Dec 08

From the Wealth Plus Group we thank you for your

support during 2008 and wish you a wonderful

Christmas with family and friends, and a safe and

relaxing New Year.

Our offices will close end Friday 19th December.

We will return on Monday 5th January.

For any urgent enquiries during this time please email

diane@wealthplus.com.au Emails will be checked periodically.

Welcome back to ‘the Word plus’ – the newsletter for

The Wealth Plus Group, your financial partners

The Word Plus aims to provide you with educational financial information and keep you

up-to-date with important events and changes within the financial services industry. We hope

that this provides an interesting and relevant service that helps you understand this complex

industry.

In a climate of high volatility this issue of The Word Plus focuses

largely on the Australian and global markets. You will find the

following information:

• Markets are volatile, but have we seen worse? This month we look into the crisis enveloping global financial markets.

Viewing a major event in isolation from those that have gone

before it can skew perceptions, so we look back through history

to investigate whether the current crisis has the potential to be as bad as the crash of

1987, or even the Great Depression. Despite what you may read, it’s not all bad news out

there. We also discuss the positive outcomes emerging from the crisis, including the

aggressive and co-ordinated global response to strengthen the world’s economy and

financial system.

• News - as always there has been a lot happening in The Wealth Plus Group since the last newsletter. We would like to welcome staff and clients at Aequitas Financial Services to

the Wealth Plus Group and the Word Plus

• Margaret River Canadian Mixed Foursomes Golf Event - read about the annual golf weekend sponsored by Wealth Plus Solutions and Wealth Plus Lending

• Managing Debt - at this expensive time of the year, Paul Tate from Wealth Plus Lending provides guidelines to managing debt.

• Market Watch - we provide the latest analysis from Colonial First State on November figures. We review the Australian Market, the Global Market, Fixed Interest and Listed

Property.

• Finally, for your taste buds - don’t miss our delicious and nutritious summer recipe, Snapper & Green Mango Salad - enjoy!

he lp ing you ach i eve f inanc i al i ndepend -

Markets are volatile, but have we seen worse?

There is no doubt that the global financial crisis currently enveloping world markets is significant and

has had devastating consequences. However, it’s important to put the recent volatility in perspective

by looking at previous downturns.

Sensationalist coverage doesn’t help investors

It’s not the media’s fault that bad news sells more papers, but sensationalised media reporting on an

almost-daily basis can make it hard for investors to make informed and rational judgements regarding

the current state of financial markets and the effect on their own investments.

While it’s vital to stay informed about what’s happening in markets, it’s important that you learn to

separate facts from sensationalism. A good source of information is the Reserve Bank of Australia

(RBA). The RBA publishes regular updates on financial markets and the Australian and global

economic outlook.

Volatility is nothing new

Sharemarkets fluctuate daily. While some rises and falls are larger, or

occur faster, than others, these ups and downs are a normal part of the

economic cycle.

It’s also worth remembering that to date, the long-term trend of

sharemarkets has been upwards. Downturns come and go, but

historically the market has always returned to previous levels and then

surpassed them. This makes it important to view the current falls in the

context of previous financial crises.

When have we seen severe downturns in the past?

In the last 40 years, the Australian market has seen at least 10 significant downturns, most of which

have been associated with recessions in the United States (US) and slower global economic growth.

As the table below shows, while the extent and length of each downturn has varied, to date the

sharemarket has always bounced back significantly in the year following the end of the downturn. Of

course, we can’t yet predict when the end of the current downturn will occur.

Is the current crisis as bad as the situation in 1987?

While the scale of the current decline is comparable to the 1987 downturn, the difference is in how

each crisis has played out and the causes behind it. The 1987 crash is thought to have been caused

by high company debt levels, stretched valuations and speculation. In the 12 months prior to the peak

in 1987, the S&P/ASX All Ordinaries index rose around 88%, indicating that speculation had got the

better of valuations.

In contrast, in the 12 months prior to the peak on 1 November 2007, the S&P/ASX All Ordinaries

index rose only 27%, despite some impressive profit gains and reasonable valuations.

Performance of the Australian sharemarket around downturns

Cause of Downturn Australian sharemarket

peak to trough*

Duration

(months)

Fall in Australian

sharemarket*

Recovery after

one year*

Recession Dec 1969 - Feb 1971 14 -25.51% 11.64%

Oil price shock Jan 1973 - Sept 1974 20 -58.24% 52.85%

Recession Nov 1980 - Mar 1982 16 -36.99% 10.95%

Sharemarket crash Sept 1987 - Feb 1988 5 -44.39% 18.76%

Property crash Aug 1989 - Dec 1990 16 -27.42% 29.04%

Recession May 1992 - Oct 1992 5 -16.16% 45.33%

Bond market crash Jan 1994 - Jan 1995 12 -20.52% 24.30%

US recession and tech wreck

Jan 2002 - Feb 2003 13 -18.38% 21.38%

Global financial crisis and recession

Nov 2007 - ? 12 to date -46.9%** ??

* As measured by the S&P/ASX All Ordinaries index using end-of-month values. Past performance is no indication of future

performance.

** As at 17 November 2008.

On 21 September 1987, the Australian sharemarket peaked at 2,376 points. In the space of just 50

days it fell 50% to a low of 1,240 on 10 November 1987, including one day, 20 October 1987, when

the sharemarket fell 25%.

In the current cycle, it has taken the S&P/ASX All Ordinaries index 382

days for the sharemarket to fall 46.9% from the high of 6,853 points it

reached on 1 November 2007 to the low reached on 17 November 2008 of

3,639.

Is the world going to enter another Great Depression?

While some countries around the world – including the United States – are

approaching, or are already in recession, it is highly unlikely that we will

see a depression like that which engulfed the world in the 1930s following

the sharemarket crash of 1929.

The 1929 sharemarket crash was categorised by panic and heavy selling

by investors. Several years of poor government policies in response to the

crisis saw the Great Depression engulf the global economy. Instead of

taking quick and aggressive action, US authorities took several years to

respond. Further exacerbating the situation, the US Government lifted

interest rates to defend the exchange rate. This collapsed consumer demand and sent the US

economy into a depression that soon spread to the global economy.

This is vastly different to the response to the current global crisis. Authorities around the world have

acted quickly to support the economy and shore up the world’s banking systems. They have also

taken the important step of implementing dramatic interest rate cuts.

Is there any good news?

While we are likely to see volatility into 2009, there is some good news. The aggressive global

response should help cushion the impact of the crisis and stimulate economic growth. The measures

taken to date by governments around the world include:

• implementing fiscal stimulus packages (including tax cuts and government spending),

• providing bailout plans for troubled financial institutions,

• and reducing interest rates.

“Although a weak 2009 is expected after several years of robust

economic growth, a recovery in 2010 is likely in the global

economy,” says Hans Kunnen, Head of Investments Research,

Colonial First State. Australia is particularly well placed for an

eventual recovery in global economic growth, given our population

growth, infrastructure spend and well-regulated and profitable

banking system.”

In addition, as a result of this year’s events it’s likely that in future

the financial services industry will be subject to more stringent

regulations and controls, primarily designed to protect the interests

of investors. Lessons are learnt from each crisis to prevent similar episodes re-occurring.

How can investors benefit from this situation?

“Investors with the fortitude to remain invested during the tough times will be best positioned to take

advantage of the eventual upswing,” says Hans. “Many professional investors actually see this crisis

as a great opportunity to invest in solidly performing companies whose share prices have been

dramatically reduced as a result of negative investor sentiment.”

If you are concerned about how events in global markets could affect you, please call us on

9368 4911. We can provide you with the most up-to-date information on market conditions and

assess the potential impact on your investments.

Important information This general advice has been prepared without taking into account your particular financial needs, circumstances or objectives, and is based on Financial Wisdom Limited’s understanding of the economic situation as at 17 November 2008. You should consider the appropriateness of this general advice to your circumstances, including by obtaining professional advice, before acting on the general advice.

Financial Wisdom advisers are Authorised Representatives of Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138, a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

“While the scale

of the current

global financial

crisis is sizeable

compared to

other recent

downturns, this

sort of event has

happened before

and it will

happen again”

Hans Kunnen

Colonial First State

Wealth Plus Lending is moving

When Wealth Plus Lending re-opens after Christmas on 5th

January it will be at new premises at 96 Hay St, Subiaco. Our

new location is centrally located and provides more space for

our ever growing team. Our contact details will remain

unchanged as follows:

Ph: (08) 9388 8700 admin@wealthpluslending.com.au

Fax: (08) 9380 4843 www.wealthpluslending.com.au

News

Wealth Plus Group is growing again

We are delighted to announce the addition of Aequitas Financial Services to the Wealth Plus

Group on 20th October 2008.

Aequitas is a boutique financial advising firm

with a reputation for providing first class service

and advice, especially to self managed super

fund trustees and people with more complex

needs. Their approach and expertise is a very

good fit with Mango Money Management services. The scale and additional expertise that will

come as a consequence of the combined team will bring substantial benefits to our Mango Money

Management clients. The new team will be led by Evan Salt at the Aequitas office, located only

500 meters from our current Hardy St address, at level 2, 76 Mill Point Rd, South Perth.

We would like to take the opportunity to welcome our Aequitas clients to the Wealth Plus Group

and to this, their first Word Plus newsletter.

Margaret River Canadian Mixed Foursomes

Golf Event September 2008

Margaret River Golf Club hosted the 31st annual Wealth Plus

Lighthouse Trophy Canadian Foursomes event over the Foundation

Day long weekend. The event was sponsored by Wealth Plus

Solutions and Wealth Plus Lending. This is the longest running open

golf event in the club’s 56 year history.

110 players teed off in the two day competition, including visitors

from many Perth Clubs and local members. The course was in

fantastic condition with the fast greens testing many a player.

The winners of the 36 Hole Event were Rick Zuromski and Angela

Thorn, visitors from Mt Lawley Golf Club, shooting 137 3/4.

Winner Angela Thorn with Robert Crane and

Jason Atkins from

Wealth Plus Group

Meet the Team - Paul Tate

Paul Tate is an experienced loan specialist with Wealth Plus Lending. He is

a licensed mortgage broker and holds qualifications in Mortgage and

Finance Broking, and a Diploma of Financial Services in Financial Planning.

Paul enjoys working with people to help them build their financial security for

the future.

When he is not working, Paul enjoys spending time with his family and friends. He follows all sports, especially AFL, and loves to get actively involved with his children’s many sport and leisure pursuits.

Important information

Wealth Plus Lending is a company separate to Wealth Plus Solutions and cannot provide financial product advice.

Wealth Plus Lending has no association with Financial Wisdom Limited ABN: 70 006 646 108 AFSL 231138.

Managing Debt

This month Paul Tate from Wealth Plus Lending provides guidelines to managing debt.

“Providing it is managed wisely, there may be nothing wrong with

borrowing money. Debt may be a useful financial tool because it may

allow us to buy the items we need but can’t afford in one payment, as

well as things that might increase in value such as property, a share

portfolio or a business.

But debt must be treated with respect. In my business I find that, while

many people manage debt well and use borrowed money to improve

their lifestyle and financial situation, others are inclined to overindulge

and borrow what they can, rather than what they can afford.

As with many financial objectives, I believe the best place to make a start on helping improve

debt management is with a simple, well-maintained personal budget. By working out your level of

disposable income you can decide if you can afford to make new purchases, whether from

existing savings or additional borrowings.

Part of my role as a loan broker is to find the lending facility that is best for my client. Generally

the cheapest form of borrowing is redrawing some of the equity in your home, but if that is not

available then there are also credit cards, store cards or personal loans.

The most obvious way to help manage home loan debt is by starting with a level of borrowings

that you can afford.

Then you should aim to pay off the loan as fast as possible by making higher than minimum

repayments, maintaining your payments if the interest rate falls and

increasing payments if your income rises.

Credit cards and store card may be a flexible and convenient way to

facilitate your purchases but may charge relatively high interest

rates. You should aim to help minimise the impact of these high

rates by paying off the card debt in full every month; avoiding second

cards and offers to increase your credit limit; and using fee free

transactions where possible, such as making payments by phone or

internet.

I tell my clients that a credit limit is not a license to spend. Your

budget and bank balance are the best guide to how much

discretionary income you have available for spending.

Of course juggling credit cards, store cards, personal loans and a

home loan, all charging different interest rates and fees, is a difficult task.

Some of my clients find the best way to overcome this problem is to roll all their loans into one.

Known as consolidation, it may help you reduce overall debt and get

back in control of your finances.

However, there is a downside. By combining short-term debts into a

longer-term, lower-rate debt you could effectively increase the cost of

the original debt, simply because you could still be paying off your

television twenty years down the track.

It is also important that you change your spending habits if they are

what caused you to get into difficulties in the first place. Consolidating

debt is of no use if you cannot stop the borrowing cycle.”

If you would like debt management advice, please contact Paul Tate at Wealth Plus Lending

0407 987 207 to discuss your situation.

“I tell my clients

that a credit limit

is not a license to

spend. Your

budget and bank

balance are the

best guide to

how much

discretionary

income you have

available for

spending.”

Market Watch

Colonial First State provides analysis on the latest global and Australian market figures.

Economic Commentary

November was not a good month for economic news.

This month a range of groups released their 2009 forecasts for

Australian and global economic growth. Among groups to

release forecasts were the Reserve Bank of Australia (RBA),

the Commonwealth Treasury, the International Monetary Fund

(IMF) and the Organisation for Economic Co-operation and

Development (OECD).

All groups expect economic growth to continue in Australia in

2009, however forecasts for global growth are particularly

weak. The US, Europe and Japan face recessions while

emerging markets such as China and India face slower, but still fairly robust growth.

In the face of ongoing financial market turmoil, the United States made adjustments to its US$700

billion banking and credit market rescue package. It also announced a further US$800 billion

package to get credit flowing through the US financial system.

The UK announced cuts to its Value Added Tax (VAT) while at the same time cutting official interest

rates from 4.5% to 3.0%. Official interest rates were also cut in the Euro zone, China and Australia.

The global economy has now seen a raft of rescue packages that aim to support the global financial

system and stimulate economic growth in 2009. Australia’s most recent contribution was the $300

million to be given by the Federal Government to local governments for the purpose of constructing

public amenities. Such measures will help sustain employment and spending in the economy.

The AUD fell in November, down 1.3% from US 66.45 cents at the start of the month to US 65.58

cents by month end. Lower interest rates and the continued offshore selling of Australian equities

dampened demand for Australian dollars.

Australian shares

Despite a late rally, Australian share prices fell over the month.

October’s 14.0% decline was followed by a 7.8% fall in November. The

S&P/ASX All Ordinaries index reached a new low of 3332 points in the

month to be down 51.3% from its peak in early November 2007. Such

levels were last seen in early 2004.

The market was buffeted by domestic and offshore news. The ongoing

credit crisis is placing pressure on companies with debts and those in

need of capital. During the month, companies to announce capital

raisings included National Australia Bank, AMP, Sonic Healthcare, CSR

and QBE Insurance.

The market also saw companies beginning to give guidance on future

earnings. Harvey Norman spoke of a 30% decline in earnings while

Qantas was indicating the possibility of a 64% decline.

The various financial system rescue announcements improved investor attitudes towards financial

institutions in Australia towards the end of the month. Citigroup was given a further US$20 billion in

backing while the US government assumed some of its bad debts. The effective rescue of Citigroup

sent the message that a repeat of the Lehman Brothers failure - which sparked a massive sell-off in

global equity and credit markets - would not be repeated.

The perilous state of banking around the globe saw financials fall heavily early in November and

then pick up in the last week. Commonwealth Bank ended the month down 15.4% while National

Australia Bank was down 12.6%.

The factors pushing the market down have not disappeared but policy actions, such as reducing

interest rates, government spending programs and global action to support the financial system will

have a positive impact over time. In the meantime, the domestic economy is slowing and parts of the

Western world are slipping into recession.

The S&P/ASX 200 Accumulation index (which includes re-invested dividends) fell 6.2% in November

to be down 40.0% over 12 months.

“While

forecasts for global growth

are weak, economic

growth is expected to

continue in Australia in

2009”

Global shares

All major equity markets fell in November. With several large nations slipping into recession and

large offshore banks continuing to report losses, global equity markets found little support. There

was a rally towards the end of the month but the damage was already done. The MSCI World index,

a broad measure of global shares, fell 6.7% in USD and was down 5.5% when measured in AUD.

Over 12 months, global shares were down 44.6% in USD terms and have

fallen 25.3% in AUD terms

A 16.9% rally in the last week of November was insufficient to stave off an

overall 5.3% decline in the US Dow Jones Industrial average over the

month. The S&P 500 fell 7.5% to be down 39.5% over 12 months. Further

banking and credit market rescue packages were announced but the US

auto industry giants were denied access to emergency funding.

The election of Senator Barrack Obama as US President, the outline of his

spending plans and his selection of economic advisors were generally well

received by the market, however, the President-elect has a lot of work to do as the US economy

slips into recession.

Asian markets generally followed global markets but at a lower rate. With Japan now officially in

recession, its market fell a further 0.8% to be down 45.7% over 12 months. Hong Kong was down

0.6% for the month and Singapore fell 3.4%. Bucking the trend was China whose Shanghai B

market rose 20.0% following the announcement of rate cuts and an economic stimulus package. Its

market is down 69.1% over 12 months.

The declines in European markets were not as severe as those seen during October. The UK

market was down 2.0%, the German market fell 6.4% as did the French market. Official interest

rates fell across Europe and the European Union announced a modest stimulus package. Despite

this, Europe faces a recession during 2009. The European Central Bank cut official interest rates by

0.5% to 3.25%.

A 19.7% decline in the price of oil to US$54 per barrel did little to help

oil producing nations.

Fixed interest

Policy makers continue to work overtime endeavouring to support their

credit markets. Improved capitalisation of banks, improved flows of

credit and lower commercial lending rates go hand in hand.

The turmoil in global financial markets continues to see strong demand

for government bonds. US 10 year government bond yields are at

levels last seen in the early 1950s with yields at 2.92% at the end of

November.

At the beginning of the month, 10 year Australian government bond

yields stood at 5.17% while domestic corporate bonds with credit

ratings in the range BBB- to BBB+ had an average yield of 10.29%. By the end of November, the

yields were 4.60% and 8.64% respectively. The higher corporate bond yields reflect the current

illiquidity in corporate bond markets and the relative risk of default in that market.

Listed property

The listed property sector actually rose 0.3% in November but is down 52.1% over 12 months.

The sector faces a significant debt refinancing task over the next few years and a slowing economy.

In this environment, future distribution yields and future capital growth are uncertain.

Global property markets fell heavily again in November. The S&P/Citigroup BMI World Property

index fell 13.2% in AUD terms and is down 41.7% over 12 months.

Note The latest IMF forecasts can be found at www.imf.org. Forecasts from the RBA and the Commonwealth Treasury can be found at www.rba.gov.au and www.treasury.gov.au respectively while the OECD forecasts are at www.oecd.org.

General Information The information contained in this market update is of a factual nature only and is not intended to constitute

either general or personal financial product advice. It does not take into account your particular investment objectives, financial

situation or needs. You should consider the appropriateness of the information having regard to your own objectives, financial

situation and needs. You should consult your financial advisor for advice before making any decision on the basis of this

information. A product disclosure statement (PDS) outlines specific information relating to a financial product. You should read the

relevant PDS prior to making any decisions about whether to acquire a product. Past performance is not indicative of future

performance. Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138

“Policy actions,

such as

reducing

interest rates,

government

spending

programs and

global action to

support the

financial system

will have a

positive impact

over time”

Snapper and Green Mango Salad

Seves 4

Preparation Time 15 mins

Cooking Time 10 mins

Ingredients:

4 (150g ea) pink snapper fillets, skin on

80ml (1/3 cup) peanut oil

60ml (1/4 cup) lime juice

1tbsp finely grated galangal

2 cloves garlic, coarsely chopped

2 small red chillis, coarsely chopped

1 cup coriander sprigs

1 cup mint leaves

3 green onions, thinly sliced diagonally

1 tbsp finely crushed palm sugar

2 tbsp fish sauce

1 green mango, thinly sliced

bowl iced water

To serve: fried shallots (available from Asian grocery stores) and steamed jasmine rice

Method:

1 Place fish in a single layer on a tray. Combine 1/4 cup of the peanut oil, 1 tbsp of the lime juice, galangal and half the garlic and chilli in a bowl, pour over fish, turn to coat and marinate for about 10 minutes.

2 Remove fish from marinade. Heat remaining peanut oil in a heavy-based frying pan over medium-high heat, add fish, skin-side down, and cook for 2-3 minutes or until brown, then turn and cook for another 3-4 minutes or until just cooked through. Remove from pan and, when cool enough to handle, flake into large pieces.

3 Meanwhile, place herbs and green onion in iced water to crisp. Place palm sugar in a mortar, add remaining garlic and, using a pestle, pound to a coarse paste. Add fish sauce and remaining lime juice and stir to combine. Transfer to a large bowl, add green mango and stand for 5 minutes.

4 Drain herb mixture, add to mango, then add fish and toss lightly to combine. Scatter with fried shallots and serve with steamed jasmine rice.

Business Address

20 Hardy Street

PO Pox 1077 South Perth WA 6951

info@wealthplus.com.au www.wealthplus.com.au

www.mangomoney.com.au

Phone: 08 9368 4911

84% of people who have seen a financial

planner in the last 12 months report that they

are very or fairly confident that they will have

enough money to retire comfortably. This

compares with 57% among those that have not

seen an advisor at all. Nielsen research

Commissioned by ING Australia, 2007

Important Information

Wealth Plus Solutions Pty Ltd & Mango Money Management Pty Ltd are authorised representatives of Financial Wisdom Limited ABN 70 006 646 108 AFS License 231138, which is a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. This newsletter contains general advice only and is not intended to constitute personal financial product advice. It has been prepared without taking into account the personal circumstances, financial needs or objectives of any one person. Individuals are advised not to rely on this information when making their own investment decisions. Instead, they should seek professional advice. Where appropriate you will be provided with a Product Disclosure Statement in relation to the product recommended to you. You should consider this document before making any decision to use the product in question. The content of this newsletter is based on the understanding that Financial Wisdom Limited has understanding of the relevant laws as at 30 June 2008. While all care has been taken in the preparation of this newsletter (using sources believed to be reliable and accurate), no person, including Wealth Plus Solutions Pty Ltd, Mango Money Management Pty Ltd, Financial Wisdom or any other member of the Commonwealth Bank group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information. Market return figures current as at 30 August 2008. Past performance is no indication of future performance.