Welcome to another edition of Mail2Me. An audio PODcast version of this newsletter can be downloaded via the MP3 file link below.

This month we look at the importance of having adequate insurance cover and a new tool Plum has introduced to help you gauge how adequate your insurance cover really is. In addition, we consider some of the women specific issues our new super education kit for women addresses and finally we provide an update on the recent Australian sharemarket turmoil and asset class return.

Click 'Play' below to listen to the PODcast

	September 2007 Plum PODcast - Insurance adequacy and what women really want
	To download an MP3 file of this PODcast, right click and save to a location on your computer

Get PODcasts with RSS If you use Internet Explorer 7, Firefox or Safari, you can be automatically notified when new PODcasts are available. Click the orange button or copy the following URL to your RSS reader: http://www.plum.com.au/files/1/Plum_PODcast.rss

*A podcast is an audio recording that you can listen to on your computer or portable digital media player, such as an iPod.

Sharemarkets take a hit over US sub-prime concerns

By Plum Investments Manager Michael Garrott

In July and August, Australian and global share markets experienced a series of declines before recovering towards the end of August.

The catalyst for this correction in share market valuations was attributed to an increasing level of sub-prime mortgage defaults in the United States (sub-prime mortgages are home loans made to borrowers with poor credit ratings). So far, the increasing level of defaults on sub-prime loans has been largely confined to the United States but the repercussions have been felt in equity markets worldwide.

Some of your investments are likely to be invested in these equity markets and as a result the value of your superannuation account may have temporarily decreased over the past few months.

To highlight the extent of the correction, on the close of market on 16 August, the Australian sharemarket had declined around 11%,from its mid-July peak. The correction appeared to culminate in an intra-day trading period on 16 August which saw the market down 5% (compounded by a technical hitch on the Sydney Futures Exchange) before recovering to end the day down just 1%.

The volatility was not confined to Australia - with many global markets also down significantly from their peaks. What did surprise many market observers however was the speed of the rally, which over the course of the next several weeks, has taken the domestic sharemarket back to just 2% short of its all time high.

It is worth reminding ourselves that even had the Australian sharemarket remained down 11%, it would still have been 16% higher than where it was 12 months ago, and 64% higher than where it was 3 years ago. Periodic corrections in share market valuations are part of the normal cycle of financial markets. The speed of the recovery highlights that you should, insofar as possible, look through these periods of higher volatility, focus upon your long term investment goals, and invest accordingly.

If the sub-prime market is just about people defaulting on home mortgages (and just in the United States) - why is it affecting the value of my investments?

A number of investment funds worldwide have announced they have either direct or indirect exposure to the US sub-prime market and have suffered losses as a consequence. This has created uncertainty amongst investors as to which investment funds have been affected. Furthermore, there has been a growing perception that risk in general in financial markets, has not been properly priced in the market. Investors have become cautious, and valuations of many investments (whether related to sub-prime markets or not) were affected.

Does Plum have any investment options with exposure to the sub-prime market in the United States?

No. Plum does not have any funds with material exposure to the sub-prime market in the US. Nevertheless, with the broad decline in share markets over recent weeks, Plum investment options with exposure to these share markets have also declined to some extent.

What is the best portfolio Plum offers during these turbulent times?

There is no such thing as the 'best' portfolio, as varying investment options respond differently depending on what is happening in the financial market, and anticipating these is almost impossible. Those portfolios that do not invest in shares will be better performers when the share market is producing negative returns. However, when the share market is performing strongly, then those portfolios without exposure to shares will perform relatively poorly. Plum offers a range of different investment options to cater for most investor preferences and we recommend you speak to a financial adviser about which options are best for you.

How will I know when the current market correction/volatility is over?

You won't. Picking the bottom of the market is incredibly difficult even for the best investment professionals. If you are in doubt over your investment options, and whether they are right for you, you should speak to a financial adviser who will be able to assist you.

I'm no longer comfortable holding investment options invested in Australian/global equity markets - what other options can I invest in?

Plum offers a range of different investment options to cater for member preferences including a variety of 'fixed interest' and 'cash' options. In the long run, these asset classes will most likely provide lower returns than growth asset classes such as 'equities' and 'property'. Alternatively, you may wish to consider adopting a more diversified portfolio, which tends to smooth out investment fluctuations (but potentially at the cost of higher returns). Before making any decisions regarding your portfolio, you should speak to your financial adviser.

Plum insurance gap calculator addresses underinsurance

With an ageing population in Australia, insurance adequacy is becoming increasingly important with industry experts telling us many people are inadequately or totally uninsured.¹

Insurance can help a person and their family in many situations - when they are injured, suffer a critical illness or are permanently disabled, which limits or prevents them from working. It can also help provide for those left behind when someone passes away.

All these events can be unexpected and it is essential to ensure you have sufficient insurance cover to maintain your quality of life if these events occur.

That is why Plum has introduced an independent interactive insurance gap calculator, that is not linked to any particular insurance products, and can help you to ascertain if you're adequately insured, or if you should consider taking action to increase your cover.

The calculator estimates the amount of insurance you may need in the areas of:

• Life cover
• Total and permanent disability cover
• Income protection cover
• Critical Illness (major trauma) cover

Plum's online calculator determines the gap between your current insurance cover and the level it estimates is required, based on the data you have entered.

It also provides a general sense of whether you or your family will be able to continue to maintain the lifestyle you are accustomed to and help meet financial commitments, in the event of the death of a partner.

The insurance gap calculator also has the ability to produce a report based on the data provided, which you can then take to a qualified financial adviser to assist in assessing your particular insurance situation.

To access the calculator, visit Plum's website and log in to your personal member site and then select the Financial Tools tab. Not sure of your member login? Contact the Plum service centre on 1300 55 7586 who will be able to assist you.

Plum looks at what women really want

Did you know that 32% of women have no super savings at all?²

This is just one of the reasons Plum Financial Services Ltd (Plum) has developed a comprehensive super education kit specifically for women, called What women want.

According to Plum's Senior Education Development Consultant Michelle Brown, statistics tell us that on average women earn less³ ,save less⁴ , and yet are likely to live longer⁵ . Therefore, it is more important than ever that women should be aware of their financial situation and take the appropriate action to ensure they have an adequate income in retirement.

Of course, we know there is no one size fits all solution for everyone, with many women earning more than their male counterparts and having more savings.

That is why Plum has developed a super education kit with women in mind, giving tips and information for women of all ages and levels of financial security, targeting some women specific issues, such as maternity leave.

The What women want kit contains a general guide, which discusses financial strategies and financial implications of various life events that women may experience, as well as a comprehensive checklist.

For example, Plum's research found that around half of all women over the age of 65 outlive their partners by 15 years.⁶ One thing women might want to consider is that if their partner's insurance cover is not adequate, they might find themself in a tough spot financially. After all, the last thing you want to worry about in your retirement years is money.

• An easy checklist for women, which they can use to help better understand their finances, or fill out and take to a financial adviser.
• A guide to What women want - outlining some super strategies that
• An online dedicated What women want module in the member's section at www.plum.com.au .

Plum's What women want can be accessed online through Plum's member web site (www.plum.com.au) and seminars are being progressively delivered face to face in the workplace to Plum members, by Plum's Education Strategists.

MARKET COMMENTARY

July 2007

Australian shares
July was a volatile month for the Australian share market. The month started with a strong performance by the market with the All Ordinaries Index hitting a record high, before a dramatic downturn in the second half of the month. The month ended with the market in negative territory, declining 2.0% as measured by the S&P\ASX 300 Accumulation Index. This fall was caused by concerns regarding the US sub-prime mortgage market.  Nearly all sectors declined over the month, with the exception of Automobiles & Components (+7.9%), Retailing (+3.4%), Materials (+1.2%) and Pharmaceuticals Biotechnology and Life Services (+0.6%).

International shares
International equities suffered to a similar extent as the Australian market, with the MSCI World Index  (excluding-Australia) declining 3.2% in Australian dollar terms over July, due in part to a further strengthening in the Australian dollar. On a hedged Australian dollar basis (which largely removes currency effects), the Index declined 2.9% over the month. Continued fears of a credit crunch, near record oil prices and concerns over the state of the US sub-prime/housing market and the US economy, meant that the fallout was widespread. European markets led the fall, sparked by rising European/global interest rates. The FTSE experienced its biggest one day loss in four years with the market closing down 3.3%. The German DAX dropped 2.4% while the French CAC fell 2.8%.

Property
The listed property sector experienced a sharp decline losing 4.6% in July, as measured by the S&P/ASX 300 Property Trust Accumulation Index. This was 2.6% behind the broader Australian equity market, impacted more significantly by the continued concerns over the deterioration in the US sub-prime mortgage markets. A few stocks remained in the black over the month including ING Industrial Fund (+6.4%), Babcock & Brown (+1.4%), Bunnings Warehouse (+1.3%), Multiplex Group (+0.8%), Australian Education (+0.6%) and Investa Property Group (0.3%).

Australian fixed interest
Domestic fixed interest declined 0.7% as measured by the UBSA Composite Bond All Maturities Index. Over the year, a return of just 4.6% was achieved.  Cash (UBSA 90 day Bank Bill Index) gained 0.5% over the month, and 6.5% for the year. International fixed interest gained 1.5% in July according to the Citigroup World Government Bond Index Hedged, and returned 5.7% over the 12 month period.