Why Daily Market Swings are Irrelevant

Dale Gillham, Chief Analyst and Head Trainer of Wealth Within

By Dale Gillham |

Let’s face it, we all want to retire on a comfortable income and research suggests that for a couple to retire comfortably they need $640,000 or $545,000 for a single. Yet the research also indicates that the average Australian is retiring on much less with men under $180,000 while for women it’s under $140,000. This means that many Australians will need to either work longer before they can retire or live a less than comfortable retirement, as they will potentially run out of money before they run out of time.

Retiring comfortably is more than just superannuation

According to the ABS, the life expectancy of males has risen to just over 81, while for females it’s 84, however, by the end of this decade it will rise to 82 for males and 85 for females. If the average couple retires at 65 with $320,000 in superannuation, and assuming they live for 17 years in retirement, it means they will have approximately $18,800 per year to live on. It is frightening to think how the average Australian will cope in retirement, especially when this could have been avoided.

The prospect of having to compromise your standard of living when you retire after working over 40 years is not very attractive, and we know the costs of living aren’t going down, so the situation will only get worse if we don’t do something about it. The current statistics confirm that the path individuals take to prepare for retirement is just not cutting it. They also show how relying on superannuation alone is not enough, which means everyone needs to be investing outside of super.

While investing in property and shares may seem daunting for those who are uneducated about investing, I have lost count of how many I have helped get started who have gone on to fund a better lifestyle for themselves in retirement. As Abraham Lincoln once said, you cannot escape the responsibility of tomorrow by evading it today. Having helped people for decades, I know that literally anyone, no matter how young or old, can begin their journey to a better financial future, and as Mr Lincoln indicates, the sooner you start the better.

What were the best and worst performing sectors last week?

The best performing sectors included Energy up 1.58 per cent followed by Financials, which ended the week exactly where it started while Information Technology was down 0.62 per cent. The worst performing sectors included Utilities down 3.39 per cent followed by Materials down 2.99 per cent and Healthcare down 2.97 per cent

The best performers in the S&P/ASX top 100 stocks included The Star Entertainment Group up 11.92 per cent followed by Pilbara Minerals up 8.10 per cent and Endeavour Group up 7.71 per cent. The worst performing stocks included Downer EDI down 8.58 per cent followed by Origin Energy down 8.01 per cent and Evolution Mining down 6.94 per cent.

What's next for the Australian stock market?

The last few weeks is a good indication of why we need to ignore the daily fluctuations in the stock market. In the nine trading days since the All Ordinaries Index closed on 7 October, it has risen or fallen around 2 percent on five occasions, yet it is only down around 1.5 per cent as at the close on Friday 21 October.

During that time, news about the stock market has been quite bearish with many investors fearful of what may unfold. But this is a very stark reminder that daily fluctuations are largely irrelevant and why investors should look at the bigger picture rather than concerning themselves with what the US market did last night. Right now, the Australian stock market is holding up and the tug of war between the bulls and bears is fairly equal with no clear direction in price.

In my last report I mentioned that if the market can hold, we are likely to see a sustained rise over the coming months. While the market has held, and technically it was an up week last week, it closed lower than it opened. Given there is no clear direction of a trend, we still need to assume that the low of 6,581 points may be challenged. How the market unfolds this week will provide a good indication of where it will head into Christmas and beyond. As always, investors need to be cautious, have an exit strategy and be selective with any stocks they buy.

For now, good luck and good trading.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the bestselling and award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online.

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