MOVEMBER: Why considering Trauma cover is so important.

It’s MOVEMBER, the time of year we see “Mo Bros” all over the world united in growing their moustaches to raise awareness and change the face of men’s health.

It’s also the perfect time to discuss your own health and future. Unexpected illness can strike anyone at any time, even the healthiest people. That’s why considering Trauma cover is just so important.

Life is full of surprises. From marriage and kids to travel and promotions, there are so many adventures to be had. However, for some of us, life’s little joys can be interrupted by sudden illness. Even the healthiest people are diagnosed with illnesses they have little chance of preventing – like cancer. If this does happen, we understand this time can be extremely difficult. Ideally, you should be focusing on your health and recovery, not monetary problems.

Trauma cover can help by providing a lump sum payment that you can use any way you like to help ease any financial pressure. The benefit is paid when diagnosis is confirmed, not when you die of the condition. This is important because it means you and your family have a lump sum you can use at your discretion, when you most need it. You could use it to pay for additional medical care, or to pay off the mortgage to relieve the financial pressure on your family.

2016 US PRESIDENTIAL ELECTION – TRUMP TRIUMPHS

Donald Trump has been elected 45th President of the United States.

Trump heads the Trump Organization which is the vehicle for his real estate business and is well-known as the host of “The Apprentice”. He announced his candidacy for president in June 2015 and was not initially seen as a likely Republican nominee. His eventual nomination as the Republican presidential candidate in July 2016 has been divisive with many senior Republicans refusing support.

Polls in the lead up to the election suggesting a Clinton win proved inaccurate. This repeats the experience of the recent Brexit vote where expectations of a “Leave” vote were underestimated. Like the Brexit vote, investors should take care not to overreact to market events in the aftermath of a Trump victory. The “Leave” vote saw a sharp decline in global equities markets on the back of investor fears that Britain leaving the European Union would set in train a UK recession, and possibly a global recession. However, equities were quick to rebound as investors reassessed the likely impact.

Nevertheless, the recent poor performance of US equities when polls were improving for Trump suggests significant investor concerns about the impact of a Trump presidency. A similar pattern was exhibited as the votes were being
counted. At the very least, the election of a president who is not closely aligned to the policy platforms of the major parties, and, in fact, has made a point of distancing himself from “traditional” political parties will mean a period of
extended uncertainty. In the near term, we could expect volatility to spike in markets on the back of such concerns. Again, like the reaction to Brexit, the realisation the Trump rhetoric may be different from the reality could limit any
negative impact in the longer run. In particular, the will of the US president is moderated by the requirement for Congressional support. Given Trump’s limited support within the Republican Party, some of his more contentious
policies are unlikely to gain traction.

“The realisation the Trump rhetoric may be different from the reality could limit any negative impact. In particular, the will of the US president is moderated by the requirement for Congressional support.”

Trump Policies

Trump’s policy platform lacks the cohesion of a “typical” Presidential candidate reflecting his relative isolation from the Republican Party (and possibly the fact he has been both a registered Democrat and Republican voter in the past.) There have also been some major shifts in policy during the campaign which makes it difficult to determine his core beliefs, although these shifts have largely been around immigration, social policies and foreign affairs.

Trump’s major economic policies include:
• Lowering the corporate tax rate to 15% from 35%, and eliminating loopholes and deductions
• Cutting the top personal income tax rate to 33% from 39.6% and simplifying personal income tax by collapsing
the current seven tax brackets to three
• Repealing estate tax laws
• Repealing or renegotiating trade deals including the North American Free Trade Agreement (NAFTA) between
Canada, Mexico and the United States, and the Trans-pacific Partnership
• Increasing tariffs on exports to the US (and leaving the World Trade Organisation if it rejects the proposal)
• Replacing the Affordable Care Act (Obamacare) with a more market-based health insurance system

As already noted, Congressional support for many of Trump’s policies is likely to be difficult to achieve, if they are pursued at all, once Trump is in the White House.

While the uncertainty associated with a Trump presidency is likely to be the major brake on equities markets, there are also concerns that, if passed, the combination of tax cuts and trade policies would see US budget deficits increase and the economy hurt by retaliatory trade actions. In the short-term, the US Federal Reserve is likely to delay interest rate increases including the potential December hike, in response to the renewed uncertainty. However, in the longer term, deterioration in the deficit and higher inflation would likely see bond yields rise.

Long term investors may be wary of changing exposure to equities where appropriate asset allocation for their risk profile is already in place. Generally, these long term investment settings would take into account short-term equities
market volatility that comes with geopolitical and other risks. Often, by reacting to short-term events, investors run the risk of mis-timing portfolio changes by selling after markets have already fallen and thereby crystallising losses and then potentially missing the bounce that generally may follow after sharp declines. As a general rule, diversification across the different asset classes may provide some natural protection from this type of event. Increased uncertainty puts pressure on equities markets but generally sees fixed interest markets improve as investors seek safer assets.

Long term investors should be wary of changing exposure to equities where appropriate asset allocation for their risk profile is already in place.

Is my portfolio sufficiently diversified?

If your investment portfolio is not properly diversified across the different asset classes of shares, fixed interest,
property, cash and alternatives, you may wish to consider the benefits of a more diversified portfolio. This is also the
case if your portfolio is skewed within a specific asset class.

Author:
Riccardo Briganti
Investment Specialist
Advice Research

 

This publication has been prepared by Westpac Banking Corporation ABN 33 007 457 141 AFSL 233714 (Westpac) and is current as at 9 November 2016. This document has been prepared for use only by advisers and clients of BT Advice, Magnitude Group Pty Ltd (trading as Magnitude Financial Planning) and Securitor Financial Group Ltd (“authorised users”). BT Financial Group is the wealth management arm of the Westpac group of companies (“Westpac Group”).This publication does not constitute financial product advice, investment advice or recommendations of any kind. This publication has been prepared without taking account of any person’s objectives, financial situation or needs, and so the reader should consider its appropriateness having regard to these factors before acting on it. This publication is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The information in this publication may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be accurate at its issue date. While this material is published with necessary permission, no company in the Westpac Group accepts responsibility for the accuracy or completeness of, or endorses this material. Except where contrary to law, we intend by this notice to exclude liability for this material. It is not the intention of Westpac or any other member of the Westpac Group that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. Past performance is not a reliable indicator of future performance.
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Odyssey Financial Management is an authorised representative of Total Financial Solutions Australia Limited.