Apply Online
Contact Us
Hejaz Financial Services
Apply Online
Schedule a call
  • Superannuation
    • Super 1
      • Superannuation

        Become an Islamic Superannuation member and receive a $100 welcome gift card.

        Learn more
    • Super 2
      • Products
        • Islamic Superannuation
        • Islamic Pension
    • Super 3
      • Things to know
        • How we invest
        • Performance
        • Consolidating your super
        • Grow your Super
    • Super 4
      • Tools & Resources
        • Retirement calculator
        • Super FAQs
        • Super Login
  • Investing
    • Invest 1
      • Risk Profile Quiz

        Take our quick Risk Profile Quiz to find the right investment product for you.

        Get started
    • Invest 2
      • Products
        • Overview
        • Income Fund
        • Balanced Fund
        • Property Fund
        • Equities Fund
    • Invest 3
      • Things to know
        • Getting started with investing
        • 9 Golden rules of investing
        • Compounding: it’s simply magic!
        • Should you invest your house deposit?
    • Invest 4
      • Tools & Resources
        • Investment FAQs
        • Forms & Documents
  • Finance
    • Finance 1
      • Finance

        We're on a mission to help more Muslims own their own home

        Apply online
    • Finance 2
      • Products
        • Overview
        • Gold home finance
        • Flexible home finance
        • Essentials home finance
        • Deposit Builder
    • Finance 3
      • Things to know
        • Sharia compliance
        • Home finance process
        • Refinancing process
        • Investment property guide
    • Finance 4
      • Calculators
        • How much can I borrow?
        • Extra repayments
        • Stamp duty calculator
        • Offset calculator
  • Hayat Protection
    • Hayat 1
      • Hayat Protection

        Protecting everday Muslim Australian's and families.

        Learn more
    • Hayat 2
      • Products
        • Overview
        • Family Protection
        • Illness Recovery
        • Critical Care
        • Loss of Income
    • Hayat 3
      • Things to know
        • No protection? Why take the risk?
        • Plan for the unexpected now
        • Protect yourself through super
        • What’s the right cover
    • Hayat 4
      • Tools & Resources
        • Hayat protection calculator
  • About
    • About 1
    • About 2
      • Who we are
        • About Hejaz
        • Our History
        • Our People
        • Investing In Our Community
    • About 3
      • More
        • Media
        • Insights
  • Support
    • Contact 1
      • Call Us

        Available 9:00am to 5:00pm weekdays AEST/AEDT

        1300 043 529
    • Contact 2
      • Schedule a Call

        Schedule a call online with a time and day that suits you

        Schedule online
    • Contact 3
      • Help Centre

        For FAQs, useful information, resources and documents

        Explore centre
    • Contact 4
      • Contact Form

        Use our online contact form for quick and convenient responses

        Contact now
Hejaz Financial Services

hejazfs

28Apr

No protection? Why take the risk?

April 28, 2022 hejazfs Hayat Protection 133

On average, only 25% of debilitating injuries occur at work or are work-related.

In 2018/19 there were 114,435 compensation claims made for serious work-related injuries in Australia.

The average time it took for a worker to return to work due to a serious injury was over six weeks.

In 2016 the median compensation payout for a serious claim was just $12,600.

 

Hayat Protection – who needs it?

Some people may not need cover. For instance, if you

  • are near retirement and would give up work if you were disabled;
  • have lots of sick, annual leave and long service leave to use up convalescing;
  • have access to adequate amounts of cash to rely on;
  • have a partner or other people who will support you.

Other people may just misunderstand. A common cause of confusion is to think you are covered by worker’s compensation insurance. This, however, only covers accidents at or during work, or illness directly attributed to work. And from the statistics above, the payments received may not be anywhere near enough to cover costs.

 

If you are not aware of the cover available, read on!

Loss of Income protection pays an income to you if you are unable to work due to an accident or illness. The income is usually 75% of your pre-disablement income and is payable after a “waiting period”. You choose the waiting period to suit your needs – for instance, if you had a lot of unused leave you could choose a longer period.

Loss of Income is particularly valuable for self-employed people, casual workers or anyone else who relies on their income but has no sick leave. You will be required to provide evidence of your usual income when taking out a policy.

The income will be paid until you recover and return to work or for a “benefit period” – this can be as short as one year or up to age 65. Some policies pay a rehabilitation benefit to help ease you back to work.

Loss of Income protection premiums are tax deductible. Many people pay the premiums annually near the end of the financial year to bring forward the tax deduction. However, be aware that the income payments are taxable.

Premiums are generally based on your age, gender, occupation and previous medical conditions but you can save money by choosing a longer waiting period and a shorter benefit period. However, there is no point in having insurance that doesn’t pay out when you need it.

If you’re not sure of your specific needs, talk to your financial adviser who can recommend a solution to suit you. Why take the risk?

Read more
28Apr

Making sure you have the right cover

April 28, 2022 hejazfs Hayat Protection 135

The concept of Critical Care cover is relatively simple. If you are ill or injured and unlikely to be able to work again and meet the conditions of your particular policy, you receive a payment. The difficulty has always been to define what is meant by “unlikely to be able to work again”.

Advances in medical science and technology have meant that people who suffer horrific injuries might be rehabilitated and able to return to work, when years ago a similar condition would have left them permanently disabled. For instance, by-pass surgery once ended a working career; nowadays normal life can soon be resumed.

Different policies have different definitions and it’s an area where insurance companies are developing new features. Typical definitions that may be used are as follows.

 

The any occupation definition

One definition of Critical Care is based on your ability to do your own job (or a similar one where you are qualified through your existing education, training and experience or possible retraining).

Example

A painter who suffers a back injury and cannot climb ladders or stand for long periods may be classed as permanently disabled if he has no other employment skills. A teacher who suffers stress-related illnesses when faced by a classroom of children may not meet that classification if she can work outside the classroom as a tutor, examiner or writer of educational material.

 

The own occupation definition

A second definition is based on your ability to do just your own job. The premiums for this type of cover will be more expensive.

Example

A surgeon who damages his hands may be classed as permanently disabled because he cannot perform surgical operations, but he will still be able to work as a doctor or lecturer though on lower earnings.

 

Homemaker definition

The definitions above are only suitable for employed people but another definition is based on the ability to live independently. You would be classed as permanently disabled if you could not dress, eat, bathe, maintain personal hygiene or move around unaided. This means that a spouse who works in the home and raises children could also be insured – what would it cost to do the shopping, childcare, transport and other activities if your spouse could not do it?

How does Critical Care cover fit into a risk management plan?

Constructing a plan to protect you and your family against disaster can use a number of different types of policies. Income protection can provide up to 75% of your income if you are unable to do your own work due to illness or injury – but can you service your debts from this income? Critical Care cover will pay a lump sum if you are diagnosed with a defined illness – but the premiums can be relatively expensive.

Putting in place the right mix of Hayat Protection cover to suit your needs is no easy task, but it is something that we deal with every day.

Read more
28Apr

Plan for the unexpected now

April 28, 2022 hejazfs Hayat Protection 134

One of the joys in life is that we don’t know what will happen next. Most of us have positive expectations but sometimes life doesn’t follow our lead and we’re dealt a blow. It’s how we manage each experience – or how we’ve planned ahead – that will make it either good or bad for us. These three stories could have easily turned out quite differently.

Mustafa started his own business servicing computers after working for a major IT company for many years. At age 38, he was enjoying the freedom and control it gave him. Unfortunately, his car collided with a truck on the way to see a client and Jordan suffered a severe whiplash injury. He couldn’t work for two months and the loss of income made life hard for his young family.

He didn’t think to arrange Loss of Income Protection to replace the workers’ compensation cover he’d had with his former employer.

By their late 40s, Muhammed and Summeya had worked hard to reduce their mortgage and used some of the equity in their home for a loan to invest in an apartment. It was tenanted and had the potential for long-term capital growth. Sadly, Muhammed died suddenly after suffering a massive stroke. On a reduced income Summeya couldn’t afford to keep paying off the investment loan. The unit had to be sold quickly at a loss.

They didn’t think to increase Muhammed’s Family Protection when they borrowed for the apartment.

At 42, Layla is a successful business owner and prides herself in managing her personal finances well. She has a diversified portfolio of property and shares. Last year she contracted breast cancer and her work was disrupted with tests and hospital treatment for five months. She has now recovered but the medical bills made a severe dent in her finances, so she was forced to sell a big chunk of her share portfolio at short notice.

Layla didn’t know that Critical Illness Protection may have paid her a lump sum if she was diagnosed with a critical illness.

 

Three important lessons can be learned from these cases.

Firstly, the unexpected can happen to anyone.

Secondly, take the time to review your Hayat Protection arrangements at least once every year. If there are changes in your circumstances – new job, new loans, family changes, etc. – you may need to make adjustments to your cover.

Thirdly, talk to an expert. There are many different choices of Hayat Protection and it pays to have a specialist analyse your needs and find the most cost-effective solution for your circumstances.

 

Checklist

  • Does your Loss of Income Protection policy reflect the income you are currently earning?
  • Will your Family Protection pay off all your current debts and be able to support your dependants if you can’t work?
  • Have you taken up a “high risk activity” such as skydiving which could affect your Family Protection cover?
  • Will your house insurance pay out enough to rebuild your home if it is destroyed?
  • Have you recently installed security devices on your home that might reduce your premium?
  • Have you bought an expensive work of art and forgotten to add it to your contents policy?

This list is by no means complete but it’s enough to start you thinking. If it’s time to arrange a review for a complete analysis of your insurance needs, contact your licensed adviser.

Read more
28Apr

Protecting yourself through super

April 28, 2022 hejazfs Hayat Protection 134

The attractiveness of superannuation as an investment and savings vehicle is well known. Although the federal government places limits on the amount of tax-effective contributions we can make, the ability to structure Hayat Protection arrangements through super remains.

 

How does Hayat Protection through super work?

The types of Hayat Protection considered here are limited to those that relate to a person’s life. Specifically, it includes cover for death, total and permanent disability and temporary disability/illness (loss of income protection.

Rather than owning one of these policies directly, you may be able to arrange for it to be owned by your super fund on your behalf. The flow of premiums and claim payments is shown in the diagram below.

 

Superannuation or personal ownership … what’s best?

The fact that you can hold Hayat Protection through your super fund doesn’t mean that in all cases you should. Everyone’s situation is different and it is crucial to seek good advice.

 

Here are a few key issues to consider

  • Cash flow: Having your super fund pay your premiums can free up some of your cash flow for other pressing needs. But don’t forget that the super fund deducts the premium from your account, so you’ll eventually pay for it through a lower retirement benefit.
  • Flexibility: Your super fund probably offers one insurer only and the beneficiaries of the policy are limited to those allowed under superannuation laws. Personally held policies allow you to shop around for the best deal, and you have more flexibility to choose who to leave the money to.
  • Tax: Super funds can claim a deduction for premiums on death and permanent disability cover held for their members (usually not available for these policies if held personally). However, tax issues are more likely to arise when these benefits are paid through a super fund in the event of claim.

On the other hand, loss of income cover premiums are deductible when the policy is either held directly or in a super fund. If your marginal tax rate is higher than a super fund’s, then the tax benefit will be greater if the policy is held personally.

As from 1 July 2019, if a super fund hasn’t received any contributions for at least 16 months, any insurance held in the fund may be canceled. You will need to advise your fund if you wish to continue to hold the insurance.

In some cases, it can be wise to have some insurance inside super and some outside. The best option for you will depend on your personal circumstances, so talk to us when considering any changes to your insurance arrangements.

Read more
21Mar

Halal Investing vs. Ethical Investing

March 21, 2022 hejazfs Investments, Superannuation 134

Halal investing is sometimes called Shariah investing or Shariah-compliant investing, while ethical investing is also called socially responsible investing. The growth of halal and ethical investments is mainly due to the fact that the corporate world becomes more sensitive to the growing social awareness of shareholders and contribution to real economic activities. 

 

Halal Investing 

Halal investing is based on religious belief, which means that all investments must adhere to Sharia principles. Halal investment must therefore follow the principles of Sharia, which must be free from prohibited elements, including riba (interest), maysir (game) and gharar (uncertainty). Riba or interests are expressly forbidden in the Quran. Basically, riba is the excess money paid by the borrower to the lender in addition to the principal for the use of the lender’s money over a certain period of time. Therefore, financial products bearing the riba element such as interest-bearing deposits, bonds, private debt securities and money market instruments are considered prohibited (haram).  

Maysir, which literally means a way to easily get something and get undeserved profit from it, are driven by pure chance. As a game of chance, gambling often leads people to take high risks and behave irrationally in order to win big. In Islam it is forbidden to take extreme risks unknowingly and to add value in view of the outcome with the possibility of losing money. Gharar essentially refers to the uncertainty of contractual terms that could lead to exploitation and deception of people, which could lead to litigation and contract manipulation. In addition to the three prohibited elements, halal investment is also based on the principle that Islam prohibits any activity with illegal activities (haram) such as wine, alcohol, adultery, gambling, tobacco, banks and conventional insurance, and meat. Pig. Therefore, the actions of companies contaminated by one of the prohibited elements are considered non-compliant with sharia. 

 

Ethical Investing 

On the other hand, ethical investing means incorporating corporate values ​​and personal concerns into investment decisions. Ethical investing considers both the financial needs of investors and the impact of the investment on society. Ethical investing applies ethical and social criteria in the selection and management of investment portfolios. Investors are concerned not only with the financial returns of their portfolios and the associated risks, but also with the characteristics of the companies in which their funds are invested. This includes the nature of the company’s goods or services, the location of the company and the way in which it conducts its business and business operations.  

The ethical investment strategy can be positive or negative. The positive approach is favourable to companies that enjoy a high reputation in terms of products, activities or business methods, while the negative approach aims to avoid investing in companies involved in products or countries. unacceptable or whose business methods are considered unethical. the ethical investment decision is mainly influenced by ethical issues such as environmental improvement, climate change, genetically modified foods, gambling, human rights violations, nuclear energy and military, animal testing, health and safety violations, etc. The concept of ethical investing is consistent as it evolves to provide appropriate policies according to the changing environment. In its most recent adaptation, ethical investing moves from negative to positive selection to promote innovation and positive contributions to society, not simply to reduce the negative impact of business and industry practices and environment. 

 

Common Values 

Despite the differences, halal and ethical investing generally share an ethical investing philosophy which is a value-based approach to aligning an investor’s portfolio with religious beliefs. Both focus on real economic activities such as improving people’s living conditions and well-being, creating social equity, and preventing injustices in trade and commerce.  

Halal and ethical investments also focus on the protection of natural and environmental resources with the exception of institutional financial sectors and invest in the same economic sectors, namely industry, health, consumer goods, services utilities, consumer services and basic materials such as technology. In addition, both apply measures that eliminate a group of companies or entire sectors based on social or religious beliefs. For example, industries such as tobacco, alcohol, and pornography are excluded due to the nature of the products and services that are harmful to society. 

 

Screening Process 

While halal and ethical investments use a screening process in managing their portfolios, the application of the screening process should be distinct. companies from which the portfolio manager can select investments.  

Ethical investing applies the screening process to ensure that the companies they invest in adhere to their ethics policy. The screening process weeds out companies deemed negative and will encourage investment in positive companies. Negative screening avoids certain types of investments, for example gaming companies or arms manufacturers. Positive filtering, on the other hand, favours activities or characteristics deemed desirable such as the renewable energy industry or health. Some managers also use the “best-in-the-industry” rule, which selects leading companies in each business sector based on their social and environmental commitment, and the “overlapping social responsibility” rule, whereby the actions of a portfolio are selected according to the usual procedure, but a process is added to address social responsibility issues.  

While the ethical investment screening process limits the inclusion of companies that are unaware of human rights and environmental concerns, halal investing appears to apply a different approach based on business compatibility with human rights. Sharia principles. On this point, halal investment is subject to the Shariah screening methodology determined by the Shariah Supervisory Board or the Shariah advisors of fund management companies. In some jurisdictions, e.g., Malaysia, the Shariah screening methodology is determined by a centralized Shariah advisory body established by the regulator, i.e. the Malaysian Securities Commission, as a more high authority in determining Shariah issues in relation to Islamic capital market activities which include Shariah compliance. investments.  

The Sharia screening process generally includes two categories of screening, namely qualitative screening and financial screening. Quality screening excludes companies involved in prohibited activities such as alcohol, tobacco, gambling, pork products, and conventional banking and insurance. Sharia screening is usually made available by index companies such as FTSE, S&P Dow Jones and MSCI, which offer a wider range of Islamic indices for fund managers to compare against. Financial screening is applied using financial ratios to ensure securities are Sharia compliant, which involves calculating ratios, such as the ratio of interest-bearing debt to assets or the ratio of the total debt to the average market capitalization of a company. The wisdom behind financial screening is to avoid investing in debt-embedded securities. 

 

Other Considerations 

Halal investing is further characterized by strict limitations such as the purification process and the exclusion of investments in interest-bearing securities to which ethical investing is not subject. On this point, halal investment provides for a purification of investment income tainted by impure income by purification. it is required when the companies are joint ventures that have passed the tolerable test of Sharia screening process resulting in tainted income generated from the investment. Purification involves giving a certain percentage of that income to charity as a form of repentance for being involved in a certain level of non-Sharia compliant investments.  

In a nutshell, halal and ethical investments are closely related but not similar. It is argued that Sharia principles often go beyond the requirements of ethical investing and have the benefit of providing clearer ethical coding and standards as well as an enforcement mechanism overseen by the supervisory board. of Sharia or Sharia advisors.  

The convergence of values ​​between the concepts of halal investment and ethical investment highlights the ethical and social protection agreement. The Halal Investment Screening Criteria applies a more standardized negative screening approach for industries and companies that do not meet the basic Halal investment criteria. Although there are differences in the interpretation of the appropriate filters in the Islamic investment screening process, the differences are minor and in fact harmonize as the market develops and progresses.  

Above all, the decision to invest in halal or ethical investments will always depend on the values ​​of the investor, as well as their overall portfolio and financial planning objectives. Investors interested in halal and ethical investing often look for fund managers who offer a high level of disclosure and transparency in terms of investment process, portfolio listings and detailed reports before making an investment decision. 

 

Read more
21Mar

Should you invest your house deposit?

March 21, 2022 hejazfs Finance, Investments 134

It’s never been easy to save the deposit for a home, but low rates make it even more difficult. For starters low rates drive up house prices, forcing homebuyers to come up with bigger deposit amounts. Then those low rates rob buyers of the ability to earn a decent, low risk return on their hard-earned savings. When the traditional savings vehicles of homebuyers – savings accounts and term deposits – offer only token rates of return, aspiring homebuyers start to ask themselves what can they do to build their deposit more quickly?

This is the situation that Ahmad and Layla find themselves in. They’ve made a solid start on saving a deposit, but calculate it will still be several years before they’ll be able to start bidding on a home.

They’ve explored the obvious options of course – spending less and saving more of their income, but there are only so many smashed avos on sourdough that can be foregone or extra jobs that can be worked. So what else can they do? Looking at the depressingly low rate they are earning on their existing savings, they wonder if those savings can be made to work harder by investing them in assets that have the potential to deliver higher returns.

The first thing that Ahmad and Layla need to recognise is that any attempt to earn more than the cash rate comes with increased risk. Most people are aware, for example, that shares can fluctuate significantly in value, even from day to day. On the positive side, over the long term – five years and longer – a well-diversified share portfolio is likely to produce significantly better returns than cash. This doesn’t mean Ahmad and Layla should invest all of their current and ongoing savings into shares. Far from it. But these statistics make a good case for investing a portion of their savings in a broad mix of higher yielding assets. In addition to shares this may include property and various forms of fixed returns. However, with protecting their fortune a high priority.

Ahmad and Layla should avoid speculative and many so-called ‘alternative’ investments. And they should avoid long-term illiquid investments, such as some unlisted property trusts. They may end up wanting to access their money at short notice.

They also need to be aware of how their investment income will be taxed both annually (share dividends, rental income) and on the ultimate sale of their investments (capital gains tax). Some tax treatments are positive, potentially including franking credits on share dividends, and a discount on capital gains tax.

Saving a home deposit requires great discipline, and exposing a portion of savings to even modest risk entails even greater discipline. Ahmad and Layla will need to avoid the temptation to invest larger sums when markets are up, or to want to bolt to cash at the first downturn in the market.

If the idea of investing a portion of your house deposit appeals to you talk to us. We will be able to help you understand the risks involved and how to manage them, recommend appropriate investment options that balance out those risks and potential returns, and help to keep you concentrated on your main goal.

Read more
21Mar

Compounding: it’s simply magic!

March 21, 2022 hejazfs Investments 135

Forget about location, location, location being the key to a good investment outcome. For now, let’s think of the most important ingredient as being regular, regular, regular!

A regular savings plan can turn small amounts of money into a sum that can take you closer to your dreams much faster. All that’s needed is time and discipline.

For example, let’s see what happens to an investment starting with just $100 and adding $100 each week from your regular income. Table 1 shows what the investment value would reach after five years and up to thirty years. In this example, we have assumed that the investment pays a return of 5% per annum (paid quarterly).

 

Table 1: Regular savings plan of $100 per week compounding monthly.

 5 years10 years15 years20 years25 years30 years
5% return$29,598$67,454$116,037$178,386$258,402$361,092

 

The results show that a regular savings habit can turn small sacrifices into real outcomes.

 

To budget or not to budget
Think about what you might have to do in order to save $100 per week to add to your investment. Maybe instead of eating out every week, make it a special monthly event. Taking lunch to work is a big saver – or you could cut back on your coffee purchases if you’re a regular at the local café. Review essentials such as your mobile phone plan and utilities to get better deals and direct that extra cash straight to your investment.

It might sound picky, but in return for this self-restraint you can see what can be achieved:

  • the $29,000 in 5 years might go towards a deposit on your first home or an overseas holiday;
  • the $67,000 in 10 years might contribute to your young children’s secondary or tertiary education; or
  • the extra $258,000 in 25 years might help you to retire more comfortably or earlier than you thought you could.

Any of these goals would seem to make your small sacrifices extremely worthwhile in the long run. And remember to write down your financial goals as early as you can because it’s much easier to make those sacrifices if you know what they are helping you to achieve.

Reducing expenses is not the only way to find a spare $100 each week. Another good time to start a savings plan is when you receive an increase in your disposable income from a new job or a pay rise. Before you spend the extra money, put it away.

 

The trick is to start soon
Everyone’s ability to save is different. If you can’t save $100 every week, the above figures are still worthy of your attention. For example, if you can save $50 per week simply halve the results in Table 1. Conversely, if your savings capacity is higher, multiply the figures.

The results also demonstrate the effect of time and compounding returns on the value of your investment. The sooner you start, the less you need to save in order to achieve the same outcomes.

 

The difference 10 years can make!

Esma plans to retire in 20 years from now so she starts saving an extra $100 per week for this goal. Based on our simple calculations she might expect to have an investment of around $178,000 to add to any other superannuation or retirement benefits she has at that time.

Esma’s twin Yusuf also plans to put down the tools in 20 years, but he is confident that he can save more money than his sister. So Yusuf ignores any type of retirement planning for the next 10 years. He then saves twice as much as Esma – $200 per week – for the last 10 years of his working life.

Assuming a 5% return on the investment, the difference is staggering. By starting 10 years earlier, Esma will have saved just over $178,000 compared to Yusuf’s outcome of $134,743.

Even though his regular savings amount totals exactly the same as his sister ($104,000 over the period of the investment), Esma has benefited from the compounding investment returns on her money over a longer period of time, earning an extra $44,000 in interest – or better known as “free money”!

Another way to look at it is that Yusuf would need to save $265 per week for the last 10 years of his working life (a total of $137,800) to end up with the same outcome as Esma.

 

And finally…
The examples we have used here are aimed at highlighting the benefits of time and discipline when it comes to investing in a regular savings plan. To keep things simple, we have not taken into account other factors that will impact on the outcomes you can achieve, such as taxation, fees and differing investment returns. These factors are nonetheless important and will need to be considered when you are deciding on the type of investment you choose for your regular savings plan.

Higher-return savings accounts, managed share funds and superannuation are just a few ways to implement a regular savings plan like the one we have examined here (although you won’t find any at call bank accounts that pay close to 5% at present!). The type of investment that is best for you will depend on your own specific circumstances, including your goals, timeframes and attitude to risk (volatility).

You can start a compounding savings plan on your own or talk to us – we can show you more options to help you achieve your dreams sooner.

Read more
20Jan

The dynamic economy of Australia that remains robust

January 20, 2022 hejazfs Media 134

The Australian economy has rebounded strongly over the past 12 months since the great coronavirus pandemic of 2020 caused a short recession. The government mandated a strict zero-COVID-19 policy by implementing prolonged periodic lockdowns in the most populous states; however, economic activity was not severely hampered, due to various stimulus initiatives by federal and state governments.

Government fiscal and monetary policy was activated to support the economy which cushioned the impact on the economy caused by the pandemic. Currently, the lockdowns are finally ending with vaccination rates now surpassing 80% double dosage for eligible individuals, allowing Australia to begin returning to the new normal.

Review of 2021

It has been a year like no other with the great pandemic continuing to dominate local and global economies and testing governments’ ability to cope with a historic black swan event. The Australian government injected unprecedented amounts of stimulus into the economy to try and protect businesses and households from a deep and prolonged recession. These measures included JobKeeper packages for business to retain their workers, monetary policy measures by way of lower financing rates and boosting credit availability in the economy.

The Australian economy contracted 7% in the second quarter of 2020 (Q2 2020); however, it has rebounded strongly by expanding 9.6% in Q2 2021 year-on-year, illustrating the effective policies provided by the federal government.

The resurgence in the employment market was also unexpectedly strong, where the unemployment rate dropped from 7.4% in June 2020 to 4.5% in August 2021. Consumer spending has also recovered strongly from a historical low in Q2 2020 to pre-pandemic levels.

The extraordinarily large-scale deployment of monetary and fiscal policies by central banks and governments over the past year has laid the groundwork for subsequent higher inflation rates, hovering around 3%. The fast-spreading Delta variant has caused significant disruptions on the global supply chain, including Australia, causing ‘supply chain-included inflation’. The Reserve Bank of Australia‘s tapering started this September by reducing securities purchases from AU$5 billion (US$3.73 billion) to AU$4 billion (US$2.99 billion) per week, causing falling stimulus, in turn increasing financing cost in real terms.

Over the past year, Australian residential property markets and equity markets have both benefited significantly from lower interest rates. As of November 2021, Australian residential property prices increased significantly in both Sydney and Melbourne, by 30.4% and 16.8% respectively. Australia’s overall annual house price growth also made history, with the 21.9% growth becoming the fastest annual rate of growth on record. The equities market had a stellar year as well with the ASX 200 delivering more than 24% over the past 12 months, while returns on Australian bonds were -3.5%.

Banks in Australia benefited largely from economic recovery as investors are expecting lower loan deferrals, bad debts and revived credit growth. Meanwhile, demand for mortgages continues to rise exponentially on the back of high demand volumes for residential property.

Preview of 2022

The IMF cut its growth forecast for Australia’s GDP from 5.3% to 3.5% in 2021; however, it upgraded the forecast for next year from 3% to 4.1% as it expects a strong rebound in the Australian economy after restrictions ease.

With two of the largest states, New South Wales and Victoria reopening, the national economy should see a strong rebound, led by the tourism and educational sectors which are big contributors to the Australian economy, while utility companies will benefit as people return to offices, shopping centres and restaurants.

Although surging housing and energy prices put pressure on inflation rates, the Federal Reserve has already indicated that interest rates will remain at historical lows until 2024.

As for the Islamic finance industry in Australia, it has capitalised with high returns in the equity and property markets to provide investors with exceptional returns, while also enjoying exponential growth in Islamic mortgages.

There are more Islamic finance product and service providers now in Australia, with community awareness of Islamic finance rising steadily. This appears to be having a positive impact with product quality and competitiveness, ensuring that Muslim consumers are the clear winners.

The next step for the industry would be to have it’s very own first Islamic bank regulated by the prudential authority, to ensure the Muslim community has access to all financial products that conform to their religious beliefs. I am glad to say that a few entities have or are in the process of applying for an Australian banking license, which allows us to look forward to exciting times ahead.

Conclusion

In 2021, Australia has seen a strong recovery from the great pandemic of 2020, driven by strong growth in consumer demand, and supportive government fiscal and monetary policy. The expectation for Australia’d economic growth in 2022 is very positive; however, the inflation rate driven by surging energy and housing prices along with the foreseeable ending of government support will impose challenges on the economy.

The Islamic finance industry within Australia is going from strength to strength with larger providers providing leading products that now compete with the conventional market. All looks good for Australia’s first Islamic bank as well, with a real possibility in the short term.

If you are interested in Islamic banking, we are in the process of applying to become the first, Australian, 100% digital Islamic bank. Designed for mobile – made for people. We’re not a bank yet, but we want to be, and we want you to be a part of it. You can register your interest here.

Read the article: https://www.islamicfinancenews.com/the-dynamic-economy-of-australia-that-remains-robust.html?access-key=4cc6cb1360a93496260ac5b9b575f37d

Read more
18Jan

Quarterly economic update October – December 2021

January 18, 2022 hejazfs Lifestyle 134

Our latest quarterly update covers Coronavirus updates, unemployment figures, property market changes, the climate change conference, energy costs and the ups and downs of the Aussie dollar.

Coronavirus

Victoria and New South Wales saw their economies roar back to life as they emerged from lockdown just in time for a new kid to arrive on the coronavirus block. Omicron spread around the world seemingly within days knocking Delta off the front pages. Appearing to cause less severe disease than previous strains, and with Australia achieving high rates of immunisation, state governments held off resorting to lockdowns in an attempt to minimise financial carnage on businesses and workers.

All this battling against the virus comes at an enormous cost. The mid-year budget update forecasts annual deficits of around $100 billion for the next few years, no surplus over the next ten years, and gross debt of $1.2 trillion by 2024-2025.

Jobs galore

The unemployment rate dipped to 4.6% in November as an additional 366,100 people joined the ranks of the employed. The under-employment rate fell 2% to 7.5%, and many employers reported difficulties in finding staff.

Homebuyer hopes

Homebuyers gained a little power over sellers towards the end of the year as a surge in listings saw auction clearance rates in Melbourne and Sydney drop to 66% and 73% respectively. If this extra supply is maintained it should help to cool what has been a very hot property market.

COP this

The Covid-delayed climate change conference COP26 was finally held in Glasgow, and Australia joined the large number of countries aiming to reach net zero carbon emissions by 2050. Good progress was made in some areas, such as reducing methane emissions, ending deforestation and, for some countries, phasing down coal. However, modelling predicts that if all current commitments are fulfilled we will still see temperatures rise by 2.4 degrees. This is well short of the Paris Agreement goal to limit warming to 2 degrees, and preferably 1.5 degrees. The Glasgow Climate pact calls on nations to “strengthen their pledges to reduce emissions by the end of 2022.”

Expensive energy

Major energy users suffered from a big spike in the costs of both coal and natural gas during the quarter. Prices corrected abruptly in November, but still remained much higher than at the start of the year. Oil prices were also higher, nudging US$85 per barrel during October and November. Aside from hitting consumers’ petrol and home energy bills, high energy prices also led to an increase in the cost of, and shortages of urea – a chemical that is critical to the production of fertilizer (and therefore food) and to keeping diesel trucks on the road.

Ups and downs

The volatility in the value of the Aussie dollar against major currencies continued for the quarter. It traded between 70 US cents and 75 US cents in line with its long-term trend. We gained more than 3.7% against the Euro and Yen, and held ground against the British Pound.

The local share market failed to excite, tracking sideways before putting on a small end of year spurt that saw the S&P ASX 200 close the quarter up 1.5%.

It was a different story for US stocks. The S&P500 closed out the year at a record high after lifting nearly 11% for the quarter. The Nasdaq was close behind with a 9% gain.

Read more
    123…9

For general information, documents & forms, support and FAQs

Visit the Help Centre
Hejaz Logo

Need help? We’re
always here to
answer your questions

Resources

  • Media
  • Contact us
  • Knowledge Base
  • Insights
  • Important Documents

Products

  • Superannuation
  • Investments
  • Home Finance
  • Hayat Protection
  • Pension

Hejaz Financial Services © 2022 / All Rights Reserved

ABN 44 16185 7478

AFSL 517686

Credit Licence 480542

Privacy Policy
Legal Notices
Refer a Friend
Schedule a Call
Knowledge Base
Apply Online

Call us: 1300 043 529