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Provision Newsletter

Is the outside of your property turning buyers off?

Posted On:Aug 07th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Are you in the process of selling your home or thinking about it in the not too distant future?

 

Perhaps you need a change of scenery, more space for a growing family, less space if the kids are grown up and living out of home, or maybe there are financial or health considerations at play.

Whatever the reason, first impressions count when it comes

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Are you in the process of selling your home or thinking about it in the not too distant future?

 

Perhaps you need a change of scenery, more space for a growing family, less space if the kids are grown up and living out of home, or maybe there are financial or health considerations at play.

Whatever the reason, first impressions count when it comes to selling your property. And, if you want to get the best price possible, street appeal is something worth thinking about, with house hunters offering 13%, on average, below the asking price if a property is unappealing from the outside.1

How much could unappealing exterior features set you back?

According to recent research from Australian comparison website Finder, vendors lose more than $90,000 on average when selling their home, simply because their property lacks external appeal.2

In fact, nine out of 10 Australians admit to offering below the property’s asking price for exactly that reason. Queensland residents are the most likely to be put off by untidy property exteriors, with New South Wales and Victorian residents the least concerned by a property’s street appeal.3

If you don’t want a bad first impression to cost you, it’s worth some thought, particularly as the Australian Bureau of Statics reported in June that residential property prices fell in the March quarter for the first time since September 2012.4

Ways to increase the street appeal of your property before selling

Street appeal can make a big difference to the value of your property, and while some things will come with a price tag, the good news is there are plenty of things you can do for little or no cost.

And, considering that 32% of people would write off a property based on an untidy garden5, some of these ideas may be worth your attention:

  • Rake the leaves, mow the lawn and get rid of weeds

  • Trim overhanging trees and bushes, and plant some flowers for colour

  • Install a modern fence, paint the old one or add one for depth and privacy

  • Touch up cracked and peeling paint—think doors, windows and the garage

  • Oil old woodwork, replace bricks and tiles, or pressure hose what you have currently

  • Put in some porch lights, add some deckchairs or spruce up the ones you have with cushions

  • Camouflage electrical and air conditioning boxes with paint or wooden screens

  • Makeover your mailbox and maybe add some modern street numbers to jazz things up.

The ability to sell your home at a higher price could help you do a range of things, such as upsize to a larger property or downsize to a smaller one, and maybe pay off any debt you have at the same time.

Depending on what goals you’re working towards. Please contact us on |PHONE| for further information.

Source: AMP 28th July 2017

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Do I have to downsize my home when I retire?

Posted On:Jul 31st, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

So maybe you’re nearing retirement and thinking about selling the family home to free up some cash for the future. Or perhaps you’ve already retired and are considering downsizing to buy a more manageable property.

Of course, there may be benefits of moving to a smaller place. You might be able to reduce or pay off your home loan, get rid

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So maybe you’re nearing retirement and thinking about selling the family home to free up some cash for the future. Or perhaps you’ve already retired and are considering downsizing to buy a more manageable property.

Of course, there may be benefits of moving to a smaller place. You might be able to reduce or pay off your home loan, get rid of some clutter and there is likely to be less cleaning and gardening. But don’t assume that moving to another property is guaranteed to give you more cash to live on.

Before you put the ‘for sale’ sign up, get a few different estimates on what your house is worth. Then think about why you want to move and what you’re hoping to achieve.

Some things to consider

  • Why do you really want to sell? Is it to have a better lifestyle, be closer to your family, pay off your home loan or have more cash?

  • Where do you want to move to, and have you trialled living there before to see if you like it? Consider a house swap or renting a property in the area you want to buy, before forking out for a deposit.

  • Why do you want to live in a particular area? You might love the idea of living on a remote beach or in the bush, but have you researched nearby facilities, such as shops, public transport or hospitals?

  • Do you have emotions tied to your family home that would make it hard to move, such as memories of the kids growing up there?

  • What about the social aspects of moving, like whether you have friends or family where you’re moving to? And what about the ones you’re leaving behind?

The real costs of moving

While there may be many good reasons to consider downsizing, selling your home and buying another property will incur some out-of-pocket expenses. You’ll have the costs of moving, such as connecting and disconnecting utilities, removalists’ fees, stamp duty and potentially real estate agent commission costs.

In addition to these, the money from the sale of your home could affect you under the government assets and income tests. For example, moving from a property that is worth $1m to one that’s worth $400,000 means you have an additional $600,000 in assessable assets, which could impact your Age Pension entitlement.

So you’ll need to carefully consider if downsizing is the right option for you and your retirement plans. For more information download our downsizing planner.

Other sources of income

Apart from selling your home, you could think about other ways to generate income leading up to, or during retirement. Here are just a couple of examples.

  • If you’ve already retired, consider getting a part-time job to help supplement your income or the Age Pension. But bear in mind there are limitations to the number of hours you can work after you have declared that you’re retire. 

  • Consider reviewing your investments to make sure they align with your goals. Just remember that past performance is no indicator of future performance and higher returns can also mean higher exposure to risk.

We’re here to help

Retirement planning can be a complex area and there may be tax or Age Pension implications which you need to be aware of before making any decisions.

You can learn more about selling the family home, contact us for further information on |PHONE|

Source: AMP 31 JULY 2017

 

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Making the most of flying solo in retirement

Posted On:Jul 28th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Getting out and about is important in retirement, especially when you lose the social aspect of working. But what if there’s just you, and it means going to the theatre alone, dining at a table for one or travelling solo?

Society tells us these types of activities can only be enjoyed with a companion. But one in four Australians currently live

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Getting out and about is important in retirement, especially when you lose the social aspect of working. But what if there’s just you, and it means going to the theatre alone, dining at a table for one or travelling solo?

Society tells us these types of activities can only be enjoyed with a companion. But one in four Australians currently live alone1 and this figure has been rising steadily for the past 70 years, going from 8% in 1946 to 24.4% in 2016.

So can we actually enjoy doing sociable things on our own?

Enjoying your own company at all ages

Research released in 20152  suggests we shouldn’t be so quick to give into our fears of how being alone in a social setting might be viewed by others. The researchers, Rebecca Ratner and Rebecca Hamilton, of the universities of Maryland and Georgetown, believe people should be bolder about doing things alone. They might discover they enjoy the activity more than they expected to.

They carried out a small test to see whether our fear of doing some activities alone was justified. They organised for university students to be invited to visit a nearby art gallery for five or ten minutes. Some students were with friends, others were on their own.

They were all asked beforehand to rate how much fun they expected to have. After their visit they were asked to rate how much fun they actually had. Those who were alone expected to have a worse time than those who went with their friends. But it turned out everyone enjoyed it just as much!

You could argue that it’s easier for a group of university students to enjoy a trip to a gallery just as much alone as with friends, than experiencing things on your own later in life. But it doesn’t have to be the case.

There are many reasons why we may end up being alone as we get older: in the 60-69 year age group, divorce or separation are the main reasons. This continues for men in their 70s but for women of this age, the main reason is the death of a partner.

Getting out and about to meet new people

If you’ve always lived alone, then you’ve probably learnt to embrace a full and well-rounded life on your own. It seems travel is a popular way to embrace this. In fact, 40% of solo travellers are in the plus 50 age bracket3.

But if this is new territory, or you’ve never felt comfortable going it alone, there are plenty of ways you can meet new people. As well as travel, you can connect with others via volunteering, mentoring or joining community groups.

Meetup, for example, has a range of interest groups you can join to make it easy to find like-minded people in your local area.

Want to know more?

Whatever your household looks like, it’s important to be financially secure so you can achieve your goals. So you can be free to take that holiday or explore new possibilities. Please contact us on |PHONE| if you would like to discuss. 

1 http://www.abs.gov.au/ausstats/abs@.nsf/mf/2071.0 
2 http://jcr.oxfordjournals.org/content/42/2/266
3 http://www.roymorgan.com.au/findings/5667-more-australians-taking-holidays-alone-201407070228

Source: AMP 24 July 2017
 

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You’ve finally paid off your home loan. Now what?

Posted On:Jul 28th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

You’re down to zero on your home loan? Congratulations! You’ve finally done what many people dream of.

But while the goal of paying off your home loan is a common one, it’s important to work out a smart plan for how to use the money that used to go to your lender.

Your first instinct might be to reward yourself and, after

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You’re down to zero on your home loan? Congratulations! You’ve finally done what many people dream of.

But while the goal of paying off your home loan is a common one, it’s important to work out a smart plan for how to use the money that used to go to your lender.

Your first instinct might be to reward yourself and, after years of sacrifice and hard work, why not? But once you’ve taken your dream trip or splashed out on a new toy it’s wise to take more of a long-term view. 

Consider boosting your super to retire your way

This window provides an opportunity to take a look at the type of retirement you’re hoping to live. While you might be surprised at how much a comfortable retirement actually costs, our retirement simulator could help you determine more accurately how much you might need.

Perhaps your super balance doesn’t quite match what you think is needed to fund your retirement dreams? If so, the lead up to retirement is a good time to give your super that extra boost.

By channelling the money that once paid off your home loan into your super, either by salary sacrificing from your pre-tax salary or paying with after-tax funds, you can give your super a decent lift.

Invest to build future wealth

If your super’s in good shape, you might like to use the surplus funds to build your wealth via other investments.

If you prefer investments with a lower risk profile, savings accounts or term deposits could be the way to go.

But if you can invest for a five to ten-year timeframe, you might consider shares or managed funds. These can provide income in the form of dividend payments, plus the potential for capital growth.

Another option is buying an investment property. While the thought of taking on a new housing loan may be the furthest thing from your mind, the potential to cover repayments with the rental income could make it worth considering.

Work less, enjoy life more

Now that such a major financial commitment is no longer hanging over your head, you could consider taking a step back from work. Known as transition to retirement (TTR), this can provide financial flexibility, allowing you to work less without reducing your take-home pay, by topping it up with a portion of your super taken as a pension.

A minimum age applies for you to benefit from TTR strategies and they can be quite complex.

Explore your goals

You may be in a position to pursue other goals that go beyond building your wealth. Perhaps you want to give your kids a leg up financially or assist ageing parents to live a happier and secure retirement.

Whatever your future plans, please contact us on |PHONE| on to assess your situation and help you understand the impact of each option to find the path that is right for you.

Source: AMP 24 July 2017

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A vital SMSF question: A corporate trustee or individual trustees?

Posted On:Jul 24th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

A self-managed super statistic that doesn’t seem to change much over the years is the strong preference of new SMSFs for individual trustees rather than a corporate trustee.

The latest-available tax office statistics on SMSF trustee arrangements show that 93 per cent of SMSFs established in 2015-16 had individual trustees – a percentage that has remained more or less static in

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A vital SMSF questionA self-managed super statistic that doesn’t seem to change much over the years is the strong preference of new SMSFs for individual trustees rather than a corporate trustee.

The latest-available tax office statistics on SMSF trustee arrangements show that 93 per cent of SMSFs established in 2015-16 had individual trustees – a percentage that has remained more or less static in recent years. Yet 77 per cent of all SMSFs in existence at June 2016 had individual trustees – again a percentage that has remained rather static.

Looking at this from another way, a third of all SMSFs have corporate trustees against just 7 per cent for new SMSFs.

There are perhaps some straightforward explanations for these trustee differences between fledgling and established self-managed funds.

Individual trustee arrangements – with all members individually being trustees – are typically less-costly and simpler to put in place when a fund is being setup.

Yet the statistics suggest that as time goes on, many SMSF members either recognise the potential greater flexibility of having a corporate trustee or a change in their circumstances necessitates a switch to a corporate trustee.

Depending upon their circumstances, some informed would-be SMSF members may decide to bite the cost-and-convenience bullet early and go with a corporate trustee from the beginning. It could be worthwhile gaining advice about the issue from an SMSF specialist.

Let’s run through some of the basic rules regarding trustees for self-managed, which should be understood by all intending and existing SMSF members.

Under superannuation law, all members of an SMSF must be either individual trustees or directors of a corporate trustee of the fund. An SMSF with individual trustees must have at least two individual trustees yet a corporate trustee can have only one director.

An SMSF with individual trustees are held in the names of individual members as trustees. If the membership of an SMSF with individual trustees changes – perhaps following death, marriage breakdown or the addition of a new member such as an adult child – the names on the funds’ ownership documents must also change. This can be costly and time-consuming.

By contrast with a corporate trustee, assets are held in the name of a company as trustee. If trustee directors change, the assets remain in the name of the same company.

If a fund has, say, two individual trustees and one dies, the fund must appoint another trustee in order to continue as an SMSF. (This is because of the requirement that a fund must have at least two individual trustees.) Yet if an SMSF has a corporate trustee, a deceased trustee director may not have to be replaced because a corporate trustee can have a single director.

In short, a corporate trustee will continue to control an SMSF and its assets after the death or incapacity of a member. This is a key estate-planning consideration.

The decision about whether to have a corporate trustee or individual trustees could have financial and personal implications for as long as an SMSF remains in existence, including when a member leaves the fund and/or a new member joins.

Unfortunately, some SMSF members may not understand the differences between having individual trustees or a corporate trustee until it is too late.

For more information about SMSFs please contact us on |PHONE|.

 

Source:

Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2017 Vanguard Investments Australia Ltd. All rights reserved.

Important:

Any information provided by the author detailed above is separate and external to our business and our Licensee, AMP Financial Planning Pty Limited. Neither our business, nor AMP Financial Planning Pty Limited take any responsibility for their action or any service they provide.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

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Why grey mortgage debt is rising

Posted On:Jul 21st, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

A mix of low interest rates, high housing prices and waves of baby boomers nearing or already in retirement is increasing Australia’s levels of grey mortgage debt.

Greater longevity would also have made some of us more comfortable about carrying debt into older ages than in the past.

Ideally, we would enter retirement with our home mortgages paid off and completely free

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Why grey mortgage debt is rising A mix of low interest rates, high housing prices and waves of baby boomers nearing or already in retirement is increasing Australia’s levels of grey mortgage debt.

Greater longevity would also have made some of us more comfortable about carrying debt into older ages than in the past.

Ideally, we would enter retirement with our home mortgages paid off and completely free of any other kind of debt. In theory at least, this may enable us to use our retirement savings to fully or partly finance our retirement.

Yet many retirees reach common retirement ages with outstanding mortgages and other debts. This leads to the inevitable question: How is the debt to be repaid?

A wide-reaching research paper*, Inquiry into housing policies, labour force participation and economic growth, published in June by the Australian Housing and Urban Research Institute at Curtin and RMIT universities, reinforces past findings that Australia’s grey mortgage debt is growing.

The project’s findings regarding the mortgage debt of older Australians include:

  • Growing numbers of householders are taking higher levels of mortgage debt, relative to their household incomes, and paying that debt down later in life.

  • Mortgage stress caused by borrowing more to pay soaring house prices is prompting more homebuyers to extend their working lives.

  • Retirement nest eggs such as super may be “raided” to pay off mortgages.

  • The take-up of more debt by highly-leveraged households exposes borrowers and the overall economy to “significant risk” if housing prices fall or if interest rates rise.

  • Home owners are increasing using flexible mortgage products to unlock housing equity “at all stages of the life cycle”.

What to do about grey debt is clearly becoming a more critical personal finance issue.

Often indebted retirees will, of course consider using at least part of their super to fully pay off or reduce their loans. And some will direct part of their super pensions to make repayments.

Other debt-reduction possibilities for grey debtors include remaining in the workforce for longer than perhaps intended, as discussed by the Australian Housing and Urban Research Institute, or “downsizing” to a less-expensive home.

However, in practice, an attempt at downsizing to repayment debt may not produce the anticipated money – particularly after taking stamp duty and real estate agents’ fees into account. And working past common retirement ages may not be achievable – an appropriate job may not be available or health considerations may act as a barrier.

It may be worthwhile seeking advice from a financial planner before taking a new mortgage or drawing down on a home equity loan if it is unlikely that the debt can be repaid by your intended retirement age.

Perhaps you need advice about how to deal with an existing longstanding mortgage as your retirement nears. Don’t overlook debt repayment in your financial planning for retirement.

If you would like to discuss anything in this article, please call us on |PHONE|.

 

*The Inquiry into housing policies, labour force participation and economic growth Inquiry into housing policies, labour force participation and economic growth Inquiry into housing policies, labour force participation and economic growth report by Rachel Ong (Curtin University), Gavin Wood (RMIT University), Stephen Whelan (University of Sydney), Melek Cigdem (RMIT), Kadir Atalay (University of Sydney) and Jago Dodson (RMIT).

 

Source:

Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2017 Vanguard Investments Australia Ltd. All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for their action or any service they provide.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

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