 Paul Ryan of Patron Finance
This article is brought to you courtesy of Paul Ryan (Dip FS (FP) Dip FM) of PATRON Financial Services Pty Ltd. who has provided a series of helpful articles to assist you with your finances.
Paul is a highly qualified and experienced Financial Advisor with over 30 years experience in Risk
Insurance, Superannuation and Investment
in the Financial Planning Industry. Paul provides advice in the areas of Wealth Creation
Strategies, Personal Insurances, Debt
minimisation strategies, Estate Planning
strategies and Superannuation (both
Personal and Corporate).
Paul may be contacted on Mobile 0418 423 720 or email: pryan@patronfa.com.au
 Finance Area: Diversification is the solution in uncertain economic times
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Paul Ryan of Patron Finance
Paul Ryan (Dip FS (FP) Dip FM) of PATRON Financial Services Pty Ltd., has provided a series of helpful articles to assist you with your finances.
Paul is a highly qualified and experienced Financial Advisor with over 30 years experience in Risk Insurance, Superannuation and Investment in the Financial Planning Industry. Paul provides advice in the areas of Wealth Creation Strategies, Personal Insurances, Debt minimisation strategies, Estate Planning strategies and Superannuation (both Personal and Corporate). Paul may be contacted on Mobile 0418 423 720 or email: pryan@patronfa.com.au
Diversification is the solution in uncertain economic times
Although forestry investments are widely
used in the US as a valuable part of an
investment portfolio, when you mention
the words 'forestry investments' in
Australia, the first thing that comes to
mind is the up-front tax deduction.
However, agribusiness assets such as a
forestry investment can also reduce an
investment portfolio's volatility, increase
returns, act as a hedge against inflation
and provide income steams for the client
in future years.
The impact of agribusiness assets on a portfolio
Studies undertaken by the Australian Agribusiness
Group (AAG) show over the past 26 years that
the inclusion of significant levels of agribusiness
assets within a balanced portfolio will provide
benefits in relation to the portfolio's return and
volatility.
The greater the proportion
of agribusiness assets in the portfolio, the greater
the investment returns generated and the less
volatility experienced.
Agribusiness
assets are not correlated to equity assets over
the longer term. Therefore by adding a forestry
investment into an investment portfolio the level of
volatility in the portfolio may be reduced.
The relationship between these two asset classes
can be explained by considering the effect of
inflation on commodities and equities.
Why are agribusiness assets not correlated to
markets?
Forestry products such as paper, sawlogs and
building materials are commodities.
Rising prices for commodities fuels inflation,
therefore it is not surprising that rises in the
agribusiness index follows inflation.
On the other hand as inflation rises, the value of
companies listed on the stock market as reflected
in the all ordinaries tends to decrease over the
longer term.
This is due to many reasons.
Rising inflation exerts
pressure on the reserve bank to increase interests
rates in order to curb demand within the economy.
At the same time rising interest rates also;
- puts pressure on the Australian dollar making
Australian goods and services more expensive
to overseas customers;
- increase the cost of debt for companies; and
- dampens consumer confidence, which can
lead to reduced sales.
All the factors above tend to reduce a company's
overall profit, leading to lower dividend
expectations, which in turn results in a lower
share price. This demonstrates that equity markets
tend to fall in times of high inflation. Forestry investments can be used to help
reduce the level of volatility in an investment
portfolio, whether that is an individual investor
or a self managed super fund. Given the current
state of the equities market and an uncertain
future a forestry investment is something worth considering. Kim Cowie -
Technical Services Manager, ITC What would you like to see in this section? Let us know by emailing editor@mylocalguide.net.au or completing a feedback form. Back to top » |
Trauma Insurance & Beating the big 'C'
While one in two people diagnosed with malignant cancer will beat the disease, their finances mightn't be so fortunate.
Cancer is a life-changing experience, not just for the person who contracts the disease but for everyone close to them. While cancer need no longer be regarded as a death sentence - more than half of the 106,000 new cases diagnosed this year will be successfully treated - the road to recovery can be long and gruelling (Ref 1).
This year, more than 480,000 new cases of cancer will be diagnosed in the Australian population, according to The Cancer Council Australia. And while four times as many cases are diagnosed in those over 60, cancer can strike at any age. For example, prostate cancer, the most common male cancer, is rare in men under 50, but it's the most frequently diagnosed cancer in those over 55 (Ref 1). Whereas a quarter of women diagnosed with breast cancer, the most prevalent female cancer, are younger than 50 (Ref 2).
Cancer is a term used to describe 100 different diseases in which uncontrolled cell growth threatens the body. Five cancers - bowel, prostate, breast, melanoma and lung - are responsible for 60% of all cases.
Aside from the physical and emotional toll, cancer can seriously dent a family's finances. Out of pocket medical bills, lost income and dwindling savings can be almost as devastating as the illness.
The best treatment option sometimes comes at a high price. Approximately 2 years ago, the Clinical Oncology Society of Australia and The Cancer Council Australia campaigned to have the drug Herceptin added to the subsidised drugs on the Pharmaceutical Benefits Scheme (PBS). Professor Alan Coates, the council's Chief Executive, said rapid PBS listing would mean that 2000 women with HER-2 positive breast cancer, an aggressive form, could benefit from the treatment each year.
The harsh reality is that many people would find it difficult to survive financially for a few months without an income, let alone having to fork out tens of thousands of dollars for non-PBS drugs that could give them the best survival odds.
Trauma Insurance, which pays a tax-free lump sum on the diagnosis of a specified illness or traumatic event, can take this financial stress out of the equation. Best of all, you can do whatever will give you most peace of mind with the money, be that paying off debts, taking a holiday, or paying for new medical treatments.
The good news is that trauma insurance is not too expensive. For example, just $30 per month will cover a 40 year old, non-smoking male for $100,000 for a long list of serious illnesses. About $6 per month more will cover a non-smoking female for the same sum insured amount. For an obligation free quote, please don't hesitate to speak to your adviser.
Ref 1. www.cancer.org.au Ref 2. Clinical best practice, statistics and research, www.nbcc.org.au/bestpractice
This article is brought to you courtesy of Paul Ryan (Dip FS (FP) Dip FM) of PATRON Financial Services Pty Ltd. Paul is a highly qualified and experienced Financial Advisor with over 30 years experience in Risk Insurance, Superannuation and Investment in the Financial Planning Industry. This has involved the provision of advice to retail clients in the areas of Wealth Creation Strategies, Personal Insurances, Debt minimisation strategies, Estate Planning strategies and Superannuation (both Personal and Corporate).
Paul may be contacted on Mobile 0418 423 720 or email: pryan@patronfa.com.au
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