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The Real Fake News

Being time poor is something I’m convinced affects your intellect.  Or maybe it’s got something to do with the easy access of information that is so readily available to us in our modern society. Perhaps it’s a combination of both.

I really miss the days of listening to the news in the morning before work or spending a lazy weekend morning drinking coffee and reading the broadsheet from back to front. I seem to have replaced that with logging into an online news site to grab the headlines. I roughly know what’s going on at home & abroad. I can keep up with a topical conversation but I’m finding more and more that I don’t know anything “in depth” anymore.  What’s even more frightening is if I’m busy or feeling too tired to exercise my brain, I’m gravitating towards really low brow stuff. I can, for example, tell you all of the dramas of this season’s Married At First Sight.  I’m a little vague on facts for things that really matter.

I know it’s not only me. I can tell this from the repetitive quick read articles on weight loss and get rich quick stories that are being presented to us as “news”.

Being in the Financial Planning industry for over 20 years, I always read the property stories.  I don’t do this for their news content but  just to give myself a giggle. It’s like a sport-will it be good, bad or ugly?  It’s seems the vast majority fall into the good category and I know that’s not the ratio I see in my professional life. It makes me wonder are we just being feed a myth we want to believe?

For 3 consecutive days the same news site ran property articles. Come on, slow news week or what?  One quick read about experts saying property keeps rising and if you are smart enough to know where to find the hot spots, you’ll be rolling in dough soon enough. Another quick read about a lady who used her divorce settlement and with the help of friend “investors” she built her property portfolio that now enables her to stay home with her children and live a comfortable life. The final story from another expert about how property prices are going to crash and lots of people are going to be in financial trouble.

Maybe it’s because I grew up in an era where investigative journalism was a true profession, a time when politicians got grilled when they said or did something questionable and when there was enough money in newsroom budgets to check facts, rather than repeat a press release word for word without objectivity.  I don’t see too much of that anymore (Leigh Sales, I’m not talking about you, you are a shining light).

What I pointedly see is an obsession with property. I haven’t seen any articles about other asset classes, such as shares or cash.  None. To be fair, shares do have a nightly section in the news devoted to market activity but I’m not counting that because it is largely irrelevant news for the vast majority of share investors.

So why are most property articles about individual stories and news about share investment is statistical?  Why isn’t my Dad a newsworthy story when he spruiks the joys of receiving his dividend payment, just like clockwork?  Why is that not promoted but an article about somebody’s property value appreciating is promoted?  I think it’s because we all believe we understand property, with the vast majority of us citing our home as our biggest financial asset (albeit, an “asset” that provides shelter for us rather than a financial return).  Even those who cannot afford to enter the market, understand the concept of property because we all live in property.

The moral of my story-don’t just believe what you read.  For every person who researched or lucked into buying property in the hot spot and made money, there are some who did the opposite and lost money.  For every investor who gambled with friend or family “investment” money (sometimes referred to as life savings), it hasn’t always worked out and relationships have suffered. For every person at smoko who’s made a mint on “whatever”, question it. Live in the world of facts. Live in the world of reality.  It’s not complex but it’s often not easy. What is easy, is to seek professional advice to put a long term plan in place. You don’t take your car to the hairdresser to get serviced.  Don’t take your financial advice from the quick read news or the guy sitting next to you at smoko.  Go to a Financial Planner.

 

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.
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TAX TIME – Child Care Benefit & Child Care Rebate

Lee Nickelson is an Authorised Representative, GWM Adviser Services Limited, Australian Financial Services Licensee

It’s that time of year again, time to hunt around for your MyGov username and password in order to log in and update Family Income details (see my previous Blog on how to avoid Family Tax benefit overpayments).  This year for those utilising subsidised child care, there is an additional form, to be completed PRIOR to 2 JULY 2018 – the Child Care Subsidy Assessment.

This requirement has arisen because from 2 July 2018, the Child Care Subsidy and Additional Child Care Subsidy will replace the current Child Care Benefit and Child Care Rebate.  The new payment system will pay directly to your approved child care provider to reduce the fee you pay.

You should complete a Child Care Subsidy assessment or claim before 2 July 2018 to ensure you don’t miss out on child care fee assistance from 2 July 2018. The new subsidy cannot be paid to your service on your behalf if you do not complete the assessment [1].

What will they ask?

Three things will confirm a family’s level of Child Care Subsidy.  The assessment will confirm:

  • Combined family income – A tiering system will apply to determine percentage of eligible subsidy, which fully phases out for income above $351,000
  • Activity level of parents – the parent with the lowest level of activity will determine the hours of subsidised care
  • Type of child care service – this determines the hourly rate cap [2]

Example

Judy works 3 x 8 hour days per week earning $60,000.  John works full time, and earns $80,000 giving them an adjusted taxable income of $140,000.  They have two kids aged 2 and 3, attending day care 3 days, where the centre is open 11 hours per day.  Centre based day care fees are $125 and $129 per child per day – gross fees per week $762.

Current rules mean Judy and John receive up to 50% of their child care fees back each week up to the annual cap of $7,500 per child – so for approximately 40 weeks of the year, Jim and Judy will receive $381 back per week in child care rebate.

Under the new rules, the estimate of subsidy for the above example would result in approximately $455 per week (up from $381) without an annual cap.  Judy and John will be significantly better off. [3]

Things start to change if Judy and John earn more than $251,248 – their percentage subsidy rate starts to decrease from 50%.  If they earn more than $186,958, a $10,000 subsidy cap is also applied per child. [4]

If you would like to know more, the sources below provide some great detail about the changes.

We are also here to help if you have any questions as well as help to complete the Centrelink assessment.

 

[1] https://www.education.gov.au/new-child-care-package-transition-families

[2] https://docs.education.gov.au/system/files/doc/other/the_new_child_care_package-2_0.pdf

[3] https://www.goodstart.org.au/subsidy-estimator/other

[4] https://www.education.gov.au/child-care-subsidy-combined-family-income-0

 

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.
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Are You Engaged With Your Super?

Lee Nickelson is an Authorised Representative, GWM Adviser Services Limited, Australian Financial Services Licensee

Hands up who knows where their super is invested and what fees they are paying for the administration services they receive?   Anyone..?  You aren’t alone in the unengaged zone.  What is also emerging is that women are less likely than men to regularly engage with their superannuation¹… which is another issue in itself.

Seems crazy doesn’t it.. our superannuation assets have ballooned to $2.3 trillion² yet we aren’t paying attention.  Most rental property owners pay attention to the rent they charge (asset performance) and get quotes on repairs/bargain with real estate agents (manage costs) – so how do we start paying attention to our super?

The ‘Compare the Pair’ advertising campaign for industry super has been around for a couple of years now, but what has become interesting is there has never been a better time to compare superannuation funds.

Recent legislative changes to Regulatory Guide 97 have required superannuation funds, industry funds included, to disclose their fees and costs in a more transparent way resulting in a raft of new Product Disclosure Statements being released.

Many of the clients I have worked with since these changes have been surprised to realise their ‘cheap’ industry funds, aren’t the cheapest option out there anymore.  But on the flip side, it isn’t all about being in the cheapest fund – especially if it is at the expense of asset performance.  Investing in cash because it has low fees is unlikely to be in your best interest long term.

Different assets (cash, term deposits, shares, property) have different performance characteristics, and your superannuation administrator is investing a percentage of your money in each of these assets on your behalf. Make sure you are paying attention to the percentages you have in each asset class as this is one of the main drivers behind investment performance.

So why not log in whilst you are winding down before Christmas and get engaged with your super – check out what fees you are paying and how you are invested.  If you aren’t confident reviewing your superannuation yourself, we are here to help.

1. https://www.commbank.com.au/content/dam/caas/newsroom/docs/2017-06-28-financial-security-report.pdf

2. https://www.superannuation.asn.au/resources/superannuation-statistics

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.
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Capital VS Income – Which is more valuable?

When we ponder our wealth, most of us immediately jump to the capital value of our assets. We believe that if we own things that are worth more than what our neighbour owns, we are wealthier. But are we?

 

Firstly, most of us believe our house is our greatest asset, therefore representing the bulk of our asset base. There is a stark distinction between a financial asset and a personal or lifestyle asset. Centrelink does not assess the homes we live in as financial assets because by definition, our house is a lifestyle asset. This is mainly due to the simple fact that our house costs us money rather than making it for us. Yes, if you use your equity wisely, you can purchase a financial asset, but more on that another day.

I want to focus on comparing capital and income.

Australian’s believe simply owning as many financial assets as possible is the key to wealth creation. The more they’re worth, the wealthier they are. I challenge this theory. Imagine I owned a financial asset base in retirement worth $1million, and this generated around $25,000 of income a year. You own a financial asset base in retirement worth $800,000,¹ which produces income of around $35,000 a year. I am $200,000 wealthier than you in capital perspective, however you’re $10,000 worth of annual income wealthier than me. Who is the wealthier person?

Let’s say our ideal retirement income is $35,000pa. I would need around another $400,000² worth of the financial assets I own, just to generate that much income. You only need $800,000. My balance sheet might have a higher bottom line, however, your income statement is stronger again. Which is more valuable? An asset base that you would need to slowly drawdown on to reach your ideal income level? Or an asset base which produces your ideal income level without needing to sell any of it? And, you did not need to save as hard for it.

If you need to sell portions of your capital base in retirement just to breakeven, you bring in avoidable and unnecessary risk you just do not need. You might hypothetically own a parcel of shares, that historically have failed to pay regular dividends, and thus, to make your $35,000 you need to sell some. What if this happens on the same day President Trump puts out a ridiculous Tweet, and in a knee-jerk reaction from the public, the market drops? (In reality I would tell you to buy more shares, because in this situation I like to say that they’re on special so stock up, similar to bananas at Coles) What if this also happens on the same day the RBA raise the cash rate by 50 basis points so the offer to buy your investment property gets revoked? You cannot chip off a couple of bricks or sell the spare room to pay for your annual flights to Bali. Not to mention that whenever you sell shares or a property, you have to fork out relatively high transactional costs and in the case of property, wait around 90 days to see the cash in your account. And once you do sell your shares or property, you do not want to leave too much of the net sale proceeds in the bank, because 2% interest rates are not helping your income situation too much.

Income is spending power and spending power enables us to do the things we want to do. We do not want to see the retirement finish line on the horizon, to suddenly realize we are riding a truck full of assets, but are income poor. At income solutions, our definition of wealth is an absence of financial worry, an income stream you cannot outlive, and a meaningful legacy for those whom you love. This definition is deliberately ambiguous enough for anyone to apply his or her own situation to it.

I now ask you if the financial asset base you are slowly building meets this definition?

If you would like to organize an informal discussion about you and your financial situation, please do not hesitate to contact me at danny.archer@incomesolutions.com.au or alternatively at 03 5229 0577.

 

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product.
¹Assuming a growth asset base earning 4.35%
²Assuming an asset base of cash, earning 2.5%
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Solutions to the Gender Gap in Retirement Savings

Lee Nickelson is an Authorised Representative, GWM Adviser Services Limited, Australian Financial Services Licensee

Women in Australia face specific issues when it comes to securing their financial future. Women have significantly less money saved for their retirement – the current average superannuation payout for women is 1/3 that of the payout for men [2]. This results in many women who are retiring on their own facing the possibility of doing so in poverty.
Why is this occurring and how can we help solve this issue?
Lack of superannuation savings can arise from a number of scenarios. Women are more likely to work part time to allow them to perform unpaid work such as caring for family members as well as managing the majority of domestic work at home – whilst the majority of men work full time performing less of these duties.
Women’s employment also tends to congregate in low paid areas such as retail, front line financial services as well as health care and social assistance. Women also often find they sacrifice income for flexibility in working arrangements to allow for their caring obligations.
So how can we address the issue of low super balances?
In my view, one of the ways we can drive cultural change is for both men and women to push for flexible working arrangements. This means challenging the traditional view that men should maintain full time employment whilst women drop to part time employment to raise their young children. If both men and women have access to flexible work hours, then it becomes easier to juggle the caring requirements of young children. This in turn should allow women to work additional hours and build larger superannuation balances in their own right.
What can we do from a practical sense in the mean time?
As a financial planner, we have a number of superannuation strategies we utilise for our clients, each with various benefits. Please seek advice to determine whether these strategies will suit your personal situation.
Contribution Splitting: In certain circumstances, an individual can split up to 85% of their previous years concessional (employer) super contributions with their spouse. This strategy has significant planning benefits including:
• Managing equalisation of superannuation account balances between spouses given the new $1.6 mill cap. Where one client is on track to build a large superannuation balance close to the new $1.6 mill cap, splitting up to 85% of contributions each year can allow the spouse with the lower balance to take full advantage of their cap.
• Where spouses have an age difference, there may be a difference in the years where superannuation can be accessed. Splitting contributions to the older spouse means superannuation benefits that would otherwise not be eligible to be accessed due to age restrictions, will become accessible to the elder spouse earlier under the low-rate tax threshold.
• Where spouses have an age difference, there may be Age Pension planning benefits to split contributions to the younger spouse. This is because superannuation only becomes an assessable asset once you become eligible for the Age Pension.

Leanne is 57 and is planning on retiring in the near future. Her husband John is 47 and earns $100,000 p.a. as a contractor. During the year, John contributes $25,000 into his super, reducing his taxable income to $75,000. Then in August, John opts to split $18,750 into Leanne’s super. These contributions will boost Leanne’s balance and become available for her to withdraw from super tax free under the low-rate tax threshold when she retires – effectively allowing John to reduce his income tax whilst not locking away the funds until John retires.

Spouse Contributions and tax offset: In certain circumstances, if an individual has an assessable income (plus reportable employer super contributions and reportable fringe benefits) of $37,000 or less, their spouse can make a contribution of $3,000 into the low-income spouse’s super account and receive a tax offset of up to $540. This will boost the super balance of the spouse whilst saving tax for the high-income earner.
Tony currently earns $90,000 p.a. and is married to Sophie, who works part time earning $30,000 p.a. Tony receives a bonus and opts to contribute $3,000 into Sophie’s super fund. By doing this, Tony receives a rebate in his tax return which reduces the tax he will pay by $540.
So, if you would like to hear more about these strategies and how they can help you, please contact Income Solutions for a catch up.

[2] Ross Clare, ‘Are retirement savings on track?’ (The Association of Superannuation Funds of Australia Limited 2007).
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product.
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Is Rent Money Dead Money?

In the eyes of a 24 year old

Let’s face it; at one stage or another, we have all been advised that rent money is dead money. Sound familiar? Maybe you can relate to one of the following examples:

  • ‘Why would you pay all that money so your landlord can pay off their mortgage?’
  • ‘Why would you waste all that money when you’ll have nothing to show for it?’
  • ‘If you had of been paying a mortgage off instead, you have paid off your most valuable asset.’

Firstly, the definition of an asset is something that pays you.

The definition of a liability is simply something that you are required to pay for.

Let’s take these definitions and apply it to our situation when we own a house.

A house:

  • Asks us to put our hand in our pocket to pay for it
  • Accrues rates & insurances
  • Requires all kinds of maintenance
  • Even the government takes their slice of our property thanks to stamp duty – great!

I now ask you, is your house truly an asset?

Circling back to the age-old question in Australia: Is rent money, dead money?

I’ll counter by asking: is interest payable to the bank dead money?

If you were to borrow $400,000 tomorrow at today’s record-low interest rates, and make principle and interest repayments at 4.5% over 30 years, you would repay $729,130, with your initial weekly liability being $467. Not too bad? $211 of which is the interest portion of your loan. Meaning, over the course of your loan, you would pay an approximate $329,626 in interest to the bank. Thank you very much says the CBA CEO. **

So, assuming a 20% deposit, it is costing you $467 per week, or $24,288 per year, to live in a house with a perceived value of roughly $500,000. But is it? At Income Solutions we reasonably assume annual expenses (rates, maintenance, etc.) to average at least 1.5% of the property’s value each year. Therefore, throw around $7,500 on top of your existing $24,284. Roughly, on average, it will cost you a touch over $31,000 per year to run the house you own.

Let’s say I rent the same house at an assumed rent price of $450 per week. This works out to be around $23,400 per year. And that is where my dwelling expenses stop. As a tenant, I have no obligation to pay any maintenance, rates or property management fees. This is the landlord’s responsibility. I simply pay my rent on time, and because my dwelling expenses are so low, I do not make a fuss when my landlord attempts to increase the rent by $20 a week every few years. As I pay on time and look after the place, the landlord is more than happy to keep re-signing me to 2-year lease agreements, providing me some security. Therefore, I pay $450 per week, compared to the landlords $611[1].

This is where renting becomes interesting. I am paying $161 less than the landlord/homeowner per week, so let’s say I use this, add another $50 to equal the $211 the landlord pays in interest in year 1 of the loan[2] and contribute this to a tax-effective income-producing asset, over the same 30-year period.

Basically, the difference between what I pay in rent per week, and the total amount the landlord/homeowner pays to own the home per week.

Assuming an annual return of a conservative 9.5%, (the Australian Share market has averaged a return of around 12.5% over the past 100 years) the power of compounding becomes your friend here, as my $211 weekly investment for 30 years would grow to a modest $2.9 million dollars. Again, this is a conservative figure, and it also assumes I never contribute more than $211 per week over the course of my working life. I’ll be 54 by this stage, and thanks to the Franking Credit system, this $2.9 million can reasonably produce me a cool, highly franked, beautiful income stream of approximately $178,000. Enough to retire, I think.

At the end of the loan period, the homeowner is hoping the value of their property has grown to at least equal to the total amount spent on the property, which in this scenario is around $945,000. If they were 24 when they bought the home, they have finally paid it off at age 54. However, they have had to find more disposable income on top of their weekly $611, which has been swallowed by their house for 30 years, to contribute to some form of financial asset. They may own their house outright, but we know our house does not produce us any income, it actually asks us for a share of ours to service it. There is a potential that they will be examples of the typical ‘asset rich, income poor’ description we sadly see too often in this country.

By renting and spending the same $611 per week, I can own an asset and not a liability. If I would like to own my dream home, I will simply withdraw the $945,000 from my investment and pay for it in cash, no interest paid to the bank. Furthermore, I’ll still have around $2mil producing me highly Franked income.

Rather than paying interest to the bank, I’d rather get paid by the bank.

 

Now, is rent money dead money?

 

*All figures are present value.

[1] This includes the P and I repayments, and the averaged costs of $7,500, broken down into a weekly figure.

[2] The interest payable will reduce over the loan term, however, the $467 will remain constant.

https://www.yourmortgage.com.au/calculators/home-loan-repayment/result/

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.  Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. 

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Don’t mention the ‘B’ word…

Lee Nickelson is an Authorised Representative, GWM Adviser Services Limited, Australian Financial Services Licensee

 

To quote Peter Thornhill’s two golden rules of wealth creation:

  1. Spend less than you earn
  2. Borrow less than you can afford ¹

Sounds simple, doesn’t it?!  Hardly!  One of the most common hurdles I encounter with clients is gaining a full understanding of their spending – I estimate only around 25% of clients have a clear idea of where their money is being spent as most people dislike the idea of a budget.

At a basic level, we have control over 3 facets of our ability to earn and maintain wealth – how long we work for, whether we invest to educate ourselves to increase our earning (income) potential, and…. this is often the hardest to manage… how much we spend.

The benefits of having an idea of expenses in comparison to earnings are clear.  You will gain confidence when future decisions on spending are made (yes, I can afford this holiday), you will be able to prioritise spending more easily (would I rather upgrade the car or pay the mortgage back 3 years faster) and you will avoid buyers’ remorse (geeze I shouldn’t have bought these shoes, I’m worried I can’t afford them).

Where to start?  Best to define the difference between the ‘B’ word (budget) and spending analysis

  • A budget is forward looking – an estimate of expenses over a specific period
  • Spending analysis is rear looking – it involves tracking what you have spent over a specific period

There are any number of budgeting and spending analysis theories, tools and programs online which can then be overwhelming.  I find a great place to start for my clients is to get them to split their spending between Non-negotiable items and Negotiable items.  What appears in each list may change from client to client (i.e. holidays may become negotiable for some, whilst Foxtel to watch the football may be non-negotiable for others).  Once the Non-negotiable items list is complete, we minus this from net earnings.  This leaves the amount of funds left over to cover the spending items under Negotiable column.

This blue print allows the spending analysis to happen – is there enough left to fund the negotiable column?  Is a rethink required regarding negotiable and non-negotiable items?  Can money be saved on any of the line items (i.e. reviewing your Electricity bill / home insurance provider)?  Am I saving enough off my mortgage to repay it before retirement?

This analysis is also the confronting part – am I borrowing from my future to fund the lifestyle I am living today?
Once the non-negotiable items are agreed and reviewed, it becomes as simple as dividing this figure by your pay cycle and setting aside this amount each period in a separate ‘bills’ account.  Anything left over can be spent with the confidence and knowledge that you will have enough to cover your non-negotiable expenses.

Unsure how to proceed?  I’d be happy to help you review your spending.  Please contact our Melbourne office to set an appointment.

1             Thornhill, P. (2003) Motivated money. Gordon, N.S.W.: Motivated Money.
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product.
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What Do We Talk To Our Clients About?

Elise Ryan is an authorised Representative, GWM Adviser Services Limited, Australian Financial Services Licensee

We like to focus on their education, and we run five different seminars each month

  • Common Sense Investing
  • Common Sense Estate Planning
  • Pivot – Your Future Starts Now
  • Kickstart!
  • Income Solutions for Women

We have built a well-researched process for clients when they are

The best investment you will ever make is in yourself, and we believe this investment is not only financially focused. At Income Solutions we encourage our clients to invest in education, health and fitness, career and following your goals.

A big focus when talking to our clients is around their goals, what they want to achieve, and we work with them to build a strategy to help them achieve it. We try and make it easy, we know your goals don’t come to you in meeting with your advisor, for this reason we built the my.solutions application. This enables you to log in 24/7, even when you are on holidays, sipping cocktails by the pool and dreaming of what your future will look like, you can log into my.solutions, pop in your goals, and your advisor will be notified immediately. This allows your advisor to consider strategies before your meeting and help you get the most out of your appointments.

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.  Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.
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You don’t need money to start investing

Kane Leersen is an authorised Representative, GWM Adviser Services Limited, Australian Financial Services Licensee

I regularly hear people stating that they do not have enough money to start investing. Anyone can start investing, right at this second. You don’t even need money to start investing. Sounds silly, doesn’t it? You might not believe me, but this is fact. Investing in yourself, your family and your future.

Now before you start shaking your head and muttering that I have lost my marbles, bear with me and I will tell you how you can do this with three different ways, anyone can start investing, and by anyone, I mean anyone. Teenagers, parents, millionaires, grandmas and granddads.  So no excuses because this applies to you. I will give you the strategies, but then it’s up to you to take responsibility.

 

1. Start investing in yourself. 

Now, this is the easiest and the hardest investment to make, it’s also the most rewarding and by far the most valuable. You can start nice and simple and slowly progress it from there. Your first investment in yourself is to finish reading this article. Open up your mind to different ideas and strategies. Go onto bookdepositry.com, amazon.com, dymocks.com.au, or pop into your local book store and purchase any book that piques your interest. Read what ever your heart desires. Personal development, sci-fi, autobiographies, finance, marketing. It doesn’t matter what it is, just read as much as you can. Learn from other peoples experiences, highlight words you don’t understand, write questions on the side of the page.

The next step, when you are feeling ready, enrol in that course you always wanted to do. Make sure, no matter how long it takes you, finish that course. Then maybe find another course, never stop learning. Find yourself a mentor, someone doing something you have always wanted to do and ask them how they have done it, why they do it and what have they learnt from these experiences. Turn up to work early and tell your boss that you want to be the best employee that you can be.

All of these little investments eventually add up and they make you the rare and valuable asset. Remember, every day we are going to work we are trading our time for money. By being the best that you can be, you will make your time as expensive as possible.

 

2. Invest a few dollars, regularly

Now that you have started investing in yourself you can start to invest some money for your future. Maybe you have received a payrise, or picked up a few extra shifts.

Now the next step.

To start investing money you do not need hundreds of thousands of dollars, you don’t even need thousands of dollars. Many of my clients start investing in the hundreds, the trick is to do it regularly, don’t try and be too clever and most of all ask for advice if you are not quite sure.

I have recently purchased the 300 biggest companies in Australia, 300 of the biggest and brightest companies built by some of the best brains in Australia. The best part is, these companies are going to pay me to invest in them! Imagine, this investment returns around 10% for shareholders over the next five years. If I contribute $200 a week this means I will be investing $10,400 a year. On a 10% rate of return, I could have $69,842 invested in five years time. Not a bad investment, when we consider the early years of compounding returns are the hardest!


3. Invest in your superannuation

In Australia it is compulsory for businesses to pay 9.5% of your wage into a superannuation account for your working life. The reality is many Australians don’t understand the impact of what our employers are doing for us. Many people haven’t consolidated multiple superannuation funds into one account. They don’t ensure that they have appropriate levels of insurance to protect their family if something goes wrong. They have no idea that they can invest in just about anything they want inside of their superannuation, no different to everyday life.

Yes, inside super we can buy shares, we can buy property, we can have term deposits. We don’t have to rely on the default option. You can even put more money into superannuation to help it grow by salary sacrificing from your wage before you have paid tax. You can also contribute your inheritance after you have paid tax.

So my challenge to you is to step up, and take charge. I don’t want any excuses. We all know life can be hard sometimes, but we also must be thankful that we are living through a period of time that has generously provided us with an abundance of wealth. Think of running water, electricity, employment, aviation and globalisation for example.

So please master these three investments. Invest in yourself, start investing a little a lot and understand what your superannuation is doing. It is simple and incredibly effective. Fortunately or unfortunately, it requires discipline, commitment and understanding.

Good luck.

 

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.  Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. 
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Ignore the Hype

Gareth Daniels is an Authorised Representative, GWM Adviser Services Limited, Australian Financial Services Licensee

As I have mentioned before (and no doubt mention again) when reading articles in the papers, watching news on TV or even listening to the radio to and from work, it is always vital to objectively consider the information we are being given.

As a history student, I was taught to always consider who has produced the source of the information, who their intended audience is and why it may have been produced. That foundation can serve us well when considering decisions that relate to our long term financial security.

At the heart of this is accepting that popular media constantly misuses the word ‘investor.’ Many of you may have heard Peter Thornhill speak or even read his book Motivated Money. He correctly spends time focusing on the difference between speculation and investing; the first being the “buying or selling of commodities or stocks… in the hope of an unexpected rise in the price“¹ and the second being “use of money productively so that an income is obtained.

Peter goes on to note that “speculation is described as investment simply to legitimise activity that has nothing to do with investing.

I read with interest the article This asset manager thinks Australian property ‘calamity’ is coming, so he sold all the firms shares². Consider this article in conjunction with the process of analysing a source:

Who has produced it: A national media organisation that knows doom and gloom predictions sell papers

Who is the intended audience: The misconception that all investors are speculators and all speculators are investors means they are attempting to reach as many people as possible. Regarding the interviewee, I would suggest he is trying to reach future potential customers (pitching for business as he apparently knows better than the market) and those clients to whom they have just returned their money (justification for selling the fund).

Why has it been produced: Again, for the publication it is the desire to get eyeballs on their paper and website and for the interviewee, future potential customers by an apparent display or foresight whilst pacifying those clients to who they have just had their money returned by way of defense of their actions.

Philip Parker may be a top fund manager as the article notes, but by what bench mark? The ASX top 200 is cited in the article, all well and good but it is the capital value of this bench mark that is the apparent measure? I would prefer to measure against corporate profits shared out as income via dividend. I would also not like to get sucked into the yield trap, jumping in and out of different assets and significantly increasing the likely effects of market timing risk.

If values are over inflated then surely it is speculators that are at risk with their hopes of gains at considerable risk that should be worried. Investors who own quality assets for the long term to be in receipt of income, should not even dedicate a second of their time to read an article clearly aimed at speculators. It can become stressful to build wealth via a fund manager who believes that over the long term, through active management³ they can beat the market rather than simply owning the best that the market has to offer. The latter allows you to confidently ignore the short term fluctuations in perceived value and and enjoying the true value of a repeating, tax-effective and increasing income stream over time.

What is intriguing is the (potentially) strategic move by this fund manager. Despite the litany of unfulfilled doomsday predictions that regularly crop up, the article even sites a few, these are readily forgotten, whilst the ones that do appear to come true elevate those that predicated them to genius status. So, this firm and it’s investment team either get lauded as the special few that were able to read the tea leaves correctly, or they simply “enjoy their time off” before returning to the fold to make further predictions; attempting to reach those that believe in speculation rather than investing. All this whilst the rest of us carry on with our investment strategy, focusing on what is important to us and critically analysing the overload of information that we are unnecessarily bombarded with.

 

1. Thornhill, P. (2015) Motivated Money; Sound Financial Advice for the post GFC World, 5th Revision. Australia: Motivated Money, pg 12

2. Patrick Commins, B. (2017) This asset manager thinks Australian property ‘calamity’ is coming, so he sold all the firm’s shares. [online] Business Insider Australia. Available at: https://www.businessinsider.com.au/this-asset-manager-thinks-an-australian-property-calamity-is-coming-so-he-sold-all-the-firms-shares-2017-5 [Accessed 7 Jul. 2017]

3. The belief that a manager knows better than most can pre-empt economic cycles, property bubbles, threats of war and crisis around the world and a whole host of other fads. They are effectively trying to speculate their way to wealth via capital appreciation.

 

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product.
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