanced at the moment.

 

It's a very complex environment out there at the moment with a crescendo to soon be reached with Brexit, China/Trump trade wars, US Economy & it's interest rate direction, the critical Australian drought and the upcoming energy crisis. Markets are very volatile at the moment as they are trying to read the play about all these themes and predict which way things will go and as yet there is no solid ground.

 

As a result we expect that markets will be continuing their daily swings up and down as they wrestle with deciphering the plethora of information coming at them. Whilst we are preparing now to be more defensive for the short to medium term with your portfolio, we are optimistic of continued modest positive returns in your portfolio.

 

Chrysalis News

New office - We have now settled into our new premises in Dee Why and look forward to showing you around when you come in next. The office is nearly 3 times the size of the previous one with more capacity now for all 4 advisers. So we are setting for substantial growth off the back of the impact of the royal commission on financial advice in Australia. Already several thousand financial advisors have left the industry and many more will leave in the coming months. It is anticipated that 25% or more may leave the industry as a direct result of new education and compliance requirements for this industry.

 

Separately Managed Accounts (SMAs)- We are in the middle of drafting compliance documentation for many of our clients to recommend changes to the new SMA investment structures that I announced in the last newsletter. These new investments will be designed and overseen by your existing Chrysalis investment committee but will come with a range of improved benefits to you. They will also be designed with the more defensive outlook in mind that we want to move you to. Stay tuned for more very shortly!

 

Recruitment - we are currently advertising to recruit a new senior back office administrator. Please let us know if you have anyone in mind with experience of 3 years or more in back office admin for financial planners.

 

Client Cocktail Evening - next February and March we will be inviting our clients located in Brisbane, Canberra and Sydney to attend a very special cocktail fund manager evening with us hosted by Magellan. This will be an event not to be missed! More info to come.

 

This year is fast coming to a close and the Christmas rush will soon be upon us all. Here at Chrysalis we continue to work hard for you in the background to add value and serve you in any and every way we can so that you can create the life you want!

 

We have received a significant increase in the number of referrals in the past couple of months and want to say to everybody that has referred people to us how thankful and grateful we are for your support and we promise to take really good care of those people for you.

 

We all wish you a fantastic remaining 2019. As always, we are just a phone call away if you need us.

Chrysalis Lifestyle Planning

Chrysalis Advice team

Chrysalis Lifestyle Planning

Website: www.chrysalislp.com.au

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