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The Ingredients to Achieving Great Things

Looking for something to read as I ate my lunch today, I settled on the latest edition of Time magazine titled “The 100 Most Influential People”; a couple of things struck me…

One was that they had a world map, pinpointing the country of origin of everyone who had been selected.  Time is an American publication and, in my opinion, there was an over-representation of the USA.  The spread of dots pinpointing where the 100 people originated however, highlighted that we truly do live in a global village.  Nationality, religion and even wealth don’t appear to have been defining factors for the people who have been selected.  The other thing that struck me was the passion demonstrated by many of those selected.

Guus Velders, an atmospheric chemist exploring how small and extremely common pollutants have the power to harm our natural world, or Glenda Gray, who’s inclusive attitude and tireless efforts have contributed to the mother to child transmission of HIV drop from 600,000 births a year to 150,000.  There is the story of Hamdi Ulukaya, a Kurd born in Turkey who moved to the US & started the Chobani yogurt company.  He has created an engaged workforce by deliberating locating his factories in areas that industry has long abandoned, re-engaging disconnected people.  In addition, he has actively expanded his team through hiring refugees to work alongside his local workforce.

What a great example of how respecting and empowering your workforce contributes to success.

I love basketball and particularly enjoyed the LeBron James documentary “More Than a Game”, which follows LeBron in his high school basketball team.  Perhaps the respect he has for those who helped him and his teammates succeed are what drives him to invest in the promise of future generations through his foundation.

There was the story of Raed Saleh, who leads the “White Helmets”, a group who provide emergency services in war torn Syria, helping injured residents get to safety.  Saleh’s mission has been quoted as getting more people to “work on the side of life”.

It was a very humbling lunch time read.  It prompted me to reflect on how sometimes great things are achieved by everyday people who are just diligently practicing and perfecting what they do until they are doing it so well they have managed to achieve great things.  In a way, this mirrors the message Income Solutions provides to our clients.  First, set a goal then we’ll work with you over the long term to achieve it.  Every step taken towards the goal is a step in the right direction.  It is an absolute privilege when we see clients achieve their financial goals and it is particularly rewarding to know that we’ve been there for the journey.

Like the people in my lunch time read, the majority of clients who achieve financial success have not started with great wealth, but rather they have taken accountability for their goals, they have gained knowledge along the way and have respected the advice they have received.  All great ingredients for achieving great things!

By Alison Adams

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A Reality Check for Accessing Super Early

So as the dream of home ownership continues to recede further into the financial distance for younger Australians in our major cities it is not surprising that the public debate about levels of housing affordability is increasing in volume.

Australians have an ingrained faith in property – both on the shelter front and as an investment.

Residential property is like other investment markets and it moves in cycles and it is strongly influenced by things like interest rate rises or jumps in unemployment but convincing younger Australians that property prices may fall in the future is one of the great communication challenges of our time.

Today we are living in a record low interest rate environment. That – as someone who had their first mortgage application rejected at a time of 16% variable rates – has not always been the case nor can it be relied on to stay that way forever.

The economics of supply and demand will play out over time particularly as house price growth outpaces household income levels and we are already hearing warnings about oversupply particularly in apartment markets in Melbourne and Sydney.

This is not to dismiss the need for a public debate on the issue of housing affordability. Clearly that is a significant social issue and a key challenge facing our state and federal political leaders.

It also impacts different parts of our community in different ways – there is the obvious challenge to the aspiring new home buyer but increasingly it can also involve parents providing loans or guarantees to enable children to enter the property market.

It is also not surprising that when housing affordability is being discussed alternative funding solutions are often raised. Recently the idea of allowing access to superannuation accounts to help finance house purchases has again surfaced.

In investing, as in life, it is all about trade-offs. The appeal of allowing part of your super balance to be used to buy a home is understandable. For a start as a younger person your super is locked away for what seems a long, long time. So being able to access it to do something useful and personally beneficial right now is instantly appealing.

The immediate risk is that markets will adjust accordingly and all you will achieve is artificially inflating house prices to allow for the additional loan from the super account. Beneficiaries are more likely to be the sales agents courtesy of the commission structures in the industry rather than new home buyers.

But the longer term risk is that by taking a lump sum out of the super account investors will lose the impact of compound earnings over several decades. You do not have to be much of a mathematician to work out that your retirement account balance will be significantly lower than it otherwise would be.

Independent consulting firm Rice Warner modelled the impact on a fund member aged 35 who is earning average wages and takes $100,000 out of their super account to use as a housing deposit.

The loss of compounding investment earnings over many years would dramatically affect the young member’s retirement balance. Rice Warner calculates that allowing someone to withdraw $100,000 from their super account would mean the federal government would have to pay them an additional $92,000 in age pension.

What is often not well understood is that the investment earnings usually represents a larger component of the retirement benefit than your contributions.

So a short-term solution on housing could mean long term pain on retirement savings.


Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.
Reproduced with permission of Vanguard Investments Australia Ltd
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.
© 2017 Vanguard Investments Australia Ltd. All rights reserved.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for their action or any service they provide.


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How to Avoid a Centrelink Overpayment

Many of you may have heard in the news recently about Centrelink sending debt recovery letters to many government benefit recipients, including Family Tax Benefit recipients. This can be a distressing time for the families when they realise they may have to repay the overpayments.

What many people aren’t aware is that Centrelink relies on the income information we provide to make their benefit calculations, and if the information they have is out of date, over or under payments may arise.

Household income affects family payments such as Child Care Benefit and Family Tax Benefit A & B. Centrelink state – ‘The payments you receive will be checked against your actual income after the end of the financial year.If you have received more than you are entitled to, this amount will need to be repaid.’

On the flip side, if you have received less than you were entitled to, this will be rectified at the end of the year when Centrelink balance payments.

How to stop a discrepancy occurring:

  • Log on to your My Gov account and access Centrelink
  • Click on the My Profile box and make sure all your information is up to date including relationship status, contact details and that all children are listed correctly
  • The Family Assistance and Estimates box shows what income Centrelink are calculating their benefits from.IS THIS CORRECT?
  • If not, in the top left hand corner, select the Menu drop down and click on Family Assistance / Update Family Income Estimate
  • Click the ‘Update Income’ box and update what you expect your income to be for that financial year

Come July, it will be a good idea to revisit your income estimate for the coming financial year considering any probable salary increases. This is especially important if you have opted to receive your Family Tax Benefit fortnightly to ensure you are not being overpaid.
Lastly, if you are unsure of anything, give your Adviser a call to clarify your situation.


Lee Nickelson, Certified Financial Planner®


Please note: The advice in this article 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.


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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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