All Ords Report 22 March 2018
Are you working harder than necessary to have sufficient savings for your retirement?
I’m finding on a daily basis, that most people who ask for information about building their wealth in the stock market are worried about whether they’ll have enough. Unfortunately, many either have no idea or only a vague notion of how much they’ll need.
Research released only two years ago said most retirees don’t have enough for a comfortable retirement and that we all need at least $1 million dollars to retire.
But if retirees don’t have enough, why are half of all retirees on welfare spending less than the age pension?
Research conducted by the Melbourne Institute in 2016 indicated that for Australians aged over 70, only 13 per cent experienced financial stress. Interestingly, ten years prior, the data indicated that only 10 per cent in this age group experienced financial stress. While there is a difference between then and now, overall it’s small.
So do we need as much as we’re being told?
For a couple in retirement, experts have suggested they need around $60,000 per annum to live a comfortable retirement. But spending declines dramatically after we turn 80.
Perhaps a good way to get a clearer picture about what you need, is to start by asking people who are already retired.
So do Australians really need to work harder to accumulate more wealth?
When estimating how much you need, remember to add two to three per cent to cover inflation each year from now until you expect to retire. Also review current expenses and remove/reduce the items you won’t require when retired. The Government website Money Smart provides calculators that can assist you to estimate what you’ll have in retirement. So, start doing your research today!
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What do we expect in the market?
The All Ordinaries Index (XAO) moved sideways last week between 6,000 and 6,080 points. This week, it initially traded higher before falling slightly towards the lower level of this zone.
The positive is that the market is holding at around an important level of support. While there may be a further move down, for the market to confirm support for the next rise, I haven’t ruled out a rise into next month.
It was interesting to observe how volatility returned to the market last month during reporting season. This is typical of what unfolds at this time of year. However, many companies have enjoyed an earnings upgrade this season, with the majority reporting positive news including, Sonic Healthcare (SHL) and Transurban (TCL). That said, Top 20 companies like Commonwealth Bank (CBA) and Telstra (TLS) reported below analyst forecasts.
I have previously shared with you my thoughts about where our market is in the bigger picture; it has been moving into the ‘improving earning’s phase’. To confirm the theory, we are seeing positive signs about the economy, with improving business sentiment.
The current NAB business survey indicated that business conditions climbed to record highs in February and annual economic growth in Australia reached 2.4 per cent to the end of December.
That said, the Financial sector is making it difficult for our market to move higher, however, when this eventually occurs we are likely to see a strong rise across the broader market.
The Financial, Property and Telecommunications sectors have been in decline and are likely to present opportunities when major stocks within these sectors confirm their share prices have bottomed. It will take a couple of months for this to occur, therefore, investors need to be patient rather than jumping in too early, as this is a risky proposition.
We’ve been producing the share market reports on our YouTube channel, so we encourage you to watch them to stay up to date.
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Dale Gillham is Chief Analyst at Wealth Within