![Why a Hubby should consider Life Insurance]()
by Jodie | Jul 21, 2014 | Advisers, Debt Management, Finances, Insurance & Protection, Men, Money, Women
Aussies we know are a pretty easy going bunch and this is probably one of the main reasons we’re also a terribly under-insured nation.
The ‘she’ll be right mate’ attitude is pretty pervasive, with most of us thinking ‘it’ll never happen to me.’
And then, wondering what’ll happen to the family when you’re gone can be perceived as a little morbid. Some hubbies have told me that the missus can take care of herself and the kids, remarry or go back to work to deal with outstanding debts. (None of them I considered as potential ‘father of the year’ candidates.)
Consider the flipside tho – if your kids have just been deprived of their father – at huge emotional cost, then you’ll also depriving them of their mother, sentenced to work out of necessity, when a bit of cover could have taken care of the big debt items.
Think you can afford it? Seriously, if you can’t afford the$100 per month whilst you’re earning an income, it’s going to be even harder for the family to find the $1000 or $4000 per month without the bread-winner and their income. Nobody I know has ever gone bankrupt paying for insurance; but families can, because they weren’t!
Chat to an adviser today about appropriate levels of cover and funding options that may mean you will never personally be ‘out of pocket’ either.
by Jodie | Jun 23, 2014 | Advisers, Australian Economy, Budgeting, Finances, Insurance & Protection, Interest Rates, Investments, Superannuation, Taxation
Finance Minister, Mathias Cormann has delayed the introduction of ‘Super Dashboard and Disclosure’ legislation until 1 July 2015. The intention of this was for members to be able to choose a Superannuation fund, get full disclosure from their fund as to the fees they pay and what exactly they have in their portfolio. Government has obviously identified this as a gap in the Super industry and will be working toward fuller disclosure by Super funds.
This begs the question though, “how many Australians actually know the details of their Super portfolios, the costs and management fees of the investments held and how many actually care?”
The sobering reality for many of us is that we are now facing a budget that is going to leave us less well off, regardless of income or age. Minister Joe Hockey is unfortunately confronted by a double edged sword: he faces the problem of tackling the country’s debt burden and the growing cost of an ageing population, with less workers in the field supporting the ‘system.’
One way to reduce debt is to cutting spending on services and in turn, add various tax increases the government labels as levies. Most agree that the current situation is unsustainable, so the government will be left with very few options.
Most likely, one solution will be pushing up the pensionable age and where this will finally rest can only be speculated at. It is obvious that many Australians are going to have to retire much later, and possibly, with much less. Unless, you start taking charge of funding your own retirement – from now!
Superannuation will play an increasingly important role in all our futures. What we do today is going to affect our Super tomorrow. This brings us back to the choice of super fund we now make and the associated costs involved. Small percentage differences can have a huge impact at the end of our working lives. The Gatten Institute has recently reported that fees and costs in Australian Super funds are higher than those in most other countries with similar retirement systems, although these fees have started dropping in the last few years, they still have a long way to go.
As there are so many funds to choose from and most Australians are left confused through choice and probably reason that one fund is as good as another. But as we know, all birds have feathers, but not all birds can fly! Besides fees and costs, other aspects to consider are things such as investment options that funds offer, exit rules, ease of interaction, taxation concerns, control over investments, insurance options and transparency.
Financial Planners make it their business to know the intricate ins and outs of funds, they have the tools to compare funds as to the benefits and advantages of one fund over the other. It is a therefore, a ‘no-brainer’ that everyone who owns a superannuation fund should at least have one discussion with a professional who can assess your situation, and possibly set an action plan in place that can deliver the desired outcome for every Australian.
The team at Wealth Planning Partners make it their aim to stay up to date, so don’t hesitate to give us a call for a no obligation visit, to discuss your needs. Now’s the time to start taking charge of your financial future.
by Jodie | Jun 13, 2014 | Advisers, Australian Economy, Economy, Finances, General, Insurance & Protection, Investments, Money, Self Managed Superannuation Funds, Superannuation, Taxation, Term Deposit
So most of us have heard about Self Managed Super funds, but where do they fit in the somewhat complex world of superannuation funds?
Basically, there’s three options at the disposal of a working Aussie.
1. The Industry Fund, some refer to as a union fund. Typically, an industry will have a designated fund for members of a certain profession, such as the MTAA for motor trades employees or CBUS for those in the construction industry. Most come with a default amount of low cost insurance, low fees and have a limited range of investment options. A very vanilla, often cheap and very easy option, especially when just starting out.
2. A retail fund, Master Trust or Wrap is a platform that offers the ability to choose from a wide range of managed funds and direct share options. Often they are the choice of an engaged employer who likes to offer additional benefits to staff, or those working with the assistance of a financial adviser. Some allow capping of fees, family linking or taxation at a member level and a choice of investor directed insurance options. They’re certainly more sophisticated and come at a higher cost than an industry fund due to the extra ‘bells and whistles.’
3. The self managed super fund is different again with the members running, administering and managing their retirement savings. There are inherent dangers for getting it wrong, and many still choose to partner with professionals so their goals can be reached. Fees can be higher depending on choice of service provides, whilst others realise substantial savings. Control & flexibility, personalised insurance, streamlined admin and extra investment options including direct property are big draw cards.
There seems to be a lot of confusion and conflicting information in the market for people researching their options in regard to self managed superannuation funds. Some sites advise that you need at least $250k for the exercise to be worthwhile and others advise that as little as $70k will do the trick.
Truth is, it comes down to you.
Firstly analyse: What are your reasons for wanting to do a SMSF?
For most the answer comes down to two big issues – control and flexibility.
After that are secondary considerations such as fees, administration and taxation.
Since the GFC or global recession began in late 2007, most haven’t been able to fully recoup losses and fund returns remain lower on average with high volatility. Many clients express the feeling they’d be better off with a property or term deposit (which may or may not be true.) Others believe that constant government meddling with legislation changes, capping deposits allowable and possible tax alterations mean it’s all just too hard to keep up with.
Having control means you’re able to choose assets that aren’t typically available in a standard industry or retail fund, such as Exchange Traded Funds (ETFs) or residential and commercial property. Flexibility provides the options or being able to pick and choose, and buy and sell at your leisure.
Fees are often touted as the ‘be all and end all’ when investing and certainly can make a impact. We’ve all seen the ‘compare the pair’ ads where only fees are ever considered. No thought is given to the impact of tailored financial advice, a strategy that includes salary sacrifice, additional investments or co-contributions and having the investments match your personal risk profile. All of which may lead your fund ahead in leaps and bounds and sometimes negate a slightly higher cost structure.
So when comparing an industry fund to an SMSF, it’s highly possible the fees on the industry fund will be lower than the administration costs of an SMSF. This however doesn’t take into account the impact of suddenly being more engaged with the fund, loving the assets you’ve chosen, contributing more and the immediate ability to defer and possibly reduce the 15% tax payable on all contributions.
Accountants often charge around $2000 and upwards for the tax return and an additional $500 or more for your annual audit. But competition is a wonderful thing and in many cases has brought prices down. But pay peanuts and you may get monkeys. So, do be careful!
If in doubt, invest in the time to sit down with a professional who specialises in SMSF to discuss your goals and see whether it fits in your financial journey. Amanda from Wealth Planning Partners would be happy to assist, or check out the SPAA website for your closest qualified specialist Adviser.
![Why a Hubby should consider Life Insurance]()
by Jodie | May 14, 2014 | Australian Economy, Budget, Budgeting, Business, Debt Management, Economy, Interest Rates, Money, Superannuation, Taxation
Well, we know that when times get tough, it makes get sense to stick to a budget, and ‘tighten one’s belt’ and that’s what the latest Australian Budget is all about. So what are some of the main changes and how will they affect you?
Pensions: Looks like we’ll be expected to work longer, but that’s cool with me. Not sure I could spend thirty years eating baked beans on a Superannuation Plan funded only by a percentage of forty-five years income. It’s also unlikely younger Aussies will get a Government Pension unless our workforce makeup alters. Changes include:
Pension payments will have the asset and income test thresholds frozen for 3 years from 1 July 2017
The Government will index pensions to inflation rather than wages from September 2017, this is expected to reduce increases.
The pension age will be increased to 70 by 1 July 2035, building on former Government’s move to increase the pension age to 67 by 1 July 2023.
Working Longer: The Government has acknowledged for older Australians to find jobs there needs to be a culture change. They’re offering up to $10,000 to businesses that employ Australians aged over 50 years who have been on unemployment or disability benefits for more than 6 months. I love that idea!
Healthcare: From 1 July 2015, previously bulk-billed patients can expect a charge of $7 per visit towards the cost of standard GP consultations and out-of-hospital pathology and imaging services. For concessional patients and children under 16, the contribution will be limited to the first 10 visits each calendar year. The Medicare levy will increase from 1 July 2014, to fund DisabilityCare, which was announced in last year’s budget.
Business gains and losses: The Government remains committed to cutting the company tax rate by 1.5% from 1 July 2015. For large companies this will offset the cost of the Paid Parental Leave Levy. For SMEs it will provide a boost to profits. The Government has also reinforced its promise to repeal the Minerals Resource Rent Tax (MRRT) and Carbon Tax. In addition, the Government introduced an Exploration Development Incentive to encourage investment in small exploration companies undertaking greenfields mineral exploration in Australia.
High income earners levy: A 2% levy will apply to those earning an income above $180,000. This for three years only from 1 July 2014 to 30 June 2017 and means those earning above $180,000 will pay the extra 2% levy on all income in excess of $180,000. e.g. if you’re earning $200,000 you will be faced with an additional 2% on $20,000 – a total levy of $400. Not too harsh!
Higher education – good and bad: The Government has announced it will deregulate the higher education sector and from 1 January 2016 will allow providers in Australia to set their own tuition fees. This is likely to increase the cost of education in Australia. The Government will continue to provide students a way to defer costs of study through HELP and graduates will begin to repay the debt only once their income reaches $50,638 from 1 July 2016.
And, from 1 July 2014, a tertiary loan system will be extended to TAFE students who will have access to 4-year concessional trade support loans to help them complete their trade course. That’s pretty cool!
More super: The Super Guarantee will increase from 1 July 2014 to 9.5%. It will then remain frozen for 4 years, after which it will increase 0.5% a year until it reaches 12% in July 2022.
So as expected, some winners, some losers in a tight budget. However, the morning headlines were overwhelmingly negative and could indicate that consumer confidence is likely to take a hit, at least initially.
This in turn likely means the RBA keeps rates on hold – possibly for the rest of the year, and maybe beyond. Each state will also be affected with hospital funding cuts and cuts to payments for education also. This will likely increase debt burdens of individual states, who in turn could look at increasing revenue through raising taxes.
So, some of the changes may affect you, and if you’re worried about how, get in touch with your Adviser for an assessment of your situation.
by Jodie | May 14, 2014 | Australian Economy, Budget, Debt Management, Economy, Finances, General, Taxation
Are you a Mature Australian? Or would at least like to think so? Wondering how the budget changes will affect you – or those other Mature Australians around you?
Here’s a quick wrap of the main alterations that may impact you from Budget 2014:
- The Super Guarantee levy has been pushed back by one year. It will increase to 9.5% on 1 July 2014 and then be frozen until 1 July 2018. Previously, the levy was to reach 12% by 1 July 2019 under Labor proposals, 1 July 2021 under the Coalition promise, now 1 July 2022.
- Excess non-concessional contributions – excess contributions tax eliminated (positive) – now refunded, any earnings taxed at marginal rate.
- Increase in caps (positive) – concessional $30,000, non-concessional $180,000.
- Australian Defence Force Super – new recruits from 1 July 2016 end of defined benefit.
A couple of other Tax Changes:
- The Mature Age Tax Offset abolished from 1 July 2014 (previously restricted).
- Dependent Spouse Tax Offset abolished from 1 July 2014 (previously restricted).
Changes to the Pension include:
- The pension age will rise to 70 by 2035.
- Indexation by CPI (rather than average male OTE) from September 2017.
- Indexation of asset test/income test thresholds frozen for three years from 2017.
- Deeming rates (for income test) reset to $30,000/$50,000 from 2017 (currently $46,600/$77,400).
Updates to the Commonwealth Seniors Health Card will be:
- Superannuation balances are to be counted in the income test (presumably at the deeming rate) – which makes it harder for non-pensioners to qualify (income limits currently $50.000/$80,000).
- No Seniors supplement – abolished from 1/7/14 ($876.20 for single, $1,320.80 couple).
It’s been a tough budget, but perhaps not as tough as some were expecting. All Australians have been told to bear the burden. According to Federal Treasurer Joe Hockey, “the economy is growing at less than normal speed and the time to fix the budget is now.”
