Posts Tagged ‘managing money’

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

Economic Update – January 2018

Friday, January 5th, 2018

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

2018 shaping up as another good year for investors

– Global growth co-ordinated
– United States (US) tax reform
– Strong jobs growth in Australia

We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact your Financial Adviser.

The Big Picture

After almost a decade of economic woes around the world, all the major economies are starting to come good together.

China, as we expected, not only stayed strong, it also gathered a little pace towards the end of 2017. The US certainly gathered momentum finishing the year at a rate of 3.2% pa.
Even Europe is looking strong, but the big surprise is the way that the third largest economy, Japan, has at last put five strong quarters back to back.

When growth is co-ordinated like this, it is much harder for any individual country to fall into recession anytime soon.

But the prospects for 2018 became even better after Trump got his tax reform through at the eleventh hour. It is doubtful if analysts have yet fully digested the consequences. It may well be that macro and market forecasts will be revised upwards in the next few months.

Citi produces a ‘surprise index’ for many major countries. It is based on how often analysts’ forecasts are beaten by the actual events. The US index stands at a reading of +73 which is a six-year high. The Australian index stands at 10.9! We keep thinking things are better than they really are.

Global growth is likely to keep us well out of recession, but we are likely to continue to underperform. Our jobs creation has been strong all year – largely because of immigration. Our unemployment rate stubbornly stands at a moderately high 5.4%

The Westpac consumer sentiment index stands at just above 100, but that is only for the second month this year. NAB’s business conditions and confidence indexes however, remain consistently strong.

Major share markets did well around the world with Wall Street being the stand-out performer. But Australia didn’t do too badly after a bad reaction to various bank inquiries. The ASX 200 posted growth of over 13% over 2017 when dividends and franking credits are factored in.

There are a number of things to watch out for in 2018. The Brexit negotiations between Britain and Europe are progressing without any major problems so far. The new US Federal Reserve chairman looks set to make two or three rate hikes, while our RBA is not expected to move in 2018.

Our Royal Commission into Financial Services might cause some angst, depending how press releases are handled.

The more difficult possibility to assess is Trump’s wish to commence a big infrastructure programme. In the election campaign he was talking about a trillion-dollar deal, but that has since been scaled back to 200-300 billion dollars. With tax reform behind him, we should see some movement on this front in January.

The ASX 200 closed at the highest level since December 2007 on the penultimate trading day of 2017, and we see growth of about 5% in 2018 – but that means that the November 2007 peak is unlikely to be surpassed this coming year.

We see strong growth continuing on Wall Street in 2018. But, if analysts revise earnings forecasts upwards in January based on company tax cuts, we might see very strong growth in the first half of the year.

On the commodities front, copper, gold and oil prices did well in 2017. It would be sufficient for our resources sector to have a good 2018 if these prices just hold over 2018.

In conclusion, we see it unnecessary to take on extra risks in 2018 to chase returns. Volatility on share markets was unusually low in 2017, and that is expected to continue for the foreseeable future.

We wish you all a safe and prosperous New Year.

Asset Classes

Australian Equities

Our market was seemingly stuck in a tight range from mid-2017 but then it blasted through 6,000 at last – and it even finished 2017 above that psychological barrier.

The Resources sector led the charge in December to give the broader index a boost of 1.6% for the month.

The Financials sector was down slightly for the year, but there were outstanding double digit returns to be had in all other sectors except for Property, Telcos and Utilities.

The February reporting season is only just around the corner, so this is the time for companies to ‘confess’ if they are likely to miss their guidance for earnings. We found analysts have started revising their forecasts in an upwards direction for the last month or two. Therefore, we are expecting a good “report card” in February.

Foreign Equities

The S&P 500 index recorded another positive month in December making it 12 in a row for 2017 and the first time on record! We do not, however, think the market is over-priced by more than two or three percent.

2017 market growth has been dominated by the big tech companies. Some are looking to Amazon to become ‘master of the universe’ by establishing a major presence across a broad array of industries.

The strong Japan economy has supported its Nikkei index to record near 20% growth in 2017.

Bonds and Interest Rates

The RBA was on hold again and is unlikely to raise rates before the end of 2018. Indeed, another cut is quite possible before the next hike.

The Fed hiked rates in December, making it three for the year. Their so-called ‘dot plots’ show that they collectively expect three more hikes in 2018, but the market has only priced in two. The Fed is unlikely to want to risk too much so two is much more likely than four. US inflation is still below target.

Other Assets

Oil and copper prices were firmly higher in 2017. Iron ore prices were down on the year, but staged a very strong comeback, returning 36% from the lows experienced throughout the year.

Regional Analysis

Australia

Over 60,000 new jobs were created in November – the latest published data point – and two-thirds of them were full-time. However, the unemployment rate was stuck at 5.4%.

Around 1,000 jobs were created on each day of the year (on average), but it seems much of this was matched by immigration flows. Price and wage inflation are also stuck at below target rates. However, we at last got a better than expected growth in retail sales (+0.5% against 0.3%).

The government presented its mid-year report card (“MYEFO”) in December, which argues the deficit is better than that which had been previously expected.

China

China has reportedly been spotted exporting oil to North Korea which got Trump’s hackles up. But other than that, there is less reported bad news about China’s economy. Of course, any developing economy starts to slow gradually as it reaches economic maturity.

We do not see China’s economy being a problem for us in 2018.

US

After a bumpy ride, a tax reform bill passed through Congress giving Trump one victory for 2017.

The infrastructure programme could be even trickier to get through, as the size of it will require a public/private joint venture. That means the private sector will have a big say on which projects start first. That will put the Democrats off-side as they always want to lead with the public interest.

If the bill makes some progress in 2018, the US economy looks set for continued growth for a few years to come.

Europe

Greece finally came out of recession in December! While the European Union as a whole still has some problems to work through – notably Brexit – the general mood appears to be positive.

Rest of the World

Japan’s Q3 growth figure was revised upwards to 2.5% from 1.4%.

Article by Ron Bewley for Infocus Money Management

Are you over 30? You need to read this…

Monday, August 21st, 2017

Superannuation is, and will continue to be, a hot topic in the financial advice industry. No matter what your age, once you begin your working life superannuation should be in the back of your mind, but MoneyTalk magazine have uncovered some confronting statistics that it’s worth thinking about if you’re around the age of 30.

If you’re 30 years old today, you have 35 years left in the workforce and need to save enough superannuation to fund you for 35 years of retirement. Now, many of you may be thinking – ‘Hold on a minute, I don’t need to save for that many years!’ well, with the ever increasing medical improvements you just might. The median age of death is increasing by 0.6 years every year, and currently sits at age 84. If this rate continues, by the time today’s 65 year old’s reach their mid 80’s, life expectancy could have been bumped up to around 94 years old!

If you’re in your 30’s or 40’s today, it’s not unlikely that you could need to fund your retirement until the age of 100 – an intimidating prospect for many. If you’re going to live to 100, and only work until you’re 65 it is estimated that you’ll need a nest egg of $3,000,000 – but how are you going to achieve this?

1. Review your superannuation fund now

When reviewing your superannuation fund, take a detailed look at the investment returns and any fees to be paid. Take special notice of tax being deducted from your account before payment needs to be made, this can equate to thousands of dollars’ worth of lost investment returns over the years.

2. Consider making extra contributions

The younger you start contributing extra funds to your superannuation account, the better off you will be. However, there are strict limitations of how much money you can contribute to your fund, and in what capacity you can contribute- familiarise yourself with these rules so as to avoid any mistakes.

3. Build up non-superannuation investments

Think about bettering your financial situation as a whole, rather than focusing solely on your superannuation. Think of how best to build your investments outside of your superannuation, with a view to eventually transferring them into your super in the most tax efficient way. You Financial Adviser can help you to plan this out.

4. Consider gearing

Borrowing to invest money is not suitable for everyone, be sure to speak to you Financial Adviser if you are considering this as an option to boost your superannuation. If done correctly, gearing can be used both inside and outside superannuation.

No matter what your current age, you must consider and plan for your financial future – invest your time as well as your money into superannuation planning.

Source: Money Matters Magazine, December 2016.

An article by Infocus Securities

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.

How to know if it’s time to review your insurance cover

Friday, April 22nd, 2016

Silhouette of Couple looking in to the distance as part of a jigsaw

It’s the last thing you think of until you need it the most, but signing up for adequate insurance is one of the most important steps you may ever take to carry you, and your dependants (if you have them), through the uncertain future. Take our test to find out if you’re protected.

1. Do you have enough life insurance?

Advocates say you should insure yourself for 10 times your salary – you need enough life cover to handle debts and education costs; to pay for all the various things your dependants will require; and to provide an income stream.

2. Do you have the right cover?

If cash flow is a problem, consider boosting your insurance cover inside superannuation where premiums come from your accumulated retirement savings or employer contributions. Your super fund is required by law to give you coverage, but the average life cover is just under $190,000. If your nominated loved ones are not tax dependants (such as a spouse or a child under 18), they may incur taxes on any payout.

3. Do you have Total and Permanent Disability (TPD) cover?

Could you and your family cope if you were incapacitated and couldn’t work? Remember to bear in mind the cost of any home modifications needed or payment for ongoing treatment.

4. Have you nominated your dependants?

If you take life cover inside your super, consider making binding death nominations to ensure your intended recipient gets the payout. Remember, these have to be updated every three years. If they aren’t, the trustees of your fund can exercise their discretion in deciding who gets your money. And no one wants that.

5. Does your life insurance policy have a terminal illness clause?

Many policies will pay out early if you are diagnosed with a terminal illness and less than 12 months to live. Payouts can vary from the entire amount made upon death, to a pre-determined limit. Not all policies offer this benefit, including some insurance cover provided via super.

6. Is your income protected?

Income protection policies usually cover you for 75 per cent of what you earn, either for two or five-year periods, or up to age 60 or 65. The suggested monthly payout for someone earning $55,000 a year is $3500.

7. Do you have a disaster fund?

This is to cover you for any period before insurance pays out. Six months of salary is a good figure to have set aside in a disaster fund. Applications for income protection can take more than half a year to process. Accessing insurance in superannuation can also take that much time. Covering yourself to bridge such a gap may be wise.

8. Is your home adequately insured?

If you own your home, make sure you have enough cover for it.
Insurers’ websites offer calculators to determine rebuilding costs, including interim accommodation, rubbish removal and inspections, but their estimates can vary, so use one of those that asks for the most detail.

9. Are your contents covered?

Even if you don’t own your home, you need to cover everything inside it – which may be worth more than you think. Policies can offer different options, such as the ability to insure individual items while travelling overseas and new-for-old replacement. Also, check you have liability coverage for incidents that may occur inside and outside your home.

10. Is your car comprehensively insured?

Third-party insurance will cover damage to other cars, but not your own. Comprehensive car insurance covers everything.

The verdict:

• 3 NOs = be alert
• 4 NOs = be slightly alarmed
• 5 NOs = it might be a good idea to sit down with your loved ones and review your insurance cover.

You should be doing this every year or at worst every three years to ensure your cover continues to meet your circumstances, financial needs and objectives . Even if you have no children, but do have a home loan, your mortgage is probably not the only legacy you’d like to leave behind.

An article by PENNY PRYOR Smart Investor

So come see us while this is fresh in your mind, and have this important discussion, so you can have peace of mind, knowing that you have in place a plan for the future.

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