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Women and Super – the Facts!

Did you know that around 90 per cent of women end up with not enough superannuation savings to fund the lifestyle they want in retirement? In fact, the average superannuation account balance for women when they retire is around $90,000 less than the average for men. There are a number of reasons why this is the case. For example, many women take time out of the workforce to have children or care for family members, and they are also more likely to be in part-time or low-paid employment. No matter what the reason is, there’s no doubt women have a much bigger task when it comes to saving for their retirement. This is why it’s important all women take simple steps to help boost their super savings. GenderGapFacts_all                   Taking sixty minutes today to sort to your super could add thousands to your retirement savings. Here are three simple steps you can take:

  • Check your super savings Get to know your super better by checking your balance regularly, as well as the insurance and investment options you have to make sure they are the best fit for your circumstances.
  • Simplify your super by rolling all your super accounts into one Consolidating your accounts and/or tracking down your lost or unclaimed super could save you thousands of dollars in unnecessary super fund administration fees, which over time can make a massive difference to your retirement savings
  • Plan to save more Even small additional contributions to your super over time can help boost your retirement savings by thousands of dollars. These extra contributions can help you catch up on the savings time you missed, for example when you take time out to have a baby.

Reproduced with permission of The Association of Superannuation Funds of Australia Limited. http://www.superguru.com.au Important note: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

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Super Baby Debt

Taking time off work means you may not have any employer contributions being paid into your super account. And if you are taking a few years off, this can have quite an impact on your retirement nest egg. Even if you are working part-time at all during this period, then your employer will only pay money into your super account if you’re earning more than $450 a month.

To overcome this problem, women should adopt the ‘one per cent rule’ by adding an extra one per cent to their superannuation contributions for the rest of their working lives.

You should also think about what you can do to continue to build on your super savings while you are out of the workforce. One way of doing this is for your partner to make contributions on your behalf. ‘Spousal contributions’ are where your spouse makes a contribution to your super account and they receive an income tax rebate. It’s a great way to keep growing your super while you’re taking time off; be it to raise a family, or for other reasons.

Also, don’t forget about the government’s co-contribution scheme. If you are a low or middle-income earner, you can make an after-tax contribution of $1,000 a year to your super account and the government will provide up to 50 cents for each dollar you contribute, up to a maximum of $500, provided you meet the eligibility requirements.

If you’re taking a few years off, it’s certainly something to consider. But remember, you can always put extra into your super account.

If you would like to discuss any issue to do with superannuation please get in touch – contactus@incomesolutions.com.au

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Supporting the rights of older people

Many people feel uncomfortable raising a complaint or concern but it is important to address your concerns early and not leaving it to escalate.

This can be particularly difficult if your complaint is about care or service that you are dependent upon for meeting your most basic needs.

Nevertheless, we live in a society where each and every one of us, regardless of our age, has rights as citizens and individuals.

What are my rights?

The Charters of Residents’ Rights and Responsibilities outlines your rights and responsibilities as a resident and those of the provider. Some of the rights and responsibilities include:

  • Full and effective use of residents’ personal, civil, legal and consumer rights
  • Quality care, privacy, dignity and respect
  • Making complaints about anything unfair or unreasonable
  • Access to advocates and to be free from fear of reprisal.

The Charter should be displayed at the aged care home, included in the Resident Agreement or you can request a copy from your provider.

Who can help?

If you feel unsure or unable to address your concerns yourself with the service provider, you can ask an advocacy service to help you.

An advocate can give information, advise and support you to express your concerns or even speak on your behalf. They will aim to achieve the best possible outcome for you.

An advocate can help you:

  • Understand your rights and responsibilities
  • Listen to your concerns
  • Discuss your options for addressing a concern
  • Raise a concern with the service provider or speak on your behalf

Advice is generally provided on consumer rights, human rights, financial exploitation, substitute decision-making and elder abuse.

How to find help

There are free and independent advocacy services in every state and territory which provide free telephone advice, community education and other assistance for older persons throughout Australia.

All advocacy services ensure the needs of people from a culturally diverse background are met through culturally appropriate services and interpreters where necessary.

If you receive Government funded home care or aged care services you can access independent and free advocacy services through the National Aged Care Advocacy Program.

Contact the National Aged Care Advocacy Line on 1800 700 600 or an Aged Care Advocate in your state for more information.

If you would like to discuss any issue to do with financial decisions in aged care please contact us on 5229 0577 or contactus@incomesolutions.com.au.

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Is a family guarantee right for you?

Entering the property market is no easy feat for a first homebuyer, but even parents who aren’t prepared to hand over cash for a deposit may help by being a guarantor on a loan. Before taking the plunge, however, it’s crucial to be aware of the implications involved.

Here are three questions to ask yourself to see if a family guarantee is right for you:

1. Am I financially fit to be a guarantor?

The very first thing you should be certain of is whether or not you are in a financially capable position to pay off the loan if the borrower finds that they can no longer do so. There can be many disruptions to an income, such as loss of employment or a serious accident, and some types of guarantor loans hold the guarantor legally accountable to ensure the mortgage is paid off.

You need to be in a strong financial position and have enough equity in your property to be a guarantor. Some banks even want to make sure that the guarantor can service the full debt as well, so it’s always advisable to get independent legal or financial advice if you’re considering it.

2. Do the benefits outweigh the risks?

It’s no secret that it can take a long time to save for a deposit and by becoming a guarantor, you offer the borrower the chance to enter the property market sooner.

Lenders may treat the loan like an 80 per cent lend, so you avoid the costly lender’s mortgage insurance (LMI). You also don’t have to save up for a full deposit for the purchase, or sometimes any deposit at all.

However, any time you borrow money or a bank places a mortgage over your property, there are definitely things that need to be taken into account. While in some instances it may be suitable, it’s definitely not a first option as there are certain factors that can put you or your property at risk. Your ability to borrow will also be reduced after using a guarantor.

3. Are there other ways I can help without being a guarantor?

If contributing to a deposit is an option, it allows you a little help without needing to put yourself or your property at risk, but there are some extra hoops to jump through if a deposit includes gifted funds.

With gifted funds, if [the deposit is] less than 20 per cent of the property’s purchase price, then the banks will most likely want to see five per cent of genuine savings. Having said that, there are a few lenders that will allow you to use rent as genuine savings. So, if you’ve been renting for a while, it shows that you have the propensity to make repayments and then the reduced (less than 20 per cent) deposit may be used in that regard.

We can provide access to tailored loan products and expert knowledge, and meet the highest educational and ethical standards. Feel free to speak with an adviser, by e-mailing contactus@incomesolutions.com.au.

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The Intelligent Investor

  The following is an exert from Benjamin Graham’s “The Intelligent Investor”. If you would like a copy, compliments of Income Solutions, please e-    mail contactus@incomesolutions.com.au and we will arrange a book to be sent to you. 

Can you beat the Pros at their own game?

Recognise that investing is about controlling the controllable. You can’t control whether the stocks or funds you buy will outperform the market today, next week, this month, or this year; in the short run, your returns will always be hostage to Mr. Market and his whims. But you can control:

  • Your brokerage costs, by trading rarely, patiently, and cheaply
  • Your ownership costs, by refusing to buy funds with excessive annual expenses
  • Your risk, by deciding how much of your total assets to put at hazard in the stock market, by diversifying, and by rebalancing
  • Your tax bills, by holding stocks for at least one year and, whenever possible, for at least five years, to lower your capital gains liability
  • And most of all, your own behaviour.

If you listen to financial TB, or read most mark columnists, you’d think that investing is some kind of sport, or a war, or a struggle for survival in a hostile wilderness. But investing isn’t about beating the others at their game. It’s about controlling yourself at your own game. The challenge for the intelligent investor is not to find the stocks that will go up the most and down the least, but rather to prevent yourself from being your own worst enemy – from buying high just because Mr. Market says “buy!”  And from selling low just because Mr. Market says “Sell!’.

If your investment horizon is long – at least 25 to 30 years – there is only one sensible approach: Buy every month, automatically, and whenever else you can spare some money. The single best choice for this lifelong holding is a total stock-market index fund. Sell only when you need the cash.

To be an intelligent investor, you must also refuse to judge your financial success by how a bunch of total strangers are doing. You’re not one penny poorer if someone in Dubique or Dallas or Denver beats the S & P 500 if you don’t. No one’s gravestones reads “HE BEAT THE MARKET”.

I once interviewed a group of retirees in Boca Raton, one of Florida’s wealthiest retirement communities. I asked these people – mostly in their seventies – if they had beat the market over their investing lifetimes. Some said yes, some said no; most weren’t sure. Then one man said, “Who cares? All I know is, my investments earned enough for me to end up in Boca.”

Could there be a more perfect answer? After all, the whole point of investing is not to earn more money than the average. But to earn enough money to meet your own needs. The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioural discipline that are likely to get you where you want to go. In the end, what matters isn’t crossing the finish line before anybody else, but just making sure you do cross it.



Your Money and Your Brain

Why, then, do investors find Mr. Market so seductive? It turns out that our brains are hardwired to get us into investing trouble; humans are pattern-seeking animals. Psychologists have shown that if your present people with a random sequence – and tell them that it’s unpredictable – they will nevertheless insist on trying to guess what’s coming next. Likewise, we “know” that the next roll of the dice will be a seven, that a baseball player is due for a base hit, that the next winning number in the Powerball lottery will be 4-27-9-16-42-10 – and that this hot little stock is the next Microsoft.

Groundbreaking new research in neurosciences shows that our brains are designed to perceive trends even where they might not exist. After an event occurs just two or three times in a row, regions of the human brain called the anterior cingulate and nucleus accumbens automatically anticipate that it will happen again. If it does repeat, a natural chemical called dopamine is released, flooding your brain with a soft euphoria. Thus, if a stock goes up a few times in a row, you reflexively expect it to keep going – and your brain chemistry changes as the stock rises, give you a “natural high”. You effectively become addicted to your own predictions.

But when stocks drop, that financial loss fires up your amygdala – the part in the brain that processes fear and anxiety and generates the famous ”fight or flight” response that is common to all cornered animals. Just as you can’t avoid flinching if a rattlesnake slithers onto your hiking path, you can’t help feeling fearful when stock prices are plunging.

In fact, the brilliant psychologists Daniel Kahneman and Amos Tversky have shown that the pain of financial loss is more than twice as intense as the pleasure of an equivalent gain. Making $1,000 on a stock feels great – but a $1,000 loss wields an emotional wallop more than twice as powerful. Losing money is so painful that many people, terrified at the prospect of any further loss, sell out near the bottom or refuse to buy more.

Quote from earlier in the book: If you burn your tongue on a hot milk, you will begin to blow on your cool yoghurt.

That helps to explain why we fixate on the raw magnitude of a market decline and forget to put the loss in proportion. So, if a TV reporter hollers, “The market is plunging – The Dow is down 100points!” most people instinctively shudder. But, at the Dows recent level of 8,000, that’s a drop in just 1.2%. Now think how ridiculous it would sound if, on a day when its 81 degrees outside, the TV weatherman shrieked, “The temperate is plunging – it’s dropped from 81 degrees to 80 degrees!” That, too, is a 1.2% drop. When you forget to view changing market prices in percentage terms, it’s all too easy to panic over minor vibrations.

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