Knowledge Centre

Monthly Financial Newsletters

Please find our regularly updated newsletters below.

Dear clients,

Following all relevant economic trends can be time consuming as well as frustrating. It is a complex and dynamic field with a plethora of different “players” across the entire globe. At Eclipse Financial Management we want to shed light on some of the most recent economic developments and legislative decisions and explain potential implications to enable you to gain a better overall economic understanding.








If you want to discuss any of the topics further or if you have any other questions, we are happy to answer them via the phone or email!

Helpful Financial Planning Videos

A summary of key insights and views on the investment outlook for 2020 in simple point form.

The key points are as follows:

  • Despite ongoing bouts of volatility, 2020 is likely to provide solid investment returns, albeit slower than seen in 2019.
  • Recession remains unlikely (it’s a bigger risk in Australia) & so too is a long deep bear market in shares.
  • Watch US trade wars, the US election, the US/Iran conflict, global business conditions indicators, and monetary versus fiscal stimulus in Australia.

For more information, click key insights and views on investment link

A review of year 2019 on the economy and a look at the outlook for 2020

6th December, 2019

The key points are as follows:

  • 2019 saw economic and profit growth slow, recession fears increase and the US trade wars ramp up, but solid investment returns as monetary policy eased, bond yields fell and demand for unlisted assets remained strong.
  • 2020 is likely to see global growth pick up with monetary policy remaining easy. Expect the RBA to cut the cash rate to 0.25% and to undertake quantitative easing.
  • Against this backdrop, share markets are likely to see reasonable but more constrained & volatile returns, and bond yields are likely to back up resulting in good but more modest returns from a diversified mix of assets.
  • The main things to keep an eye on are: the trade wars; the US election; global growth; Chinese growth; and fiscal versus monetary stimulus in Australia.

Have a read of Review of 2019 and Outlook for 2020 to find out more.

Australian Economy

13th March, 2019

Australian economy following another quarter of very weak growth and what it means for investors.

The key points are as follows:

  • Australian growth slowed even more in the December quarter. Growth may bounce back a bit this year, but the housing downturn will likely constrain it to around 2-2.5%.
  • As a result, unemployment is likely to drift up and wages growth and inflation remain lower for longer.
  • The RBA is on track to cut rates this year and the housing downturn will likely see Australian shares continue to underperform global shares.

Have a read of the Australian Economy Constrained article.

Reserve Bank News

The attached note from Oliver’s Insights, looks at the Reserve Bank of Australia’s decision to cut the official cash rate by 0.25% to a new record low of 1.25%.

The key points are as follows:

  • The RBA’s latest rate cut is aimed at heading off a further slowing in growth which would threaten higher unemployment and lower for longer inflation.
  • Cutting the inflation target would be a big mistake.
  • More rate cuts are likely to be needed ultimately taking the cash rate to a low of 0.5% next year. Ideally this will be combined with more fiscal stimulus.
  • For investors it means low interest rates for even longer.

Housing Prices

Oliver’s Insights – Threats to Australian house prices from coronavirus  (20/3/20)

The attached note looks at the threat to Australian house prices from coronavirus:

  • The Australian housing market is at risk from the coronavirus recession Australia has likely now entered.
  • A relatively short recession that sees unemployment rise to around 7.5% would likely only set prices back around 5% or so after which prices would bounce back.
  • But a deeper recession with say 10% or more unemployment risks tripping up the underlying vulnerability of the housing market around high prices and high debt levels. This could see a 20% fall in prices.
  • This is not our base case, but it highlights the need for the Government & the RBA to minimise the fallout from coronavirus shutdowns in terms of businesses and jobs.

Oliver’s Insights – looks at the outlook for house prices and revises our forecasts.  (24/5/19)

The key points are as follows:

  • The combination of the removal of the threat to property tax concessions, earlier interest rate cuts, financial help for first home buyers and APRA relaxing its 7% interest rate test points to house prices bottoming earlier and higher than we have been expecting.
  • As a result, we now expect capital city average house prices to have a top to bottom fall of 12% (of which they have already done 10%) rather than 15% and to bottom later this year.
  • However, given still high house prices and poor affordability, still very high debt levels, tighter lending standards and rising unemployment a quick return to boom time conditions is most unlikely.

Australian house prices back from the abyss – read more from Oliver’s Insights 11/9/2019

Share Market

26/3/20 – The hit to economic growth from coronavirus and whether it’s a recession or a depression or something different altogether.

The key points are as follows:

  • Global share markets have fallen into a bear market, but whether this turns out to be long or short depends on how long the hit to the economy from coronavirus lasts.
  • There are big differences between the current disruption to economic activity – which could be very deep in the short term – and past recessions and depressions.

16/1/2020 –  click on market updates to find out the latest market information

Oliver’s Insights  – Seasonal patterns in share markets. (6/5/2019)

The key points are as follows:

  • Seasonal patterns typically see shares do well from around November to May and not so well from May to November. This partly reflects a combination of tax loss selling in the US, new year cheer and the pattern of capital raising through the year.
  • While we see shares doing well this year, right now they are vulnerable to a short-term pull back after strong gains since December. Renewed trade fears obviously don’t help.


What is Diversification?

Diversification is the practise risk management technique where the overall risk is reduced by investing across a wide variety of investments and asset classes within a portfolio – “not sticking all your eggs in one basket”.  The rationale behind Diversification contends that such portfolio will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.

Types of Diversification

There are three main ways of diversifying:

  1. Spreading your portfolio across various different asset classes as detailed above
  2. Using fund managers to spread your risk
  3. Investing in Australia, as well as global markets

Asset Classes

What are the five main Asset Classes?

Includes bank deposits,term deposits, savings and cheque accounts and cash management trusts. These short-term investments are suitable to investors who have a low tolerance to risk. Cash provides a stable and low risk income, usually equally in the form of regular interest payments.

Generally refers to government bonds, corporate bonds, mortages and hybrid securities. Fixed-interests can be more volatile than cash

Property is a direct investment in residential, industrial and commercial property and can also include indirect investment in listed property vehicles on the Australian share market. Moderate to high rate of return.

Generally includes shares held in publicly listed companies and listed on the Australian stock exchange. Returns are through dividend distribution and capital growth. These shares may experience volatility over the short to medium term, but the returns may be potentially higher.

Offer increased diversification in a much wider range of companies and countries not limited to listed companies on the ASX. However, investors risk increased volatility due to rises and falls in international share markets and currencies. International shares are generally viewed as a longer term investment and have a high rate of return.

Risk and Return

What is investment risk?

Investment risk can be defined as the probability or likelihood of occurrence of losses relative to the expected return on any particular investment. Stating simply, it is a measure of the level of uncertainty of achieving the returns as per the expectations of the investor. All investments carry some risks due to many factors including inflation, tax and economic downturns.

As a general rule: the larger the potential investment returns, the higher the investment risk.

The risk-return trade off

All investments carry some degree of risk. Higher risk is associated with greater probability of higher return and lower risk with a greater probability of smaller return. This trade off between risk and return which an investor faces while considering investment decisions, is called the risk return trade off.

The risk-return trade off is the principle that potential return rises with an increase in risk. Low levels of uncertainty or risk are associated with low potential returns, whereas high levels of uncertainty or risk are associated with high potential returns. According to the risk-return trade off, invested money can render higher profits only if the investor is willing to accept the possibility of losses.

Higher risk does not always promise greater return. Rather, it tells us that higher risk gives the possibility but not the guarantee of higher returns.

As your financial planners, we will take to your income, goals, investment horizon and personal situation into account and create a risk profile with that information. It is important to know which level of risk you are prepared to tolerate to provide you the best financial advice as possible.

Useful Links

Use the Insurance Gap Calculator to see how much cover is adequate for you!

Australian Securities and Investments commission (ASIC) is the corporate, markets and financial services regulator.

Federal Budget Summary


  • Dividends are great for investors. They augur well for earnings growth, provide a degree of security in uncertain times, are likely to comprise a relatively high proportion of returns going forward and provide a relatively stable source of income.
  • Including reinvested dividends, the Australian share market has surpassed its 2007 record high.
  • It’s important that dividend imputation is not weakened in Australia to ensure dividends are not taxed twice.

Read more about dividends, by clicking on the link.

“At Eclipse Financial Management, we value your referrals.
In fact, a referral from an existing client is the highest compliment our business can receive.”