Viewing posts from: June 2016

10 Smart Saving Tips For The New Financial Year

All / 30.06.20160 comments

10 Smart Saving Tips For The New Financial Year

The new financial year is almost here. It’s nearly time to dig out the receipts and book an appointment with your accountant. Tax time is also a good opportunity to review your current financial situation and put a plan in place for the next 12 months.

Sorting out your finances doesn’t have to be complicated, as even small savings can add up over the year.

Here are 10 tips to help you get started.

  • Tip 1 – Write down your financial goals and current spending
  • Tip 2 – Make a list of your wants and needs
  • Tip 3 – Build a budget
  • Tip 4 – Track your spending
  • Tip 5 – Review your plans
  • Tip 6 – Sort out your super
  • Tip 7 – Check your investments
  • Tip 8 – Make insurance more cost effective
  • Tip 9 – Pay off debt
  • Tip 10 – Speak to a financial professional

 

Write down your financial goals and current spending

Make a note of where you’d like your finances to be this time next year. Now jot down your income and expenses for the last month. How much is left over? Are your goals realistic? It’s only by taking a close look at your current financial situation that you can begin to take control of it.

Make a list of your lifestyle wants and needs

With the new average Australian lifestyle now more affluent than it used to be (1), it appears many of the things that used to be considered to be ‘wants’ are fast becoming ‘needs’. If you want to save or invest more money this new financial year, you may need to consider whether there is anything that you’re willing to sacrifice to get ahead. Could you live without that overseas trip? Do you really need to update your smartphone again? It all adds up.

Build a budget

To ensure you’re getting the most from your money, you’ll need to build and stick to a budget. Balance is key here. If you make your budget too restrictive you’ll likely break it. Alternatively, if you make it too light you might miss out on some financial benefits. And don’t worry if you’re not a fan of spreadsheets; there are a range of digital tools to help you organise your finances.

Track your spending

Once you have a budget, it’s important you stick to it. That means tracking your expenses. A great way to do this is to use a digital money tracker. These are available either through online banking or as a standalone app for smartphones and tablets.

Review your plans

The new financial year is an ideal time to review your regular monthly plans to ensure you’re getting the best possible value for your money. There are a range of sites that provide direct comparisons of different suppliers offering mobile phone, internet, pay TV and utilities plans.

Sort out your super

If you haven’t sorted out your super yet, now is a good time to do it. If you have multiple super accounts, finding and consolidating them in the one account could help you cut down on fees and grow your money faster with compound interest.
To boost your balance, consider setting up additional regular contributions. Depending on your salary, you may even qualify for government co-contributions.

Consider the caps

Before you decide to invest more in super, you need to be aware that caps apply to different contribution types and penalties may be payable if you exceed the relevant cap. You also need to consider that super contributions generally can’t be accessed until you retire. So if you’re saving for something else, you’ll need to consider other options.

Check your investments

Make checking the performance of your investments an annual ritual. Check that your asset allocation and level of risk are appropriate for your age and plans. A financial adviser can help you understand and manage your portfolio more effectively.

Make insurance more cost effective

There are ways of setting up personal insurance so it’s more affordable and may be more tax-effective. This can include purchasing your insurance through your super fund.

Buying insurance through super can be cheaper than buying it outside super. Also, it could be possible to have the premiums deducted from your superannuation account balance, without making contributions to cover the cost.

In some cases, you may be eligible for a discount if you pay your premiums annually rather than monthly and holding all your personal insurances in the one policy can reduce fees. Savings can also be made by consolidating the insurances held by yourself and family members into one policy.

Pay off debt

If you’re paying off multiple debts with a range of interest rates, you should consider the appropriateness of prioritising paying down the debt with the highest interest (while continuing to meet your repayment obligations in relation to your other debts).

Alternatively, you may be able to combine your debts with a debt consolidation loan. If you can continue to make the same level of repayments, this may significantly reduce the amount of total interest payable and help you pay off your debt sooner.

Speak to a financial adviser

The investment market, taxation rules and government regulations change frequently, so unless you’re a financial professional, chances are you’ll need help to navigate them.

If you have a financial adviser and accountant, now is the time to book an appointment to discuss your investment performance and plans for the year ahead. Your advisers can help ensure you receive all the benefits you’re entitled to while supporting you to grow and manage your portfolio.

If you don’t have a financial adviser, take this opportunity to arrange an initial appointment. Meeting with a financial adviser is a positive experience, and the benefits of a tailored financial plan can add up substantially over your lifetime. All you’ll need for your first meeting is photo ID, relevant financial statements, details of your assets and liabilities and an hour or so to discuss your financial goals.

Important information

Information is current as at 01/06/2016 and may change. Please keep in mind that the above links are provided for information purposes only. You will need to make your own judgement about the reliability of the information contained in the above.

 
(1) MLC and IPSOS, Australia Today, Feb 2016.
Source: MLC

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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SMSFs: The Five Essential Facts

All / 23.06.20160 comments

SMSFs: The Five Essential Facts

Self-managed super funds (SMSFs) remain a popular vehicle for investors to build their retirement savings. According to the Australian Taxation Office (ATO), 99.5 per cent of all super funds are SMSFs. A total of 29 per cent of the $2 trillion in super fund assets are in SMSFs and the average SMSF balance now exceeds $1 million.

While SMSFs are a great option for people who have the time and inclination to manage their super themselves, it pays to be aware of the basics before deciding to open your own fund.

1. Meeting the sole purpose test

Every SMSF must meet the sole purpose test. This means the fund must only be run to provide income in retirement for members. Funds that don’t meet this test won’t be able to receive concessional taxation benefits that apply to super fund assets.

If the ATO does form the view the assets in the SMSF do not meet the sole purpose test it could impose civil or criminal penalties on the fund members.

2. Ensuring the fund meets compliance requirements

There are strict rules every SMSF fund member must meet to ensure the fund complies with regulatory requirements.
These include ensuring either a corporate or individual trustee is appointed to the fund, creating a trust and a trust deed to determine how the fund is administered and recording members’ tax file numbers.
The ATO can take various steps to ensure funds found not to be compliant are brought into line with its requirements. For instance, the ATO might require members to undertake education and training. Serious breaches might lead to the ATO freezing the assets in the fund.

3. Preparing an investment goal and strategy

Every fund should have a clearly articulated, written investment strategy and goal. This will set out the performance expectations of the fund and the objectives the fund is designed to meet.

For instance a goal might be for the fund to have $1 million in assets before the members retire. The investment strategy will set out the types of investments and asset classes in which the fund can invest. These two documents act as a blueprint for how the fund should be run.

4. Ongoing monitoring

All SMSF members are required to monitor how the fund is tracking against its investment goals and objectives on an ongoing basis.

This is especially important when the fund members’ circumstances change. If a member retires, receives a redundancy or contracts a serious illness, for instance, the goal and investment strategy must be amended to take this into consideration.

5. Seeking advice

Even if you want to take responsibility for your own superannuation, it’s still important to seek advice. This will help to ensure the fund meets regulatory requirements and to ensure assets are positioned to maximise members’ wealth in retirement.
To find out how we can help to ensure you are making the most of the assets in your SMSF, and at the same time stay within the law, please contact TNR Wealth today.

 

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Baby Boomers Need To Get Their Financial House In Order

All / 16.06.20160 comments

Baby Boomers Need To Get Their Financial House In Order

New research by super fund REST has found younger people are concerned about their financial future and worried they will have to support their parents in retirement.

REST surveyed (1) 1000 people between the ages of 18 and 34 – the group known as the ‘Millennials’ – in early 2016 and found 30 per cent said they were concerned they would have to give up work to look after their Baby Boomer parents.

While this finding is troubling, there are plenty of steps Baby Boomers can take to help ensure they can fund their own retirement.

Building a retirement nest egg

Superannuation remains one of the best ways to build retirement savings. If you’re still in work, think about making voluntary contributions to your super fund over and above the super guarantee. Doing this will help to build your nest egg, and at the same time help reduce your taxable income.

Ensure you have the right cover

Another way to help secure your financial future is to put in place insurances so that in the event you do suffer an accident or illness, you can still pay your bills.

There are a range of different types of insurances that can help you to do this. Income protection insurance will pay out if you suffer an accident or illness and cannot work for a period of time. You might also consider taking out trauma or total and permanent disability cover, which will pay out if you suffer a serious illness such as cancer or a heart attack.

If you do have this cover in place, it’s likely you will be able to cover basic expenses while you get back on your feet again.

Finding an aged care solution

All too often, people leave it too late to plan for a time when they are not able to live in their own home anymore. Often, people put this off and when the time comes, it falls to their children to find a solution.

To avoid this, talk to a financial adviser about what your options are, including remaining at home and receiving at-home care, so that when the time comes, you won’t have to rely on your children to make decisions about your aged care accommodation needs.

The earlier you start to focus on building and protecting your wealth, the better your outcomes will be in retirement and the less chance you will be a financial burden on your children. To find out how we can help you build a stronger financial future for you and your family, contact TNRWealth today.

(1) REST Super Baby Boomers Need To Get Their Financial House In Order

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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5 Ways To Sort Out Your Finances Before June 30

All / 09.06.20160 comments

5 Ways To Sort Out Your Finances Before June 30

The end of the financial year is just around the corner. Now is an ideal time to get your finances in order and boost your super before the 30 June cut-off. You may also be entitled to a range of benefits or concessions.

Here are five things to consider:

  • Boost your super
  • Prepay interest on investment loans
  • Buy income protection
  • Reduce capital gains tax
  • Generate income in retirement

For information on your entitlement to tax deductions and tax offsets, and other tax liabilities, speak with your registered tax agent.

Boost your super

Consider increasing your contributions to super, so you can save more for retirement and benefit from tax concessions if available.

Things to know:

  • If you are employed, you could make super contributions from your pre-tax salary.
  • If you are self-employed, you may get a tax deduction for the money you put into super.
  • If you contribute after-tax pay or savings into super you may pay less tax on investment earnings compared to investing outside super. You may also qualify for a super co-contribution from the Government, or if you make a contribution for a low income spouse, you may qualify for a tax offset.

You should also be aware of the contributions caps. If you exceed these limits, you may have to pay additional tax.

For more information on how to maximise your super savings within the caps, speak to your financial adviser. For information on your entitlement to tax deductions and tax offsets, and other tax liabilities, speak with your registered tax agent.

Prepay interest on investment loans

Pre-paying interest on any investment loans before 30 June could help you manage your cash flow more efficiently.

Buy income protection

Take out an income protection policy outside of your super account before 30 June and you could be eligible for a tax deduction this financial year.

Reduce capital gains tax

You may be able to reduce the amount of capital gains tax you have to pay by making tax deductible contributions to super (if you’re eligible).

Generate income in retirement

Maximise your income-generating capability in retirement. Speak to your adviser and registered tax agent about how you could structure your financial assets to maximise your retirement income.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Make the most of your super contributions

All / 02.06.20160 comments

Make the most of your super contributions

  • Are you looking to grow your retirement savings?
  • Do you make voluntary super contributions?
  • Are you aware of the $30,000 concessional contributions cap?

How does it work?

There are many important tax benefits associated with investing in super. But to make the most of these benefits you need to understand the different types of super contributions, and be aware of the limits (referred to as ‘caps’) that exist on how much you can contribute to super tax-effectively each financial year.

The two main types of contributions that have a cap are:

  • Concessional (before-tax) contributions – these are generally made to a super fund by your employer, or if you’re self-employed, those made by you for which you claim a tax deduction. Examples include Superannuation Guarantee (SG) contributions, salary sacrifice amounts, and any amount allowed as a personal deduction in your income tax return.
  • Non-concessional (after-tax) contributions – these are personal super contributions which you or your spouse makes for you with after-tax income.

The following table shows the caps that currently apply to both concessional and non-concessional contributions. It also details the extra tax that would apply to any amounts that exceed the cap.

What does it mean for me?

There are two key reasons why you need to know exactly what these amounts are:

  • If you haven’t reached your cap, there’s an opportunity to boost your super and reduce your taxable income this financial year.
  • If you have reached your cap, you may be subject to penalty tax on any excess super contributions you make before 30 June as per the table below.
 Concessional contributionsNON-CONCESSIONAL CONTRIBUTIONS
Maximum contributions allowed (2015/16)$30,000 cap $35,000 for those aged 50 (1) and over$180,000 cap
Tax on amounts over the capIncluded in your income in the year of contribution and taxed at your marginal tax rate (0%-49%) plus an interest charge.49% unless withdrawn (2)
Important informationAny concessional contributions in excess of the cap will also count towards your non-concessional contributions cap.If you are 64 years old or under on 1 July, you may be able to bring forward the next two years’ worth of non-concessional contributions. This effectively allows you to contribute up to $540,000 in one financial year.3

 

To meet this qualification you need to be age 49 and above on 30 June 2015.
1. Members are allowed to withdraw excess non-concessional contributions and any associated earnings with the earnings only be taxed at the individual’s marginal tax rate. Should the member decide to leave the excess non concessional contributions in the super fund, the excess is to be taxed at 49%.
2. The non-concessional contribution limit is set at 6 times the concessional contribution cap.
Source www.wrapinfo.com,au/eofy

Please contact TNRWealth for more information.

 

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