All Ords Report 08 June 2018

Do you worry about how your children will survive when everything we rely on is increasing in price?

While all we want for our kids is security and happiness, as parents we can sometimes come across as the bearer of cruel realities when trying to get them to understand the pressures that come from the rising costs of housing, food, utilities, petrol and the list the goes on.

So here are two simple things you can do today that will help guide your kids towards their own financial success and security:

First, instead of telling them that property prices are escalating and city living is becoming a nightmare or that they need a good job and to save better, let your kids in on how much your home costs and how prices have changed so they gain an appreciation for rising costs.

Second, it’s not easy for most children to think that far into the future, so start by asking them about what they want this year. Give them a questionnaire that gets them to focus on the next 12 months, which may include questions such as

  1. Do you want to have money saved by the end of the year?
  2. What job would you like or what career progression seems achievable by the end of the year?
  3. How mobile do you want to be – do you want to own a car?

Keep it fun, ask about relationships, travel or educational goals they would like to achieve.

The outcome is a one year plan and it creates the potential to extend it to five years.

These days children have a greater awareness about so many things, as information is so much more readily available. But it's important that we broaden their horizons in areas that are going to help them in life and one of these is investing.

The best way to help your children is if you actively invest. But more importantly, if you demonstrate the right way forward, starting with a good education. After all, isn't that what we tell our kids as they move from primary school into secondary education? How many times have you shared with them that they must get a good education. So it is when investing in the stock market.

It starts with a basic course, right up to a more professional level of education. How far you choose to go depends on what you want to achieve.

You can also give them a good start by sharing my newly published book, Accelerate Your Wealth—It’s your money, your choice, also available in all good bookstores.

What do we expect in the market?

The Australian market gapped up strongly on Thursday, well above 6,100 points, while attempting to build support to trade higher. Although the market is currently holding steady right now, which indicates it remains bullish, a strong move down below 6,097 points would indicate a short term change in sentiment.

If this occurs, it may test historical support between 5,950 and 6,000 points, which would be considered normal and therefore wouldn’t change my overall view on the market. There are good opportunities for savvy investors.

The RBA’s decision to leave rates on hold, as well as solid balance of trade data, helped to keep the market buoyant this week. I cannot say that the RBA's decision was a surprise. It is good to know that Australia's GDP has grown above expectations for the quarter, with exports in commodities providing the higher result.

Looking at our market, it is definitely split, with the Financial sector being strongly down and areas such as Materials, Energy, Healthcare and Consumer Discretionary being some of the solids performers.

This is where having a portfolio with constraints that require investment weightings in certain areas can really weigh on your portfolio, particularly if you are heavily exposed to one of the under performing sectors.

Global markets

I find talk of the North Korean leader being on his knees to request a meeting with the US as disturbing, as I'm getting a bit tired of the propaganda being spread.

We are likely to see tensions between some of the major global players persist for some time. From an investor's perspective, it is so important to keep your eye on what the markets are doing rather than paying too much attention to what is being said.

The Dow Jones continued higher this week towards important resistance between 25,800 points and 25,400 points. It is interesting to observe that the Hang Seng (HSI) has been trading in a similar pattern, as trade related matters persist between the US and China. The HSI is heading up towards 32,000 points, but if it fails to trade above this level over the coming weeks, it is likely to be trading closer to 30,000 points into the second half of the year.

Remember, we’ve been producing the share market reports on our YouTube channel, and this week's report is already published!

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Dale Gillham is Chief Analyst at Wealth Within