Your personal investing strategy
At Morgans, we take a personalised approach to help you achieve your investment goals. We understand that investing is not a one-size-fits-all endeavour, and we are here to tailor our services and products to your specific needs and preferences.
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Our investment philosophy
Getting started is an important step, and we want to ensure that we have a deep understanding of where you stand when it comes to investing. We consider four foundational aspects.
Income Investing
Income investing
Income investing is a strategy focused on generating a reliable and steady stream of passive income. Investors pursuing this style often choose assets such as dividend-paying stocks, real estate investment trusts (REITs), and high-yield bonds. The primary goal is to accumulate regular cash flow from these investments, providing a consistent source of income. This approach appeals to those seeking financial stability and regular returns, making it a popular choice for retirees or anyone looking to supplement their income through strategic investment choices.
Capital growth
Capital growth investing is a strategy centered on increasing the value of an investment portfolio over time. Investors pursuing this style typically allocate funds to assets with the potential for substantial appreciation in value, such as growth stocks or emerging market opportunities. The focus is on long-term capital appreciation, with the goal of building wealth and achieving significant returns.
While capital growth investing involves a higher level of risk, it appeals to those with a longer investment horizon and a willingness to withstand market fluctuations in pursuit of higher overall portfolio value over time.
Capital security
Capital security investing prioritises the preservation of invested capital and minimising the risk of loss. Investors adopting this strategy tend to allocate funds to low-risk assets such as government bonds, high-quality corporate bonds, or other stable securities. The primary objective is to safeguard the initial investment, even if it means accepting lower returns compared to riskier investments.
Capital security is particularly attractive to conservative investors or those nearing retirement who prioritise protecting their wealth and are more risk-averse. This approach provides a sense of financial stability and security, albeit with potentially lower returns compared to higher-risk investment strategies.
Risk / return
Risk/return investing involves a balanced approach to investment strategy, carefully weighing potential risks against anticipated returns. Investors pursuing this style seek to enhance their portfolio performance by selecting a mix of assets that align with their risk tolerance and financial goals. This strategy acknowledges that higher potential returns often come with increased risk and vice versa.
Balancing the risk-return profile allows investors to tailor their portfolios to match their individual preferences, whether they are comfortable with more volatility in pursuit of higher returns or prefer a more conservative approach with lower risk and stable, albeit potentially more modest, returns. This versatile strategy enables investors to align their portfolios with their specific risk preferences and financial objectives.
News & Insights
Australian’s life expectancies are increasing over time. We can now expect to live longer - on average 5 to 7 years longer - than our parents or grandparents did.
The problem is that as we live longer, we also need to support ourselves for longer in retirement. This is compounded by the fact that, according to the Australian Bureau of Statistics (ABS), we are retiring earlier these days with the average age of retirement reported to be 56.9 years. Interestingly, the average age people intend to retire is 65.4 years.
According to the ABS’s May 2024 report:
- There were 4.2 million retirees
- The average age at retirement (of all retirees) was 56.9 years
- 130,000 people retired in 2022, with an average age of 64.8 years
- The average age people intend to retire is 65.4 years
- Pension was the main source of income for most retirees
In their Media Release supporting their 2024 retirement report, ABS’s head of labour statistics, Bjorn Jarvis, said: “While the average age people intend to retire has risen over time, it hasn’t changed much in the last 10 years. This average has been between 65.0 and 65.6 years for close to a decade, since 2014-15. On average, men intend to retire slightly later than women, but this gap is closing. In 2022-23, there was around half a year difference between men and women, compared to a year difference a decade ago.”
Source: ABS
Income at retirement
According to the ABS retirement report, a government pension or allowance was still the main source of personal income at retirement for 43% of retirees. This was followed by Superannuation, an annuity or private pension at 27%.
Source: ABS
Factors influencing retirement
In 2022-23, the most common factors influencing older workers’ decision to retire was still financial security (36%) and personal health or physical abilities (22%). Around one in eight retirees (14%) said reaching the eligibility age for an age (or service) pension was a key factor.
Retirement planning
According to the ABS, 710,000 people intend to retire in the next 5 years, with 226,000 in the next 2 years. Will you be one of these people? If so, do you have the confidence your retirement plans will be enough to support you in retirement? Your Morgans adviser can review your retirement position and recommend strategies that will help you stay on track so that your retirement, when it happens, is an enjoyable stage of life. Already retired? We can help there too.
Contact your Morgans adviser today to schedule an aged care advice appointment. Our expert team will be able to simplify the aged care system, guide you through Government subsidies, analyse payment options, create 5-year cash flow projections, and model the benefits of home concessions and future asset values for your beneficiaries.
Following the release of the Aged Care Taskforce report earlier this year, the federal government has recommended a number of changes to the cost of residential aged care, some will commence from the beginning of 2025 and the remainder expected to commence from 1 July 2025.
Over the next 40 years, the number of people over 65 is expected to at least double and the number of people over 85 expected to triple. A significant amount needs to be invested in the Aged Care sector, by both government and private sector, to be able to manage the growing numbers of older people needing care and support in their later years.
From 1 January 2025:
- Increasing the refundable accommodation deposit (RAD) maximum amount without approval from $550,000 to $750,000. This amount will be indexed annually.
From 1 July 2025:
- Introduce a RAD retention amount of 2% pa to a maximum of 10% over 5 years.
- Removing the annual fee caps and increasing the lifetime fee caps to $130,000 or 4 years, whichever occurs first.
- Introducing a means-tested hotelling supplement of $12.55 per day which is to be indexed.
- Removing the means tested fee and replacing it with a means tested non-clinical care contribution (NCCC). The daily maximum is $101.16 which is to be indexed.
From 2029/30:
- The government is looking to commence a phase out RAD altogether by 2035. A commission will be established to independently review the sector in readiness.
Grandfathering arrangements will protect anyone who enters care prior to 1 July 2025 under the “no worse off” principle to ensure they do not pay more for their care.
Comparison of current and new aged care costs
Current aged care fees
The Basic Daily fee continues to be paid by all residents without change.
The Hotelling Supplement is paid by residents as a contribution towards their living costs. It is a means tested payment calculated at 7.8% of assets greater than $238k or 50% of income over $95,400 (or a combination of both). The Hotelling Supplement is capped at $12.55 per day (indexed).
The Non-Clinical Care Contribution (NCCC) replaces the current means tested fee. The NCCC is a contribution towards the cost of non-clinical care services which will be capped at $101.16 per day (indexed). It is a means tested fee calculated at 7.8% of assets over $501,981 or 50% of income over $131,279 (or a combination of both).
The lifetime cap for the NCCC is increasing to $130,000 or 4 years, whichever occurs first, indexed twice per year. There is no longer an annual cap.
Any contributions made under the home support program prior to entering residential aged care will count towards the NCCC cap.
Who will likely pay more from 1 July 2025?
It is expected that at least 50% of people entering care will pay more for their care each year.
The below chart illustrates the expected changes for regular care costs (excluding accommodation costs and retention amounts) for individuals based on specific asset levels:
Should you enter residential aged care before 1 July 2025?
It depends. For some people, if they have an ACAT assessment and are eligible to enter residential aged care, then it would be best to seek advice from your Morgans Adviser on both the current and future cost as well as cash flow and cost funding advice.
Contact your Morgans adviser today to schedule an aged care advice appointment. Our expert team will be able to simplify the aged care system, guide you through Government subsidies, analyse payment options, create 5-year cash flow projections, and model the benefits of home concessions and future asset values for your beneficiaries.
The year 2024 will arguably be known as the ‘cost of living crisis’ year. So many Australians are feeling the pain of this high inflation environment, particularly with everyday consumer items and mortgage stress. Unfortunately, our Chief Economist, Michael Knox, is not expecting an interest rate cut by the Reserve Bank of Australia until mid-2025.
As we enter production of this edition of Your Wealth, the proposed $3 million super tax – or Div 296 as it is known - faces an uncertain future. Will it be tabled in February when Parliament resumes? If an early election is called, it could effectively be off the table until after the election.
We hope it gets shelved completely. We have always viewed this as bad policy; in fact, the worst policy that has ever been proposed for superannuation.
This latest publication will cover Australian retirement intentions, the new Aged Care Act 2024, Trump's trade negotiations policy, expected to reduce tariffs, contribution strategies for older generations, and understanding the benefits of the Legacy Pension Amnesty which is now law.
Morgans clients receive exclusive insights such as access to our latest Your Wealth publication. Contact us today to begin your journey with Morgans.
