Provision Newsletter

Impulse purchases and buyer’s remorse often go hand in hand. But if you take a week (or a month) to reflect on your spending, you could see a noticeable boost in the funds accumulating in your savings account. Enter, the Seven-day Rule.

Don’t reply to text messages after you’ve had a glass of wine, and take a deep breath before confronting someone when you’re upset. These are both common social strategies relied upon to make you think – with reflection and clarity – before making a rash decision that could cost you something you value. Think of the ‘Seven-day Rule’ as the financial equivalent of pressing pause on your reply, or putting your phone down before hitting send.

Impulse purchases

Most of us have been in a situation where we spot something shiny and expensive that we’d really like to have: a new phone, some make-up, an expensive outfit, or maybe a new pair of skis. But in these impulse situations we often spend money based on emotions, rather than our budgeting goals. We get swept up in the excitement of having a new toy.

Many of us go ahead and make the purchase. In fact, 84 % of all shoppers have made impulse purchases, with this equating to almost 40 % of all money spent on e-commerce¹. Research also shows that about half of us regret the purchase almost as soon as we’ve made it².

Delay gratification

The goal of the ‘Seven-day Rule’ is to stop impulse purchasing, and give yourself a ‘cooling-off’ period to think about how much joy the item will bring to your life. You’re not denying yourself – you’re just delaying the potential gratification.

The idea is surprisingly simple: If you see something you want to buy, but haven’t budgeted for it, walk away for a week.

Over this time, ask yourself if you really need the item. If, after seven days, the answer is yes, you can go back and buy it. If you’ve forgotten about it, then your time away from the stores has saved you from facing buyer’s remorse.

Cooling-off period

When you’ve put the item back on the shelf (or closed that online shopping browser), do a few things:

• Write what you want to buy on a piece of paper, along with the price, date and store name.

• Stick the note on your fridge, so you can re-address it in a week.

• Do some further research online – chances are you can find significant discounts or better models elsewhere.

• You could then consider transferring the cost of the item from your everyday bank account to your savings account.

• Do you really want to buy that jacket in a week and spend money that is now going toward a larger savings goal, like purchasing a new car?

The ‘30-day rule’

The Seven-day Rule concept won’t work for every purchase you make, so set yourself a financial hurdle – say, walk away if the item in question costs more than $100. Then make this hurdle scalable: if your potential purchase is $300 or more, elevate the cooling-off period to 30 days.

Giving yourself a month to evaluate your spend also means you have the time to set yourself a financial challenge. Say you have your heart set on a pair of shoes that costs $350. Rather than taking the money from your savings account, why not see if you can save that amount from scratch?

For example, you’d need to set aside around $12 a day for 30 days to save $350. Check out the articles below for tips on how to save money on everyday items.

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

1-2 https://www.invespcro.com/blog/impulse-buying/

Source : AMP January 2020

Important:
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. 

How to build environmental and social considerations into your investments.

In the wake of recent ferocious bushfires, the climate change debate has climbed the news agenda, with many Australians now considering what they can do to help.

If you’d like your money to make a difference to the environment as well as your future, now might be the time to consider ethical investing.

It’s a growing trend. More than half of all investments in Australia are already invested responsibly and ethically according to the Responsible Investment Association of Australia (RIAA)¹ .

AMP financial adviser Di Charman says, “Every little bit counts and for those wanting to take action on the environment, money is a powerful language that can be a force for good”.

“Whether it’s through super, investments or savings, more and more people are reviewing their financial arrangements to ensure their funds are put to work in a way that does no harm, and ideally leaves the world in a better place”.

“Responsible investment takes into account environmental, social and governance (ESG) factors into the investment process of research, analysis, selection and monitoring of investments.

Here are some tips to help Australians who want their finances to be environmentally friendly.

Understand what matters to you.

Everyone’s values are different, so you need to first work out what’s most important to you. Do you feel strongly about not investing in fossil fuels? Are you interested in discovering cutting-edge solutions for climate change or is improving energy efficiency a greater priority for you? How will these preferences affect your investment performance? From here you can identify the areas where you don’t want to invest or, conversely, where you’d rather put your money to make a positive impact.

Do your research and get to know the ESG principles.

Each investment manager has its own investment policy when it comes to ESG investing. For instance, some may apply a ‘negative screening’ or ‘exclusion’ policy, meaning that they steer clear of certain sectors like fossil fuels. Be mindful of exclusion policies as they may lead to increased volatility in your portfolio. Climate change investing tends to be a form of ‘positive screening’—in other words, actively choosing to invest in companies that are making a difference in areas such as renewable energy. RIAA is a good resource to use when you’re starting on this journey as it details the investment strategies of ethical and sustainable funds. Many super funds or investment managers also now have information about sustainability and ESG on their websites. Look to see if they have signed the United Nations backed Principles of Responsible Investing and whether they have published their scorecard.

Start with super.

Do you know where your super is invested? Does it offer a socially responsible investment (SRI) option? Make sure you read all the information provided by your super fund about the particular sectors, businesses and investment activities considered for investment. It’s worthwhile knowing that some people believe many SRI options don’t go far enough. Again, it pays to know what matters most to you and then you can find an option that aligns with your values.

Don’t forget the eggs rule.

One of the key principles of good investing is diversification—not putting all your eggs in one basket. It spreads risks and ensures you’re not exposed to any single investment or asset class. So consider the risks of crafting a portfolio that’s too narrow and concentrated. Climate-themed funds also haven’t been around for a long time, with many having only launched several years ago. This makes their performance hard to assess.

Ask for help.

Being a more responsible investor involves a lot of research and working out exactly how far you want your investment decisions to reflect your sustainable and ethical concerns and can be a minefield (pun intended). For example, you might not want to invest in coal companies, metallurgical coal miners and mining companies, but what about transport companies that freight coal, coal seam gas, oil and conventional gas, electricity generators, or diversified energy generators that may have large investments in renewables as well as coal?

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

1 ‘From values to riches: charting consumer attitudes and demand for responsible investing in Australia’, Responsible Investment Association Australasia, Nov 2017

Source : AMP January 2020 

Important:
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

Ready to jet off to exotic locales this year? Lonely Planet has released their ‘Best in Travel 2020’ destinations, to fire up your inspiration. These top spots offer the best value, in terms of getting off the beaten path, soaking up exciting experiences and keeping your budget happy too. 

East Nusa Tenggara, Indonesia

Are you looking for an alternative to Bali? The islands of East Nusa Tenggara offer all the sundrenched beaches and cultural diversity you want, without the crowds. With more than 500 islands, the options for diving, surfing and jungle adventures to spot Komodo dragons are virtually limitless. Stay on one of the three largest islands of Flores, Sumba and Timor, and fly into the capital, Kupang City. 

Budapest, Hungary

 

These handy hints can help you hit the road with absolute faith in your home on wheels.

Whether you’re buying a TV, a house, or a caravan, there are always questions you need to ask and answer before you purchase.

If these questions go unanswered, it can lead to problems, regrets, and inconveniences. Worse yet, it could be very costly.

To help you avoid any of this, we engaged the experts at New Age Caravans in Newcastle, who put forward a handful of key questions to consider when you’re looking to invest.

You want to be comfortable with your purchase.

1. What is your budget?

While being fixated by an exact amount can have its drawbacks, it helps to have a ballpark figure of how much you wish to spend on a van. This allows you to easily:

• Have perspective about what you can and can’t afford.

• Understand the difference between essentials and luxuries.

• Narrow your search to find your preferred caravan.

We also recommend considering more than just the upfront purchase price. The resale value of the vehicle is an important consideration down the track when it comes time to sell or trade in your caravan.

It helps to quickly identify the difference between needs and wants.

2. Where are you going, and who is coming along?

Think about the intended use of your caravan and the number of people in your travelling party, as this will quickly help you find the model that’s right for you.

How many berths do you need? Does the van need bunks to accommodate all travellers? Answering these questions will help determine the size of your caravan.

Are you sticking to the tarmac or likely hitting dirt roads? If the answer is the latter, perhaps you should consider a van with independent suspension.

Considering the size of your travelling party will go a long way to helping find the best van for you.

3. What is the quality of the caravan you are looking at?

We suggest doing research to determine how reputable your chosen manufacturer is. There is plenty of information available online, including reviews and forums.

Many promises are made at point-of-sale, but can the manufacturer deliver on them? Sometimes, it’s worth following the advice of the cliché: If it’s too good to be true, it probably is.

Quality counts for everything.

4. How long is the warranty period?

Your desired caravan might be bright and shiny now, but you will thank yourself later if take a peek at the imaginary road ahead, in case things go wrong. And one question leads to a few more!

Is the warranty offered directly from the manufacturer, or is it an insurance-type guarantee? How helpful is the manufacturer likely to be at claim time? Do they provide roadside assistance?

Dig deeper: Doing further research and/or probing the salesperson for answers often provides clarity.

If you’re second-guessing the reliability of your manufacturer, that’s never a good sign. And if the manufacturer doesn’t have complete faith in their product, then why should you?

It pays to know as much about your caravan’s warranty as possible.

5. What are the service costs?

This is a very important question, as service costs can be extreme and deter owners from regular servicing. And irregular servicing can create bigger, more costly issues. We’ve seen and heard about some terrible situations!

We advise choosing a manufacturer that offers affordable, fixed-price options so you know in advance how deep you could be digging into your pockets.

Regular servicing is essential to maximising the lifespan of your van.

6. Does the brand have a national repair network?

Whether you’re planning on doing the Big Lap or simply clocking up a few hundred kilometres in your own state, you want assurance that you can quickly and easily get help if trouble arises. And more than that, you want assistance without it costing you a fortune.

Your manufacturer should be able to easily provide you with info about its national repair network and give you peace of mind.

If trouble arises, clearly you want help as quickly and easily as possible.

7. What are the weight limits of your tow vehicle?

Caravans are just one component of a duo. And you need both parts to complement each other in order to operate properly. Gross combined mass or GCM (the combined weight of the caravan and car) and the towing capacity are important factors, yet sometimes are not understood, or ignored.

It’s vital that you comply with these weights from both a legal viewpoint as well as a safety one. Again, your manufacturer should be able to assist you with any queries about this.

The weighting game: Understanding this is vital.

Looking to buy a caravan? Check out the range at New Age now.

And when it’s time to hit the road, book your next caravanning adventure with BIG4.

Source : BIG4 Holiday Parks

Reproduced with the permission of BIG4 Holiday Parks. This article first appeared on BIG4.com.au and was republished with permission.

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

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

At the end of 2018, after a dismal fourth quarter – in fact, the worst quarterly performance in seven years – the Australian share market closed at a two-year low.

No doubt, many investors at the time were probably anticipating a mediocre year ahead.

Yet, seven months later, the Australian share market had not only recovered all its 2018 fourth-quarter losses, but breached its all-time peak set back in November 2007.

And, while ongoing geopolitical tensions and economic fears, overshadowed by the US-China trade war, have continued to rattle global financial markets through 2019, it’s been a relatively solid investment year.

The message from us at Vanguard to investors, as always, has been to tune out from the daily market noise, and to remain disciplined and diversified, irrespective of shorter-term volatility.

Many investor portfolios are well ahead on where they started 12 months ago. In fact, just about every major asset class barring cash has delivered strong year-to-date returns.

Driving that has been an insatiable hunt for yield. With interest rates at record lows, investors globally have been searching for investments generating higher returns. Concurrently, investors seeking a degree of safety have diverted capital into the more defensive asset classes such as bonds.

That’s driven huge capital inflows into shares, listed property and fixed income assets. In turn, that demand has driven strong price appreciation across global financial markets.

Strong double-digit returns

Those with broad exposures to Australian, US and international shares, and to Australian and international listed property, have achieved double-digit 12-month returns. Even bonds have returned close to 10 per cent so far this year.

You can see the relative returns of a range of different asset classes over the year, and all the way back to 1970, by accessing and bookmarking the Vanguard Interactive Index Chart.

Of course, past performance is never an indicator of future performance. The best and worst performing asset classes will often vary from one year to the next.

Australian listed property was the best-performing asset class return in the financial year to 30 June, 2019, delivering 19.3 per cent. But, in 2018, the best performer was US shares, and the financial year before it was hedged international shares.

In fact, the last example of the same asset class delivering the best returns in two consecutive years was more than a decade ago, back in 2008 and 2009, when hedged international bonds returned 8.6 per cent and 11.5 per cent respectively.

Taking a longer-term look

Although shorter-term returns analysis can be somewhat useful, it’s only when one does a much longer examination of investment trends that a more meaningful picture emerges.

This year marks two decades since the turn of the century, so it’s an opportune time to capture almost a full 20 years of investment returns across eight different asset classes.

The chart data below goes up to the end of October (the latest chart data available) – which is broadly in line with total returns through to the middle of December.

 

One of the biggest retirement challenges is ensuring that the savings accumulated during your working years lasts as long as you do.

If you had invested $10,000 in Australian shares on 31 October 2009 without any further contributions or withdrawals, you would have experienced an average of 8.3% annualised rate of return and ended up with $22,278 a decade later on 31 October 2019.

Obviously, the numbers change once you start withdrawing income.

Unforeseen events such as market downturns can shorten the lifespan of your retirement portfolio if you withdraw funds to pay bills during a period of falling share values. The market downturn not only impacts the value of your portfolio but the regular withdrawal of funds to pay for everyday expenses (exactly what your retirement portfolio was meant to do) means that the capital left in your portfolio to help earn gains when the market eventually rebounds, is also diminished.

If the market downturn continues into the beginning of your retirement years, during which a high proportion of negative returns occur, it can have a lasting negative effect, ultimately reducing the amount of income you can withdraw over your lifetime. This is known as the sequence of returns risk.

Fortunately, there are number of straightforward strategies that can limit the odds that investors will fall into the downturn trap.

An approach that has been rather successful in the US is the target date fund model, which works to derisk an investment portfolio based on a ‘target date’ for retirement with the fund. The concept has been gaining momentum here in Australia and superannuation funds typically base these products on a ‘lifecycle design’.

Vanguard’s US target date fund glide-path takes place over four stages and constructs a portfolio based on balancing market, inflation, and longevity risks in an efficient and transparent manner over an investor’s life cycle. Investors are generally split into four phases beginning at those aged 40 years and younger, and gradually moving towards the fourth and final retirement phase. The first phase considers the time horizon of an investor in the early stages of their career, thus allocating up to 90 percent of the portfolio to equities. Phases 2 and 3 gradually de-risk the portfolio away from equities before the retirement phase.

Phase 1 starts with an allocation of around 90 percent to equities and then commences de-risking during the mid to late career phase. Phase 3 encompasses the transition to retirement phase, where the portfolio de-risks further before reaching a landing point in the final retirement phase.

While this is a sound concept, it could have adverse effects if not implemented properly. For instance, being too conservative in the investment approach during the early years of one’s career or too aggressive as one approaches retirement. The objective of this asset allocation model is to avoid being either extreme end of the spectrum and to adequately diversify where possible.

Having a proper asset allocation strategy will improve the odds that your retirement portfolio will endure but you may want to investigate other methods that also achieve this goal. Another suggestion is the dynamic spending strategy, in which investors set minimum and maximum percentage withdrawals based on market performance and individual goals.

Whichever strategy you choose, finding a way to curb the effects of volatility on your retirement portfolio may improve your odds of retiring on your own terms and not the market’s.

Please call us on |PHONE| if you would like to discuss.

Source : Vanguard 

Written by Robin Bowerman, Head of Corporate Affairs at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd

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

© 2020 Vanguard Investments Australia Ltd. All rights reserved.

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

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