As we step into a new financial year, a raft of changes will take effect, so consider the opportunities and challenges ahead.
June delivered a mixed picture for the Australian economy as the new financial year begins. Headline inflation eased, but underlying inflationary measures rose to their highest level in almost two years, reinforcing expectations that interest rates may remain higher for longer.
Domestic data highlighted ongoing structural pressures. Building approvals remained subdued, signalling persistent constraints on housing supply despite strong demand. Consumer confidence weakened, falling 2.9% to 80.6, returning to pessimistic levels after a brief improvement in May.
Australian share markets were volatile, with the ASX 200 moving within a narrow range as investors responded to shifting rate expectations and global uncertainty.
Globally, shares delivered strong gains, however, risks remain elevated. In the United States, concerns about policy direction and financial stability unsettled markets, while geopolitical tensions including the on-again off-again ceasefire in the Gulf continued to cause inflationary and supply risks.
The Australian dollar experienced modest fluctuations and finished July at a three-month low.
Navigating turbulent times in the share market
As investors grapple with uncertainty, keeping a cool head has never been more important.
“Time in the market, not timing the market” is a popular investment philosophy that emphasises the importance of staying invested over the long term rather than trying to predict short-term market movements. While markets can be volatile in the short term, historically, they tend to grow over time.
It’s a strategy that helps you avoid getting caught up in short-term market fluctuations or trying to predict where the market is heading.
With the recent market turbulence, from the global effects of US President Donald Trump’s administration to ongoing conflicts in Ukraine and the Middle East, savvy investors look beyond the immediate chaos to focus on strategies that encourage stability and growth over the long-term.
It’s a hallmark of the approach by the world’s most high-profile investor, Warren Buffet, who argues that short-term volatility is just background noise.
“I know what markets are going to do over a long period of time, they’re going to go up,” says Buffet.i
“But in terms of what’s going to happen in a day or a week or a month, or even a year …I’ve never felt it was important,” he says.
Buffet first invested in the sharemarket when he was 11 years old. It was April 1942, just four months after the devastating and deadly attack on Pearl Harbour that caused panic on Wall Street. But he wasn’t fazed by the uncertain times.
Today Buffet is worth an estimated US$147 billion.ii
Long-term growth in Australia
While growth has been higher in the US, investors in Australian shares over the long-term have also fared well. For example, $10,000 invested 30 years ago in a basket of shares that mirrored the All Ordinaries Index would be worth more than $135,000 today (assuming any dividends were reinvested).iii
And it’s not just the All Ords. If that $10,000 investment was instead made in Australian listed property, it would be worth almost $95,000 today or in bonds, it would be worth almost $52,000.
In real estate, the average house price in Australia 30 years ago was under $200,000. Today it is just over $1 milllion.iv
Meanwhile, cash may well be a safe haven and handy for quick access but it is not going to significantly boost wealth. For example, $10,000 invested in cash 30 years ago would be worth just $34,000 today.v
Diversify to manage risk
Diversifying your investment portfolio helps to manage the risks of market fluctuations. When one investment sector or group of sectors is in the doldrums, other markets might be firing therefore reducing the chance that a downturn in one area will wipe out your entire portfolio.
For example, the Australian listed property sector was the best performer in 2024, adding 24.6 per cent for the year. But just two years earlier, it was the worst performer, losing 12.3 per cent.vi
Short-term investments – including government bonds, high interest savings accounts and term deposits – can play an important role in diversifying the risks and gains in an investment portfolio and are great for adding stability and liquidity to a portfolio.
Ongoing investment strategies
Taking a long-term view to accumulating wealth is far from a set-and-forget approach and by staying invested, you give your investments the best chance to grow, avoiding the risks of missing out on key growth periods by trying to time your buy and sell decisions perfectly.
Reviewing your investments regularly helps to keep on top of any emerging economic and political trends that may affect your portfolio. While it’s important to stay informed about market trends, it is equally important not to overreact when there is volatility in the share market.
Emotional investing can lead to poor decisions, so remember the goal is not to avoid market declines but to remain focussed on your overall long-term investment strategy.
Please get in touch with us if you’d like to discuss your investment
i Warren Buffett: The Truth About Stock Investing
ii Bloomberg Billionaires Index – Warren Buffett
iii, v, vi Vanguard Index Chart | Vanguard Australia Personal Investor
iv The Latest Median Property Prices in Australian Cities.
Things to do today that your future self will thank you for
Achieving your long-term financial goals doesn’t need to be overwhelming. If you can put in place some basic financial steps, you are on the road to a successful outcome.
It means keeping on top of your options and devising strategies for investment, debt reduction and risk protection. The start of the year is a perfect time to take a few proactive steps, that your future self will thank you for.
Building your nest egg
Adding to your superannuation is one of the most powerful and tax-effective ways to build your wealth over the long term. If you’re an employee, consider salary sacrifice to add to the mandatory contributions made by your employer. Even a small amount, paid regularly, will make a big difference over time. Don’t forget that there are some limits on how much you can invest before tax is affected, so it’s a good idea to keep track of any before-tax, or concessional, contributions.i
Small business owners, sometimes struggling with cash flow issues, may be tempted to neglect their own super contributions but you risk missing out on the benefits later in life.
Finding ways to cut living expenses and reducing or eliminating debt, including paying off the mortgage as quickly as possible, are also obvious ways to attain financial security, although not always easy to implement with cost-of-living pressures. But, again, any small and regular steps towards your goal are a positive contribution.
Preparing for the unexpected
Apart from finding ways to build your wealth and reducing debt, being prepared for unexpected losses is another way to secure your future.
For example, losing your home, business premises or vehicle in a catastrophic event when you’re not adequately insured creates a significant financial burden.
As natural catastrophes increase in frequency and intensity so does the ‘protection gap’, the economic losses caused by underinsurance or no insurance. One study estimated these losses in Australia at more than $18 billion in the nine years to 2023.ii
The Insurance Council of Australia (ICA) says there are some common reasons for underinsurance.iii
- Making an incorrect guess about how much it would cost to repair, rebuild or replace property and contents. The ICA suggests using a building insurance calculator and a contents insurance calculator. Most insurers include both types of calculators on their websites.
- Forgetting to update your insurance after upgrades to your home and belongings. Renovations, new furniture, and upgraded appliances can all add to the value of your home. It’s a good idea to reconsider the value of replacement at least every time you renew your policy.
- Adding the extra costs such as demolition, clean-up, asbestos removal, council applications, architect, and surveyor services, and even the cost of temporary accommodation during a rebuild.
- Not accounting for all your assets – you probably own a lot more than you realise. Have you included the contents of your garden shed and you wardrobe?
Financial protection for personal events
Protecting yourself financially against unexpected personal events is also worth weighing up.
A survey of more than 5000 working Australians shows that, on average, almost 80 per cent have car insurance while just one-third have life insurance.iv
Life insurance is a valuable protection for your family if something happens to you. There is also income protection insurance and various other personal insurances that can ensure you continue to receive an income when you’re unable to work.
While cost-of-living pressures might make insurance or self-insurance seem like a luxury you can’t afford, making an informed choice is the best you can do. That means the financial risks associated with events that affect yourself or your property and carefully weighing your options.
We’d be happy to help you review your wealth building and risk strategies and solutions for a financially safer 2025 and beyond.
i Concessional contributions cap | Australian Tax Office
ii Insurance Catastrophe Resilience Report | Insurance Council of Australia
iii The risk of underinsurance | Insurance Council of Australia
iv Financial security takes back seat exposing advice crisis | CALI
The generation redefining aging
As we advance into the 21st century, the concept of aging is undergoing a transformation, largely thanks to a new generation of “oldies” who don’t feel old – and are reframing what it means to be getting on in years.
Traditionally, aging has been associated with decline, frailty, and a sense of irrelevance. However, today’s generation is challenging societal norms and expectations while embracing a more vibrant and empowered perspective on life in later years.
A generational shift
Never a generation to just accept the way things are, Baby Boomers and even Gen X, laid the groundwork for what it means to live authentically. This is the generation that redefined adolescence, invented pop culture, challenged inequality, and protested when they saw things they wanted to change.
So, it’s no surprise that as they age, they’re also redefining what growing older looks like. The mantra “60 is the new 40” isn’t just a catchy phrase; it’s a way of life for many in this generation. They’re proving that age is merely a number and that it’s perfectly acceptable to keep living life to the fullest – no matter the decade.
Age is just a number – who’s counting?
Gone are the days when turning 60 felt like a one-way ticket to the rocking chair. Today, many who have had a few milestone birthdays are living life with the enthusiasm of a kid at an amusement park, and it’s reflected in improved longevity and better health outcomes.
Science says we all have a chronological age (the actual years on the clock) and a cognitive age (how old you feel). It’s been found that those who have a younger cognitive age have improved health, higher life satisfaction, greater activity levels, and more positive attitudes toward ageing than those who have an older cognitive age – regardless of their chronological ages.i
Another study conducted an experiment with a group of elderly men – taking them back to where they lived in their youth and treating them as the young person they were back then. Compared to the control group, those who mentally went ‘back in time’ showed improved posture, dexterity and physical appearance. Even their vision improved.ii
Embracing longevity and vitality
It’s not just about your mindset though. One of the most significant shifts in how we view aging is the increased focus on health and well-being along with the average life expectancy. As a society, our overall health is improving with the average life expectancy, which for males is 81.1 years and for females is 85.1 years.iii
Nowadays, staying healthy is not just about dodging the doctor; it’s about thriving! With an abundance of information on nutrition and fitness, today’s older adults are more informed than ever. Many are embracing a proactive approach to aging, with lifestyle tweaks, focusing on mental health, mindfulness, and physical fitness.
Lifelong learning and personal growth
Education is another area where the perception of aging is evolving. Gone are the days when education was seen as a one-and-done deal. Today, many individuals see learning as a lifelong journey and the availability of online courses, workshops, and community programs has made it easier for people to pursue new interests and skills at any age.
This focus on lifelong learning not only enriches individual lives but also has broader benefits. Older adults are increasingly pursuing new careers, starting businesses, or volunteering in their communities. They are leveraging their experiences to make meaningful contributions, proving that age does not limit one’s potential for achievement.
Challenging stereotypes and embracing authenticity
Despite these positive changes, ageism remains a significant societal issue. Stereotypes about aging can limit opportunities for older adults and perpetuate harmful narratives. However, today’s generation is actively working to combat ageism and promote a more inclusive view.
One of the most exciting parts of this shift is the emphasis on individuality. Whether it’s starting a new trend, or speaking out about causes we care about, it’s about showing the world that aging doesn’t mean fading into the background. Instead, it’s about standing out and living well.
None of us can hold back the years but this redefined perspective on aging encourages us to view our later years as a time for growth, exploration, and fulfillment. As society evolves, it’s crucial to support and amplify this message, ensuring that aging is embraced as a vital and dynamic part of life and fostering a culture that values every stage of life.
Forget the rocking chairs; the golden oldies are here to live boldly, laugh heartily, and inspire others along the way.
i Marketing to Seniors: Age Really is a State of Mind |SMU
ii What if Age Is Nothing but a Mind-Set? | NY Times
iii Life expectancy, 2021 – 2023 | Australian Bureau of Statistics