Mclowd Trustee User Update June 2019

Welcome to the Mclowd Trustee User Update.

Nonetheless, Lowe is all but certain to reduce the official cash rate to 1 per cent in the next couple of months and possibly lower before the end of 2019, before extreme monetary stimulus measures are potentially contemplated.”
Ushering in a new era of easy money, AFR June 5th

Introduction

The interest rates on German Government Bonds are now negative out to a period of 13 years (and the worldwide stock of negative-yielding bonds now exceeds US$12.5 trillion).

This means that investors – far from expecting a nominal yield on their investment – are prepared to pay for the privilege of lending the German Government money for more than a decade.

Investors don’t buy 13-year negative yielding bonds because the global economy is a rosy picture of health.

They buy those bonds as an insurance policy against the capital destruction that is an inevitable consequence of one thing:

Deflation

And while they have been held at bay for some time in Australia, those same deflationary forces have finally reached our shores.

This macroeconomic environment will challenge even the hardiest of self-funded retirees, because Mr Lowe’s policy is designed to:

  • Benefit borrowers (by lowering the weighted average cost of capital, thereby encouraging investment)
  • At the expense of savers (who are now presented with the wealth management equivalent of Sophie’s Choice – between materially lower nominal incomes and riskier asset allocation)

Either way this ultra-low yield environment will focus ever more attention on costs, just as the technology platform underpinning the Mclowd Community begins to mature.

Product Development

The recent release of the GST upgrade, alongside the upcoming deployment of year end simplification illustrate the momentum the Community now has across various metrics, including:

  • Active usage
  • Growth in revenue

As a consequence the Mclowd Team will shortly turn their attention to our product development goals for FY20, including:

  • Allocation rules
  • Full editability (via an upgrade to the existing transaction screen)
  • Improved support for cryptocurrencies and other custom assets
  • Integration with the upcoming open banking regime

Marketplace

In relation to the Marketplace, Mclowd has both the participation and support of a growing body of SMSF professionals.

As activity levels continue to grow, these service providers are becoming key stakeholders, with a vested interest in the long term success of the Community.

This supply-side equation is important for Trustee users, because it means that the Mclowd Marketplace now provides:

  • Liquidity (as to the provision of SMSF-related services)
  • Transparency (as to both price and quality)

Speaking of his experience, Trustee user Michael Coghill had this to say:

“My wife and I had tried using MYOB and then Xero to manage the accounting for our SMSF. However these were still fairly time consuming, expensive and not really designed for self-managed super.

Mclowd offers a free version, comprehensive Fund Setup instructions and loads of great tools and tips to make the transition super easy. The additional features available in the Premium version has already:

  • Streamlined our fund management processing
  • Saved us many hours of time
  • Provided us with detailed insights into how our portfolio is performing on a daily basis

With audit services available in the Marketplace from $275 ex GST, the total savings are in the thousands of dollars a year.

We are very happy with Mclowd.”

Conclusion

There is nothing ‘new’ about this era of easy money.

We have been in an era of ‘easy money’ for more than a decade, and yet all that era has achieved is the accumulation of a toxic level of debt (both here in Australia and around the world).

SMSF Trustees (and their professional service providers) should be under no illusion that – as between that debt and deflation – it is the deflation that will prevail.

Regards

Ashley Porter

Managing Director
Mclowd Pty Ltd

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