Category Archives: Finance Chats

A little on making or saving money

Get Retirement Ready!

Planning is key… and so is getting advice!

Avoiding pinching pennies in retirement because you haven’t saved enough means serious planning.

First, figure out how much you’ll need!

Find out how much income you will need by answering a few simple questions:

  • What are your perosnal retirement goals?  Do they include climbing mountains, lawn bowls, sky-diving or spoiling the grandkids?
  • What kind of lifestyle do you want?  Are you quite frugal or want to live it up?
  • What is your life expectancy?  Do you have good genes and are likely to outlast your cronies?  Or have you lived a little harder than most and might not see the great-grandkids arrive?

While it’s relatively easy to set goals and have some lifestyle expectations for retirement, estimating how long you’ll live can be tricky, but is crucial to your retirement decisions. It can help decide your own asset allocation or when to stop working to ensure you have enough funds for your retirement.

Although there are tools and calculators you can use for working out life expectancy, your financial adviser can help guide you through the process too. Your adviser can also help you come up with an estimate of your required retirement income based on your lifestyle expectations, risk profile and life expectancy.

Second, ensure you’ll have enough income!

With an estimate of how much you’ll personally need, your adviser can make recommendations to help you meet your required retirement income. These strategies may include transition to retirement or contribution strategies, growing your retirement fund by investing some or all of it or even growing wealth outside of superannuation.

Most investment products carry some sort of risk, so it’s important to choose ones that suit your risk appetite and need for returns.

If you want a regular flow of income in your retirement, there are options available for you, as well as ensuring you won’t outlive your funds.

Always seek professional advice and how you can get appropriate outcomes for you.  And of course, I’d love to help!

A couple of questions for your adviser

With all the drama currently surrounding the Royal Commission, banks, financial institutions and advisers are heavily in the spotlight.

Whether you have an adviser, or you want to start looking, what are a couple of questions you should ask before you get started?  Remember, you’re looking for the best person to fit your needs.

1  What is your background? What formal qualifications do you hold?

In dealing with any professional, it is important to have an understanding of their professional background and qualifications.  Doctors and Lawyers usually have their certificates proudly displayed on the wall.  But how can you be sure?

All financial advisers in Australia must meet minimum educational requirements and these standards are constantly being raised, soon to a degree level minimum as the Industry works toward becoming a Profession.  That said, there’s already many professionals working in the financial advice space.

And, the more qualified and experienced your adviser is, the better for you. Your Adviser should also show a commitment to continual ongoing education. When looking at an adviser’s qualifications, consider their formal education and their life and business experience:

  • What degrees, diplomas or post-graduate qualifications do they have? Do they hold a basic diploma or a Masters Degree?
  • Do they have professional designations that have been earned or paid for?
  • What specialist accreditations do they hold? e.g. life risk specialist, SMSF specialist, estate-planning or aged-care specialist etc.
  • What is their experience as a financial adviser?  How many years have they been advising or in the financial services space?  And how long do they plan on continuing to give advice?
  • Are they a member of any industry associations or professional bodies that adhere to a code of ethics, such as the Association of Financial Advisers or the Financial Planning Association?

If you think someone might be fudging the certificate on the wall, you can always check an adviser’s qualifications through the financial advisers register on the ASIC MoneySmart Website.

2 What is the scope of your advice?  What can you advise me on?

In a similar way to lawyers or medical professionals, not all financial advisers provide the same services.  Some offer holistic advice, covering everything, others offer advice in limited areas such as insurance or superannuation. It is important to ask a potential adviser if they are capable of providing all of the services you require. It’s no surprise that an adviser that suits one individual may not suit another.  These areas should all be explained on the Adviser Profile that accompanies their Financial Services Guide.

Some advisers may not have the experience or qualifications to advise on a particular specialist areas that you require, such as self-managed superannuation funds, direct shares or gearing and margin loans.

Have a think about your long-term needs and objectives and make sure the adviser you choose can meet them all.

This is a person you will be trusting to shape your financial future and have a long-term relationship with.  Also ask your adviser what actions they will take to implement, update and maintain any plan you devise together.  How often will you meet with your adviser? Do you have access to a team of experts or just the adviser?  If your adviser is on leave or uncontactable, who can they turn to?

 

These are just a couple of questions at the start of any conversation you can have.  And the beauty of the internet means that you can even do some snooping before you meet to qualify your potential adviser before you arrive.

There’s lots more to cover, like fees and charges, whether the adviser is ‘aligned’ or ‘non-aligned’ with a large institution or how long they’d like to keep practicing for…  But, you might just get a feel of whether or not they’re the one for you from these couple of questions.

 

Are you a Key Person?

Key-person insurance is Protection for your business

How would your organisation cope if something happened to a key person?

Unexpected events can play havoc not only with people’s lives but also with businesses.

However, business owners are often so busy they don’t stop to consider the true cost of the loss of a key employee, business partner or even themselves.  Eeeek!

The knock-on effects may include disruption to other staff, missed opportunities, delays or penalties for late delivery of projects, lost revenue, increased expenses, significant costs to find and train a suitable replacement, loan repayment and even loss of the business.  Ouch!

What is key-person insurance?

Key-person insurance protects a business’s financial position against the significant impact of a traumatic event such as the death or disablement of a key person.

A key person may be an employee, owner or an individual whose contribution to the business is significant.

This cover is not a specific kind of insurance but the application of life insurance to protect against key-person risk. It can be used with buy/sell life insurance (also known as business succession insurance) which covers the change of ownership if an owner dies or becomes incapacitated.

The benefits

Often a cash injection to an affected business may keep a bad situation from becoming worse or even catastrophic. The insurance proceeds may be used to:

  • minimise or eliminate the potential loss of revenue, sales or profits
  • help cover the often significant costs of finding or training a replacement
  • service or repay any debts that are called in
  • cover the impact of a writedown in the goodwill of the business
  • provide needed liquidity
  • help keep staff and maintain essential supplier relationships.

Are there alternatives?

A business may have other strategies to help manage their risks, including asset sales, promoting staff or reallocating workloads even temporarily, using profits, borrowing more, or drawing down existing loan facilities.

However, insurance is the only practical alternative where a business doesn’t have the capacity to cover its risks.

If you want to know more and see if it can apply to your business, why not give me a call? 07 5593 0855.

Planning a holiday? Here are some tips

With the summer holidays now behind us, it’s not too late to do your financial planning for the next holidays – or 2019. Here’s how to minimise your financial stress for a well-deserved break.

Plan ahead

OK, at the risk of sounding like Captain Obvious, the earlier you start planning, the more money you can save. And when it comes to peak travelling times such as December, typically the earlier you book your flights and accommodation the better your account balance will be.

Create a budget

Whether you choose Bali, Barcelona, Brazil or the bush, create a budget. Account for expenses such as flights, petrol, food and activities, such as visiting museums or a spa. Research activities at your destination and see if you can book early – or if there’s some great free ones. The more you can book and pay for beforehand, the less you’ll need to worry about overspending. 

I’m counting down until my 25th Wedding Anniversary next year and we’ve always dreamed of a trip around the Greek Islands.  I’m already in overdrive looking at airfares and cruises… extensions and adventures.  And ok, it’s dearer than any trip we’ve ever done, but hey! how many make it to their 25th?  That’s got to be worth a splurge!

Start saving

When you’ve worked out how much you will need, start saving. Even putting a small amount aside each week can add up, so you could enjoy some amazing experiences you may not have thought you could afford. A good tip is to open a high-interest savings account and set up an automatic transfer on your payday.  Alternately, offset the funds against your mortgage to save interest on your loan and draw them back as needed.

I also use a travel money card that I transfer my spending money into each week as I’m preparing for a trip.  It means I average in to the account depending on what the dollar/euro/ringgit/pound/kwatcha is doing on the day and means I have funds available in the local currency when I travel.

Hunt for bargains

There are lots of useful websites that compare deals on everything from flights to tours. Sometimes, a package deal is more effective – make sure to research well.

Just make sure you turn on private browsing when researching online. Warning!! Some travel sites track users and raise prices on the things you are researching if you return repeatedly.  (The cheek!)  I’m a bit of a fan of Trip Advisor and have made a few bookings via booking.com for hotels and Viator for adventures.

And don’t worry if you have left things to the last minute – there’s a website for that too: lastminute.com.au.

While you’re on holiday…

It can be easy to splurge – you’re on holidays after all. But to avoid spending the rest of your life paying it off, keep track of your finances while you’re away.  And seriously, do you really need that Sombrero and yard glass?

Set yourself a daily spending limit – or use a travel app to help you stay on track.

But if that’s too much of a buzzkill, you can transfer the exact amount you’ll need into a bank account just for your holiday. This may help you stay out of your other accounts unless it’s absolutely necessary.

Talk to your adviser

Your adviser may help you create a financial plan tailored to help you achieve the holiday you want.

I’d love to help and as a travel junkie myself, may even have a few tips for you… so give me a call today to reach your financial goals for your holiday.

Create a great financial new year

New Year’s resolutions are easy to make but often hard to keep. But there are real benefits to making financial resolutions. Here are some helpful suggestions to get you started.

Chances are by now, you’ve forgotten what you wanted to achieve last New Year’s Eve, but a new financial year is also a great time to reset.

Get back to basics

If you find it near-impossible to reach your financial goals, you may need to revisit the basics: sticking to a budget. Does temptation usually unravel all your good saving intentions? Consider opening a locked savings account that you can’t deduct money from for a period of time, and automatically transfer funds into it each payday.  Automating everything in your life that can be is truly a gift!

Plan for large purchases

Whether you need a new fridge or are considering placing a deposit on a home, the earlier you start planning for these purchases, the more manageable they become.

If you know you’ll need a new item in 6 months that costs $1,000,  that means you need to set aside around $40 per week to make it happen… that’s a few sneaky coffees that may need to go!

Set up an investment plan

If you’re considering investing this year (instead of someday,) developing a sound investment plan is essential for your success. This may include working with your financial adviser to identify clear financial targets, calculate how much you can afford to invest and determine how much risk you’re willing to take on. 

If you’d like to have a small nest egg before you sit down with someone, again, automate the process so every week you’re setting aside an amount to put towards that portfolio.  Everyone started somewhere!

Review insurance policies

Knowing you are properly insured provides peace of mind if your circumstances change unexpectedly. But identifying appropriate insurance policies and levels of coverage for your unique situation can be difficult – and getting it wrong is risky… as you’ll likely find at claim time. This is why it’s important to regularly review your insurance policies with your financial adviser, especially if your situation changes.

You may be able to find that funding via various structures frees up cash flow to invest in personal insurances you may not have otherwise been able to afford.  Good advice is worth every cent!

Check your super

If you have multiple superannuation accounts – or have forgotten where your super is – you’re not alone. According to the Australian Taxation Office, there’s $18 billion of lost super waiting to be claimed nationally.1

Effectively managing your super is vital for building your retirement nest egg. Contact your financial adviser who may help you manage your super.  It’s also worth seeing what insurances are covered in your fund so you aren’t paying extra for cover you don’t need.

Set retirement goals

The earlier you set clear goals for your retirement, the more options you’ll have. Work out what assets you have – from your home to superannuation – and review your current spending patterns, then determine your goals for retirement and what lifestyle you’d like to enjoy. This will help you calculate how much you’ll need.

Remember, we’re now living a lot longer, which means our money may now need to last 30 years in retirement, or we may choose to work longer.  Our health is also an issue that needs consideration as we age and this too will impact our retirement years.

Create an estate plan

Estate planning involves more than writing a will. It outlines what you want done with your documents, contacts, debts, bills and assets, making the process easier for your beneficiaries after you’ve passed away.

Whatever your financial New Financial Years’ resolution may be, seeking professional advice may help you make it reality this year.

 

Note:
1 The Sydney Morning Herald, 2017, ‘Almost $18b in lost super waiting to be claimed’. Accessible at:

http://www.smh.com.au/money/super-and-funds/tax-office-holds-records-of-almost-18-billion-in-lost-super-20170920-gylo3z.html

A money-wise wedding

Creating a budget for the big day

Whether you’re planning a large, luxurious, lavish and luscious wedding or a small, intimate affair, smart budgeting could help free you from financial worries, so you can enjoy your special day even more.

Following these steps may help ensure no one’s worried about debt on the honeymoon.  And remember, even if you only plan on doing the walk down the aisle once, it’s just a day… and the rest of your life is what it’s all about.

Starting with massive debt and stress about money is a less than ideal way to continue your life together.

1. Plan early

Given that the average (is there such a thing?) Australian wedding costs $36,200[1], the sooner you start saving, the sooner your dream wedding can become a reality.  (I hope your parents are all over this stat!)

The day after the engagement is fine… tho some do start even before that… like while you’re watching the latest episode of Batchelor in Paradise and dreaming about finding Mr or Mrs Right.

2. Create a budget

Take stock of your income and calculate the maximum you can afford to spend on the wedding – and your ideal cost scenario. Will your parents be pitching in and what can you expect from them?

Knowing what you can spend in each area means that you’re all over it when negotiating with suppliers.  If you don’t have room to move, you can play hard-ball or find someone else who is willing to come to the party.

No-one will remember if you had the world’s largest bouquet or the best tablecloths or the food you serve (unless the oysters are dodgy,) it’s all about celebrating your love and new life.

3. Talk to your family

If you’re part of the bride’s or groom’s family and want to contribute, let them know. You could contribute a set figure or fund a specific part of the ceremony, such as the flowers, drinks (very brave move!) or venue.

If you’ve got friends in the right places, make sure you include them in your planning.  Chances are, they may also know some others who are happy to help.

4. Prioritise

What must you have at the wedding and what can you compromise on? For example, do you want a live band but aren’t fussed about fancy table decorations?  Do you want the Disney fairytale carriage experience, or your mate’s EH Holden will do the trick?  Agreeing on your priorities up front can help you clarify which aspects to save for and which to downplay or skip altogether.

Do you want the amazing Vera Wang frock that you can rock on the day and hang in the cupboard for the rest of your life and drag from home to home; or would you rather spend it on the honeymoon or save for a housing deposit?  Life’s full of compromises!

5. Start a spreadsheet… if you must!

Once you have an idea of your budget and priorities, it’s time to dive into the details.  OK, not everyone loves this part, but it is really necessary!

If you’re an excel nerd, use a spreadsheet to list a maximum cost for every wedding-related item from bouquet to band and compare it with vendors’ quotes. Don’t forget to take into account hidden costs like insurance, corkage and the marriage licence or celebrant as well as costs related to the rehearsal dinner and honeymoon.

Otherwise, a wedding planning notebook is fine… as long as you have something to track it all in.

6. Stay accountable

Avoid blowing out your budget by keeping your spreadsheet (or Kikki K notebook) up to date, setting up a wedding-expenses-only bank account, and sticking to your guns as far as your limits and priorities are concerned.

If you’ve created your budget and despair of affording your dream wedding any time soon, don’t worry. Here are some tips to help you reign in your costs.

  • Limit your guest list to your favourite people: At $100 per head, every 10 guests cost you $1,000.
  • Think outside the box when picking a wedding venue: A park, garden, art gallery or friend’s house may be more affordable than a hotel, and the natural ambience can save you money on decorations.
  • Book an out-of-season wedding: It can be cheaper to schedule a wedding in winter, on a week night or a Sunday morning.
  • Keep your menu simple: Stick with the specialties of the season and region, consider canapes or buffets over three-course meals, and ask for house spirits (not top-shelf varieties) or beer and wine.
  • Investigate hiring over buying: If there’s some items you don’t need forever, like suits or gowns it may be worth hiring for the day and giving back.  No dry-cleaning necessary!

Call in an expert

While you may call upon a wedding planner to help you organise your special day, a financial planner may be just as important.

A professional financial adviser may help you create and stick to your budget as well as stay accountable – so you can focus on the important things, like celebrating with the people you love!

If all that just sounds too hard, run off to the Registry office and have a party when you make the announcement!

And hey!  Congratulations!!

 

[1] Australian Securities and Investments Commission, ‘How much can a wedding cost?’. MoneySmart. Available at: https://www.moneysmart.gov.au/managing-your-money/budgeting/simple-ways-to-save-money/how-much-can-a-wedding-cost

Do you have a valid will?

Creating a valid will is one of the most important things you can do to protect your loved ones.

Here we explain how to go about it.

1. Seek legal advice

While DIY will kits can seem like an easy and inexpensive way to make a will, they can be fraught with pitfalls.

Your affairs are probably more complex than you think – your family home, other properties, business assets, superannuation, investments and personal belongings.  You may be surprised to learn that not all assets are covered as standard in a Will and stay outside of your estate.  Having a properly drawn up will helps to determine who gets what and can save your family time and stress when you are gone.  And not all assets are automatically included in your estate and may need separate provision made to ensure their distribution.

Your lawyer or financial planner will also be able to provide insights into how to best structure your will, both to protect assets and to minimise tax. Examples include setting up a testamentary trust to provide for minors or protecting your estate from creditors.

2. Safeguard your children’s future

Probably one of the most important reasons to make a will is to ensure any dependent children are well cared for should the worst happen.

Sydney wills, probate and estate specialist, Graeme Heckenburg of Heckenberg Lawyers, says generally parents should make separate rather than joint wills, as they are likely to die at different times.

Heckenburg says a will should also appoint a guardian to take care of the day to day living and housing arrangements for the children and a trustee to execute the will and make any financial decisions. This can be one person or two different people.

“If you don’t appoint a guardian and there are young children, ultimately the decision will be made by the Guardianship Tribunal [in NSW]. If the guardianship is contested, the matter could even end up in the Supreme Court,” he says.

If you have adult children, you also need to consider their circumstances.  If they’re caught up in a divorce or bankruptcy issues, any inheritance can form part of their assets, which may not be what you wish.

Vulnerable adult children also need to be considered as receiving a large lump sum may not be in their best interests either.

3. Keep your will updated

Once you have made a will, don’t leave it in a drawer gathering dust.

Circumstances change over time, and often quickly, so ensure your will reflects your current situation, particularly if your spouse has died, you have married, re-married or divorced or you have become a parent or step-parent.

We’d love to help or put in touch with our legal experts who can assist with your estate planning.