Love is in the air, and some of us are searching for that perfect gift to express our affection for those closest to us. And despite a grisly past, this day has come to be known for lovers… So just what is the ultimate gift of love this Valentine’s Day?
While chocolates and flowers are lovely, this year, consider giving a gift that transcends the ordinary. That is, the gift of protection and security. Yes, we’re talking about life insurance. The ultimate expression of love and care for your partner and family. In this post, we explore why life insurance is not just a financial product. It is a symbol of unwavering commitment and love.
5 Reasons Insurance is a Gift of Love
Protecting Your LovedOnes: Life insurance provides a financial safety net for your loved ones in the event of your passing. It ensures that they can maintain their standard of living, pay off debts, cover funeral expenses. Also, allowing them to achieve long-term financial goals, even in your absence. By securing adequate life insurance coverage, you’re showing your commitment to protecting your family’s future. No matter what life may bring!
Peace of Mind: One of the greatest gifts you can give your partner is peace of mind. Knowing that they and your family will be taken care of financially can alleviate stress and anxiety. This allows you both to focus on enjoying the present moments together. With life insurance in place, your loved ones can feel reassured that they have a financial cushion to rely on. This in turn gives the freedom to live without fear of financial hardship.
Planning for the Unexpected: None of us can predict the future, but we can plan for it. Life insurance enables you to prepare for the unexpected and ensure that your loved ones are not left financially vulnerable if tragedy strikes. It provides for your spouse, supports your children’s education, and maintains your family’s lifestyle. Life insurance allows you to fulfill your responsibilities and promises, even when you’re no longer here.
Demonstrating Long-Term Commitment: Giving the gift of life insurance is more than just a financial transaction – it’s a declaration of your long-term commitment and love. It shows that you’re thinking about your partner and family’s future. And also, that you want to continue caring for them, even beyond your lifetime. By taking proactive steps to secure their financial well-being, you’re strengthening the bond of trust and love that forms the foundation of your relationship.
Tailored Solutions for Every Couple: Life insurance policies come in various forms and can be funded from personal or retirement savings. As a couple, you can customize your coverage to suit your unique needs, goals, and budget. Whether you’re newlyweds starting your journey together or seasoned partners planning for retirement, there’s a life insurance solution that can align with your specific circumstances. Thereby providing the protection you both deserve.
This Valentine’s Day, why not go beyond the traditional gifts and consider giving your loved one something truly meaningful – the gift of life insurance.
Ensure the future of your loved ones today
Basically, by safeguarding their financial future, you’re expressing your love and devotion in a tangible and enduring way. Yes, the ultimate gift of love this Valentine’s Day. Reach out to your Wealth Planning Partners’ adviser today to explore your life insurance options or call us on 07 5593 0855. So why not take the first step towards securing a lifetime of love and protection for those you hold dear?
Happy Valentine’s Day! Above all… don’t forget the chocolates!
As of 2023, the indexation rate for HECS debt in Australia is 7.1%. This means that the outstanding balance of HECS debt will increase by 7.1% on June 1st of each year to account for inflation.
So, if you owe $35,000, this will increase to $37,485.
For those who are considering borrowing for a home, it’s important to understand that HECS debt can affect your borrowing capacity. Lenders take into account a borrower’s income and expenses when assessing their borrowing capacity, and HECS debt is considered an ongoing expense.
When calculating borrowing capacity, lenders typically assume that the borrower will be making repayments on their HECS debt at the minimum repayment rate. The minimum repayment rate is currently set at 1% of taxable income and is adjusted annually based on income.
If a borrower has a high level of HECS debt, their minimum repayment rate could be quite significant. This could reduce borrowing capacity, as it would be considered an ongoing expense. This needs to be taken into account when assessing ability to make mortgage repayments.
However, it’s worth noting that HECS debt is not considered a bad debt by lenders. It is a relatively low-cost form of borrowing. In fact, some lenders may even take a borrower’s HECS debt into account as part of their overall financial position.
Overall, if you’re considering borrowing for a home and you have HECS debt, it’s important to factor in. Understand the impact of your HECS repayments on your borrowing capacity. This can help you to determine how much you can realistically afford to borrow and repay over time.
Or if you should make some repayments earlier.
If you’d like to run through your own circumstances, contact your lender or reach out to the Team at Wealth Planning Partners.
Market volatility has been elevated over the past week driven by the failure of the Silicon Valley Bank (SVB). Global banking system volatility is on the rise!
The unfolding situation in the US could be seen by some as having echoes of the Global Financial Crisis (GFC) from 2008. This, combined with recent falls in Credit Suisse shares (which appear to be unrelated to the US mid-tier banks), has caused jitters. Despite SVB’s failure being the second largest in US history, when put into perspective. However, it’s assets are less than one tenth of J.P.Morgan’s, one of the major players in the US banking system.
The US Federal Deposit Insurance Corporation (FDIC) has already taken control of the SVB to navigate the collapse. This is to ensure the best interest of the financial system. Further announcements from U.S. Treasury have sought to calm the broader market of the financial system’s health. And also, to reassure the market the relevant tools are available. There will be no GFC-style bailout, nor will one be necessary.
The US financial system is considered to be well capitalised overall. According to Mark Zandi, Moody’s Chief Economist, the size of the smaller banks at risk is not likely to pose any threat to the financial system.
How it happened
• SVB has been operating in a relatively unusual manner. Instead of lending the deposits received, the Bank invested in long dated fixed interest rate bonds. This exposed the Bank’s assets to significant interest rate risk which was not sufficiently hedged.
• Given rising interest rates, the value of the bonds held to cover customer deposits have fallen significantly. The need to sell fixed interest rate securities to cover the withdrawal requests resulted in realised losses.
• Earlier in the month, a single sale resulted in a $1.8 billion loss. This led the Bank to raise capital to increase the balance sheet health. The capital raise failed, which prompted customers with deposits with the Bank to withdraw their funds. In turn, resulting in a run on the Bank.
• Within 48 hours the Bank was bankrupt with the FDIC taking control.
• The US Federal Reserve and US Government have guaranteed customer funds at SVB will be paid back in full.
• Major investment bank Credit Suisse experienced panic after the share price dramatically fell, with banking operations under pressure.
• Overnight, the Swiss National Bank and the Swiss financial regulator announced support for the Bank. They announced, “Credit Suisse meets the higher capital and liquidity requirements applicable to systemically important banks.” And confirmed they will “provide liquidity to the globally active bank if necessary.”
What to do?
This current market volatility, while significant, does not alter our long-term views on how portfolios are positioned. It is important to manage your portfolio in line with long-term objectives, aligned to risk tolerance. Please give us a call to discuss your portfolio if you still have concerns.
Time is running out to apply for a Director Identification Number (director ID)
You may have heard about the new rules which require directors of Australian companies to obtain a Director Identification Number (director ID). It is a unique 15-digit identifier that directors apply for once and keep forever.
The following provides some useful further information.
As a director of my SMSF’s corporate trustee do I need a director ID?
The new requirement to obtain a director ID applies to all directors of corporate trustees of an SMSF. This obligation also applies to any directors who may have resigned from all director roles after 31 October 2021. This applies even if you have no intention to ever be appointed as a director of an Australian or foreign company.
How long do I have before I need to get my director ID?
Individuals that were a director of any company prior to 1 November 2021 have until 30 November 2022 to get a director ID. This transitional period also applies to newly appointed directors of corporate trustees of an SMSF. This is provided they were an existing director, of a company, before 1 November 2021.
Otherwise, first time directors are now required to have a director ID before they are appointed as director of any company.
What is the fastest way to apply for a director ID?
With 30 November 2022 fast approaching, we strongly encourage all directors to apply for their director ID now. The fastest way to apply for your director ID is online at abrs.gov.au/directorID.
A myGovID is different to your myGov account. Your myGov account allows you to link to and access online services provided by the ATO, Centrelink, Medicare and more. myGovID is an app that enables you to prove who you are and log-in to a range of government online services.
Don’t already have a myGovID? You will need to set this up before you can apply for your director ID online. Refer to mygovid.gov.au/setup for more information.
You will need to choose your identity strength, noting that ‘standard’ identity strength is the minimum required for a director ID.
What if I can’t set up myGovID online?
Where you are experiencing difficulties setting up your myGovID, the ATO encourages you to contact them on 13 62 50.
To speed up the phone application, please have your TFN ready as well as the information listed below, required to verify your identity.
If you’re unable apply online or over the phone, the ATO will provide you with a paper form to complete. This is the least preferred option and will require you to provide certified copies of documents to verify your identity.
Can we help you get your director ID?
You must apply for your director ID yourself, so that the ATO can verify your identity.
Verify your identity against your ATO records: once you have logged into ABRS online using myGovID, you’ll need your tax file number, residential address held by the ATO, and information from two of the following:
· bank account details (where your tax refunds or payments are made and received)
· an ATO notice of assessment
· a dividend statement
· Centrelink payment summary
· a PAYG payment summary (this is different to your income statement or your PAYG instalment activity statement).
How can we help?
Have questions or would like further information about director IDs? Please feel free to give me a call on 07 5593 0855. Or arrange a time for a meeting, so we can discuss your requirements in more detail. Although we are unable to apply for a director ID on your behalf, we would be more than happy to guide you through the process. And where possible, source documents to help you verify your identity with the ATO.
For other information, resources, and timely updates relevant to your SMSF, please refer to the SMSFA’s trustee education platform. SMSF Connect.
Heightened global markets volatility can easily trigger kneejerk reactions by panicked investors.
Widespread selling, triggered by the Russia-Ukraine crisis, has been behind recent big swings on global financial markets. This includes stock markets, commodities and currency markets.
As serious as the current events are, heightened market volatility is nothing new. The onset of the COVID-19 pandemic also triggered major falls on global markets two years ago.
In March 2020, the Australian share market dropped 35%+ over 20 trading sessions. It reached its lowest level in over a decade. Very soon after, it and other global financial markets staged a quick and very strong rebound.
By the end of 2020, share markets were back near record levels, and last year they continued to build momentum.
Investors who didn’t panic, chose to ride through all that early 2020 markets volatility. Those who have remained invested ever since, have been well rewarded with both capital and income growth over time.
In volatile market conditions, staying the course is generally the best investment strategy.
Three mistakes to avoid during a downturn
1. Failing to have a plan
Investing without a plan is an error that invites other errors. Chasing performance, market-timing, or reacting to market “noise” driven by headlines included. Temptations multiply during downturns, as investors looking to protect their portfolios seek quick fixes.
2. Fixating on losses
Market downturns are normal, and most investors will endure many of them. The number of shares you own won’t fall during a downturn unless you sell. In fact, the number will grow if you reinvest your funds’ income and capital gains distributions. And any market recovery should revive your portfolio too.
3. Overreacting or missing an opportunity
In times of falling asset prices, some investors overreact by selling riskier assets. And, then moving to government securities or cash equivalents. It’s a mistake to sell risky assets amid market volatility in the belief that you’ll know when to move your money back to those assets.
Time in the markets is what counts
Trying to time markets is virtually impossible. Just being invested in the market, and making ongoing contributions, will ensure you never miss out on long-term growth.
If you’re unsure about your current investment portfolio, call the Wealth Planning Partners Team today to discuss a strategy for you.
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.
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