MASTERCLASS Investing – Financial Health Part 4 – What is Technical Analysis and how does it work?

Investing – Financial Health Part 4 – What is Technical Analysis and how does it work?

This is Part 4 of our Company Financial Health Series

(click for Part 1 Determine a Healthy Company

and Part 2 Difference between Fundamental and Technical

and Part 3 What is Technical Analysis and how does it work?)

In Part 1 we looked at how to determine financially healthy companies to invest in. In Part 2 we looked at how share investors can tend to fall into 2 groups – fundamental analysis and technical analysis, and explained what is the difference between them – our experience is that both fundamental and technical, can help for increased share-market investment success. In Part 3 we looked in detail on what is.

In this final Part 4, we look in detail about Technical Analysis.

Technical analysis

Using the technical analysis means to chart a stock’s share price upward or downward momentum. A technical analyst follows share prices in order to align investors with on-coming positive or negative price action – that is, to forecast/prepare investors to BUY when share-price patterns and volume data are indicating potential sustained rising, and to SELL when charting is indicating a potential meaningful fall in a stock’s (or the market’s) share price/s.

Technical analysis believes that the past trading activity and price changes of a security are better indicators of the security’s likely future price movements, than the intrinsic value of the security. Technical analysis developed from basic concepts taken from Dow Theory (a theory about trading market movements that came from the early writings of Charles Dow). Two basic assumptions of Dow Theory that underlie technical analysis are 1) market price discounts every factor that may influence a security’s price and 2) market price movements are not purely random but move in identifiable patterns and trends that repeat over time.

Technical Analysis – How it is used

Technical analysis attempts to predict the future price movement of shares/stocks and virtually any tradable instrument that is generally subject to forces of supply and demand, including stocks, bonds, futures and currency prices. In another way, technical analysis can be viewed as the study of supply and demand forces as reflected in the market price movements of a security. It is most commonly applied to price changes, but some analysts may additionally track numbers other than just price, such as trading volume or open interest figures.

Over many years, numerous technical indicators have been created in attempts to accurately forecast future price movements. Some indicators are focused primarily on identifying the current market trend, such as support and resistance areas, while others are focused on determining the strength of a trend and the likelihood of its continuation. Commonly used technical indicators include trendlines, moving averages and momentum indicators such as the moving average convergence divergence (MACD) indicator.

Technical analysis applies technical indicators to charts of various timeframes. Short-term traders may use charts ranging from one-minute timeframes to hourly or four-hour timeframes, whereas other traders analyse longer-term price movements by scrutinizing daily, weekly or monthly charts.

Assumptions

One assumption, that price discounts everything, means the market price of a security at any given point in time accurately reflects all available information, and therefore represents the true fair value of the security. This assumption is based on the idea the market price always reflects the sum total knowledge of all market participants.

A second basic assumption underlying technical analysis, is that price changes are not random, leads to the belief that market trends, both short term and long term, can be identified, enabling market traders to profit from investing according to the existing trend.

Want to learn the core issues of share investing?

See our slides SMSF  & Shares Overview to get a quick session where you can learn to easily understand Company Financial Statements, how to find healthy companies, what Tools and Ratios to use, work on examples, and also includes how to get better investment outcomes.

If you have questions, call 0407 361 596

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Basics about Super – Super & SMSF for Business Owners

Basics about Super – Super & SMSF for Business Owners

As a Business Owner, if you employ staff, you have a legal obligation to provide Superannuation in most cases.

Learn here about Superannuation in Australia, what we all need to retire comfortably, what we need in super to achieve it, how SMSF works … plus more …

Self-Managed Super Funds have become increasingly popular amongst investors, particularly with small business owners.

Everything a small business owner needs to learn about Super Funds including how to get better outcomes will be covered.

Learn:

• How much do you need to retire;
• Life Expectancy – how many years you need to have a supply of money;
• Overview of what super is and how it works;
• Average Super amounts in Australia;
• SMSF – what it is, structure, pros, cons, investments allowed, invest in property.

Click here for the Slideshow

Simple steps to TAKE ACTION:

• Talk with your financial advisor and tax agent;
• A plan of action is better than NO action:
  • Strategy – to become a controller of your wealth;
  • Structure – maybe a Self-Managed Super fund (SMSF) is the answer; and
  • Support – a service to handle all the set up and compliance such as SuperBenefit.

If you have any questions, please call or email as we would be happy to assist you with further information.

For a FREE no obligation discussion of the options for you, call us to book a time to meet.

0407 361 596 Paul, or info@superbenefit.com.au

Masterclass SMSF –What happens to super when you die?

SMSF –What happens to super when you die?

On the death of a person the law is that a member’s benefits must be cashed as soon as practicable. It is called a death benefit payment. Super does NOT form part of a person’s estate. To do so, a person can elect to include super in their estate by completing a Binding Death Nomination to provide for the distribution of the death benefit in accordance with their will.

In the absence of a binding death benefit, the trustee of the super fund may exercise their discretion and pay the super death benefit to the estate, where it can then be distributed according to the will. There is no legislative definition or APRA interpretation of how long “as soon as Practicable” is. Cashing means the literal payment of the benefit (balance) to a beneficiary and is complete when received by the beneficiary, ie transferred to their bank account or a cheque honoured. If the beneficiary is a dependent, the amount cannot be transferred to their member account by journal entries, it must be a physical movement of money.

How death benefit can be cashed

Benefits can be cashed either by:

• A single lump sum (in cash or in-specie ie transfer the shares, or assets);
• Part and final lump sum;
• One or more pensions (with restrictions – only to a dependent);
• Rollover for the purchase of one or more annuities (with restrictions – only to a dependent).

After 1 July 2007, the restrictions state that if the member’s benefits can ONLY be paid as a pension or annuity to a DEPENDENT such as spouse or partner financially dependent, with restrictions on children. For children that are dependent and of age 18 or over, the child at time of death must be:

1. Financially dependent on the member and less than 25 YO; or
2. Have a disability that is intellectual, psychiatric, sensory or physical or a combination, is permanent, results in substantially reduced capacity for communication, learning or mobility and requires ongoing support services;
3. Otherwise, the death benefit must be paid as a lump sum.

If a pension is paid, unless there is a disability, the pension must be cashed up when the dependent reaches 25YO.

Dependants – who are they?

A dependent is a person who is either a:

• Spouse – married, de facto, and same sex, whether financially dependent or not, but not former spouses for super purposes;
• Child – by birth, step, ex-nuptial or adopted, under 18 (over 18 must be financially dependent even if partial). Over 18 is still defined as a child for super benefit purposes, but not for tax purposes, unless financially dependent in some way;
• Interdependency also applies – evidenced by close personal relationship, living together, financial and domestic support and or personal care above a mere friend or flatmate. It may include a partner that does not meet the definition of a spouse, a close relationship but they may not live together eg working overseas or serving a jail sentence.

The tax definition will determine how a death benefit is taxed (ie as dependent or non-dependent).

For further information see the Australian Tax Office (ATO) website HERE.

Interested to know what self-managed super (SMSF) is all about, and if it is for you?

See the slides SMSF Roadmap Overview.

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and see how our Super-Connector Service assists you to find the right expert to answer your question – it’s FREE also!

No obligation. 0407 361 596, Paul.

NEWS – Labor’s excess dividend imputation credit policy unfairly targets SMSFs – SMSF Association

Labor’s excess dividend imputation credit policy unfairly targets SMSFs – SMSF Association

SMSF Association Media Release I 13 March – The SMSF Association strongly opposes the Federal Labor Party’s proposal to cancel cash refunds for excess dividend imputation credits.
Association CEO John Maroney says refundable franking credits have been a well-established principle for nearly two decades, having been introduced on 1 July 2000, and many SMSFs in retirement phase have partly built their investment and income strategies around this policy.
Click here to read our full Media Release.

Also appeared in: ABC News Breakfast, AdviserVoice, SMSFAdviser, Self Managed Super and Nestegg.com.au

John Maroney, CEO, SMSF Association appeared on ABC’s 7.30 report on Tuesday 13 March to speak about this issue. Click here to view the program, with the story beginning at 0:59.

Shorten’s tax hit is a betrayal of self-funded retirees The Australian (Licensed by Copyright Agency) I 13 March As a self-funded retiree who has budgeted for a full rebate of tax on dividends, I feel a sharp sense of betrayal at Bill Shorten’s statement that there is no additional tax (“Shorten’s big hit on super funds”, 13/3). Based on the presumption that once retired there is no income tax on income received by a SMSF, the reality is that cash flow into my superannuation fund from dividends will be cut by about a third. To say there is no additional tax is a complete distortion of the truth.

Articles on the same topic also appeared in: Bill Shorten faces a backlash on tax plan – Australian Senior (Licensed by Copyright Agency) Bill Shorten’s tax grab to affect the lowest incomes – The Australian (Licensed by Copyright Agency) Bill Shorten’s retirement planning move a bit rich – The Australian (Licensed by Copyright Agency) Low-income earners the major losers in Labor’s tax plan, says Peter Costello – The Australian (Licensed by Copyright Agency) Fund managers warn Labor policy to spark cash flight to property – The Australian (Licensed by Copyright Agency) Devil is in the detail of Bill Shorten’s dividend rebate ban – Financial Review (Licensed by Copyright Agency) Dividend imputation rule ‘a large distortion’: Forager Funds Management – Financial Review (Licensed by Copyright Agency) Paul Keating backs Labor over dividend imputation wind back – Financial Review (Licensed by Copyright Agency) Wealthy retirees hardest hit by Labor’s dividend tax plan – The Age (Licensed by Copyright Agency) All investors to suffer hit from Labor policy, says stockpicker Geoff Wilson – The Australian (Licensed by Copyright Agency) Franked dividends: how investors and retirees are affected – The Australian (Licensed by Copyright Agency) Bill Shorten sting hits $150bn of SMSF shares – The Australian (Licensed by Copyright Agency) Labor dividend hit sets scene for income tax cut war – Financial Review (Licensed by Copyright Agency)

Call for FREE education, or to speak to an advisor about your specific situation. SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need.

A call is FREE. No obligation. 0407 361 596, Paul

MASTERCLASS Investing – Financial Health Part 3 – What is Fundamental Analysis and how does it work?

Investing – Financial Health Part 3 – What is Fundamental Analysis and how does it work?

This is Part 3 of our Company Financial Health Series

(click for Part 1 Determine a Healthy Company and Part 2 Difference between Fundamental and Technical)

Fundamental analysis

Is used as an aid to successful investing and is a process of analysing the financial statements of a business (Balance Sheet, Profit & Loss, Cash-flow Statement), as well as creating ratios of some of the figures, to determine the financial health and assess the management of the business before making an investment by comparing the results with other businesses.

Fundamental analysis attempts to determine the value of a company by analysing the financial data from the annual reports and using other qualitative data about the company and the environment in which they operate. This value is often called ‘intrinsic value’. Fundamental analysis assumes that over the long term, a stock price will reflect the company’s intrinsic value.

Definition

A sound fundamental definition comes from Investopedia.  They define fundamental analysis as:

…a method of evaluating a security in an attempt to measure its intrinsic value by examining related economic, financial and other quantitative and qualitative factors. Fundamental analysts attempt to study everything that can affect the security’s value, including macroeconomic factors (like the overall economy and industry conditions) and company-specific factors (like financial condition and management). For further reading and an online video from Investopedia go to the fundamental analysis page.

Quantitative factors are those capable of being measured or expressed in numerical terms, measures such as:

• Revenue and growth of Revenue from year to year
• Earning / Profit
• Assets
• Debts

These financial measures are commonly combined to produce fundamental or financial ratios that analysts can use to compare the company they are analysing to:

• Prior trading period results
• Other companies in the same industry
• The overall market

Well-known Ratios include:

• Debt to Equity(DE)
• Return on Capital (ROC)
• Return on equity (ROE)
• Dividend yield
• Price to earnings ratio (PE)

Qualitative factors are those that are not in numbers – more like assessments and opinions/evaluations. So they can be subjective, and may include:

• Management performance and experience
• Competitive advantage
• Economic environment and head/tail winds/changes
• Business model
• Branding strength

Pros and Cons

Some Pros of fundamental analysis include that it can be objective (the quantitative parts), has a long-term focus, provides a guide to real stock value

Some Cons include being subjective to our own biases, the time involved to prepare/study, that market sentiment doesn’t always follow our own reasoning, the assumptions used, data looks back so the future can easily change the outcome.

To re-cap

Fundamental analysis is used as an aid to successful investing and is a process of analysing the financial statements of a business (Balance Sheet, Profit & Loss, Cash-flow Statement), as well as creating ratios of some of the figures and assessing  to determine the financial health and assess the management of the business before making an investment.

Want to learn the core issues of share investing?

See our slides SMSF & Shares Overview to get a quick session where you can learn to easily understand Company Financial Statements, how to find healthy companies, what tools and ratios to use, work on examples, and also includes how to get better investment outcomes.

If you have questions, call 0407 361 596

Centrelink – Moving to Aged Pension from Disability Support Pension? What are the pros and cons?

Centrelink – Moving to Aged Pension from Disability Support Pension? What are the pros and cons?

A very good lady asked whether moving to Aged Pension (AP) from Disability Support Pension (DSP) was the best thing to do and was there any pros or cons? I connected her (our Connect/Assist service) to the advisor for clarification.

While the amount paid stays the same, the main consideration when leaving DSP is that it may mean you loose certain benefits such as the incentive allowance, mobility and rent assistance allowance, as well as services and concessions from other providers. It is best to make a few calls and list the benefits and draw-backs on paper, with a column for each payment and the pros and cons that relate to you.

The Department of Human Services website explains more –

When you reach age pension age

Just before you reach age pension age, we’ll invite you to transfer to Age Pension.

You’ll need to tell us if you:

• want to transfer to Age Pension, or want to stay on Disability Support Pension, and
• have any superannuation

What won’t change

Whether you transfer to Age Pension or stay on Disability Support Pension some things won’t change, such as:

• your rate of payment
• the income and assets tests
• your concession card
• access to the Work Bonus
• payments being taxable
• rules to assess permanent blindness

Benefits of each payment

If you transfer to Age Pension:

• there are no medical eligibility rules or medical reviews
• the rules may be better if you want to travel outside Australia, and
• and live on a single title of land covering more than 2 hectares, we can exempt more land from the assets test

If you stay on Disability Support Pension, you may:

• get the Pensioner Education Supplement and Education Entry Payment if you study
• continue to get the Incentive Allowance
• keep the higher rate of Mobility Allowance
• get a higher rate of Rent Assistance if you’re single and sharing privately rented accommodation

If your partner gets Wife Pension they can also get the Pensioner Education Supplement if they study.

Other services and concessions

Before you decide to transfer to Age Pension, you should check if you’ll still be eligible for any services or concessions you currently get from other providers.

Read more about how to transfer to Age Pension.

Get your FREE 5 Easy Steps to Plan Retirement One-Page planner from the Resources

Got questions? If you want experts who have years of helping others, without the hype then call for a FREE strategy session today

No obligation call 0407 361 596, Paul

Masterclass SMSF – What can SMSF invest in?

SMSF – What can SMSF invest in?

For the Self-Managed Super Fund (SMSF) Trustee, there are certain rules that must be followed to ensure the SMSF super fund stays compliant regarding what you can invest in. Here they are and the Regulations or rule from the SIS Act (Superannuation Industry (Supervision) Act 1993) that it comes from.

Key Investment Rules

• Ensure Fund-Ownership of assets is secure (preference in   trustee name (individual(s) or corporate name) – S52(2)(d)
• Invest following the written Investment Strategy – Reg 4.09
• Cannot lend money or financially help others or members – S65
• Cannot buy assets from members or related members or entities (except shares and securities at market value, business real property) – S66 & S69-71E
• Must be no charge over any assets in the fund (recourse) S67A-67B & Reg 13.12–13.13
• Meet Sole Purpose Test – Decisions that will provide for retirement – S62.

Investment Choices

SFs can invest in various asset classes including:

• Shares, Options, CFD’s ,Covered Call Options
• Property – Residential and Commercial
• Managed Funds
• Term Deposits and Cash
• Government Bonds
• Exotic Assets (with a proviso***) such as:
• Art and Collectables
• Cars, Wine
• Antiques, Jewellery

***The Main Issue is you cannot USE/Enjoy them YET – this would break the Sole Purpose Test and is a breach of the SIS Act – S62 & Reg 13.14.

Interested to know what self-managed super (SMSF) is all about, and if it is for you?

See the slides SMSF Roadmap Overview.

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and see how our Connect/Assist Service assists you to find the right expert to answer your question – it’s FREE also!

No obligation. 0407 361 596, Paul.

Also get your FREE Expert Guide – Self-Managed Super and You – top right hand side above.