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Will Member Super Fund Withdrawal Crash Hostplus?

5875631921 8ab8f53139 zWarren Buffett was famously quoted “Only when the tide goes out do you discover who's been swimming naked”. And I’m sure you would agree with me that the tide has now definitely gone out!  

So who’s been swimming naked and what does it mean to you?

Hint? They’re endorsed by “the barefoot investor”.

Back in March 2019 Sam Sicilia Hostplus’ CIO (Chief Investment Officer) was interviewed by Bloomberg. Saying and I hope this was a miss quote

Hostplus has held no cash since at least 2011 and bonds in its portfolios were effectively zero over the past three years, according to Hostplus. The firm prefers stakes in office buildings, pipelines and emerging technology”.

Fact since March 2020 (12 months after that interview) Australian and Global shares have lost over 30% of their value.

What about unlisted assets?

24th March 2020 Mark Delaney CIO at Australian Super (Australia’s largest superannuation fund) reported Investment magazine  “the market downturn triggered from the outbreak of the coronavirus had seen the value of its unlisted assets fall by 7.5 per cent on average”. On the 25th March 2020 Unisuper have also reported cutting their onlisted infastructure by 6% and unlisted property holdings by 10%

Hostplus are yet to report any decline in value to their unlisted assets but one would expect they may also decide to do so and revalue down their unlisted assets as other industry funds are doing so too.

But what’s concerning me more is….

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What does a stock market correction really look like?

010312093105 422609 10150588760314212 511794211 9285741 549660928 n CopyWhat does a stock market correction really look like?

Over the past 31 years, the S&P 500 has undergone three corrections that turned into bear markets, where the S&P 500 lost 20% or more of its value.

What's more interesting than just the sheer number of corrections is how long they tend to last?

Of the three bear markets, which resulted in respective declines of 33.5%, 49.1%, and 56.8%, took 101 days, 929 days, and 517 days to go from peak to trough. 

Two things you absolutely should do during a stock market correction

First, don't panic. 

In 35 out of 35 instances since 1950, the S&P 500 (America’s version of our ASX 200) has erased any stock market corrections totaling 10% or higher at some point in the future. That's a 100% success rate over nearly three dozen data points.

So buying any major dip is about as close to a guarantee as you're going to get when it comes to investing in the stock market.

It also means that if you already hold shares in profitable companies, chances are that your original investment theses for the stocks you own still holds true, even if they've followed the stock market lower.

That said anytime is a good time to review why you bought the stocks you own and ensure that thesis still holds water, a correction is an even more in-your-face reminder to do so. Only when there's been a material change in the business and/or your investment thesis does it make sense to sell a stock.

Remember, with the exception of the most recent correction, bull markets have erased each and every correction and bear market in the ASX200, DOW and S&P 500 since their inception.

Great businesses tend to increase in value over time, which is a great incentive to buy and hang on over the long run.

Secondly.Buying and holding is truly the most effective strategy.

You might be wondering why you can't just dive in and out of a share markets at the first hints of stock market trouble and then jump right back in after an official correction of 10% has been reached.

The answer is pretty simple: Timing the market with any long-term accuracy isn't possible.

Researchers from Vanguard undertook the following test.

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10 reasons why share market corrections are good news for investors

peter profileWhile share market corrections are scary, they are in fact normal and welcomed by long term savvy investors. I also understand that if you are highly leveraged and investing in high risk speculative shares you probably won't share my optimism. The same too for those fully invested and rely on their investments to generate an income however a well diversified asset allocation is designed specifically to dampen the volatility of single asset classes i.e. weather the storm.

The following are my 10 reasons why and how share market corrections are good for everyone especially investors.

  1. Many discretionary items will be cheaper i.e. travel, cars and electronics. Why? Because sellers need to sell to survive and they will discount stock to maintain volume in trying to ride out the consumer pull back in spending.
  2. If you have shares and a dividend reinvestment plan your dividends will be reinvesting/ buying you shares at a lower price i.e. buying more for your dollar. Often a correction is a discount of share price, not a drop in dividends.
  3. As a dividend return on investment investors dividend returns will increase. If a company’s dividend remains unchanged at $0.50 and the share price drops from $10.00 down to $5.00. Buying the share at $5.00 the dividend return will have increased from 5% to 10%.
  4. Your regular contributions into your super i.e. SGC (Super Guarantee Contribution) and Salary Sacrifice will buy more for your contribution dollar. So with more shares and when the share market rises in the future (as it always has) you will have more shares and they will be worth more.
  5. To stimulate economies and keep money circulating in the economy governments and central banks often lower interest rates and provide fiscal stimulus to the markets. i.e. they provide a capital injection to support business and slow further downside.
  6. It sorts out the pack. As they say a rising tide lifts all boats however when the tide goes out it reveals who’s not wearing bathers. Good quality companies, with good management and good process not only survive corrections, they go on to thrive post the correction because of less competition.
  7. You may have the opportunity to minimize tax. If you unfortunately do realize a loss, this loss may be carried forward to offset future capital gains and minimize your future capital gains tax.
  8. Nearly everything on the share market is sold down. This opens up asset miss pricing and the opportunity for investors to buy great companies at discounted prices.
  9. If we observe historical share market charts most gains in share prices and markets occur within the first six to twelve months post a correction while longer term valuations are factored back into share prices and market valuations.
  10. The last reason is increased investment confidence. Generally speaking if you are investing into a good company (increasing ROI- Return on Investment, good management, competitive advantage, low debt etc.) and the share price has come down significantly. The probability of the share price going down significantly further is often less than the probability of the share price increasing in value i.e. capital loss downside is less.

General Advice Disclosure 

Sources of this information are considered to be reliable but are not guaranteed. Information published in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this document is General Advice and does not take into account any person's particular investment objectives, financial situation and particular needs.

About Peter Horsfield 

Peter Horsfield in an Authorised Representative and Investsure Holdings Pty Ltd ABN 16 050 286 630 as trustee for Horsfield Family Trust ABN 55 609 068 513 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523

2019 Benchmarking Success

IMG 9286Well friends, 2019 is now dry cement.

However before we embark on our plans for 2020 I’d like to share the ups and downs, successes and failures of the 2019 that was.

I do this to keep myself accountable and inspired on this journey called life. As a reference point click the 2017 Benchmarking Success link here.

The past maybe dry cement, but I believe it’s also important to also celebrate how far we’ve come, reflect on where we could have done better and put myself out there publicly as a form of motivation to do the work I need to do in making my plans a reality.

I hope that you find my wins, stumbles, and insights help you on your own journey to getting the most out of your life.

Each year I ask and I answer three basic questions.

  1. What went well?
  2. What didn’t go well?
  3. What to do better?

Feel free to apply a similar format and use for your own journal.

What went well in 2019?

As I like to begin on a positive let’s cover the wins of 2019. Here’s what went well in the year that was.

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The Good, the Bad and the Ugly of Working with Your Spouse

IMG 1878Our first encounter was at was at a training event. In truth a non-event would have been a better description.

Our second encounter was in an elevator. And my unplanned elevator pitch “Do you work here?” was to become my one liner, because by the time we were outside the building I had discovered this goddess standing in front of me had recently returned from overseas, was also a financial planner, just moved to Kirribilli and like me also loved to travel.

Jump forward 3 months on a semi daily basis we were working together i.e. I was a junior adviser and she a senior advisor. Meaning in the hierarchy of banking, I was to refer larger investing customers to a more senior staff

Twelve months later we were married and jumping forward another ten years I'm now running my own financial planning business and in need of a qualified, committed employee whom I could whole heartedly trust, Who could fill such a position and expectations? I know.... my wife.

Many of you would advise me against my decision, along with giving me many valid reasons. Others would congratulate both my wife and I, while in the same breath ask us “how on earth we do it?” Our answer always the same “You just do!”

If you have your own business you're already well aware of the many risks and benefits of working with your spouse.

With this in mind and with the clarity of hindsight (approaching twenty years of marriage and eight years working together) the following is my Good, Bad and Ugly list of what us brave souls who work with their spouses will most probably experience.

The Good

The good news is…..

  1. You’re in this together. Meaning that together you will live and breathe your goals, your hopes, struggles and success together, in both life and business. Just as in marriage you are in business together. For richer, poorer, in sickness and in health, you are not alone, your spouse will be right there beside you. For anyone in business just knowing you have this level of support is often what gets you through the dark times.

It’s interesting to note that successful business also have exactly the same ingredients and characteristics as successful marriages. They have trust, appreciation, acknowledgement, pleasant surprises and the sacrificing of ones ego for the benefit of the other. Implement these ingredients in business and so too will your relationships by their very nature be enhanced along with experiencing something more enriching than just tasting success on its own.

  1. Your business is transparent. The truth is results always require action. “An inch of action always goes further than a mile of good intentions”. The good news is working with your spouse will be held accountable to your actions, in business and at home 24/7 and 365 days a year. You each have a very good idea of what each other is doing, or not doing.and by knowing so you will be more motivated to do the work required i.e. action!

Strengths, weaknesses, outstanding and completed tasks quickly become apparent and allow each spouse to contribute to the solution and again by doing so, deliver a better outcome for all. As we both like to say “so nothing falls through the cracks”. It is this doing, reviewing, doing again and holding each other accountable along the way that we have come to have greater confidence to achieve both our businesses and personal goals, on time, on budget while staying on track.

The Bad

The bad news is……

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The problem with life stage planning advice

IMG 1242We’ve all heard the saying “If it ain’t broke don’t fix it!” however this doesn’t mean “don’t take care of what you have”.

Most of us understand the importance of maintaining our vehicles, our homes, investing time in our children and doing regular health checks. We do this because we see the value of a small cost outweighing the bigger financial impact of not doing so.

Unfortunately for most people the same cannot be said about our finances.

In fact researchers have found over 50% of Australians live in constant financial stress and 85% say this is stress is effecting their wellbeing.

While this is unacceptable, it is completely understandable.

Why? Well simply because life gets in the way.

The following is a list of major life events I have considered we face throughout of lifetimes

  1. New job/ business
  2. Job loss
  3. New long term relationship (marriage)
  4. End long term relationship (divorce)
  5. Big holiday experiences
  6. Vehicle sale & purchase
  7. New dependent (own/adopt)
  8. Saving for home deposit
  9. New home finance
  10. Home renovations finance
  11. New school funding
  12. Dealing with health issues impacting employment
  13. Empty nest syndrome
  14. Financial assistance children (university/home/marriage)
  15. Elders care (relatives)
  16. Inheritance or financial windfall
  17. Sale of home/ downsizing
  18. Retirement/ relocation
  19. Loss of partner
  20. Self-funding lifestyle/ social security assistance
  21. Estate planning
  22. Add more ……

Compounding this list is the probability of times these events will occur and impact us throughout our life

But that’s not all folk’s.

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What's the Price of Financial Advice?

maxresdefaultShut up.... and make me money!

Making money is simple, but not easy.

However if the process has slipped your mind, the following is a quick refresher.

  1. Save and invest first i.e. don’t spend then save.
  2. Invest and reinvest earnings in growth assets for the long term
  3. Keep fees and taxes to a minimum.
  4. Invest for the long term (life expectancy)

Sadly many become so obsessed with making more and more money, they lose their “life” along the way.

“Man. Because he sacrifices his health in order to make money. 

Then he sacrifices money to recuperate his health.

And then he is so anxious about the future that he does not enjoy the present; 

The result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.” Dalai Lama

In the same crusade of seeking more... many view financial planning as a zero sum game, Framed by basic questions of more money, rather than seeking the greater intangible benefits and improvements to ones quality of life.

For example the question is framed as

  1. How much money does it cost?
  2. How much money did it make?

And by doing so, we unwittingly place financial goal roadblocks in the way of our relationships, personal growth and the legacy we would like to leave rather than the opportunity to experience a higher quality of life.

Instead we should be framing our question as

  1. What's important to me & why?
  2. How much is too much?
  3. How would we like to be remembered by those important to us?

But it's also not all our fault.

Industry bodies, product manufactures, shareholders and advisers have also sold the dream of saving more and investing all to achieve financial Nirvana, while they have been found to put sales and profits first before the individual in their own desire for more. As we have seen laid bare and their undoing on the journey towards making financial planning an aspired profession.

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Dude Ranch Days

CounselorsMy journey of a 1000 miles and financial independence began with a single step on my 25th birthday.

Twenty plus years later and 20,000+ hours of studies, certification & professional experience  to this day, I still continue to learn new things, invest in new opportunities and also help others along their journey too.

I've learnt that simply earning more money is not the only ingredient required to become wealthy.

True financial independence requires the blend of simplification, organisation, implementation, perspiration and being held accountable every step along the way.

Action ultimately the DNA of one's success. "An inch of action will always deliver you more results than endless miles of intentions"

However prior to a ¼ century crisis (25th birthday) I was not all that together or focused. In fact I was in a word “lost”.

After finishing high school I was encouraged by my parents to study teaching (they said I had always been comfortable around kids). The truth is my grades were average and teaching had a low university entrance mark. I studied early childhood for 2 ½ years then I flunked out.

As a university dropout, I was left to pick up odd jobs (so not to move back home and acknowledge failure to myself ). I catered, I taught swimming lessson, and labored, and did anything that paid me $$$$ so I could survive day to day and continue living in my ingnorance and arrogance that I was in my eyes "the best"

It was at that time I read about being a camp counselor at CAMP America

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What does success mean to you?

IMG 3208 4Money is a really powerful thing – it has the power to help us destroy, or to massively improve the world, depending on how we handle it.

And business success (to me) is my enabler to walking my talk and help many others to live their ideal life worry free too.

I'm so passionate about this.

And believe if we all get better at managing our money while aligning financial choices to our unique and core values not only we, but the bigger world will be a much better place for us all.

In this new year we are often bombarded with motivational quotes like....

"Whether you think you can or you can't, your right" Henry Ford

"Do more of what makes you happy"

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Refined by F.I.R.E.

IMG 1309When most people first hear of the F.I.R.E. (Financial Independence Retire Early) movement it’s natural to assume the movement is all about money and being free, however we would be wrong.

In truth the F.I.R.E. movement is about self-discovery, our authenticity, experiences and our journey towards personal mastery.  The mastery of being able to better define, develop and live our own authenticity and to add value to others.

I don’t know who came up with F.I.R.E. as an acronym, if it was Peter, Vicki or a general consensus, however, the acronym resonates with more than just the goal in itself,

F.I.R.E is the distilled aspiration of the movement. Just as FIRE being an energy refines and purifies all things.

I also think it’s important to take a moment and dispel a broadly embraced belief about the F.I.R.E. movement.

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FearlessSadly many of us only know how to live life in fear, without knowing how to escape it.

We’re even schooled and educated to believe that fear is excellent motivator and a catalyst to our “success”.

“Use you fear for motivation” and “Fear is a good thing because it keeps you alive”.

Fear, shame, and guilt in some circles is even promoted as good and to be our trusted battle cries to get us off our butts and move forward towards our goals.

Being fearless is a total game changer and is even more important than having a pair when facing our fears.

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The Monkey and the Coconut

MonkeyFive sailors are shipwrecked on a desert island. They quickly determine that the only other inhabitant of the island is a monkey and that the only food is coconuts. They set about collecting as many coconuts as they can and put them all in a very large pile. By nightfall they are too tired to divide the harvest; so they agree to go to sleep and share the coconuts equally the next morning.

During the night one sailor awakens, suspicious that the others might try to cheat him, and decides to take his portion then and there and not wait until morning. He divides the coconuts into five piles and finds there is one coconut left over, which he gives to the monkey. He hides one of the five piles, then puts the rest of the coconuts back into a pile and returns to sleep. Later a second sailor awakens with the same suspicions and does the same thing: He divides the coconuts into five piles, leaving one extra, which he gives to the monkey. Then he hides what he thinks is his share, puts the remaining coconuts into a pile and goes back to sleep.

One after the other, the rest of the sailors do the same: They each take one fifth of the coconuts in the pile (there is always an extra one, which is given to the monkey) and then return to sleep. When the sailors awaken the next morning they all notice the coconut pile is much smaller than it was the night before, but since each man is as guilty as the others, no one says anything. They divide the coconuts (for the sixth time) and again there is one left for the monkey.

How many coconuts were in the original pile?



2017 Benchmarking Success

SintraWell friends, 2017 is now dry cement.

However before we embark on our plans for 2018 I’d like to share the ups and downs, successes and failures of the 2017 that was.

I do this at the start and end of each year to keep myself accountable and inspired on this journey called life. As a reference point click the 2016 Benchmarking Success link here.

The past maybe dry cement, but I believe it’s also important to also celebrate how far we’ve come, reflect on where we could have done better and put myself out there publicly as a form of motivation to do the work I need to do in making my plans a reality.

I hope that you find my wins, stumbles, and insights help you on your own journey to getting the most in life.

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You Are My Everything

Photo7 inner 43 665 451 685 24 955 441 1001You bring me pleasure and joy.

Watching you sleep, your eyes closed, a relaxed face, your chest rising and falling with each breath you take brings me joy.

I know your desires, pains, strengths and self-doubts. I know them all.

I’m deeply touched by things you do for me.

Be yourself always and rest assured that your uniqueness is beautiful and brings me much happiness.

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I Do

IMG 1683 2Growing up my Dad said he considered changing my brother and my names to Gunna and Gotta.  Why? Because whenever he asked if we had done our chores, I would say “Yes dad. I’m gunna” and my brother would say “Yes Dad. I just gotta…..

Even today I still catch myself saying I’m gunna when it comes to chores around the home, however sixteen years and nine months ago I said I do.

Not I will, or I must, or should but I do. For better or worse, sickness or health, poverty or riches until death do us part and knowing the difference is the secret to success.

Success is simple. First you decide specifically on what you want and secondly you decide if you’re willing to pay the price for it. Then you pay the price.

If we really want to experience that which is important to us we simply must DO the things we know we need to do. Period.

Want a happier relationship? If you’re not prepared to work at it, or pay the price in other areas of your life for it….. Rosalind (Mrs H) has a saying for you Well go ahead; want on one hand and shit on the other and see which one fills up quicker”. She has such a great way with her words!

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Why Investing in Experiences and Ourselves Heightens Our Happiness

FullSizeRender 1“Traveling – it leaves you speechless, then turns you into a storyteller.” Ibn Battuta 

Today I rode a camel.

Riding a camel is nothing like riding a horse. Not the mounting, dismounting, riding/swaying or the itchy, smell and overall discomfort. However the experience concluded by watching the sun setting over the Sahara dunes followed by a dinner, drums and drinks in a Berber tent and under a star filled night.

An experience to leave me speechless and one I will cherish for the rest of my living days.

This journey and most recent experience has taken many years. From an initial thought, followed by an interest, then a plan and lastly a committed action.

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The Price of Success

Darwin Twilight WaterfrontEvery day we are bombarded with media, work colleagues, strangers, families and friends judgments about our body shapes.

Our feelings of self-worth, twisted and magnified by our own expectations, past experiences and the physical changes due to our hormones and the foods and drinks we consume.

The good news is that we are not our past and each day we have the opportunity to live, believe in and do the activities to bring us closer to experiencing our ideal lives.

In life I’ve learnt that success is simple, but not easy. You simply need to know specifically what you want, know how much it will cost and pay for it.

I also know that change can happen in a moment, however coming to the decission to change can take years if not decades.

Recently I decided to change my relationship with food and myself and pay the price to achieve my goal.

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Money Worries? Do this to Stop Worrying!

Stress-FreeMoney issues that can cause stress and the solutions to help.

1."Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." - Charles Dickens, David Copperfield

Solution:  1. Make more money, 2. Spend less money, 3. Do both 1 & 2.

2. “This would be a much better world if more married couples were as deeply in love as they are in debt.” -Earl Wilson.

Solution: If you are in debt your most important priority is to ensure your debts are manageable and not impacting your choices, quality of life, relationships and aspirations.

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What's Your Golden Panda?

Gold PandaIn our busy consumer and capitalist modern day lives, it’s easy to be coaxed into believing bigger is better.

Business leaders set Big Hairy Audacious Goals (BHAG's) for their organisations. Motivational speakers preach “Aim for the stars, because if you miss at least you’ll land on the moon”, whilst talented athletes train for years with their hopes set on Olympic Gold.

We're constantly striving for more; more money, more experiences, more accolades and attention. Whilst forgetting or unaware of how much is really enough.

Often we buy into the misbelief that we’re less than others based on others having more. Which by the way is a fondational globally successful strategy used by advertisers to push their products.

A“caveat emptor” about goals.

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Investsure Holdings Pty Ltd ABN 16 050 286 630 \(t/as Horsfield & Associates\) is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049, who holds an AFSL and Australian Credit License No. 236523.
Information published on this website has been prepared for general information purposes only and not as specific advice to any person. Any advice contained in this document is General Advice and does not take into account any person's particular investment objectives, financial situation and particular needs. Before making an investment decision based on this advice you should consider, with or without the assistance of a qualified adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. Past performance of financial products is no assurance of future performance.