Welcome to the third instalment of our market wrap-up for 2021. As expected, there has been no shortage of data which has impacted markets. Australia has again posted a strong growth number with Gross Domestic Product (GDP) improving 3.1% over the December quarter - an amazing result given what transpired in 2020. Although Australia has experienced a strong rebound, the economy is still 1.1% smaller than the same time last year – meaning that continued work by governments and the private sector remains. The end of February saw stock markets wobble again due to concerns inflation may begin rising earlier than anticipated, a stance which caused a roller coaster ride on bond markets. The challenge facing central banks is not how to drive yields lower again — but ensuring the pace of increases remains slow and controlled. The next few weeks will be a key test of their ability to do so. Property prices in Australia continue to sky rocket due to low rates, minimal housing stock and rising confidence in the jobs market. Should the property boom continue, the Reserve Bank may be forced to raise rates or increase pressure on the banks to reduce the amount of lending. An interesting space to watch – especially given that property gains are often based on massive debts. Monthly Jargon Buster – Bonds: Bonds are a debt security meaning that when an investment is made, money is lent to a company or government – either in Australia or overseas. In return, the bond holder receives regular interest payments called coupon payments. Bonds are a defensive asset and generally provide a stable source of income which can compliment other assets such as shares and property. Smart Money Tip: Did you know that contributions into super can now be claimed as a tax deduction (subject to various caps). With the end of year fast approaching, additional contributions into super may help to reduce your tax position, whilst having the added benefit of boosting retirement outcomes. It’s important to seek advice when undertaking this strategy, as contributions caps need to be considered. Keep an eye out for April’s edition and remember that we are always happy to answer any queries you have about your personal situation. Synergy Private Wealth Level 3, 12 Pirie Street ADELAIDE SA 5000 E: info@synergypw.com
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