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2019 FEDERAL BUDGET ANALYSIS

Treasurer Josh Frydenberg’s first Budget focuses on reducing the tax burden for the majority of working Australians, greater superannuation flexibility for retirees and a one off energy relief payment for eligible income support recipients.
Note: These changes are proposals only and may or may not be made law.

Personal tax savings 

Immediate tax relief 
Low and middle income earners will receive a tax saving of up to $1,080 per person. This can be claimed in the 2018/19 tax return.
Preservation of tax relief for low and middle income earners 
From 1 July 2022, the 19 per cent tax bracket will increase from $41,000 to $45,000, with an increase in the low income tax offset from $645 to $700.
Reduction in key marginal tax rate 
From 1 July 2024, the current 32.5 per cent marginal tax rate will drop to 30 per cent for income between $45,000 and $200,000.
Minimisation of bracket creep 
The Government estimates that from 1 July 2024, 94 per cent of taxpayers will have a marginal tax rate of no more than 30 per cent.

Greater superannuation flexibility for retirees 

Changes to voluntary super contributions 
Australians aged 65 and 66 will be able to make voluntary super contributions without meeting the Work Test – removing the need for people of this age to work a minimum 40 hours over a 30 day period.
Increasing age limit for spouse contributions 
The age limit for people to receive contributions made by their spouse on their behalf increases from 69 to 74 years.
Extended access to bring-forward arrangements 
People aged 66 and under will now be able to make three years’ worth of non-concessional contributions to their super in a single year, capped at $100,000 a year.

Small to medium business 

Increase in instant asset write-off 
The threshold for the instant asset write-off increases to $30,000 from $20,000. It has also been broadened to include businesses with up to $50 million in turnover, making it available to around 3.4 million Australian businesses.

Pensioners and welfare recipients 

Energy Assistance Payment 
Over 3.9 million eligible Australians will automatically receive a one-off payment of $75 for singles and $125 for couples (combined) to assist with their energy bills. This payment will be exempt from income tax and not counted as income for social security purposes.

Any questions? Please see your Income Solutions Adviser for more information.

Important Information
2019 Federal Budget Analysis 2 April 2019 2019 Federal Budget Analysis | 2 Important information The Federal Budget Analysis prepared by the MLC Technical team, part of GWM Adviser Services Limited. The information contained in this Federal Budget Analysis is current as at 2 April 2019 and is prepared by MLC Technical, part of GWM Adviser Services Limited ABN 96 002 071749, registered office 150-153 Miller Street North Sydney NSW 2060, a member of the National Australia Bank Group of Companies. Any advice in this Federal Budget Analysis is of a general nature only. Before acting on any advice, you should consider whether it is appropriate to your objectives, financial situation and needs. Any tax estimates provided in this publication are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlement that arise, or could arise, under taxation law. We recommend you consult with a registered tax agent. Past performance is not a reliable indicator of future performance. Before acquiring a financial product, you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product. Small to medium business Increase in instant asset write-off The threshold for the instant asset write-off increases to $30,000 from $20,000. It has also been broadened to include businesses with up to $50 million in turnover, making it available to around 3.4 million Australian businesses. Pensioners and welfare recipients Energy Assistance Payment Over 3.9 million eligible Australians will automatically receive a one-off payment of $75 for singles and $125 for couples (combined) to assist with their energy bills. This payment will be exempt from income tax and not counted as income for social security purposes. Any questions? If you have any questions, please speak with your financial adviser or call us on 132 652 between 8 am and 6 pm (AEST), Monday to Friday

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Unintended Consequences of the ‘Stress Sickie’

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

The term ‘take a sickie’ has been part of the Australian vernacular for generations, with many thinking it is their god given right after a big weekend to take an extra recovery day or two before heading back to work. Since employers have cottoned on to this phenomenon, many now request a medical certificate forcing a trip to the doctors and a medical reason for the absence. No harm.. surely?!

What many of us have been slow to realise is that these medical certificate trips are recorded on our medical history, which are commonly requested by insurers to make assessments both when applying for insurance cover and at the time of a claim.

A few trips to the doctor citing stress in order to get some time off work could result in an insurer putting an exclusion on all mental health conditions when they offer you cover. Or worse, a group insurer could use these doctor’s visits as proof of a pre-existing condition and then knock back a legitimate mental health claim in the future.

Another interesting learning I have come across when implementing insurance plans for clients are the instances where doctors’ reports do not match with the recollections of the patient. Many doctors are unaware of the consequences of writing ‘discussed feelings of depression’ when it could have been a more general conversation without a medical diagnosis. An insurer underwriting again may infer this as evidence of a pre-existing or recurring condition when it could have been a discussion of state of mind at the time.

It is all the more important to pay attention to how we interact with our medical records, including what we see our doctor’s for, what notes they actually write down during the consultation and who has access to those records going forward, because of the Governments new My Health Record initiative.

A My Health Record will be created for every Australian after 31st January 2019 unless you opt out. The record is designed to be a central place medical professionals can view your medical conditions, treatments, medicine details, allergies and test or result scans.

I encourage all Australians to take charge of your medical history, be aware of the implications of seeing a doctor on future insurance applications, and head to the My Health Record website before 31st January 2019 to make a decision for yourself whether a digital health record is right for you. https://www.myhealthrecord.gov.au/for-you-your-family

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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Benefits of Advice

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

In the wake of the Royal Commission into Misconduct in the Banking, Superannuating and Financial Services Industry, it is important that we continue to focus on the benefits of receiving expert Financial Advice.

SunSuper commissioned CoreData to investigate the benefits of advice in their 2017 Value of Advice report which produced some interesting results. Overwhelmingly, those surveyed who receive financial advice are more ”well” in life.  They are better equipped to deal with unexpected expenses, more prepared for retirement and have more confidence in making financial decisions (1).

80% of those currently advised believe advice has given them more confidence in making financial decisions

Financial literacy is an important benefit and outcome of an advice relationship. Whilst we don’t expect clients to follow the movements of the NASDAQ, having an understanding of investment characteristics such as income versus capital values, the importance of asset allocation and investing for the long term gives clients greater confidence when making financial decisions.  This in turn brings a greater sense of financial security and less worrying about money.  After all, our definition of wealth is an absence of financial worry.

79% of those currently advised believe advice has given them more control over their financial position

Planning for the future is so important as it gives you confidence you can achieve your immediate and future financial goals.  Whether it is setting aside funds for a rainy day, increasing your savings, or contributing to a retirement plan, having an advice relationship allows you to map out your own path to financial freedom.

77% of those currently advised believe advice has helped them feel prepared for retirement

Many of us think that retirement is so far away that it doesn’t warrant planning now – this couldn’t be further from the truth.  Einstein’s 8th wonder of the world is compounding returns, earning interest on your interest, so paying attention to your retirement nest egg early, no matter how small, is well worth while.

67% of those currently advised feel advice has made them more equipped to handle sudden, one off costs

Through accountability, information and support, receiving financial advice can help people establish contingency plans, insurance and debt management strategies to deal with unexpected events and life’s twists and turns.

80% of those currently advised believe advice has given them more peace of mind.

Financial security is important for everyone, to know we are on the right track and not borrowing from our future to live the life we are currently.  A staggering statistic from the report is 39% of those unadvised felt they had enough money to pay for recreational activities compared to 79% who were advised.

Financial stress affects people’s lives in quantifiable ways.  It can affect your health, relationships at home, and both your productivity and attendance at work.  This is why we continue to believe in the value of financial advice; knowing that it improves lifestyle outcomes and overall wellbeing.

If you are interested in your own financial health check, please don’t hesitate to contact an Financial Adviser at Income Solutions.

 

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 triggered?

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

Language in general and the ways in which specific words are used is fluid and open to change over time. Think of the way that ‘bad’ and ‘wicked’ have become accepted to mean ‘good’ and ‘cool’. One example that has recently started annoying me is the way that my children (and all their mates) say that two teams are ‘versing’ each other. I always thought that it was ‘versus’ as in Hawthorn versus Geelong. Or that the two teams were playing each other. My wife tells me that I am already sounding like an old man and to get over myself!

You may have come across the term ‘trigger warning’ or that a person has been ‘triggered’. This term actually dates to the early post-traumatic stress studies that came out of WWI. It references the idea that reminders of trauma can trigger a debilitating physical, emotional and mental response. Over the last ten to twenty years it has become more and more common and can be seen in use when discussing substantial issues such as discrimination and racism.

Well I am going to give it yet another use here; what reality is going to trigger you in to action in regard to your relationship with money?

Seemingly innocuous transactions through a ‘have it now pay for it later’ system have begun to create a material negative impact on people’s finances such as their ability to get a home loan.

How Afterpay could impact your chance of getting a home loan READ HERE

The article linked above sights cases of people being turned down for a mortgage as they did not meet the banks servicing criteria because they had a live Afterpay account. The eye opening thing for me is that the women featured in the piece didn’t even need to use the Aftepay service as she had enough money to pay for her items outright. A well-meaning (although misguided) friend encouraged her to do so. Beyond the stated idea about the ease of spreading the payments the truth is that the process tacitly encourages us to spend more.

The article linked below goes further, reporting that research shows that people using this modern lay-by equivalent will also buy more expensive items, possibly ones that they can’t truly afford.

Afterpay, Zip Pay and others cause financial strife for ‘young’ shoppers: ASIC READ HERE

None of us want to be told directly what to do, especially if we know deep down that the thing that seems hard or that we can tell ourselves is unfair is in reality true and correct.

I am constantly reminded that I get better behaviours and choices from my kids when they feel they have reached a decision on their own rather than me simply telling them that they must do something.

I am not belittling the important issues that, when discussed, warrant a true trigger warning. I know that I am making an exaggerated point; I am doing so deliberately.

However, we must listen to the facts that are being presented, and if they are coming to us from multiple sources and conveying corroborating information to us then we ought to listen.

Lending criteria is getting tighter. We must be able to prove accurately that we can service loans. Spending less than you earn is an adage. Paying for something on credit, or through a payment system that’s lets you have it right now even if you can’t afford it right now has never been a successful way to manage your spending habits and it will have a consequence as you move through life.

It’s about a reality check. It doesn’t matter if it’s Afterpay or Zip Pay or a misuse of a basic credit card (insert your preferred method of buy now pay later here). It is recognising that it will have an impact on you. It may stop you from getting a home loan or you may get the loan but not at a competitive rate. It is pushing you further into debt and inducing all the stress that this causes. You may miss out on something that is truly to your benefit such as an important life experience or the ability to take a course that will further your career… whatever piece of information it takes to trigger you, lets take some action as you will be the beneficiary!

 

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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Everything Stays the Same, But for How Long?

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

Interest rates are staying on hold again.

An interesting article on the 9 News finance webpage https://finance.nine.com.au/2018/12/04/12/05/ross-greenwood-analysis-why-interest-rates-have-been-on-hold-for-28-month provides some commentary and thoughts as to why this might be the case.

It suggests that rates will remain on hold, to a greater extent, until the end of 2020 whilst acknowledging that this is an oddity given certain factors including a well performing economy and low(ish) unemployment.

The reason that the article sights for the RBA not raising rates is falling house prices. It also notes that general rising living costs (fuel, power bills etc) means that households are under pressure to juggle all of their outgoings.

Overall the piece links intertwined economic factors to paint a picture that some uncertainty lies ahead.

Ever the optimist I can’t help but see a common-sense opportunity here…

We know that genuinely having an understanding of where your money goes is an incredibly powerful tool to help you feel confident about your current financial position and to enable you to make informed decisions about how to build for your future.

In the past I have pulled my punches a little in encouraging people to put time and effort into a writing a budget and most importantly sticking to it. I’ve possibly even let them off the hook when they don’t engage with the task but most people dread the exercise. Well no more.

Just do it.

You have to do it.

There is no excuse not to do it.

It isn’t even that hard.

Consider two basic approaches. You can use historic information pulled from your bank and credit card statements to understand where the money has been going or you can consider yourself as a business and set a budget for the year ahead.

The first approach can be a little time consuming, daunting and even painful (count the number of times Dan Murphy’s pops up on your statement and you will know what I mean)! It can allow you to take stock and adjust spending habits. It can even vindicate some of the discretionary spending that you have made as perhaps it wasn’t as bad as you feared! You are allowed to enjoy life, budgeting is not about restricting it’s about being honest with yourself and putting yourself in control.

If you take the second approach you need to do some planning. Take a moment, it may only be a couple of hours, to run through some of your non-negotiable costs such as power, phone and other utilities and ensure you are getting the best deal. Also set yourself a goal of where you would like

your debt to be come the end of the year; don’t simply settle for the minimum repayment that will satisfy the banks thirty year timeline. Again, include the fun stuff too so when you do have that dinner out or go to your friends birthday it can be enjoyed guilt free. Just be very clear on how much money is allocated to go where.

The final component regardless of the approach you take is monitoring and tracking. This can be manual through regular engagement with your online banking or via one of the numerous apps that exist to help you do this efficiently and accurately. As I said early though;

Just do it.

You have to do it.

There is no excuse not to do it.

It isn’t even that hard.

It may be that I am an optimist, I like to not think blindly. There are genuine trials and tribulations in life and significant challenges that are thrown at us. It is fair though to think that we might develop the fortitude, and lean on available support where needed, to give us the capacity to step back and find the opportunity that exists within these challenges.

A great client of mine lives with the mantra “everything is temporary”.

I have no doubt that rates will rise again at some point, when and by how much I am not game to say.

I am happy to say though that practical steps including setting a budget, tracking it and therefore sticking to it will go a long way to enabling you to get ahead on the repayments to your single largest barrier to creating meaningful wealth; your mortgage.

Far from being restrictive, understanding your budget will provide you the chance to make the most of this current opportunity.

These low rates, in the greater scheme of things, may well only be temporary. The cash rate has remained the same for “twenty-eight months straight” (a long time as the article intermates). However, put another way that’s just over 2 years or about one twentieth of your thirty-year loan term. To me low rates mean one thing, time to take control and time to get ahead!

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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How to kill a conversation – ‘lets talk about super’

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

Driving home from work last night there was a conversation the radio relating to super funds and how they perform relative to each other.

Many people would reach for the dial or press the button to change channels but the nerd in me resisted.

The item was a simple one; a firm has compiled independent research into the performance of super funds every year for the last five years and rates them accordingly on an annual basis.

The cynic in me listened intently for the criteria by which they had categorised the funds, but I had a bit of a ‘Wow!’ moment when they stated that they had looked at performance net of all fees and charges and had reached the overall conclusion that funds that charge lower fees typically outperformed funds that charged higher fees!

Further, in most cases, Australians would see a better performance from their super fund if they selected a low-cost index option that tracked the broader market rather than paying performance fees to active fund managers who fell short of the bench mark over the long-term.

Now I know I can be a bit sarcastic, but that ‘Wow!’ moment was genuine.

Simple, common sense advice can sadly be lacking in the superannuation space, frankly in financial planning in general. So when I hear it from an external source it jumps out at me and I realise that maybe we are not alone in our philosophies.

I downloaded the report that the firm produced, and a couple of key comments shouted at me from the pages;

Our research shows there is a clear correlation between high fees and long-term underperformance in super (The Fat Cat Funds Report Super Fund Guide 2018 page 3)

Poor fund performance comes predominantly from active management fees as well as higher administration and operating expenses than necessary (The Fat Cat Funds Report Super Fund Guide 2018 page 3)1

The funny thing is this information probably doesn’t surprise you. It is logical; it is common sense. So why don’t more of us follow it?

Like superannuation itself, the concept at the heart of following an index approach is BORING! We don’t want to talk about so its sits at the back of our minds. Over time we might not fully remember

why we are following that strategy anyway, particularly with the drip drip effect of other people’s opinions impacting on us. The reality is, what is there to talk about anyway?

Imagine the barbeque conversation;

“Yeah so I er um yeah paid no attention to my superfund again this year but as I track the broader Aussie market I got a nice steady long-term average return and I er um received a good level of fully franked dividends and I didn’t have to manage or worry about anything to get that…”

Well, that’s not very interesting is it? Not compared to the person who runs their self-managed super fund and trades shares daily and has a no recourse loan for the residential unit development that they are building up there in wherever and they had to meet with their accountant for three hours last week because there was some problem with the audit and now it seems like they might have to take that piece of art off the wall an put it storage because it “doesn’t really meet the sole purpose test after all”…. What?

Superannuation is an investment vehicle for you to set yourself up for the retirement lifestyle that you want. Research shows that a lower cost fund with an indexing approach will typically provide better long-term result than any other investment option. The point is that the more you pay in fees through more complex investment options the more likely that the long-term returns will be lower.

Our research shows that 96% of balanced super funds underperformed a simple low-cost index strategy after fees and taxes. This is consistent with research from Finalytiq4 which found similar results in the UK, and S&P Dow Jones whose SPIVA research shows that 80% of active Australian share fund managers have underperformed the index over 15 years. (The Fat Cat Funds Report Super Fund Guide 2018 page 35)

Why does superannuation need to be an interesting conversation anyway? Why does managing money have to be at all? Far more interesting is what you do with the time you have to enjoy life rather than worrying about money and what you spend your passive income on!

So how does any of this impact you? If you have made it this far through the article, then you have already met more than half of your required quota for paying attention to superannuation this year. Well done!

From here, check in with your adviser and (subject to your risk profile) determine your level of exposure to growth assets which should come via an index approach, balance that with your need for defensive assets and then ensure that you are on a fee favourable platform.

Simple but not easy I know; but it is common sense!

 

1 The Fat Cat Funds Report Super Fund Guide 2018 is produced by by Stockspot Stockspot Pty Ltd ABN 163 214 319 is a Corporate Authorised Representative (No. 453421) of Sanlam Private Wealth (AFS License No. 337927). They are a Robbo Advice firm and have no affiliation or connection to Income Solutions. We still believe that personal relationships are at the heart of quality financial advice, and have referenced the The Fat Cat Funds Report Super Fund Guide 2018 as an opinion piece.
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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Your home – the best investment you will ever make

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

It has been said before and it will be said again, “your home is the best investment you will ever make!”

Those of you familiar with our philosophies on wealth creation (being income focussed and the fact that the best investment that you will ever make is in yourself, your career or your business) will know that we do not subscribe to this mantra about the family home.

Recent legislative changes however, have created an opportunity to make the home you have loved, cared for and put money into over the years pay a little something back.

The downsizer

As people settle into their retirement it is common for them to realise that the home they have enjoyed for so many years is in fact now a bit too big, the garden a bit too much work, and the level of maintenance needed is now a bit too daunting. The decision to downsize is therefore made.

Moving to a smaller, more manageable property can result in substantial funds being left over from the transaction as the bigger family home is of a higher value than the new property. So, what to do with those funds?

Superannuation

Super has many rules about the amount of money that can be contributed to it, before tax contributions (concessional contributions) capped at $25,000 pa and after-tax contributions (non-concessional contributions) capped at $100,000 pa or $300,000 under the draw forward rule.

Legislative changes that came into effect on the 1st of July 2018 now mean that when the source of funds are identified as coming from the sale of the primary residence, money can be added to super as an after tax contribution above and beyond the normal annual limits; up to $300,000 per member.

Having additional money inside the superannuation environment as a retiree could provide a significant boost to the provision of passive, tax-free income to support the lifestyle that you want to live.

Eligibility

There are criteria that must be met, a summary of which includes:

* 65 years of age or older when the Downsizer Contribution is made

* You or your spouse has owned the home for 10 years or more

* It is a home in Australia (not a caravan, mobile home or houseboat)

* It is your main residence and so exempt or partially exempt from CGT

* The contribution to super is made within 90 days of receiving the proceeds

* The maximum contribution is $300,000 per person and the contributions must not exceed the total sale proceeds of the house

Next Steps

To determine if the strategy is relevant and beneficial there are some steps to work through:

* If you have determined to move, ensure the house that you are moving to meets your long term needs and that you are not ‘cutting your nose to spite your face’ by purchasing a cheaper place to boost what you can get into super only to find after a few years you are unhappy in that property

* Work with your adviser to determine what is genuinely ‘spare’ as a result of the sale of the family home. Most people incur some lump sum expenses when they move to a new house; new couch, new blinds, changing that ugly carpet in the spare room.

* Once the total available funds are known, again, work with your adviser to ensure that the correct Downsizer Contribution into Super form is completed and submitted with the contribution

* Also work with your adviser to be clear on the how the funds should be allocated within super in regard to your risk tolerance and goals and when to use the super monies to purchase an income stream.

In the truest sense of the word it may be hard to call the family home an investment. Hopefully it has been a space that has created many happy memories over the years; and now with the right implementation of strategy it may prove to be a boost to enjoying the retirement you have dreamed of.

 

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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Getting into the Great Outdoors

Despite our intrepid image, Australia is an incredibly urbanised country by world standards, with almost 90% of our population living in or around cities.i The impact of this cosmopolitan living is a proclivity for the indoors, often resulting in sedentary lifestyles, which can augment rates of stress, depression and obesity. The antidote to all this is simple: get outdoors more often. Your body and mind will thank you for it.

The power of nature on the mind
The romantic poets wrote about it at length, and countless artists throughout history have reached the same conclusion: there is healing power in the magnificence of nature. Increasingly science is supporting this thesis, with research into the mental health benefits of being outdoors coming from all corners of the globe.

In Japan, for example, they have a tradition known as Shinrin Yoku, which basically translates as ‘forest bathing’. The idea being that you go into the woods for a length of time to calm down from city life. This practice has been shown to decrease cortisol levels as well as giving your immune cells a boost. In the States they have made similar findings, with research demonstrating that participants performed 50% better on creative problem-solving tasks after having spent three days in the wilderness.ii

By contrast, city dwellers are at much higher risk of developing anxiety and mood disorders than their rural counterparts. The reasons for this are manifold: traffic jams, excessive time seated in front of screens, the close proximity of everything and everyone – they all make it easy to get stuck in your head and sweat the small stuff. The beauty of nature by contrast is its vastness, how it can situate you in the ‘here and now’ and put your problems into perspective.

Body and soil
It appears the old saying ‘go outside and get some fresh air’ was more than just a trick your mother used to get you out of her hair. Indeed, the benefits of fresh air cannot be underplayed. Not only does the increase in oxygen help your white blood cells and thus your immunity, it also boosts your serotonin levels, ameliorating your mood and fostering a sense of well-being and joy.iii

Moreover, people who get outdoors more often are more likely to be exercising thereby producing endorphins. Even the decision to walk to the local shops rather than drive can have numerous benefits.

Cheap and easy
Getting outdoors doesn’t have to mean going on a five-day canoe trip or taking your swag to some remote location. It can be as simple as going to your local park. Australia has a legacy of public green spaces from Victorian times, as well as vast reserves of national parks not far from city centres. The best bit about them is that they are free for everyone and actually function as a social leveller. So why not take your bikes for a ride, pack a picnic with the kids, or enjoy a leisurely stroll with the dog around your local park.

To the future
The proof as they say is in the pudding, with governments around the world developing responses to the health problems associated with the concrete jungle. Many are starting to factor this into both their urban planning and public health policy. In Singapore they have long held the ‘city as a garden’ concept aiming to foster green spaces in municipal centres. Finland’s government endorses five hours of forest time every month to promote good mental health. Studies even showed that suburbs that are more heavily treed have residents with better heart and metabolic health. The same level of increase one would usually associate with a $20,000 rise in income.iv

With science on its side and governments the world over responding to our human need for nature, it seems clear that it’s something we could all use a little more of. Start with the little things—a morning walk around the block or some time out in the garden—and with warmer weather just around the corner, what better time to embrace the new, outdoorsy you.

i https://www.indexmundi.com/australia/urbanization.html

ii https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3520840/

iii http://www.phantomscreens.com/resource/getting-fresh-part-1-the-health-benefits-of-fresh-air/

iv https://www.nature.com/articles/srep11610

 

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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Plugging into Technology Stocks

On August 2, Apple became the world’s first company to reach US$1 trillion in market value. It took 42 years to get there from humble beginnings in an LA garage, but a handful of younger technology companies collectively known as the FANGs – Facebook, Amazon, Netflix and Google – are already nipping at its heels.

What do they have in common? All have used innovative technology to create new markets, often beginning with a single product or service. Think Apple’s early desktop computers, Amazon’s online book retailer, Netflix’s streaming service, Facebook’s social network and Google’s search engine.

According to Forbes magazine, these tech giants have become so much a part of everyday life that their products or services are regarded almost as utilities, as essential to modern living as power or water.i They have also used technology and digital transformation to redefine customer experience in a way that is leaving traditional companies behind.

While their products and services may be cutting edge, their investment appeal is old school. Legendary investor Warren Buffett has been a major Apple shareholder for some time. He is known to look for stocks with reliable, long-term earnings at an attractive price with a strong ‘moat’. A moat might be a brand name, key products or high barriers to exit. Switch your iPhone for another brand for example, and you lose your iTunes music library and countless apps you downloaded.

China unleashes BATs

While Apple and the FANGs are US-based, they face stiff competition in the global tech stakes from China’s BATs. Baidu, Alibaba and Tencent may not be household names in Australia, but they deserve to be on investors’ radar because they are a dominant market force not just in China but increasingly elsewhere as well.

Hong Kong-listed Tencent Holdings is known as China’s equivalent of Facebook. Tencent was the first Asian company to reach the US$500 billion stock market valuation mark. It’s WeChat social media platform recently reached an eye-popping one billion members and it’s also involved in online gaming, music, e-commerce and smartphones.

Alibaba (China’s Amazon plus eBay) is the world’s biggest retailer. It’s New York Stock Exchange (NYSE) listing in 2014 was the world’s biggest and this year it became the second Asian company to be valued at more than US$500 billion.

Baidu (China’s Google) is the second most widely used search engine in the world. It’s also moving into mapping, artificial intelligence and autonomous vehicles. And these are just the biggest of many emerging Chinese tech stocks.

Opportunities and challenges

The tech giants are also beginning to expand into new business areas such as cloud storage, music and video streaming. Some are also growing by acquisition, with Facebook buying What’s App and Microsoft buying LinkedIn.

Yet big does not necessarily deliver success. Facebook’s share price recently fell 19 per cent in a day. The sell-off was due partly to concerns about the company’s ability to deal with privacy issues, but also to a flattening out of user numbers. China’s BATs also face challenges from the worsening trade dispute with the US.

So how can Australian investors participate in the dynamic technology sector without getting burnt?

Getting down to business

Diversification is the key to investing in the world’s leading tech stocks, while minimising the risk of individual companies performing poorly. The simplest way to gain exposure is via a traditional managed fund or an exchange-traded fund (ETF) which can be bought and sold on the Australian Securities Exchange (ASX) like individual shares.

For the broadest exposure there are global technology funds. A popular way to access the FANGs plus Apple, Microsoft and others is to choose a fund that tracks the Nasdaq 100 Index. Although the US-based Nasdaq exchange is home to a wide range of companies, it is well known for tech stocks.

Tech companies are often seen as exciting, but investors would do well to follow Buffett’s lead and make sure that the fundamentals are sound, looking at their financial health and ability to deliver sustainable returns. If you would like to talk about your investment strategy, give us a call.

i ‘Apple and the rise of the trillion dollar firm’, 6 August 2018, https://www.forbes.com/sites/dantedisparte/2018/08/06/apple-and-the-rise-of-the-trillion-dollar-firm/#6eecde0c631d

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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Is your money personality set in stone?

Our upbringings hugely influence the attitudes we have towards money. Did you observe your parents working hard to put food on the table? Was money a cause of conflict in your household? Was it spent freely, or were budgets obeyed?

The money attitudes you were exposed to as a child aren’t necessary the ones you’ve taken on though. Some people exhibit money habits very different to the ones they grew up seeing, perhaps in a reaction to those circumstances or as a reflection of their personality. Take a look at a family of siblings and you might notice very different money personalities.

Here are four of the most common money personalities:

Avoider

As the name suggests, an avoider doesn’t want much to do with money. They don’t want to spend time thinking about it, which is why bills go unpaid and little attention is spent on investing and saving. There are many reasons why someone could be a money avoider, but two common ones are either feeling overwhelmed or confused around financial matters, or believing that money represents greed so it’s bad to focus on it.

Hoarder

This money personality type excels with saving but struggles to spend. This can lead to Scrooge-like tendencies, as the hoarder finds it difficult to part with their money. They’re anxious that money could be taken away from them and they must have substantial savings at all times. The hoarder doesn’t have fun with their money – the greatest enjoyment they get is knowing it’s untouched.

Spender

The opposite to the hoarder, the spender enjoys buying things for themselves and loved ones, making them very generous but sometimes irresponsible if they spend more than they earn. They risk falling into debt and struggle to save enough money for substantial purchases such as a house deposit. Delayed gratification is foreign to the spender, who’d rather buy on impulse.

Status seeker

Unlike the other money personality types, whose habits might go unnoticed at first, there’s no mistaking the status seeker. They’re the ones with the newest gadgets, flashiest cars, most fashionable clothes. The status seeker uses money to exalt their image. They have high standards and are deeply invested in how others see them. Like the spender, the status seeker risks going into debt if they can’t afford their lifestyle.

Perhaps you identify strongly with one of these types, or can see yourself in several. None are inherently bad, but they all represent unbalanced attitudes to money.

While many of these beliefs can be quite entrenched, it is possible to change your thinking and foster a more positive money mindset.

Here are some tips to bring these beliefs into equilibrium:

Understand the emotions that drive your decisions

The money hoarder tends to be driven by anxiety, while for the status seeker it’s insecurity. Identify your emotions – this observation will make you more aware of how you view and use money.

Create and maintain good money habits

A budget provides a clear picture of where money is going. They’re useful for everyone to have, but are especially helpful for the spender and avoider.

Stop comparing yourself to others

The status seeker is the worst offender, but many of us also buy things to impress others. Focus on what you want and don’t worry about keeping up with the Joneses.

Communicate with your partner about money matters

It’s possible you and your partner are different money personality types. Ensure you’re on the same page about shared spending, saving and long term goals.

Practice gratitude

Appreciating what you already have will cut down on any unnecessary spending and anxiety around your finances.

Get assistance

Whatever your attitude to money, it’s always worthwhile having someone in your corner to assist you to make the most of your financial situation. We are here to help.

 

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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