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Provision Newsletter

Top 5 tips to achieve your money goals in 2019

Posted On:Jan 16th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth
Make a plan for your money

What are your money goals for this year? To give yourself the best chance at achieving them, your goals need to be SMART: specific, measurable, achievable, realistic and timely. Setting timely goals means giving yourself a timeframe to achieve them.

With a SMART goal in mind, you now need to set up a plan for how

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Make a plan for your money

What are your money goals for this year? To give yourself the best chance at achieving them, your goals need to be SMART: specific, measurable, achievable, realistic and timely. Setting timely goals means giving yourself a timeframe to achieve them.

With a SMART goal in mind, you now need to set up a plan for how you’ll achieve it. For example, if you want to save $5,000 by the end of the year, work out how much you can allocate to that goal each pay day. 

Start with a budget

A budget will help you to map out your finances and work out where your money is going. Start with the essential costs like rent or mortgage, food, bills and transport, then allocate money for any debts you’re paying off. Anything left over can go towards your other money goals. 

Home in on your savings

Having savings set aside will help cover you in case of an emergency and will also help you reach your bigger money goals. Set up an automatic recurring payment to regularly transfer money into a high-interest savings account that is easy to deposit into but hard to withdraw from.

We have lots of tips to help you zero in on your savings if you’re:

Check out our savings infographic to see what other people are saving for and how they are reaching their savings goals.

Knock out your debts

If you want to get on top of your debt in 2019, break down what you owe into manageable chunks by prioritising what you can pay first.

You could start by making extra repayments on your smallest debt first. Once you have paid that off, move on to the next smallest, and so on. If you start small, by the time you get to your biggest debts you will be well equipped to knock them out.

Another option is to pay off the debt with the highest interest first.

Financial counselling is a free service you can use if you need help sorting out your debts. Financial counsellors are independent and confidential. 

Smart tip

Stay on top of your credit health by getting a free copy of your credit report and correcting any details that are wrong.

Take charge of your super

Make 2019 the year you get on top of your super. If your super is spread out across multiple funds, you are paying multiple sets of fees that are reducing your balance. Your super is your nest egg for your future, so why not start the year by consolidating your super into one fund so you pay less fees and grow your lump sum faster

You might also think about contributing extra to your super to grow your balance. See our page on super contributions for more on how to do this. 

Smart tip

Get to know your super by checking your investment options and what, if any, life insurance your super covers.

our page on super contributions for more on how to do this. 

See how much extra contributions could grow your super. 

super contributions optimiser

Invest in your future

If your debts are under control and you’ve built up some savings, 2019 could be the year to start investing.

Boost your investment knowledge

Never invest in something you don’t fully understand; take the time to read up on the types of investment options you’re interested in. Follow the golden rules and invest smarter.

You might also consider reading money or investing magazines, or following finance and investing experts on social media.

Invest for your time frame

It’s best to choose an investment based on how long you are prepared to have your money tied up. Growth assets like shares and property that usually have better long-term returns, can be more volatile in the short term. We have guidance to help you choose your investments.

Setting and reaching your money goals will help you achieve financial freedom. By putting a good plan in place and committing to keeping your money on the right course, you’ll hit your target. 

If you seek further assistance on this topic please contact us on |PHONE|

Source : MoneySmart January 2019 

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://www.moneysmart.gov.au/tools-and-resources/news/new-years-resolutions

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 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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5 life insurance questions you’ve always wanted to ask

Posted On:Jan 15th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

What impact do factors like your weight, age and smoking status have on your ability to buy life insurance?

‘Sneaky smokers’ can breathe a sigh of relief – just because you’ve got an unhealthy habit or two, it doesn’t necessarily mean you can’t get insurance.

This list reveals the answers to those awkward questions you might have – but are afraid to

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What impact do factors like your weight, age and smoking status have on your ability to buy life insurance?

‘Sneaky smokers’ can breathe a sigh of relief – just because you’ve got an unhealthy habit or two, it doesn’t necessarily mean you can’t get insurance.

This list reveals the answers to those awkward questions you might have – but are afraid to ask – about your ability to buy life insurance.

1. Am I too overweight to buy life insurance?

Life insurance applications generally ask for your height and weight, and insurers typically use a measure known as Body Mass Index (BMI) – which is calculated by dividing your weight in kilograms by your height in metres squared – to assess whether you are overweight.

A BMI of less than 18.5 is considered underweight, with 18.5-24.9 classified as a healthy weight range. Anything over 25 is considered overweight.1  

People who are overweight have higher rates of death and illness than people of healthy weight and are more susceptible to conditions such as cardiovascular disease, high blood pressure and type 2 diabetes.2

But having a BMI of over 25 will usually not prevent you from buying life insurance, as insurers also take other weight-related factors into account such as your waist circumference, medical history and pre-existing medical conditions. 

Depending how high your BMI is, you might be required to have a medical assessment, and based on your perceived risk, may be offered cover at a higher premium or with exclusions applied. Only in extreme cases is it likely that cover would be denied.

2. Am I too old to buy life insurance?

All life insurers have a maximum entry age, which in Australia typically ranges from 59 to 79 years old.3. The oldest age at which you can buy life insurance from AMP is 70.

However, older applicants may not be eligible for all the benefits included in the cover, or for the maximum levels of cover.

All policies also have an expiry age, after which you’re no longer covered. In Australia, this typically ranges from 85 to 100 years old.4 The expiry age for AMP’s stand-alone life insurance is 99 and if your life insurance is held through your super the expiry age will be lower.

But given the purpose of life insurance is to ensure the financial security of your dependents and provide a payment which will cover your debts, it’s possible that some older people may no longer need life insurance.

3. Can I get life insurance with a history of mental illness?

With almost a fifth of all Australians reporting having suffered from a mental or behavioural condition, mental illness is a relatively common occurrence and will not necessarily prevent you from buying life insurance.5

When assessing your application, insurance companies will consider a range of factors including the seriousness of your mental health condition, its impact on your employment and lifestyle, the success of any treatment, management strategies and any ongoing symptoms.6

In severe cases, you may be declined insurance, although different companies have different underwriting criteria, so it pays to shop around.

4. Can I apply as a non-smoker if I sneak a cigarette now and then?

The short answer to this question is no. Life insurers consider anyone who smokes cigarettes – regardless of the quantity – a smoker. This definition also extends to people who smoke cigars, chew tobacco or use nicotine patches.7

Smokers can be charged much higher premiums than non-smokers, and your premiums can be impacted by how much you smoke and how long you’ve been smoking, as these factors increase your risk of serious illness or death.8

In order to be classified a non-smoker, you need to have not used any nicotine product in the past year. The good news is that if you’re able to do this, you could qualify for a reduction in your premiums.9

It’s important not to lie about your smoking status as, in the event of a claim, your insurer could deny your claim if they can prove you’ve lied.

5. Can I leave my insurance money to someone other than my spouse?

As long as they’re aged over 18, you can generally nominate whoever you like as your life insurance beneficiary.10

You can also nominate more than one beneficiary if you choose and specify what percentage of the payment you want each person to receive.

Depending on whether your insurance is held inside or outside of super may affect who you can chose as your beneficiary.

Other considerations

The life insurance available through super is typically bought on a group basis meaning it usually guarantees you cover without taking into account your specific circumstances.11

So if one or more of the situations above applies to you, opting for life insurance through your super may be the easiest and most cost-effective way to get cover.

Please contact us on |PHONE| if you seek further advice .

 

1 Australian Institute of Health and Welfare, Overweight and obesity, paragraph 4.

2 Australian Institute of Health and Welfare, Overweight and obesity paragraph 1.

3, 4 Finder, Life insurance for over 70’s, table.

5 Australian Bureau of Statistics, National Health Survey: First Results, 2014-15, mental and behavioural conditions, paragraph 3.

6 Lifewise, Mental illness and life insurance, what you need to know – a brief guide, paragraph 6.

7, Finder,  Regular smokers and life insurance, paragraph 1.

8, Finder,  Regular smokers and life insurance, paragraph 6.

9, Finder,  Regular smokers and life insurance, paragraph 9.

10 Finder, Updating life insurance beneficiaries, paragraph 6.

11 Moneysmart, Insurance through super, paragraph 4.

Source : AMP January 2019 

 Important information: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 13 30 30, before deciding what’s right for you. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice. Although the information is from sources considered reliable, AMP does 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 does not accept any liability for any resulting loss or damage of the reader or any other person

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Are you eligible for school subsidies?

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

Get up to speed with the government subsidies you may be able to claim in 2019 before the kids go back to school.

With 2019 now in motion, many parents and carers are probably looking at how they’ll cover school fees for the year ahead, not to mention other costs, which might include things like uniforms, shoes, stationery, excursions and transport.

The

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Get up to speed with the government subsidies you may be able to claim in 2019 before the kids go back to school.

With 2019 now in motion, many parents and carers are probably looking at how they’ll cover school fees for the year ahead, not to mention other costs, which might include things like uniforms, shoes, stationery, excursions and transport.

The good news is, you may be eligible for some financial assistance through subsidies in your state or territory, which may be means tested or require you to hold a concession card1.

State and territory allowances

According to figures from ASG, for a child born today, the total cost of schooling in a capital city (from ages 0 to 17) is estimated to be around2:

  • $68,007 if they attend government schools

  • $252,085 if they attend systemic/catholic schools

  • $499,593 if they attend private schools.

With that in mind, it’s worth exploring some of the rebates and tax breaks you as a parent or guardian may be eligible for.

New South Wales

Children in Kindergarten through to Year 12, who are aged between four and a half and 18 (including those that are home-schooled), are eligible for an Active Kids Voucher, providing parents and guardians with $100 to put toward registration and participation costs for sport and fitness activities.

This year, the Creative Kids program was also launched, providing one $100 voucher each year to all school-aged children to help with the cost of creative classes and activities, such as music, dance and drama lessons, language classes, coding and design.

In addition, if you drive the kids to school because there’s no public transport where you live, you may be eligible for the School Drive Subsidy

There are also two financial support programs for eligible families who have children boarding away from home to complete their secondary education. To find out more, check out information on the Living Away from Home Allowance and Boarding Scholarship for Isolated Students.

Queensland

If you have secondary-school-age students who are attending state and approved non-state schools, you may be able to receive financial assistance to help with the cost of textbooks and other learning resources. For more details, check out the Queensland state government website.

Living Away from Home Allowance Scheme is also available, while talented students from regional and remote areas, who aren’t eligible, may apply for Queensland Academies Isolated Students Bursary.

On top of that, a voucher of up to $150 under the Get Started Vouchers program may also be available for children who can least afford, or may otherwise benefit from joining a sport or recreation club, while there are additional funding sources that aim to support young athletes.

Victoria

Depending on your situation, your family may be eligible to receive free or discounted uniforms, shoes, textbooks, stationery and more through the State Schools’ Relief.

The Camps, Sports and Excursions Fund may also provide payments so eligible students can take part in school trips and various sporting activities.

South Australia

The School Card scheme assists with expenses, such as school fees, uniforms, camps and excursions. This is available for eligible students attending government schools.

The State Education Allowance is also available to geographically isolated parents with children at secondary level, who board away from home to attend school. The allowance assists with travel, boarding and other education-related expenses.

Western Australia

The Secondary Assistance Scheme is available to parents who hold eligible concession cards. It provides an education program allowance, which is paid to the school, and a clothing allowance that can be paid to the school or parent.

Boarding Away from Home Allowance also assists geographically isolated families with boarding and education costs for primary and secondary-school-age children.

Tasmania

The Student Assistance Scheme assists with the cost of school levies. It provides support to low-income families to help with the cost of students in kindergarten through to year 12.

Northern Territory

The Back to School Payment Scheme provides financial assistance to parents and guardians of children enrolled in a Northern Territory school, or who are registered for home-schooling. The entitlement can be used towards things like uniforms, books and school camps.

There’s also a Sport Voucher Scheme that assists with sport, recreation and cultural-activity costs. And, you may be eligible for financial help if your child has to live away from home or travel long distances to go to school. Check out info on the Northern Territory state government website.

Australian Capital Territory

The Secondary Bursary Scheme and Student Support Fund programs provide assistance to eligible low-income earners in the state with dependent full-time students in years seven to 10.

Commonwealth Government assistance

Commonwealth Government assistance may also be available for eligible young people through Youth Allowance and various Assistance for Isolated Children programs.

There’s also a Child Care Subsidy (which replaced the Child Care Benefit and Child Care Rebate in July 2018) which may help with the cost of child care if you meet certain criteria. 

Another initiative the Australian Department of Social Services is involved in is Saver Plus – a program that’s delivered in 60 communities across the country. It delivers up to $500 in matched savings for education costs and provides free financial education workshops and support.

Other considerations

The cost of kids doesn’t come cheap, so it’s worthwhile making the most of the subsidies available to you.

In the meantime, if you need further help, speak to your school about what financial support is available. It might also worth talking to other parents who have children at the same school or schools nearby.

For further tips around budgeting and how to take control of debts, please contact us on |PHONE|

Source : AMP January 2019 

Money Smart – Reducing back to school costs (Government assistance with school costs)
ASG – supporting children’s education (Table: Calculate the cost of your child’s education)

 Important information: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 13 30 30, before deciding what’s right for you. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice. Although the information is from sources considered reliable, AMP does 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 does not accept any liability for any resulting loss or damage of the reader or any other person.

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6 things to avoid as a newbie investor

Posted On:Jan 08th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Whatever your age, if you’re thinking of dabbling in investments like shares, managed funds or cryptocurrencies, here are a few things to steer clear of.

You might be looking to invest your money in something (whether it be shares, manage funds or cryptocurrencies, such as bitcoin) for a variety of reasons.

You may have money in savings and property, and want to

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Whatever your age, if you’re thinking of dabbling in investments like shares, managed funds or cryptocurrencies, here are a few things to steer clear of.

You might be looking to invest your money in something (whether it be shares, manage funds or cryptocurrencies, such as bitcoin) for a variety of reasons.

You may have money in savings and property, and want to diversify, or you might simply be looking to invest in something affordable, should investing in things like real estate be a bit out of your reach.

If your goal is to get rich quick (wouldn’t that be nice), spoiler alert – that’s probably not going to happen, as more often than not things like time in the market, compound interest and avoiding unnecessary risk will be the keys to success (I know, sorry to burst your bubble).

Meanwhile, if you are very close to dipping your toe in the water, here’s a list of common mistakes newbie investors tend to make which are generally worth steering clear of.

Investment mistakes beginners make

1. They fail to plan

When looking to invest, it’s generally wise to think about:

  • your current position and how much you can realistically afford to invest (consider what other financial priorities you have or existing debts you may be paying off?)

  • your goals and when you want to achieve them

  • implications for the short/medium and long term

  • whether you understand what you’re actually investing in

  • whether you know how to track performance and make adjustments

  • if you want to invest yourself, or with the help of a broker or adviser.

2. They don’t know their risk tolerance

As a general rule, investments that carry more risk are better suited to long-term timeframes, as investment performance can change rapidly and unpredictably. However, being too conservative with your investments may make it harder for you to reach your financial goals.

  • Low-risk (or conservative) investment options tend to have lower returns over the long term but can be less likely to lose you money if markets perform badly.

  • Medium-risk (or balanced) investment options tend to contain a mix of both low and high-risk assets. These options could be suitable for someone who wants to see their investments grow over time but is still wary of risk.

  • High-growth (or aggressive) investment options tend to provide higher returns over the long term but can experience significant losses during market downturns. These types of investments are generally better suited to investors with longer term horizons who can wait out volatile economic cycles.

Try our ‘What style of investor am I?’ tool to help understand what level of risk you might be comfortable with.

3. They think investment returns are always guaranteed

The idea of guaranteed returns sounds wonderful, but the truth when it comes to investing is returns are generally not guaranteed.

There are risks attached to investing, which means while you could make money, you might break even, or even lose money should your investments decrease in value.

On top of that, liquidity, which refers to how quickly your assets can be converted into cash, may be an issue. Depending on what type of investment you hold or what may happen in markets at any point in time, you mightn’t be able to cash in certain investments when you need to.

4. They put all their eggs in one basket

Investment diversification can be achieved by investing in a mix of:

  • asset classes (cash, fixed interest, bonds, property and shares)

  • industries (e.g. finance, mining, health care)

  • markets (e.g. Australia, Asia, the United States).

The reason diversifying may be a good thing is it could help you to level out volatility and risk, as you may be less exposed to a single financial event.

5. They believe the opinions of every Tom, Dick and Harry

Changing your strategy on the basis of market news may or may not be a good idea. After all, people have made all sorts of market predictions over the years, all of which haven’t necessarily come true.

On top of that, we all have that one friend that likes to pretend they’re a property, share or general investment guru, who while may come across as persuasive in their market commentary, does not have the qualifications to be giving people advice.

With that in mind, if you’re looking for guidance, you’re probably better off consulting your financial adviser who may be able to give you a more well-rounded picture of the current climate and the potential advantages and disadvantages you should be across.

6. They make rash decisions based on fear or excitement

Many investors get caught up in media hype and or fear and buy or sell investments at the top and bottom of the market.

Like with anything in life, it is easy to get stressed and concerned about the future and act impulsively but like with other things this may not be a smart thing to do.

While there may be times when active and emotional investing could be profitable, generally a solid strategy and staying on course through market peaks and troughs will result in more positive returns.

Contact us on |PHONE| for more information.

 

Source: www.amp.com.au

Important information: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 13 30 30, before deciding what’s right for you. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice. Although the information is from sources considered reliable, AMP does 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 does not accept any liability for any resulting loss or damage of the reader or any other person.

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9 money tips for expecting parents

Posted On:Dec 12th, 2018     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Starting a family is an exciting time but it can also be an expensive one. Check out these nine financial tips from AMP to ensure you’re family-ready. 

Amid the excitement and anticipation, if you’re about to start a family or are thinking about doing so, it’s a good idea to get across the upfront and ongoing costs that are likely to

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Starting a family is an exciting time but it can also be an expensive one. Check out these nine financial tips from AMP to ensure you’re family-ready. 

Amid the excitement and anticipation, if you’re about to start a family or are thinking about doing so, it’s a good idea to get across the upfront and ongoing costs that are likely to be coming your way.

After all, according to research, it costs an average of $144 a week to raise a child between the ages of zero and four, and that doesn’t take into account the potential amount you may be paying for childcare1.

If you’re not sure where to start, here are some tips to get your finances in order.

9 money tips for expecting parents

1. Make sure you’re across any medical expenses

Medical costs may include doctor and hospital bills, scans, birthing classes and special medical tests.

Also think about whether you want to have your baby in a public or private hospital, as there may still be out-of-pocket expenses with either option, even if you have Medicare or private health insurance.

Many private health funds also have waiting periods before you can claim on pregnancy and birth-related costs, so this is worth looking into if it’s something you’re considering.

Meanwhile, if you want your child to be covered under a health insurance policy, this is worth some investigation, as a single or couple policy may need to be extended to a family policy.

2. Consider other upfront and ongoing costs

These might include things like:

  • car seat and stroller

  • cot and mattress

  • change table and high chair

  • baby clothes and diaper bag

  • food, nappies, bottles and formula

  • childcare.

3. Research your employer entitlements

Many organisations have their own parental leave policies, which may include various paid and unpaid parental leave entitlements for new mothers and fathers.

Check out whether your employer has such a scheme in place and what they offer. You may also want to find out if you’re eligible for any annual leave, long-service leave or regular unpaid leave if you’re planning to take time off work.

Meanwhile, superannuation is generally not paid when you’re on parental leave, so you may want to consider whether you’ll make additional contributions while you’re still working.

4. Explore the government’s paid parental leave scheme

If you meet criteria, primary carers of newborn or adopted children can apply for parental leave payments from the government, which provide the national minimum wage for up to 18 weeks2.

These payments can be received in addition to any payments your employer pays under its own parental leave policy if you’re eligible.

5. Investigate other government assistance options

You may be entitled to other assistance such as Dad and Partner Pay3, which provides up to two weeks of government funded pay, and the Family Tax Benefit, which helps with the cost of raising children.

There are also a range of additional payments for families, such as assistance with child care fees that also may help. See the Department of Human Services website to find out more.

6. Create a budget with the information you’ve collected

Once you’ve considered the costs, any entitlements you may be eligible for and how long you may take off work, it’s important to set up a budget and start putting money aside.

When you do this, remember you’ll need to account for existing day-to-day expenses, such as utility bills, groceries, petrol, insurance, rent or home loan repayments, and other debts you may be paying off.

Remember to also factor in any additional sources of income you could be receiving and whether you have family that may be able to assist in helping you minimise expenses, such as childcare.

7. If you can, prioritise your existing debts

If you do have existing debts—credit cards, personal loans or a home loan—it may be a good idea to reduce these debts as much as you can before the baby arrives, particularly as, like with most things, there may be unexpected expenses along the way.

Higher interest rates and added fees can also really impact what you pay back on top of the principal amount, so also consider shopping around to see if you can get a better offer.

Other things worth looking into might include:

  • Your credit card situation and whether you’re really getting a good deal

  • Consolidating your debts into one if it means you’ll pay less in fees and interest charges

  • If you can pay off your home loan faster or refinance to reduce the loan payment amounts.

8. Consider your will and broader estate plan

If a little person is about to enter your life, who you love and want to take care of, thinking about your estate plan may also make good sense, noting this involves more than just drawing up a will.

It’ll include decisions around who will look after you and your child if you’re ever in a situation where you can’t make decisions for yourself, as well as documenting how you want your assets (which may include insurance and super) to be distributed should you pass away.

9. Don’t forget, money does not trump love

A new addition to the family can be an expensive time and a slightly daunting one, particularly if numerous people are giving you their ‘two cents’ on the parenting front.

With that in mind, remember your ability to afford the most expensive pram, baby clothes and possibly day-care centre will not outweigh the love you have for your child.

If you do have to go without a few non-essential baby items, opt for things that are second hand or handed down from families whose children are now a bit older, it’s all good – don’t be afraid to tell those with a few too many opinions where to go.

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

 

1 AMP.NATSEM report – The Cost of Kids: the cost of raising children in Australia
2 Department of Human Services – Parental Leave Pay

3 Department of Human Services – Parental Leave Pay – related payments and services

Source: www.amp.com.au

Important information: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 13 30 30, before deciding what’s right for you. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.

All information on this website is subject to change without notice. Although the information is from sources considered reliable, AMP does 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 does not accept any liability for any resulting loss or damage of the reader or any other person.

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8 tips for first home buyers

Posted On:Dec 12th, 2018     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

If you look at the statistics, it takes the majority of Australians a little over three and a half years on average to save for a deposit on a first home1

If you’re thinking about, or aren’t far away from, putting some money down on that place of your dreams, we look at some of the financial and non-financial considerations you’ll

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If you look at the statistics, it takes the majority of Australians a little over three and a half years on average to save for a deposit on a first home1

If you’re thinking about, or aren’t far away from, putting some money down on that place of your dreams, we look at some of the financial and non-financial considerations you’ll want to be across.

1. Figure out how much money you have to play with

The most common loan terms in Australia are generally 25 and 30 years2, and as a mortgage is likely to be the biggest debt you’ll ever take on, it’s important to prioritise any other financial goals you may have and figure out where a home purchase ranks on that list.

The price of the property you’re looking to buy will also play a big part as it will often determine the deposit you need, so it’s worth figuring out how much you can realistically afford early on.

If your family is willing to help, it’s a good idea to discuss how they plan to do this. And, keep in mind there could be risks, benefits and tax implications if financial help is given.

Meanwhile, if you’re buying property with a partner, it’s important to be upfront about your financial past and plans, and whether you’ll put something in writing should the unexpected happen.

Check out AMP’s cost of home loan calculator if you’d like help crunching the numbers, or alternatively speak to a bank or mortgage broker.

2. Find out if there are black marks on your credit report

A credit report, which details your repayment history, could affect your ability to get approval on a loan if it doesn’t read well.

As each lender will assess your credit file against their own policies, there may be instances where some approve your application, while others reject it or delay the process.

The main credit reporting agencies in Australia are Veda, Dun & Bradstreet, Experian and the Tasmanian Collection Service, and you can request a copy if you’d like to see what yours says.

3. Know what you’re going to fork out

Here’s a snapshot of some of the costs you’re likely to come across early on and on an ongoing basis.

The upfront costs

  • Purchase price – This is the actual cost of the property. And, unless you’re able to pay for it outright, you’ll generally need to take out a loan, noting that lenders will generally ask for a minimum deposit of 10% to 20%.

  • Loan application fee – This is a one-off payment to your lender when your loan commences. Fees may vary depending on your provider and will cover things such as credit checks, property appraisals and basic admin.

  • Lender’s mortgage insurance – If you have a deposit that’s less than 20%, you may be required to pay lender’s mortgage insurance which is there to protect your lender in the instance you’re unable to repay your loan.

  • Government fees – Stamp duty is a land/property transfer tax applied by all Australian state and territory governments, which can vary greatly depending on where your dream home is located. Mortgage registration and transfer fees also apply and differ from state to state.

  • Legal and conveyancing fees – These cover the services of a real estate conveyancer or solicitor, who’ll prepare the necessary documentation and conduct the settlement process.

  • Building, pest and strata inspections – Payment for these services or reports will identify structural concerns, as well as maintenance and financial issues (if you’re in a body corporate).

  • Moving costs – This will come down to how much you do yourself, whether you rent a truck, or hire professionals to move your stuff for you.

The ongoing costs

  • Loan repayments – What you pay back and how often you make repayments will generally have a big impact on the length of time it takes you to pay off your home loan.

  • Interest charges – You can generally choose a fixed or variable rate, or a combination of the two, which is worth some research, particularly as interest rates can go up and down.

  • Other ongoing expenses – This might include strata fees for communal properties, council rates, utility costs, building and contents insurance, and things like home improvements.

4. Ensure the locations you’re looking at stack up

To ensure you buy something you love and for the right price, consider:

  • How much properties are going for in the suburbs you’re interested in

  • How far you’re willing to live from family, friends and work

  • Whether there’s off-street parking and local amenities, such as schools, shops and transport

  • Whether you’ll need to renovate and if you have the extra funds available to do so

  • If there is price growth potential in the suburbs you’ve shortlisted

  • If there are proposed developments in the area that may impact the value of your home

  • What the crime rate is like in the areas you’re keen on

  • If you’re moving far away, how the local job market fares and what the weather is like.

If you need help gathering some of this information, speak to real estate agents who work in the area, or look at real estate companies online.

Meanwhile, different features will appeal to different people when looking for a home to live in, so consider what works for you.

5. Research whether you’re eligible for assistance

The First Home Owner Grant

The First Home Owner Grant is a national scheme. If you’re unsure about eligibility, contact your state revenue office and be sure you apply with enough time.

Stamp duty concessions

Certain state and territory governments offer additional incentives to first home buyers, some which involve stamp duty concessions, so research what’s on offer in the area where you’re buying.

The First Home Super Saver Scheme

Eligible first home buyers can withdraw voluntary super contributions (which they’ve made since 1 July 2017), to put toward a home deposit.

Under the First Home Super Saver Scheme (FHSSS), first home buyers who make voluntary contributions into their super can withdraw these amounts, up to certain limits, in addition to associated earnings, from their super fund to help with a deposit on their first home.

If eligible, the maximum amount of contributions that can be withdrawn under the scheme is $30,000 for individuals or $60,000 for couples.

6. Familiarise yourself with different types of loans

Depending on whether you’re after a basic package or one with added features, home loans can vary a lot when it comes to interest rates and fees.

To get a better idea of costs, when you see a home loan advertised, you’ll notice two rates displayed—the interest rate and the comparison rate.

The comparison rate will incorporate the annual interest rate as well as most upfront and ongoing fees. Some home loans, with lower interest rates, are laden with fees, so while they appear cheap, they aren’t. The comparison rate can help you identify this and compare loans more accurately.

Some other things worth exploring when you’re looking at different loans is the potential advantages and disadvantages of various features, which may allow you to make extra repayments, redraw funds, or use an offset account which could reduce the interest you pay.

If you’re looking for the best deal, remember to shop around and don’t be afraid to ask your lender if they can do better than the rate that they’re currently advertising.

7. Get your finances in order so you’re ready to go

It’s a good idea to have your loan pre-approved so you know exactly what you can borrow. You’ll also need formal approval closer to purchasing and to have your deposit ready, or you may miss out.

This may mean having your cheque book or a bank cheque ready to go if you’re buying your first home at auction.

As part of the process your lender will also advise if lender’s mortgage insurance is required.

8. Don’t forgot your last chance for an inspection

Inspections will alert you to serious issues that may not be visible to the eye—asbestos, termites, electrical, ventilation and serious plumbing faults, which could in the long run cost you a whole lot more than the building inspection itself.

Meanwhile, strata reports, if you’re buying a townhouse or apartment, can tell you whether the property is well run, well maintained and adequately financed.

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

 

1 Finder – 1 in 3 first home buyers stuck saving for a deposit for over 5 years press release
2 Finder – How long should my home loan be? paragraph 12

Source: www.amp.com.au

Important information: 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 13 30 30, before deciding what’s right for you. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.

All information on this website is subject to change without notice. Although the information is from sources considered reliable, AMP does 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 does not accept any liability for any resulting loss or damage of the reader or any other person.

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