Precision Financial

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02/06/2025

Did you know these shortcuts to wealth? Here are some tips to manage and optimise income.

Are Share Markets due for a major correction?Australian and Global share markets have retreated by between 5-10% in the ...
25/01/2022

Are Share Markets due for a major correction?

Australian and Global share markets have retreated by between 5-10% in the first 25 days of January 22. This is not a great surprise as these markets have rallied very strongly for 2 years. Global interest rates are likely to increase slightly over the next 2-3 years. Higher interest rates usually lower future expected Share market returns. We estimate that Australian interest rates will increase slightly by around 0.5% pa for the next 2-3 years.

Some shares prices have dropped significantly. For example Netflix is down 37% in January 2022. However this more dramatic drop is due to limited growth in new subscribers. When you take a 10 year timeframe Netflix has delivered 39% pa. Shares which have risen very strongly in the past tend to have larger market pull backs when news is not so good.

Will Share markets have a major correction?

I expect we are going through a normal short term correction which can result in a short term drop of 10-20% from the market peak. A short term corrections usually turns around within 3-6 months.
We could be going through a more significant medium term market correction like the GFC ^. I expect this is unlikely as Global growth is currently very strong. However it is possible as we do have some potential market bubbles such as crypto currencies.

Should I buy or sell now?

If you could sell investments at the top of the market (e.g. Oct 2007 for the GFC ^) and buy at the bottom of the market (e.g. Mar 2009 for the GFC ^) that would be wonderful. However it is exceedingly difficult to time markets as they tend to overshoot on the way up and on the way down. Usually people trying to time markets react in one of two ways:

• Over-reactors - get out of the market too early and get back in the market too early, and miss the upside prior to the unknown peak.

• Delayed-reactors – get out of the market too late and get back in the market too late and miss the significant gains that usually occur in the first 6 to 12 months of the recovery.

What should I do?

If you have chosen a medium to long term investment strategy that you are comfortable with, it is best to stick with the strategy. It may in fact be an opportunity to invest a little more of your surplus income.

However if you are felling nervous to adopt this approach then we suggest reducing your exposure to growth assets (i.e. shares and property) by 15%. For example if your current investment strategy is 100% growth asset, switch 15% of the growth assets to cash and retain 85% in growth assets.

If you are feeling nervous please contact your Financial Adviser to discuss what to do in your circumstances. My best email is [email protected]

If your friends and family are feeling a little nervous feel free to share this article with them.

How do I achieve the best results in the long term?

The best way to build wealth is to regularly save your surplus income for the long term. It is important to choose an investment strategy for which you are comfortable with both the expected return and the expected risk.

It is important to stick with your chosen investment strategy and not try to time the market. Trying to time the market usually results in lower returns over the long term.

How do Precision investment portfolios get the best long term results?

At Precision we use the following strategies to ensure clients achieve the best results over the long term:

1. Invest in line with a client’s investment risk profile (i.e. the right balance of expected return and investment risk for them)

2. Invest most funds for the long term

3. Retain an appropriate amount in a cash reserve

4. Invest additional amounts regularly as it is difficult to time markets

5. Invest in assets and investment managers that focus on protecting downside risk when markets have small corrections and more major downturns.

6. Invest in high income assets that provide sufficient income to meet client’s cash flow needs.

7. Invest in high quality unlisted assets that are much less volatile than listed assets. This less rocky ride enables clients to ride through investment storms and stay invested in the market for the long term.

Key Messages of this article

A. Share markets have retreated 5-10% in the first 25 days of January 22.

B. We expect this is a normal short term correction after a strong run. There could be a more material fall.

C. Don’t panic and don’t try to time markets.

D. Sticking with your long term investment strategy is the best option.

E. Precision investment portfolios have strategies in place that manage investment risk during market corrections.

F. If you are feeling nervous please contact your Financial Adviser.

^ GFC = Global Financial Crisis

4 days left to buy the perfect gift.As hysteria builds from the retail sector in the lead up to Christmas we were reflec...
20/12/2021

4 days left to buy the perfect gift.

As hysteria builds from the retail sector in the lead up to Christmas we were reflecting this week on how blessed we were in Australia during Covid-19. Most of us retained our jobs or at least our income during this difficult period.

At Precision more than 10% of our profits go to help those who need a hand. One of our favourite charities is World Vision Child sponsorship. We enjoy watching our $40 per child per month get pooled with others to assist many children in poor communities around the world. It helps them gain education, clean water and provides assistance for micro-enterprises in their community.

Wishing you and your families a Merry Christmas and a happy New Year. May Christmas be a wonderful time for us as Australians to give generously to those in need.

https://www.worldvision.com.au/sponsor-a-child

Watch Out for Cryptocurrency ScamsWhile Crypto currency is now a mainstream investment, countless Australians are still ...
13/12/2021

Watch Out for Cryptocurrency Scams

While Crypto currency is now a mainstream investment, countless Australians are still getting scammed because everything appears so real:
https://www.abc.net.au/news/2021-12-08/cryptocurrency-scams-targeting-australians-losing-millions/100678848

So how can you avoid a Crypto scam?
To ensure your hard earned money is invested wisely and legitimately, follow these key steps:

1. Open an investment or trading account yourself with a dependable known broker (e.g. trading platform of a Big 4 Bank).

2. Start with a small amount (e.g. $500 or $1,000) to confirm the investment is real

3. Invest in cryptocurrencies via a managed fund or listed ASX investment or ETF (exchange traded fund) with a legitimate provider. For example ETF code CRYP with BetaShares (https://www.betashares.com.au/fund/crypto-innovators-etf/)

4. Finally and most importantly, diversify your investments! Limiting any one investment to 5% of your non-super asset base is critical. This way if you are scammed, you only lose a small portion of your hard earned savings.

At Precision Financial managing investment risk is one of our key objectives. Feel free to reach out if you need assistance.

🎉 20%+ Super Return 🎉Most good super balanced funds earned more than 20% last financial year! Check that you got that to...
30/11/2021

🎉 20%+ Super Return 🎉
Most good super balanced funds earned more than 20% last financial year! Check that you got that too! If you super fund returned less than 20% - speak to us today - it may be time for a review.

Also, super fund choice rules have just changed!

If you’ve started a new job after 1 Nov 21 your employer will need to contribute to your “stapled” super fund.

We suggest reviewing if your “stapled” fund is performing well and if you have made a good choice.

As always, if you need any assistance at all - feel free to reach out.

Get better returns on your cash. HERE’S THE PROBLEM Most cash transaction accounts don’t earn any interest at all....
22/11/2021

Get better returns on your cash.

HERE’S THE PROBLEM
Most cash transaction accounts don’t earn any interest at all. And term deposits generally earn a measly 0.5% pa. Even good online saving accounts only give you around 1% pa.

If you expect you may need to draw on the money in the next 2 years (maybe for that home deposit) and desire higher returns with little risk - this is not going to work.

HERE’S A SOLUTION
Invest in high quality .

An “A” or “BBB” rated can earn 2-5% pa. We recommend picking a fund with at least 100 different loans to larger, strong well rated companies to manage .

A word of warning though - be careful of fixed interest funds claiming to earn more than 10% pa.

NEED HELP?
Picking an that’s right for you can be overwhelming. At Precision Financial we find great investments to suit people at all life stages. Talk to us.

Is crypto a good idea?Crypto currencies have now become a mainstream asset class. But is it an investment or pure specul...
15/11/2021

Is crypto a good idea?

Crypto currencies have now become a mainstream asset class. But is it an investment or pure speculation?

Crypto currencies can be most easily compared to other currencies like the $A. Investing in a currency is speculative in nature as the value can go up and down but generally trades around a “fair” value. The slight difference with crypto is that the supply is more limited than traditional currencies. This scarcity can have an impact on the price of Crypto currencies.

Traditional investments like shares provide dividend income. In addition the company earnings and growth of earnings give us a way to determine the “Fair” value of the share. Crypto currencies do not provide an income return and the “Fair” value cannot be determined.

So Crypto is a new asset class. It is speculative rather than being a true investment with a measurable value. For this reason we suggest that if clients want to buy Crypto, that they limit it to 5% of their non-super investments.

At Precision Financial managing investment risk for clients is one of our key objectives.

If you’re fresh out of university and just landed your first full time job, here are 7 key tips:1. Make the most of your...
09/11/2021

If you’re fresh out of university and just landed your first full time job, here are 7 key tips:

1. Make the most of your Benefits
(See here https://bit.ly/31Ct4XL)

2. at least 20% of your net salary, and don’t park money in a bank account. Invest in higher earning investments such as shares or managed funds to make your money work for you.

3. Set up a trading account. One of the best ways to learn is to dive in and get some practical experience.

4. Set a goal to a property within the next 5-10 years. To do this you will need to save at least $100,000. Work backwards to see how much you need to save each year to achieve this goal.

5. Your Biggest Assets - you’ll be surprised at what exactly that is. (See here https://bit.ly/3wtcpkW)

6. Give to a charity or a cause that is meaningful to you. Helping others keeps us grateful for what we have.
7. Seek Expert Help – investing is risky and can be scary. It is never too early to engage a financial planner and the benefits far outweigh the costs - even in the short run. (See here https://bit.ly/3H7jrkq)

Address

Melbourne

Opening Hours

Monday 8am - 6pm
Tuesday 8am - 6pm
Wednesday 8am - 6pm
Thursday 8am - 6pm
Friday 8am - 6pm

Telephone

+61402015105

Website

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