10 Lessons From Black Monday

Tom Stevenson is an investment director at Fidelity Worldwide Investment. article from morningstar 

1. Keep calm and carry on. The FTSE 100 ended 1987 higher than it started and within two years the index had surpassed its pre-crash peak. By the time you have recovered your equilibrium, the moment to sell has very likely passed and by panicking at this stage you will simply miss out on the subsequent recovery.

2. Look through the market gyrations to what is happening in the real world. The 1987 crash was triggered by over-exuberance (the market had risen by nearly 40 per cent in the first nine months of 1987) and was then compounded by automated computer trading. The underlying economy was sound at the time - hence the quick recovery.

3. Take a long-term view. The 1987 crash looks insignificant on a long-term chart today even though, at the time, it felt like the end of the world.

4. Be prepared for the worst and don't put all your eggs in one basket. I was in Hong Kong at the time of the 1987 crash - the market there shut for a week, emphasising the point that emerging markets can sometimes be markets from which it is difficult to emerge in an emergency.

5. Don't try and time the market. When your emotions are running high you will make the wrong investment decisions because our brains are hard-wired to run from danger. The best investors do the reverse - they walk towards danger, albeit with their eyes wide open.

    

6. Invest regularly, a little at a time. This way, you will take advantage of market falls like the 1987 crash, picking up a few shares or units in a fund when they are cheap and even though your mind is telling you to put your money under the mattress.

7. Reinvest your dividends. The chart below shows the performance of the UK stockmarket since the 1987 crash - the lower line reflects just the capital growth while the second includes the compounded benefit of putting dividend income back to work in the market.

8. Keep some of your powder dry. Crashes happen, and when they do you want to have some ammunition ready to take advantage of them. It may be frustrating to have even a small proportion of your savings earning next to nothing in cash when shares are rising, but so too is being unable to capitalise on bargain basement prices when periodically they appear.

9. Beware of buying high and selling low. Remember that the stockmarket is the only market in the world in which we prefer to buy when prices are high and are put off by low prices. Think about how you would buy fruit and veg at a street market. You would behave in exactly the opposite way.

                                    

10. Watch costs but worry more about value. The difference between the charges on an actively managed fund and a tracker might be 1 per cent a year. If you back the right manager, however, that might be the best 1 per cent you ever invested.

October - Educational Webinar Series

Ark Total Wealth are proud to present their SMSF Strategy Series to our subscriber list. I encourage anybody who is interested in wealth creation in Australia to attend this series. 

Self managed super funds (SMSF's) are now one of the largest and fastest growing segments of the super industry having an annualised growth rate of 20%. Education amongst members as to what they can do with their SMSF's and how they can most effectively use them is patchy however, and many are simply not unlocking their SMSF's full potential. The Ark SMSF Strategy series has been created to educate and empower SMSF directors/trustees to get the most out of their retirement funds, increase their wealth and manage their tax. Webinars will be held on the following topics: Personal Insurance inside your SMSF Direct Equities & Managed Funds within an SMSF Transition to Retirement Strategies within an SMSF How to buy property within a SMSF If you can't attend a webinar, or you are not sure how to log on, please 'click for an advisor' on the right and we can provide you with the steps on how to register or a brief run down of the webinar content. At the webinars we will cover off the following; Personal Insurance - The different insurances that can be held within an SMSF and the tax consequences. Direct Equities and Managed Funds - What your investment options are within your fund and how to get access to these investments. Transition to Retirement Strategies - A detailed look at the options when approaching retirement and the benefits of utilising this strategy Property in Super - How to purchase an investment property within your super with borrowing At the conclusion of the webinar, we are happy to provide fact sheets and a short video on each topic, however we will not be sending out the specific  slides. Regards, The ARK Total Wealth Team Please click the links below to register for the webinars: SMSF and Personal Insurance Tues 16th Oct @ 5:30pm Investing within an SMSF Wed 17th Oct @ 5:30pm Retirement Strategies Tues 23rd Oct @ 5:30pm Buying Property in an SMSF Wed 24th Oct @ 5:30pm Each webinar will be 30mins in duration

www.arktotalwealth.com.au | info@arktotalwealth.com.au

Time to look at your travel insurance

Ensure that your travel insurance needs are covered before going away. Top cover is complete cover, which is your peace of mind away from home! see http://www.bsi.com.au/news/cat/wealth/post/travel_insurance1/

A perfect time to review your Insurances…

Hi 


Please find an email below from Dylan Chan of Ark Total Wealth. There is a real opportunity for you to save substantial dollars on your insurance premiums.


For a complimentary review of your personal insurances, contact Dylan Chan on 02 9262333 or click here fro more information.......




During our regular research review of various insurance providers, we’ve noticed that there is considerable pricing difference between the various insurance providers and some major providers are currently offering personal insurance at extremely competitive and low rates.

These low rates won’t be around forever as they are currently undertaking their review to increase their insurance rates in mid February.

If you have an existing insurance policy (Life/TPD, Income Protection or Trauma) you may be able to replace these insurances at a lower cost to you.  This can create additional cash flow or if your insurance is held within super it will give you more money back into your pocket to spend as you like.

If you have an insurance policy that has been underwritten within the last 5 years you can potentially roll your insurance over without completing any additional medical forms.

Below is an example of a client whose insurance we re-structured in December;

Current Insurance

Life/TPD and Income Protection all held outside of super costing $5,644 per annum from their personal cash flow.

New Insurance

Life/TPD moved to inside super and all insurances moved to new provider at a total cost of $3,962 per annum. This reduced their premiums by 30% and their cash flow was increase as the Life/TPD insurance is now funded through their superannuation.

If you would like a quick and easy complimentary review of your personal insurances please contact 02 9262 3333 or click here.

Regards,

	Dylan Chan Financial Advisor Level 7, 14 Martin Place, SYDNEY NSW 2000 PO Box 4013, SYDNEY NSW 2001 P: +61 2 9262 3333 begin_of_the_skype_highlighting            +61 2 9262 3333      end_of_the_skype_highlighting F: +61 2 9262 5788 E: dylan.chan@arktotalwealth.com.au www.arktotalwealth.com.au ...taking you beyond what you thought possible...

Insurance Lift Off

Just when they have the money, time and inclination to travel, senior Australians say they are being stopped in their tracks by the cost and difficulty of arranging suitable insurance.

But don't falter at the first hurdle, specialists say, because you will be able to find cover - at a price.

''Once you're over 70 … everything is a pre-existing condition,'' laments Ruth, 74, of Bondi who has had trouble securing insurance since back surgery for sciatica, despite fully recovering.

 

''People are living much longer now - must we vegetate at home?

 

Advertisement: Story continues below ''There are people in their 40s and 50s who are in worse health than we are but because of their age they can travel.''

The general manager of online insurer Travel Insurance Direct, Ian Jackson, says that while health insurance is ''community rated'', travel insurance is based on the risk of the insurer having to pay out.

 

''With medical insurance, regardless of the risk factors, everyone pays the same whether they're 18 or 80,'' he says. ''With travel insurance it's a bit different - basically, insurers base the cost of travel insurance on risk factors, taking into account years and years of data.

''And the older we get, the statistics say, the more we claim.''

His business insures people up to the age of 80, with a ''loading'' for travellers aged between 71 and 80.

 

''Different insurers have different caps,'' he says. ''People can be disappointed when they start to look but they should shop around.''

Jackson also argues that going online, where the insurer doesn't have to build in costs such as commissions to travel agents, helps keep down the cost of what can be an expensive product.

Peter Arnold, an analyst with financial products researcher Canstar Cannex, says there are several products on its database that go up to age 85 and even some that have no maximum (see box).

 

Your first task is to find an insurer that insures your age group. Your next undertaking is to look at how each of the insurers on your shortlist handles pre-existing conditions.

''Some will be covered without further ado,'' Arnold says. ''Some will be covered conditionally - you might have to show your medical records or meet certain criteria. Then there are conditions they just won't cover.''

 

Each insurer assigns conditions differently to those ''boxes'', so while one insurer may not cover a pre-existing condition, another may well do.

 

Still not quite there?

Arnold says your final step may be to phone the insurer to see if the insurance can be tailored to meet your needs - again, probably at a cost.

 

''A few people might have to get their head around the fact that they may have to pay double what their son or daughter will pay - there's definitely a cost involved,'' he says.

 

A short cut could be to go to a group such as National Seniors or the Council on the Ageing, which have negotiated with insurers to provide a service to members and non-members.

 

''We've got very good at arguing the case with them for older people and we're continually out there in the market testing what we can get, trying to ensure that older people have the right to get insurance,'' says the COTA chief executive, Ian Yates.

 

''We work to make sure that extra premium or loading is evidence-based, not some lazy, arbitrary line in the sand.''

Natalie Nicastri of Odyssey Travel, a not-for-profit organisation with offices in Sydney and Melbourne and specialising in travel for the over-50s, says it has started using SureSave's TravelClear service, a simplified, phone-based medical assessment system.

This is allowing older clients who wouldn't previously have had access to medical cover to travel, she says.

An Ark General Insurance broker, Michael Klompas, says another alternative is to use a broker to find the right cover.

 

He says there are three things you shouldn't do:

• rely on basic credit card cover,
• travel with no cover, or
• travel with inadequate cover just because the policy is cheaper.

 Call Michael Klompas on 02 92623333 or email him on michaelklompas@yahoo.com 

 

''A broker will make sure there are no gaps or holes, and that's very important,'' Klompas says.

 

Most major insurers have ''find a broker'' services on their websites.

 

Read more: http://www.smh.com.au/money/planning/insurance-liftoff-20110719-1hm21.html#ixzz1SiVc4rAx

 

Have you taken out Travel Insurance on your Holiday

The holiday season is approaching, and many of us are looking forward to our annual holidays. My family is travelling to South Africa for our Annual Holiday, and I am in the process of looking to take out a travel insurance policy to mitigate any risks that might occur on our holiday.

After searching the Web for articles on travel insurance and what the best deals are, (I have reposted the relevant articles on our website  - click here ), we have decided to take out a Chartis Travel Insurance Policy (who are the leaders in this space).

If Travel Insurance is critical for me when travelling, it will also be critical for our clients and subscribers.

I have negotiated a deal with Chartis, so that our clients will be able to get a 20% discount on regular travel insurance prices if they book though the attached link. Click here to access this link.

I hope you enjoy the festive season, and wish you “health, wealth, wisdom and happiness” for 2011.

Arks June Informer - Investing in Equities

Ark's June edition of the Informer talks about equity markets, and an ebook explaining what Seperately Managed Accounts (SMA's) and Exchange Traded Funds (ETF's) are, and how these are used to build an investment strategy..

To Download your free Ebook, click "here"

If you need any more information, please don't hesitate to contact me.

regards

Ivan

Where to from here... are you a bull or a bear?

The 'Informer' is an Ark total Wealth initiative, developed to help individuals identify and understand the current opportunities that exist in investment markets. This initiative forms part of our commitment to provide innovative solutions and advice to clients, with the aim of creating, managing and protecting wealth.

This edition will focus on the ever-changing equities environment.

The past two years have been characterised by extreme market trends with the worst bear market in equities since the Great Depression, followed by the biggest recovery.¹ The start of 2010 has greeted us with even more volatility and we have watched on with cautious optimism as interest rates increase domestically and more debt issues emerge from Greece and Dubai.

This rapidly changing investment environment has left us with the question... where do we go from here?

MLC Investment Strategist Brian Parker presented a very simple but concise outlook on the market in his February 2010 Market Watch. He spoke about the following;

Firstly, even though the worst of the Global Financial Crisis is over, the aftershocks are set to continue, and at least some of those shocks are going to be quite severe from time to time for financial markets. In short, not all the financial sins committed during the boom have been atoned for.

Secondly, It's still our expectation that we'll see a recovery in both business and consumer spending in the major world economies, and that a modest but sustainable economic recovery will result. However, as we've discussed previously, it will take some time for heavily indebted households in the US and elsewhere to get their balance sheets back in order.

Finally, our medium term estimates of returns still look reasonable, and if anything have probably increased as share prices have declined of late. However, the fact that our prospective return estimates look no better than reasonable at this point, speaks volumes about just how far and how fast markets rose during 2009.

This summary, is in line with the views of many leading economists in Australia and it has been played out over the past few weeks with extreme volatility in our sharemarket and Australian Dollar. The key theme however is that investors need to proceed with caution and do your due diligence when investing.

At Ark Total Wealth, we have combined several simple and innovative investment strategies that will help you invest in the market without over extending yourself.

Ark's investment philosophy allows individuals to invest in a recovering market with confidence. The aim is to ensure that any investment made during this period of unpredictability, will not be overexposed to any undue risk. Although there may be continued after shocks from the Global Financial Crisis, our strategy can help mitigate potential risks and put you in a position to benefit from any recovery upside.

Click here to find out more about this investment Philosophy.

¹Blackrock Investment Review and Outlook - January 2010

²MLC Economic and Market Developments - February 2010 - MLC Investment Strategist Brian Parker