Interesting performance stats
* June quarter rise of 11.76% - Best quarterly rise in 8.5 years
* Financial year down 27.1% - worst financial year in 28 years
* Last two financial years down 37.4% - worst two consecutive financial years in 73 years.
* Standard and Poor 500 index in the United States up 15% for the quarter - best performance in over 10 years.
* Australian Dollar rose 17.56% - best quarterly performance ever (since floated in 1980s) But this has affected performance of some international investments.

Some of these statistics may sound a little grim and the expectation for the future from the economist at Macquarie bank is
"We believe it is likely that we are about to return to the "big and sharp" economic cycles seen in the 70s & 80s. If correct, this has major implications for the volatility of corporate earnings, particularly cyclical companies and equity returns. Investment processes of whatever ilk will, in our view, need to pay more heed to the macro cycle and its position. Investors are likely to face shorter and more volatile returns cycles driven more by macro themes than stock specifics.

If this economic view is the case and we have big and sharp economic cycles we will need to be aware of our emotions in the market and ensure that we put in place a strategy for risk management of your portfolio and wealth and also to check in with yourself and your emotions around your investment and their performance.

What self care strategies do you have in place? I have recently begun training for the City 2 Surf in Sydney on the 9th of August. Now I am not a runner and I did some training the other day with a mate who does and can run and he gave me some pointers on technique to lessen the impact on my body and help my running style.

I had a bit of a moment after the run while we were stretching and having a chat about technique and some of the training I do for people about money. I realised that this can be the same when it comes to your financial life. How do you respond when you see your portfolio or superannuation value go down? What is the impact on your body? and how do you carry yourself during these times? What mechanisms and self care practices do you have in place to ensure you can ride out any volatility with least impact on your body.

I would suggest that the self care practices are just as important as an appropriate risk management strategy. I have recently also discovered Rosen Body Work and there are plenty of other practices out there which can assist in creating more balance or reducing the impact on your body.

I challenge you to write down your goals for the new financial year and if you do not already do it include some self care items to bring greater balance to the coming financial year.

Over the March 2009 quarter, industry funds' assets fell by 1.4 per cent ($2.6 billion) to $180.0 billion.
Retail funds' assets fell by 2.6 per cent ($7.8 billion) to $285.6 billion,
corporate funds' assets declined by 2.9 per cent ($1.6 billion) to $52.0 billion; and
public sector funds' assets fell by 3.2 per cent ($4.7 billion) to $144.7 billion.

This may be a good time to review your superannuation fund investment strategy including the types of assets you are invested in.
Some funds have exposure to unlisted property investments which have not yet been revalued, speak with your superannuation provider to check they types of assets they are invested in and if in doubt send me an email.

As you should be aware 1 July 2009 also makes the changes to the concessional contributions cap for people aged under 50 which will be halved to $25,000 per financial year from its current limit of $50,000. Essentially, this is the amount of before-tax contributions that can be made into a superannuation fund in a financial year at the concessional tax rate of 15%. This includes both employee salary sacrificed super contributions and other employer contributions and will be indexed.
Special rules apply to contributions made to defined benefit funds, if you are a memeber of the Commonwealth Superannuation Scheme or Public Sector defined benefits schemes the employer component does not count towards your contribution cap. Further details on this can be found on the ATO website

The existing transitional concessional cap for those aged 50 years and over will be reduced from $100,000 to $50,000 per year. The transitional concessional cap of $50,000 will apply for the 2009/2010, 2010/2011 and 2011/2012 financial years. After this time, affected persons will revert to a $25,000 cap (or the applicable indexed amount).



The non-concessional contributions cap will remain at $150,000 for 2009/10 financial year (and thereafter calculated as six times the indexed concessional contributions cap).

The Government's super co- contribution will be temporarily reduced from 150% to 100% for contributions made from 1 July 2009. This means the maximum co-contribution for the 2009/2010 financial year will be $1,000. The Government does intend to return the co-contribution to 150% in the 2014/2015 financial year.



Note: It is your responsibility to ensure you do not exceed the superannuation contribution limits. If you exceed the above limits, any contributions exceeding the limits will be taxed at 31.5% on top of the 15% superannuation contributions tax paid by the fund.

From 1 July 2009, the definition of income will be expanded for the purpose of means tested Government programs, to include Reportable Employer Superannuation Contributions (RESC). It is a requirement from this date that all RESCs be reported on payment summaries.

RESCs will include salary sacrificed contributions and those contributions made on behalf of a person during an income year by their employer above those required by law, an industrial award or superannuation guarantee regime.

If you have any questions about your current superannuation setup please contact Money Mechanics for a personalised review.

What are the mechanics of this? ETCs track the performance of an underlying physical commodity or commodity index allowing investors to gain direct exposure to the underlying asset without the need to trade futures or take physical delivery of the commodity.

Aside from the underlying asset, ETCs are very much like Exchange Traded Funds and are traded and settled on ASX, just like shares, making them both accessible and affordable. 
ETCs are open- ended securities meaning new units may be created and existing units may be redeemed in the primary market based on market demand by the market maker. This unique feature helps ensure the market price of the ETC tracks closely to its Net Asset Value (NAV). It also creates an arbitrage opportunity should the market price of the ETC move away from its NAV.

ETCs replicate the performance of the underlying commodity or commodities index because the issuing entity would have a direct investment in the underlying asset or the commodity derivative contract. As such, the investment value of a portfolio would generally rise and fall in direct proportion to the price of the underlying. This broadens the investment opportunities for potential investors because for many commodities, no listed companies exist.

Further, in certain circumstances ETCs may be a useful hedging tool against currency risk. ETCs are traded and settled on ASX in Australian dollars. For underlying commodities which are valued in a foreign currency, fluctuations in the exchange rate can affect the value of the portfolio. As such, a weak Australian dollar will increase the value of investments held in non-Australian dollars. On the other hand, if the Australian dollar rises, the value of investments held in non-Australian dollars will fall.

The first ETC to launch on ASX was an exchanged traded gold product in 2003. There are now a number of ETCs currently quoted on ASX.

The development of Gold Bullion Securities (ASX code: GOLD) has been a joint initiative between Gold Bullion Limited and the World Gold Council. A GOLD security consists of a gold bullion share of nominal value and a beneficial interest in approximately 1/10th of one fine troy ounce of gold bullion held on trust for the holder of the security.

The gold is held in London vaults by a custodian. A trust deed establishes a separate trust for each holder of GOLD so that the holder is absolutely entitled to the gold bullion held in the vaults. Each time a holder transfers GOLD to a new holder, the beneficial interest in the gold bullion automatically transfers to the new holder.

About the Market Pricing

The price of GOLD is based on the spot price of gold less the daily Management fee.
Daily price of GOLD: = 0.10oz of Gold x Gold spot price less daily Management Fee
The spot price for gold is based on the LBMA's specifications for Good Delivery (loco London), which is an internationally recognised and transparent benchmark for pricing physical gold.

Investment Objective

ETFS Physical Gold (GOLD) is designed to offer investors a simple, cost-efficient and secure way to access the precious metals market. GOLD is intended to provide investors with a return equivalent to movements in the gold spot price less fees.

The graph above shows the relationship between the GOLD price listed on the ASX and the All Ordinaries Index over the last 2 years. There is a clear inverse relationship between the two as the share prices go down the gold price comes back up.

As with all investment opportunities you should confirm if this relates to your overall investment objectives and is suitable to achieving your investment outcomes.

Economic and Policy Trends
Both the International Monetary Fund (IMF) and the Organisation for Economic Co-Operation and Development (OECD) were encouraged by signs of stabilisation in the world economy, but warned that recovery was not guaranteed and implored policy makers to follow through with promised stimulus and provide more if needed. The OECD are looking for total OECD area growth to fall 4.1% over 2009 before growing by 0.7% in 2010.

In their comments on the Australian outlook, both the IMF and OECD spoke about the need for a prolonged period of lower cash rates to help support the Australian economy. The RBA left the cash rate unchanged at 3% in early June and signalled that it had an easing bias. We believe that the RBA is on hold well into 2010 and that when the RBA tightens, it will take monetary conditions from accommodative to neutral levels, not to tight levels in 2011 as currently priced in by markets.

Data readings were mixed, with signs of life in those sectors benefiting from monetary and fiscal stimulus, like the housing and retail sectors. Overall credit growth continues to contract, with housing lending the exception.

The labour market continued to weaken, with the unemployment rate rising and part time jobs being substituted for full time jobs. While GDP rose 0.4% in the March quarter, a massive positive contribution to growth from the external sector masked a 1% fall in domestic demand.

Equity Market Trends
Equity markets were mixed over the month. In the US, the S&P 500 was unchanged in home currency terms, while Germany's Dax fell 2.7%. Japan's Nikkei did better, up 4.6% over the month. After allowing for a slight appreciation in the currency, the MSCI World ex-Australia Accumulation Index in Australian dollars fell 1.6% over the month. Risk appetite continued to hold up in Australia, with the S&P/ASX 300 Accumulation Index gaining 3.96% over June.

Bond Market Trends
Yields continued to rise in Australia, Bond Market Trends mainly on markets shifting to price in a fairly aggressive tightening profile. Over the month, three year and 10 year Government bond yields rose 60 and 24 basis points to end June at yields of 4.56% and 5.52% respectively. Sector returns, as measured by the UBSA Composite Bond Index, were down 0.61% over June. The cash sector, as measured by the UBSA Bank Bill Index, gained 0.27% in June.

Investment Strategy
The recent sharemarket rally and rise in bond yields continues to reduce the intensity of our signal. We remain mindful that significant monetary and fiscal stimulus continues to support the economic outlook and a tactical overweight Australian shares position. The massive deterioration in the Government's fiscal position points to a medium term rise in the term premium and a reason for remaining underweight in the Australian fixed interest sector.

Managing on a Low Income
Wednesday 23rd September at REID CIT Campus
Cost $25
Struggling to make ends meet? Sometimes it can be hard to imagine getting ahead, let alone really getting there. Living on a low income can take a lot of energy and require a lot of skill balancing your budget from day to day. Our habits and attitudes have a lot to do with how we relate to our money and making ends meet. You may or may not already have good money management strategies in place. This course is one of the first simple steps to making the most of your money, from getting a greater grasp on your day to day budget and debt strategies, to your longer term superannuation strategies.

Superannuation Demystified
Wednesday 12th August at REID CIT Campus
Cost $50
This evening will cover the taxation strategy of superannuation including the taxation on co- contributions while in the scheme, and on the way out of the scheme. Technical strategies such as advantages and disadvantages of salary sacrifice to superannutaion and defined benefit superannuation schemes in the context of your financial life and estate plans will be covered.