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Provision Newsletter

Now’s the time for tax planning

Posted On:Apr 16th, 2018     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

With less than ten weeks remaining to the end of the financial year, now is the time to start some serious tax planning.

Getting ready for tax time should go well beyond bundling receipts into a shoe box for your accountant. The run up to 30 June is a critical time for investors to take a good look at their investment

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With less than ten weeks remaining to the end of the financial year, now is the time to start some serious tax planning.

Getting ready for tax time should go well beyond bundling receipts into a shoe box for your accountant. The run up to 30 June is a critical time for investors to take a good look at their investment portfolio.

Your goals and needs may have shifted over the year, and your portfolio needs to keep up with the right blend of assets to meet your goals. Even if nothing has changed on the personal front, investment markets don’t sit still for long.

Property investors in Sydney and Melbourne for instance, have enjoyed tremendous value gains over the past few years but this may mean the weighting of your portfolio is dramatically skewed towards bricks and mortar.

If that sounds like you, bear in mind rental yields on property are sitting at just 3.7% across our state capitals, and a significant chunk of your wealth could be tied up in low-yielding assets.

Consider new legislation

The need to review your portfolio ahead of 30 June isn’t just about market performance. It can also involve taking advantage of, or responding to, new legislation.

We’ve heard lots of speculation recently about Labor’s plan to scrap cash refunds for excess franking credits on Australian shares.

So far, this policy has been amended to include a so-called Pensioner Guarantee that will exempt full and part-time pensioners including those who are recipients of a self-managed superannuation fund.

Nonetheless, jumping the gun and altering your portfolio based on what may – or may not – happen further down the track is a gamble, and on this particular score it could be worth taking a wait and see approach.

In the meantime, plenty has happened in other areas that could directly impact your portfolio.

As a guide, since 1 July 2017 property investors can no longer claim the cost of travel to inspect a rental property. This could be a significant downside for investors who own an interstate property – especially if part of the appeal was a tax break on an annual trip to check out the property.

Also, from 1 July 2018, those aged 65 and over may be able to contribute up to $300,000 from the sale of their main residence to super without the money counting towards contribution caps.

Each member of a couple can take advantage of the $300,000 limit, potentially adding $600,000 to their combined nest egg. It could be an option worth considering if you’re thinking about downsizing.

Get your portfolio in shape for a new financial year

Fine-tuning your portfolio ahead of 30 June can mean paying costs, and capital gains tax may apply to any profit you make on the sale of an investment. The upside is hitting the new financial year with a portfolio that’s in tune with your goals and lifestyle.

Please contact us on |PHONE| to review your portfolio before the end of the financial year. It can be a valuable step to ensure your money continues to work hard for you.

 Source : AMP 13 April 2108 

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

Important 

This article 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.

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Planning for a (much) longer life

Posted On:Apr 13th, 2018     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

We generally need to make earnings from 40 to 50 years in the workforce extend across what could be 80 to 90 years of living.

Australians today need to do something our parents and grandparents didn’t even think about – plan for a long life, and a new report shows the benefits of planning for longevity go beyond money matters.

The gift of

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We generally need to make earnings from 40 to 50 years in the workforce extend across what could be 80 to 90 years of living.

Australians today need to do something our parents and grandparents didn’t even think about – plan for a long life, and a new report shows the benefits of planning for longevity go beyond money matters.

The gift of an extra decade

Australians enjoy one of the longest life expectancies in the world. Around 3.7 million of us (15% of the population) are aged 65-plus, and today’s 60-somethings can expect to live for another 20 years on average. That’s an increase of more than eight years for men and almost 10 years for women since the turn of the century.

However, a new study by National Seniors Australia (NSA) shows that our savings behaviour is not keeping pace with increasing life expectancy.

The challenge of ageing is simple – in theory at least. We need to make earnings from 40 to 50 years in the workforce extend across 80 to 90 years of living. The NSA report highlights a key problem with this: We have a tendency to take the present more seriously than the future, and that means we often fail to save enough to pay for later life.

Look beyond early retirement

The same study found that what matters most to people about their finances in retirement is having regular, constant income. Conserving capital to leave money for the next generation is becoming less of a consideration for many Australians.

Nonetheless, many of us expect to maintain similar spending patterns in retirement as we did in the workforce. Crunch time often comes as we head towards retiring age, and the reality of what may be a limited nest egg becomes more obvious.

We also have a tendency to make plans for travel and leisure in early retirement. However, it pays to look a little further over the horizon and consider how you will meet aged care costs because chances are, either you – or your family – will need to pay for them.

Avoid future disadvantage

It all highlights the need for good planning. The NSA found that people who have no plans to deal with an increased lifespan are more likely to experience financial, social and emotional disadvantages.

I’m pretty sure that’s not the outcome you want for your retirement. Thankfully there is a solution. Part of the answer lies in committing to saving for retirement while you have enough income to do so. But it also hinges on how you use your super and other investments once you leave the workforce.

Striking the balance between a quality retirement and running out of funds prematurely is a juggling act that calls for expert financial advice, and it’s not something you should put off until you’re ready to walk away from the workforce for the last time. Seeking good advice early can be one of your best investments.

Regardless of your life stage, contact us on |PHONE| about laying foundations to enjoy a rewarding future. Retirement really does come around far sooner than any of us expect.

Source : AMP 5 April 2018 

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

Important 

This article 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.

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5 tips to save money at university

Posted On:Apr 04th, 2018     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Back at uni? Do away with the poor student clichés with these money making and money saving tips.

Students aren’t exactly known for rolling in cash, but by following these simple tips to save money at university you can make the most of what you’ve got.

1. Get a part-time job

This might seem obvious, but part-time jobs aren’t what they used to be. Sure,

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Back at uni? Do away with the poor student clichés with these money making and money saving tips.

Students aren’t exactly known for rolling in cash, but by following these simple tips to save money at university you can make the most of what you’ve got.

1. Get a part-time job

This might seem obvious, but part-time jobs aren’t what they used to be. Sure, you could take on regular shifts at a shop or café, or look for work tutoring or babysitting, but you could also think outside the box for ways you can use your skills to make money.  

If you’re a talented photographer, sell your images, or you may be able earn money from the comfort of your own home (or dorm room) by filling out online surveys or reviewing websites and apps. Technology has made the transfer of goods and services easier than ever before.  

Similarly, the share economy has opened up a world of employment opportunities, through companies like AirtaskerFreelancer or Fiverr.

2. Take advantage of freebies and cheapies

If you can be flexible on times, students can access cheap movie tickets, and last-minute tickets to theater previews, and other performances. 

You can also enjoy cut-price meals by taking advantage of specials and 2-for-1 offers – particularly early in the week – or by eating at restaurants run by catering and hospitality training schools. Similarly, getting your hair cut and coloured by hairdressing trainees can save you a fortune on expensive hair maintenance.

Tap into your student union as they often have details of discounts available to students and be sure to use your student concession card when you can and always ask if you’re eligible for a student discount. 

Other ideas to save include shopping for clothes and household goods at op shops or on sale, exercising in nature instead of joining a gym, taking a BYO water bottle to refill for free on the go and investing in a BYO coffee cup – and seeking out cafes which offer a discount for its reuse.

3. Learn to cook

Shopping for food, cooking and eating at home is a great way to save money. If you don’t know how to cook, try to learn enough to cover at least a few basic dishes (try YouTube for how-to videos).

To ensure you don’t overspend thanks to the overwhelming choices in the supermarket aisles, take a list and stick to it, or shop online.

For cheaper groceries, try no-name brands or buy in bulk, and track down your local produce market for cheap and fresh fruit and veggies. 

 

4. Use public transport

Running a car is an expensive business – not just in the initial outlay but in petrol, registration, maintenance, and insurance costs. Think carefully about whether you really need one, or if you can get where you need to go by walking, cycling or public transport – or a combination of these.

If you really do need a car, consider whether you can also use it to generate an income, such as becoming an Uber driver, but be sure to research potential income streams thoroughly as there may be additional costs involved on things such as insurance.

5. Plan your finances

Regardless of whether you have a little money or a lot, it’s what you do with it that really matters. To make the most of what you have, set yourself a budget and stick to it. 

If you’re not sure what you’re spending your money on in the first place there are many apps that can help you track and manage your money easily,  available on android and the app store.  

Other smart money tips include not making impulse purchases, and setting aside money for bills, rent and food as soon as you’re paid. 

And if you have a credit card, leave it at home when shopping so you only spend what you have and save it for true emergencies (and no, a pair of shoes on sale does not count). If you do have to pay for something on credit, prioritise this debt and pay it off as soon as you can.

More ideas

If you’re looking for more ways to maximise your money while studying, you could consider the following:

  • Studying close to home to enable you to continue living at home and save big money on rent.

  • Studying part-time and working full-time rather than vice versa.

  • Checking whether you’re eligible for any government subsidies.

 For further assistance please contact us on |PHONE|

Source : AMP 3 April 2018

Important 

This article 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.

 

 

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New rules to benefit those downsizing for retirement

Posted On:Apr 04th, 2018     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Downsizers will be able to top up their super with the proceeds from the sale of their main residence from July 2018.

From 1 July 2018, Australians aged 65 and over who are downsizing for retirement will be able to contribute the proceeds from the sale of their main residence (up to $300,000) into super1.

We take a look at what this could

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Downsizers will be able to top up their super with the proceeds from the sale of their main residence from July 2018.

From 1 July 2018, Australians aged 65 and over who are downsizing for retirement will be able to contribute the proceeds from the sale of their main residence (up to $300,000) into super1.

We take a look at what this could mean for you, bearing in mind that like with all important financial decisions, it’s a good idea to get financial advice before deciding what’s right for you.

Super benefits for downsizers

Currently, people aged between 65 and 75 who want to make voluntary super contributions must satisfy a work test, while people over 75 are generally unable to contribute to their super.

From 1 July 2018 that will change. People aged 65 and over will be able to make an after-tax contribution to their super of up to $300,000 using the proceeds from the sale of their main residence – regardless of their work status, superannuation balance, or contribution history.

For couples, both spouses will be able to take advantage of this opportunity, which means up to $600,000 per couple can be contributed toward super.

How does it work?

Proceeds from the sale of your main residence that are contributed into super as part of this initiative can be made in addition to any other before-tax or after-tax contributions you’re eligible to make.

The government said the aim is to encourage older Australians, where appropriate, to free up homes that no longer meet their needs and make room for younger growing families2.

To qualify, the contracts for sale must be exchanged on or after 1 July 2018. The property that’s sold also needs to have been your (or your spouse’s) main place of residence at some point in time, and you need to have owned the home for at least 10 years.

‘Downsizing’ contributions are not tax deductible and can be made regardless of super caps and restrictions that otherwise apply when making super contributions. The property that’s sold must also be in Australia and excludes caravans, mobile homes and houseboats.

Things to note

No special Centrelink means test exemptions apply to the downsizing contribution. Due to this, there may be means testing implications as a result of downsizing, which need to be considered.

Meanwhile, additional rules may apply to your situation, so make sure you do your research before making any decisions.

Also note, , Downsizer Contribution Form from the Australian Taxation Office (ATO) will need to be provided  when making, or prior to making, this type of contribution. These forms will be available from 1 July 2018.

Check out this infographic below for a snapshot of some of the advantages and considerations.

 
 
 

Like with most things, when you’re making a big financial decision, which could have implications, it’s worth doing your research . For further assistance please contact us on |PHONE|

 
 
 

Important 

This article 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.

 

 

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Life cover – do you even have it?

Posted On:Apr 04th, 2018     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

If you have family, dependents or debt, life insurance might be important, but one in four Aussies don’t know whether they have it.

If you die and your life is insured, your beneficiaries receive a lump sum pay-out. This money can be the difference between the people who matter most to you enjoying a decent lifestyle or facing a financial struggle,

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If you have family, dependents or debt, life insurance might be important, but one in four Aussies don’t know whether they have it.

If you die and your life is insured, your beneficiaries receive a lump sum pay-out. This money can be the difference between the people who matter most to you enjoying a decent lifestyle or facing a financial struggle, yet one in four Australians aren’t even sure whether or not they have life insurance.

Many of us have some level of life cover through our super fund. However, this isn’t always the case so it pays to ask. Despite this being a matter of picking up the phone to speak with your fund, a recent study by Finder shows one in five super fund members have no idea whether they have life insurance through their super.

If you have more than one super fund – and 40% of Australians do, you could be doubling up on premiums. The downside here is that paying multiple premiums through several funds, will eat away at your total nest egg over time.

Women can be more vulnerable to underinsurance

Having some life cover in place is better than having none at all especially if you have dependents. And incidentally, these days it makes sense for both parents in a family to have life cover even if one person is a stay-at-home parent. Too often the economic worth of the child-rearer’s work is overlooked, and ideally, both parents should be insured at a similar level.

I mention this because Finder’s research found woman tend to be more uncertain than men about whether they have life cover in place. Close to one in three women simply don’t know if their life is insured.

Insurances works best when it’s tailored to your needs

Like all insurances, life cover works best when you have the right level of protection in place for your situation. The insurance available through your super is typically very affordable because your fund ‘buys in bulk’ for a large number of members.

However, life insurance policies arranged through super may not be as comprehensive as standalone cover purchased directly from an insurer.

Similarly, life insurance organised through your super fund is unlikely to be designed with your individual circumstances in mind, and figures from industry body Lifewise show up to 50% of fund members can be underinsured by $100,000.

The solution is simple. Contact us on |PHONE| for a comprehensive review of your life insurance. This will include confirming whether you have life insurance through your super – and more importantly, the level of cover in place. We can also explain what’s available with an independent insurer and if you need to consider topping up your life cover. At least this way you will have control over your family’s financial well-being if tragedy occurs.

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

Source : AMP 3 April 2018  

Important 

This article 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.

 

 

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Personal debt – maybe the mortgage isn’t so bad

Posted On:Mar 27th, 2018     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Household debt in Australia is high but more of us are taking a sensible approach to debt management.

Nationally, our household debt ratio is nudging 200%. On paper it means we owe twice as much in debt as we bring home in our pay packets each year. It sounds like an alarming figure but as 74% of all households have some

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Household debt in Australia is high but more of us are taking a sensible approach to debt management.

Nationally, our household debt ratio is nudging 200%. On paper it means we owe twice as much in debt as we bring home in our pay packets each year. It sounds like an alarming figure but as 74% of all households have some level of debt, the reality is that some of us owe more, others less.

The question is, is debt a problem?

The answer lies in the make-up of your personal debts. Given today’s high property prices, it’s not surprising that home loans often account for the bulk of personal debt. But this is what I call good’ debt because generally your loan will be whittled away over time while the value of your home may steadily rise.

In fact, the gradual uptick in home values, while not consistent from year to year, is a long-term trend. A study by the Bank of International Settlements found Australian home values have risen 6,550% since the early 1960s. In 1983, when my wife Vicki and I purchased our first home – a semi on Sydney’s lower north shore, the place cost of us $90,000. Today the same property (we’ve since moved on) would be worth close to $2.2 million.

If you can handle your repayments and you’re confident you’re getting a good deal on your home loan, this type of debt may not be a problem.

In addition, data from banking watchdog the Australian Prudential Regulation Authority shows Australians are taking a more cautious approach to borrowing. In the past quarter, just 21% of new home loans involved a deposit of less than 20%. Ten years ago, that figure was closer to 37%. Stumping up a bigger deposit is a smart move. It could mean lower repayments, more home equity and extra wiggle room if interest rates rise further down the track.

It’s not just home loans that we’re managing better

Comparison site Finder says debit card spending is tipped to hit $27.6 billion in August 2018, with credit card spending trailing behind at $27.5 billion. It could be an important tipping point where we rely less on high-interest debt and more on our own money to make regular purchases. And that’s a good thing.

Sure, some Australians are experiencing financial stress, and it can be an extremely challenging position to find yourself in. If that sounds like you, it’s critical to seek expert advice early.

Interestingly though, Reserve Bank data shows the most financially stressed households are not home owners with a mortgage, but rather low-income earners facing high rents.

The upshot is that it always makes sense to monitor your debt levels, so think carefully about taking on extra debt, and take early action if repayments look like they’re becoming a problem. However, if you are comfortable with good debt, and aim to minimise bad debt like credit card balances, you’re heading in the right direction.

Contact us on |PHONE| about the best way to manage debt for your personal circumstances.

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

Source : AMP 23 March 2018 

Important 

This article 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.

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