Financial Security Practitioners

Articles and Company News

We aim to keep our clients up-to-date with news and relevant opinions which concern your finances. Our regular email bulletin is designed to inform and share views with our members.

The Next Virus

By Wellinvest

Beware of the Next Virus... It’s Coming!

The Corona Virus is the forerunner. This one is unavoidable! It will infect every living soul, no exceptions. It’s not fatal, but it is potentially disastrous.

It is a direct consequence of the Corona Virus, and no-one can escape this one.

Where is this horror-virus coming from?

We are breeding it. Deliberately. Here in Australia. So is every other country in the World.

Why? How? What is it?

As we know, our government - and governments everywhere - are embarking on “economic stimulus packages” to counter the disastrous effects of the current pandemic.

This is commendable and necessary.

However, it means one thing: they are spending money. But it's money they don’t have! They will have to print it!

This translates to one inevitable result: a highly infective economic virus.

It’s called INFLATION.

Inflation means RISING PRICES - of everything. Your Cash will lose value. Your money will buy less at the shops. Everything will cost more.

You will be poorer - inevitably.

Australia has enjoyed almost three decades of economic prosperity and negligible Inflation.

No doubt, we are well placed to weather the economic storm, but - unavoidably - the price will be high inflation - the disease of the 1970’s and 1980’s, but this outbreak will likely be worse.

Here’s the Question

Is Cash (in the bank, or under the bed, or in your SuperFund) the safest asset?

Interest rates are the lowest in living memory and are destined to fall further. Couple this fact with the government’s printing money and we have a potent formula for personal financial disaster.

The Lesson - The Safeguard

Do not be tempted to turn your investment assets - whatever they are - into Cash.

Inflation means that you will need more cash to pay for goods and services, certainly. But equally, you’ll need more cash to buy shares and real estate. They - notwithstanding the present (and future) volatility - will hold, and increase their value.

From past experience, real property - that is, shares and real estate, and not cash - will prove to be the safe haven for your investments.

In summary, we know the economic virus is coming, but - to the wise and the practical - and the faithful - we can avoid infection.

Cash is certainly not the medicine. Cash could be the problem.


Please call us if you have any concerns on (02) 9476 2200 or contact us here.

Your financial security is our concern.

Who’s not worried - about their investments, their life savings?

By Wellinvest

Well, correct that everyone is concerned - and should be. After all, in our lifetimes, at least, we’ve never experienced the current situation.  

But who should be concerned about their investments?

Answer: They whose investments are structured to rely on Capital Growth - as are 95% of holders of Superannuation or Pension Funds. 

The present ‘market downturn’ is a potential calamity for those folks.

For SuperFund holders, at least they have time on their side - given the market recovers before they reach retirement. If not, well...

But for Pension holders it’s a tragically different story. Today, they are having to draw down on their capital, at a time when their capital has shrunk, and they face the real risk of exhausting their capital. No more capital means no more Income (other than CentreLink).

So, where do you stand - whether retired or not?

In a few words; if your have listened - and acted - on our advice over the past few years, your investments are as safe as they could be, especially throughout periods such as the present, because they are structured essentially to generate a continuing and growing Income Stream. 

As such, your funds will inevitably have suffered a reduction in their market value, BUT because your funds are now structured to maximise INCOME (essentially through share-dividend Income), and because the number of shares you own (call them ‘units’ in your Super/Pension fund), hasn’t changed, and because dividends are paid PER SHARE, your Investment Income continues.

Time and circumstances will tell whether company dividends will be reduced pending the end of the present pandemic, but - given you now have this investment structure - you are in the best possible position to withstand the negative effects of this present episode in human history.  


If your funds have not been structured as we advocate, should you be worried?  

Yes, and NOW is the time to act. It’s Better Late Than Never.

We can, and will, assist you. We want to, and you only need to contact us.

Call us on (02) 9476 2200 or contact us here.

Your financial security is our concern.

RBA Media Release, March 2020

By Jack Wellings
RBA Update

Statement by Philip Lowe, Governor: Monetary Policy Decision

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 0.50 per cent. The Board took this decision to support the economy as it responds to the global coronavirus outbreak.

The coronavirus has clouded the near-term outlook for the global economy and means that global growth in the first half of 2020 will be lower than earlier expected. Prior to the outbreak, there were signs that the slowdown in the global economy that started in 2018 was coming to an end. It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path. Policy measures have been announced in several countries, including China, which will help support growth. Inflation remains low almost everywhere and unemployment rates are at multi-decade lows in many countries.

Long-term government bond yields have fallen to record lows in many countries, including Australia. The Australian dollar has also depreciated further recently and is at its lowest level for many years. In most economies, including the United States, there is an expectation of further monetary stimulus over coming months. Financial markets have been volatile as market participants assess the risks associated with the coronavirus. Australia's financial markets are operating effectively and the Bank will ensure that the Australian financial system has sufficient liquidity.

The coronavirus outbreak overseas is having a significant effect on the Australian economy at present, particularly in the education and travel sectors. The uncertainty that it is creating is also likely to affect domestic spending. As a result, GDP growth in the March quarter is likely to be noticeably weaker than earlier expected. Given the evolving situation, it is difficult to predict how large and long-lasting the effect will be. Once the coronavirus is contained, the Australian economy is expected to return to an improving trend. This outlook is supported by the low level of interest rates, high levels of spending on infrastructure, the lower exchange rate, a positive outlook for the resources sector and expected recoveries in residential construction and household consumption. The Australian Government has also indicated that it will assist areas of the economy most affected by the coronavirus.

The unemployment rate increased in January to 5.3 per cent and has been around 5¼ per cent since April last year. Wages growth remains subdued and is not expected to pick up for some time. A gradual lift in wages growth would be a welcome development and is needed for inflation to be sustainably within the 2–3 per cent target range.

There are further signs of a pick-up in established housing markets, with prices rising in most markets, in some cases quite strongly. Mortgage loan commitments have also picked up, although demand for credit by investors remains subdued. Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality. Credit conditions for small and medium-sized businesses remain tight.

The global outbreak of the coronavirus is expected to delay progress in Australia towards full employment and the inflation target. The Board therefore judged that it was appropriate to ease monetary policy further to provide additional support to employment and economic activity. It will continue to monitor developments closely and to assess the implications of the coronavirus for the economy. The Board is prepared to ease monetary policy further to support the Australian economy.

Oh! The Markets

By Wellinvest

“More than $130 billion wiped off ASX as coronavirus bloodbath continues”

“ASX faces worst week since GFC”

Oh dear, here we go again - the end of the World is nigh!

BUT ISN'T IT NICE TO KNOW that if your investments (including your Superannuation or Pension Fund) have been wisely structured to generate INCOME (from share dividends), rather than gambling on Capital Gains, then your income is not under threat?


It’s as Simple as This...


Dividends are paid PER SHARE.


They are NOT paid according to the SHARE PRICE.


So, markets rise, markets fall. But the number of shares you own stays the same.


Falling - or rising - share-prices doesn’t change the number of shares you (or your Super or Pension fund, on your behalf) owns.


Worth Repeating...


Dividends are paid PER SHARE.


Whilst it may transpire to be the case that some companies may have their profits trimmed and consequently have less to pay to their shareholders, others may actually benefit from the downturn. For example, building materials companies are booming following the devastation of the recent bushfires and floods, as rebuilding gets underway. Commercial opportunities abound in every situation.


It is not the purpose of this brief article to discuss the coronavirus outbreak, but simply to send a note of calm and caution.


Doubtless, markets will recover anyway, as they inevitably do. It’s in the nature of our advanced economy, and those of the developed World.


In the meantime, as said, your Investment Income remains safe and secure.


Best Wishes,


Your Team at Wellings & Associates

Your Franking Credits are Safe.

By Jack Wellings

The cloud has lifted. You are not going to lose your Franking Credits. What a boost for the moral - and financial well-being - of retirees!

The retention of Franking Credits means there will be no reduction to pensions and share-dividend income.

The depressing prospect of up to a 30% reduction in share dividend income that has seemed to be a foregone conclusion for the past several months suddenly disappeared late Saturday evening.

All retirees - but especially low-income retirees - were in grave danger of experiencing up to 30% reduction to their living income. This will now not take place.

Politics notwithstanding, we regard this as a victory for common sense and honesty.

Also bear in mind that it wasn’t just investment Income that was going to be affected. Capital Gains Tax was also going to increase - by a massive 50%! That isn’t going to happen either.

Neither will we see the loss of tax deductibility of negative gearing.

(Negative gearing essentially means that where the ‘running costs’ (mortgage interest, maintenance, rates, insurance, etc) exceed the rental income of the property, then the investment runs at a loss; such loss then being offset against the taxpayer’s other income earnings.)

We should recognise that tax deductibility of negative gearing has been an underlying principle in the supply of rental housing in Australia for the past half-century or more. We should also recognise that the vast majority of residential property investors are not, as often portrayed, ‘the top end of town’, but are typical Mum & Dad investors seeking to provide for their own and their children’s future financial security.

And let's not ignore the salient fact that this ‘loss of taxation revenue to Treasury’ is actually ‘money in the bank’ for Treasury, as Treasury ultimately gains revenue - by Capital Gains Tax - when the property is eventually sold. Up to 23.5% of the gain, in fact.

Couple the loss of tax deductibility of negative gearing with a 50% increase to Capital Gains Tax, and why would anyone have wished to invest in residential real estate?

In summary, it's a case of the classic maxim “If it ain’t broke, don’t fix it.” Thank goodness, we didn’t.

So here’s to the continuing prosperity of our great nation, and thereby to the financial security and well-being of each of us who are privileged to be Her beneficiaries.

Let's Change the Headline

By Jack Wellings

Dow Jones Industrial Average Share index drops 4.6%, or 1,175 points, in biggest drop since 2008 financial crisis.

In Sydney, the ‘All Ords’ dropped 1.63%, or 101 points yesterday, and will likely do the same again today. 

WHOOPEE! Crack the bubbly! Let’s celebrate!

Let’s Change the Headline:

‘The price of cars, petrol, electricity, bread, milk, clothes, wine, beer, all fell by 4.6% yesterday!'

What would you do?


Does this reasoning seem weird to you? Well, yes it does - if you are a share-trader. A speculator. A gambler. 

But if you bought your shares to secure a reliable, consistent income-stream, what does today’s price matter? Apart from the fact that you could buy that same income-stream for less today.

In fact, if you are a regular contributor to your SuperFund, you ARE buying cheaper today. Whoopee!

OK, so it’s the same old message we’ve been preaching since 2002; ie ‘It’s not about the All Ords. It’s about the economy, Stupid!’

The simple fact is that lower share-prices means that you can buy more dividend-producing shares. Just like you could buy more bread, milk, petrol, etc.

And, incidentally, if you’re now retired and living on your dividend income, your income doesn’t change because there’s a temporary (they all are) fall in share prices. In fact the prognosis for dividends this year and next year (because it’s about the economy, Stupid) is nothing less than very positive.

Enjoy your day. Have a glass of bubbly. Celebrate.

I will. 

Securely yours,

Jack Wellings

Please Update your Records

By Jack Wellings

After 22 years in our Lindfield office, we have relocated to Hornsby on Sydney's upper north shore.

You will now find us at:

Suite 604, Avanti Building
90 George Street
Hornsby 2077

Our new land-line is (02) 9476 2200

We look forward to welcoming you at your earliest opportunity.

From the Paris Desk

By Jack Wellings

I happen to be on holiday in Paris at this moment. Zero degrees, but nothing can detract from the wonder of this beautiful city.

And, of course, the financial news here is the same here as everywhere else in the developed World;  "Markets spooked as oil leads commodity crash". Always 'the markets'. Oh dear!

In other words, the price of oil on World markets has fallen. Of course, for oil-producing countries, including the US, but particularly Nigeria, Saudi Arabia, Norway, Canada, Indonesia and Russia, this is not welcome news.

But cheaper oil means good economic news for the rest of the World, and will be a spur to economic growth. And, of course, you will be paying less for your petrol.

So, yes, there's a very positive spin on this.  But, then, share prices are down, and - as an investor - and as always - you're supposed to panic.

And if you're 'in the market'; that is, as a trader (ie, a gambler), maybe you would panic.

But as a serious, security-minded investor, who holds shares (particularly Australian 'blue chip' shares) in your SuperFund, and does so because they produce a consistent, reliable (and increasing) income-stream from company dividends, which continue unabated, why should you care about lower share-prices? Certainly, your fund value may be lower, but your Income is safe. And, in any case, prices can't stay down forever - not in a growing economy, now benefiting from lower oil prices!

So, in summary, what should we think about what is happening?

Here Are The Facts

  • There is no sign of a recession on the horizon for the US, Australia or China and there are no signs of negative global growth
  • Growth in Europe isn’t shooting the lights out but it is accelerating
  • Japan is doing what Japan does with growth trending at about 0.5% per annum thanks to population issues.
  • There is no collapse in the banking/payment system or credit squeeze like there was in 2008.

Holding (not trading) shares, as a conservative, security-conscious investor, doesn't mean you are 'in the market'. You bought your shares (at least your SuperFund did), and - unless you're selling them, prices simply don't matter.

It's an excellent time to be buying though!

Three Lessons on Investing

By Jack Wellings

Lesson One

Your investment is only as good as the economic environment

In a sound and healthy economy, conditions are conducive to economic enterprise operating profitably. By definition, inflation will be well under control; that is, money will hold its purchasing power and investment returns will not be eroded by rising prices.

Also in a low-inflationary environment, increasing productivity can take place, leading to increasing profitability and capital values. Companies have more funds to invest in increased productivity; they make even more profit and pay bigger and bigger dividends. And so the cycle of wealth creation continues.

Lesson Two

It’s not about the All Ords

It’s not about share prices, nor about buying and selling (ie trading). It’s about creating a secure, continuing income stream.

For example, let’s say you owned 2,000 Woolworths shares, purchased in 1997. What if the selling price of your shares had increased over the past year by (say) 10%? What would you do? Cash in and go on a spending spree? No, of course not. 

But if your shares had returned you a dividend – an actual payout (‘hot cash’ so to speak) - of say $1500, would you feel free to spend it? Of course you would. Because this is the real return on your investment. And you wouldn’t be jeopardising the security of your investment; you’d be conserving it for next year’s bounty!

(By the way, your 2,000 Woollies shares would actually have paid you a dividend of $2,780 over the past year (2015). In your PensionFund this would actually be $3,971 due to tax credits. Not a bad year’s Income return on a $10,000 investment wouldn’t you say?)

(And, incidentally, your $10,000 investment – essentially because of current dividend earnings - would today to be worth $48,980!)

Lesson Three

Don’t bother trying to do it yourself

Our position at Wellings & Associates is not to recommend direct share ownership, but to use managed funds.

Why? Well, why bother, when you can have a well-diversified portfolio (even if you invest in only one fund), well-diversified investment management, all the book-keeping looked after, plus regular uptodate reports and tax statements.

And the cost? A mere 1 or 2 percent of your portfolio, per year.

And with the ongoing guidance of qualified, experienced financial advice, what more could you ask?

So please don’t go it alone.

What makes an investment safe?

By Jack Wellings

This includes your Super account, Pension account, or any investment account you may have. 

The normal answer to this question is ‘I can’t lose my money’; that is, safety of capital. But is it only safety of capital? And what makes an investment safe?

It really depends on what the purpose of the investment is. For example, is it capital held in reserve for a ‘rainy day,’ or to meet some future capital payment (a future debt, or tax liability for example)? Or is it to cover present or future regular expenditure, such as retirement living expenses? ie: Is it for a Capital purpose, or an Income purpose?  

Capital or Income? 

Clearly, if you need to meet a future Capital obligation, the capital has to be there. And if you need a regular Income- stream, you need to know the Income will be there.

In regard to the latter, clearly Capital is of less importance than if you had to meet a capital liability. In other words, the safety you need for your Income-stream is the assurance that your Income-stream will be there come what may. 

Of course, you need the capital to fund the income stream, but that’s a relatively simple matter of knowing how much Income you require, and how much capital you initially need to fund that Income. 

Sounds obvious? Yes, it is. But it also depends on how the investment generates the Income-stream. Is the income Interest-income (earned on money ‘lent’ to a financial institution), or is it Investment-income (ie profit) earned on some asset you own, such as company shares, or a rental property? (We call this equity investment.) 

There is a big, big difference! The difference is that the capital value in the Interest-income investment remains constant (excluding re-invested interest), whereas the capital value of the Investment-income asset will tend to change, even day by day, despite the constancy of the income-stream. 

But in a normal, healthy economic environment, the Investment income- stream will tend to increase year-by-year. And as the Investment income increases, so too will the capital value of the investment asset. It must. 

What deceives many investors, however, is that the Income-stream and the asset value don’t automatically increase at the same time. The asset value may increase ahead of, or lag behind, the increase in the Income- stream. Sometimes, in fact, the Capital value will decrease, although the Income-stream is increasing. 

But if the Income–stream is increasing, and expected to continue increasing, then clearly, falling asset values don’t matter. The assurance of the Income-stream is what matters! And if the Income-stream does increase, and capital values ultimately follow, then we can regard the investment as safe. 

 This simple concept is the ‘trick’ to understanding share investment (or, as we at Wellinvest prefer to call it – ‘Investment in economic enterprise’). 

It is also the secret to having Peace of Mind in regard to your investment capital, and thereby in regard to your whole financial security. 

Share prices around the World have declined over the past twelve months (though have recovered somewhat over the past few weeks). However, here in Australia particularly, our economy continues to prosper and grow. Income from most of Australia’s major companies in 2008 is expected to exceed its 2007 levels. Does this suggest that shareholders in these companies have a safe investment? Even though their share prices are currently lower than they were a year ago? 

 Let us, however, recognise that this is not the lesson taught by much of the media, nor even by the investment industry itself. As we have said many times previously “It’s not about the All Ords.” 

Footnote: Many investors do invest essentially for Capital Profits, and pay scant attention to Income generation. This however is gambling – it’s speculation – no matter how calculated, or how ‘systematic’. And gamblers don’t usually win. There is no need to gamble with your Capital; it can be safely (and very profitably) invested by understanding the above guidelines. 


­Strategies and Advice? We’re here to help. Call our office on 02 9476 2200