Travel destinations to get the most bang for buck

by DFS Ipswich on November 5, 2018 No comments

Aussies love travelling overseas – it’s a simple fact. According to ABS stats, more of us head abroad for our holidays than ever before (ABS, 3401.0). This is despite the fact that the Aussie dollar hasn’t fared too well of late, making it more expensive for us to get our hands on other currencies to make purchases at our destinations.

So how does one afford an overseas holiday with an underperforming Aussie dollar? It’s not necessarily about resorting to hitchhiking and staying in backpacker hostels. Rather, it’s about being smart with your choice of destination. There are a number of countries around the world where luxury hotels, shopping and local activities are still affordable for Australians.

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DFS IpswichTravel destinations to get the most bang for buck

Spring cleaning your finances

by DFS Ipswich on September 4, 2018 No comments

The sun is shining, the days are getting longer, flowers are blooming, the department stores are bringing in their Christmas stuff… yes, spring is finally here. Everyone knows that spring is the season of fresh starts. Most people will take the opportunity to do a bit of spring cleaning, getting to all those pesky once-or-twice-a-year jobs around the house. But right now is also a great time of year to review your finances. 

Why now? Well, with the end of the last financial year and your tax return well behind you, you’ve got some great data to help you reset your goals and measure your progress by. You’ve also got a little breathing room before the end of the calendar year so hopefully you’ll be a little less pressed for time when you’re making some important decisions. It’ll also give you enough time to sustainably budget for bigger expenses in the new calendar year, from home improvements to holidays. Here’s how to get started.

Clear out the cobwebs

Take a minute to sit down and review your budget. Make sure you have all the relevant information from your bank statements, tax notice of assessment, budgeting app, etc. In the last twelve months, have you stuck to your spending and saving guidelines? If not, what patterns can you see that you’ll want to ‘clear out’ of your spending habits for the coming year? This is your chance to develop a plan for avoiding wasteful spending. For example, if you notice that you’ve spent a lot on takeaway meal delivery, perhaps you could try planning a week of meals or signing up for that cooking class you’ve always wanted to take.

Fix that safety net

Just like you fix all those broken hinges, cracked tiles and split frames around the house come spring, now’s a great time to fix your financial safety net – your insurance. The fact is, the various risks and liabilities in your life change all the time. Sometimes it’s a little more obvious, like welcoming a new baby, or moving house. But some of the risks you can insure against shift a little more subtly. For example, you may have made a few purchases that you should have included in your contents insurance, but didn’t add them individually at the time.

Plant seeds for the future

Herbs, fruits, veggies, flowers – all the best stuff is planted in spring for harvesting weeks or months down the track! While you’re in the ‘planning ahead’ mindset, have a think about your retirement income too. Chances are that by now, you’ll have received a statement from your super fund with the details of your contributions, returns, fees paid and more. Take this opportunity to review whether your super is on track according to your long term goals. Use the budget info you gathered earlier to see whether there’s room for you to make some extra contributions on a regular basis. If you do find that you’re on track, think about other ways to put your money to work for your financial future. For example, you may consider a type of investment that’s now right for your changed circumstances.

Reset and revamp

Working out whether you’re on track with your budget and goals is a great start. But when was the last time you thought about what those goals should look like? Everyone’s circumstances, desires and priorities change. It’s normal to not have the exact same financial goals from one year to the next. That’s why it’s a good idea to review your previous benchmarks, even if you don’t end up changing what you’re aiming for. Carve some time out of your schedule, sit down with your partner/family, and have a chat about your ideas of financial success or independence. Better still, make an appointment to come in and see us. We’ll help you get the fresh perspective you need for the coming year and beyond.

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DFS IpswichSpring cleaning your finances

Decluttering your lifestyle

by DFS Ipswich on August 6, 2018 No comments

At what point does the amount of ‘stuff’ we have in our lives start becoming problematic?

Spending the entire day organising his garage instead of playing in the backyard with his son was the catalyst for Joshua Becker to declutter. Now the founder of the Becoming Minimalist website and author of several books on decluttering, Becker realised he wanted to spend more time with his kids instead of maintaining his many possessions.

You don’t need to be a parent to relate to this scenario. Many of us are time poor and are looking for ways to fit more into our days. If some of your day is being spent searching for your keys in a cluttered house or working around the clock to pay for those big purchases, decluttering can give you back both time and money. Clearing out your life can result in a cleared out headspace as well, giving you more mental energy for your career and relationships.

Decluttering, the act of paring back and reducing unnecessary things from your life, has become increasingly popular. The drawbacks of owning and pushing for more are becoming apparent. Even IKEA’s Head of Sustainability, Steve Howard, was quoted as saying, “In the west, we have probably hit peak stuff.”i Reducing your consumption and streamlining your life can create space and time for the things that really matter to you. Your hard-earned money can be spent on what you value, rather than what’s being marketed to you as a ‘must-have’ item.

Review your posessions

While having a decluttered home and life will give you back time, it does take time to achieve it in the first place. Set aside a weekend to begin to tackle the clutter in your home. Even if your home isn’t packed to the rafters with possessions, it’s likely you’ve been holding onto things you no longer need. If this task feels overwhelming, the best way to approach the job is one room at a time or even start with tackling a particular space like a cupboard or a specific type of item.

Ask yourself the following questions when you review your possessions, “When did I last use this?”, “When will I use it again?”, “Is this item useful?” “Does it make me happy?” Categorise items into piles, a pile for items to be thrown out or recycled, one for those that can be donated or sold and you can even have a pile for the items that you don’t quite know what to do with (not too many of these though!).

These items didn’t arrive in your home by accident, so take a look at your spending habits. Do you buy the latest gadgets? Are you a big clothes shopper? Do you purchase a lot of gifts for your loved ones? Being conscious of what you’ve been purchasing and what your triggers are will help you hone in on potential areas to cut back on. And now that your home has been organised, you’ll have a much better awareness of what you already have and what you don’t need more of.

Consider your commitments

Once the clutter in your home has been addressed, take a look through your calendar. Is it packed with appointments, social engagements, driving the kids around? Consider what commitments you can let go of and delegate. Once your schedule has been freed up, it can be tempting to utilise the spare time you’ve just created to fit other things in. Be mindful that you don’t fill it up again out of habit. We all need some downtime to recalibrate and relax. This might mean saying no to more things, which can be difficult if you’re a people pleaser, but it’s important to protect your time.

Decluttering does involve an initial commitment in time and effort, however it’s a worthwhile activity that will pay off in the long-run. The popularity of decluttering is due to the positive impact it can have on your life. It can provide a greater sense of contentment and calm amid our increasingly chaotic and busy lives, as well as saving money and time.

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DFS IpswichDecluttering your lifestyle

Market Update JUNE

by DFS Ipswich on July 2, 2018 No comments
  • Last week’s US dollar strength subsided somewhat this week, but the USD has been quite strong over the last quarter. This has translated to poor performance across the board in Emerging markets over the same period – but in particular the non-Asian based emerging markets of the Americas and Europe. This is because much of Emerging Asia’s debt is no longer denominated in USD, so USD strength doesn’t really hurt them as much (in fact it makes their exports cheaper to Americans) – but regions such as Turkey and Egypt have large USD denominated debt burdens – so a strengthening dollar is disastrous for them
  • In the last week most equity markets performed poorly, with Australia being a notable exception. In fact, over the last quarter both Europe and Australia have done very well compared to the rest of the world
  • Friday of last week, was the official meeting of OPEC, prior to which both Saudi Arabia and Russia had indicated production increases were ‘inevitable’. The results of the meeting were that production increases will indeed occur. This is somewhat surprising since Iran is a member of OPEC, and any change in policy requires unanimous decisions – and Iran don’t want production increases. Increased production leads to lower prices, and due to sanctions enforced on them by the US they have limited partners to whom they can sell their oil, so they have less to sell at a potentially lower price
 Portfolio Construction 101 – correlation

Anyone who has spent time learning the fundamentals of portfolio construction would be familiar with the concept of correlation, and the idea that less than perfectly correlated assets provide diversification and either a better return for the same risk, or less risk for the same return. For those lucky enough to have not spent much time thinking about it, correlation is simply a measure of how one or more assets move compared to each other. If you can find assets that both provide a positive return over time, but have a negative correlation when one performs particularly badly and a largely zero correlation at other times – that’s an ideal asset combination.

The foundation of multi-asset investing over the past few decades has been the idea that bonds act as negatively correlated assets to equities when equities sell off – in other words they go up in price when equities go down in price. If we look at the rolling 3 year correlation of the S&P 500 with the US 10 year Treasury index we can see this negative correlation:

Source: Bloomberg

This is the asset-allocation basis behind the majority of large Superannuation funds in Australia, endowments overseas and has worked really well for the last 20 years.

However, are bonds always negatively correlated with equities? Students of history would know that this isn’t the case. Unfortunately Bonds and equities can be positively correlated, and worse still, when they’re both going DOWN. We tested the correlation of Australian Bonds and equities back to 1885 (with the help of Milliman) to see how sound the theory was, with more than just 20 years’ worth of data – you can see the results below:

Future Potential Inflation

We are mentioning this now because global Central Banks have begun the process of either raising rates (the US and Canada) or easing/ceasing their Bond purchasing programs (ECB). This is because wage price inflation appears to be finally feeding through to the real economy and could feed through to prices. Central Bankers don’t want a repeat of the late 60’s leading to the inflation of the 70’s and the reaction required in the early 80’s. We are confident they have learned their lessons, but believe it is worth noting that in a rising rate environment, the building blocks of portfolio construction which have been broadly assumed by market participants for the last 20 years are unlikely to be best ones for the next 20. This is why DFS take a contrarian and evidence based approach to investing. We don’t just take assumed dependencies and rely on them ‘simply because’. We are constantly testing our thesis and looking for new ways to increase the robustness in our portfolio construction.

General Advice Warning
Past performance is not an indicator of future performance. The information provided in this article is general in nature and does not take into account your particular investment objectives, financial situation or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.  Dobbrick Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. Dobbrick Financial Services are a Corporate Authorised Representative of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357 306.

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DFS IpswichMarket Update JUNE

Market Update May

by DFS Ipswich on June 5, 2018 No comments


  • There was mixed performance for investment markets last week. European and Japanese equities performed well, whilst emerging markets, US and World equity indices performed poorly. Australia faired OK
  • Fixed rate sovereign bonds such as UK Gilts, German Bunds, US Treasuries and Australian Government securities all had a tough week, but floating rate instruments tracked sideways
  • The US Dollar fell as Gold rallied (extending the current negative correlation), whilst most other commodities were positive over the week
  • Whilst many commodities continue to do well, Oil in particular continues to power ahead with Brent crude being up over 45% for the year

 Federal Budgets and Long-Term bonds

Last week we discussed the 100-year Argentinian bond and the disbelief that Argentina was able to not only find buyers for the bond but also that the offer was oversubscribed. We also took that as an opportunity to review how things can change surprisingly quickly in markets. We recently had the May Federal Budget issued here in Australia and these two topics evoked some previous thoughts and presentations we’ve given for clients in the past that we thought we’d share with you.

Over the years we have presented on various topics including previous Federal Budgets. Usually the Budget presentation is structured as thus:

  • 5 minutes – Budget summary
  • 10 minutes – why the budget has next to, or absolutely no influence on your investments, as well as why it is such an asinine practice having investment specialists on the TV giving budget run-downs and synopsis
  • 30 minutes – on what you should actually be thinking about regarding your investments

Why does the budget have little to no effect on your investments? Budgets have the capacity to influence economies, however there is little empirical evidence to suggest a relationship between economic performance and subsequent investment market performance.

If positive economic performance preceded positive stock market performance and negative economic performance preceded poor market returns, there would be an upward sloping line of dots and an upward sloping ‘line-of-best-fit’ (and in fact vice versa if bad economic numbers meant good performance and good economic performance meant bad market performance). However, there is a flat line – meaning there is no relationship.

Back to our story

So, in May 2016 I was asked to present on the Budget for the second year, and if you recall this was around the time the Government were trying to release a budget that would convince the ratings houses to retain our AAA credit rating. For the months leading up to the budget, the ratings houses had been warning that persistent budget deficits meant that without a convincing budgetary plan they would downgrade Australia. This would have flow on effects by causing the banks to drop one level in their credit ratings, meaning their cost of borrowing would go up, and of course this would be passed on in the form of higher mortgage costs along with other negative effects.

So what did we propose at the time? The Government should borrow more… a lot more. We said that debt isn’t bad if the interest on the debt is serviceable, and this is achievable by owning productive assets – i.e. productive infrastructure assets.

Since then…

The Government has actually announced an infrastructure spend which will hopefully lead to productivity gains here in Australia. In addition, they could fund some of the infrastructure through the issuance of Inflation Linked Bonds – an area of the market desperately needed by retirees but disgracefully underfunded here in Australia. Inflation Linked Bonds are bonds that pay an amount of interest that is linked to inflation – they are well suited to funding infrastructure assets where the pricing for the use of the asset is linked to inflation. Retirees need income products that can protect them against inflation erosion – this is another tool they could add to their tool kit.

Back to our 100 year bond

What we also said was that as tax payers, we wanted the Government to issue as many long-dated bonds (AUD denominated of course) as possible because the yields on offer were at multi-generational lows. If you want proof that these are indeed multi-generational lows in yields, here’s a chart of Australian 10 year Government Bond yields from June 1857 to June 2014:

Source: Global Financial Data *(1)

The Australian 10 year is currently yielding 2.86%, around as low as it’s ever been – it’s only been close to this in the 40’s and late 1890’s.

So, the Argentinian bond and the recent Government budget got us thinking –our original premise in 2016 was and is still valid, and in fact our Government has been following through on it. In fact, the ‘duration’ of the common index of Australian debt securities (if duration is a foreign term, think ‘time-to-maturity’ on a basket of debt issued in Australia) has slowly been getting longer – so the Government has been issuing longer and longer dated debt:

Source: Bloomberg

As a tax payer, this is a good thing if the debt is used wisely to fund productive assets that can service the interest. The interest would be pretty easily served if it was at a fixed rate issued at multi-generational lows, or via Inflation-Linked Bonds that are funded by assets that collect inflation linked revenues above the cost of the interest burden.

* (1)This is a composite of the following bonds: The New South Wales 5% Debenture is used from June 1857 to December 1858, the New South Wales 5% Bond Redeemable 1888-1892 is used from January 1858 to December 1874, the New South Wales 4% Bond of 1875 Redeemable 1903-1910 from January 1875 to February 1886, the South Australia 4% Inscribed Bonds of 1886 Redeemable 1917-1936 from March 1886 to June 1917, the Australia 5.50% Registered Bonds Redeemable 1922-1927 from July 1917 to June 1922, and the Australia 5% Registered Stock of 1925-29 from July 1922 to June 1932 quoted in London and quoted in Sydney from July 1932 to July 1933. From January 1933 until December 1936, 4% bonds are used, and starting in January 1937, a weighted average of bonds of 10 through 1940, 12 years from 1941 to May 1959, 20 years from June 1959 through 1980, 15 years from 1981 through 1990, and 10 years since 1991 to produce the theoretical yield on a perpetual ten-year bond.

General Advice Warning
Past performance is not an indicator of future performance. The information provided in this article is general in nature and does not take into account your particular investment objectives, financial situation or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.  Dobbrick Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. Dobbrick Financial Services are a Corporate Authorised Representative of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357 306.

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DFS IpswichMarket Update May

A note about the Royal Commission

by DFS Ipswich on May 11, 2018 No comments

In recent weeks we have seen plenty of media surrounding the Royal Commission into Banking and Financial Services. We felt it would be helpful to you for us to provide you with our preliminary thoughts.

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DFS IpswichA note about the Royal Commission

Federal Budget 2018-19

by Paul Dobbrick on May 8, 2018 No comments


The focus of this year’s budget was on reining in spending, cutting taxes for middle Australia and small to medium sized enterprises, and giving older Australians a bit of love.

The Government revealed a seven-year personal income tax plan for “lower, fairer and simpler taxes” with relief for low and middle income earners, starting 1 July 2018. The measures will also tackle bracket creep.

From 1 July 2018, the Government will provide a tax offset of up to $530 for tax payers in the 2018-19, through 2021-22 financial years.

Those earning up to $37,000 who currently face a 19 per cent tax rate will have their tax bill reduced by up to $200. These savings will increase incrementally between $37,000 and $48,000 to a maximum saving of $530 for those earning between $48,000 and $90,000. The benefit will then gradually reduce to zero at an income of just over $125,000.

Bracket creep measures will see the upper threshold of the 32.5% tax bracket increase from $87,000 to $90,000 from 1 July 2018 and to $120,000 from 1 July 2022. The Low Income Tax offset will also increase from $445 to $645 from 1 July 2022. This will be followed by a flatter personal tax system by 2024-25 where the 37 per cent tax bracket will be abolished completely. Australians earning more than $41,000 will then pay only 32.5 cents in the dollar all the way to the top marginal tax rate threshold that will be adjusted to $200,000.

The top marginal tax rate of 45 per cent will apply to incomes above $200,000.

Small to medium sized enterprises

Attention to small to medium sized enterprises was targeted at keeping them competitive globally. The Government extended the $20,000 instant asset write off for a further 12 months to 30 June 2019 for businesses with a turnover of up to $10 million.

Tax cuts for small business began in 2016-17 when companies with a turnover of less than $10 million had their tax rate cut to 27.5%. This rate was extended to companies with annual turnover less than $25 million in this financial year and from 1 July 2018 will be expanded to include companies with annual turnover less than $50 million.

The Government also announced tough new anti-phoenixing measures to stop businesses who deliberately go bust to avoid paying their bills and potentially affecting other businesses through their demise.


The focus on superannuation was on lost super and allowing Australians to build their super balances by saving unnecessary fees and unwanted insurance.

The ATO will be given powers to send lost super to people’s active super accounts. Fees on accounts with balances of less than $6,000 will be capped at 3 per cent and superannuation fund exit fees will be abolished for those wanting to switch funds.

For superannuation fund members aged under 25, they will need to opt in should they wish to have insurance within their super policies.

For SMSFs, the maximum number of members will increase from 4 to 6 people from 1 July 2019. This will allow for greater flexibility for larger families. In addition, the audit requirements for SMSFs will move from annually to three year periods for funds with a history of good record keeping and compliance.

For older Australians

The Pension Loans Scheme will be open to all Australians, including full rate pensioners and self-funded retirees to enable them to boost their retirement income by up to $17,800 pa for a couple, without affecting their eligibility for the pension or other benefits. An expanded Pension Work Bonus will allow pensioners to
earn an extra $1,300 a year without reducing their pension payments. This will also be extended to self-employed individuals who can now earn up to $7,800. People aged 65-74 with a total superannuation balance below $300,000 will now be exempted from the work test for voluntary contributions for the first year they would otherwise fail to meet the work test.

Aged care, skills training, Medicare and the PBS

For older Australians who would like the choice to remain in their homes and avoid residential aged care facilities, there will be a total of 74,000 high level home care places funded by 2021-22. A new Skills Training Incentive will provide mature aged workers with the opportunity to update their skills. And, employers will be incentivised with $10,000 wage subsidies for employing mature workers. Extra funding into Medicare and the PBS will see new medications being funded including those to treat spinal muscular atrophy, breast cancer, refractory multiple myeloma and relapsing-remitting multiple sclerosis and an HIV preventive drug.

For more information, please feel free to call our office.


General Advice Warning
The information provided in this article is general in nature and does not take into account your particular investment objectives, financial situation or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.

Dobbrick Financial Services (Gympie) Pty Ltd ABN 48 931 205 109 & DFS Oakland ABN 64 340 527 395 and their advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.

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Paul DobbrickFederal Budget 2018-19