The festive season is a great opportunity to spend some quality time with family and friends. It’s the best time to truly relax, go on a holiday, or shop up a storm at the boxing day sales. It is also a good time to reflect on what’s happening in the world and reflect on your own financial position. In the last few months we have been subjected to an endless flow of negative news. We’ve been getting daily updates on the Banking Royal Commission and sensational news stories about the political and economic state of the world. But are things really that bad?

Here are some positive facts to consider,
as we enjoy the festive season with our loved ones:

• In 2018 average life expectancy in Australia is 81 for men and 85 for women. This has increased 2-3 years in the past 10 years. We are living longer, so your superannuation is becoming more important.
• Extreme poverty in poor nations has reduced by half in the past 20 years. Infant mortality rates have dropped and 80% of us now have access to electricity, increased over the same period.
• Deaths from unforeseen natural events has decreased by half over the past 100 years, not even accounting for population growth.
• Unemployment is below 5% in Australia’s major states NSW and VIC, and our national average is 5%. This is a very good result.
• Our largest trading partner is China (30%) followed by Japan (12%) and Europe (7%). The US represents a mere 5% … we have more important geographical relationships.
• The average Australian corporate earnings growth rate is 7% and is similar to last year. This is not reflected in the ASX at present, but the stock market is cyclical.
• The household savings ratio is 1%, suggesting Australians are now spending about as much as they earn, helping the broader economy, including our retail sector.
• US corporate earnings are around 20% pa. It’s still a very strong economy and the cash rate is now close to neutral.
• Australian economic conditions remain favourable at 3.4% GDP, with increases in population of 1.6% pa, and strong business and infrastructure investment.
• The ASX200 dividend yield is now higher than 5% on current prices (remember cash is only there for funding and parking).
• Asian share markets, following trade tensions and currency adjustments, are seriously cheap at 8x Price/Cash Flow (v US 15x) with strong forecast earnings.
• Reform is occurring to improve corporate culture and prevent misconduct. It’s better late than never!
• Financial advice is becoming more transparent. There is an emerging separation between product and advice (banks are selling their wealth divisions), enabling better choice and financial well-being. As a non-aligned advisory service, we look forward to the recommendations from the Royal Commission, due in February 2019.

On balance, economies around the world are growing slowly, but surely, on average. Living standards are improving and are much higher than 20 years ago. The threat of war is extremely low. Most of us live in peaceful societies and have done since WW2, and this should continue.

Overall, our nation’s financial outlook is positive, and we should all be able to enjoy the holidays knowing that, if we make the right decisions regarding our money, we should enjoy many more festive seasons to come.