Market & Portfolio Update - March 2021
For The Financial Year Ended 31 March 2021
The March market update reflects a theme of ongoing strength in global sharemarkets, but weakness in assets whose value is mainly driven by changes in long-term interest rates. Overall returns for the year ended March have been very strong, despite some recent drag on portfolios with high allocations to fixed interest securities (bonds). These have seen some weakness as long-term interest rates have risen, and a little softness in NZ shares lately.
The first quarter also saw the anniversary of the fastest market correction ever seen - during February and March 2020. The subsequent 12-month returns for many asset classes reflect the sharp recovery from those lows, providing a vivid reminder of the merits for a disciplined long-term investment approach.
Central banks and governments are committed to continuing their support for the global economic recovery for some time, thereby keeping short-term interest rates very low and fiscal policies expansionary. This provides investors with both unprecedented challenges and opportunities, “the risk is to search for yield in all the wrong places”. Financial research company DALBAR, has attempted to quantify the effects of poor behavior on investors’ long-term returns. According to their 2016 study, the average individual investor underperformed the broad share market by 2.89% over the past 20 years. The lesson of course is to work with an Adviser who understands your goals and can keep you on track.
You’re Missing Out on Tax Savings If You Haven’t Had a Chattels Valuation Done
We’ve been recommending chattels valuations from Valuit for over 20 years, and it still amazes us how many property investors haven’t had one completed.
If you own a rental property and your current accountant hasn’t discussed chattels valuations and depreciation with Valuit, there’s a very good chance you’re paying thousands of dollars more tax than you need to over the life of the property.
12 Common issues and mistakes we regularly see
We review many financial statements prepared by other accountants. Below are some recurring issues we frequently identify, many of which are also areas the IRD commonly focuses on.