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The Foundations of Successful Investing

All / 13.04.20170 comments

Establishing an investment portfolio can be likened to building a home. The most destructive, yet unpredictable predator to the structure of a home is the weather. Even in these most technically advanced days, we are still unable to accurately predict the weather.

And so too, a man is a fool if he thinks he can successfully predict the future of the global economy. Like the weather it can be the most unpredictable and destructive threat to your investment earnings. But with a carefully built portfolio based on sound foundations, you have a much better chance of weathering any financial storm.

Investment principles

The foundations of a strong portfolio rely on four key ‘pillars’ or investment principles… quality, value, diversity and time.

We are probably all tiring of the old line, “don’t put all your eggs into one basket” – meaning to diversify your portfolio – but that is only one pillar on which to rely. The other three are equally important. Forget about just one and you are setting yourself up for a very bumpy ride!

Let us briefly explain why all four pillars are crucial to your investing success…

If we look at the first two pillars, quality and value, it’s obvious this means to look for assets that are expected to provide
higher returns relative to their risks. Applying this to shares, quality companies will have a sound basis to their operations and growth; that is, their earnings are not driven by fads. This however, might mean they take time to deliver. Remember that investing in the share market is generally a long-term strategy.

Quality and value don’t always go hand in hand. Quality stocks may trade at such high prices that they offer low initial value or it could be that expectations for these companies are sometimes too high. The key here is quality… the expectation is that they will be around for a long time, not just a good time.

This takes us back to diversity. Diversity acts like the scales in a portfolio, providing balance. True diversity in a portfolio gives the investor the opportunity to take advantage of “hot stocks” or asset classes, whilst balancing out the risk with quality stocks and asset classes. It can provide a buffer against mistakes in assessing value because nobody gets it right all of the time. A well-balanced portfolio can cope with occasional losses.

And finally, one of the most important pillars is time because it applies to all three, giving you the best chance of success. Every market will suffer periodic downturns, however over time the upturn will always triumph. The golden rule is don’t panic and refrain from getting caught up in the fear and greed cycle.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.


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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Super in Your 20’s. Boring? Doesn’t Have to Be!

All / 13.04.20170 comments

Superannuation is for the oldies, right? In some ways that’s true, but even in your twenties there are good reasons to take a bit more interest in your super. The average 25-year-old has around $10,000 in super, but the decisions you make now, even with relatively small sums of money, could earn you hundreds of thousands of extra dollars over your working life.

Are you getting any?

Earn more than $450 in any given month (excluding overtime, bonuses and some allowances)? Then every three months your employer should be paying 9.5% of that into your super fund. Usually you can choose your fund; if you don’t, it gets paid into a super fund of your employer’s choice. But that doesn’t mean you don’t get a say in how it’s invested.

If you don’t know if your super is being paid, or the fund it’s being paid into, ask your employer. If you think you’re missing out, search ‘unpaid super’ on the tax office website (ato.gov.au) to see what you can do. This is your money.

Where have you got it?

Had more than one job? If you have a lot of little super accounts the money can disappear in a puff of fees and insurance premiums. Simple fix – combine your super into one account.

What about insurance?

If you don’t have any dependents, your super fund could be paying for insurance you don’t really need just yet. Cancelling unnecessary life insurance leaves more money in your account to boost your savings. On the other hand, if you do need life or disability insurance, then doing it through super could be a better option.

Is it working for YOU?

Your money is going to be stuck in super for a long time, so you want it to be working hard for you. Most funds offer a range of investment choices and some will do better than others.

Imagine your income and super contributions follow a particular pattern over the next 42 years[i]. Your fund earns 5% per year, and when you retire it is worth $1,037,154. Now change just one thing – you choose an investment option that earns 8% each year. Now your balance could grow to over $2,000,000! That’s nearly a million bucks extra, just for ticking a different box on your super fund application form!

There’s a bit more to it. An investment choice that is expected to produce higher returns over the long term can bounce up and down in value. Some years it may even go backwards in value. However, “safer” investment options usually produce lower long-term returns.

What do you want?

Buying a new car. Travelling, Having fun. Let’s face it, there are lots more exciting things to do with your money than sticking it into super. The choice is yours but think about this:

  • If Mum and Dad retired this year, they would need a minimum of around $59,000 per year to enjoy themselves [ii]. If that doesn’t sound like much now, by the time YOU retire inflation could have pushed that annual amount to around $204,000[iii]. That means you will need to have at least $3.5 million[iv] in savings! Sure you’ve got 40-plus years but that’s still a lot of money to save up! It can be done if you start early enough – and you don’t need to miss out on enjoying life now.
  • Fact: you’re going to live much longer than your parents and grandparents. Can you imagine living another 30 years without earning an income? A sound investment plan designed to make your super work hard while you’re employed will be the difference between enjoying those decades and scraping by on a measly pension.
  • Starting early and adding a bit extra when you can makes a big difference. Let’s work on another 40 years before you can retire. If you start now by making an extra post-tax contribution of just 1% of your annual income to super, ($350 from a $35,000 salary – and the government could add to that with a co-contribution[v]) at an 8% investment return could add an extra $149,000 to your retirement fund. If you wait 20 years before starting to make that extra contribution, you’ll only get a boost of $49,000. $100,000 less! Continuing this small extra contribution as your salary increases will turbo boost your super fund balance. Imagine your retirement party?!

So, still find super boring? That’s okay; you’re not alone. But instead of finding the time to organise all this yourself, contact a licensed financial adviser who will review your current super, any insurance required, the investment choices and prepare a strategy to get your super into shape – then you can get back to enjoying life!

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

 

[i] Starting salary $50,000 pa increasing at 4% pa over 42 years. Super contributions fixed at 9.5% of salary and taxed at 15%. Investment returns before inflation but after tax and fees.
[ii] Income required to provide a couple with a “comfortable” level of income as calculated by The Association of Superannuation Funds of Australia (ASFA) (December 2016)
 [iii] Value of $58,922 today in 42 years at 3% inflation.
 [iv] Sum required to fund an annual income of $204,000 for 30 years at a return of 4% pa after inflation, fees and tax, disregarding any age pension.
 [v] The government makes a co-contribution to super for low income earners under $51,021pa (2016/17).

  

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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4 Ways to Manage Risk Later In Life

All / 07.04.20170 comments

A health crisis can occur at any time of life, but the risks obviously increase as we age. Unfortunately, due to this increased risk of illness or injury the cost of insurance for those over 50 can be high. As a result, people in this age group are tempted to drop their insurance cover altogether just when the need is at its greatest.

If age 50 is looming, or recently passed by, it’s even more important to continue to protect both your income-earning ability and the financial security of any dependants. Here are some solutions to consider:

  • Review your level of insurance. As your investments and superannuation increase, you may be able to reduce your cover and still provide for your beneficiaries.
  • Life and disability insurance can be arranged through most superannuation funds. Premiums can be lower and are paid from the superannuation balance thereby reducing strain on the household budget.
  • For income protection insurance, if you have accrued adequate annual or sick leave, you might want to increase the waiting period which may reduce your premiums. Depending on circumstances, this may allow you to retain an important benefit at a more affordable price.
  • Pay in advance. Prepaying 12 months’ worth of income protection policy premiums before 30 June may allow you to bring forward a tax deduction for next year into the current year. This can potentially reduce your taxable income and the tax you pay this financial year.

Everyone is different so there might be other solutions not mentioned here. If you’re not sure what to do, always talk to a licensed financial adviser before you make any adjustments to your insurance cover. We can help you achieve the right balance for your needs.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

 

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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How Perception Affects Investing

All / 28.03.20170 comments

When it comes to choosing to invest in property and shares, many issues are the same:

  1. do the research before you buy,
  2. be aware of your investment timeframe,
  3. monitor performance, and
  4. know when to sell.

But there is one big difference and it’s all about perception of risk.

Shares are valued daily so you can see the volatility in prices every time you read a newspaper or visit the ASX website. To some investors these price movements are very distracting and they perceive that shares are more risky. .

Property, on the other hand, is not subject to continuous public evaluation. You only really know the value when a similar property sells or you ask someone to put a price on it. This means investors are more likely to see property as a long-term investment and perceive it to be less risky.

Investments in growth assets – property and shares – should be seen as long-term investments. The real risk to investors is that they become disturbed by price volatility and sell quality investments at the worst time. History has shown that changing asset allocation too frequently can ruin sound long-term investment strategies.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

 

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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A Lifetime of Super

All / 24.03.20170 comments

As a rule of thumb, it is suggested people should aim for a retirement income of between 50% and 70% of pre-retirement
salary/wages. If you want a retirement income equal to about 60% of your final salary, regardless of what that final salary is,
then it is estimated you will need to save around 15% of your income for 40 years. The problem here is that your employer is only compelled to provide superannuation contributions for you at the current rate of 9.5% of your income per annum.

The solution is simple – start contributing to super earlier in your working life, raise the combined rate of your super contributions to 15% by making personal contributions, and take heed of the following tips throughout your working life.

Young, single and independent

  • Retirement is a long way off but starting early lays the foundations for future comfort.
  • Maximise your government co-contributions—they will potentially add thousands to your super.
  • If appropriate, take out disability insurance through your super fund. It is often the cheapest and most tax-effective way of providing insurance cover.
  • Choose an investment strategy that suits your long-term risk profile.

A family and a mortgage

  • Your focus may be on repaying the home loan, but don’t forget your super entirely.
  • Take out life and disability insurance through superannuation. A mortgage and young children mean insurance is a top priority.
  • Check eligibility for a tax offset on spouse superannuation contributions and government co-contributions.
  • Review your investment strategy and risk profile.

The “in between” years

  • A higher income and a smaller mortgage open up the opportunity to boost your super.
  • Find out how salary sacrifice can boost your super savings.
  • Review your insurance cover and investment risk profile.

Retirement is looming

  • Over 55s enjoy some great incentives to contribute to superannuation.
  • Combine salary sacrifice with a transition to retirement pension.
  • Review your insurance cover, investment strategy and risk profile.
  • Start comprehensive retirement planning.

Down tools

  • You’ve made it. For retirees over 60, withdrawals and pension payments are tax free!
  • Review your investment risk. Keep enough growth in your portfolio to ensure your money lasts as long as you do.
  • Review your insurance.
  • Stay active and enjoy life (and keep working if you want to!)

 Remember, it’s never too late to start…

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

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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No Insurance? Why Take the Risk?

All / 17.03.20170 comments

On average, only 25% of debilitating injuries occur at work or are work related

In 2013/14 there were approximately 531,800 work-related injuries in Australia. Of these, only around 298,000 received workers compensation.

Two-thirds of workers can expect to be off work for more than three months during their working life due to illness or injury.

Research conducted by Rice Warner in 2014 revealed that underinsurance in Income Protection cover costs the government $260,000,000 per year in providing income replacement benefits.

Who needs it?

Some people may not need cover. For instance, if you

  • are near retirement and would give up work if you were disabled;
  • have lots of sick, annual leave and long service leave to give you protection;
  • have access to adequate amounts of cash to rely on;
  • have a partner or other people who will support you.

Other people may just misunderstand. A common cause of confusion is to think you are covered by worker’s  compensation insurance. This, however, only covers accidents at or during work, or illness directly attributed to work.

If you are not aware of the cover available, read on!

Income protection insurance pays an income to you if you are unable to work due to an accident or illness. The income is usually 75% of your pre-disablement income and is payable after a “waiting period”. You choose the waiting period to suit your needs – for instance, if you had a lot of unused leave you could choose a longer period.

Income protection is particularly valuable for self-employed people, casual workers or anyone else who relies on their income but has no sick leave. You will be required to provide evidence of your usual income when taking out a policy.

The income will be paid until you recover and return to work or for a “benefit period” – this can be as short as one year or up to age 65. Some policies pay a rehabilitation benefit to help ease you back to work.

Income protection insurance premiums are tax deductible. Many people pay the premiums annually near the end of the financial year to bring forward the tax deduction. However, be aware that the income payments are taxable.

Premiums are generally based on your age, gender, occupation and previous medical conditions but you can save money by choosing a longer waiting period and a shorter benefit period. However, there is no point in having insurance that doesn’t pay out when you need it.

If you’re not sure of your specific needs, talk to your financial adviser who can recommend a solution to suit you. Why take the risk?

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

 

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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TNR Wealth Management Sponsors Local Charity Event Raising Money for “Our Kids”

All / 10.03.20170 comments

On Saturday 4 March 2017 TNR and TNR Wealth Management Sponsored the the Annual Lismore Samson Challenge, a local charity event to raise money for “Our Kids”.

The Samson is a major fundraiser for “Our Kids” helping to raise money to purchase paediatric equipment for the Children’s Ward and Special Care Nursery at Lismore Base Hospital.

TNR and TNR Wealth Management were proud sponsors and provided volunteers on “Prowler Push” leg of the event.  We also had 3 teams that participated in the challenge.

We would like to congratulate everyone who participated or volunteered on the day and helped raise $20,000 for Our Kids.

Image courtesy of SOK IMAGES

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TNR – TNR Wealth Management Participate in Local Charity Event Raising Money for “Our Kids”

All / 10.03.20170 comments

   

On Saturday 4th March 2017 three teams from TNR and TNR Wealth Management participated in the local charity event “Lismore Samson Challenge”. This is a major fundraiser for “Our Kids”, helping to raise money to buy equipment for the Children’s Ward and Special Care Nursery at Lismore Base Hospital.

It is a gruelling four person team event and the teams were put through their paces during the ten tough challenges and still finished with smiles on their faces.

    

Not only did we participate in the Challenge, but TNR and TNR Wealth Management were a sponsor of the Prowler Push Leg of the event and we had volunteers who helped competitors on the Prowler Push leg on the day.

A big congratulations and thanks to everyone involved in a great event that raised $20,000 on the day for Our Kids!

Images Courtesy of SOK Images & TNR

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Making Your Money Work Harder

All / 03.03.20170 comments

When establishing a long-term savings plan, online savings accounts and fixed term deposits in a low-inflation economy will not generate much growth. As an alternative, managed funds, given at least five years, can have a higher potential to surpass cash and fixed term investments.

Managed funds are also an easy way to invest in Australian and international shares. Through managed funds you can spread your money across different assets with one application, which can increase the potential for growth. Your choice of fund can restrict the investments to particular segments to meet your risk tolerance.

Investing works best over the longer term. But don’t let that deter you. Five or ten years isn’t “forever”.

How much do I need to start?

Depending on the fund chosen, you can start with as little as $1,000 initial investment, then make regular payments to build your investment. Salary deduction is an ideal way to establish a regular savings plan – if you don’t get it you can’t spend it and probably won’t notice it “missing”. Meanwhile it’s working for you.

Growth, income… and the opposite

Your money will be exposed to capital growth through rising unit prices as well as income from distributions. The income you receive is taxed in the same way as bank interest, at your marginal tax rate. It also carries the benefit of any franking credits attached to dividend income distributed by the fund, reducing the tax payable. Be aware though, like any investment, the value of unit prices, and your investment, can also go down. It’s another reason why good research and professional guidance is essential.

What about borrowing to invest?

Using someone else’s money to improve your own financial worth can be good as long as the terms work in your favour. It all comes down to the fact that all debt must be serviced. The interest and fees need to be paid. Ask yourself, “Will the return on my investment be greater than the cost of the debt?” If you can’t answer this question, seek professional advice and if the answer is “no”, find something more appropriate to you.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

 

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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Financial Planning – More Than Just Advice

All / 01.03.20170 comments

Financial planners are often the first port of call for people seeking advice on investing a lump sum of money. But that is just the tip of the iceberg. A professional financial adviser has the knowledge and skills to help you achieve your goals and objectives by tailoring strategies to address your specific needs.

TNR Wealth Management can and will provide you with assistance and guidance on:

  • Budgeting – reviewing your finances and identifying opportunities to manage debt and save money.
  • Risk management – guiding you on protecting your family and your assets in the event of illness, injury, disability or death.
  • Government benefits and allowances– determining your eligibility for government assistance for various benefits from pensions to co-contribution allowances and ensuring you receive the correct entitlements.
  • Retirement planning – helping you find answers to the important questions such as; “how much money do I need to retire?”; “what do I need to do before I retire?” and “will I be able to retire comfortably now?”
  • Estate planning – we work closely with estate planning professionals to show you how best to structure your assets to benefit your estate when you’re no longer here.
  • Education – helping you to understand your investments and other key financial matters. This builds your knowledge and confidence.

Quite simply, we can help alleviate the worry and stress associated with your finances, leaving you with more time to enjoy life. Get started now by giving the team at TNR Wealth Management a call on 02 6621 8544.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

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    Amongst the changes made to superannuation effective 1 July 2017 was the welcome and sensible move to give everyone who makes a personal contribution to super the option of claiming a tax deduction for it. Prior to this date, tax deductions on personal contributions could only be claimed by the “substantially self-employed”. The upshot is […]

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    Investing bears no resemblance to gambling and, unfortunately past ‘form’ seldom provides an indication of future performance. Many investors are tempted to look at the best performing sector over the past year and then switch their investments accordingly. Beware this can be a recipe for disaster. In many cases, last year’s poor performer can turn […]

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