Category Archives: Wealth

6 ways to get the most out of a financial windfall

Received a large sum of money? Lucky you! By taking practical steps, you can ensure your newfound wealth goes much further…

Research has shown that on average, people who receive an inheritance spend about half of it.1  So how can you be that amazing and eminently sensible one who makes sure your windfall doesn’t just vanish but helps you build a secure financial future? Here are six smart ways.

1. Set money aside

To avoid the temptation of spending it impulsively, rashly and super quickly, you could put the money away temporarily in a deposit account or short-term investment. Leaving the sum aside for one or two months may give you more time to plan, have a think about what you’d like or to engage a professional financial adviser for guidance on using the money wisely.

2. Settle debts

Using a windfall to clear debts can put you on a better financial footing. Consider working with your financial adviser to create a budget that considers all your debt obligations, income and windfall. This can also be a good chance to discuss the opportunity to invest and grow your money.

3. Grow the emergency fund

Building up your emergency fund – or creating one if you haven’t got one – can be another way to make good use of the funds. By increasing the emergency stash to cover expenses for six months, you may be better positioned to handle unexpected events such as a job loss, illness or accidents.  Working out where best to put that can also be done with the assistance of an adviser.

4. Beef up retirement savings

Making extra contributions to your superannuation may help you optimise your windfall. Whether you make non-concessional contributions or, if you are employed, arrange to have a portion of your pre-tax salary paid to your super, increasing your retirement savings can help you secure your financial future.  And don’t get me started on how compound interest can help you out here over all those years to retirement too!

5. Fund your goals

Take the opportunity to build savings for some of your personal goals, such as higher education or travelling to places on your bucket list.  Maybe consider doing this only after you’ve paid off debt and built up that emergency stash!

6. Give to others

Receiving a large windfall can be a chance to help others in need. If you decide to give some money away to those less fortunate, consider donating it to an organisation that’s entitled to receive tax-deductible gifts, so you can claim a tax deduction.  Being philanthropic feels good too!  Websites now also have to tell you how much of the money actually gets to where it’s needed and what is spent on administrative purposes.

Chances are, your future self will be pretty chuffed with you doing such great ‘adulting!’

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1. The Ohio State University, 2012, ‘Most Americans Save Only about Half of their Inheritances, Study Finds’. Available at: https://news.osu.edu/most-americans-save-only-about-half-of-their-inheritances-study-finds—ohio-state-research-and-innovation-communications/.

Tips to manage your money when in a relationship

It may sound bleedingly obvious, but couples can reach their shared goals by keeping their finances healthy.

Whether saving for a house or holiday or seeking to grow or preserve wealth, couples can reach their common goals by managing money well. Here are some practical tips for managing your finances together.

Talk about it, talk about it, talk about it, yeh…

At the risk of sounding like a lyric, it’s important for couples to talk to each other about their finances and how to manage them, to avoid any potential conflict. Discuss your financial situation and goals, and any concerns you may have.  Chances are, you may have grown up with wildly different parenting styles when it comes to money, and your personal ideas about money are brought to the joint kitchen table. The American Psychological Association also suggests talking about your beliefs about money to help you better understand each other and set the stage for healthy conversations.[1]  You may hold the ideas your parents instilled, or have vastly different beliefs about money.

Set goals

Couples often have wide ranging and different priorities, but this doesn’t mean you can’t set common financial goals and work together to save for them. Keeping an open line of communication about your aspirations may help you adjust personal priorities to achieve shared goals.  Everything from big ticket household items, new cars, holidays and babies can be covered here.

Divvy up responsibilities

Sharing responsibilities for paying joint expenses and building savings may help ensure you and your partner are on the same page when it comes to finances. You can opt to split those responsibilities equally or put the main breadwinner in charge of most of them. Whatever you choose, it’s important both are happy with the decision.  Some enjoy maintaining their own personal accounts and contribute a set amount to a ‘family account’ to cover all joint expenses and debts.

Create a budget

A budget usually tracks your spending on a weekly or monthly basis, but often the very mention of the word can make eyes glaze over and you suddenly find that doing the ironing is actually more interesting. So, if a budget isn’t your thing, simply agree on how you will spend – and save – your money.

Build your funds

If you are married or in a de facto relationship, you may want to consider helping each other build retirement funds. You might explore contributing to your partner’s superannuation account if your partner is not working or earns a low income.

Before you make such an arrangement, it is wise to get professional advice on how it works. Your financial adviser may talk you through the rules of spouse contributions and the requirements to become eligible for a tax offset.

Bet we can help with some other stuff too!

 

[1] The American Psychological Association, ‘Happy couples: How to avoid money arguments’. Available at http://www.apa.org/helpcenter/money-conflict.aspx.

Here’s why you need income protection

Your ability to earn an income is usually one of your biggest assets, so why not protect it?

Income Prot

A sudden illness or injury can keep you from working and leave you in financial difficulty. You may get help from a worker’s compensation payout or personal savings, but are they enough to help you meet your expenses and financial obligations?

Taking out an income protection (IP) plan may help provide peace of mind that you’ll be able to meet your financial responsibilities and focus on recovering. IP cover may provide a monthly income while you’re unable to work as a result of illness or injury. It generally replaces up to 75 per cent of your income for a set period of time.

Standalone or through super?

Getting your IP cover through your superannuation fund may be a good idea if you want to avoid paying for your insurance out of pocket. But keep in mind that the policies offered through super may not cover all your financial obligations for an extended period of time.

A standalone IP policy may provide more adequate coverage. It may also offer you tax benefits – IP premiums are usually tax deductible when you fund your cover outside super.

Making your policy affordable

If cost is a concern in taking out a standalone plan, there are a few ways you may be able to make your premiums more affordable. One of them could be choosing a longer waiting period before you receive benefits after being unable to work due to illness or injury. Generally, the longer you wait, the lower the premiums you have to pay.

Opting for indemnity cover may also help you keep your insurance costs down. You’ll have to choose between indemnity and agreed-value cover for your IP plan. Under an indemnity policy, your insurer bases the monthly benefit you would be paid on your income at the time you make a claim. For an agreed-value policy, the benefit is based on your income when you apply for coverage. Premiums for indemnity cover are usually lower than for an agreed value policy.

But indemnity policies may vary among providers, so speak to your adviser about which cover may suit you. Your adviser may also help you tailor your plan to meet your income protection needs.

Gold! Glorious Gold!…

Recently, I was privileged to be given a tour of Gold Bullion Australia, located in Miami on the Gold Coast, of all places!  If you’re like me, then you probably think of capital cities, bank vaults and the Perth Mint as the places where it all happens in the precious metals arena.  Who knew I could try something so local?

It was pretty brilliant I must say to be able to get my hot little hands on a 1000g bar of gold and eye off the gorgeous ingots of silver and gold… sadly I didn’t get to hide any in the handbag and do a runner!

But when markets look like they may turn south and people traditionally flee to the perceived safety of gold and precious metals, I’m often asked… “How can I invest in Gold?”  (Apparently, ‘try Tiffany’s is the wrong answer!’)

You might be surprised, that there’s actually up to 4 different ways that you can invest in precious metals!

Exchange Traded Funds (ETF’s)

Precious metal Exchange Traded Funds (ETFs) are the cheapest, easiest and most convenient way to buy and sell gold.   Unlike physical gold however, there are a number of things to be aware of with ETF’s.

Firstly, you can expose yourself to counter-party risk and liquidity may be an issue, meaning you can’t sell out as quickly as you usually could. In short, when you buy an ETF, the metal you buy may not be held by the ETF provider, it’s held by a large global bank.  Just a possibility to be aware of!

Junior Miners

As gold production is primary, there are a selection of mining companies that explore and extract the glittering, precious metal from Mother Earth’s crust.  By investing in these “Junior Miners” you are investing in gold indirectly.  The price of shares in these companies will be affected by the mining stocks as well as many other factors such as the position of the mining company and markets in general.

Futures and options

Futures and options are vehicles known as derivatives which are available to investors via platforms or exchanges.  A futures position can become a physical position in precious metals and they have a delivery mechanism for buyers and sellers.  Options are like an insurance policy on price.  Most use the recommendations of a reputable Stockbroker and/or their Adviser when looking at these style of investments.

Buying Physical Gold

There are many seasoned investors who have been long term loyal fans of physical gold; the real stuff!  I’m kind of a fan of wearing it myself! (All donations graciously accepted!)  They like to be able to hold a tangible asset with no third-party risk which has been a valuable form of currency for over 5,000 years.  And getting your hot little hands on a 1kg bar is seriously a lot of fun – but may make some of the scenes in the Italian Job look a little less real than previously thought…

To Note ~

Gold does not replace income – that is the role of cash and fixed interest or even real estate – what it does do, is provide a non-correlating alternative to traditionally defensive assets.  Unlike property, cash, stocks and bonds, gold is not sensitive to Macroeconomic factors such as inflation and interest rates – in fact, it usually performs better in a volatile market.

Physical gold can be more expensive than investing in an ETF, although since it is an internationally recognised and trusted form of exchange, the worldwide network of dealers can provide prices 24 hours a day and you can exchange gold for cash practically anywhere in the world.

What are the costs?

Dealers charge a premium on the world spot price of gold; there is a production cost depending on the type of product you purchase and there may also be delivery, storage and insurance costs.

If you can buy from a dealer closer to your location, you will also save on the cost of shipping.  For precious metals, this cost can be significant due to their weight and value.  (Wandering out of the vault with a backpack of gold bars isn’t great for the back!)

When it comes time to sell, the dealer will buy back at spot price less a premium.  The dealer will want to see the physical product, so again it is best if your dealer is close by.  Alternatively, you can store your precious metals with the dealer so you can buy and sell instantly with them.  Buying bullion isn’t risk free, but then, there’s not much in life that truly is.  Researching a reputable trader is imperative.

Have a chat to your financial adviser to see whether physical gold, silver, platinum or other investment options are worth a position in your portfolio.

And for those who want to know a little more, here’s an e-book put together by Gold Bullion Australia for your viewing pleasure called “Why Buy Gold.”

Lost Super?

There are about 14.8 million Aussies with a superannuation account, 40% of which hold more than one account.

Some of that 40% make up the $18 billion in ‘lost super’. Is some of that yours?

Find it

Moved home? Changed your job? Don’t quite remember where your teenage self stashed your super? It’s really pretty easy to track it down.

Combine it

Save on fees, reduce your paperwork, keep track of your hard earned money, grow your retirement fund.  But maybe get advice first!  If your health has changed and getting new insurance is problematic, it may be worth keeping more than one account open.

Get online

Many websites and super funds offer to help find and combine your super. It is quick, easy and free. You can check with your known superannuation provider/s, your MyGov site 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!

Fees are just part of the story, do you also know how your fund has performed?  Are you able to choose your own insurance levels?  Or opt-out of insurance if not required?  Do you know your investment risk profile and which style of investing is best for you?

Truth is, most of us get excited when we find $20 in a pocket or an old handbag… your superannuation is likely worth thousands, and it is YOUR money!  Take care of it!

 

Source: https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Super-accounts-data-overview/

What should I expect when seeing an Adviser?

What should I expect at my first meeting?

Your initial consultation with a financial planner will give you a chance to get to know each other.  Most provide an initial consultation at their own time and expense.

Your financial planner will explain how their service works, and how it can work for you.  You should receive a Financial Services Guide and an Adviser Profile and have these documents explained to you.  You’ll have the opportunity to talk about your current financial situation and your financial goals.

Some questions to consider before your first meeting:

  • Reflect on what you want in life. Start with the next few years. Are there any changes you’d like to make, or things you’d like to do? What about 5, 10 or 25 years from now? Where do you want to live? What do you want to be doing?  Is retirement on your radar?  Are there specific goals you’d like to meet in the near future?
  • Consider your attitude to money.  Are you a spender or a saver? A risk taker or someone who prefers more certainty? When it comes to spending and managing money, what do you enjoy and what keeps you awake at night?  You can complete a Risk Profile questionnaire that can provide you with you personal risk profile in relation to different investments.  You might be much more aggressive when investing your superannuation than you would be if saving for a home deposit.
  • Think about the financial issues you find most challenging.  Where do you think you could be making better decisions?  What do you think you need to better understand?  Do you know you have downfalls in specific areas?

Talk to your spouse or partner about these issues too. When you visit a financial planner, you’ll want to discuss what it is you want to achieve together as well as your individual dreams.

Many people also neglect to educate their children about money.  What issues did you wish you knew about when you were younger.  Is there something you could pass on to make their life a little easier going forward?

What to bring along

To help your financial planner gain a clearer understanding of your current finances and the services that could be right for you, a little preparation can go a long way. If possible, try to gather the following information before your first consultation:

  • Your income. If it’s easier, feel free to bring in tax documents, especially if you have income from multiple sources or you’re self-employed.  Otherwise, a recent payslip is helpful.
  • Your assets. Including property, superannuation, savings and investments.  Do you also have different structures like Trusts that hold assets?
  • Your budget.  An estimate of where your money goes each month, including your mortgage or rent, personal or business loans and credit card debt will be helpful.
  • Insurance covers. Especially life, disability and income protection policies, if you have them.
  • Questions. In addition to a list of your short and long-term financial objectives, bring any questions or concerns you may have.  And write them down so you don’t forget any!

Your first meeting is informal so don’t worry about gathering all the details if you can’t lay your hands on everything.  The important thing is to get started thinking about your financial future.  If you choose to proceed with your Adviser, you can nail the details in subsequent meetings.

To find out more, contact us and we can guide you through the process.

Educate yourself on financial advice

You might be surprised to know, that working out how to achieve your financial goals is easy and you don’t have to earn a high income to do it.

Whether you’re looking to get your financial affairs in order, buy a first or subsequent home, start a family or prepare for your retirement, seeking quality advice from a qualified financial expert can help you achieve your goals sooner, and with more confidence.

So just what is financial advice?

Financial advice is about much more than just making money. It’s about creating new opportunities to help you achieve whatever you desire in life. A financial planner can help work out what’s important to you. They can help develop a plan that aligns your financial decisions to your lifestyle goals.

Priorities can change over time, as can economic conditions, government legislation and investment markets. Advisers can help re-focus your plan, track your progress and keep you accountable along the way, whether you’re starting out, building wealth or planning for retirement.

Seeking financial advice will help you identify solutions to important questions like:

  • Will I have enough income to live comfortably in retirement?
  • Is my family protected should something unexpected happen – what do I need to know about life insurance?
  • How can I make sure I have enough money to fund my children’s education?
  • How can I invest and structure my finances in the most tax effective way?
  • How can I manage my debt and pay off my home sooner?
  • How can I make my money work harder for me?
  • What’s the best structure to protect my investments and assets?
  • How can I maximise my entitlements to government benefits?
  • How does estate planning fit?

At its best, financial advice is an ongoing long-term partnership centered entirely on your goals.

If you’re weighing up whether financial advice is right for you, consider booking an initial complimentary obligation free appointment.  We’d be happy to help!