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Provision Newsletter

Rebooting for retirement

Posted On:Oct 31st, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

As retirement comes into view, it’s time to imagine a new you for the post-work age.

You remember your first day at school, your first job, your first home. And now your final pay check is in sight. You’re nearly there. That’s quite an achievement.

How to be trigger happy

As with other big life events, retirement triggers choices that shape your future.

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As retirement comes into view, it’s time to imagine a new you for the post-work age.

You remember your first day at school, your first job, your first home. And now your final pay check is in sight. You’re nearly there. That’s quite an achievement.

How to be trigger happy

As with other big life events, retirement triggers choices that shape your future. Whether it’s moving to that dream cottage at the end of the peninsula or flexing that senior’s card for cheaper travel, it’s time to take stock and reboot your life.

You didn’t rock up at your first day of work without investing in appropriate clothes or checking out what kind of transport would get you there.

As you did when you started to invest, it makes sense to make sure you’re ready when the time comes so you can minimise surprises and maximise your new free time.

Dollars and sense

For instance, if you’re downsizing your house or vehicle, you might consider how shedding assets and acquiring new ones affect your tax position before you retire.

If you haven’t already, now’s the time to understand how your future will be financed. With the help of Adam Spencer, AMP explains how you can access your super via different types of pensions, and how these compare with the government’s age pension.

Whether you’re unsure about super, tax or dealing with Centrelink, a financial adviser might be able to help. Please contact us on |PHONE| if you seek further assistance .

Having your finances in order is important, but there’s more than money to enjoying the fruits of your new phase of life. Here are five ways you can make sure retirement’s a milestone not a millstone.

1. Think mind and body

Without a clear idea of how you’ll spend your time, the initial euphoria of the untouched morning alarm can give way to anything from boredom to panic. Most of your 24 hours may be unstructured, so figure out how you’ll spend it wisely.

You might try something new. Perhaps now is the time to keep bees, join a choir or learn archery. If you have a partner, remember to involve them in the planning. Even if they don’t fancy joining you on a skydive, they may see a chance to learn how to take better action pictures.

Travel is near the top of many wish lists in retirement. If you don’t have the funds for a Caribbean cruise, there are a host of cheaper options around Australia and even beyond. And now you’ll have more time to spend, without worrying about annual leave quotas, or who’ll look after your business while you’re away.

2. Have a purpose

A rest is as good as a change. Recharging your batteries means getting them ready for your next challenge, rather than letting them go flat. Although it’s great to have unstructured time to think and dream, boredom can be a damaging state of mind, particularly if it’s prolonged. People who are no longer working can lose a sense of purpose, so make sure you have an idea of how you’ll use your extra hours to do something you love.

It’s OK to catch up on a few boxsets you missed out on along the way, but even Seinfeld only ran to 180 episodes, and most of them are only half an hour. If cocktail hour edges back before 5pm, that might be a sign you should join that book club or volunteer to widen your social circle.

It might mean doing more of what you love already, just more of it. Switching from sketching to watercolours. Thirty-six holes rather than eighteen.

If you’re already physically active, this can be a great time to extend yourself, embrace something new like yoga, or aqua aerobics. If you’re healthy but know you could improve, you might sign up for a sponsored cycle ride or walk to help a cause you care about.

3. Catch up on what you’ve missed

Many of us put off expanding our passions while we’re working because we don’t have time.

If you’ve always wanted to read the classics, now might be your chance to explore the jewels of world literature. Reading is brain expanding and inexpensive. Books older than 70 years from the death of the author are out of copyright and therefore cheap in print or even free on your Kindle. Plato and Charlotte Bronte take you to new lands without leaving your chair.

4. Follow your heart, not the herd

Just because the neighbours move to the beach house doesn’t mean you have to. You might prefer to be closer to the action of the city or just your favourite coffee shop.

Many people downsize coming up to retirement. A smaller property usually means lower utility bills and maintenance. Perhaps there’s an affordable unit close to your daughter’s place, or the first tee. If you’ve still got your long-gone kids’ stuff lying around the place, you could start the groundwork straight away, preparing your house for your new chapter.

But it’s not for everyone. If your spare bedroom has the right natural light for your artist’s studio or you just love your lemon trees, you might be better off staying where you are and saving yourself the real estate fees and hassles.

You’re facing a change in life, but you don’t have to change for change’s sake. Put yourself and your loved ones first.

5. Listen to the voice of experience

As with so many things in life, you can learn from experts . Talk to people you know who have already retired, and see what worked for them, and what they wish they’d put in place before they took the plunge.

Consider what will make you happy in the years beyond work, so you can live the life you want.

Finally, if you haven’t yet given these things serious thought yet, don’t panic. You’ve dealt with other changes in your life, this is just another one.

Think of it as a new adventure. Let’s face it, you’ve earned it.

Source : AMP October 2019 

This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling |PHONE|, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person.

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World’s Best Beaches 2019: The Votes Are In

Posted On:Oct 18th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

How would you like to laze on one of the world’s best beaches for your next getaway? Voters in this year’s TripAdvisor Travellers’ Choice Awards ranked Australia’s Manly and Surfers Paradise beaches among the top 25. However, it’s these five dazzling stretches of sand that won the most sun-loving hearts.

5. Grace Bay Beach, Turks and Caicos

The poster child of the

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How would you like to laze on one of the world’s best beaches for your next getaway? Voters in this year’s TripAdvisor Travellers’ Choice Awards ranked Australia’s Manly and Surfers Paradise beaches among the top 25. However, it’s these five dazzling stretches of sand that won the most sun-loving hearts.

5. Grace Bay Beach, Turks and Caicos

The poster child of the Turks and Caicos, Grace Bay often plays a starring role when it comes to the world’s best beaches. This tropical heaven is just a short flight from Florida and features easy access for boat trips to explore its barrier reef and incredible wall dives. Back on the beach, water sports take centre stage, with parasailing, banana boating and kayaking on a backdrop of pearly white sand and azure water. In terms of accommodation, take your pick of luxury resorts on the island of Providenciales, surrounded by world-class restaurants, shopping plazas and that all-important, easy-going vibe.

4. La Concha Beach, Spain

As far as city beaches go, San Sebastian’s La Concha certainly makes a sensory impact. The shell-shaped Concha Bay sets the scene for a diverse landscape including lush mountains and the city’s elegant architecture, like Miramar Palace. Find your own perch on the beach under a blue and white striped umbrella, to soak up the cosmopolitan atmosphere and indulge in people-watching. When hunger strikes, San Sebastian just happens to be one of the world’s foodie capitals, and nothing goes better with sun and sea than seafood tapas and sangria.

3. Eagle Beach, Aruba

With powder-soft sand that stretches on and on, Aruba’s Eagle Beach is often singled out as among the most beautiful in the Caribbean. Although you’ll find a holiday buzz along its sparkling shores, this is a low-rise hotel area with plenty of charming boutiques for a truly relaxing escape. Combine lazy days with turtle nest-spotting, photographing the iconic divi-divi trees and sipping cocktails at breezy beach bars. From here, it’s a quick taxi or bus ride to Oranjestad, the vibrant capital of the Dutch island.

2. Varadero Beach, Cuba

Varadero combines art galleries, markets, cigar shops and cabarets for a taste of Cuban culture, with the country’s premier beach destination. All-inclusive hotels, spas and restaurants line a spectacular, 20 kilometre stretch of uninterrupted white sand for a sun-drenched holiday. Sailing, glass-bottom boat rides and diving are at the top of the agenda, along with a round of golf or two. As the sun sets, a festive nightlife scene ensures you can get your fix of live music and salsa dancing.

1. Baia Do Sancho, Brazil

It’s not that easy to get to this year’s most-loved beach, which is perhaps part of the appeal for TripAdvisor voters. That and the fact that Baia do Sancho is a sheltered cove of glittering turquoise water and golden sand, wrapped in lush, forest-clad cliffs, on a paradise island. Keen beach-goers must traverse near-vertical ladders through a rock tunnel to feel that silky sand squishing underfoot, dive into the azure sea and enjoy the absence of crowds so often found on such slices of paradise.

You can count on it staying this way too, as the volcanic islands of Brazil’s Fernando de Noronha archipelago are part of a protected UNESCO World Heritage Site, with limited visitor access and an environmental fee to explore. To get there, the main island offers a small airport, with flights available from Recife and Natal.

Other beaches in the top 10 include Florida’s Clearwater, Spiaggia dei Conigli in Sicily, Grand Cayman’s Seven Mile Beach, Playa Norte on Mexico’s Isla Mujeres and that other famous Seven Mile Beach, in Jamaica. With so many inspirational shores to discover, it’s always a good time to pack the sunscreen and jet off to paradise.

 

Important:

This provides general information and hasn’t taken your circumstances into account. 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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Succession planning: A competitive advantage strategy

Posted On:Oct 14th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Sidestep the negative effects of change with thorough succession planning and you’ll put your business ahead of the curve. Not only does this improve your company’s value, but it also provides something every good business manger strives for: your employees’ peace of mind.

You know this is true – succession planning is the cornerstone of any business that lasts. It smooths

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Sidestep the negative effects of change with thorough succession planning and you’ll put your business ahead of the curve. Not only does this improve your company’s value, but it also provides something every good business manger strives for: your employees’ peace of mind.

You know this is true – succession planning is the cornerstone of any business that lasts. It smooths the way as one leader leaves and another takes over, creating an environment in which the new management – and your business – can be successful, while reducing the effects of the unavoidable turmoil of change.

Yet succession planning is so often overlooked.

According to Deloitte, 86 percent of leaders see leadership succession planning as ‘urgent’ or ‘important’, but only 14 percent believe they do it well.

This is something that I’ve seen regularly as the CEO of Star Business Solutions – an MYOB business partner.

Here it is in a nutshell:

  • Succession is inevitable

  • Planning is imperative to manage risk

  • It can affect your entire business

  • Consider the emotional aspects

  • Data provides objectivity during uncertainty

Succession planning for a family business is especially important, because the organisation is more than just a company – it’s a legacy, tied to the life’s work of just a couple of people. It’s so complex that there have been entire books written on the subject.

But even in traditional businesses, the process of letting go and handing over the reins to a successor can be surprisingly painful for the exiting leader.

Managed poorly, it’s not uncommon for the process of succession to stir up feelings of resentment, resistance and even hostility in otherwise level-headed business people.

In the middle of all that upheaval, the organisation and your team are left struggling to keep the doors open and the lights on.

A great succession plan doesn’t just create organisational stability, market confidence and value, it also comes with a raft of other benefits.

  • More diverse leadership – with the objectivity that comes from succession planning, you’ll be able to more clearly see what your company needs, rather than simply replacing leadership like for like.

  • A career pathway mapped for emerging leaders – this means you’ll be more able to attract and retain top talent with the promise of genuine opportunities to come.

  • A strong and healthy culture – panic-purchasing leaders is the fastest way to erode staff good will, and damage that intangible, yet utterly important element: culture. When you have time to consider your options, you’ll be able to choose leaders who will embody your company values and maintain a strong and healthy workplace culture.

Why succession planning will get you ahead

Having an eye on those inevitable future changes means you’ll transition more smoothly, and your new leadership will get fully operational faster. But that’s not all.

A succession plan is about more than just planning for the future – since so many businesses fail to do it, it actually gives you a competitive advantage.

You’ll be sidestepping the messiness, infighting and underperformance that so many of your competitors will deal with.

Systems ready for change

While software isn’t the be-all and end-all of business, an old or inefficient system can make a succession process far more difficult.

At the most basic level, when BAU relies too heavily on the knowledge of one leader, it creates risk – when that leader leaves, even with the best preparation, it’s likely they’ll be leaving gaps through which leak money, time and good will.

This is especially important if you’re replacing first-generation leaders, who’ve built the business almost from scratch. They may not even be aware of how much they know – the ratios, the leading indicators and warning signs, for example.

These can, and should, be taken out of leaders’ heads and embedded into the business intelligence reporting. This will mean the system plugs the knowledge gaps, and keeps everything ticking over, while staff and new leadership get their feet under them.

These systems should also enable leaders to track progress simply and quickly. This delivers much-needed oversight, allowing others in the leadership team, the board and any consultants to keep an eye on the business as the incoming leaders learn the ropes. This gives new leaders a safety net – they can trust that any major misses will be caught early by those in the business with more experience. Similarly, during a hand-over period, it allows the outgoing leadership to stay engaged with performance, without feeling like they’re breathing down their successor’s neck.

The data objectivity can also help minimise resistance and resentment. Planning for and finding a successor based on transparent, accessible data will let all management be engaged in the process, and more readily accept outcomes.

Plan for changes of leadership team, not just the CEO

Succession planning is so often focused on protecting the business when the CEO is replaced.

The reality is that this role, while truly critical, is only one piece of the management puzzle.

Any sudden or poorly planned exit of any of your senior leadership team can create problems. The new leaders, underprepared, could have gaping holes in their knowledge of your business systems and processes, and in their understanding of the new team.

At best, this will mean they take much longer to begin working at capacity. At worse, they’ll lose the respect and support of the people they’re leading, and make decisions that abjectly affect their department and the business as a whole.

A well-prepared leader will be equipped with the context and understanding needed to be successful in the role from day one – and for that they need to be entering the business under an agreed plan.

Establish long lead times

The ideal time to plan for succession of an organisation as a whole is when a business is established.

For senior leadership, preparing for their departure should begin as part of their induction process. Obviously, that rarely is the case, but it indicates how critical early preparation is.

With long enough lead time, preparing for this change becomes BAU for everyone in your business, rather than something that seems to come out of nowhere. It also gives you time to properly develop criteria for evaluating candidates and gives the outgoing leader a chance to prepare for the change – both practically and emotionally.

There can be huge problems with the outgoing CEO not letting go emotionally and practically. It can make the new leader’s job impossible and they’ll go elsewhere.

In a best-case scenario you’ll have five years to prepare for a change in CEO, with three years being the minimum. Succession plans for the remainder of the executive, and other management will need less time.

Establish accountability and advocacy

According to research from Deloitte, succession planning is often overlooked due to a lack of ownership – it’s not clear who bears responsibility for creating the plan or for finding top talent.

This means that while people acknowledge the importance of succession planning, they’ll assume it’s someone else’s job until told otherwise.

Similarly, having advocates at executive level will help build a succession culture into the organisation – staff at every level will expect succession planning as a normal part of growth and success.

Design for where you’re going

Most succession planning looks at what you need in order to maintain the status quo.

A moment’s pause will reveal the flaw here – succession planning should be about the future of the company, not its present.

Focusing on the needs of your business in the future won’t just better prepare your next leaders for the changing world but can help remove a barrier to successful planning itself: fear.

In most businesses, staff at all levels are incentivised to appear irreplaceable – and that butts up against the most basic goal of succession planning, which is, quite literally, to replace people. That often leads to leaders spending time protecting their patch and holding back from preparing people to take over.

If the goal is to build leaders for what the business is next, it removes the feeling that leaders are replaceable now.

This makes it easier for the outgoing leadership to accept that their replacement will – and should – do things differently. This can be particularly difficult if the outgoing leader still has an ongoing financial relationship

You might think, ‘It’s my money so I have a right to be involved here’, but it becomes counterproductive. You have to trust that you’ve made the right choice of leader, and then let them get on with their work.

Sidestep the messiness, smooth the transition

A successful business doesn’t stand still – it grows, innovates, maybe even diversifies. Meanwhile, your leadership can either stand still, or move forward with the future of the business.

A great succession plan, not just for the CEO but for all the individuals on the management team, creates an environment of stability, confidence and value in a business – definitely a competitive advantage. Not only that, but it diversifies the leadership, offers career paths for promising staff, keeps an eye on the future of your business, and maintains a healthy work culture for the present.

A smart leadership team will recognise the emotional and cultural risk of a poorly planned succession. You’ll manage a smoother transition by keeping software systems up to date (retaining specialist knowledge that’s currently in the heads of the Old Guard), assigning responsibility and advocacy for succession, and establishing clear future goals.

Most importantly, your plan will begin long before it’s needed, so when succession time happens, everyone is well prepared and ready for the inevitable.

Who knows? They might even look forward to the fresh air of change.

Source : MYOB 

Reproduced with the permission of MYOB. This article by Trish Hall was originally published at https://www.myob.com/au/blog/succession-planning-competitive-advantage/


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. 

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Understanding cash flow

Posted On:Oct 14th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Understanding cash flow in the time it takes to play a game of solitaire.

In the time that it takes to go through your deck and figure out your game strategy, this article will help you understand what cash flow is and how to write a cash flow statement.

That’s only two minutes of reading time. Ace.

One of the biggest reasons businesses

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Understanding cash flow in the time it takes to play a game of solitaire.

In the time that it takes to go through your deck and figure out your game strategy, this article will help you understand what cash flow is and how to write a cash flow statement.

That’s only two minutes of reading time. Ace.

One of the biggest reasons businesses fail is because of “inadequate cash reserves”. That’s just a fancy way of saying they ran out of money.

Making sure you’ve got positive cash flow – meaning you’ve got more money coming into your business than going out of it – is the single biggest factor that will affect your financial health.

Cash flow is all about the liquidity of a business. That is, the amount of money flowing in and out of a business and how much cash you actually have on hand.

The state of your cash flow will change with your business. For example, you probably won’t have much cash flow when you launch your business, as you probably wouldn’t have made many sales.

But as your business grows, keeping on top of the cash coming in and out of your business will become more and more important.

How to write a cash flow statement

Cash flow statements are an overview of money a business has coming in (inflows), and how much it has going out (outflows).

It’s important to write up cash flow statements regularly so you know that there’s enough cash to keep the business functioning.

Cash flow statements are important for many reasons. These include:

  • To make sure business expenses, such as bills and wages, are paid on time

  • To apply for a business loan

  • To convince potential investors to invest in the business

Cash flow statements generally include three main parts:

1. Operating activities

How does your business make money on a day-to-day basis?

The ‘operating activities’ section of your cash flow statement covers how your business makes revenue.

The cash inflows in this section record whenever customers buy your product and services. The cash outflows record your everyday operational costs, such as wages, materials and other expenses.

2. Investing activities

This section of the cash flow statement relates to any long-term investments the business makes. This could include the purchase or sale of property, vehicles or other equipment, which are considered non-current assets.

The investing activities section could also include financial assets, such as securities purchased on the stock market.

3. Financing activities

This section of the cash flow statement includes information about any financial activities your business undertakes. This could include taking out business loans or issuing stocks.

This is also the part of the cash flow statement that records any debt that the business needs to repay.

Managing your cash flow

How you manage your cash flow depends on what your business does and how often you make sales.

For example, businesses that sell many low-cost products and services every day – such as grocery stores – will have inflows every day.
But a construction company that might only do one or two big jobs per year might have bigger chunks of money coming in only a few times per year.

As you can imagine, the cash flow statements of these two businesses would look very different. How they manage their cash flow and put together their statements will also be very different.

We’ve put together some general tips for managing your cash flow, as well as more specific tips for managing cash flow in a business with significant seasonal differences.

Top 3 takeaways

  1. Your cash flow is the amount of money coming in and out of your business.

  2. A cash flow statement helps you keep track of the movement of your business’ money. Update this regularly so you keep on top of your business’ finances.

  3. A cash flow statement includes information about operational activities, investing activities and financial activities.

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

 

Source : MYOB 

Reproduced with the permission of MYOB. This article by MYOB Team was originally published at https://www.myob.com/au/blog/understanding-cash-flow/

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.

 

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How to stop freaking out about speaking in public

Posted On:Oct 14th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

The first rule of being a good public speaker is understanding it doesn’t come naturally, says public speaking coach Andrew Griffiths. Here’s how to overcome that.

According to this study people prefer the idea of death to speaking in front of a crowd of strangers.

Gulp. Seems a bit drastic, doesn’t it?

But as entrepreneur, author and public speaking coach, Andrew Griffiths told Flying Solo

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The first rule of being a good public speaker is understanding it doesn’t come naturally, says public speaking coach Andrew Griffiths. Here’s how to overcome that.

According to this study people prefer the idea of death to speaking in front of a crowd of strangers.

Gulp. Seems a bit drastic, doesn’t it?

But as entrepreneur, author and public speaking coach, Andrew Griffiths told Flying Solo the  good news is that public speaking is something we can learn to excel at.

Lucky for us, he shares a stack of excellent tips in this video.

Here’s a sneak peek at the top 3:

1.Prepare, prepare, prepare

According to Andrew a big part of the reason we feel nervous about speaking is because we feel under prepared. He recommends doing your research and writing your speech well ahead of time so you can practice.

2.Remove the ‘unknowns’

Where possible try and Google the venue to find out what size the room is that you’ll be speaking at, and where in the room you’ll be standing.

3. Get to know your audience

Always arrive early to the event and use that time to chat to people in the audience. Andrew recommends telling them that you’ll speaking and if they have any thoughts on the topic, as this can be great addition to your intro.

 

Source : Flying Solo

This article by Lucy Kippist reproduced with the permission of Flying Solo – Australia’s micro business community. Find out more and join over 100K others.

 

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. Any information provided by the author detailed above is separate and external to our business and our Licensee. 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 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.

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Myth busting: the cost of setting up renewable energy in a home

Posted On:Oct 14th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Market research indicates the average Australian home has 17 connected devices; ‘smart’ devices in the internet of things that offer everything from efficiency to safety, convenience and entertainment.1  Renewable energy devices – behind the meter, on the roof and in your pocket – are the next frontier, offering real savings and the potential to power them all.

In 1981, you could

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Market research indicates the average Australian home has 17 connected devices; ‘smart’ devices in the internet of things that offer everything from efficiency to safety, convenience and entertainment.1  Renewable energy devices – behind the meter, on the roof and in your pocket – are the next frontier, offering real savings and the potential to power them all.

In 1981, you could buy a personal computer (PC) for about the same price as a used car. The next screen revolution – flat screen televisions – hit the market in the late 1990s to the tune of about $15,000 for a large model.

Prices dropped rapidly over the next decade as technology improved. Research shows the average Australian home now has 6.6 screens, including internet-capable televisions, tablets, smartphones and high definition televisions.2

So it goes that breakthrough technologies seem to be underestimated and overpriced at the outset, but costs decline rapidly as the technology improves and adoption becomes widespread.

The declining cost of renewable energy

Similar dynamics can be observed in renewable energy technology.

The climate crisis upon us and finite reserves of coal and gas capture a decade-long debate about how our electricity should be produced. In mainstream debates, renewable energy is increasingly being understood as a necessity, not a choice, to future-proof energy sources for homes and businesses.

For example, in 2017, onshore wind was named the world’s cheapest way to produce electricity. Its unsubsidised levelised cost of energy (LCOE) range of US$30-60 per megawatt hour (MWh) fell below the range of the cheapest fossil fuel, natural gas (US$42-78 per MWh). Solar was right behind as the world’s second-cheapest energy source, with the high end of its LCOE range (US$43–53/MWh) less than any other generation source. Globally, Australia has the lowest costs for solar-powered generation.3

If history repeats itself, this means that as energy companies transition their portfolios to hold greater proportions of renewable electricity generation, retail energy costs should decrease over time.

In the meantime, there are savings and gains to be made by investing in distributed energy resources (DER) that generate power directly for the home and reduce the amount of energy one needs to consume. Rooftop solar is the most common, with an investment case that’s more compelling than you might think.

Myth 1: Installing renewable energy in a home is a major expense

Rooftop solar, with or without a battery for storing your power, is one of the most commonly deployed DER solutions.

Australia’s Clean Energy Council estimates 1 in 5 rooftops have solar panels installed – including 2 million homes – with 6 panels installed each minute in 2018.

Recent market surveys indicate the average price across Australian capital cities for a 5kW system without battery storage is $5,100. A system of this size is generally suitable for a family of four and takes anywhere from two to seven years to pay for itself.4

As for batteries, market research suggests they are still relatively expensive, and the payback time will often be longer than the warranty period of the battery. The current cost is between $8,000 and $15,000 (installed), depending on capacity and brand.5  It’s worth checking what’s available in your area, as there are some government schemes that offer financial incentives. At a minimum, it’s worth making sure your system is ‘battery ready’ as battery costs are declining rapidly.

Myth 2: Long-term cost-savings aren’t that significant

According to Clean Energy Council Chief Executive Kane Thornton, homes with rooftop solar are saving on average about $540 per year on their electricity bills.

This represents a 25 percent saving on the average annual electricity bill of $2,088 for a four-person home.6

According to Choice, the price of a 5kW solar system has fallen by around 58 percent in the last six years – and the technology is getting cheaper.

Looking ahead

Distributed energy resources are set to play an increasing part in Australia’s energy system. These small-scale energy solutions are forecast to dramatically increase and deliver almost half of all electricity supplied by 2050.7

Current examples of DER include rooftop solar, batteries, microturbines, fuel cells, electric vehicles and ‘demand response’ applications that moderate consumption.

Solar is the most prevalent today and, while the technology is continually improving, it is already a compelling investment that is within the reach of many.

As technologies continue to improve, the choice and benefits for investor-owners in solar and other solutions should expand.

Source : AMP CAPITAL September 2019 

Australian IoT@Home Market Study, Telsyte, 2019
Australian Video Viewing Report, Nielsen, 2018
Global renewable energy trends, Deloitte Insights, 2018
How to buy the best solar panels for your home, Choice, 2019
How to buy the best solar battery storage, Choice, 2019
What is the average electricity bill?, Canstar Blue, 2019
The Distributed Energy Integration Program, Australian Renewable Energy Agency, 2019

Important notes: While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455)  (AMP Capital) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.

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