We are being sent some interesting queries from clients that we thought we would share for the interest of everybody – please keep sending in the questions.
Blueprint Advice has a COVID-19 policy of which some of you would already be aware – in brief, we are now maintaining contact with clients via telephone, video conferencing and email only. All face to face meetings have been cancelled until otherwise advised. This is to protect you (clients), us (staff) and all of our families as well as in trying to assist the wider community in this fight.
We are still here though, rest assured – and watching like the rest of you.
ONE OFF $750 STIMULUS PAYMENT
As many of you would be aware, as part of the stimulus package offered by the government, it has been proposed that those on a range of welfare payments (age pension, disability support - see the link below for full listing) will receive a one-off payment of $750. Note that this measure is subject to the passing of legislation.
The proposal allows for one payment per person, with funds received somewhere between 31 March and 17 April 2020. The purpose of these payments is to stimulate the economy and maintain a degree of spending – consider using the payment to purchase supplies from businesses local to your area and keep the economy going (people in jobs, business open, supply chains moving etc.)
Finally, please be aware of scams operating in relation to this payment – the government has said that they will NOT be contacting you in relation to this, they will just be depositing the funds. If you receive a text message or email in relation to the stimulus measure, it is likely a hoax. Be cautious.
From the information we are receiving, it seems that the following information applies for the personal income protection policies provided by the institutions that we deal with:
You need to check your policy does not have an exclusion for pandemics or epidemics. We believe that the majority (if not all) of those that we recommend do not, however it is obviously best to be sure, so feel free to ask and we can check your specific contract.
In the unfortunate event you contract COVID-19 and are unable to work because of the sickness (your doctor will need to support this position) then it is likely you could claim on your income protection (all other conditions being met). Remember that you need to be off work due to the illness for the duration of the waiting period before your benefits would begin.
You will NOT be covered purely through being made redundant, forced into isolation or making a decision to isolate. The condition around a successful claim is based upon BEING SICK and therefore remains hinged to the degree of disability as a result of the illness.
Some insurance companies do offer redundancy benefits however which include a premium holiday in the event of a redundancy. Others MAY offer premium holidays under financial hardship. Please ask if you are struggling to pay.
If you are looking to take out income protection, then being diagnosed with COVID-19, being in contact with a confirmed or suspected case of COVID-19, being in isolation having returned from overseas, or having flu-like symptoms may present complications. Future travel plans to affected countries may also be a problem. Talk to us.
Do you have a large amount of cash held in one Australian institution and are you concerned about the collapse of that financial institution?
The Australian Government guarantees deposits up to $250,000 in Authorised Deposit-taking Institutions (ADIs) such as banks, building societies or credit unions. This means that if something happens to the bank, this money is guaranteed by the government to be paid back to you.
Many of you are interested as to whether you should continue regular contributions to superannuation account at this time. These contributions are generally smaller amounts (hundreds or thousands, as opposed to $100,000, or $500,000) and the regular nature of them means you are buying units at varying prices (mostly relatively low prices at present).
The markets may fall further, but they will also eventually improve – I don’t know how much further, and I don’t know when they will improve. But continuing with the regular contribution of smaller amounts will mean you are purchasing units in your investments at a variety of prices, likely very low prices, and you will only benefit when the market turns.
If you have large amounts to invest as part of a financial strategy (say $10,000 and upwards), then please speak to us about your specific circumstances.
Please note though that if you are looking to trade and/or make a quick dollar on a market turnaround or a specific stock, in which case this is NOT our area of expertise. This is ‘timing’ the market – we do ‘time in’ the market.
HIGH GROWTH INVESTMENT STRATEGIES
Some are asking whether to maintain high growth investment strategies through the crisis, or whether to reduce the exposure to growth assets such as shares and property.
The majority (if not all) of our clients who follow a high growth investment strategy are easily 10 years away from retirement and therefore, should have the time to recoup any losses. As we’ve said before, by converting your investment to cash OR by changing your strategy to a reduced exposure, you are only converting losses on paper, to losses in real dollar terms. Stay invested and if you think you have a unique situation that might require a different strategy then please ask, we’re happy to talk.
One of the key roles of a financial adviser is to work with the client to ascertain the most suitable investment risk profile (i.e. the level of risk or amount of growth assets your money is exposed too). Of course, the risk profile is governed by other factors as well – timeframe, experience, money needed compared to starting point – but a large factor is the way you feel about volatility, risk, market downturns.
We take the setting of a risk profile for our clients very seriously and believe to have it right in most cases – please contact us if you would like to talk about yours.
That's it for today. More important than money, we wish you all good health, now and into the future.
Information contained on this web page is of a general nature only and your personal financial position, objectives or needs have not been considered. Please ensure you have the necessary financial, tax and legal advice before acting on this information. Do not rely upon it when making financial decisions.