Category: Provision Newsletter Articles

Why pay yourself super

There are advantages to contributing to super:

• You save for your retirement.

• You can claim a tax deduction for super contributions.

• Super contributions are taxed at 15%, so you may save tax depending on your situation.

• Super investments usually get better returns than bank savings accounts, so your savings will grow faster.

How to pay yourself super

If you already have a super fund, check that you can make contributions when you’re self employed. You’ll need to give your fund your tax file number (TFN) so they can accept contributions.

If you don’t have a fund, see choosing a super fund.

Transfer a regular amount or a lump sum

There are two ways to contribute, depending on how you pay yourself. If you receive:

• A wage — set up a regular transfer into super from your before-tax income.

• Income from business revenue — transfer a lump sum when you have enough cash flow.

Tax deductions for super contributions

You can claim a tax deduction for contributions you make from your pre-tax income (known as concessional contributions). You benefit because you reduce your taxable income.

To claim a tax deduction, you need to send a ‘Notice of intent to claim’ form to your super fund before the end of the financial year. Contact your fund to find out how much time you need to allow for processing.

See claiming deductions for personal super contributions on the Australian Taxation Office (ATO) website for detailed information.

Always confirm the details of any super contributions with your accountant or tax agent.

How much to contribute to super

As a guide, employers contribute at least 9.5% of an employee’s earnings to super.

There are limits to how much you can contribute each financial year:

• up to $25,000 in concessional contributions  (from your pre-tax income, for which you can claim a deduction), and

• up to $100,000 in non-concessional contributions  (from your after-tax income)

If you’re on a low income, you may be eligible for government super contributions, see super contributions.

Source : ASIC’s MoneySmart

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/grow-your-super/super-for-self-employed-people

Important note: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

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 takes any responsibility for any action or any service provided by the author.

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..

Get more out of each morning by listening to these brilliant business podcasts on your ride to work.

It’s hardly a secret that podcasts are the new radio.

The audio format is growing, with ABC’s 2019 Podcast Survey finding 30 percent of Australians listen to a podcast monthly.

That’s a number that only looks set to increase as the medium finds more mainstream appeal.

And while comedy and true crime are the most popular genres, it’s not just entertainment out there – there’s a healthy appetite for informative and educational content.

After all, what better way to make the most of your commute than by gaining insights and honing your skills?

With that in mind, we’ve put together five of our favourite business podcasts aimed at owners, managers and entrepreneurs of all kinds. It’s a mix of inspiration and information from at home and abroad.

READ: Speakers on International Women’s Day podcast seek #balanceforbetter

And of course, we feel it’s only fair to add our SUCCESS: The Podcast into the mix (a 10-part series which sees us ask a range of diverse personalities the deceptively simple question: “Are you successful?”)

So whether you’re a tradie or own a cafe, looking for some practical tips, motivation or straight up inspiration – there’ll be something in this list to make you want to hit ‘subscribe’.

The Hospopreneurs

If you work in hospitality – from front-of-house all the way to the back-end supply chain, there’s something for you in James Henderson’s Hospopreneurs.

Each episode is an informative Q&A with a diverse range of industry figures – from craft brewers to catering companies through to app developers and legal experts.

And with 70-plus episodes under the belt, there’s a lot of insights, nuggets and downright interesting stories to delve into.

Henderson has a focus on innovators and creative types within the industry, which, combined with his informed but not in your face approach to interviewing, results in some fascinating listening. If hospitality is your world,

Hospopreneurs is a great way to stay on top of the latest trends and significant developments.

Rework

Rework, a podcast by the team from Basecamp promises to offer a better way to work and run your business.

Basecamp, if you’re not familiar, is a remote workforce productivity tool/way of life espoused by founder Jason Fried, whose book It Doesn’t Have to Be Crazy at Work questions a lot of the ‘norms’ of modern business, like endless meetings and email chains.

If cutting through this chatter and focusing on productivity sounds like your cup of tea, you should give Rework a listen.

With episode titles like ‘The Open Office’ and ‘The Worst Performance Review’ along with a sustained focus on remote work as well as the impact of tech and digital on business, this one is well worth a listen.

How I Built This

If you’re into your business origin tales, then Guy Raz has the podcast for you.

Billed as the podcast that ‘drives into the stories behind some of the world’s best-known companies’, US-based Raz’s style is both informative and story-driven, resulting in a podcast that makes you feel inspired as you learn.

Featuring founders including the likes of Michael Dell (Dell Computers), Selina Tobaccowala (Evite) and even James Dyson (Dyson), here’s a podcast that’s got an eye for the entrepreneurial.

Lady Startup

If you’re looking for something akin to How I Built This but with more of a local, fem-forward flavour, then Lady Startup from Mamamia is the podcast to get listening to in 2020.

Hosted by Rachel Corbett, each episode features ‘some of the most inspiring and successful female entrepreneurs’ with an aim of revealing how they ideated, launched and grew their respective businesses into the successful enterprises they are today.

Featured speakers include Ronni Kahn (OzHarvest), Kate Morris (Adore Beauty) and Melanie Perkins (Canva).

Tradies in Business

This one does exactly what it says on the tin. Tradies in Business is for tradies, by tradies.

Hosted by trade-focused financial advisors and business coaches Warrick Bidwell and Nicole Cox, Tradies in Business is all about providing targeted tips and developing skills that are relevant to people who work with power tools.

From advice on topics like how to avoid problem clients and when to raise your rates through to interviews with industry insiders and external experts on a range of useful topics.

Equal parts big picture and targeted, practical tips, this one is a must if you run your own trades-based business.

Source : MYOB

Reproduced with the permission of MYOB. This article by Felix Scholz was originally published at https://www.myob.com/au/blog/top-five-business-podcasts-2020/

Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author.

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.

Have you ever thought about the fact that your ‘digital estate’ may incorporate just as many items as your material belongings? Everything from music, photos, accounts, social media profiles and attempted memoirs rest on the cloud. That’s a lot of personal stuff to manage upon one’s death, much like a house full of cherished possessions. 

These days, there’s just as much need for a ‘digital executor’ as there is for one in a traditional sense. Here’s a look at how to manage your digital afterlife. 

Consider your wishes

First thing’s first, what do you want to happen with your accounts when you die? Much the same as your Will, deciding on this beforehand saves your family and friends from any doubt about your wishes. For example, do you want your social media accounts deleted or continued, perhaps for business or memorial purposes? 

Have a think about all your accounts, what they contain, and the best course of action for either continuing them or shutting them down. This way, you can leave instructions as to how you’d like them managed. As an added bonus of being prepared, this is a great way to clean up your ‘digital estate’ now, as it’s easy to forget just how many unused or ineffective accounts we have! 

Give someone your passwords

If there’s someone you absolutely trust, giving your login details to them is by far the easiest method of ensuring your wishes are carried out, whether that’s to keep or delete accounts. This is particularly true for social media sites, as even family members aren’t given access to passwords. 

This makes it easy for someone to delete your accounts, update them and keep an eye on them in case of spam or hackers. Don’t want to give anyone your passwords right now? Research password management services that let you appoint a nominee who’ll gain access to your passwords upon request, in the case of death or incapacity. 

Research the options for different social media platforms

Depending on the social media platforms you use, different rules apply to account deactivation and their ongoing use. First of all, make sure family or friends know which accounts you have and what you’d like done with them. One of the most popular options is to have an account memorialised, so the content remains visible to those it was shared with in the first place.

When you nominate a legacy contact on Facebook, through the Settings and Security tabs, that person can respond to friend requests and add posts to your profile. You can change the nominated legacy contact at any time. It’s possible to memorialise Instagram accounts, however, they can’t be changed. Twitter allows for deactivation, but no one will be able to gain access to the account unless you’ve given them your login details. 

Make a detailed list of your digital accounts and devices

Along with social media, and presuming financial and insurance accounts will be in the hands of a power of attorney, you could have accounts including:

• Email addresses

• E-readers

• Shopping accounts 

• Websites and blogs

• Copyrighted materials

• Video sharing accounts

• Online storage accounts

• Subscription accounts

• Domain names

Keep a record of them and forward this to the appropriate people, including logins and passwords so they can be easily deactivated or managed. This includes digital assets that may require passwords to access, such as external hard drives, tablets, smartphones and digital music players. With the information about everything ‘digital’ all recorded in one place, it’ll be easy for friends and family to manage. 

Back everything up

Whether you view it as a shame or a fantastic convenience, many of us don’t have photo albums anymore, let alone handwritten letters. Consider compiling cherished memories and backing them up on a hard drive, specifically for this purpose. This way, you don’t run the risk of anything becoming lost in the cloud, in the case of complications with retrieving passwords or information. 

Source: Clientcomm library

Important note:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.Any general tax information provided in this publication is intended as a guide. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author.

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.

It wasn’t long ago that the common view was to save and invest through your working life and then retire to a portfolio that delivered at least a 5 per cent income yield every year. For many retirees it worked, at least while interest rates were high. They could live comfortably on income payments and preserve their principal for rainy day events or large ticket items like aged care.

But in an era of all-time low interest rates, that plan no longer works.

Retirees today must work with expected equity returns in Australia of between 4 and 6 per cent over the next decade, alongside fixed income returns between 0.5 and 1.5 per cent¹. Globally, Vanguard data shows the median balanced portfolio is expected to return 4.9 per cent per annum over the next 10 years. That includes both income and capital growth².

Given many retirees target an annual spending rate of 4 per cent of their portfolio it leads to what appears to be an insurmountable problem: spending 4 per cent when your portfolio’s income component is around half that doesn’t add up. Something must give—you either find higher yielding (and riskier) investments or start selling assets and drawing down on your capital to fund your spending.

The underlying question is one of portfolio construction.

How can you design a portfolio that provides income to live off while preserving your capital across your retirement?

The answer lies in recognising that the two types of return in an investment portfolio—income and capital—are interrelated. And that preferencing income over capital growth is not always the right way to go.

All investment portfolios provide two types of return. The income return is made up of the dividends and interest while the capital return comes from the growth of the value of the underlying assets over time.

The problem is many of us are hardwired to prefer an income-biased portfolio – many investors are fine with spending the total amount of income generated by a portfolio but balk at the idea of spending capital. Given a choice between a portfolio that returns 4 per cent income and 2 per cent capital growth over one that returns 2 per cent income and 4 per cent capital growth, many will prefer the one with the higher income despite the fact that both portfolios returned 6 per cent.

This preference can lead to problems when spending is not covered by the natural yield of a portfolio.

In that case, a retiree has three choices—spend less, sell assets, or overweight the portfolio to income producing assets.

That third option can lead to trouble.

Chasing income means seeking out higher yielding companies, buying fixed income investments like high-yield corporate bonds and emerging market debt or diversifying into property investments.

On the surface these provide an attractive yield, but that higher income can come at a cost as risk and return are correlated. Higher yield means higher risk.

The solution is to take a total return approach.

Total return investing involves holding a diversified portfolio that aims to maximise the overall return of the portfolio, rather than preferencing income over growth.

Total return investing has a number of advantages, led by the fact it allows investors to maintain diversification which reduces the risk of capital loss.

The approach also provides better control over the size and timing of withdrawals, allowing a retiree to decide how much and how often to take cash rather than being held to the schedule of dividend payments and distributions. Being able to reduce withdrawals in a down year dramatically increases your chances of not running out of money in retirement.

This means the portfolio’s longevity³ is improved under a total return approach—and that means the portfolio can support your lifestyle for longer.

^1.https://static.vgcontent.info/crp/intl/auw/australia/documents/research/rs219 vemo2019 summary

^2.https://pressroom.vanguard.com/nonindexed/Vanguard Global Economic Market Outlook 2020

^3. https://www.vanguard.co.uk/documents/adv/literature/total return investing

Please contact us on |PHONE| if you seek further discussion on this topic.

Source : Vanguard

Written by Robin Bowerman, Head of Corporate Affairs 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.

© 2020 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 takes any responsibility for any action or any service provided by the author.

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.