If you are self-employed, or you have a spouse who is on a low income, you can save on the cost of life insurance premiums by buying insurance cover through a superannuation fund rather than as a separate 'ordinary' policy. In some cases, this strategy can reduce your premiums by almost 50%.
Usually super funds will offer insurance to fund members against death, as well as total and permanent disability (TPD). Some funds also provide additional insurance to protect against loss of income and temporary disability.
How Does The Strategy Work?
The same tax deductions and offsets that apply to superannuation also apply to insurance purchased through a superannuation fund. If you’re self-employed, you can claim a tax deduction on your super contributions, irrespective of whether the contribution is used to purchase investments or insurance. Similarly, if you are making super contributions on behalf of a non-working or low income spouse, you may be able to claim a tax offset of up to $540 p.a.
These tax benefits can make it significantly cheaper on an after-tax basis to insure through a super fund rather than through a non-super insurance policy. All you need to do is nominate how your contributions are to be allocated between the superannuation fund and the insurance policy.
The Benefits
· The amount saved via deductions and offsets can be used to increase your level of insurance cover.
· This strategy is ideal if you have a young family and you’re looking for financial protection.
Case Study
Andrew (age 43) is a self-employed professional married to Vivien (age 40). The couple are raising a young family and Vivien also works part-time. Andrew and Vivien both have super and separate insurance policies for death and TPD insurance in their own names. Andrew is currently paying premiums of $1,337 a year, while Vivien is paying $815 a year.
To claim a tax deduction for premiums on Andrew's insurance cover and a spouse offset for the premiums on Vivien's cover, they arrange their existing insurance cover so that it is provided through their respective super funds.
Being self-employed, Andrew can claim a tax deduction in his annual tax return **. His marginal tax rate is 46.5%.
By contributing $815 on behalf of Vivien, Andrew can claim an 18% offset in his annual tax return (Vivien is assumed to be earning less than $10,800 p.a.). (18% rebate available on a maximum contribution of $3,000)
By changing their insurance arrangements, Andrew and Vivien have a combined saving of $795 p.a.
Tips & Traps
Insurance cover purchased through a super fund is owned by the trustee of the super fund who is responsible for paying benefits.
All lump sum death benefit payments made to a dependant will be tax-free.
If you are self-employed, you can claim a tax deduction on 100% of contributions up to $50,000 (or if over 50 you can contribute up to $100,000pa over a transition period which ends 2012).
You could also reduce the cost of life insurance via a salary sacrifice arrangement. Instead of having separate insurance and paying premiums from after-tax salary, you could have the insurance through your super and pay the premiums from pre-tax salary.
As super funds get a tax deduction for death and disability premiums there should be no contributions tax charged on these premiums.
The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
Tuesday, September 29, 2009
Refinancing
Before embarking on this route you should be clear about what you hope to achieve by refinancing as it may involve the time consuming task of shopping for finance and the nerve-racking ordeal of interviews.
The most common reasons for refinancing are to:
1. Upgrade Your Home.
2. Reducing Total Interest Costs.
3. Reducing Monthly Repayments.
4. Tapping Into Home Equity.
Home Upgrade:
Upgrading your home provides the ideal opportunity for refinancing as in most situations you are upgrading to a more expensive property and borrowing to cover the shortfall.
** If you currently have a fixed loan and are upgrading your home, it is an ideal opportunity to switch to a new fixed lower rate or a variable loan.
Reducing Total Interest Costs:
If interest rates have fallen since you first obtained your home loan, consider refinancing your fixed rate loan to take advantage of the new low rates.
You could also reduce interest costs by refinancing regardless if loan rates fall, by having a shorter term even though your monthly repayments may be higher.
** Refinancing would reduce your total interest bill and perhaps reduce your monthly repayments.
** Make extra payments whenever you can to reduce your mortgage debt and save interest.
Reducing Monthly Repayments:
You can refinance your loan to reduce your monthly repayments by extending the repayment period. For example, if you have already paid off five years on an existing mortgage, refinancing a new loan on a 30year period will reduce your monthly repayments.
** By switching to a variable interest rate, if you have an existing fixed rate mortgage, it is possible to reduce your monthly interest payments.
However, if the interest rates rise again, your monthly repayments will also increase.
Tapping into Home Equity
For many people, their home is their biggest asset and source of savings. The improved value of your property and the amount you have paid off on your mortgage can be put to work for you, to borrow money.
You can refinance with a new mortgage that is larger than your remaining balance or obtain a home equity loan.
** Consider negotiating with your current lender. They may be willing to offer concessions on costs, etc. in order to retain you as a customer.
Credit card interest rates are usually higher than mortgage rates so you may save money by paying off your cards.
**If you have other debts such as credit cards and other loans, it may be cheaper to incorporate these into your mortgage
The Cost of Refinancing
The time it takes to recover the costs of refinancing should be short enough to make it worthwhile. If you think you will only be in that house for three to five years and it will take you five years to cover the costs of refinancing, then it probably is not advisable to refinance.
** Make sure you fully understand the fees that you will pay both going into and getting out of the loan.
The cost of refinancing can be considerable, particularly if you are exiting a fixed term loan. You may incur costs for ending your current loan and costs for starting a new loan such as:
· Break costs - terminating a fixed loan (perhaps thousands of dollars);
· Early termination charges - ending a variable rate loan;
· Mortgage discharge fee - an administrative cost;
· Mortgage stamp duty - on your new loan (varies from state to state);
· Valuation fees - to establish value of property to be refinanced;
· Lender’s Mortgage insurance - if you are borrowing more than 80% of the value of the property;
· Ongoing fee - monthly cost for having the loan;
· Establishment or Loan Application fee - cost for applying for a loan.
** Keep accurate records of all repayments, and check your lenders statements regularly for errors.
** Allow for an extra 1 or 2 percentage points when budgeting for repayment. Interest rates have a habit of changing.
Finally:
** Don’t compare loans based on interest rate alone. This won’t tell you exactly how much you will save on your total interest repayment compared with your current loan. You should also compare refinancing with getting a second mortgage, an equity line of credit or not refinancing at all.
We will be more than happy to refer you to a mortgage broker!
The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
The most common reasons for refinancing are to:
1. Upgrade Your Home.
2. Reducing Total Interest Costs.
3. Reducing Monthly Repayments.
4. Tapping Into Home Equity.
Home Upgrade:
Upgrading your home provides the ideal opportunity for refinancing as in most situations you are upgrading to a more expensive property and borrowing to cover the shortfall.
** If you currently have a fixed loan and are upgrading your home, it is an ideal opportunity to switch to a new fixed lower rate or a variable loan.
Reducing Total Interest Costs:
If interest rates have fallen since you first obtained your home loan, consider refinancing your fixed rate loan to take advantage of the new low rates.
You could also reduce interest costs by refinancing regardless if loan rates fall, by having a shorter term even though your monthly repayments may be higher.
** Refinancing would reduce your total interest bill and perhaps reduce your monthly repayments.
** Make extra payments whenever you can to reduce your mortgage debt and save interest.
Reducing Monthly Repayments:
You can refinance your loan to reduce your monthly repayments by extending the repayment period. For example, if you have already paid off five years on an existing mortgage, refinancing a new loan on a 30year period will reduce your monthly repayments.
** By switching to a variable interest rate, if you have an existing fixed rate mortgage, it is possible to reduce your monthly interest payments.
However, if the interest rates rise again, your monthly repayments will also increase.
Tapping into Home Equity
For many people, their home is their biggest asset and source of savings. The improved value of your property and the amount you have paid off on your mortgage can be put to work for you, to borrow money.
You can refinance with a new mortgage that is larger than your remaining balance or obtain a home equity loan.
** Consider negotiating with your current lender. They may be willing to offer concessions on costs, etc. in order to retain you as a customer.
Credit card interest rates are usually higher than mortgage rates so you may save money by paying off your cards.
**If you have other debts such as credit cards and other loans, it may be cheaper to incorporate these into your mortgage
The Cost of Refinancing
The time it takes to recover the costs of refinancing should be short enough to make it worthwhile. If you think you will only be in that house for three to five years and it will take you five years to cover the costs of refinancing, then it probably is not advisable to refinance.
** Make sure you fully understand the fees that you will pay both going into and getting out of the loan.
The cost of refinancing can be considerable, particularly if you are exiting a fixed term loan. You may incur costs for ending your current loan and costs for starting a new loan such as:
· Break costs - terminating a fixed loan (perhaps thousands of dollars);
· Early termination charges - ending a variable rate loan;
· Mortgage discharge fee - an administrative cost;
· Mortgage stamp duty - on your new loan (varies from state to state);
· Valuation fees - to establish value of property to be refinanced;
· Lender’s Mortgage insurance - if you are borrowing more than 80% of the value of the property;
· Ongoing fee - monthly cost for having the loan;
· Establishment or Loan Application fee - cost for applying for a loan.
** Keep accurate records of all repayments, and check your lenders statements regularly for errors.
** Allow for an extra 1 or 2 percentage points when budgeting for repayment. Interest rates have a habit of changing.
Finally:
** Don’t compare loans based on interest rate alone. This won’t tell you exactly how much you will save on your total interest repayment compared with your current loan. You should also compare refinancing with getting a second mortgage, an equity line of credit or not refinancing at all.
We will be more than happy to refer you to a mortgage broker!
The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
What to expect when you meet withGurney Financial Service
In the beginning…
After your initial contact with Gurney Financial Services, you will be asked to complete a personal questionnaire; this will assist and prepare you for your first appointment. It will also allow you to put together any questions, issues or thoughts you might have on financial planning or your financial future.
Your first appointment will be of a relaxed nature, where you will talk about your current financial set-up, and then look at where you would like to be in a year, maybe five, ten or even twenty years time. You will also discuss how you feel about investment risk and other information your adviser needs to prepare a comprehensive plan for you. You will be fully informed of the costs before you make any commitment to proceed.
Some topics that are covered in your first appointments will be:
o Budgeting: working out what is going where, and why.
o Savings: for debt payments, purchases, holiday’s education, retirement.
o Debt Management: how to get out of debt.
o Superannuation: looking at your current superannuation, and making sure it works for you, consolidation of superannuation products, investing into the correct investment allocation.
o Insurance: what is needed for you and your family, debts and lifestyle?
o Estate Planning: making sure your financial affairs are in order
If you own a small business, then we also look at the requirements for you as an employer, and in relation to superannuation and protection for your employees.
Before a strategy and plan is put together, Gurney Financial Services will provide you with some general information and quotations for you to think about, as well as their fees and charges. On your approval, we will then go on to the next stage which will be to design a personal and strategic holistic plan for you and your family and business.
Develop the strategy
Your adviser will view your financial situation from every angle to produce a complete financial plan. They will then present it to you in person and in writing. At this stage you can fine-tune your plan, making sure that you are perfectly comfortable with the potential outcomes.
Implementing your plan
When you’re happy with the plan, your adviser will set the wheels in motion and ask you to authorise any paperwork required.
Your adviser will prepare and follow up all documentation until completion, where you will be informed in writing that this finalised.
Keep it fresh
Your financial plan will need to be adjusted regularly to sustain the changes in your life, be they around your goals or your financial situation as well as changed in investment markets and legislation. Your adviser will discuss the level of ongoing service you require as well as costs.
Gurney Financial Services provide Annual Reviews, regular updates which include general information from the market place, aswell as personal touches. We believe in relationship building, and as a client of Gurney Financial Services, our mission would be that we would work with you to create a financial lifestyle that you and your family desire.
Gurney Financial Services, Looking after you and your family.
If you would like to meet with a representative of Gurney Financial Services, please contact us and we will be excited to meet with you, at your place or mine.
Kind Regards
Tarnia Gurney
After your initial contact with Gurney Financial Services, you will be asked to complete a personal questionnaire; this will assist and prepare you for your first appointment. It will also allow you to put together any questions, issues or thoughts you might have on financial planning or your financial future.
Your first appointment will be of a relaxed nature, where you will talk about your current financial set-up, and then look at where you would like to be in a year, maybe five, ten or even twenty years time. You will also discuss how you feel about investment risk and other information your adviser needs to prepare a comprehensive plan for you. You will be fully informed of the costs before you make any commitment to proceed.
Some topics that are covered in your first appointments will be:
o Budgeting: working out what is going where, and why.
o Savings: for debt payments, purchases, holiday’s education, retirement.
o Debt Management: how to get out of debt.
o Superannuation: looking at your current superannuation, and making sure it works for you, consolidation of superannuation products, investing into the correct investment allocation.
o Insurance: what is needed for you and your family, debts and lifestyle?
o Estate Planning: making sure your financial affairs are in order
If you own a small business, then we also look at the requirements for you as an employer, and in relation to superannuation and protection for your employees.
Before a strategy and plan is put together, Gurney Financial Services will provide you with some general information and quotations for you to think about, as well as their fees and charges. On your approval, we will then go on to the next stage which will be to design a personal and strategic holistic plan for you and your family and business.
Develop the strategy
Your adviser will view your financial situation from every angle to produce a complete financial plan. They will then present it to you in person and in writing. At this stage you can fine-tune your plan, making sure that you are perfectly comfortable with the potential outcomes.
Implementing your plan
When you’re happy with the plan, your adviser will set the wheels in motion and ask you to authorise any paperwork required.
Your adviser will prepare and follow up all documentation until completion, where you will be informed in writing that this finalised.
Keep it fresh
Your financial plan will need to be adjusted regularly to sustain the changes in your life, be they around your goals or your financial situation as well as changed in investment markets and legislation. Your adviser will discuss the level of ongoing service you require as well as costs.
Gurney Financial Services provide Annual Reviews, regular updates which include general information from the market place, aswell as personal touches. We believe in relationship building, and as a client of Gurney Financial Services, our mission would be that we would work with you to create a financial lifestyle that you and your family desire.
Gurney Financial Services, Looking after you and your family.
If you would like to meet with a representative of Gurney Financial Services, please contact us and we will be excited to meet with you, at your place or mine.
Kind Regards
Tarnia Gurney
insurance - who needs it
Insurance who needs it?
Did you know?
Ø Each year there are more than 10,000 house fires
Ø A vehicle is stolen every seven minutes in Australia
Ø Of the working population, one in six men and one in four women are expected to suffer a disability from the age of 35 to 65 that causes a loss of six months or more from work.
Ø That in 2008, the key 13 insurers, for term life, total and permanent disablement, trauma and income protection, paid out a staggering $3,045,333,112 - that's
$12 million a day!!
Ten Second Insurance Check
Ø Are you the sole income earner? Yes / No
Ø What is your total annual income?
o Less than $20,000
o $20,001 to $40,000
o $40,001 to $60,000
o $60,001 to $80,000
o $80,001 to $100, 000
o $100,001 +
Ø What are you total debts?
o Less than $100,000
o $100,001 to $250,000
o $250,001 to $500,000
o More than $500,001
o
Ø How many dependent children do you have
0 1 2 3 or more
Ø Could your partner pay the bills if you could not work? Yes / No
If you could not maintain your lifestyle without support during illness or injury, please contact Gurney Financial Services or your financial planner
Did you know?
Ø Each year there are more than 10,000 house fires
Ø A vehicle is stolen every seven minutes in Australia
Ø Of the working population, one in six men and one in four women are expected to suffer a disability from the age of 35 to 65 that causes a loss of six months or more from work.
Ø That in 2008, the key 13 insurers, for term life, total and permanent disablement, trauma and income protection, paid out a staggering $3,045,333,112 - that's
$12 million a day!!
Ten Second Insurance Check
Ø Are you the sole income earner? Yes / No
Ø What is your total annual income?
o Less than $20,000
o $20,001 to $40,000
o $40,001 to $60,000
o $60,001 to $80,000
o $80,001 to $100, 000
o $100,001 +
Ø What are you total debts?
o Less than $100,000
o $100,001 to $250,000
o $250,001 to $500,000
o More than $500,001
o
Ø How many dependent children do you have
0 1 2 3 or more
Ø Could your partner pay the bills if you could not work? Yes / No
If you could not maintain your lifestyle without support during illness or injury, please contact Gurney Financial Services or your financial planner
Dollar Cost Averaging
You don’t need to predict the future to build wealth in investment markets. You can make money by simply investing a fixed amount at regular intervals over a period of time. You can also take the guesswork out of trying to pick the right time to buy and sell, and not have to worry about putting all your money in the market at the one time. This strategy is called ‘dollar cost averaging’ and it can help you to turn the ups and downs of investment markets to your advantage.
Dollar cost averaging is a simple concept that works really well when investing on a regular basis via a managed investment. Assuming you invest a set amount each month, your money will buy more units when the unit price falls and fewer units when the unit price rises.
Things to be aware of:
Investing in shares or property (either directly or via a unit trust) allows you to access the potential for long-term capital growth.
An easy way to implement this strategy is to pay-yourself-first (i.e. invest a fixed amount of your salary each month before you spend your money on other things).
You can purchase units in a unit trust automatically by arranging to have money transferred directly from your nominated bank account or your salary. Direct Debit is available through most financial institutions and fund managers.
By reinvesting your income to purchase additional units, your regular investments can benefit from the power of compound returns.
To accelerate the creation of wealth, you could consider installment gearing, which allows you to supplement your regular investments into a managed fund with regular draw downs from an investment loan.
To find out more information you should speak to your Financial Planner.
The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
Dollar cost averaging is a simple concept that works really well when investing on a regular basis via a managed investment. Assuming you invest a set amount each month, your money will buy more units when the unit price falls and fewer units when the unit price rises.
Things to be aware of:
Investing in shares or property (either directly or via a unit trust) allows you to access the potential for long-term capital growth.
An easy way to implement this strategy is to pay-yourself-first (i.e. invest a fixed amount of your salary each month before you spend your money on other things).
You can purchase units in a unit trust automatically by arranging to have money transferred directly from your nominated bank account or your salary. Direct Debit is available through most financial institutions and fund managers.
By reinvesting your income to purchase additional units, your regular investments can benefit from the power of compound returns.
To accelerate the creation of wealth, you could consider installment gearing, which allows you to supplement your regular investments into a managed fund with regular draw downs from an investment loan.
To find out more information you should speak to your Financial Planner.
The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
Sunday, May 31, 2009
Superannuation
To provide an insight to why the government has placed enormous importance on superannuation in recent years, consider the following facts:
Today: There are six taxpayers to every one pensioner.
15 years time: There will be an estimated three taxpayers to every one pensioner.
In the past it was automatically assumed that when you retired from the workforce you would receive the age pension. With an ever increasing and aging population, the availability of the pension cannot be relied upon. People are also retiring earlier and living longer and this means that more and more people are going to have to fund for their own retirement.
Whilst the government has legislated to address this issue with the introduction of the superannuation guarantee levy, in most cases this will not be enough. This all means that you need to pay closer attention to your superannuation savings and the level of performance, security and flexibility offered by your current fund. You must review or make plans now to self fund your retirement.
While superannuation can be transferred between superannuation funds you should be aware that contributions to superannuation are almost always compulsorily preserved. This means that they generally can not be withdrawn until you are over 60 (or over 55 if you were born before 1 July 1960) and are retired.
Superannuation is one of the most tax-effective ways of saving for retirement. The earlier you start, the longer you have to invest towards your goal and the lower the amount you may need to invest on a regular basis.
When you invest regularly, you will enjoy the effects of compounding. Compounding occurs when income earned on your savings is re-invested, so you earn money on your initial capital, as well as on any income you have already earned.
How to choose a superannuation fund?
Portability – make sure that if you get a new job, you can invest the contributions from your new employer into the same super fund. This will save you opening another account and paying more fees.
Rollover facilities – make sure that when you retire, you can rollover your lump sum into an allocated pension or term allocated pension account.
Insurance – you should be able to easily access insurance for death, total and permanent disability and income protection through your superannuation fund.
Communication – you should expect to access your account information online and on the phone.
Fees and charges – these may apply when you make contributions, during the investment phase, and when the money is paid to you. Make sure you are fully aware of all relevant fees on your account.
Flexibility - can the fund accept spouse contributions; are you limited / charged to switch investment options?
Investment Choices – are there not only single funds i.e. Shares, but also Multi-Manager Funds to invest your money in?
Superannuation is a savings vehicle for your future.
The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
Today: There are six taxpayers to every one pensioner.
15 years time: There will be an estimated three taxpayers to every one pensioner.
In the past it was automatically assumed that when you retired from the workforce you would receive the age pension. With an ever increasing and aging population, the availability of the pension cannot be relied upon. People are also retiring earlier and living longer and this means that more and more people are going to have to fund for their own retirement.
Whilst the government has legislated to address this issue with the introduction of the superannuation guarantee levy, in most cases this will not be enough. This all means that you need to pay closer attention to your superannuation savings and the level of performance, security and flexibility offered by your current fund. You must review or make plans now to self fund your retirement.
While superannuation can be transferred between superannuation funds you should be aware that contributions to superannuation are almost always compulsorily preserved. This means that they generally can not be withdrawn until you are over 60 (or over 55 if you were born before 1 July 1960) and are retired.
Superannuation is one of the most tax-effective ways of saving for retirement. The earlier you start, the longer you have to invest towards your goal and the lower the amount you may need to invest on a regular basis.
When you invest regularly, you will enjoy the effects of compounding. Compounding occurs when income earned on your savings is re-invested, so you earn money on your initial capital, as well as on any income you have already earned.
How to choose a superannuation fund?
Portability – make sure that if you get a new job, you can invest the contributions from your new employer into the same super fund. This will save you opening another account and paying more fees.
Rollover facilities – make sure that when you retire, you can rollover your lump sum into an allocated pension or term allocated pension account.
Insurance – you should be able to easily access insurance for death, total and permanent disability and income protection through your superannuation fund.
Communication – you should expect to access your account information online and on the phone.
Fees and charges – these may apply when you make contributions, during the investment phase, and when the money is paid to you. Make sure you are fully aware of all relevant fees on your account.
Flexibility - can the fund accept spouse contributions; are you limited / charged to switch investment options?
Investment Choices – are there not only single funds i.e. Shares, but also Multi-Manager Funds to invest your money in?
Superannuation is a savings vehicle for your future.
The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
Sunday, May 3, 2009
Boost Savings and Save Tax
It’s a fact – we all need to take responsibility for funding our retirement. So if you are looking for a simple and tax effective way to boost your retirement savings, you may want to consider a strategy known as salary sacrifice.
Salary Sacrifice involves getting your employer to contribute some of your salary, wages or a bonus payment directly into super – before tax is deducted at your marginal rate (which could be up to 46.5%). The advantage of this strategy is that salary sacrifice super contributions are taxed at a maximum rate of 15% - a potential tax saving of up to 31.5%.
By implementing this strategy you can save on tax and make a larger investment for your retirement.
To use this strategy you will need to make an arrangement with your employer that is prospective in nature. In other words, you can only sacrifice income that relates to future performance. When sacrificing regular salary or wages, the agreement should commence on the first day to which the next pay period relates.
However, you may only salary sacrifice a bonus payment to which you have no previous existing entitlement. In practice, this means the arrangement must be made no later than the day before the employer determines your bonus entitlement.
In both cases, it’s also important to have the agreement thoroughly documented and signed buy both parties.
You need to be aware:
· A salary sacrifice arrangement may result in a reduction in other benefits such as leave loading, holiday pay and Superannuation Guarantee contributions, as these benefits are often calculated on your base salary, you should check with your employer.
· Salary Sacrifice contributions must be preserved until permanent retirement after reaching your preservation age or a condition of release. So you need to ensure you have sufficient investments outside super if you plan to retire before reaching your preservation age.
· If you’re an employee (and your assessable income plus reportable fringe benefits are less than $58,000pa) you may also want to consider making a personal after-tax super contribution of $1,000. This may enable you to qualify for a Government co-contribution of up to $1,500.
· Although it is possible to sacrifice salary below the minimum entitlement under an industrial award, employers should be aware that they may still be required to provide the minimum salary or wages under industrial law.
The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
Salary Sacrifice involves getting your employer to contribute some of your salary, wages or a bonus payment directly into super – before tax is deducted at your marginal rate (which could be up to 46.5%). The advantage of this strategy is that salary sacrifice super contributions are taxed at a maximum rate of 15% - a potential tax saving of up to 31.5%.
By implementing this strategy you can save on tax and make a larger investment for your retirement.
To use this strategy you will need to make an arrangement with your employer that is prospective in nature. In other words, you can only sacrifice income that relates to future performance. When sacrificing regular salary or wages, the agreement should commence on the first day to which the next pay period relates.
However, you may only salary sacrifice a bonus payment to which you have no previous existing entitlement. In practice, this means the arrangement must be made no later than the day before the employer determines your bonus entitlement.
In both cases, it’s also important to have the agreement thoroughly documented and signed buy both parties.
You need to be aware:
· A salary sacrifice arrangement may result in a reduction in other benefits such as leave loading, holiday pay and Superannuation Guarantee contributions, as these benefits are often calculated on your base salary, you should check with your employer.
· Salary Sacrifice contributions must be preserved until permanent retirement after reaching your preservation age or a condition of release. So you need to ensure you have sufficient investments outside super if you plan to retire before reaching your preservation age.
· If you’re an employee (and your assessable income plus reportable fringe benefits are less than $58,000pa) you may also want to consider making a personal after-tax super contribution of $1,000. This may enable you to qualify for a Government co-contribution of up to $1,500.
· Although it is possible to sacrifice salary below the minimum entitlement under an industrial award, employers should be aware that they may still be required to provide the minimum salary or wages under industrial law.
The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
Sunday, April 5, 2009
Debt Management
To take control of your debt, the first thing you should do is a budget. This will allow you to see exactly how much you are earning and spending. It will also show where you are overspending and possibly where this expenditure can be reduced.
If the burden of debt is starting to take control of you, for some people to consolidate all of these debts into the one loan would be the best solution. Consolidation allows you to lower your overall interest rate and more easily manage your debt.
Loan consolidation will save you interest where your new repayment and loan term are at least equal to your total current loan repayments and loan terms. Otherwise, you could be converting your short-term debts into longer-term debt and be paying more interest in the long run.
One option is to use the equity in your residential premises. If you have owned your home over the last few years, with the fuelling property prices you are likely to have the capital to cover your existing mortgage, as well as other loans and credit cards. You would need to refinance your home loan which usually offers more competitive interest rates than Credit Cards and Personal Loans.
By paying less interest, more of your repayment can be used to reduce the debt. This assumes that you maintain the same overall repayments.
You should ensure that your existing home loan offers the features and flexibility to repay sooner rather than later.
To ensure you take control of your debts:
Review all your debts regularly;
Close credit card and store accounts and have the discipline not to obtain more. Don't buy on credit; you are only using money you don't have.
Credit cards can work well and to your advantage, as long as you use them correctly. Only use the interest free period.
If you find yourself on the credit card round-a-bout, (that is every time you pay some money off you credit card you go out and put more on it), you have to STOP. You are spending more than you're earning.
If you do retain a credit card then ask the institution to reduce the limit to the minimum needed - this should be what you can comfortably repay each month.
Every time your statement arrives pay twice the required amount. Realise that you can do without it. If you don't stop using credit you will ALWAYS be in debt.
Resolve to spend money where it makes sense and cut back where it doesn't, paying particular attention to cash and expenditures. Your cheque book and credit card statements reveal big-ticket items, so that monitoring daily spending for a while may show where your money is slipping away in ways that don't give much satisfaction.
Most importantly a disciplined approach is needed to ensure debts are not increased to fund unnecessary purchases - a good rule of thumb is that your liabilities should not exceed your assets - if they do - it probably means you have borrowed for the wrong reasons.
Remember IT IS NEVER TOO LATE to take back control.
Review your spending patterns and curb these to fit within your budget!
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
If the burden of debt is starting to take control of you, for some people to consolidate all of these debts into the one loan would be the best solution. Consolidation allows you to lower your overall interest rate and more easily manage your debt.
Loan consolidation will save you interest where your new repayment and loan term are at least equal to your total current loan repayments and loan terms. Otherwise, you could be converting your short-term debts into longer-term debt and be paying more interest in the long run.
One option is to use the equity in your residential premises. If you have owned your home over the last few years, with the fuelling property prices you are likely to have the capital to cover your existing mortgage, as well as other loans and credit cards. You would need to refinance your home loan which usually offers more competitive interest rates than Credit Cards and Personal Loans.
By paying less interest, more of your repayment can be used to reduce the debt. This assumes that you maintain the same overall repayments.
You should ensure that your existing home loan offers the features and flexibility to repay sooner rather than later.
To ensure you take control of your debts:
Review all your debts regularly;
Close credit card and store accounts and have the discipline not to obtain more. Don't buy on credit; you are only using money you don't have.
Credit cards can work well and to your advantage, as long as you use them correctly. Only use the interest free period.
If you find yourself on the credit card round-a-bout, (that is every time you pay some money off you credit card you go out and put more on it), you have to STOP. You are spending more than you're earning.
If you do retain a credit card then ask the institution to reduce the limit to the minimum needed - this should be what you can comfortably repay each month.
Every time your statement arrives pay twice the required amount. Realise that you can do without it. If you don't stop using credit you will ALWAYS be in debt.
Resolve to spend money where it makes sense and cut back where it doesn't, paying particular attention to cash and expenditures. Your cheque book and credit card statements reveal big-ticket items, so that monitoring daily spending for a while may show where your money is slipping away in ways that don't give much satisfaction.
Most importantly a disciplined approach is needed to ensure debts are not increased to fund unnecessary purchases - a good rule of thumb is that your liabilities should not exceed your assets - if they do - it probably means you have borrowed for the wrong reasons.
Remember IT IS NEVER TOO LATE to take back control.
Review your spending patterns and curb these to fit within your budget!
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
Budgeting Skills For U & Ur Family
Planning your Financial Future
Step One. Financial Analysis – Goals, where you want to be: 1, 2, 5 and 10 years
Step Two: Budget planning – bills, rates, mortgages, savings
Step Three: Debt Consolidating – get rid of bad debt – maybe refinance
Step Four: Minimise Risk – Fixing loans, consolidate and diversifying super
Step Five: Investment Portfolio – looking at: Superannuation & Cash Investment
Step Six: Plan Protection – Insurances:Personal – Life, TPD, Trauma, Income Protection
General – Home Contents, Building, Car,Health – Ambulance, hospital, dental, etc
Step Seven: Estate Planning – Wills and Power of Attorneys.
Step Eight: Wealth Creation - Investment property & Share investment
Step Nine: Monitoring or Reviews
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
Step One. Financial Analysis – Goals, where you want to be: 1, 2, 5 and 10 years
Step Two: Budget planning – bills, rates, mortgages, savings
Step Three: Debt Consolidating – get rid of bad debt – maybe refinance
Step Four: Minimise Risk – Fixing loans, consolidate and diversifying super
Step Five: Investment Portfolio – looking at: Superannuation & Cash Investment
Step Six: Plan Protection – Insurances:Personal – Life, TPD, Trauma, Income Protection
General – Home Contents, Building, Car,Health – Ambulance, hospital, dental, etc
Step Seven: Estate Planning – Wills and Power of Attorneys.
Step Eight: Wealth Creation - Investment property & Share investment
Step Nine: Monitoring or Reviews
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
Sunday, February 1, 2009
Too Much Debt...
Too much debt…
More and more Australian Families are finding themselves in a debt crisis. With the introduction of lines of credit, credit cards and the availability of credit in general, more Australians are finding it difficult to get their head above water and make ends meet.
This leads to stress with partners and families, and often leads people to a merry-go-round situation for many years, never becoming debt free, in most cases until retirement. This means there was never enough money to even begin creating wealth. As a result, the quality of life for over 90% of Australians will be extremely poor during the 30 or so years of retirement.
Did you know that if you currently have a mortgage you could be paying up to three times what you borrow in interest? What makes it even more difficult is that you have to pay up this in after tax dollars.
Australians are now more in debt than ever. Lines of credit offered by banks and other lending institutions are eating away at our equity and keeping us in debt longer than ever before. As part of an effective long-term financial planning strategy, debt management and debt structure must be considered.
Too much to worry about?
These days most people with a mortgage and young families don't have the time to be studying financial planning facts and figures. People are working longer hours and there are more financial pressures. Car payments, the mortgage, credit cards, interest free loans etc that all need to be paid. Not to mention the cost of living, interest and taxes. Even buying the first home these days seems daunting and out of reach to most people.
Today around the world more people are realising it makes so much sense to place your finances in the hands of someone you can trust who specialises in taxation, superannuation and all areas of money. We help you and guide you through the ever changing complex legislation relating to all areas of financial planning to assist you to retire in comfort.
Are you willing to take a gamble with you entire financial future? Place a call to us now and secure your financial future. Don't gamble it!
Little or no savings?
With the cost of living on the increase, more access to credit, the increase cost of entry into the property market, more and more people are finding it difficult save anything.
Another major factor to this is that most people spend in an undisciplined manner and have no idea what it actually costs them to live.
Most people don't realise the importance of managing the personal home finances in such a way to allow some savings to be made. In fact most people spend everything they earn most of their lives. They only realise they should have done more when it's too late.
The team specialise in assisting you turn your home finances into a successful 'business', ensuring there is a profit at the end of the year rather than just more debt. And as part of our unique "Wealth Creation Program" our team can show you new and innovative ways to save money. And not just by spending less, but by paying less tax, less interest and increasing the returns you may be currently getting on your investments.
Not enough protection?
When things get tough the first thing people cancel is their personal insurance. Having your bases covered with the correct level of insurance is an intelligent move. You never know when tragedy may strike. Think about this. Do you think any one would have boarded the Titanic if they knew it was about to sink?
What would happen to you if you hurt yourself at home or work and you were not covered? Who would pay the bills and provide an income to sustain your family and you lifestyle? It makes sense to insure your car or you home contents, yet many people don't see the importance of insuring their income.
Further to this our statistics indicate that those current clients that do have themselves protected in some form were paying more than they needed to, plus they were under insured..
Some people think they just cannot afford it. Such ones may be surprised at the possibilities that are available to them to be able to fund their insurance needs through superannuation. Your advisor will be able to explain to you the pros and cons of each of the options available to you, as well as its impact on your long term wealth creation.
Would you like a us to show you how you can insure for more while paying less for all you insurance needs?
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
More and more Australian Families are finding themselves in a debt crisis. With the introduction of lines of credit, credit cards and the availability of credit in general, more Australians are finding it difficult to get their head above water and make ends meet.
This leads to stress with partners and families, and often leads people to a merry-go-round situation for many years, never becoming debt free, in most cases until retirement. This means there was never enough money to even begin creating wealth. As a result, the quality of life for over 90% of Australians will be extremely poor during the 30 or so years of retirement.
Did you know that if you currently have a mortgage you could be paying up to three times what you borrow in interest? What makes it even more difficult is that you have to pay up this in after tax dollars.
Australians are now more in debt than ever. Lines of credit offered by banks and other lending institutions are eating away at our equity and keeping us in debt longer than ever before. As part of an effective long-term financial planning strategy, debt management and debt structure must be considered.
Too much to worry about?
These days most people with a mortgage and young families don't have the time to be studying financial planning facts and figures. People are working longer hours and there are more financial pressures. Car payments, the mortgage, credit cards, interest free loans etc that all need to be paid. Not to mention the cost of living, interest and taxes. Even buying the first home these days seems daunting and out of reach to most people.
Today around the world more people are realising it makes so much sense to place your finances in the hands of someone you can trust who specialises in taxation, superannuation and all areas of money. We help you and guide you through the ever changing complex legislation relating to all areas of financial planning to assist you to retire in comfort.
Are you willing to take a gamble with you entire financial future? Place a call to us now and secure your financial future. Don't gamble it!
Little or no savings?
With the cost of living on the increase, more access to credit, the increase cost of entry into the property market, more and more people are finding it difficult save anything.
Another major factor to this is that most people spend in an undisciplined manner and have no idea what it actually costs them to live.
Most people don't realise the importance of managing the personal home finances in such a way to allow some savings to be made. In fact most people spend everything they earn most of their lives. They only realise they should have done more when it's too late.
The team specialise in assisting you turn your home finances into a successful 'business', ensuring there is a profit at the end of the year rather than just more debt. And as part of our unique "Wealth Creation Program" our team can show you new and innovative ways to save money. And not just by spending less, but by paying less tax, less interest and increasing the returns you may be currently getting on your investments.
Not enough protection?
When things get tough the first thing people cancel is their personal insurance. Having your bases covered with the correct level of insurance is an intelligent move. You never know when tragedy may strike. Think about this. Do you think any one would have boarded the Titanic if they knew it was about to sink?
What would happen to you if you hurt yourself at home or work and you were not covered? Who would pay the bills and provide an income to sustain your family and you lifestyle? It makes sense to insure your car or you home contents, yet many people don't see the importance of insuring their income.
Further to this our statistics indicate that those current clients that do have themselves protected in some form were paying more than they needed to, plus they were under insured..
Some people think they just cannot afford it. Such ones may be surprised at the possibilities that are available to them to be able to fund their insurance needs through superannuation. Your advisor will be able to explain to you the pros and cons of each of the options available to you, as well as its impact on your long term wealth creation.
Would you like a us to show you how you can insure for more while paying less for all you insurance needs?
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
Quick Facts for Budgeting for the Family
Quick Facts from GFS… Budgets
In today's tough economic climate, it is more important than ever to budget and establish a savings plan. This is because budgeting is the best way for you to take control of your finances, save money and plan for the future. Some times it was easy to get away with a more casual approach to financial planning: you could be sure of earning enough to pay your bills, even if this meant looking for some extra overtime or taking a second job for a while. But those times are rare and wasted if you do not take advantage of them.
A sound budget and a savings plan will help you achieve your immediate needs and long-term financial security. Few individuals or families know just how they spend their money. They know that at the end of their pay period - weekly, fortnightly or monthly - it is all gone. A budget will change this. It is the direct and sensible approach to personal money management.
Basically, a budget is a financial plan that itemises an individual's or a family's spending and helps accomplish short-term and long-term goals. Its main purpose is not to get you out of trouble - although it will help. Better still, it will keep you out of trouble in the first place.
In fact, a budget is really an essential part of everyday life. Without a budget it just is not possible to cope with those unexpected bills and to see at a glance, how you can most easily cut back you’re spending. The ultimate aim of budgeting is to ensure that you can:
o Adequately meet all your financial commitments and
o Have some money left over to save.
Set a savings goal that is within your reach and will not put a strain on your budget. Even if you begin by saving only a small amount each pay period, this will add up over a year to a respectable amount. Everyone will have his or her own savings target. But, as a general rule, we suggest you aim to save 10 per cent of your gross annual income: five per cent for short-term aims and five per cent for longer-term intensions. While this may not be practicable now, it is worth aiming to reach this goal in the future - and sooner rather than later.
People with young families should aim to build up an emergency fund equal to three months take-home pay in case of retrenchment or emergencies. Remember:
o Your savings will help you through those difficult times and emergencies;
o Savings will free you from day-to-day money worries;
o If you have money saved, you can use it in emergencies instead of credit cards (with their high interest charges);
o By saving, you will establish a financial track record, which will be important when you apply for a loan for a major purpose (house, land or car);
o Your longer-term savings will help you build up income-producing investments for a better, more secure lifestyle;
o By saving and investing responsibly, you will contribute towards Australia's future by helping to create a national savings pool to fund our development and reduce our dependence on foreign capital;
o A dollar saved is a dollar earned
Deciding to budget does not mean that you have to cut out spending on discretionary items that are important to your lifestyle. But you should be realistic about them and become a disciplined shopper (as well as a disciplined budgeter). This will help make your money work better for you. Here are just a few ideas on this important topic:
o Consider buying lower priced "generics" or items of a similar nature to your regular purchases;
o Switch to less expensive versions of goods or services.
o Shop harder for the best possible deals on items you must have;
o Avoid buying items that are of limited value to you or your family;
o Become a comparison shopper: watch the advertisements and be aware that prices vary from day to day on a whole range of goods from furniture to food;
o Watch for genuine sales and specials;
o Deal with shops, which offer good service and will take goods back without argument if they are unsatisfactory.
o Shop for seasonal specials and stock your freezer. But buy in bulk only when you know you can use everything you intend to buy - otherwise you will have to throw a lot of it out. Waste is costly.
o Phase your purchasing of big items like furniture and major electrical goods over three to five years and buy only when you really need and can afford the items;
o Think about buying good second-hand items - check-out auctions and garage sales;
o If you are holding money in a special savings account, you can often use it to pay for an item - and get a discount for cash;
o Buy Australian-made goods in preference to imports - buying Australian helps save jobs and reduces the nation's overseas payments and debt problems.
But you should be realistic about them and become a disciplined shopper (as well as a disciplined budgeter). This will help make your money work better for you. Here are just a few ideas on this important topic:
o Consider buying lower priced "generics" or items of a similar nature to your regular purchases;
o Switch to less expensive versions of goods or services.
o Shop harder for the best possible deals on items you must have;
o Avoid buying items that are of limited value to you or your family;
o Become a comparison shopper: watch the advertisements and be aware that prices vary
o from day to day on a whole range of goods from furniture to food;
o Watch for genuine sales and specials;
o Deal with shops, which offer good service and will take goods back without argument if they are unsatisfactory.
o Shop for seasonal specials and stock your freezer. But buy in bulk only when you know
You can use everything you intend to buy - otherwise you will have to throw a lot of it out. Waste is costly.
o Phase your purchasing of big items like furniture and major electrical goods over three to five years and buy only when you really need and can afford the items;
o Think about buying good second-hand items - check-out auctions and garage sales;
o If you are holding money in a special savings account, you can often use it to pay for an item - and get a discount for cash;
o Buy Australian-made goods in preference to imports - buying Australian helps save jobs and reduces the nation's overseas payments and debt problems.
Try to be as realistic as possible. Do not make the budget so tight and demanding that it will be impossible to achieve your goals. Do not make it too generous - or you will destroy your incentive to budget and save. Be flexible - but disciplined.
Partners should budget together. But involve everyone in your household - tell them about your budget and savings goals and why it is so important to achieve them. Do not be discouraged if you cannot get your budget to work - try again. Once you have set up a workable budget, you will find that budgeting becomes a habit.
Today is the best day to begin budgeting.
There are two main items to consider: your INCOME and your EXPENDITURE. In the section headed INCOME, list all your incoming money (after tax).
Expenditure:
o When you begin compiling your expenditure, it will be helpful if you have by you all the receipts from last year's bills that you can find.
o If you do not have these, keep a detailed list of your spending over the next few months. If you see some items that you can cut back on, note them for future attention.
o If you look after your possessions, they will last longer. Money spent on maintenance to extend life of a costly item can be money saved.
o Learn to be a good supermarket shopper. Make up a shopping list - and stick to it. Avoid impulse buying. Once in a while it is OK to buy something you do not really need. But if you let impulse shopping get out of hand it will overload your trolley and destroy your budget.
o When you have completed your Budget, add up all your income and expenditure and subtract the expenditure total from the income total. What is left over is your spare money for the year.
o As this is a yearly figure, you will need to divide this by 52 to bring it down to a weekly figure, by 26 to make it fortnightly or by 12 to make it monthly. This money is yours to spend or to save; we suggest you save it each pay period.
You may find that you have a shortfall - in fact that you are spending more than you earn. If this is the case, you will need to go back and reassess your expenditure or, look for ways to increase your income. You may have made a mistake with your calculations. Or you may need to cut down on some area of your spending: entertainment, gifts, clothing, and luxury items. It is better for you (or your family) to make these decisions, rather than have them taken out of your hands. This will enable you to see at a glance the payouts you will have to make each month to the nearest dollar. This means you can calculate the minimum amount you need to have available to meet your bills. Some months you will be more heavily committed to repayments than in other times of the year. Be sure you are adequately covered so you will not be short of money.
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
In today's tough economic climate, it is more important than ever to budget and establish a savings plan. This is because budgeting is the best way for you to take control of your finances, save money and plan for the future. Some times it was easy to get away with a more casual approach to financial planning: you could be sure of earning enough to pay your bills, even if this meant looking for some extra overtime or taking a second job for a while. But those times are rare and wasted if you do not take advantage of them.
A sound budget and a savings plan will help you achieve your immediate needs and long-term financial security. Few individuals or families know just how they spend their money. They know that at the end of their pay period - weekly, fortnightly or monthly - it is all gone. A budget will change this. It is the direct and sensible approach to personal money management.
Basically, a budget is a financial plan that itemises an individual's or a family's spending and helps accomplish short-term and long-term goals. Its main purpose is not to get you out of trouble - although it will help. Better still, it will keep you out of trouble in the first place.
In fact, a budget is really an essential part of everyday life. Without a budget it just is not possible to cope with those unexpected bills and to see at a glance, how you can most easily cut back you’re spending. The ultimate aim of budgeting is to ensure that you can:
o Adequately meet all your financial commitments and
o Have some money left over to save.
Set a savings goal that is within your reach and will not put a strain on your budget. Even if you begin by saving only a small amount each pay period, this will add up over a year to a respectable amount. Everyone will have his or her own savings target. But, as a general rule, we suggest you aim to save 10 per cent of your gross annual income: five per cent for short-term aims and five per cent for longer-term intensions. While this may not be practicable now, it is worth aiming to reach this goal in the future - and sooner rather than later.
People with young families should aim to build up an emergency fund equal to three months take-home pay in case of retrenchment or emergencies. Remember:
o Your savings will help you through those difficult times and emergencies;
o Savings will free you from day-to-day money worries;
o If you have money saved, you can use it in emergencies instead of credit cards (with their high interest charges);
o By saving, you will establish a financial track record, which will be important when you apply for a loan for a major purpose (house, land or car);
o Your longer-term savings will help you build up income-producing investments for a better, more secure lifestyle;
o By saving and investing responsibly, you will contribute towards Australia's future by helping to create a national savings pool to fund our development and reduce our dependence on foreign capital;
o A dollar saved is a dollar earned
Deciding to budget does not mean that you have to cut out spending on discretionary items that are important to your lifestyle. But you should be realistic about them and become a disciplined shopper (as well as a disciplined budgeter). This will help make your money work better for you. Here are just a few ideas on this important topic:
o Consider buying lower priced "generics" or items of a similar nature to your regular purchases;
o Switch to less expensive versions of goods or services.
o Shop harder for the best possible deals on items you must have;
o Avoid buying items that are of limited value to you or your family;
o Become a comparison shopper: watch the advertisements and be aware that prices vary from day to day on a whole range of goods from furniture to food;
o Watch for genuine sales and specials;
o Deal with shops, which offer good service and will take goods back without argument if they are unsatisfactory.
o Shop for seasonal specials and stock your freezer. But buy in bulk only when you know you can use everything you intend to buy - otherwise you will have to throw a lot of it out. Waste is costly.
o Phase your purchasing of big items like furniture and major electrical goods over three to five years and buy only when you really need and can afford the items;
o Think about buying good second-hand items - check-out auctions and garage sales;
o If you are holding money in a special savings account, you can often use it to pay for an item - and get a discount for cash;
o Buy Australian-made goods in preference to imports - buying Australian helps save jobs and reduces the nation's overseas payments and debt problems.
But you should be realistic about them and become a disciplined shopper (as well as a disciplined budgeter). This will help make your money work better for you. Here are just a few ideas on this important topic:
o Consider buying lower priced "generics" or items of a similar nature to your regular purchases;
o Switch to less expensive versions of goods or services.
o Shop harder for the best possible deals on items you must have;
o Avoid buying items that are of limited value to you or your family;
o Become a comparison shopper: watch the advertisements and be aware that prices vary
o from day to day on a whole range of goods from furniture to food;
o Watch for genuine sales and specials;
o Deal with shops, which offer good service and will take goods back without argument if they are unsatisfactory.
o Shop for seasonal specials and stock your freezer. But buy in bulk only when you know
You can use everything you intend to buy - otherwise you will have to throw a lot of it out. Waste is costly.
o Phase your purchasing of big items like furniture and major electrical goods over three to five years and buy only when you really need and can afford the items;
o Think about buying good second-hand items - check-out auctions and garage sales;
o If you are holding money in a special savings account, you can often use it to pay for an item - and get a discount for cash;
o Buy Australian-made goods in preference to imports - buying Australian helps save jobs and reduces the nation's overseas payments and debt problems.
Try to be as realistic as possible. Do not make the budget so tight and demanding that it will be impossible to achieve your goals. Do not make it too generous - or you will destroy your incentive to budget and save. Be flexible - but disciplined.
Partners should budget together. But involve everyone in your household - tell them about your budget and savings goals and why it is so important to achieve them. Do not be discouraged if you cannot get your budget to work - try again. Once you have set up a workable budget, you will find that budgeting becomes a habit.
Today is the best day to begin budgeting.
There are two main items to consider: your INCOME and your EXPENDITURE. In the section headed INCOME, list all your incoming money (after tax).
Expenditure:
o When you begin compiling your expenditure, it will be helpful if you have by you all the receipts from last year's bills that you can find.
o If you do not have these, keep a detailed list of your spending over the next few months. If you see some items that you can cut back on, note them for future attention.
o If you look after your possessions, they will last longer. Money spent on maintenance to extend life of a costly item can be money saved.
o Learn to be a good supermarket shopper. Make up a shopping list - and stick to it. Avoid impulse buying. Once in a while it is OK to buy something you do not really need. But if you let impulse shopping get out of hand it will overload your trolley and destroy your budget.
o When you have completed your Budget, add up all your income and expenditure and subtract the expenditure total from the income total. What is left over is your spare money for the year.
o As this is a yearly figure, you will need to divide this by 52 to bring it down to a weekly figure, by 26 to make it fortnightly or by 12 to make it monthly. This money is yours to spend or to save; we suggest you save it each pay period.
You may find that you have a shortfall - in fact that you are spending more than you earn. If this is the case, you will need to go back and reassess your expenditure or, look for ways to increase your income. You may have made a mistake with your calculations. Or you may need to cut down on some area of your spending: entertainment, gifts, clothing, and luxury items. It is better for you (or your family) to make these decisions, rather than have them taken out of your hands. This will enable you to see at a glance the payouts you will have to make each month to the nearest dollar. This means you can calculate the minimum amount you need to have available to meet your bills. Some months you will be more heavily committed to repayments than in other times of the year. Be sure you are adequately covered so you will not be short of money.
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
Estate Planning
Quick Facts… Estate Planning
Estate Planning is about making sure your family is provided for and that your assets go where you want them to after you die. If you pass away without a Will your assets will be allocated as per the current legislation, this may not be in line with your wishes.
A good estate plan will:
Ensure that the ownership and control of your assets pass to your intended beneficiaries in the correct proportions; Minimize tax being imposed on the income and capital gains earned on those assets; Protect those assets should a beneficiary be involved in any legal difficulties, for example, bankruptcy or divorce.
Essentially, a good estate plan can provide you with peace of mind and minimize potential complications for your beneficiaries.
Firstly, have you accumulated sufficient assets to provide for your family and pay off any debts in the event of your death? If you determine there is a short fall, your financial planner will be able to suggest some ways for you to make up the shortfall.
Consider your estate planning needs, have you thought about who will inherit your assets, which assets they’ll inherit and in what proportions?
If you are injured and unable to control your investments, have you chosen someone to manage your affairs for you whilst you are recuperating? This is known as an Enduring Power of Attorney. It gives another person the legal power to act on someone’s behalf in relation to their financial affairs.
You should review your estate planning needs on a regular basis, and particularly when an important event occurs, such as: Retirement, Marriage, Divorce, The birth of a child, Death of a relative you have provided for, Commencement of change of employment
Each of these events can be a life changing experience for you and your family and should trigger a consideration of your estate planning needs and objectives. At any stage of your life, estate planning is important and it should be considered and reviewed regularly. Estate planning is an important part of your overall financial plan and it shouldn’t be left until it is too late.
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
Estate Planning is about making sure your family is provided for and that your assets go where you want them to after you die. If you pass away without a Will your assets will be allocated as per the current legislation, this may not be in line with your wishes.
A good estate plan will:
Ensure that the ownership and control of your assets pass to your intended beneficiaries in the correct proportions; Minimize tax being imposed on the income and capital gains earned on those assets; Protect those assets should a beneficiary be involved in any legal difficulties, for example, bankruptcy or divorce.
Essentially, a good estate plan can provide you with peace of mind and minimize potential complications for your beneficiaries.
Firstly, have you accumulated sufficient assets to provide for your family and pay off any debts in the event of your death? If you determine there is a short fall, your financial planner will be able to suggest some ways for you to make up the shortfall.
Consider your estate planning needs, have you thought about who will inherit your assets, which assets they’ll inherit and in what proportions?
If you are injured and unable to control your investments, have you chosen someone to manage your affairs for you whilst you are recuperating? This is known as an Enduring Power of Attorney. It gives another person the legal power to act on someone’s behalf in relation to their financial affairs.
You should review your estate planning needs on a regular basis, and particularly when an important event occurs, such as: Retirement, Marriage, Divorce, The birth of a child, Death of a relative you have provided for, Commencement of change of employment
Each of these events can be a life changing experience for you and your family and should trigger a consideration of your estate planning needs and objectives. At any stage of your life, estate planning is important and it should be considered and reviewed regularly. Estate planning is an important part of your overall financial plan and it shouldn’t be left until it is too late.
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
The Importance of Insurance
The importance of insurance
Insurance is used as financial protection for a variety of personal and business purposes – for example, to protect income, repay debts, or provide for dependants. To minimize the loss that may result from your death or serious disability, it’s important to implement suitable protection strategies.
Protect your greatest asset – your income
What is your greatest asset? Your home and its contents? Your car? Your life? Many people insure these assets, yet, all too often they don’t adequately protect what is potentially their greatest asset – their ability to earn an income.
Take a moment to consider what could happen to your lifestyle if you were unable to work for an extended period due to illness or injury. Your expenses could quickly run down your savings. You may even need to sell your investments to make ends meet.
By taking out income protection insurance you can protect your greatest asset and avoid putting your family’s lifestyle at risk.
If you suffer an illness or injury and are unable to work, income protection insurance can pay you a monthly benefit (usually 75% of your pre-tax income) to replace lost earnings. You can generally claim these premiums as a tax deduction.
You can choose a range of benefit payment periods, with maximum cover usually up to age 65. You can also choose a range of waiting periods normally between 14 days and 2 years.
Eliminate Debt
If you’re like most people, you’ve used debt to finance a range of lifestyle purchases, including the family home. However, if you die, the loan repayments will still need to be made, even though the salary your family has relied upon is no longer available.
Your loan documents may even contain a clause that requires immediate repayment if you die or become disabled. However, sometimes this is not feasible, and the only option may be to sell the underlying asset to repay the lender. When this asset is your family home, your dependants could be in the unenviable position of either having to re-finance the loan or sell and downgrade their residence.
Maintain your family’s lifestyle
You also need to consider whether your family will be able to meet their ongoing expenses.
Death, permanent disability or a serious medical condition can have a big impact on a family’s finances and standard of living. If something should happen to the main breadwinner, the emotional strain could be significant.
Protect the homemaker
It’s also potentially dangerous to overlook the insurance needs of the person who predominantly takes care of the home and the children.
If something should happen to the homemaker, the family can suffer financially, as well as emotionally. Despite advances of modern technology, there are still plenty of things that need to be done around the house and hiring someone to provide home help and child care services can cost a lot of money.
To protect your household (and avoid putting a big dent in the budget) it’s important to include the homemaker when developing suitable insurance strategies for your family.
Keep your business running
While income protection insurance should still be considered, it’s also important to protect the very thing that generates your income – your business.
By taking out business expenses insurance, you can cover certain ongoing expenses and keep your business running while you recover.
If you are self-employed or in a small partnership, business expenses insurance can help you meet 100% of your share of eligible business overheads, should you be unable to work due to illness or injury.
This can help keep your business afloat and ensure that, in the worst case scenario, there is still a business to sell should the need arise.
Expenses that can be covered with this type of insurance typically include, amongst other things, office rent and mortgage payments, equipment or vehicle leasing costs and utility bills such as electricity, heating and water.
Cover the key person in your business
The most valuable business asset is the one that produces the most profit – your staff. Material assets can be easily replaced, staff can not.
The loss of a key staff member can have a substantial impact on profitability, operational management and the goodwill of your business. Many businesses also find there are no suitable candidates readily available within the organization and it can take substantial time and money to recruit and train an external replacement.
By covering your key person, you can help fund the loss of a valuable employee by providing an injection of cash for a revenue or capital purpose.
Establish a Will for your Business
Establish a Will for your business by creating what is known as a Buy / Sell Agreement.
A Buy / Sell Agreement is a legal contract which can facilitate the orderly transfer of a person’s share in a business to the remaining owners when certain trigger events occur (such as death or serious disability).
To help fund the transfer, the agreement normally uses life insurance so that sufficient capital becomes available to buy out the departing owner’s share in the business.
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
Insurance is used as financial protection for a variety of personal and business purposes – for example, to protect income, repay debts, or provide for dependants. To minimize the loss that may result from your death or serious disability, it’s important to implement suitable protection strategies.
Protect your greatest asset – your income
What is your greatest asset? Your home and its contents? Your car? Your life? Many people insure these assets, yet, all too often they don’t adequately protect what is potentially their greatest asset – their ability to earn an income.
Take a moment to consider what could happen to your lifestyle if you were unable to work for an extended period due to illness or injury. Your expenses could quickly run down your savings. You may even need to sell your investments to make ends meet.
By taking out income protection insurance you can protect your greatest asset and avoid putting your family’s lifestyle at risk.
If you suffer an illness or injury and are unable to work, income protection insurance can pay you a monthly benefit (usually 75% of your pre-tax income) to replace lost earnings. You can generally claim these premiums as a tax deduction.
You can choose a range of benefit payment periods, with maximum cover usually up to age 65. You can also choose a range of waiting periods normally between 14 days and 2 years.
Eliminate Debt
If you’re like most people, you’ve used debt to finance a range of lifestyle purchases, including the family home. However, if you die, the loan repayments will still need to be made, even though the salary your family has relied upon is no longer available.
Your loan documents may even contain a clause that requires immediate repayment if you die or become disabled. However, sometimes this is not feasible, and the only option may be to sell the underlying asset to repay the lender. When this asset is your family home, your dependants could be in the unenviable position of either having to re-finance the loan or sell and downgrade their residence.
Maintain your family’s lifestyle
You also need to consider whether your family will be able to meet their ongoing expenses.
Death, permanent disability or a serious medical condition can have a big impact on a family’s finances and standard of living. If something should happen to the main breadwinner, the emotional strain could be significant.
Protect the homemaker
It’s also potentially dangerous to overlook the insurance needs of the person who predominantly takes care of the home and the children.
If something should happen to the homemaker, the family can suffer financially, as well as emotionally. Despite advances of modern technology, there are still plenty of things that need to be done around the house and hiring someone to provide home help and child care services can cost a lot of money.
To protect your household (and avoid putting a big dent in the budget) it’s important to include the homemaker when developing suitable insurance strategies for your family.
Keep your business running
While income protection insurance should still be considered, it’s also important to protect the very thing that generates your income – your business.
By taking out business expenses insurance, you can cover certain ongoing expenses and keep your business running while you recover.
If you are self-employed or in a small partnership, business expenses insurance can help you meet 100% of your share of eligible business overheads, should you be unable to work due to illness or injury.
This can help keep your business afloat and ensure that, in the worst case scenario, there is still a business to sell should the need arise.
Expenses that can be covered with this type of insurance typically include, amongst other things, office rent and mortgage payments, equipment or vehicle leasing costs and utility bills such as electricity, heating and water.
Cover the key person in your business
The most valuable business asset is the one that produces the most profit – your staff. Material assets can be easily replaced, staff can not.
The loss of a key staff member can have a substantial impact on profitability, operational management and the goodwill of your business. Many businesses also find there are no suitable candidates readily available within the organization and it can take substantial time and money to recruit and train an external replacement.
By covering your key person, you can help fund the loss of a valuable employee by providing an injection of cash for a revenue or capital purpose.
Establish a Will for your Business
Establish a Will for your business by creating what is known as a Buy / Sell Agreement.
A Buy / Sell Agreement is a legal contract which can facilitate the orderly transfer of a person’s share in a business to the remaining owners when certain trigger events occur (such as death or serious disability).
To help fund the transfer, the agreement normally uses life insurance so that sufficient capital becomes available to buy out the departing owner’s share in the business.
The contents of this blog are of a general nature only and have not been prepared to take into account any particular investor’s objectives, financial situation or particular needs. Where this publication refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.
Tarnia Gurney (ASIC No. 292206) trading as Gurney Financial Services (ABN 85 296 598 954) an Authorised Representative of AFG Financial Planning, Australian Financial Services Licensee Number 247105, ABN 74 099 029 526.
Subscribe to:
Posts (Atom)
Posts
