The Hopkins Group’s Managing Director and Senior Financial Advisor, Michael Williams shares the group’s position on the FY23-24 Australian Federal Budget, its impact on our clients, and things to keep an eye on in the future.
If you are looking for a financial advisor, a mortgage specialist, property agents or general advice, book a no-obligation consultation with us today: https://outlook.office365.com/owa/calendar/TheHopkinsGroup@thehopkinsgroup.com.au/bookings/
Stock markets globally have dropped up to 20% or more during 2022. Volatility remains high, and there is uncertainty about where markets are headed.
However, is this unusual? We asked one of Australia’s leading AI-Drive Investment Firm, Sixpark.
“It is incredibly challenging to time the market consistently – to buy when prices are low and to sell when prices are high,” Sixpark said.
In the past, steep market declines were typically followed by swift recoveries. Recent examples of this:
At the onset of the COVID pandemic in early 2020, markets fell steeply but recovered quickly.
In the first half of 2022, markets fell significantly but recovered during July and most of August. They fell again in September.
Also, the best and worst trading days tend to cluster in brief and difficult-to-predict periods. So although it is tempting to trade in and out of the market during market volatility, doing so also increases the risk of missing some of the best days in the market.
If the past few months have shaken your confidence in staying invested, remember there is a potential cost of getting out of the market.
In the past 20 years alone, the S&P 500 annualised return has been 9.7%, but missing just 10 of the market’s best days, which tend to occur within less than one month of the ten worst days, would have reduced that annualised return to 5.5%. (Source: 
Ultimately, the biggest challenge in trying to time the market is being correct not just once but twice.
There is only a narrow window of opportunity for optimising both of these timings. History shows that most investors are unlikely to get these moves right.
While no strategy can guarantee a profit or protect against losses, history suggests that what matters most for building wealth in the long term is your time in the markets, not timing the markets.
If you are yet a client of ours, we encourage you to request a no-obligation, initial online consultation with one of our financial advisers by emailing us at info@thehopkinsgroup.com.au or visiting the page www.thehopkinsgroup.com.au/contact/#message.
If you are a client of ours already, we encourage you to book a meeting with your account adviser, and they will be more than happy to help and answer any questions you may have!
Market Performance
January saw strong gains in markets across the globe. The Australian market rose 6.5% for the month out paced by a 11.7% rise in the Chinese market and 6.6% in the US. The discretionary retail sector was the best performing sector (up 10.1%) in Australia with the resilience of the consumer supporting strong 4th quarter results for major retails Myer, JB HiFi and Super Cheap Auto. Materials rose 8.9% on the back of the removal of Covid restrictions in China, with an expected spending spree like what Developed Markets have seen. The worst performing sectors were Energy and Utilities but these remain the best performing sectors over the last 12 months.
Economic Indicators
The economies of Australia & the US continue to report high inflation, well above the desired range of central banks. Australia reported a 7.9% inflation for December, above consensus forecasts, resulting in expectations of continued rate rises to bring it back under control. There is no Reserve Bank (RBA) meeting in January, but expectations are now for rate rises in February, March and possibly another 2 (at this stage) by the end of the financial year. The US is in a similar situation with rises to date not slowing the consumer enough to bring inflation down toward the desired level.
Interest rate rises will impact the economy. In Australia there is many loans that were previously fixed rolling to variable. This is likely to double the cost of loan repayments which will impact consumer spending. There are also significant price rises in energy which also restrict consumer spending. The issue the RBA faces is determining how much of the rises they have made so far will impact the economy in the future. There is a lag in the impact of rate rises of up to 18 months. While markets expect further rises, it could push the economy over the edge given the amount of debt in the economy. Bringing inflation under control is the only focus, letting inflation run causes more issues than the short-term pain of recession.
If you would like to discuss your fixed or variable mortgage, contact Loreen Dyer ldyer@thehopkinsgroup.com.au
Real Estate Markets
The listed Real Estate market had a strong month rising 8.1%. The reasons for the rise are unclear but most likely bargain hunting after significant price corrections in 2022. The interest in property is consistent with what Brad, Stephen and Natasha are reporting with an increase in enquiries and attendance at open for inspections. The property management team are reporting an increase in rents across most markets with demand from tenants exceeding supply of available properties. Pressure is expected to increase as Chinese students are required to attend classes for their degree to be recognised in China. The overall expectation is that property prices will come down on the back of rising interest rates but lack of supply and strong yields counter this argument.
If you would like to discuss property, you can contact Brad Carlin-Smith (Real Estate Agent) on bcarlinmith@thehopkinsgroup.com.au or Stephen Phillips (Head of New Property) at sphillips@thehopkinsgroup.com.au or the Sarah (Business Development for Property Management) for property management enquiries sholdsworth@thehopkinsgroup.com.au
The impact of high-interest rates on saving can be both positive and negative.
On the one hand, high-interest rates can encourage people to save more, as they provide a greater return on their savings. On the other hand, high-interest rates can also hurt the economy, leading to decreased spending and economic activity and the erosion of the purchasing power of your savings.
The key benefit of high-interest rates is that they incentivize saving.
When interest rates are high, people are more likely to deposit their money in savings or other interest-bearing accounts, as they can earn a greater return on their savings. This can be particularly beneficial for those saving for long-term goals, such as retirement or buying a home, as the additional interest earned over time can help their savings grow more quickly.
In addition to encouraging saving, high-interest rates can also control inflation. Central banks often raise interest rates when inflation rises too quickly, as higher interest rates can curb spending and slow down the economy. This can help to reduce inflationary pressure and maintain price stability.
However, high-interest rates can also have negative consequences for the economy.
One of the main ways in which high-interest rates can impact the economy is by making borrowing more expensive. When interest rates are high, borrowing money, such as taking out a mortgage or a personal loan, becomes more costly.
This can lead to decreased spending, as consumers are less likely to take out loans to purchase big-ticket items such as cars or homes. This, in turn, can lead to decreased economic activity, as businesses may sell fewer goods and services.
Another negative impact of high-interest rates is that they can erode the purchasing power of savings.
When interest rates are high, inflation often rises as well. If the interest rate on a savings account needs to be higher to keep pace with inflation, the purchasing power of the money in that account will decline over time.
This can make it more difficult for people to save for their future goals and make it more challenging to maintain their standard of living in retirement.
High-interest rates can also impact the stock market, as they can make bonds more attractive to investors. When interest rates are high, the bond yield is typically higher, making them a more attractive investment than stocks.
As a result, investors may shift their money from stocks to bonds, leading to a decline in the stock market. This can harm the economy, as a declining stock market can reduce consumer confidence and decrease spending.
It is important to note that the impact of high-interest rates on saving can vary depending on the individual.
For example, older individuals closer to retirement may be more likely to save to ensure they have enough money to support themselves later. On the other hand, younger individuals may be less likely to save, as they may feel they have more time to build their savings and may be more focused on paying off debt.
In conclusion, the impact of high-interest rates on saving can be complex and multifaceted. On the one hand, high-interest rates can encourage saving and control inflation. On the other hand, high-interest rates can also make borrowing more expensive, erode the purchasing power of savings, and impact the stock market.
In our first MDA update of the year, our Senior Financial Adviser and MDA Investment Committee Chairman Mark Wenzel takes a look at December 2022 and the progress we’ve made so far in 2023.
Mark tackles what the committee has discussed about the current economic environment, our portfolio positioning, and any particular changes we are going to make. Check out the video.
It is tempting to make an ambitious saving goal at the start of the year as part of our resolution – but when bills and unexpected expenses start to pile up, reality kicks in hard, and we abandon our goal.
Let’s make this year different by setting realistic goals we can efficiently achieve without stretching ourselves too thin. To help you secure your new 2023 saving goal, we’ve scoured the internet and found you our top five tips on building a solid saving plan for 2023.
Tip #1: A Realistic, Sustainable Start – 50|30|20
Consider a realistic and sustainable saving plan when you first start, such as the 50|30|20 saving rule – 50% of your net income goes to what you need, 30% to what you want and 20% towards your saving.
Think of wealth-building more as a marathon than a sprint – and yes, slow and steady will win the race.
Tip #2: Automate Your Saving!
Another effective way to secure your saving goal is to automate an amount from your paycheck to a dedicated saving account the moment you get paid.
Most online banking Apps provide an ‘automatic transfer’ feature where you can automate the transfer on the day you get paid.
Tip #3: Envision & Celebrate
Besides unexpected expenses, a lack of or a loss of motivation is the most common reason we fail our saving goal.
To motivate you, imagine the feeling when you achieve your goal – a new car, your next destination holiday, or the deposit for your and your family’s dream home.
To keep your motivation alive, set key milestones and celebrate when you hit them.
For example, if you plan on saving $100,000 for a down payment with your partner, celebrate and reward yourselves with a nice night out each time you’ve saved $10,000.
To help motivate you, Moneysmart.gov.au provides a saving calculator that indicates how much you can save with consistent effort: www.moneysmart.gov.au/savings-goals-calculator
Tip #4: The 52 Weeks Challenge
If you’ve just begun your saving journey, a nifty little trick can help save you nearly $1,400 a year.
You can start by saving $1 the first week and $2 the second week until you save $52 a week at the end of the challenge. Easy. All up, you’ll save $1,378.
Or you can do it the opposite way and count down, so you get the hard saving out of the form at the start of the year.
Tip #5: Speak to a Financial Advisor
If you are savvy with your money and already have considerable savings, consider speaking to a financial advisory professional to evaluate your current savings and investment strategy.
Accredited financial advisors can help you discover a new, sustainable way to explore new ways to build your wealth.
Secure the future you deserve with the help of our financial experts. Book a 30-minute obligation-free online consultation today.
Key Summary:
We are excited to announce that The Hopkins Group (THG) won the 2022 ‘Holistic Firm of the Year’ IFA Excellence Award. This award is a testament to our seamlessly integrated service offerings and their value to our clients.
THG and its staff also received seven other finalist nominations under the ‘individual categories, including:
We would also like to extend our congratulation to all our staff. A genuinely holistic advice firm requires more than sound financial advisors – but an equally good team behind them.
With their support, our Financial Advisory Team can provide a truly holistic and seamless integrated service offering to our clients.
We also thank the organiser of the IFA Excellence Awards, the Independent Financial Adviser. The event offers the industry a forum to congratulate outstanding independent financial advisors and a place to celebrate our industry’s successful individuals and companies.
Mark Wenzel speaks to Anthony Doyle from S3 Global Opportunities Fund by Firetrail.
S3 is a sustainable fund that focuses on identifying companies whose earnings are going to grow while making a positive difference to society. S3 is not constrained by ratings agencies, preferring to research companies who will improve their ESG ratings over a 5 year time frame while increasing their earnings.
S3 is different to most ESG funds in the market. The discussion with Anthony fleshes the differences out with examples of current holdings in the fund, the process that is followed for inclusion, why sustainable earnings are a crucial component of decision making and why S3 is a concentrated fund.
This is a great episode for investors looking for an ESG fund that focuses on sustainable, growing earnings and making positive change in society.
Compound your wisdom!
Talk Investment with Mark Wenzel speaks with Andrew Lockhart from Metrics Credit Partners.
Metrics Direct Income Fund is a holding in The Hopkins Group Managed Discretionary Account and widely used by our advisers for fixed income exposure.
We discuss how Metrics generate returns for investors, the rigour around their investment process and the risk of capital impairment. We talk about the Direct Income Fund and the listed investment trust alternatives, which represent an opportunity to buy exposure at a discount to Net Assets.
This is a great podcast for anyone looking for high income returns by gaining exposure to quality Australian corporate borrowers. You will gain a deeper understanding of how your money is invested and the risks involved.
Compound your Wisdom!
Talk Investment with Mark Wenzel talk to Rob Promisel from Resolution Capital about their Global Real Estate Fund.
Global Real Estate offers opportunities that are not available in Australia such as Healthcare, technology data centres and Built to rent properties, which Resolution Capital own.
This is a great insight into the differences between Australian Real Estate Investment Trusts and Global Real Estate Investment Trusts, a deep dive into 2 current holdings in the portfolio and the outlook for Global Real Estate.
Compound your wisdom!
Get the latest news and insights from The Hopkins Group, as it happens.
Street Address
Postal Address
Contact Us
Office Hours
