Welcome from Chris Cuffe
We’re all looking for the Holy Grail of post-retirement financial planning: ensuring money does not run out while enjoying the wealth opportunities from growth investments. It’s a dilemma that pushes many retirees to low income, low volatility assets to avoid the risk of equities.
Andrew Gale argues investors should rank three retirement goals – capital or estate preservation, income requirements and tolerance for variability of income. An economic model can then show an investor the likely trade-off between these three over time. It’s a useful discussion.
With central banks pumping so much money into global economies, it’s difficult to identify which assets are well-priced and which are simply responding to buckets of liquidity. If there’s one asset that still looks expensive, despite recent rate rises, it is long-term bonds. Roger Montgomery says buying bonds at yields below long-term inflation rates is asking for trouble.
In Australia, we believe our economic management has been better than the European counties often grouped into the PIIGS, the likes of Italy and Spain. So it will surprise many to learn that Australian 10-year bond rates, once yielding 5% less than these countries, are now trading at the same level. Ashley Owen explains how it happened.
There’s often criticism that the Australian superannuation industry is not innovative enough, especially in the post-retirement phase. Melissa Howes takes us through the two types of ‘stagnation risk’ that she has seen in her experience.
Finally, two short historical pieces. Don Stammer highlights the upcoming 30th anniversary of the float of the Aussie dollar, a policy that changed the economic direction of the country. And on the subject of Keating, was anyone eagle-eyed enough to read the notes he had written in the margin of a newspaper dated 5 September 1985, shown during the ABC interview with Kerry O’Brien last Tuesday? It said: 'The beginning of national super'. I’m sure most people would have nominated the start of national compulsory super in 1992.
Chris
Latest posts from Cuffelinks, 22 Nov 2013, Edition 41
- A better approach to post-retirement planning Andrew Gale
- Beware the headache when the QE party ends Roger Montgomery
- Australia joins the PIIGS Ashley Owen
- Companies that fear innovation risk stagnation Melinda Howes
- Happy 30th, $A float best policy change in post-war era Don Stammer
- Keating’s margin notes on the start of national super Graham Hand
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