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Superannuation

Superannuation is important … because it’s your money for your retirement

When you start off in the workforce, you might not have much in your superannuation fund. And your retirement may seem like it’s a long way off. So it’s easy to forget about your super savings.

But things change. As your employer and personal contributions add up over the course of your working life, your super could grow to become your largest single investment after the family home.

Super’s low-tax framework is designed to help build up your nest egg so you don’t have to rely on the basic Age Pension to make ends meet in retirement.

After a lifetime of hard work, many people don’t want to be scrimping and saving in retirement. They want to maintain a decent standard of living, with enough money to spend time with family and friends, enjoy a range of leisure activities and reward themselves with a few overseas trips.

The Age Pension may not provide you with the retirement lifestyle you are seeking.

So taking a few simple steps now can put you in control and on the path to enjoying the retirement lifestyle you want.

Getting your Super sorted

Yes…retirement may seem like a long way off, it could be just around the corner, but putting money into super now is still a tax effective way to invest your money. That’s because some types of contributions you make, and the investment earnings on those contributions, are taxed at concessional rates.

Not only is super a tax effective way of saving and investing, but you can benefit from the effects of compounding returns.

Debt Reduction

Debt reduction and cash flow management

Debt is part of modern life. It can be used to help you reach your goals, but only when you are in control of it, not when it is in control of you. It’s easy to build up little bits of debt here and there that don’t appear to amount to much, but can quickly eat into your cash flow.

It can be challenging when it comes to understanding where your money goes and how best to manage it.

Personal Insurance

What if the unexpected were to happen?

Personal Risk and Insurance Planning is a very important part of your overall financial plan. Personal insurances can help to ensure that those who depend on you will not be financially disadvantaged in the event of your death, a medical crisis, a long-term injury or your disablement.

To fully understand the importance of financial protection the typical questions listed below are often raised:

What would happen if your income suddenly stopped? Do you have income protection?
How would outstanding debts be paid off if you prematurely died? Do you have life insurance cover?
Who would be the people most affected and how would they cope not only emotionally but financially?
Who would carry the burden of looking after you in the case that you are permanently disabled and are they financially capable? Do you have total & permanent disability insurance?
What if you were to suffer a traumatic event which required had an immediate financial expense? Do you have trauma cover?

These hypothetical questions are not nearly thought about as often as they should be. These types of unfortunate and unforeseen events occur more frequently than most people think.

Create Wealth

Why should I invest?

There are a number of goals you may want to achieve from investing, but they’re likely to fall into one, or both, of the following categories:

Capital growth: building and protecting your moneyCapital growth at a real rate (after fees, tax and inflation) means you want the original investment amount to grow by more than inflation, so you’ll be able to buy more in the future than you can today.
Income generation: paying yourself an incomeYou may be at the stage in your life when you choose to live off your investments. Typically, this is when you retire and want to use the money you have invested to support your lifestyle. You’re likely to look at investments where there is a stable income or dividend stream and little risk of your original investment declining.

What are the five key investment principles

Start early, invest regularly and reinvest returns:The earlier you start investing, the more chance your investment has to grow through the magic of compound interest – which means you’re earning interest on your interest. Einstein called it ‘The most powerful force in the universe.

Investing the same amount at regular intervals, known as dollar cost averaging, can help take the guess work out of investing as you don’t have to worry about trying to time the market. If the market is falling on the day you buy, you’ll get more units/shares on that day. It’s the opposite when the market rises. This tends to average out the investment price and smooths out market fluctuations.

It also means you don’t risk investing a large amount at the wrong time or waiting too long and missing a rebound in the market.

Set your investment goals: You need to have a clear understanding of your investment goals, then select the right investments to achieve them.You also need a budget to help you assess your current financial situation and how much you can spare.

You can then have this amount automatically deducted from your pay to your investments. It’s the tried and tested way to stick to an investment plan.

Diversification: Do you want to have all of your eggs in one basket, or a few?Simply put, diversification is about investing in different markets, so if one goes down, you can minimise the impact by being in a market which goes up. In economics, some markets tend to move counter to each other.

This effectively lowers the risk across your portfolio by spreading the risk. This has a smoothing effect on your investment returns – you generally won’t get the huge gains, but you shouldn’t experience the big losses.

Timing the market versus time in the market: Timing the market is when you try to buy when the market is low and sell when it’s high. Anticipating the market’s movements can be extremely difficult.

Giving your investment time in the market: allows it to recover from short-term downturns and experience the highs of the market. History shows that while shares may experience negative returns over the short term, returns tend to be higher than cash over the longer term.

Invest for the long term – the trade-off between risk and return: All investments involve some degree of risk. And generally, when chasing higher returns there is an increased risk of negative returns. How comfortable you are with this will determine the types of investments you should be in. It’s called an investor profile.

What investor style are you? Our advice process enable you to identify your investment style and what sorts of investments you might consider. If you want us to help you identify your investment style contact us today.

You’ll need to strike a comfortable balance between the risk you’re prepared to take and your desired return. As a general rule, the longer the timeframe, the more risk you can afford to take.

You should also remember your strategy depends on your attitude to risk, your financial situation and goals. To identify your attitude to risk a discussion with a financial planner can help. Contact us today to truly understand you comfort level towards investing.

Once you understand the basic principles of investing, it’s time to answer some questions.

Simply by thinking about these questions, you’re on your way to developing a sound investment strategy.

What are your goals? What do you intend to do with the money you earn from your investment(s) and what’s the timeframe you want to achieve it in? You may have a number of goals with different timeframes. Set them all out and put them in order of priority.
What sort of investor are you? What is your approach to investing? Are you conservative, aggressive or somewhere in between? The answer will reflect a combination of your attitude to risk and your time frame.
What investment options will suit me? Not all investment options suit everyone. You need to match your investment options to the sort of investor you are.What investor style are you? If you want us to help you identify your investment style and match your investment options contact us today.
How do you want to manage your investments? Do you want to invest the money yourself or do you want a fund manager or broker to manage it for you?
Do you want to diversify your investments? Do you want to invest in a variety of asset classes and markets or invest in just one? Do you realise you can do both?There are many options and ways of diversifying.
Do you want to invest inside or outside superannuation? Generally, the investment options are similar regardless of whether you invest inside or outside of super. The main differences are in the tax implications and when you can access your money.You may find that once you set your goals and understand the types of investments which suit you, many of these questions will answer themselves. That should give you more time and better direction to find the right answers.

Setting your investment goals

To invest successfully you need to set goals and select the best investments to achieve them. To assess your current financial situation, and how much you can afford to invest, you should see a financial planner. This will help you work out how much you can afford to invest. Then you need to work out your goals.

Short versus long-term goals

You may have a mixture of short, medium and long-term goals. As investments vary in risk and return, you need to understand your goals and match your investments to them

For instance:

In the short-term you may be saving for a car or to take an overseas trip, so you need easy access to your money and the return is reasonably certain. The investments to suit these goals could be banking products, where there’s no risk of losing any of your money even though the return may be lower compared to other types of investments.
At the other end of the spectrum, a medium to longer-term goal may be saving for your children’s education or a deposit for a house. Here, you should consider investments more likely to grow in value over the longer term. Growth assets, such as shares, carry more risk but may be more likely to help you achieve this goal.

You still have some searching to do to find the best investments within these broad categories. Knowing where to look will cut down your search time and help you find the right one.

If you want us to help you invest for your future contact us today.

Saving for that special something

Most of us have things we want but not everyone can simply go out and buy them. Whether it’s a new car, an overseas trip or a deposit for your first home, that something special is achievable if you are realistic and put in place a disciplined savings program.

Retirement Planning

Dreaming of retirement? Start planning today.

Retirement isn’t what it used to be. Australians are living longer, healthier and more active lives in retirement.

How will you choose how to spend your time?

What will your first day of retirement look like? Have you considered how you’ll fund the lifestyle you’re dreaming of? While you’re still working, you may have more flexibility to make changes and more opportunity to boost your retirement savings.

There’s a lot to think about when planning your retirement.

For many people, their big concerns are whether they’ll be able to maintain their lifestyle, and if they’ll have enough money. But before you can answer those questions you’ll need to understand what retirement may look like for you.

What type of lifestyle do you want in retirement?
How will you spend your time? How will your partner spend theirs?
Are there any ‘must haves’ on your dream list?
When you’re not working do you expect your living costs to go up or down?
Have you estimated how much you’ll need a week to live on?
Be honest with your finances. Take a good look – will you have enough?
Are there things you can be doing today that will boost your retirement savings?
How will you manage your transition to retirement?
The sooner you start planning the better chance you have of getting the retirement lifestyle you want.

Do you know your retirement number?

Do you know how much you need to live the retirement you want? If the answer is no – you’re not alone.

Many people don’t know how long their money will last or how much money they’ll need to live the lifestyle they want.

So…your retirement?

Depending on what your stage of life is; a long way off retirement, close to retirement or already retired, retirement will hold a different level of importance.

Here we look at how you can maximise your income in retirement, whether you’re:

Retirement still more than 10 years away

Retirement can seem irrelevant when you’re in your 30s or 40s. There are so many other things you can do with your money – go overseas, buy a house, raise a family, or just have fun.

However, according to research by the Investment and Financial Services Association (IFSA)1, the Age Pension won’t be nearly enough to fund the lifestyle we’d like when we’re no longer working. So the best thing to do is to start saving now.