2016 US Election Results
Wow, the mainstream world didn’t see a Trump presidency coming.
Most polls indicated a win by Hillary Clinton, but the media seem to have western politics all wrong this year starting with Brexit. There is a general feeling that people want and need change, and they will vote for whatever can bring about that change. So the road ahead looks rocky and uncertain, but have your fears from yesterday just been played out today? We wait and see.
At AvSuper, we maintain that rises and falls occur in investments all the time in reaction to world events, company forecasts, natural disasters and human disasters. These events can initially shock us, but over time, opportunities arise, we rebuild and strengthen and grow from the experience. This is no different from the volatility markets witnessed with Brexit back in June this year. For all investors, it is important not to react to panic and be irrational; instead, remain clear and focussed on your long term goals, avoid reacting emotionally and always seek professional input from your adviser.
Remember, selling or indeed switching your investment options in response to sudden falls in markets can just lock in an investment loss and reduce your capacity to make those losses up in future. The noise generated through the media can make adherence to long term investment strategies difficult, we understand this. So, stay strong and keep your eyes open (alongside your financial advisor) as often such scenarios throw up opportunities.
What are the potential economic implications?
At face value, Trump’s policies come with many economic and market uncertainties.
Much of the potential impact hinges on Trump’s ability to implement his planned tax cuts and his intentions regarding trade. The tax cuts could provide a meaningful boost to growth via higher consumer spending and business investment, but would also likely to lead to a large increase in the budget deficit. Higher infrastructure spending would also be beneficial for growth.
His plan to deport illegal immigrants could place upward pressure on wages but also lower growth as the population and workforce contract. Trump’s trade policies would be expected to dampen international trade and growth, with a magnified impact on emerging markets given their greater reliance on international trade as a source of growth.
What are the potential implications for growth and markets?
We’ve seen some analysis which highlights the potential inflationary impact if Trump’s policies are implemented. Any boost to growth from tax cuts, upward pressure on wages from deporting low-wage illegal immigrants and higher prices of imports from any imposition of tariffs would be inflationary and place upward pressure on interest rates and bond yields.
A key risk for the global economy is a trade war if a Trump Administration imposes tariffs on Chinese goods, which could lead to retaliation. Any reduction in global trade volumes is likely to be a have a meaningful negative impact on global growth.
In summary, in the short term, tax cuts and higher infrastructure spending could provide a boost to growth and ‘risk’ assets such as equities, while the uncertainty and negative market reaction to Trump’s election could further defer additional rises in interest rates by the Federal Reserve.
However, over the medium term, if implemented in full, Trump’s economic policies could reduce US and global growth which would be negative for ‘risk’ assets, including equities. The impact on interest rates and bond yields is unclear given the conflicting forces of lower growth but higher inflation. Given that full implementation is considered unlikely for political reasons, the overall impact on growth and investment markets will be dependent upon which policies are ultimately implemented and to what extent.
Should I change Options?
Superannuation is a long term investment, here at AvSuper we are riding this current wave of volatility with cautious optimism.
Everyone is at different stages in life in terms of meeting retirement savings objectives. Before you make any decisions in changing investment options be sure to speak with our Member Advice Consultants, who are qualified financial advisors, if you think you need assistance.
The gender gap is still clear when it comes to superannuation, with latest data from the ABS* showing that on average, men retire with 80% more superannuation savings than women. That’s a big difference, a difference that makes it more likely for women to have to rely on Government pensions than men.
In the 55-64 age group, men have 79% more super than women, while in the 30-34 age group men already have 70% more super saved. And overall, men hold 64% of total super balances and receive 65% of tax concessions given to super members.
Interestingly, the average AvSuper balance is $242,000 for men and $141,000 for women, both being higher than average for Australia. You can find more statistics on super between the genders on our super for women page.
So what can we do about it?
While there is little we can do to reduce the gender gap in the short term as individuals – changes to legislation for concessions and societal changes for equal wages will take bigger effort – there are things we can do for ourselves and for all the women in our lives.
- talk to the women in your life to ensure they understand the basics of super and building a long-term financial future.
- remember that a man is not a financial plan – women need to build up their own savings, too.
- make personal contributions – and encourage others to do the same. At AvSuper it’s easy – make ad hoc contributions to our bank account and tell us via our online form, or set up regular payments via your employer or banking facility.
- if you’re part of a couple, look into spouse contributions and the related tax offset as a possible way to even up your retirement savings.
- talk to an AvSuper Member Advice Consultant to maximise your options, whether it is a different investment strategy or the most effective way to make contributions in your current circumstances.
* Australian Bureau of Statistics “Superannuation account balances by age and gender” December 2015
AvSuper members have started receiving their annual statements and the AvSuper Trustee Report.
As always, we recommend you read both documents carefully and then contact us with any questions you may have. Our annual report includes information about our investment performance and investment markets generally, as well as giving you updates on our insurance option and spouse accounts.
If you have requested hard copies and they have not yet arrived*, you can view them online while you wait. Of course, if they do not arrive within the next week, please let us know so we can check your contact details are correct before reissuing your statement.
∗ All members can choose to receive their statements and/or annual report electronically – simply log into Member Online to check and update your preferences under the ‘member details’ tab.
We are very pleased to announce members will be able to electronically access their accounts from our Canberra office as of today!
There will be an iPad in our Canberra foyer (just across the plaza from Airservices Australia reception) so that members can log into Member Online to check their account or make some changes (such as an investment switch, insurance application or update contact details).
We expect this to be particularly useful for members without private access to a computer at work and those wanting help with using Member Online – our Member Advice Consultants can join you in the foyer to talk about accessing and managing your account.
So any time you are in Canberra, come along and check your account in our office, and say hello while you’re here!