Welcome to the 2020 Autumn Edition of the BFG Report
Top Tips When Preparing Your Will
Preparing a Will can be complicated, especially if you have a complex family or asset structure. Here are some tips to consider when writing a Will.
Make a List of Your Assets and Beneficiaries
Your Will should include a list of your assets that you wish to pass on to your loved ones. Your list of assets should include, for example, property, life insurance, super, bank accounts and valuables. Then, list all your beneficiaries including those who are financially dependent on you and those who you would simply like to leave an inheritance. Make sure you spell out their first, middle and surnames correctly.
Consider Your Super
Contrary to popular belief, your super doesn’t automatically become part of your estate and is not covered by your Will. If you do want it to form part of your Will, a correctly worded death benefit nomination, which outlines who you wish to receive your super, should be made to notify your super fund. The tax consequences of these nominations should also be considered and understood.
Choose Your Executor
The role of your executor is to communicate with your beneficiaries and distribute your assets according to your wishes (as outlined in your Will). An executor should be someone who can be trusted and who is reliable. They should be organised, financially savvy, fair and impartial. You can also nominate a professional trustee company to manage the administration of your Will on your behalf. It is important to have a detailed understanding of the nature of the executor role prior to deciding who is most appropriate in your circumstances.
Check the Details
When including an organisation in your Will, such as a charity, it is essential to get the name and other details, for example, ABN or ACN, correct. If an organisation is incorrectly described, it may not receive the benefit or there may be significant legal costs incurred before it does.
Keep Your Will in a Safe Place
Tell your executor and (if appropriate) family members where they can locate your original, signed and witnessed Will. If your Will is damaged or if your executors can’t find it after your death, then your wishes might not be followed. Never attach other documents to your Will. Marks made by, for instance, staples, paper clips or sticky tape can raise questions about whether the Will has been tampered with or whether pages and amendments are missing.
Review Your Will
Your Will should be reviewed regularly including for example whenever your personal circumstances, family dynamics or ownership of assets changes. A good rule of thumb is to review your Will every three to five years. A review doesn’t need to mean that adjustments will be required, particularly if your Will has been well drafted to take into account various contingencies at the outset.
Get Professional Advice
Writing a Will isn’t straight forward. We recommend you consult a solicitor, estate planning lawyer or trustee company that specialises in estate planning to make sure you get it right.
Investment Market Review – Quarter Ended 31 December 2019
Australian Shares
The S&P/ASX 300 Accumulation Index rose 0.7% during the December quarter, underperforming global markets. Most sectors performed positively, except for the banking, property and consumer staples sectors. The banking sector, as a major component of the overall market, struggled as both Westpac and NAB faced regulatory scrutiny. Energy stocks did well on the back of a new deal by nations in the Organisation of the Petroleum Exporting Countries (OPEC) such as Iraq, Kuwait, Libya and Saudi Arabia, to cut back global oil production. The prospect of reduced supply helps drive oil prices higher.
Australian Shares
1 Year is 23.8%
5 Years is 9.1%
10 Years is 7.8%
Listed Property Trusts
The Australian real estate investment trust (A-REIT) sector fell -0.7% during the December quarter. This was predominantly interest-rate driven. A-REITs are often held for their income generation as an alternative to bonds. As such they are sensitive to changes in bond prices. As bonds become cheaper and offer more attractive yields to investors, REITs will tend to follow suit with negative capital returns as a result. Company news was focused on annual general meeting (AGM) updates and guidance for the 2020 financial year.
Listed Property Trusts
1 year is 19.6%
5 Years is 11.2%
10 Years is 11.6%
International Shares
Global markets had a strong quarter with the MSCI World Index in Australian dollar terms recording a gain of 4.2% for the December quarter. Most global share markets rose during the quarter (in local currency terms) led by positive performance in US technology shares with Chinese shares close behind. Expectations of a resolution to the trade war between the US and China contributed to improved investor risk appetite, as did easing by central banks during the quarter. In addition, positive economic reports, such as the JP Morgan Global Composite Purchasing Managers Index (PMI), signalled improvement in global growth. The Australian dollar rose during the quarter which slowed unhedged global share returns. Key drivers for this was progress on trade talks between the US and China as well as stronger underlying Chinese growth as signalled by the Chinese Manufacturing PMI.
International Shares
1 Year is 27.9%
5 Years is 12.1%
10 Years is 12.2%
Fixed Interest
Australian and global bond yields fell further during the quarter with the Bloomberg AusBond Composite index declining by -1.3% during the December quarter, which was driven by higher bond prices. In Australia, there has been a continuation of weak data for the domestic economy, including weaker economic growth and poor consumer and business confidence, as measured by Westpac and NAB surveys respectively. While inflation rose slightly by 0.6% during the June quarter (reported in July) on an annual basis it was only 1.6%. This remains below the Reserve Bank of Australia (RBA) target range of 2–3%. In addition, the unemployment rate at 5.2% (as of September) remains above the RBA target of 4.5%. Taken together, these factors contributed to the RBA’s rate cut decisions in June, July and, following quarter-end, in October. Concerns over rising trade tensions between the US and China, as well as weaker global growth fears, contributed to falling yields globally which also affects Australian bond yields.
Fixed Interest
1 Year is 7.3%
5 Years is 4.2%
10 Years is 5.7%
Cash
The RBA cut interest rates early in the quarter by 0.25% and subsequently left the cash rate on hold at 0.75%. The RBA outlook continues to be driven by concerns over slowing economic growth and their view that rate cuts can continue supporting lower unemployment without increasing inflation. The ultimate impact will be mixed. Borrowers benefit from greater spending power while investors and savers will see lower future returns as a result.
Cash
1 Year is 1.5%
5 Years is 1.9%
10 Years is 2.9%
High Yielding Internet Savings Accounts
Financial Institution Interest Rate**
RaboDirect Bank 2.50% p.a.
ME Bank Online Saver 2.05% p.a.
Citi Online Saver 2.30% p.a.
ING Savings Maximiser 1.95% p.a.
Rams Saver 1.90% p.a.
St George – Maxi Saver 1.80% p.a
* Rates are subject to conditions and change. Rates are correct as at 5/03/2020.
