October 2024 Insights
AW constantly monitors the investment markets and aims to keep our valued clients regularly informed and updated. We aim to help investors cut through all the media noise and hype and understand what is really driving investment markets and portfolio returns.
In this edition, we cover:
USA Cuts Interest Rates
Australian Interest Rates
Commonwealth Senior’s Health Care Card
USA Cuts Interest Rates
In late September, the USA Federal Reserve cut interest rates by 0.50% from 5.50% to 5.00%. This interest rate cut reflects a proactive approach to stave off any potential economic weakness.
With a sequence of interest rate cuts on the way, the risk of a recession has receded, and share markets are responding positively. Since 1985, five of the top 10 years for the USA share market (S&P 500) occurred during periods of interest rate cuts by the Federal Reserve, without the economy entering a recession. While high share valuations may limit USA market gains in the short term, historical trends suggest that investors have good reason to be cautiously optimistic on the outlook for shares.
Australian Interest Rates
After holding interest rates steady at 4.35% in late September, the Reserve Bank of Australia may be open to considering an interest rate cut sooner than expected. There is a slight possibility of an interest rate cut on Melbourne Cup Day, when the next forecasts are released. However, this is only a small chance, as it would likely require a further loosening in the labour market or a negative global growth shock. The market is pricing in a 20% chance, which seems reasonable.
The likelihood of an interest rate cut is much higher after the summer break on February 18th, when the next set of forecasts will also be released. The market is fully pricing in a 100% chance of an interest rate cut by the end of February.
What does the Commonwealth Senior’s Health Care Card do?
If you receive Centrelink Age Pension benefits or are over the age of 67 with an income below $158,440 for couples and $99,025 for singles, you may be eligible to qualify for the Centrelink Commonwealth Seniors Health Care Card. The card offers the following benefits:
Pharmaceutical Benefits Scheme (PBS): Concession cardholders can access medicines on the PBS for a maximum of $7.70 per prescription, compared to $31.60 for non-concession holders. Once a concession cardholder reaches the PBS safety net threshold of $277.20 in a calendar year, their PBS-listed medicines will be free for the remainder of the year.
Extended Medicare Safety Net (EMSN): This provides an increased rebate for Australian individuals and families who incur out-of-pocket costs for Medicare eligible out-of-hospital services. Once the annual out-of-pocket threshold is met, Medicare will cover up to 80% of future out-of-pocket costs for out-of-hospital Medicare services for the rest of the calendar year.
Bulk-billed Doctor Visits: Doctors can receive higher Medicare reimbursements for treating concession cardholders. As a result, some practices that typically do not bulk bill for general patients may choose to do so for concessional cardholders, although this is not mandatory.
Australia Post: Concession cardholders can receive discounts on stamps and mail redirection services, as well as free document certification.
Any advice contained in this insight/update is general advice only and does not take into consideration the reader’s personal circumstances. To avoid making a decision not appropriate to you, the content should not be relied upon or act as a substitute for receiving financial advice suitable to your circumstances. When considering a financial product please consider the Product Disclosure Statement. Aspirations Wealth Group is a Corporate Authorised Representative of Aspirations Private Wealth Pty Limited. ABN 57 622 182 076 – AFSL 503889.