by Jodie | Dec 4, 2018 | Australian Economy, Money
2018 has been a mixed year for investors, with some gains, and some losses. But are we at the end of the growth cycle… for now?
Market Cycles and the end of the Growth Cycle
We’ve seen a complex economic environment with geopolitical and trade uncertainty, a change of PM (again,) a Royal Commission or two and the possible burst of the crypto-bubble. Pretty easy to say, there’s been plenty going on that can affect markets, your investments and long-term retirement savings.
Markets traditionally work in cycles of around 9 years and we’re now at the very pointy end of the longest bull run in history. Bear markets traditionally last for less than 1.5 years. So, somethings gotta give… right? Does this mean the end of the growth cycle?
Looking forward, 2019 is likely to be characterised by further volatility and a difficult environment for shares.
So what’s next? And what should you do?
Many indicators are pointing to a potential downturn in 2019 in developed markets, so is now the ideal time to position for a lower growth environment and focus on alternatives and the more stable, cash flow producing investments? Or… the end of the growth cycle! Possibly, so what are my options?
There’s four main choices you have…
- Do nothing, hold the course. You understand that markets fluctuate, that’s just a part of how they work. Your goals and risk profile remain the same and you’re committed for the long term. No worries! Review your statement, throw it in the file and have yourself a cuppa.
- Panic! Sell out and pop everything into cash… tho chances are, you aren’t great at picking the bottom of the market and won’t be brilliant at deciding when to ‘get back in.’ You’ll possibly miss some growth options too… As someone wiser than me once said, “it’s time IN the market that counts, not timing the market.” Have a chat with your adviser before doing anything too rash. Remember, you only crystalise gains and losses when you make the sell!
- Sell down part of your portfolio into cash to make way for some future buying opportunities, in case things go pear shaped and you can take advantage of the potential volatility. Again, schedule time with your adviser to work out if this option is for you, and which funds you’re happy to sell.
- Things have changed… Contact your adviser! See if you are still happy with your existing Risk Profile Questionnaire and update your current circumstances. You may need to rejig what you currently have, arrange a switch or two of growth vs defensive stocks and be reassured to hold steady or change to a different profile. Do you now have a moral bent towards more socially responsible investing? Do you have a greater or lower income requirement? Has your family structure or debt level changed? All good triggers to visit an adviser and review.
Australian retail, housing and banks to suffer*
Australia’s retail sector is already weak and there are indicators showing it’s unlikely to improve any time soon, with lower motor vehicle sales growth, falling house prices and money supply growth at a 26-year low.
With State and Federal elections slated over the next six months, keep a close eye on consumer confidence, which tends to be timid ahead of major elections. Falling consumer confidence, tighter lending standards and the Reserve Bank of Australia’s reluctance to cut interest rates further, mean we’re likely to see house prices continue to fall nationally in 2019.
Defensive stocks likely to see gains*
The 2018 drought across Australia has seen many agricultural stocks fall. While a rebound in crop volumes is not likely to hit until 2020, 2019 may be the year to pick up some agricultural stocks at the bottom of the cycle. In times of volatility, other defensive sectors to consider are telecoms, utilities, healthcare and staples.
Investors may be in for a bumpier ride in 2019. However, those with well-positioned portfolios should still be able to capitalise on some attractive income and growth opportunities.
If you have any questions, please don’t hesitate to get in touch. Our office in Robina is always stocked with tea, coffee, hot chocolate… or even a wine and we’d love to see you and update at any time.
* Source: Desktop Broker
by Jodie | Sep 4, 2018 | Australian Economy, Superannuation
If you’re a recent retiree and looking to increase superannuation savings, we’ve got some good news!
The Australian Government is proposing to make it easier to boost super with the work test exemption. For recent retirees, you can save more super by contributing for a year without having to show you’ve been ‘gainfully employed’.
Current rules
Currently, anyone under age 65 can contribute to their super regardless of whether they work or not. But, those aged between 65 and 74 need to meet the ‘work test‘ before they can make super contributions. To pass, they have to show they’ve been gainfully employed for at least 40 hours over 30 consecutive days in the financial year they plan to contribute.
The government has already given members with a total super balance of less than $500,000 some flexibility to grow super. These individuals can carry forward any unused amount below the concessional contribution cap of $25,000. This can occur on a rolling basis for 5 years from 1 July 2018. They can use unused cap amounts from 1 July 2019. People between 65 and 74 must still meet the work test before they can make ‘catch‑up’ contributions.
Proposed measure
So, to encourage this age group to save even more for retirement, the government is proposing changes. This is to give individuals who don’t meet the work test an extra year to beef up super savings.
From 1 July 2019, those between 65 and 74 with a super balance under $300,000 will be able to make voluntary contributions. This is in the first financial year that they don’t satisfy the work test. Once eligible, they don’t have to remain under the $300,000 balance cap during the 12‑month period.
The annual concessional and non-concessional contributions caps will continue to apply, but members can access unused concessional contributions cap amounts they have carried forward.
The government will assess total super balances at 30 June of the financial year in which members last met the work test. So those who retire in the 2018–19 financial year may be eligible to make additional contributions.
Seek professional advice
If you’re considering contributing to your super under the proposed work test exemption, it may be wise to speak to your adviser to see how making additional super contributions may work to your advantage. We’re your local Gold Coast financial advisers. So give us a call to see if this applies to you! 07 5593 0855.
by Jodie | Jul 19, 2018 | Finances, Superannuation, Taxation
The new Downsizer Contribution
Since the start of the new financial year, 1 July 2018, superannuation contribution opportunities for those aged 65 plus have expanded. They now include the new Downsizer Contributions. Have you heard about it? Checked out the rules?
How do I qualify?
These contributions let eligible individuals to contribute up to $300,000 from the sale of their property into super within 90 days. And you don’t need to satisfy the work test. Bonus!
This extra payment can be made in addition to the concessional contribution and non-concessional contribution caps. It is not restricted by your total superannuation balance.
An “eligible property” must have been owned by an individual, their spouse or former spouse for 10 continuous years just before sale. Also, the individual must satisfy all the requirements to qualify for a full or part capital gains tax (CGT) exemption.
Check the ATO Rules to see if you tick all the boxes here.
Top Downsizer Contribution Tip!!
Downsizer contributions can present an opportunity to implement a recontribution strategy. What’s this, you ask?? This strategy enables you to increase the tax-free component of your superannuation. This helps reduce tax liability on death benefits that will paid to non-dependent beneficiaries, such as adult children.
Any Downsizer Traps?
TRAP!! Pensioners should know, that selling the family home then making a Downsizer Contribution may reduce Age Pension entitlements. This is because the principal home is an exempt asset for Centrelink purposes. Whereas, superannuation is counted as an asset for clients who are of age pension age.
If this sounds like something you’d like to know more about, give your adviser a call, or we’d be happy to walk you through whether or not it’s right for you.
by Jodie | Jun 12, 2018 | Money, Superannuation
Lost Super stats
Did you know there is about 14.8 million Australians with a superannuation account? Around 40% hold more than one superannuation account? Some of that 40% makes up the $18 billion in ‘lost super’. Is some of that yours? Should you care about lost super?
Find it
Have you moved house since starting work? Changed jobs over the years? Don’t know or remember where your teenage self stashed your super? It’s easy to track it down. It’s time to care about your lost super.
Combine it
Combining your multiple accounts can help save on fees and reduce your paperwork. Having all your superannuation together in a single account means you can keep track of your hard earned money. Even further grow your retirement fund.
Get online
Many websites offer to help find and combine your super. It is quick, easy and free. You can check with your known superannuation provider or the Australian Tax Office.
Grow it
A qualified financial adviser can help you find an appropriate superannuation fund that will grow your hard-earned income ready for your retirement – and the sooner you get on top of this, the better! Give the team at Wealth Planning Partners a call if you’d like to grow your super.
Source: https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Super-accounts-data-overview/
by Amanda Cassar | Jun 5, 2018 | Finances
“Cancer isn’t always a matter of genetics or bad luck.” – Prof. David Whiteman, Brisbane’s QIMR Berghofer Medical Research Institute.1
A recent study from the institute found risky habits and behaviour are to blame for more than 16,000 Australians being diagnosed with cancer each year.2 The good news is that changing these behaviours may help prevent certain cancers forming.
The most common types of cancers that are directly related to lifestyle choices include skin melanomas; lung, bowel, liver and stomach cancers.3
The key culprits causing these types of cancers are pretty obvious to most of us, and include:
- smoking
- high intake of red & processed meats
- low fruits and vegetables
- excessive exposure to UV light
- excessive alcohol consumption
- physical inactivity
- overweight.4
You don’t need to be a genius to know it all boils down to what we put in our bodies and how often we move.
So, what changes can you make for a healthier lifestyle?
- The biggest cause of preventable cancer is smoking, so your first mission is to “hang tough, don’t puff!”5
- Eat more fruit and veg and reduce red and processed meat –going vegetarian just two days per week may help you create a more balanced diet. You might even be surprised at some of the tasty and creative options available minus the meat!
- Decrease the grog – limit drinks to special occasions, weekends or set yourself the challenging of nursing one to two drinks only at a party.
- Exercise regularly – exercise helps reduce risks of various physical and mental health problems.6 If you have a sedentary ‘sit on youb bum’ lifestyle, even committing to 15 minutes of walking a day could be a great start.
- Reduce exposure to UV light – get your rays early in the morning or late in the afternoon and use a combination of protective clothing, shade and sunscreen. The tan bed has got to go!
1-5 ABC News, (2017), ‘Changes to risk factors could have prevented 40 per cent of cancer deaths, study finds’. Available at: http://www.abc.net.au/news/2017-12-12/cancer-study-finds-40pc-deaths-preventable-with-lifestyle-change/9247876
6 Australian Government, Department of Health, ‘Physical Activity’. Available at: http://www.health.gov.au/internet/main/publishing.nsf/content/phy-activity
by Jodie | Jun 4, 2018 | Advisers, Budget, Finances, Money, Retirement, Savings, Superannuation, Taxation
The end of financial year doesn’t have to be too taxing a time. These five tips will help organise your finances for the coming financial year.
Take the pain out of EOFY by being organised. With the right preparation, you can make lodging your tax return a painless process and maybe even increase your refund!
Firstly…
1. Plan ahead
Decide when and how you will lodge your tax return. Will you do it online, via a lodgement service, the MyGov portal or ask your accountant? Your choice may depend on the complexity of your affairs but whichever option you choose, allocate time in advance. Often, it can be a great idea to meet with your adviser or accountant in June to ensure you are maximising the deductions and investments available before June 30. Don’t leave it to the last minute and find out you’ve missed out!
2. Find all you need
Often the most challenging part of lodging your tax return is finding all the relevant paperwork if you haven’t been of top of it all year. It can pay to keep your tax information together through the year, including receipts and bank and credit card statements. You’ll also need payment summaries, records of interest, details of any foreign pensions, your spouse’s income details and other records if you have investments or rental properties. You can see the complete list on the ATO website. If you’re not great at being overly organised, invest in a tray or spike that you can put all the relevant paperwork on as it comes in so that it’s handy when you need it each year.
3. Know your deductions
Many people don’t realise what you can claim tax deductions on. From dry-cleaning to charitable donations and superannuation contributions, knowing what expenses are tax-deductible may increase your tax refund significantly. Typical deductions include work-related training or courses, uniform costs, some insurances and office expenses.
The ATO website has a useful list of deductible expenses. If you want to get ahead, you could even purchase deductible items for next year before June 30 so they’re deductible against this year’s income. Again, it’s worth checking in with your accountant early to ensure you get it right.
4. Boost your super – and your spouse’s
By sacrificing some of your pre-tax salary throughout the financial year, you can increase your retirement savings but also reduce your taxable income. Salary sacrifice contributions are taxed at a maximum rate of 15%[1] which may be less than your marginal rate. Popping in a lump sum prior to June 30 also works for many – just make sure you get the type of contribution right!
Also, contributing to your spouse’s super will boost their super savings and you may be entitled to a tax offset if your spouse earns less than $13,800.
5. Get ready for the year ahead
The end of the financial year is a great opportunity to understand your finances. Usually, you have until October 31 to finalise a personal return. After lodging your return you should be well equipped to plan for the next financial year. Start thinking about how you can improve your budget or if you have the funds to invest.
Automating a small savings program can have small funds quickly add up.
By following these tips, speaking with a financial adviser or accountant and conducting your own research too, you should be ready to transition easily into the new financial year.
[1] Australian Taxation Office. Accessed at www.ato.gov.au/Individuals/Super/Growing-your-super/Adding-to-my-super/Salary-sacrificing-super/
by Jodie | May 25, 2018 | Business, Finances, Insurance & Protection
Starting a new business can be exciting but there’s a lot to think about and organise too.
Before you even begin, consider how prepared you are to make the difficult decisions, work those long hours required, face possible and ongoing financial constraints, lose a fair amount of sleep, turn grey and maybe confront failure confront failure.
If that doesn’t put you off, here’s some more tips before you get started!
Research
If you still have the drive to make a success of your business idea, start by talking with others who have gone down the same path and can help you figure out your next steps. Most will tell you it’s hard, but totally worth it, tho some have enjoyed the journey, they’re also happy to go back to being employees.
Be under no illusions, this is a complex process with many moving parts, and having a checklist will make things easier.
The Department of Industry, Innovation and Science offers a lot of help through its business.gov.au website, including a start your own business preliminary checklist.
The checklist recommends following these steps:
- choose your business structure and type
- apply for an Australian Business Number (ABN)
- register your business name and trademark
- protect your intellectual property
- understand the appropriate standards and codes of practice
- set up record- and account-keeping processes
- register a website name
- work out what taxes you need to register for
- find out the registration processes and licences you need
- consider your insurance needs
- buy or lease business premises.
Business plan
One essential ingredient of any new business venture is to draw up a business plan, which you will need to secure any financing. It will also provide direction and help keep you on track. A business plan can run over one page, to being a small novel.
Financing your idea and keeping track of when the money comes in and where it goes, is crucial to your success, so a good bookkeeper and/or accountant is vital.
Employment
If you intend to hire people, you will also need to be familiar with the relevant labour laws, superannuation rules, work health and safety obligations and tax laws. Information about pay and conditions is available from the Fair Work Ombudsman website. You will also need workers’ compensation and public liability insurance.
A financial adviser can assist you with some of these, but there’s a lot to think about before jumping in.
But if you do still want to go for it, good luck to you and many successes ahead. We’d love to be a part of your journey and assist many in small business to get ‘all their ducks in a row.’ We’d love to help you too!
by Jodie | May 15, 2018 | Finances, Superannuation
Planning is the key to be retirement ready… and so is getting advice.
You can avoid penny pinching in retirement because you haven’t saved enough money, but you do need to plan well ahead.
Here’s two top tips you’ll need to consider.
1. Figure out how much you’ll need
Find out how much income you will need by answering the following three questions:
- What are your retirement goals?
- What kind of lifestyle do you want?
- What is your life expectancy?
While it’s fairly easy to set goals and lifestyle expectations for retirement, estimating how long you will live can be a bit more tricky, but is crucial to retirement planning decisions. It can help you decide on your risk profile, your personal asset allocation and even when to stop working to ensure you have enough funds for your retirement.
Although there are tools that you can use for calculating life expectancy, your financial adviser can help guide you through the process too. It could also depend on the longevity history in your family. Your adviser can help you come up with an estimate of your required retirement income based on your lifestyle expectations, tailored risk profile and how many years you’re likely to spend in retirement.
2. Ensure you’ll have enough income
With an estimate of how much you’ll need, your adviser can make recommendations to help you meet your required retirement income. These may include growing your retirement fund by investing some or all of it. It may also mean depositing more into superannuation or building wealth outside of super.
Investment products usually carry risks. It’s important that you choose instruments that suit your personal risk appetite and need for returns.
If you prefer to have a regular and stable flow of income in retirement, there are definitely options available for you.
Seek professional advice on how this can be done and how you can get appropriate outcomes. We’d love to help!
by Jodie | May 15, 2018 | Superannuation, Wealth
For many years, salary sacrifice has been the most tax-effective way to build superannuation.
New Super Strategies! Now, add personal deductible contributions to your super strategy.
New legislation introduced 1 July, 2017 removes restrictions on claiming a tax deduction for personal contributions to super. That is, if 10% or more of your total income is attributable to employment. So, from a tax and super viewpoint, personal deductible contributions will have the same net effect as salary sacrifice.
You can use either strategy to reduce your taxable income and boost super contributions. However, personal deductible contributions are taxed. For certain defined-benefit super funds, existing qualifications on these deductions remain. For example, you must give a notice of intent form to your super fund before:
- starting an income stream with all or part of the contribution
- withdrawing or rolling over benefits (including the contribution)
- giving the trustee a splitting contributions application.
In any other case, you must give a notice of intent form to your super fund when you lodge your tax return. Or at the end of the financial year following the year in which the contribution was made – whichever comes first.
You must be aged under 65 or satisfy the work test between 65 and 74. But, a contribution can be accepted within 28 days of the end of the month you turn 75.
Salary sacrifice has its drawbacks
While salary sacrifice has been the cornerstone strategy, it can have restrictions. For example, some employees do not offer it, or will not allow you to pick your own fund. There’s no guarantee about the frequency of contributions. If you have income replacement insurance, you might find this is affected by your reduced income through salary sacrifice. Your employer may even reduce your super guarantee entitlements to match this reduced income. It may be time to implement a new super strategy.
A comprehensive super strategy
Personal deductible contributions could be a great fit for your financial plan. You can choose your super fund and the timing of your contributions. And because you’re claiming a tax deduction on your super contribution – not reducing your salary – your income protection probably won’t be affected.
Personal deductible contributions can also work well alongside your transition to retirement strategy and other contributions you’re making. These include spouse contributions, co-contributions and contribution splitting.
It’s always a good idea to review your financial situation and savings plan before new legislation comes into place. Speak with a financial adviser to learn about how you could benefit from building personal deductible contributions into your retirement savings strategy.
The advisers at Wealth Planning Partners would be happy to help!
by Jodie | May 11, 2018 | Australian Economy, Budget, Economy, Finances
So… have you been wondering how the latest Federal Budget may affect Australian families?
Each year, the Federal Government hands down their annual budget. Basically, it’s a spending plan for the country. For many it passes without a blip. Yet, some others are up all night dissecting the information to see how different parts of the Australian population will benefit. Or even possibly be disadvantaged. Who are the winners? And who misses out?
Here’s the highlights reel of exactly what you need to know! These points are the winning points for families out of the 2019 Federal Budget:
- The Federal Budget is to return to surplus in 2019/2020
- There is a 7 year plan to eliminate the 37% tax bracket
- A major crack down on tax cheats is set to begin
- The Medicare Levy will remain the same at 2%
- Superannuation exit fees will be banned for all members
- The Child care combined income threshold will increase to $187k
- 14,000 Aged Care Home Care places will become available over the next four years
- Schools are set to receive an extra $24.5bn over 10 years to improve education
- Infrastructure spending is to increase including $1billion to improve traffic flow
- Energy costs will reduce by $400 per year for each family from 2020 – that’s a great bonus!
- National security spending will be increased with a $293.6m investment
Piqued your interest? Well, If you want to know more?… click here!
So, to see how the budget may affect families, and in particular, your family, give your Gold Coast financial planning team a call on 07 5593 0855.
