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Downsizing

All / 24.02.20170 comments

By the time you retire, you have probably collected a considerable amount of home equity and downsizing can be a way to tap into that valuable cash.

Downsize your lifestyle – not your life

When your kids left home you probably had big plans for those unoccupied bedrooms – like the art studio you’ve always wanted, a sewing room or a play room for the grandkids.

But it’s a fair bet those rooms have barely changed and now you may be wondering if you really need all the extra space.

Downsizing can be a way to harness the home equity you have built up. But it’s a big decision and you need to be sure it is the right choice that helps you scale back your life without scaling back your lifestyle.

Let’s look at some factors to consider.

1. Where would you like to move to?

When you’re not in the workforce, your choice of location is no longer dictated by proximity to work. You’re free to explore a change of scenery or even relocate overseas.

This opens exciting possibilities, although you may want to remain close to family or friends. This certainly makes a long distance relocation something to think through carefully. If you’re heading off to a new location, investigate whether the area has clubs and organisations to help you make new friends and become part of the community

2. What sort of property are you looking for?

Along with the location, plans to downsize should cover the type of property that is right for your needs – both now and in the future.

Some of the factors you may want to look at are the ease of maintenance of the property, how many stairs it features and whether doorways are wide enough to accommodate aids such as a walking frame. Single level living is often a plus for seniors.

3. Does it stack up financially?

On paper at least, downsizing can seem like a great way to free up extra cash. But you will need to pay for a new home and this brings a range of buying and selling costs which can eat into the sale proceeds of your current home.

There are ongoing costs to consider too. Moving from a house into an apartment can mean a lower maintenance style of living. Be sure to look into strata levies though. The more facilities an apartment complex offers, the higher the levies you are likely to face.

4. Have you considered your emotional needs?

There’s a lot of family history tied up in our homes and you shouldn’t discount the emotional attachment to your place. Think through the decision to move very carefully and discuss it with your family. The last thing you need is to make a decision you’ll regret.

Investing the proceeds from the sale of your property

Give some thought to how you will use the funds remaining from the sale of your old place once you have purchased a new home.

One possible strategy is to use the money to make a non-concessional (after tax) contribution to your super fund.

The non-concessional contributions cap for the 2016/2017 year is $180,000, however this will reduce to $100,000 per annum from 1 July 2017. The ability to make non-concessional contributions up to 3 times the cap by bringing forward the cap for the following 2 years in certain circumstances will be retained but will be based on the lower cap.

If you’re aged 65 or over, you must satisfy a work test to be able to make a non-concessional super contribution and you cannot take advantage of the bring-forward rules.

In addition, from 1 July 2017 non-concessional contributions can only be made by those who have total superannuation balances of less than $1.6 million.

While investing the proceeds from the sale of your property into super is one potential strategy for you to consider, we can further discuss other strategies that are tailored towards your situation and goals.

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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Economic and market update – Feburary 2017

All / 16.02.20170 comments

How did the markets perform in January? Click Here to learn more.

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Superannuation Education Sessions

All / 01.02.20170 comments

 

The May Budget introduced significant changes to superannuation that will affect all members and trustees. After months of speculation, the reforms have passed through parliament with most changes effective from 1 July 2017. We now have just a few months to make arrangements for the new rules.

To assist with making these crucial decisions, TNR Accountants and TNR Wealth Management have been running one hour education sessions during January and will be running more throughout February.

To date there have been over 100 people register for these sessions with another four scheduled in February.

The dates for the February sessions are as follows:

Friday 3rd 12pm – 1:15pm

Monday 6th 5:30pm  – 6:45pm

Wednesday 8th 10am – 11:15am

Friday 10th 12pm – 1:15pm

If you would like to attend one of the above sessions please contact the office on (02) 6621 8544 or click here to book

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5 Tips to Save You Money in 2017

All / 25.01.20170 comments

If you have a hard look at your finances there are almost certainly lots of small steps you can take to reduce your day-to-day costs and increase the money in your hand. Here are some great ways you could save money across major household expenses.

1. Cut your mortgage and rent costs

One of the best ways to reduce your mortgage is to accurately compare and contrast the different loans a range of lenders are prepared to offer you and move to a cheaper lender if the numbers stack up.

Cameron McAusland, principal of MLC Advice Randwick advises taking care when you do this assessment to make sure you consider and account for all associated costs. These include any break fees you may have to pay to settle one mortgage and take out another with a different lender.

Cameron also advises borrowers to use their home loan offset account to help lower the interest they pay.

“It’s a good idea to pretend the interest rate you pay is higher than the rate set by the bank and make loan repayments based on that amount. That way you’ll avoid rate shock in the future when interest rates do start to rise,” he explains.

Other tips include paying your mortgage fortnightly instead of monthly to help lower repayments over time. “Have your salary or income credited to your offset account or loan account and live off your credit card. But ensure you don’t spend more than you earn and pay the credit card balance in full before the interest free period ends.”

If you’re leasing, consider the cost of rent in the area you want to live. Renee Hush, principal of MLC Advice Parramatta, advises living a little further out of town to reduce your rent but still maintain your lifestyle.

Another option to lower your rent or mortgage is to rent out a seldom-used spare room to a lodger or pay rent in advance – say a year ahead – in exchange for a discount.

2. Look for petrol specials to lower car expenses

When it comes to saving money on transport, Renee suggests looking for petrol specials and filling up on low cost days. The Australian Competition and Consumer Commission publishes information on the petrol price cycle on https://www.accc.gov.au/consumers/petrol-diesel-lpg/petrol-price-cycles you can use to plan when you buy petrol.

Also take advantage of shopper dockets and loyalty programs offered through supermarket chains to get fuel discounts.

Planning your trip in advance and using toll ways during off peak rather than full price periods will also help slash transport costs.

Don’t forget to look for discounts offered by major transport providers such as bus and train networks to help get this expense down.

3. Food: no need to sacrifice quality to cut the grocery bill

It doesn’t have to be expensive to eat well. Shopping at bulk purchase outlets such as Aldi and Costco can dramatically reduce your household bills – and also save you time.

The idea is to buy bulk non-perishable items such as tinned food from outlets such as these. Aldi in particular also has inexpensive perishable food such as milk, fruit and vegetables, helping you save on every day meals.

It’s also a great idea to look for specials on items you buy regularly and stock up.  Check out sites like Catch Of The Day for specials, plan your menu each week and only buy what you need for the menu.

Another option to save money is to invest in entertainment books that have great discounts for dining out.

4. That’s entertainment … on a budget

With a little foresight it’s possible to enjoy a great social life without it breaking the bank. For instance, Cameron recommends buying a book of 10 movie tickets at a time for cheap film nights.

But it’s also a good idea to curtail going out to save money – there are lots of fun things you can do at home, so why not swap a regular night out for a night in from time-to-time?

5. Energy bills: plenty of options to cut costs

According to Renee a great way to cut your energy bills is to shop around for energy providers. Use comparison sites such as iSelect as a research tool.

“Also pay your bills by direct debit and on time for added discounts and buy appliances that don’t use much energy. They may be more expensive, but over time they’ll save on energy usage and reduce your bills,” she adds.

Don’t forget it’s worth checking out energy saving devices such as showerheads and light bulbs and also seal windows and door cracks to reduce draughts. Use heating and cooling sparingly, make sure your home is properly insulated and look into solar power to cut energy costs over time.

There are lots of easy ways to save money on almost every expense. The idea is to be persistent and vigilant identifying cost saving techniques to give you more disposable and non-disposable income every week.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.
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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Economic and market update – January 2017

All / 18.01.20170 comments

How did markets perform in December? Click here to read more

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Three top SMSF compliance tips for 2017

All / 17.01.20170 comments

With so many new rules, the risk of non-compliance is higher. So here are three tips to keep in mind to ensure your fund stays inside the rules next year and beyond.

Significant changes to the superannuation system are coming into force in 2017. These rules will reduce the funds self-managed super fund (SMSF) investors can contribute and maintain in the superannuation environment.

These regulations could have knock on effects, for instance to salary sacrifice arrangements. SMSF investors need to take into account these changes as we head toward the start of the new regime in just six months.

1. Maximise eligible contributions

From 1 July SMSF investors will only be able to contribute $25,000 a year to their super fund on a pre-tax basis. Another change is the introduction of a transfer balance cap that means investors will only be able to keep assets to the value of $1.6 million in the pension phase in their fund.

Additionally, the bring-forward provisions that currently allow investors to contribute $540,000 over three-years will change. Instead, investors will be able to contribute $100,000 a year, or
$300,000 over three years, on a non-concessional basis.

But until 1 July, for couples, assuming both parties have the full bring-forward provisions available to them, each partner will be able to contribute $540,000 to a super fund in the three years prior. So even if their assets are subsequently valued at more than $1.6 million, as long as the funds arrive in the SMSF before 30 June 2017 the fund will still be compliant. This is because current rules don’t include the transfer cap balance limitation that will apply from 1 July 2017.

“For the small number of people who already have close to or more than $1.6 million in their super account, this is their last opportunity to get that extra bit of money in before the rules change,” says Peter Hogan, the Self-Managed Super Fund Association’s head of technical.

2. Re-assess salary sacrifice arrangements

Salary sacrificing arrangements are another important factor for SMSF investors who are still working to consider. At the moment anyone 49 and older can contribute up to $35,000 to super each year on a before-tax basis. People younger than 49 are able to contribute up to $30,000 a year before tax until 1 July next year. But that amount will fall to $25,000 after that date.

“Every time the government has, in the past, reduced the concessional contribution caps a large number of people have contributed too much to their fund in the next year. So start having conversations with your employer or payroll after Christmas and make adjustments to the amount that’s deducted each week, fortnight or month to ensure you stay inside the rules,” says Hogan.

3. Ensure your pension payments comply

SMSFs that are in the pension phase must meet a number of rules each year to enjoy a favourable tax status. For instance, pensions must usually be account-based and the pension payment must be made at least once a year. Another rule is that it’s not possible to make additional payments to the member’s pension account once it has started paying a pension.

“So check your minimum pension payments for the year now. It is a housekeeping matter, but it is something people often get wrong,” Hogan explains.

“You do hear stories of people who, rather than make a pension payment on a monthly or quarterly basis, only make an annual distribution and forget to make the distribution one year,” he adds.

The risk is that not making the payment will mean the fund is effectively in accumulation phase. This could mean that the fund is in breach of various regulations in this situation and be required to pay tax at 15%. To avoid this, SMSF trustees should make payments at least quarterly.

Hogan’s other advice is to use this time of the year as an opportunity to review the fund’s strategy and investment performance.
Have a look at the performance of your investments and make some adjustments if you think the strategy may require changing,” he suggests.

For more information, please contact TNR Wealth Management on 02 6621 8544.

Source: Amp Capital

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 You Benefit From Investing

All / 17.01.20170 comments

Building a portfolio of quality investments is one way to help you get ahead financially and achieve your long term goals.

It’s easy to think of ‘saving’ as investing. While the two often go hand in hand, they also work quite differently.

‘Investing’ is more than building rainy day savings

On a practical level, saving involves putting aside money today for use in the future. It’s what economists describe as ‘forgone consumption’. In other words, rather than spending all your money, you tip some into a savings account for another time.

Savings is a sensible starting point in investing because it provides the funds you need to purchase a range of different assets. However investing goes one step further, helping you achieve personal goals with three significant benefits.

1. The potential for healthy long term returns

While saving means setting aside part of today’s money for tomorrow, investing means putting  your money to work to potentially earn a better return over the longer term. Different classes of investment assets – cash, fixed interest, property and shares – typically generate different levels of return (which is relative to the risk of the investment).

Compare these historical returns over the past 30 years. As you can see…

‘Growth’ assets, such as shares and property, have historically had the best overall returns of all asset classes but have also had bigger peaks and troughs. As an investor, there is the potential to earn capital growth over the longer term as well as an ongoing income return (like dividends from shares or rent from a property).

‘Defensive’ assets, like fixed income and cash, may not have generated the same level of returns over time as growth assets but these returns have been less variable, with smaller peaks and troughs.

2. Beat inflation

Inflation is the ongoing rise in the cost of living over time, and it can impact on our financial wellbeing.

One way to help outpace inflation – and generate positive ‘real’ returns over the longer term – is by investing in assets that are not just capable of delivering higher income returns but also offer the potential for capital growth.

3. Earn additional income

It is possible to earn extra income by investing in quality investments.

The return on your investments might be used as a source of regular extra income for day-to-day living. Or you might choose to reinvest the money to further grow (or compound) your wealth.

The bottom line is that savings are important. Depending on your appetite for risk the benefits of investing can mean having more than some ‘rainy day’ cash.

For more information, please contact TNR Wealth Management on 02 6621 8544.

Source: BT
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 descr ibed 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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Why Insurance Is Important – real benefits for you and your family

All / 17.01.20170 comments

Discover the importance of insurance and why it plays a central role in your financial wellbeing, helping to provide financial security for you and your family when it’s needed most.

Insure your greatest asset – you!

You insure your car and your home. But nothing is more important than your life and your ability to make a living. So it makes good sense to insure your greatest asset – you!  As we move through life, find a partner, raise a family, and maybe start a business, the importance of insurance in a long term plan increases. That’s because insurance is all about providing a financial safety net that helps you to take care of yourself and those you love when you need it the most.

5 reasons why insurance matters

Why is insurance important? Let’s look at five key reasons.

1. Protection for you and your family

Your family depend on your financial support to enjoy a decent standard of living, which is why insurance is especially important once you start a family. It means the people who matter most in your life may be protected from financial hardship if the unexpected happens.

2. Reduce stress during difficult times

None of us know what lies around the corner. Unforeseen tragedies such as illness, injury or permanent disability, even death – can leave you and your family facing tremendous emotional stress, and even grief. With insurance in place, you or your family’s financial stress will be reduced, and you can focus on recovery and rebuilding your lives.

3. To enjoy financial security

No matter what your financial position is today, an unexpected event can see it all unravel very quickly. Insurance offers a payout so that if there is an unforeseen event you and your family can hopefully continue to move forward.

4. Peace of mind

No amount of money can replace your health and wellbeing – or the role you play in your family. But you can at least have peace of mind knowing that if anything happened to you, your family’s financial security is assisted by insurance.

5. A legacy to leave behind

A lump sum death benefit can secure the financial future for your children and protect their standard of living.

Case Study

Tony and Karen – Young Family

The following scenario is illustrative only to demonstrate the importance of insurance and is not based on an actual event.

Tony (34) and Karen (33) recently upgraded to a new home to allow their twin boys Nicholas and Rocky (aged 4) more room to play. This also meant taking on a bigger mortgage on one income, as Karen is a homemaker. To protect the family, Tony decided to take out Income Protection Insurance.

During a simple Saturday afternoon game of backyard cricket with the twins, Tony tripped and broke his leg. What appeared to be a simple break was more complicated than initially realised and Tony required several reconstructive operations followed by physiotherapy.

It meant Tony was out of the workforce for over six months, and while his employer was sympathetic, Tony only had two weeks of sick leave owing to him.

Thankfully, Tony’s Income Protection insurance meant he received a stream of payments equal to 80% of his regular wage (including super). The couple needed to tighten their belts a little until Tony was back on his feet but they were able to keep up with their home loan repayments, which would not otherwise have been possible without their Income Protection cover.

For more information, please contact TNR Wealth Management on 02 6621 8544.

Source: BT
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 s 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 descr ibed 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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The Importance of Staying Invested

All / 12.01.20170 comments

The Importance of Staying Invested

Ending wealth values after a market decline

DESCRIPTION

The image shows three different reactions to a recent investment loss.

The green line shows the experience of an investor who stayed invested in stocks.

The red dotted line shows the experience of an investor who exited the stock market and invested in cash.

And the orange line shows the experience of the investor who exited the market at the bottom but then reinvested in stocks a short time (12 months) later.

EXTENSION

Investors who attempt to time the market run the risk of missing periods of exceptional returns, leading to significant adverse effects on the ending value of a portfolio.

The image illustrates the value of a $10,000 investment in the stock market during the period October 2007– January 2014, which included both the global financial crisis and the recovery that followed. The value of the investment dropped to $5,282 by February 2009 (the trough date), following a severe market decline.

If an investor had remained invested in the stock market over the next 59 months, however, the ending value of the investment would have been $10,155. If the same investor exited the market at the bottom to invest in cash for a year and then reinvest in the market, the ending value of the investment would have been $7,260. An allcash investment at the bottom of the market  would have yielded only $6,394. The continuous stock market investment recovered its initial value over the next five years and provided a higher ending value than the other two strategies.

While recoveries may not all yield the same results, investors are well advised to stick with a long-term approach to investing.

Returns and principal invested in stocks are not guaranteed. Stocks have been more volatile than bonds or cash. Holding a portfolio of securities for the long term does not ensure a profitable outcome and investing in securities always involves risk of loss.

ABOUT THE DATA

The market is represented by the S&P/ASX 200 index, which is an unmanaged group of securities and considered to be representative of the Australian stock market in general. Cash is represented by the UBS Bank 0+ Years index. An investment cannot be made directly in an index. The data assumes reinvestment of income and does not account for taxes or transaction costs.

PRINCIPLES

It is natural to have an emotional reaction to changes in fortune.

However, acting on that natural emotion can end up making things worse; investors may leave the market and miss out on the subsequent recoveries.

An investor who exited the market at the bottom, waited for a year, and then reinvested would have missed out on fully half the recovery in stock prices.

Morningstar-Staying-Invested

© 2016 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice or ‘class service’ have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement (Australian products) or Investment Statement (New Zealand products) before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 (“ASXO”).
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Happy Holidays from the TNR Wealth Management team!

All / 22.12.20160 comments

Happy Holidays from the TNR Wealth Management team!

The team at TNR Wealth Management wish you a safe and happy holiday period and we look forward to working with you during 2017.

Our offices will be closed from 5pm on Thursday, 22nd December 2016 and will reopen at 8.30am on Monday, 9th January 2017.

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