Dear Sir/Madam,

As I write to you, we have just passed the 12-month anniversary of the very first COVID lockdown in Australia when it first hit us in mid-March 2021.  When you look back at what ensued over the following 12 months your head spins!  Having just experienced the worst bushfires disaster in a generation we were met with a COVID world in economic, health and unemployment crisis, Mexit as Harry & Meghan stepped down as royals, drought ended, globally Governments printed endless money and handed it out everywhere, The Olympic games was postponed as was every global event and sport, Borders were locked, BLM & riots, Hong Kong under threat of China takeover, Australia in recession for first time in 30 years, one of the sharpest falls and fastest recoveries of world sharemarkets in history, COVID vaccines announced, trade war with China and the farcical spectacle being the US Presidential Elections!!!  That year left everyone dazed and bewildered!


2021 has presented as a year with some monumental economic challenges but with a sense of hope for many that better times are ahead.  In Australia, there are some nervous times coming in April for many given the imminent termination of the JobKeeper program, small business tax deferral and the freezing of mortgage payments.  It will be quite telling how resilient Australia is when the COVID life support programs are removed.  The markets will be watching this closely.


Overall, we are hearing positive outlooks from economists, the Chrysalis investment committee analysts and the many many briefings we attend.  This is a year where the world must begin the long recovery from the damage sustained from COVID.  Governments will continue to print money to underwrite the recommencement of businesses and to minimise the social displacement this Pandemic has caused.  In Australia, State and Federal Governments are gun shy about opening internal and international borders and with federal and state elections coming up, you can bet that there will be no appetite to run the border opening gauntlet unless the vaccine has been widely injected and proving effective in preventing transmission of the virus.  Aviation and travel related industries are likely to sustain further impacts for some months/years to come.  We expect many of the industries that are not impacted by those border issues to experience a positive year of growth which should bode well for sharemarket and property returns (which are red hot currently).


In case you are wondering, we are not overly worried about inflation in the short to medium term.  The central banks can sort out inflation quickly short term by merely suggesting that they are considering a change in policy rather than actually doing anything. Biden is going to spend big, and this is what bond markets are forward looking towards as the catalyst to cause growth and more inflation, and not just in the US, but across the world as it spills over.  We have to start seeing demand outstrip supply and then it will follow into wage growth, which is the key for sustained inflation. With plenty of capacity in the labour market globally as well as Australia, we believe it will take some time for this to occur.  Inflation will be an issue down the track though and it will need to be addressed.               


We also don’t expect interest rates to move higher for many years to come. The Australian Reserve Bank Governor has said as much in the media.  The reason is that central banks and governments will try hard to keep interest rates at a level that does not stall their economies. If interest rates do go much higher, that will slow growth and inflation as consumers and businesses have a lot of debt and will cut back on spending.  Earnings is the key.  We are expecting earnings growth to continue for the next 18 months or so, just like what we saw after the GFC but with more volatility.   We expect your investments to grow solidly this year as a result of these economic conditions and Government input.


We want to acknowledge the punishing 12 months our Qantas clients have just been through as their careers & lives were held in limbo.  Now that most of the redundancies have taken place, we want to congratulate you and celebrate some incredible careers and a wonderful new chapter in your lives to be written.


At Chrysalis we have managed to navigate through the lockdowns and COVID impacts with minimal impact to our operations.  We want to thank you for your wonderful patience as we tried to communicate the plethora of changes in a timely way and be there for you personally to allay your fears and concerns.  Your investment portfolios have withstood the most severe crisis the world has faced in over 100 years.  We are working hard to ensure your investments are positioned now to take full advantage of the recovery cycle which is currently underway.


Thank you again for your loyal support and for the many referrals that continue to come in.  As a result of our recent growth, we are currently trying to recruit another adviser and adviser support staff member to ensure our service levels continue to meet and hopefully exceed your expectations.  We will be calling each client every year to hold a review meeting together which is now required by law.  We look forward to speaking with you then.


On behalf of the whole team, we trust that 2021 is proving to be a much better year for you and one which will deliver wonderful memories.  Look after yourselves and your loved ones and enjoy the cooler weather as winter approaches.  We are always there to help in any way so please don't hesitate to call us.


Chrysalis Lifestyle Planning

Chrysalis Advice team

Chrysalis Lifestyle Planning


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