Posts Tagged ‘building more wealth’

Insurance in super – is your cover adequate?

Friday, January 5th, 2018

If you’ve got super, you probably have some life insurance included. It’s an easy way to get a basic level of cover, but is it enough to give you and your family true peace of mind?

More than 70% of Australians hold life insurance policies, and more than 13.5 million separate policies, through their super funds.¹ Yet despite this, under-insurance remains a huge problem in Australia.

Rice Warner estimates that the median level of life cover in super meets only 60% of the basic needs for the average household, and less for families with children. The position is even worse where total and permanent disability (TPD) and income protection cover are concerned. The median level of cover in super will provide just 13% of TPD needs, and 17% of income protection needs.

Of course, some insurance is better than no insurance, and insurance in super is convenient to set up and pay for. But it comes with a couple of points to be aware of, and this is where professional advice is invaluable.

Limited cover

Firstly, a portion of your super is used to pay the insurance premium. This can help your cash flow if money is tight, but it also means you may not be contributing as much to your retirement savings as you thought.

It’s also worth keeping in mind that super funds offer standardised ‘off the shelf’ policies that may not suit your needs. This helps keep costs down, but that’s no consolation if your policy falls short when you need it most.

Because the insurer pays your super fund which then pays you, it may take longer to receive the money. What’s more, unless you make a binding nomination, the fund trustees have the ultimate say in who receives benefits when you die. Your beneficiaries may also be taxed more heavily than they would if you held the insurance outside super.

A tailored solution

Your insurance needs are as individual as you are, and should be reviewed regularly along with your other financial affairs. Whenever your circumstances change – if you marry, have a child, or buy a new home for instance – your life insurance should be reviewed.

It’s easy to underestimate what it would cost to ensure your family is able to maintain their current lifestyle, come what may. It’s important not to forget partners who don’t earn an income and may not necessarily have cover in their super, particularly where dependent children are involved.

Take the example of Mark, whose wife Suzy, 43, passed away suddenly after an illness. Thankfully, the couple had arranged a full suite of insurance cover in and outside their super. Mark claimed on Suzy’s life insurance which covered his mortgage, credit card and car loan repayments; it also allowed him to hire a part-time nanny to help with their two children.

Getting additional insurance outside super can be a little more expensive, but you will have access to a wider range of policies that can be tailored to your individual needs. Some policies, such as Trauma insurance, can only be bought outside super.

Even if you have some level of cover inside super, it’s important to do your sums to work out exactly how much your family would need to maintain your current lifestyle if you or your partner were to die or become seriously ill. It may take a little time, but with so much at stake, guesstimates won’t do, and we would be only too happy to assist. 

¹ Ricewarner, Insurance through superannuation, 20 April 2016.

Article by TAL

The benefits of consolidating your super

Friday, January 5th, 2018

If you’ve had a few jobs over the years, it’s possible that you’ve got a few different super funds with small balances in each. It’s easy to forget all about them until the annual statements arrive, but the sudden influx of paperwork can often leave you feeling dazed and confused.

The Australian Securities and Investment Commission reports that there are billions of dollars sitting in unclaimed or “lost” superannuation accounts as at 1 January 2017, with thousands more accounts added to the list each month. Inactive accounts with balances of less than $6,000 are transferred to the ATO, so if you think you might have some old superannuation accounts, don’t hand it over the government, claim it!

This year, instead of ‘filing’ your statements in the bottom drawer and forgetting all about it until next year, take the plunge and consider consolidating your accounts. That way, you’ll be saving fees, reducing your paperwork, and making it easier to keep track of arguably one of the most valuable investments you’ll ever make – your retirement savings.

Here’s a few steps to get you on your way:

Choose your fund – talk to us so we can sit down and help you decide which super fund is best for you.

Check your insurance – before you start closing your accounts, we can help you make sure your insurance needs are covered in your chosen fund.

Advise your employer – make sure your employer knows where to pay your super guarantee contributions – speak to your payroll or HR about any paperwork they may need from you or your fund.

Rollover your other accounts to your chosen fund – you can do this online through the myGov website, or you can transfer your super by using a form and sending it to your chosen fund. Some funds have an online process for combining your super too, so it’s a good idea to check what’s going to be easiest.

Visit the SuperSeeker service at www.ato.gov.au or via your MyGov account at www.my.gov.au for more info.

As always, we’re here to help, you so if you’d like to talk this though, give us a call. We would love the opportunity to assist you in your journey to a better financial future.

Article by TAL

Relationship Capital: An Advice Practice’s Most Valuable Balance Sheet Asset

Monday, August 21st, 2017

An article from Riskinfo E Magazine that highlights the most valuable asset for any business that is often overlooked when looking at the Value of the business, but in reality is the platform on which any good business should be built. It’s about Trust, integrity, and relationships – something we at Active Wealth Managers firmly believe in and practice.

When we think of business capital, it is done in financial terms, for without this asset it is impossible for an advice focussed enterprise to operate or grow.

Mentor Education argues that ‘relationship capital’ is equally vital. In fact, it is the foundation for developing new markets (and clients) – and a quick glance at the financial statements will reveal how much of this asset a business has.

Business isn’t a spectator sport, and how well you develop and nurture relationship capital will define and play a major role in its financial success…or failure.

Building relationship capital

Developing strong relationship capital is a business strategy that’s often overlooked and even approached in a superficial or tokenistic manner.

It’s the relationship capital of your people that combine to become the reputational capital of your business.

But the effort put into building good relationship capital is one of the most cost- effective strategies with potential to deliver extraordinary outcomes.

It takes thought, practice, and the right attitude to get it right with the key focus being trust, sincerity, honesty, integrity and dependability – that when combined create the business culture, and in turn the reputation capital.

The practice principal and key personnel of an advice business build culture over time, as a result of their daily activities and interactions. It’s the relationship capital of your people that combine to become the reputational capital of your business.

When people think of ‘networking’, they often do so through a very narrow prism of networking events, adding contacts to a database, having meetings, etc.

In order to build relationship and reputational capital, a broader view is required.

With every P2P interaction – client, employee, the local café cashier – you’re engaging with people in your network, and the manner in which you speak and engage with each and every one is either contributing to or deducting from, your relationship capital.

Therefore, choose words, topics, and your thoughts carefully.

How many interactions have we all experienced with people that were lazy, argumentative or patronising in the way they sought or articulated information?  Those people are undermining their personal and commercial capital, one careless and thoughtless interaction at a time.

We are all brokers of information, and the quality of the information is determined by us, and how well we deliver it.

Networking and engaging with other people is something that deserves more thought and preparation than many people give it. To be successful and effective it must be strategic and tactical in its application and purpose.

If you’re going to put time into networking, you must also put in the effort required to maximise the opportunities and outcomes.

Time isn’t money – relationships are money

Reflect on those significant client win successes: was it related to the number of hours worked each week on the proposal, or was it the rapport and depth of relationship and trust developed with the client?Developing relationships demands a significant time investment, but it’s the quality of the relationships – and the amount of relationship capital developed – that you’ll be able to take to the bank!

The extent to which positive, trusting and solid relationships are built will ultimately be reflected in the balance sheet.

Remember, people can open doors for you, but you must walk through them to find the opportunity. No matter how many networking events you attend, only you can build relationships with the people you meet.

It’s important to understand the opportunity cost to you of not networking well

The cost of not getting it right

Some might say that it’s difficult to measure the success of networking and building relationship capital. I would argue that measuring your success in these areas is as easy as looking at the financial statements of your advice practice.

It takes time to develop good relationship capital, but it’s important to understand the opportunity cost to you of not networking well and failing to develop that capital.

Relationship capital grows into reputation capital for your advice business over time. If you view this type of capital as an asset, you’ll see the sense in growing and protecting it. And as it starts to increase, you’ll see a corresponding increase in opportunities, and in your financial statements.

If you’re a reluctant networker, let me leave you with these two quotes:

“Life isn’t about finding yourself. Life is about creating yourself.” (George Bernard Shaw)

“Death is not the greatest loss in life. The greatest loss is what dies inside us while we live.” (Norman Cousins)

 

Article from Riskinfo E Magazine

Issued by Mentor Education RTO 21683: www.mentor.edu.au

New year, new start

Monday, March 13th, 2017

how to make New Year’s resolutions that stick

How many of last year’s New Year’s resolutions did you keep? If you can’t even remember them all a year later, let alone whether you stuck to them, you’re not alone. One survey found that 58% of Aussies break their resolutions within the year. And 15% of those do so because they forgot what they promised they’d do in the first place.i

That doesn’t mean that you can’t set and achieve things you actually want. You just have to be smart about the way you do it.

Turn visions in to goals

When someone asks you to picture your ideal lifestyle, what you see in your head is actually a collection of dozens of different goals. It’s important to break it down and articulate those goals if you want your vision to become a reality.

This is easier than it sounds. Just say you want to ‘enjoy life more’. To make a start on this, you could write down a list of social activities and hobbies you love doing or would really like to try. Then turn each one in to a task that fits with your schedule and can be planned ahead of time, like ‘Make a date with a friend twice a week’ or ‘Book in for an evening class every month’. If your schedule is jam packed, set corresponding time management goals like ‘Leave work on time at least 3 out of 5 days’.

Tell people

Think of your friends and family as your cheerleaders and supporters in reaching your goals. If you tell them what you’re aiming for and why, they’ll be better able to help you. They might even be able to join you on your way. For example, if you decide you want to lose weight and get fitter, ask around for a gym buddy or someone to join you on walks. Or if you’re ready to make a change in your career, start putting the word out amongst your network, that you’re open to new opportunities.

Give yourself (the right amount of) time

Yearly goals, especially ongoing ones, can be hard to keep track of. Try to work out a reasonable time frame for your goal. Some small things might be quicker, and feel less significant – but you can always build on your results. And some things just take time. For example, you’re unlikely to save up for a new car or lose 20 kilos in a month. But you might lose two kilos, or save X-percent of the amount you need. Consultant Todd Herman reckons the ideal time frame for the brain to plan around is 90 days, and that it’s better to do a series of goals ‘sprints’ rather than one long marathon.

Keep track of your progress

If you’re the kind of person who uses to-do lists – on paper, in an app, or in project management software – you’ll know how satisfying it is to tick something off. If you’re not in the habit of keeping lists, now is the time to start. Your list shouldn’t just be one point – your resolution with a check box next to it. Break it down in to smaller milestones. Say you’ve resolved to improve your diet – set yourself little achievements like ‘went a whole week without eating favourite junk food’. To make it fun, try a smart phone game like Habitica.ii

Don’t wait ‘til December 31st

It might be a New Year tradition, but you don’t have to wait for one particular time of year to set goals and resolve to change your life. With the right attitude and a bit of planning, you can start working your way towards a goal any time.

Speaking of this, we’re here to help you set and achieve your money-related goals. Don’t wait for an annual appointment to chat; drop us a line any time, we’d love to hear from you!

i. finder.com.au, Be a geek and live in Tasmania: How to win at New Year’s resolutions

ii. Habitica

General Advice Warning This information is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. Michael J Berinson Pty Ltd strongly suggests that no person should act specifically on the basis of the information contained herein but should seek appropriate professional advice based upon their own personal circumstances. Although we consider the sources for this material reliable, no warranty is given and no liability is accepted for any statement or opinion or for any error or omission.

Tips to Manage Your Money Better

Monday, February 22nd, 2016

risk management perth

Money management has become more important than ever. Our economy is always changing, so being able to save some money is a useful skill to have. Our tips below will ensure you will be able to save some of your valuable money and ensure you have some money aside to deal with difficult economic times should they arise.

Getting Your Budget Right

The first and most important aspect of money management is budgeting. Not everyone is willing to create a budget as many people feel it limits them considerably; however creating a budget plan is not a negative thing, especially when it’s done correctly.

The first step in creating a budget plan is to record your income and expenses for a month. Don’t make any changes to your regular spending habits to ensure you get the most accurate data possible. The data you acquire from this task will form the basis of your budget plan and will give you an overview of expenses you could do without.

Spend Your Money Wisely

Now that you have your list of expenses, you can see exactly where your money is going and look at ways to reduce your expenses where possible. Bills can pile up quite quickly and before you know it, you’ve already gone through most of your income. By managing your bills, you can start spending your money more wisely.

Looking at bills is an essential part of money management. It can provide you with insight into the services you are paying for. If you believe you could save some money by getting a better deal, your bills will be the best starting point.

Reducing Debts Quickly

Debt can have a devastating impact on your money management, so it is essential to take care of any existing debt as quickly as possible.

Before you create your debt recovery plan, you need to take a look at all the debt you currently have. Find out how much you need to repay monthly and how much income you have coming in. A big tip is to minimise the use of your credit card and always pay debt off quickly so you avoid paying too much interest.

Be Realistic about Money

When you implement your budget plan, it is very important to be realistic and don’t set goals that aren’t achievable.

Some people find it difficult to live within their budget, possibly due to a credit card debt or another repayment that is affecting their living expenses. If this is the case, there are other options available and you can always seek expert advice if you are having difficulty sticking to your budget.

Save for a Rainy Day

As mentioned earlier, saving is the key to a secure financial future. By setting a budget, reducing your debts and spending your money wisely, saving money will become a lot easier.

Saving for the future is one reason why people decide to implement a money management plan; however you can also implement a money management plan for a specific goal. For instance, you may be saving for a deposit on a new home or you may want to buy a new car.

Excerpt of article from Wealth Professional

Mortgage paid? Now it’s time to build wealth for the future

Saturday, January 16th, 2016

It’s like buying $100 worth of apples every week — you get more when they’re cheap, so you end up with more cheap apples than expensive ones. Then, if apples go up in price, you’re investment should be worth more than you paid for it.

With your mortgage finally paid off, you can think about building more wealth for tomorrow.

Here are three ways:

1. Invest regularly in managed funds

Paying off a mortgage teaches you the healthy financial habit of investing a set amount each month. So, now the house is paid off, why not keep up that discipline with a regular investment into a managed fund?

Managed funds can help you gain exposure to a diverse range of assets, even for a relatively small investment. You’ll also get the benefit of the expertise of the fund manager who selects and manages the investments — so there’s no need to research and choose stocks yourself.

By regularly investing the same amount of money over time, you’ll be employing a strategy known as ’dollar cost averaging’. Because you automatically buy more units in the fund when prices are low, and fewer when they’re high, your average cost per unit is reduced, increasing your potential for profit.

It’s like buying $100 worth of apples every week — you get more when they’re cheap, so you end up with more cheap apples than expensive ones. Then, if apples go up in price, you’re investment should be worth more than you paid for it. However, the cost of apples will go up and down.

2. Salary sacrifice into super

Another good place to invest some of your income into your super, through a salary sacrifice arrangement.

It’s easy to do — simply arrange for your employer (if this option is available) to pay part of your pre-tax salary into your super, along with the compulsory superannuation guarantee super payments they already make.

Salary sacrifice may also be a very tax-effective strategy. That’s because it comes out of your pre-tax earnings, which means it may lower your assessable income. As a result, you could pay less income tax each year, while building your retirement savings.

What’s more, the money you salary sacrifice to your fund is taxed at just 15% within super. So if you’re in a higher tax bracket — for example, if you’re paying a marginal rate of 46.5% tax — this could reduce the tax you pay on this money by 31.5%.

3. Diversify into other types of investment

Many Australians like to put money into investment properties. And there’s no question that this could be a great investment, with potential capital growth and rental income. But don’t forget the importance of diversification, spreading your investments across a range of assets, markets and industries — including overseas.

For example, international shares can give you exposure to rapidly growing emerging markets, such as China, Russia and India. You can also enjoy access to the developed markets, and some of the world’s most successful companies.

You may also want to consider investing in fixed interest assets, like term deposits or bonds, for more predictable returns.

Or if you are keen to stay in property, indirect investment property is another option. By pooling your money with other investors into a property fund, you can gain exposure to commercial or overseas property, at a lower cost than investing directly.

If that all sounds too hard, there are plenty of managed funds to choose from, that can provide instant diversification — without having to do the legwork yourself.

Making your money work for you

Investing can be complex, and everyone’s financial situation is different. So it’s important to get the right financial advice. A financial adviser can work with you to determine the most tax-effective investment to make the most of your surplus cash.

Source: Colonial First State