Tag Archives: investing

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.”

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!

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

What is Bitcoin all about?

Chances are by now you’ve heard all about Bitcoin… but you may not know too much about what it really is.

Bitcoin is a type of digital currency known as a cryptocurrency. It operates on a decentralised peer-to-peer networked program on your computer, meaning that transactions can be conducted between a buyer and seller without the need for any third party oversight such as a regulator or bank. The underlying technology that makes all cryptocurrencies possible is the blockchain.

Bitcoin’s ‘wild run’

Bitcoin’s value has oscillated wildly. It peaked at US$20,000 in mid-December 2017, lost 40 per cent of its value within a week, then bounced back and hasn’t stopped bouncing since.

What are the risks?

Bitcoin certainly has all of the hallmarks of a ‘speculative bubble’ and history is littered with plenty of examples of speculative fevers that ultimately collapsed. Another risk is regulation. Some cryptocurrencies are becoming the preferred medium of exchange for criminals due to anonymity, if governments can find a way to crack down they surely will.

Want to know more?

There’s lots of information now available.  Have a chat to your financial adviser who can help you work out if Bitcoin or cryptocurrency, merits further investigation or is worth leaving behind.

The Truth about Investing

Plenty of people tell me, “I’ll come and see you when I have money to invest!”  Great!!  (Mostly, I’m still waiting…)

So how much does it really take to start investing?

Truth is, you really don’t need a lot.  Some start with a small lump sum and others put small amounts away regularly.  It’s really what’s best for you.

The best advice I can give you for free… is to start!  Then keep adding to your investments regularly.

You’ve probably heard it before, but remember – don’t put all your eggs in one basket! And, the higher the earnings or return you expect from an investment, the more risky it’s likely to be. Investments that offer lower returns are generally less risky.

A financial adviser can assist in working out your risk profile – that’s the level of risk you’re comfortable with, and that can depend on what you’re investing or saving for.  You may have a much higher tolerance for volatility for your superannuation or retirement funds than you would when saving for the deposit on a home.

Advisers are also qualified to assist when you’ve had an inheritance, lost or divorced a partner or had a major change in circumstances.

Sit down and work out your personal budget and see just what’s left each pay period that you can use to either bring down debt or start your savings plan today!  If you don’t know where to start, an adviser can definitely assist.  So stop putting it off and waiting for the magic to happen… chances are you’re more likely to get ahead by starting, than waiting.

Saving for the Kids’ Education

Preparing for higher education

Like most parents, you want your children to have the best education possible, yet school and university expenses and fees are undeniably costly. The money you spend on your kids’ education could be one of your family’s biggest expenses.  Depending on where you’re based, it may be right up there with your Mortgage repayments.

Not that many of us begrudge the spend, viewing it more of an investment in our children’s futures.

Some will need to decide whether 12 years of formal schooling will be undertaken in the private space or whether just the high school years will be funded.  Others are also happy to help with University costs and some allow Fee Help (formerly known as HECS) to pick up that tab.  Whatever you choose, there’s costs attached and it’s best to be prepared.

Once you’ve worked out your family’s preference, starting to save early will help your children have a high-quality learning experience.

It pays to do your homework.  Research what schools in your area charge each term so you have an understanding of what is required.  Will you need to move to be in the catchment area of your preferred school?  Do you know other parents or students of the school you can ask for testimonials about their experience there?  Do you need to register your child years in advance to get into your preferred school?  Knowing your costs early will give you greater time to save and help avoid disappointment.

The decision to send your children to public or private schools and then to university will determine just how much you need to put aside to start saving.  Despite your wishes, it’s also hard to know whether your children will want to go on to University until they’re some way into their academic career and begin to form some idea about what they’d like to do for a living.  Will a gap year needed to figured into the equation with money for travel?  Or will they fund that by working a part-time job from when they’re able.

What will you need?

As an example… if you send two children to private high school for six years each, which costs around $20,000 a year for each child, by the time they graduate you’ll have spent $240,000 on school fees. And that doesn’t take into account any extras like school uniforms, textbooks, trips and excursions, tutoring, extra-curricular activities, sporting clinics and the like.  This could see costs closer to $275,000 by the time they’re through.

If you only wish to save only for high-school years, you’ll have around 11 to 12 years to save for each child.  If the figures seem out of reach, you may need to rethink what you have to put aside, or review the schools your child will attend.

Public schools are much cheaper but there’s still no such thing as ‘free education.  There are extra fees for textbooks, uniforms, trips, stationery and school camps to pay for. These can easily add up around $1,000 per annum.

Trade Colleges are dearer than public schooling but for those looking to enter trade’s or take over dad’s business, these can be a great option for later high school years.  Often they’re around $4 – $7,000 and only two years is required.

The cost of going to university or college can also vary. If your child is eligible for HECS-HELP (a government loan available to tertiary students) they can choose to defer payment of university fees until they’re earning a living.  Entering the work force with large student loans may not be ideal, but in many cases is unavoidable.

Even if you (or they) aren’t paying upfront tuition fees, there’s still books, textbooks and materials, union and sports fees, lunches, accommodation and transport costs. Contact the university or college and find out how much each of these things will cost each semester, so you have an idea of how much money you will need to save.  And if you’re thinking ahead, don’t forget to allow for inflation too.

The earlier you start saving for your children’s education, the better. Education costs are usually a long-term goal that can take more than 5 years to achieve so stashing early is your best bet.

Then, once you’ve got a ballpark figure in mind to reach for, work out where you’ll put that money.  Are you happy with high interest, web based savings accounts and term deposits or want to invest in education funds or bonds for the longer term?  With interest rates at historical lows, it’s hard to find good returns on conservative styles of investments.

If there’s a top tip to getting set for education costs, it would be to research, plan, track and manage your savings goals on the go.  And be sure to review on at least a half yearly basis to make sure you’re on target.