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Provision Newsletter

Keeping your super intact: It’s fundamental

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

Ideally, investors should begin investing as early as possible in their lives, invest more whenever possible and remain in investment markets for as long as possible.

These fundamentals of sound investment practice should increase your chances of investing success.

Yet super fund members who attempt to illegally gain access to super savings before being eligible are doing the opposite.

And they are reducing

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Ideally, investors should begin investing as early as possible in their lives, invest more whenever possible and remain in investment markets for as long as possible.

These fundamentals of sound investment practice should increase your chances of investing success.

Yet super fund members who attempt to illegally gain access to super savings before being eligible are doing the opposite.

And they are reducing their opportunities to save for a satisfactory standard of living in retirement. It is difficult to later rebuild super savings spent on paying pre-retirement expenses.

The tax office, the regulator of self-managed super funds (SMSFs), recently reinforced its warning about participating in illegal early-access schemes. These relentless schemes typically use new SMSFs as a means to obtain super savings initially held in large super funds.

Preservation rules

With limited exceptions, super fund members cannot legally gain access their super savings before turning 65 or reaching their preservation age (55-60) and retiring (or taking a transition-to-retirement pension).

Members can seek to legally gain early access to their super on various compassionate grounds or in such circumstances as severe financial hardship, terminal illness or incapacity.

And other ways that fund members can legally gain early access to some of their super are through the First home super saver scheme and transition-to-retirement pensions. (Members taking a transition-to-retirement pension can receive up to 10 per cent a year of the balance in their super pension accounts as a pension upon reaching their preservation age yet before retiring.)

Promoters misuse of SMSFs

Typically, promoters of early-access schemes try to convince members of large super funds to transfer their super into a new SMSF before taking the savings out of super. In such cases, the members wanting to withdraw their super become trustees of the new SMSFs.

Scheme promoters try to convince fund members to use their super money to pay for new cars, holidays and financial help to their families, and to reduce credit-card debt. High fees or commissions paid to promoters further dilute super savings.

Promoters tend to target individuals who are in financial difficulties, perhaps with a poor understanding of super. In some cases, the targeted members may have been eligible to legally gain early access to their super on financial hardship or other limited grounds.

Implications for SMSF trustees

Possible consequences for SMSF trustees allowing early access to super include: disqualification as trustees, personal liability to pay penalties, and prosecution. As well, an SMSF may be declared non-complying, leading to the loss of valuable tax concessions.

Dipping into super

Some members gaining early access to their super do not participate in early-access schemes pushed by promoters. Instead, they illegally dip into their SMSFs from time to time with the hope of not to being detected.

In the past, the tax office has warned, for example, about the use of super to prop up small businesses with financial difficulties. Unfortunately, super saving can be a temptation for owners of a business with cash-flow problems.

Please contact us on |PHONE| if we can be of further assistance.

Source : Vanguard April 2019 

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.
© 2019 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 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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Rebalance your portfolio, rebalance your emotions

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

Is your portfolio suffering from what is sometimes called portfolio drift?

This occurs when a broadly-diversified portfolio drifts away from its strategic or target asset allocation with movements in investment markets and diverging returns from lower-risk and higher-risk assets.

Your diversified portfolio’s strategic asset allocation to different asset classes should be set with the aim of reaching your goals without exceeding your

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Is your portfolio suffering from what is sometimes called portfolio drift?

This occurs when a broadly-diversified portfolio drifts away from its strategic or target asset allocation with movements in investment markets and diverging returns from lower-risk and higher-risk assets.

Your diversified portfolio’s strategic asset allocation to different asset classes should be set with the aim of reaching your goals without exceeding your tolerance to risk. (See Goodbye to ad-hoc portfoliosSmart Investing, April 15.)

And then regular rebalancing of your portfolio back to that asset allocation will regain its intended risk-and-return characteristics. The primary benefit of rebalancing is to keep a portfolio’s risk profile, not to maximise returns.

In today’s low-interest, lower-return investment environment, investors may be more tempted to delay rebalancing their portfolios. This is a trap because a portfolio usually becomes progressively more volatile and riskier without rebalancing.

Repeated research* over more than 30 years, including by Vanguard, has concluded that a diversified portfolio’s strategic asset allocation is the main cause of variations in its long-term returns.

A recent Vanguard research paper, Getting back on track: A guide to smart rebalancing**, suggests three straightforward practices for portfolio rebalancing:

  • Rebalance to manage your risks and emotions: A disciplined, easy-to-follow rebalancing strategy helps remove emotions from your investment decisions. And as discussed, rebalancing reduces the likelihood of your portfolio becoming riskier with movements in investment markets.

  • Set rebalancing trigger: Most investors following a rebalancing strategy use either a “time trigger” or a “threshold trigger”. With a time trigger, you rebalance your portfolio at set intervals of, say, once a year or more frequently. And with a threshold trigger, you rebalance when your portfolio drifts from its asset allocation targets by a predetermined percentage.

  • Minimise rebalancing costs: Keep potential tax and transaction costs of rebalancing to a minimum. Some investors use cash where possible – perhaps from dividends and savings accounts – to replenish asset classes that have become underweight over time. Those with investments inside and outside superannuation should keep in mind when rebalancing that their super savings are either concessionally-taxed or exempt from tax.

The rebalancing of a portfolio can seem counter-intuitive. This is because rebalancing requires the selling of currently outperforming assets to buy currently underperforming assets.

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

*The global case for strategic asset allocation and an examination of home bias, Vanguard 2017.
**Getting back on track: A guide to smart rebalancing, Vanguard 2019.

Source : Vanguard April 2019

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.
© 2019 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 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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Forget willpower: Why habits are the key to achieving financial goals

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

What’s the value of $20 per month?

It’s not a trick question. Obviously, the simple answer is $20. But if you’re talking about a 21-year-old earning $50,000 who salary sacrifices $20 per month to her super, the value is $10,077, the extra amount she would have in her super at retirement age, according to the Australian Securities & Investment Commission retirement planner.

But the real

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What’s the value of $20 per month?

It’s not a trick question. Obviously, the simple answer is $20. But if you’re talking about a 21-year-old earning $50,000 who salary sacrifices $20 per month to her super, the value is $10,077, the extra amount she would have in her super at retirement age, according to the Australian Securities & Investment Commission retirement planner.

But the real value of that $20 is that it establishes the habit of saving. It’s that first step that makes the next one easier to take. The study of habit — how to break bad ones, build good ones and leverage them to achieve goals — is flourishing.

Much of what habit researchers are discovering runs counter to conventional wisdom about getting things done.

Many people believe they must set big goals and work tirelessly to achieve them. That can work, but may instead lead to failure. Big goals are rarely achieved quickly, and it’s easy to lose interest and commitment along the way.

The new science of habit advises the opposite strategy. As the Stanford University behaviorist BJ Fogg explains, “Only three things will change behavior in the long term.

Option A. Have an epiphany
Option B. Change your environment (what surrounds you)
Option C. Take baby steps”

Using this way of thinking, economists have discovered that putting healthy choices such as carrots at eye level in school cafeterias will do more to get children to eat vegetables than a million lectures on the evils of junk food. By focusing on habits, instead of goals, you set up systems that dramatically increase your odds of achieving the goal.

How can you apply habit research to your financial life? Start by identifying money habits you want to change, then implement a system to get there by changing your environment and taking baby steps.

Here are few ideas to get started:

Let’s say you are spending too much on your credit cards. You can tackle this in a number of ways.

One principle of breaking habits is to make the activity harder. Someone trying to kick the sugar habit, for example, might start by keeping it out of the house, so that it’s an occasional treat that requires going somewhere to indulge in.

You could try leaving your credit cards at home, or spend only cash on purchases. Some researchers believe that because cash is such a tactile experience, the brain pays more attention to it, making people less likely to spend. But even a baby step, such as wrapping your credit cards in a piece of paper, may be enough to remind you to walk away from the purchase.

A more tech-oriented person might benefit from an app that regularly updates you on how much you are spending on sneaky expenses such as eating out. The key here is to figure out what works for you.

Scheduling activities also can work. If you want to save money on eating out, start with a goal so small that you will be able to achieve it no matter what. You could commit to taking your lunch once a week. Then, add the required items to your grocery list and schedule time in your calendar to pack it.

Automating a habit also pays big dividends. People have written books by deciding to write, say, 1,000 words every day at a certain time.

Many ways to automate the saving habit exist. One of the best is dollar-cost averaging, which involves investing the same amount of money into, say, shares or managed funds at regular intervals over a long period – whether market prices are up or down. This takes the emotion out of investing, minimising the risk that you will panic and sell when share prices fall. From a habit point of view, it keeps you on track even when motivation flags. That’s worth a lot.

Please contact us on |PHONE| if we can be of any assistance on this topic.

Source : Vanguard April 2019

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.
© 2019 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 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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Statement by Philip Lowe, Governor: Monetary Policy Decision, May 2019

Posted On:May 07th, 2019     Posted In:Rss-feed-market    Posted By:Provision Wealth

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The outlook for the global economy remains reasonable, although the risks are tilted to the downside. Growth in international trade has declined and investment intentions have softened in a number of countries. In China, the authorities have taken steps to support the economy, while addressing risks

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At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The outlook for the global economy remains reasonable, although the risks are tilted to the downside. Growth in international trade has declined and investment intentions have softened in a number of countries. In China, the authorities have taken steps to support the economy, while addressing risks in the financial system. In most advanced economies, inflation remains subdued, unemployment rates are low and wages growth has picked up.

Global financial conditions remain accommodative. Long-term bond yields are low, consistent with the subdued outlook for inflation, and equity markets have strengthened. Risk premiums also remain low. In Australia, long-term bond yields are at historically low levels and short-term bank funding costs have declined further. Some lending rates have declined recently, although the average mortgage rate paid is unchanged. The Australian dollar is at the low end of its narrow range of recent times.

The central scenario is for the Australian economy to grow by around 2¾ per cent in 2019 and 2020. This outlook is supported by increased investment in infrastructure and a pick-up in activity in the resources sector, partly in response to an increase in the prices of Australia’s exports. The main domestic uncertainty continues to be the outlook for household consumption, which is being affected by a protracted period of low income growth and declining housing prices. Some pick-up in growth in household disposable income is expected and this should support consumption.

The Australian labour market remains strong. There has been a significant increase in employment, the vacancy rate remains high and there are reports of skills shortages in some areas. Despite these positive developments, there has been little further progress in reducing unemployment over the past six months. The unemployment rate has been broadly steady at around 5 per cent over this time and is expected to remain around this level over the next year or so, before declining a little to 4¾ per cent in 2021. The strong employment growth over the past year or so has led to some pick-up in wages growth, which is a welcome development. Some further lift in wages growth is expected, although this is likely to be a gradual process.

The adjustment in established housing markets is continuing, after the earlier large run-up in prices in some cities. Conditions remain soft and rent inflation remains low. Credit conditions for some borrowers have tightened over the past year or so. At the same time, the demand for credit by investors in the housing market has slowed noticeably as the dynamics of the housing market have changed. Growth in credit extended to owner-occupiers has eased over the past year. Mortgage rates remain low and there is strong competition for borrowers of high credit quality.

The inflation data for the March quarter were noticeably lower than expected and suggest subdued inflationary pressures across much of the economy. Over the year, inflation was 1.3 per cent and, in underlying terms, was 1.6 per cent. Lower housing-related costs and a range of policy decisions affecting administered prices both contributed to this outcome. Looking forward, inflation is expected to pick up, but to do so only gradually. The central scenario is for underlying inflation to be 1¾ per cent this year, 2 per cent in 2020 and a little higher after that. In headline terms, inflation is expected to be around 2 per cent this year, boosted by the recent increase in petrol prices.

The Board judged that it was appropriate to hold the stance of policy unchanged at this meeting. In doing so, it recognised that there was still spare capacity in the economy and that a further improvement in the labour market was likely to be needed for inflation to be consistent with the target. Given this assessment, the Board will be paying close attention to developments in the labour market at its upcoming meetings.

Source: Reserve Bank of Australia, May 7th, 2019

Enquiries

Media and Communications
Secretary’s Department
Reserve Bank of Australia
SYDNEY

Phone: +61 2 9551 9720
Fax: +61 2 9551 8033

Email: rbainfo@rba.gov.au

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Seasonal patterns in shares – should we “sell in May and go away” and what about renewed trade war fears?

Posted On:May 06th, 2019     Posted In:Rss-feed-oliver    Posted By:Provision Wealth

Since late last year share markets have rebounded with US shares up 25% to their recent high, global shares up 22% and Australian shares up 17% as last year’s worries about tightening monetary policy led by the Fed, global growth and trade wars have faded to varying degrees. Following such a strong rebound some have said that maybe it’s now

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Since late last year share markets have rebounded with US shares up 25% to their recent high, global shares up 22% and Australian shares up 17% as last year’s worries about tightening monetary policy led by the Fed, global growth and trade wars have faded to varying degrees. Following such a strong rebound some have said that maybe it’s now time to “sell in May and go away” given the old share market saying. Of course, this is a reference to seasonal pattern in shares.

It’s all seasonal

Seasonal patterns have long been observed in equity markets. Yet, despite the potential they provide for astute investors to profit from them – and in so doing arbitrage them away – they seem to persist. The “January effect” has perhaps been the most famous, where January typically provides the best gains for US stocks, but anticipation of it in recent years has seen it morph into December such that it has become the strongest month of the year for US shares. However, it is part of a broader seasonal pattern, which is positive for shares from around October/November to around May and then weaker from May. This can be seen in the seasonal pattern of average monthly changes in US share prices (using the S&P 500 index) shown in the next chart.

Source: Thomson Reuters, AMP Capital

The key factor behind the seasonal pattern is the regular ebb and flow of investor demand for shares relative to their supply through the course of the year. In the case of US shares the principal drivers of the seasonal pattern are:

  • investors and mutual funds selling losing stocks to realise tax losses (to offset against capital gains) towards the end of the US tax year in September. This is also normally at a time when capital raisings are solid; 

  • investors buying back in November and December at a time when capital raisings wind down into year-end; 

  • which then combines with the tendency for investors to invest bonuses early in the new year, new year optimism as investors refocus on the future, put any disappointments of the past year behind them and down play bad news all at a time when capital raisings are relatively low. The illiquid nature of investment markets around late December and January (due to holidays) makes these effects all the more marked.

The net effect has been that the US share market is relatively weak around the September quarter, strengthens into the new year with January often being the strongest month and then remains solid out to around May by which point new year optimism starts to fade a bit. As noted earlier, in recent years anticipation of the “January effect” has caused buying to pull it forward into December. Calendar year end window dressing by fund managers may have also added to this tendency. Since 1985 US share prices for December have had an average monthly gain of 1.5% monthly gain. This compares to an average monthly gain across all months of 0.76%. By contrast August and September are the weakest months with falls on average.

Consistent with the influence of the US share market on global markets generally, along with specific local influences, this seasonal pattern is also discernible in other countries, including Europe, Asia and Australia. In Australia the January or now December effect is not as dominant as in the US, possibly because tax effects are not relevant in Australia around that time of year. The seasonal pattern for the Australian stock market is shown in the next chart. While the strongest months of the year in the Australian market are April and July, December also tends to provide above average gains. Since 1985, Australian share price gains in December have averaged 2.1%, with April averaging 2.3% and July 2.2%. This compares to an average monthly gain for all months of 0.61%. (Note that the lower average monthly gain for all months in Australia compared to the US partly reflects the fact that a greater proportion of the return from Australian shares comes from a higher dividend yield compared to the US.)

Source: Thomson Reuters, AMP Capital

In Australia, tax loss selling may explain the weakness often observed in May and June and the strength often seen in July, given that the Australian tax year ends in June.

“Sell in May & go away, buy again on St Leger’s Day”

As a result of this monthly behaviour a typical pattern through the year is for stocks to strengthen from around October/November until around May (or July in Australia’s case) of the next year and then weaken into September/October (and November for Australian shares). This seasonal pattern can clearly be seen in the following chart which shows an index for US and Australian shares and the month to month pattern of share prices after the longer term fundamentally driven trend is removed.

Source: Thomson Reuters, AMP Capital

Breaking the year into two six-month periods also reflects this pattern. Since 1970, the average total return (ie, from price gains and dividends) from US shares from end November to end May is more than double that from end May to end November. A similar pattern exists in Australia, Asia and for global shares as shown in the next chart.


Source: Thomson Reuters, AMP Capital

While the US influence may be playing a big role in the continuation of this seasonal pattern in shares, the old saying in its full form of “sell in May and go away, buy again on St Leger’s Day” has its origins in the UK as St Leger’s Day is a UK horse race on the second Saturday in September suggesting that the seasonal pattern in shares dates back to the UK. In fact it may have its origins in crop cycles with grain merchants having to sell their shares at the end of the northern summer to buy the summer crop (which depresses shares around August/September) and they then bought back in after they sold the crop on to mills. Of course, that’s not so relevant to today. So, the explanation discussed earlier explains why it likely persists.

Qualifications

There is no guarantee that seasonal patterns will always prevail. They can be overwhelmed when contrary fundamental influences are strong, so they don’t apply in all years. For example, while Decembers are on average strong months in the US and Australia that wasn’t the case last December and not all years see weakness in the May to October/November period. However, they nevertheless provide a reasonable guide to the monthly rhythm of markets that investors should ideally be aware of. In simplistic terms, around May (and July in Australia) is perhaps not the best time to be piling into shares and around September to November is not the best time to be selling them.

What about now?

For the year as a whole we see shares doing okay. Valuations are okay helped in part by very low bond yields, global growth is expected to improve into the second half of the year and monetary and fiscal policy has become more supportive of markets all of which should support decent gains for share markets through 2019 as a whole.

However, from their December lows, shares – globally and in Australia – have run hard and fast and so are vulnerable to a short-term correction. Still soft global growth indicators and the latest flare up regarding US and China trade could provide triggers.

President Trump’s latest threat to increase the tariff on $US200bn of imports from China from 10% to 25% (delayed from January) and his threat to look at taxing remaining imports from China too suggest that the latest round of US/China trade talks in China did not go as well as planned and looks aimed at putting pressure on China to resolve the talks. Ultimately, we remain of the view that there will be a resolution given the economic damage not doing so would cause, particularly ahead of Trump’s re-election bid next year (US presidents don’t get re-elected when unemployment is rising). But the latest threat adds to the risk of market weakness in the short term, particularly if China delays a trip to the US to continue the negotiations in response to Trump’s threat.

In Australia, uncertainty around the impact of various tax increases if there is a change of Government in the upcoming Federal election could cause short-term nervousness for the Australian share market.

Of course, long term investors should look through all this.

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

 

Source: AMP Capital 06 April 2019

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

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8 things you might need to get sorted when you fly the nest

Posted On:May 03rd, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

If you’re moving out of the family home for the first time, here’s what you need to think about.

So the time has come to think about moving out of the family home.

It’s a big step…take a second to imagine what it will feel like. Playing your music as loud as you want. House guests who can come and go as

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If you’re moving out of the family home for the first time, here’s what you need to think about.

So the time has come to think about moving out of the family home.

It’s a big step…take a second to imagine what it will feel like. Playing your music as loud as you want. House guests who can come and go as you please. Your very own remote control.

But hang on…there’s the washing to consider. And cooking dinner every night. And the bills to pay.

Moving out of home for the first time is exciting. But with freedom comes responsibility. You’re on the hook for a lot of stuff your parents might have been covering, from your nightly entertainment on the goggle box to simply paying for the water that comes out of the taps.

And as well as going solo with all the drudge work like cooking, washing and cleaning, the financial implications of independent living can come as a bit of a shock.

You might be surprised at the number of essentials your parents subsidised over the years. It’s not just keeping them sweet with $50 towards the weekly groceries. It’s everything from the electricity bill to home repairs to running a car.

Checklist when you’re moving out of your parents’ home

If you’re looking to fly the nest, here’s a quick checklist to help you get to grips with life in the big wide world.

1. You might need to land your first full-time job.

To secure an interview, it could be a good idea to review your resume (CV) to make sure it accurately reflects and presents your experience and potential. Check out this helpful guide to grabbing the reader’s attention in six seconds. And as always, be sensible with social media and don’t upload anything that is going to cruel your chances with future employers. Once you’re at the interview you’d be amazed at how much difference the simple things make.

  • Arrive with plenty of time to sit down and prepare for what you’re going to say.

  • Add some colour to what you plan to wear to stand out—but not too much so you’re over-dressing.

  • Prepare a few answers to the most important topics as interviewers often repeat the same question1.

2. You might need to find your first apartment.

If you’re looking to rent, make sure you read the small print of your contract so that you know your rights and obligations.

  • How much notice does your landlord need to give to turf you out?

  • And how much notice do you need to give if you want to move on?

  • Have you met your prospective housemates if you’re looking at a shared house?

  • What are your rights – will the landlord cover repairs and maintenance?

  • Can you move your pet cat in or redo the bedroom colour scheme?

  • What’s the process for paying the rent and what happens if you’re late?

3. You might need to furnish your pad.

Maybe your parents or other family members are keen to get rid of some old furniture. Alternatively, it’s amazing what you can find on eBay and Gumtree at knockdown prices. It doesn’t need to be in mint condition…you’re furnishing your first pad, not auditioning for The Block.

4. You might need to set up a broadband contract.

Until now you might have benefited from your parents’ telco setup. But now you might need to open your own home internet and telco account for the first time. While a landline might be a bit old school, super-fast broadband these days is seen as a necessity and doesn’t always come cheap. Try shopping around and seeing if you can bundle your broadband with your existing mobile phone plan. And it doesn’t stop at broadband. You might need to work out if Netflix, Stan or Foxtel is a necessity or a luxury you can live without…or share the costs with your housemates or partner.

5. You might need to own a car for the first time.

It’s great if you can commute to work by public transport but not everyone is near a train station, a bus stop or a bike path. The reality is that you may need to get around in your own car. If you’re buying a car, make sure the vehicle is roadworthy so you don’t have any nasty surprises. You can always negotiate on price or walk away so don’t feel rushed into buying a lemon. And running a car doesn’t come cheap. Rego, insurance, fuel, repairs, maintenance…it all needs to be paid for so make sure you factor it into your budget.

6. You might need to connect and pay for utilities.

It could depend on your rental contract but you may have to cover utilities like water, gas and electricity – all the boring stuff but kinda necessary for a functioning household. In your parents’ day, there was generally one option for utilities…it wasn’t the Soviet Union but it was close. These days there are plenty of plans out there so there’s no excuse for not shopping around for the best deal.

7. You might need to budget for groceries for the first time.

Even if you’ve been helping the olds with the weekly shopping, it could come as a shock to cover your entire grocery bill for the first time. Look out for specials at the supermarket and stock up on staples when they’re cheap. You might want to think about cutting down on takeaways and having friends round to eat in rather than eating out.

8. You might need to think about how much you spend, how much you save and even how much you invest.

Now you’ve moved out of the parents’ home, there’s probably even less excuse to blow your monthly savings on a round of cocktails at the local dive bar. But flying solo financially involves a bit more than just avoiding excess. It sounds basic, but if you can get a handle on the three areas—what’s coming in, what’s going out and what you can save—it’s the key to developing healthy money habits throughout your working life. 

Please contact us on on |PHONE| if we can be of assistance 

Source : April 2019 

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.

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