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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Who is making your Financial Decisions?

In January 2018, women marched in all 50 American States, in 92 Countries, on all 7 continents in protest of the policies and positions of the Trump administration. Women worldwide are channelling their energies to articulate their right to take up equal opportunities, with respect, safety and dignity. Women worldwide are becoming outspoken and active political participants.

The #metoo movement has broadened the global dialogue on the widespread prevalence of violence and sexual assault. Women are demanding accountability and beginning provocative conversations. Women are becoming more outspoken, more educated, and the opinions of women are being represented politically and socially. Women are becoming publicly progressive in their endeavour for gender equality.

In light of the current political and social climate, I was surprised to read in an article published in the Sydney Morning Herald by Georgina Dent, where Financial Coach Julia Sotas stated that ‘56% of married women leave investment and financial decisions to their husbands…because they believe their husbands know more’.¹ In a world where women are progressive, and willing to actively participate in the global political and social dialogue of gender equality, it is interesting that women still believe that they are incapable of making investment and financial decisions.

In your partnership is your partner taking control of your financial future?
Curious to discover what motivates financial decisions of the women around me, whether they be married, in defacto relationships or single, I decided to ask some questions. I am overwhelmed by the responses I received from these educated and determined women. There is a trend, indistinguishable from cultural traditions, that most women are influenced financially by the men in their lives.
Empowered and progressive women, I urge you to become eager for not only political but also financial freedom. I urge you to take up equal opportunities and to stop underestimating your capabilities to manage your investment and financial decisions. It is time to become financially aware, involved and secure.

 

At Income Solutions we run regular Income Solutions for Women seminars. If you would like to register for an upcoming event please contact us or go to www.incomesolutions.com.au/events for more information.

 

  1. Dent, G. (2018). More women will end up alone and managing their own money. Sydney Morning Herald. [online] Available at: https://wwwsmh.com.au/money/investing/more-women-will-end-up-along-and-managing-their-money-by-themselves-20180614-p4zlfy.html [Accessed 3 Aug. 2018]
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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Interviewing a New Financial Planner

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

How do you find the right financial planner?

Seeking financial advice can be a daunting task. You work hard for your money, so, in turn, you need to have faith that your financial advisor will make your money work hard for you to achieve your goals.

When you are looking for someone that you will trust it’s a good idea to start the search by asking your friends and family for recommendations. A referral from a trusted person will help you find an adviser with a good reputation, and someone you can have confidence in from the outset.

The next port of call that we suggest is the Financial Planning Association. They have a list of highly qualified professionals here: https://fpa.com.au/find-a-planner/

When you find an advisor that you are interested in meeting, have a look at their education. Look for qualifications like:

  • Bachelor of Commerce (BComm)
  • Certified Financial PlannerTM
  • Master of Financial Planning (MoFP)

Another key indicator is the business that they are working in. Have a look at their website and the offices where they work. If it is a growing, thriving business, they must be doing something right!

When you meet with your potential planner, make sure to interview them, this is your chance to ask them questions like:

  • Are they a specialist in a certain area or for a certain type of client? – for example: women, retirees, young professionals etc
  • What are their qualifications?
  • How many years have they been in the industry? (this is not necessarily the years they have been advising. Many advisors start in the industry and learn the ropes for years before becoming an advisor)
  • What is the process to become a client?
  • What can you expect from the service?
  • Are there additional services such as Accounting, Mortgage Broking & Cash Flow Management?
  • What technology is available to clients interact?

Don’t feel like you must go with the first planner you meet, if you don’t connect with them its ok to interview other planners even within the same business.

At Income Solutions, our first meeting is call The Right Fit.

It is a no obligation “getting to know you” meeting for both the client and the planner. Is it a chance for you to get to know if Income Solutions is the right fit for you and your financial needs and the planner to find out if you are the right client for 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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Managing Family and Finances

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

Everyone leads a busy life, but it’s important to take time out to think about your current finances and your financial future.

When you are planning or have a young family, there are a lot of important tasks that are on your mind. It is easy to let every day things like managing your finances fall to the wayside.

Paying the bills is quick and easy, but thinking about the big picture in 10, 20 or 30 years down the track can feel like a daunting task. Many people think retirement is so far away and that they have plenty of time before they need to start looking at planning for that phase of their lives. There is also the belief that it will just work itself out.

But you are reading this, so take the time now to think about your life in 30 years’ time.

You don’t want to regret not planning for your future.

By engaging an advisor, it forces you to take time out once or twice a year to chat about your goals and strategy and make adjustment where needed. This helps you to not only be aware but also re-evaluate what’s important to you and what your goals are year to year.

Research shows that by writing down your goals, you are more likely to plan and work towards achieving them.

By having a trusted financial advisor to look at your goals and create a tailored strategy, you will have to spend less time thinking about your financial future, and you will be in a much better position in the future.

At Income Solutions, we place a lot of time educating our clients on our investment philosophy so that they walk out of their meetings with complete understanding of what their strategy will be and how it will help them reach their financial goals.

It’s never too late to re-assess your financial position and change your strategy, and it’s never too early for your teenage children to start understanding their finances.

We run 4 events each month that will help you start making a plan, no matter what stage you are in for planning your finances:

Common Sense Investing

Common Sense Estate Planning

Kickstart: Your Financial Future

Pivot: Choose Your Financial Direction

We urge you to have a look at our website – www.incomesolutions.com.au/events or have a chat to one of our financial advisors to see which event would help you to achieve your goals, for you and 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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Peace of Mind is King

We have all heard both sides of the argument between owning a home and renting a home. You would have all experienced loyalists to both sides of the argument passionately lecturing you about why their side is superior to the other. It all comes down to what it is you want to achieve, and above all else, peace of mind.

It is an interesting phrase, peace of mind, often referred to as a sleep at night factor. The Collins Dictionary defines it to mean ‘the absence of worry’.¹ Whenever making a decision in life – financial or not – I believe the criterion we should give the most weighting to is whichever option gives you the best sleep at night. There is no point making a decision and lying in bed at 2am every night worrying if you made the right one or not. That is not what life is about.

Circling back to the argument of renting a house versus buying a house. Each side has its own logic and merit, there is no doubt about that. A house is a lifestyle asset so we need to be prudent in ensuring the costs associated with owning or renting one does not adversely affect our lifestyle too much. Let’s break down some advantages and disadvantages of the two, and I will focus on living in the Geelong area as a reference point.

When you own your home, the first thing people realise is a sense of stability. The home is now yours, and provided you have no issues repaying the mortgage, it is very difficult for anybody to take it off you. Although, it can be done², think ‘The Castle’.

What’s more than the sense of stability is the emotional attachment you have with your home. This is often deemed priceless. Most people would have memories of their family home growing up. Because you own it, you can do what you like, such as drawing a height chart on the wall that you add to on your children’s birthdays, renovating, putting picture frames wherever you like, and if you’re lucky, you could even put a pool in.

Arguably, the most valuable aspect of home ownership is the opportunity to use the equity you potentially own to invest for the future. For this opportunity to become beneficial, you have either got to paydown the principal of your mortgage significantly, or are lucky enough to own a home in an area that has experienced large capital growth. The lifestyle on offer in the Geelong area is envied all around the world, which has lead to capital growth in recent years. So much so, they have developed a new estate in Armstrong Creek. The demand for homes in this area is so strong, that the average time a home listed by local agent, Armstrong Real Estate, spends advertised on the market is just 16 days. This estate is situated only 10-15 minutes from the Geelong CBD and numerous coastal beaches, what a great lifestyle that would be? If owning a home and having this sort of lifestyle sounds decent, at Income Solutions, we can help assist implementing the strategies necessary to ensure you can lead your desired lifestyle and still get a sound nights sleep without any worries.

Of course, as Gary Ablett now knows, the value of your house can just as easily drop³. There are risks. They do not always go up in value, and, as the owner of a mortgage, you are a slave to interest rates. Interest rates are an obvious issue and can affect your peace of mind. They’re currently quite low, however, they are on the increase. This can cause severe financial stress (4) and is something you’re unlikely to experience whilst renting. On top of rising interest rates are the costs of owning a home. Rates, insurances, maintenance, stamp duty when buying etc. These all add up and it is mandatory to allow for these kinds of costs in your annual budget before making the decision to buy a home. Remember, planning for these can still give you great peace of mind.

Alternatively, there is the option of renting. Viewed with a lot of unfair stigma in this country, renting can be seen as ‘dead money’. I agree, to an extent. In most cases, it can be cheaper to rent a house than it is to buy it. You can live in an area that best suits your lifestyle at a cheaper price. The demand for rentals in the Geelong area is also booming due to the lifestyle on offer; the supply of homes cannot keep up with the demand. Armstrong Real Estate lease out advertised homes in an average of 7 days, such is the popularity of this area.

A prudent renter should use the cash they save on their dwelling and invest this for their future. It is when this cash saving is simply squandered on lifestyle that rent does become dead money. Everybody’s favourite finance commentator, The Barefoot Investor, says in his book that if a person rented the same house their friend had bought, invested the difference in their associated costs, the renter would be in a better financial position in 20-30 years time. True, for the most part.

Another aspect of renting is the flexibility. This can also be seen as uncertainty. If the freezing winter’s of Geelong become too much to handle, it is very easy to simply sign a new lease and move to a place like the Whitsunday’s, not needing to worry about the extremely lengthy time it can take to sell your home. The other side of the same coin is also very real. A family of 5 receiving a letter from their property manager telling them they have 30 days to vacate the premises is surely going to cause a few sleepless nights. If the potential of this happening to you as a renter causes you severe angst and little-to-no peace of mind, then renting is probably not for you.

Personally, I understand that owning a home will cost me more money than renting one. Unfortunately, this country does not offer 10-20 years leases like other countries of the world(5). Therefore, I currently rent, with the goal to own a home in the near future for two reasons. Primarily, I would like to buy a nice little acreage around Geelong. These types of properties are hard to come by as rentals, and I would like to have full control over it. I am aware of the opportunity cost and it is a risk I am willing to take. Secondly, I plan to use the equity I build in my house to invest in my capital base. I will turn my bricks and mortar into an asset, and have it earn me some cash, rather than force me to spend cash on it.

The basic thing is I have a plan. This plan is what gives me peace of mind. At Income Solutions, we can help you create your plan, and, with a bit of luck and forethought, some decent peace of mind as well.

 

1 https://www.collinsdictionary.com/dictionary/english/peace-of-mind
2 https://www.afr.com/real-estate/residential/cancelled-east-west-link-houses-are-being-sold-to-the-public-with-conditions-20150416-1mmedq
3 https://www.news.com.au/finance/real-estate/melbourne-vic/geelong-star-gary-ablett-caps-off-homecoming-with-sale-of-gold-coast-home/news-story/017f13105e10ae150a73b0b8215497a0
4  https://www.yourmortgage.com.au/mortgage-news/nearly-one-million-households-are-in-mortgage-stress/248566/
5 https://www.smh.com.au/business/companies/renting-property-dont-hold-your-breath-for-a-long-lease-20141104-11eftx.html
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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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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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 [email protected] 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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From Frivolous to Finance – Getting Your Money in Order.

Savings.

Growing up I’ve been lucky enough to live a really good Aussie life.

Mum, Dad, two little brothers, a Dalmatian dog named Stripes (I wish that was a joke) and a white picket fence. I received an above average education, studied overseas, taken many family holidays and have never gone without.

I’ve had it really good.

So you can imagine my shock and embarrassment when after thirteen years of schooling, four years of tertiary education and my abundance of worldly experiences, I was ill-equipped to handle my finances.

I can tell you about Pythagoras’ Thoerum, go into detail analyzing Euripedes Medea, and Peut parler un minimum français! (I took a little French in school, if I’m being honest it was just to go on the Year 10 trip to Paris.)

But up until recently, I couldn’t tell you how my bank accounts worked.

I couldn’t tell you what the interest rate was on my Credit Card, and I definitely couldn’t tell you ​​why I thought it was OK to go into the bank and take out a loan to travel Europe for 4 months.

But don’t worry guys, I know how to solve for x using  x + 9 = 18 + -2x …phew!

So when I returned from gulping my way through the beer halls in Germany and skiing the slopes in Switzerland, it was time to return home and face the music.

But how?

I was so ashamed to admit that after all the education my parents had provided me with and the privileges life had thrown in my direction, that I was in this position.

By a stroke a fate, I had applied for a job in admin support here at Income Solutions, and got it. I couldn’t help but laugh at the irony! Me, who can’t get her account out of the red working at this financial firm?

What has struck me over the last six months is how the key skills you need are so simple. They are based on common sense. Why is this not being taught to us at high school?

But it’s ok, I know HBr is Hydrogen Bromide… I’ll use that one day!

No matter your history or your circumstance, it’s important to make a decision to want to help yourself and do something about it.

Once you’ve made that decision, it’s about education and discipline.

Education isn’t just for the young, you need to keep educating yourself throughout life. Education in knowing where your money is going, where you’re being taxed or getting charged interest and what options are available to you.

Discipline in sticking to your plan, being able to say ‘not yet’ to those shoes you want, living within your means and not relying on credit.

If you would like to take the first step towards improving your financial situation, go to www.incomeoslutions.com.au/events and register for our First Steps to Financial Success seminar. Topics that are covered include Setting Goals, Managing your Cash Flow, Debt Management, and strategies for building and protecting wealth.

It’s free, no obligation and the purpose is to provide tips and education to people who want it.

What have you got to lose?

Celeste Smith – Marketing Coordinator

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.

153 Mercer Street, Geelong

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WOMEN – Professional Self-Taught Jugglers

Spotlight on Women - WEbsite SizeWhether you are single or in a relationship, one thing we all have in common is that we are juggling many roles all at once. I learnt quickly that once you begin to add little munchkins to your clan, the number of balls that you are juggling dramatically increases. When I thought I had achieved some rhythm to my new found skill of juggling, it was time to return to work. I had no idea what I was in for in regards to the level of organisation it would require trying to fit in my own personal time, setting goals for now and later, while continuing to run a house!

Returning to work is a big decision. For some it is financial and for others it is to assist with self-fulfilment. Whatever the reason, finding the right work life balance is crucial. There is no right or wrong level of work life balance. The solution that works for your family is individual.

Following returning to work, I began to experience guilt. Guilt for not being able to spend more time with my little ones, that I wasn’t completing as much at work as I had (in comparison to my old, full time employed, child free self), that the house wasn’t as tidy as it used to be and the list goes on! I had to find a way to put a positive spin on what I was doing and the reasons as to why I had returned to work. I realised it was to achieve my goals! Our goals often take second place to day to day activities, however even without realising it, it is another one of those balls we are juggling. Understanding and knowing why I was back at work and the benefits my employment brings to myself and my family was very important, empowering and motivating. Without goals, it is easy to question why. It helps you stay on track towards reaching those goals which are important to you. Also, it is hard to know if you are on the right track, if you don’t know where you are heading.

Goal setting doesn’t just end with the things you want to do in the next 12 months. Goal setting should include what you and your family want to do in 5 years – family holidays, education for your children, a new car, when it is that you and your partner would like to stop work or wind back into retirement. As far away as these milestones may seem, without having an active plan in place, time will continue to fly by. Without a solid plan our goals rarely materialise.

Planning your exciting goals and aspirations doesn’t have to be a weighted time consuming ball that you have to learn to juggle along with everything else. It is easier than you think if you work with someone who can help you plan and keep you motivated. It is very rewarding when you realise you are actually living and experiencing the achievement of the goals you wrote down.

We use systems all the time without realising. Just like we put systems (well try to!) in at home to make our home life easier, it is vitally important to establish systems that ensure your money is working for you, and your family.   Something as simple as structuring your banking correctly can have a big impact on how hard your money works for you.

Now that you are back at work and earning additional money to put towards your household, it is important to ensure that all the sacrifices that have been made to earn this money have not gone to waste. You need to ensure that your hard earned money is working for you.

I have written about my own personal experience, as a Mum working part time. In my professional life I am a Financial Planner with Income Solutions.   I regularly hear stories just like mine, which provided me with the motivation to create a tailored presentation for women which provides some examples of the impact receiving financial advice can make to your day to day lifestyle as well as your long term goals. For more information, book a one-on-one meeting or a workplace Income Solutions for Women session.

Invest in yourself – it could be the best investment you’ll ever make!  

Jess Hall, 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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Myth #5: Now I have a plan, I am set

Blog - Linked In Size (1)For the final instalment of the Financial Planning Myth Series, I wanted to touch on a Myth that even some people who already engage a Financial Planner believe; that is “Now that I have a Plan in place, I am all set and can execute the plan myself.

A Financial Plan is not unlike a Personal Training or eating plan; you get much better results when you have a coach who holds you accountable to enact the plan and to stick to it! Like weight loss or muscle gain goals, achieving financial goals requires hard work and dedication. Getting successful outcomes is always easier when you have someone challenging you along the way.

Whilst our industry is full of people who recommend change for change sake (mostly when it is not actually required), occasionally there are changes to your circumstances that you might not realise cause ripple effects right throughout your Financial Plan. For example, consider the impact of a large home renovation, whilst this might not seem like a huge deal, have you considered things like:

  • Does your Will need changing to reflect your wishes and to equalise your estate?
  • Do you require higher sums of Life and Total & Permanent Disability Insurance?
  • Does your Home Loan need reviewing and could you get a better rate now you have more debt (hence more bargaining power with the Bank)? Perhaps you should contact your Mortgage broker or lending specialist.
  • Are there strategies you could use like Debt Recycling to reduce your Mortgage more quickly?

A good Financial Planner can give you the tools and create a Plan to get you on the right path, but even the best laid plans will require tweaking and adjustments over time. The value added through a long-term partnership with your Planner can be invaluable.

To quote Will Rogers: ‘Even if you’re on the right track, you’ll get run over if you just sit there.

Steven Nickelson, 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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