When debt collectors call, know your rights

When debt collectors call, know your rights

Updated on Budgeting, Education

Debt is a fact of life; some might say it’s a necessity. Rarely is a home or large-ticket item purchased without finance of some kind. Australians typically manage their financial obligations well, but rising interest rates, cost of living pressures and unexpected expenses combine to place stress on a household budget. In an increasingly cashless economy, it’s difficult to keep track of spending, and before you can say, tap-and-go, the morning latte and toastie has maxed out the credit card. Most people tighten the belt and get back on track. Unfortunately, others find themselves caught in a downward spiral that quickly gains momentum until realising they’re in over their heads. Failure to meet your financial obligations may result in you being contacted by a debt collection agency as creditors seek to recoup their losses. While this is traumatic, keep your cool and remember that you have rights. According to MoneySmart.gov.au a debt collector can only contact you: Debt collectors may: Debt collectors cannot: If you believe a debt collector, or agency they represent, has acted outside of their boundaries, you are within your rights to take action. Violent or threatening behaviour is never acceptable; immediately contact the police. Alternatively, if the collectors are intimidating or harassing you, write to them or their agency to report the behaviour and request it be stopped. If this doesn’t work, reach out to the Australian Financial Complaints Authority on 1800 931 678 for advice. Debt collectors aside, you must take action to manage your debt. No debt ever went away because it was ignored, but there are ways to dial down the pressure. Here are some steps you can take today to get started: You can also seek professional assistance from a qualified financial adviser. They’ll work with you to create a realistic strategy for managing your expenses and guide you in developing a plan to move forward and eliminate debt. Debt can be debilitating and seem overwhelming, but by understanding your rights, knowing where you stand financially and seeking professional advice and support, you can take back control of your finances and look towards a comfortable financial future. The information provided in this article is general in nature only and does not constitute personal financial advice.  

Loud budgeting: Amplifying your financial awareness

Loud budgeting: Amplifying your financial awareness

Budgeting, Education

Saving for a first home often requires a significant amount of discipline and sacrifice. The challenge of accumulating the necessary deposit can feel overwhelming, making it difficult to maintain motivation. Everyday distractions, such as weekend outings with friends or the latest gadgets, can easily derail savings efforts. A common issue is the perception that long-term savings goals are unattainable, which can lead to a lack of motivation to forego immediate pleasures. Traditional methods of managing finances may not always address this issue effectively. Enter loud budgeting—a strategy designed to tackle these challenges head-on. Loud budgeting is a goal-oriented approach that involves openly sharing savings goals with trusted friends and family, creating a system of accountability. The transparency of loud budgeting helps maintain focus and drive. Here’s how loud budgeting works: Incorporating loud budgeting into your routine can transform the savings process into a structured and motivating experience. Each progress update on the tracker brings a sense of accomplishment, and reaching milestones is celebrated with those who offer support. Consider a scenario where you aim to save $20,000 for a home deposit within 16 months. By adopting loud budgeting, you break down the goal into manageable monthly targets. For example, you set a target to save $1,250 each month. At the beginning of the process, you create a colourful chart and track your progress regularly. You use budgeting apps to monitor your savings and share updates with your support network. Every time you hit a monthly target, you celebrate with your family or friends, reinforcing your commitment. Over the course of these 16 months, this approach helps maintain your motivation despite encountering challenges such as missed trips or unexpected expenses. By consistently tracking your progress and celebrating milestones, you remain focused and driven. As each milestone is achieved, the sense of accomplishment grows, making the final goal of reaching the $20,000 deposit feel attainable. By the end of the 16 months, you successfully reach your target amount. The journey has been marked by steady progress, accountability, and shared celebrations, showing how loud budgeting can make saving for a home feel like a rewarding team effort. Loud budgeting might not be for everyone, but it’s a great way for many people to hit their financial goals. It can make saving for a home feel like less of a solo mission and more of a team effort that’s both rewarding and fun. The information provided in this article is general in nature only and does not constitute personal financial advice.  

Is FORO ruining your retirement?

Is FORO ruining your retirement?

Updated on Education, Finance, Retirement

FORO – the fear of running out. I’d never heard the expression until I met Mark and Susan. Of course I’d heard of FOMO, the fear of missing out, but never FORO. As the newly-retired couple sat across from me, explaining how they were so afraid of running out of savings that they were not enjoying the retirement they’d worked so diligently for, I grasped the meaning of FORO immediately. They rarely went out for dinner, bought anything new or – heaven forbid – took a holiday. After a lifetime of saving hard, paying off a mortgage and raising a family, Mark and Susan were naturally frugal, but FORO had left them feeling vulnerable and afraid of the future. After two decades as a financial planner, I’d come across this situation before, although, it is unfortunately becoming more common. Mark and Susan had never sought financial advice before and weren’t sure what I could do to help, but came to see me because they didn’t know where else to turn. When I assured them that there was plenty I could do to help, they visibly relaxed. I explained that the key to overcoming FORO was having a well-structured financial plan. After I outlined my 5-step strategy, they were eager to proceed. The steps we took were as follows: 1. Conduct a financial assessment By thoroughly assessing their current financial position (superannuation, savings, investment and social security entitlement), I formulated a picture of where they were at, and their future cash flow projections.  2. Establish a sensible strategy Working together, we identified essential living expenses and discretionary expenses, then allocated funding that balanced financial security with lifestyle goals. Next, we determined a retirement investment portfolio with a sensible withdrawal rate to support their retirement plans. 3. Create an emergency buffer In my experience, the what if factor is a major concern for retirees. What if…I become ill? What if…the fridge breaks down? What if…the car dies? These questions, and more, play on peoples’ minds to the point where they fall back into a FORO mind set. To ease their anxiety, I recommended they include a contingency fund in their portfolio to ensure that unplanned expenses were covered. That way, if something unexpected pops up, their retirement lifestyle strategy remains on track. 4. Enjoy the early years FORO had been holding Mark and Susan back for too long. I explained that hobbies, travel and social activities are crucial to mental well-being. So once we had established a responsible financial plan, I showed them how they could afford to spend, sensibly, and enjoy themselves. I especially encouraged them to make the most of their early retirement years, while they were fit and energetic. 5. Schedule regular reviews The final step in the process was my ongoing commitment to Mark and Susan. Retirement planning is not a set-and-forget strategy; it’s a journey through every stage of life – physical retirement being one of those stages. By regularly reviewing their financial position, I helped Mark and Susan monitor their spending and investment performance, and made portfolio adjustments that kept them in control of their retirement plan. Last week I bumped into the couple on the street. They were glowing with excitement and told me they’d just booked a Pacific cruise. Of course, I was thrilled for them – it was a big tick off the bucket list! But when Susan said they’d turned FORO into FOMO and were living their best lives, well, I’ll just say it was one of those moments when I absolutely love my job! The information provided in this article is general in nature only and does not constitute personal financial advice.  

The impact of student loans when buying a home

The impact of student loans when buying a home

Budgeting, Education, Finance

For many Australians, particularly young Australians, the dream of home ownership is often accompanied by the reality of carrying student loans, known as HECS-HELP debt. Understanding the impact of HECS debt on your ability to secure a home loan can help you plan for and navigate the home loan process. Case Study Sarah, is a 32-year-old marketing professional from Melbourne. She has a stable job with a steady income and has managed to save a decent deposit for her first home. However, like many Australians, Sarah carries a HECS debt from her university education. What is HECS-HELP debt? HECS-HELP is a loan offered by the Australian government to pay for studies at a university or approved higher education provider. Once a person earns above the compulsory repayment threshold, loan repayments are automatically deducted from their pay through the ATO. There is no interest on the loan, but the debt is annually indexed against inflation. Sarah’s Home Loan Goals Sarah’s goal is to purchase a two-bedroom apartment close to the city. She is aiming to take out a $450,000 home loan, considering her savings and the property prices in her desired area. Sarah is concerned about how her HECS debt will affect her home loan application and how she can maximise the amount she can borrow. The Application Process and the Impact of Student Loans When Sarah approached a mortgage broker to discuss her home loan options, she learned that her HECS debt, while interest-free, would still impact her borrowing capacity. Sarah’s potential lenders must consider her ability to meet all financial obligations, including her HECS repayments. This could potentially lower the loan amount Sarah qualifies for, as lenders assess her debt-to-income ratio. Strategies and Solutions Sarah’s mortgage broker advised that there are several strategies she can consider to enhance her borrowing capacity despite her student debt: Outcome By proactively managing her finances, seeking professional advice, and implementing strategies to manage her HECS debt, Sarah was able to strengthen her home loan application. She successfully secured a home loan with a competitive interest rate, allowing her to purchase an apartment within her parameters. The impact of student loans on home loan applications is a significant consideration for many young Australians. But the good news is that there are steps you can take to minimise the impact of HECS-HELP debt. Doing so enhances the chances of securing a home loan, and empowers you to make informed decisions on your financial journey. Reach out to us today and take the first step towards home ownership! The information provided in this article is general in nature only and does not constitute personal financial advice.  

Is your money mindset holding you back?

Is your money mindset holding you back?

Updated on Budgeting, Education

Does your Money Mindset have your back? Or… Is it holding you back?   If you’ve never really thought about it, you’d be forgiven. When it comes to our financial success, we tend to focus on things like income, investments, and expenses. It makes sense to put our financial position down to how much we earn or spend, or the performance of our investments. But what about the role of our Money Mindset?  What is a Money Mindset? A money mindset is your set of beliefs and attitudes about money. It shapes how you make financial decisions, how you perceive wealth, and how you react to financial challenges. Understanding your money mindset is important because it can either support you in achieving financial success, or hold you back from it.  There are various types of money mindsets, but they often fall into two broad categories:  Abundance Mindset vs. Scarcity Mindset Abundance Mindset: An abundance mindset is the belief that ample opportunities exist to earn, grow, and enjoy wealth. People with this mindset see the world as full of potential and possibilities. They tend to be optimistic about their financial future and are willing to take calculated risks.  Scarcity Mindset: A scarcity mindset, on the other hand, is the belief that resources are limited and difficult to obtain. People with this mindset often focus on what they lack rather than what they have. This can lead to fear, anxiety, and a reluctance to take risks.  Fixed Mindset vs. Growth Mindset Fixed Mindset: A fixed mindset in a financial context means believing that your financial abilities and knowledge are static and unchangeable. People with a fixed mindset might think they are either “good” or “bad” with money and that this cannot be altered. Growth Mindset: A growth mindset is the belief that financial skills and knowledge can be developed through effort and learning. Individuals with a growth mindset see financial challenges as opportunities to improve and grow.  Money Mindsets in Everyday Life Having explored the concepts of abundance vs. scarcity and fixed vs. growth mindsets, let’s look at how these money mindsets might manifest in everyday life: Kylie believes there are many ways to grow her wealth. She takes an online investing course, consults a financial adviser, and starts a diversified investment portfolio. She views market fluctuations as learning experiences and opportunities for growth. Jacob believes he will never be good with money and that financial success is reserved for others. He avoids investing due to fear of losing money and prefers to keep his savings in a low-interest account. He often feels stressed about his financial future and is reluctant to seek advice. Taylor is optimistic about her financial future and believes in plenty of opportunities. However, she thinks her financial skills are unchangeable. She sticks to familiar, low-risk investments and dismisses new strategies, missing out on potentially higher returns. Oscar grew up believing money is scarce and financial security is hard to achieve. Despite this, he commits to improving his financial situation through education. He starts with low-risk investments to build confidence and gradually diversifies his portfolio, overcoming his fears over time. Strategies to shift a negative Money Mindset If you’ve identified that your money mindset might be holding you back, don’t worry! The following strategies can be used to help you to shift your mindset to a more positive one:  Your money mindset plays a crucial role in your financial success… it should have your back, not hold you back! By identifying and overcoming negative financial beliefs, you can create a healthier relationship with money and achieve your financial goals. Take the first step today by reflecting on your financial mindset and seeking professional advice to guide you on your journey. The information provided in this article is general in nature only and does not constitute personal financial advice.  

6 steps to a Happy New Financial Year

6 steps to a Happy New Financial Year

Updated on Budgeting, Education

The new financial year provides an opportunity for a fresh start for your finances. Make this the financial year you get on top of yours… for good!  We’ve broken it down into six bite-sized, manageable steps for you to tackle over six months, because real change takes time! The below is a suggested path to a New Financial You, however, you can choose your preferred order and pace. July: Goal Setting What is it that you want? I mean REALLY want? As with any goal, your financial goals should be SMART – Specific, Measurable, Achievable, Relevant, Timely. Whether you’re wanting to build an emergency fund, get out of debt, or save for a specific goal, write down your goals in detail and then revisit these regularly to remind yourself of what you’re working towards. August: Set your Budget A budget helps you see what’s coming in, what’s going out and most importantly how much you have to allocate towards your goals. There are plenty of free templates online so find one that works for you and add in your personal income and expenses.  Tip – Go through your last three months’ bank statements to get details of your spending. September: Set up a Savings Plan You can do this by working out how much money you need for a particular savings goal and by when, then breaking it down into regular amounts to be set aside. Example – If you want to save $2,000 for Christmas by December 1st, you’ll need to set aside $154/week from September 1st. Tip – Automate savings by setting up a regular transfer. October: Super Check It’s time to health check your superannuation:  Make sure your contact details are up to date to ensure you’re not missing out on important correspondence. Do you have a current beneficiary nomination in place? A valid beneficiary nomination will direct your super fund on how you would like your super benefits to be paid, if you were to pass away. How much is your super costing future you? There are a whole range of fees that might be funded from your super, including administration, investment, and adviser service fees, all of which will have an impact on your retirement savings.  Do you know how you’re super is invested? Is it Conservative or Growth? How well has it performed over the long term? Some important things to consider when choosing an investment option include your life stage, investment horizon and comfort for risk. November: Insurance Review There are a range of insurances that offer financial security for you and your family, including:  This month, get to know your current insurances and consider whether the types and amounts are suitable for your needs. December: Estate Planning Estate Planning involves documenting what you want to happen in the event you pass away or become incapacitated. It might include Wills, Powers of Attorney, Health Directives and Guardianship nominations.  If you don’t have these in place already, it’s time to build out your Estate Plan.  If you do, it’s time to dig these out for a review. Congratulations, you made it!  If you’d like some extra support on your journey, reach out to your Financial Adviser today for help with achieving your financial goals!   The information provided in this article is general in nature only and does not constitute personal financial advice.  

2024-25 Federal Budget Recap 

2024-25 Federal Budget Recap 

Centrelink, Economy, Superannuation, Tax

In his 2024 Federal Budget speech, treasurer, Jim Chalmers, announced that ‘The number one priority of this government and this Budget is helping Australians with the cost of living’.  But what exactly does that mean?   Let’s take a closer look at what the 2024 Budget proposes –   An average tax cut of $1,888 in 2024-25  The budget proposes significant tax relief for ALL Australian taxpayers to alleviate cost-of-living pressures, including reduced tax rates, adjustments to the income thresholds, and increased low-income thresholds for the Medicare levy.   This measure aims to boost disposable income and encourage economic activity by allowing Australians to retain more of their earnings.  $300 back in the pocket for ALL Australian Households  To combat rising energy costs, the government has allocated $3.5 billion for a one-time $300 energy bill rebate for all Australian households, designed to directly reduce headline inflation by about 0.5 percentage points in 2024-25 without adding to broader inflationary pressures.  This initiative also extends to one million small businesses, receiving a $325 rebate.  Superannuation contributions on paid parental leave  The 2024 budget integrates enhancements to parental leave and childcare into comprehensive support for families. It includes a $1.1 billion investment to extend superannuation contributions to government-funded Paid Parental Leave, improving financial security for new parents.   Additionally, the budget boosts childcare support, aiming to make childcare more affordable through increased subsidies, reducing the financial burden on families and supporting parents’ return to work.   These measures are part of a broader effort to provide more robust support for families and promote gender equality.  $3 billion in student debt… wiped  In an effort to alleviate the burden of education costs, the budget proposes a change to the way the government calculates HELP debt indexation, erasing $3 billion in student debt for over 3 million Australians.   An investment in education for Australians  The budget commits to reforming tertiary education and increasing vocational training funding, aligning skills training with market needs.   Specifically, it allocates $88.8 million to provide 20,000 new fee-free TAFE places, including pre-apprenticeship programs relevant to the construction industry.   Additionally, the government is introducing Commonwealth Prac Payments to support students undertaking mandatory placements, offering $319.50 per week to more than 73,000 eligible students, which includes those in fields like nursing and social work.   This investment is part of a broader effort to align skills training with labor market demands and support sectors critical to economic growth.  Supporting small businesses  To aid small businesses, the 2024 budget extends the $20,000 instant asset write-off for an additional year, enabling continued investment in necessary business equipment. This extension is designed to enhance the cash flow of small enterprises and encourage further economic activity among local businesses.   Additionally, the budget includes investments to support the mental and financial well-being of small business owners, recognising the unique challenges they face and bolstering the resources available to them for sustainable operation.  Access to affordable medicines  The budget allocates up to $3 billion to reduce the maximum PBS co-payments. This includes a one-year freeze on the maximum patient co-payment for everyone with a Medicare card and a five-year freeze for pensioners and other concession cardholders, ensuring that no pensioner or concession card holder will pay more than $7.70 for PBS-listed medications until 2030.  … And an increase to health funding  The budget allocates $888.1 million to expand mental health services. This includes funding for new and existing programs that provide critical support for individuals facing mental health challenges.    An additional $2.2 billion is directed towards improving the aged care system, and investments are made in strengthening Medicare with a focus on urgent care clinics, reducing hospital admissions, and supporting regional and remote health services.  This expansion aims to provide wider access to necessary health services, significantly improving health outcomes and making healthcare more affordable and accessible to more Australians.  A 10% increase to Commonwealth Rent Assistance  In response to the housing affordability crisis, the budget increases Commonwealth Rent Assistance by 10%, benefiting nearly 1 million households. This follows a 15% increase from the previous year, marking a substantial boost to aid renters, especially given the rising rental market costs.  Housing affordability  The government is investing $6.2 billion in new housing initiatives to tackle affordability and accessibility.   This funding supports the construction of more homes, including affordable and social housing options, addressing critical housing shortages and supporting community infrastructure development.   The 2024-25 Federal Budget is strategically focused on alleviating financial pressure through targeted support measures. By understanding and applying these benefits, Australian households can better navigate the challenges of rising living costs.  For tailored advice on how to adjust your financial plan in light of the new budget measures, consider consulting with a financial adviser or accountant. They can help you understand the specific impacts on your personal finances and strategise accordingly.  The information provided in this article is general in nature only and does not constitute personal financial advice.  

Get ready for June 30 now!

Get ready for June 30 now!

Updated on Superannuation, Tax

When it comes to getting the most (money) from your annual tax return, there is usually a lot to think about, so we’ve identified a few options that could open the door to some opportunities to save on tax. The key here is to plan ahead. Deductions — lower your tax liability If you have some spare cash available, paying for certain expenses before June 30 could mean you get your tax break back from the ATO earlier. Expenses paid in July could leave you waiting more than 12 months for the return. A popular expense in this category is prepaying interest on an investment loan, but be careful because not all expenses qualify for a tax deduction in advance. This year the ATO is focusing on work-related expenses. If you are planning to claim expenses for things like a home office, mobile phone, tools and equipment, etc, make sure you claim only eligible expenses and have the paperwork to substantiate them. You can claim the premiums you have paid for your income protection insurance as a tax deduction. Note that you can only claim the portion of the premium that covers you for loss of income, not for any benefits of a capital nature. Premiums for other personal insurance cover such as life, critical care or trauma cannot be claimed. You also can’t claim deductions for premiums that are paid from your superannuation contributions if your policy is held in your fund. Super contributions — don’t waste the limits June 30 is not just about deductions for expenses. It’s also a good time to review your superannuation contributions to date and take advantage of the annual caps. The annual limit for these types of tax-deductible contributions is $27,500 per annum, regardless of age. If you’re an employee, this limit covers both employer super guarantee and salary sacrifice contributions. How much has your fund received in contributions so far this year? Do you need to review and adjust your current arrangements? Anyone under 65 (whether working or retired) can contribute $110,000 each year to super as after-tax or non-concessional contributions. You can also contribute $330,000 in a single year by bringing forward the limit for the following two years. But – when it comes to super there’s usually a ‘but’ – check your total super balance to ensure any extra contributions do not exceed the general balance transfer cap which is currently $1.9 million. And one final point on super contributions – the total contributed is based on how much is received by your fund, not when you sent it to the fund. Another reason why planning ahead is crucial. These are just a few ways to manage how your money is taxed. Depending on your circumstances, other options may be available. Your licensed adviser can work with you to help you achieve what is best for you this financial year. But please don’t leave it too late. The information provided in this article is general in nature only and does not constitute personal financial advice.  

Building financial resilience 

Building financial resilience 

Updated on Budgeting, Education, Finance, Investing

Resilience is the ability to quickly recover from setbacks, and while setbacks can come in many forms most of them will have a financial component. So what can you do to build financial resilience?  Expect the unexpected  Rarely do we get advance warning that something bad is about to happen to us, so the time to develop your resilience strategy is now. And while we don’t know the specifics, we can anticipate events that would throw our finances into disarray. A house burning down or a car being stolen. Not being able to work due to illness or injury. The death of a breadwinner or caregiver.   With some idea of the type of threat we face we may be able to insure against some of them. If you have taken out any type of insurance policy you’ve already made a start on your resilience plan.  Create buffers  You can’t insure against every possibility, but you can build financial buffers. This might simply be a savings account that you earmark as your emergency fund that you contribute to each payday. If your home loan offers a redraw facility you can also create a buffer by getting ahead on your mortgage repayments.   Buffers can be particularly important for retirees drawing a pension from their super fund. Redeeming growth assets for cash in order to make pension payments during a market downturn can lead to a depletion of capital and reduction in how long the money will last. By maintaining a cash buffer of, say, two year’s worth of pension payments, redemptions of growth assets can be deferred, giving time for the market to recover.  Cut costs  The Internet abounds with tips on how to cut costs and save money. In difficult economic times cost cutting can help you maintain your financial buffers and important insurances.   Key to cost cutting is tracking your income and expenditure and yes, that means doing a budget. Find the right budgeting app for you and this chore could actually be fun.  Invest in quality  There are many companies out there that have long track records of consistently pumping out profits and dividends. They may not be as exciting (i.e. volatile) as the latest techno fad stocks but when markets get the jitters these blue chip companies are more likely to maintain their value than the newcomers.  This is important. The more volatile a portfolio the more likely an investor is to sell down into a declining market. This turns paper losses into real ones, depriving the investor the opportunity to ride the market back up again.  The other key tool in creating resilient portfolios is diversification. Buying a range of investments both within and across the major asset classes is a fundamental strategy for managing portfolio volatility.  With a well-diversified portfolio of quality assets there is less need to regularly buy and sell individual investments. Unnecessary trading can create ‘tax drag’ where the realisation of even a marginal   capital gain triggers a capital gains tax event and consequent reduction in portfolio value.  Take advice  Building financial resilience can be a complicated process requiring an understanding of a range of issues that need to be balanced against one another and prioritised. Your financial planner is ideally placed to assist you in developing your own, personalised plan for financial resilience.   The information provided in this article is general in nature only and does not constitute personal financial advice.  

Quarterly Economic Update: April-June 2022

Quarterly Economic Update: April-June 2022

Updated on Economy

The price of a lowly head of lettuce has never been a recognised barometer of the strength of the Australian economy, that is until the media started reporting iceberg lettuces were selling for $10 a head. Suddenly, this has become a touchstone for everything that is wrong with the domestic economy. Prices are on the rise, spurred by higher transport costs and climate-based disruptions to the food chain, and the cost of living is surging. While some relief came with an unexpected 5.2 per cent increase in the basic wage, a move endorsed by the newly elected Federal Government, the prospect of similar inflation linked wage increases were dismissed as a ‘baby boomer fantasy’ by the trade union movement. Nonetheless, fears of further wage increases remain. So, all eyes are now focused on price rises with the most recent figures from the Australian Bureau of Statistics, pegging Australia’s rate of inflation at 5.1 per cent per annum. As bad as this might seem, it is still one of the lowest inflation rates among OECD nations, beaten only by Japan and Switzerland, at the bottom of the inflation table with 2.5 per cent, followed by Israel on 4.0 per cent, and Korea and France with 4.8 per cent. However, with inflation in the United States at 8.3 per cent and 7.8 per cent in the United Kingdom and both countries expecting this rate to go higher, the fear is Australia’s rate will start moving towards 7 per cent – a rate not seen in Australia for more than 20 years. Inflationary fears were made worse by the Governor of the Reserve Bank, Phil Lowe, calling for “front-loaded” interest rate hikes to avoid stagflation and warning against any super-sized wage claims. Just the mere mention of stagflation, something not seen since the seventies, has sent a shiver through the economy. This drove fears that home loan interest rates will also be pushed higher, causing more financial stress for those who have borrowed heavily and bought property at the recent record-high prices. While all four of the big banks are reporting current home loan arrears at record low levels and the majority of customers are tracking well ahead on their home loan repayments, fears still remain about the impact of higher interest rates. Property prices have already started to slide with industry analysts expecting the average prices in Melbourne and Sydney to fall by 10 per cent this calendar year and by potentially as much again next financial year. Meanwhile, the value of cryptocurrencies, which seems to magnify prevailing market sentiments, has collapsed across the board with values falling by as much as 70 per cent. The largest single cryptocurrency, Bitcoin, which was trading at just $US67.81 in July 06, 2013, soared as high as $US68,000 last November, is currently trading at $US20,200, with little market enthusiasm. While cryptocurrency was once touted as being something of a safe haven and a means of diversifying investment portfolios, it is fast becoming a magnifier of market excess and pessimistic economic sentiment.   The information provided in this article is general in nature only and does not constitute personal financial advice.

The female investor

The female investor

Updated on Investing

Investment and portfolio building has traditionally been a male-dominated world, but these days more women are trading on the market – and they’re good at it! According to an ASX Australian Investor Study completed in 2020, female investors make up 42% of Australian investors, yet 45% of those only began investing in the year prior to 2020. It’s intriguing that younger women – known as Next Generation Investors aged 18 – 25 – are taking up stock portfolios. Their goals include saving for a holiday (50%) or paying down existing debt (34%). The ASX study highlighted a few other interesting points: Women prefer products more commonly understood, such as direct Australian shares (53%), residential investment property (37%) and term deposits (31%). Women are less concerned than men about low interest rates and market fluctuations, but consider issues like whom to trust, hidden fees and liquidity. While men are more accepting of market volatility, women prefer stable or guaranteed investment returns. While we’re about breaking down stereotypes, the study found that women are generally more successful in their investments than men. This could be because women are cautious by nature, taking longer to research investment choices and, once settled, preferring to ride out market ups and downs. Conversely, men tend to regularly review their portfolios and trade aggressively, buying and selling assets, potentially incurring additional fees and losses due to market swings. In recent times there has been a surge in Australian women backing other Australian women in start-up business ventures. According to SmartCompany.com.au, female venture capitalists are recognising that entrepreneurial women face a specific set of challenges, such as a lack of networking and mentoring opportunities, and lingering perceptions around gender-based work/family roles. Further, support for Indigenous businesswomen is increasing as women’s investment networks strive to encourage women from diverse backgrounds. Fact is, almost 40% of Australian women who are single for reasons of divorce, widowhood or otherwise, will retire in poverty. Issues around the gender pay gap are recognised contributors to women generally having less money in savings and/or superannuation: women save an average of $598 per month compared with men $839. In an effort to improve these figures, many women strive to secure their financial futures through self-education: magazines, blogs, podcasts etc. Others seek professional advice through referral from a trusted friend or relative. The financial planning industry recognises that more women are actively investing. Financial advisers are developing strategies specific to women’s needs and goals – in fact, the industry is well-served by a large number of financial professionals who are women. The Financial Planning Association of Australia (FPA) can put you in touch with a qualified professional adviser, just like us, so you can ensure all your decisions are well-informed and that your personal needs and goals are considered.   The information provided in this article is general in nature only and does not constitute personal financial advice.

Financial Advice, Royal Commission and You

Financial Advice, Royal Commission and You

Updated on Finance

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry delivered its final report in February 2019, capping off a process that revealed the unethical and, in some cases, illegal practices of some of Australia’s largest banks, insurance and other financial services companies. Many of the Royal Commission’s recommendations are aimed squarely at financial services companies, and they should lead to changes in corporate attitudes and practices that will deliver indirect, and hopefully positive changes to many consumers. The Royal Commission also made a number of recommendations that will have a more direct impact on investors. Unfortunately, these may not always be for the better. Even though the Royal Commission unearthed a wide range of bad behaviours, it’s important to acknowledge the large number of financial advisers who have always adhered to high ethical standards while delivering great outcomes to their clients. Clients of these advisers may see little change in the relationship with their adviser and how their money is managed. So what changes are likely to affect consumers? A ban on conflicted remunerationConflicted remuneration arises when an adviser has an incentive, such as a sales bonus, to recommend an investment product. Conflicted remuneration was banned some time ago, but existing arrangements were ‘grandfathered’. These grandfathered arrangements will now cease. An end to trailing commissionsInvestment and superannuation products may pay the recommending adviser an ongoing annual or ‘trailing’ commission. The expectation is that the adviser will continue to provide ongoing review of the suitability of the product and recommend changes when warranted. Unfortunately, the Royal Commission revealed numerous cases where fees were charged and no advice given. This extended to fees being charged to dead peoples’ accounts. All investment and superannuation trailing commissions will cease from 2021. While this should lead to higher investment returns, many consumers will miss out on proactive follow up from advisers unless they ‘opt-in’ and agree to pay for advice. As the cost of such advice may be uneconomic for investors with smaller portfolios, the end of trailing commissions may deliver mixed outcomes. One prediction is that it may spark an increase in so called ‘robo advice’, where automated systems deliver lower cost, albeit more generic advice. Increased educational requirements for advisersNew advisers must now hold a relevant, degree level qualification. Existing advisers without such qualifications will need to undertake further study. While qualifications are important, they overlook the value of the real-world knowledge of experienced advisers. Many older advisers may retire rather than undertake additional study, which may lead to a shortage of advisers. Incidental outcomesAnother indirect outcome of the Royal Commission is that many of the larger banks and insurance companies have decided to sell off their financial advice businesses. This also has the potential to reduce the number of active advisers but may see a rise in the number of smaller, independent advisory firms. The Royal Commission has delivered a major and necessary shake-up of the financial services industry. To find out what the direct, personal impacts may be for you, talk to us. We’re here to help.    This is general information only

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