MLC Market Watch

The recent volatility in sharemarkets has put the role of debt in a portfolio under the spotlight. Natalie Comino looks at the value of debt in an investor’s portfolio.

 
Her analysis includes:

• the advantages of debt over shares
• the impact of interest rates on debt, and
• debt strategy in uncertain times.

View the Natalie Comino video here.

MLC Investment Strategist Brian Parker answers the big picture economic questions we didn’t manage to get to in our December webcast. View the online discussion and watch this space for more Q&A.

Have you any idea when the bounce may come?

The short answer is that no-one knows. What we can say is that share market recoveries tend to happen before economic recoveries. In other words, waiting for better economic news as a sign of better times for the share market could mean you miss the bounce when it happens.

What will recover quicker the Australian share market or the international share market?

In this kind of environment, the local market is likely to take its lead from offshore movements. That’s not to say we cannot recover without a lead from offshore, it’s just that you would not want to bank on it.

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On Thursday 4 December, MLC hosted an online discussion for people in or approaching retirement. Here, MLC’s Head of Technical Services, Andrew Lawless, tackles the super and pension questions the panel didin’t manage to get to in the webcast.

A number of commentators suggest people previously considering retiring shortly should remain working now for a number of years – does this make sense when taking into account how long most people will be retired for, and how share markets should perform over the long term?

If the sharemarket performs exceptionally well, then any reduction in your account balance could be restored without needing to stay in the workforce and save more. However, no one can predict when the sharemarket will rebound and how strong its performance will be. If, therefore, you have the opportunity to continue working and save more from your income, this could be a prudent strategy. This could be reviewed depending on future market performance.

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MLC’s Greg Miller, General Manager of Advice Solutions answers questions posed to our panel on Wednesday 12 November on how to find a quality financial adviser.

How do you find a trustworthy adviser? I know people who have lost everything by trusting people.

Developing a plan for your finances is one of the most important things you can do in your life, so it pays to find an adviser you can trust to understand your needs and act in your best interests.

Most financial institutions are able to refer you to a qualified financial adviser, so you can ask for recommendations from an institution you trust. You can also search on the Financial Planning Association website.

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Andrew Lawless is Head of Technical Services at MLC. Here he answers the super and pension questions the panel didn’t manage to get to in MLC’s online panel discussion, held on Wednesday 12 November. Watch this space for more Q&A.

Is salary sacrifice a good idea in these times as I want to retire in a year?

Regardless of market conditions, salary sacrifice is a tax effective way to save for retirement. This is because your super contribution is taxed at a maximum rate of 15%, instead of your marginal income tax rate which could be up to 46.5%*.

There could also be advantages to investing in super when markets are down. This is because share values are cheaper, so you can buy more with your contribution and capitalise on this when the market recovers.

You should see a financial adviser to work out whether salary sacrifice is the best way for you to boost your retirement savings. If it is, they will also be able to advise on what investments you choose to generate sufficient income for your retirement.

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