Service your future regularly

All / 13.12.20170 comments

Most of us take for granted that we have to get our car serviced regularly. It’s not something we look forward to, but we know we have to do it – or it will let us down when we most need it.

A regular review of your financial plan is just as important – and for the same reason. Life changes so quickly we can forget important updates to our financial planning, particularly insurance as shown by this real life event.

Josh and Kate had their first child late last year. A close friend who knew Josh was quite casual about finance matters reminded him that their circumstances had now drastically changed. He suggested it would be a good idea to talk to his financial adviser about their insurance situation given their newfound responsibilities.

The adviser discovered that Josh and Kate had last updated their life insurance when they bought their first home three years previously. He emphasised that with the new baby, things had changed dramatically for the couple, and having insurance that only covered their mortgage would leave a shortfall should something happen to one of them.

When it was suggested they increase their cover from $250,000 (the mortgage) to $750,000, Josh was stunned! But then the adviser explained: should something happen to Josh, $400,000 would be drawn down over the long term to replace his income and allow Kate to look after their son. Otherwise she could use these funds to hire a nanny if she went back to work. Part of the remaining lump sum could be invested for their son’s future education – this being one of their current savings goals that they would not want to change.

This one option removed considerable pressure from Josh and Kate in their new roles as parents.  Having appropriate life insurance in place gives you and your family options should the unthinkable occur.

Does your financial plan need reviewing?

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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Holidays without financial baggage

All / 13.12.20170 comments

We all need something to look forward to and for many members of Generation X the lure of discount airfares and package deals are irresistible; others have luxury holidays high on the agenda.

And why not? We all love a holiday and what’s more, happiness, apparently, is not just in the holiday itself, but in the planning of it too.

Research conducted by Roy Morgan Research concluded that people with an overseas holiday planned are optimistic about the future. Not surprisingly, there’s a demonstrated link between optimism and health and well-being.

But it’s not just the planning; it’s how you fund your trip that has the biggest impact.

Alex and Tony are both in their mid-40s. During their annual portfolio review with us, Alex talked of their dream to visit Europe. With a hefty mortgage, they couldn’t see how they could afford such a holiday without refinancing their home.

To their surprise, we suggested they consider a savings account tailored to meet this specific goal.

These accounts are opened with a small initial sum, and pay bonus interest to encourage regular deposits.

Assisted by their local travel agent the couple planned the holiday of their dreams. They paid the upfront deposit, and with our guidance, selected a suitable account to save up the balance. An agreed amount was automatically transferred from each of their salaries every fortnight to this new account.

Eighteen months later, Alex and Tony sent us a selfie taken while sipping coffee beneath the Eiffel Tower.

Saving for something upfront may be considered somewhat old-fashioned. These days, there is a variety of options for funding the trip of a lifetime.

Some people sell assets like share portfolios or the ‘mid-life-crisis’ jet-ski that never got used.

Many others turn to credit cards or holiday loans.

Holiday loans are unsecured personal loans lending up to $50,000 over terms of up to seven years. They’re quick to establish and approved cash is easily accessed. Interest is calculated at personal loan rates, i.e. lower than a credit card.

Jules and Paul financed their holiday using a holiday loan and returned with some fantastic memories. They also came home to a sizeable debt.

Many returning holiday-makers experience a kind of depression known as Post-holiday blues. Seriously – you can Google it!

Post-holiday blues seems to coincide with the fading of the tan and the unwelcome arrival of loan statements.

With little incentive to save for the holiday before they left home, the couple had zero incentive to pay for it once they’d returned.

The Huffington Post suggests that to beat post-holiday blues, simply plan your next trip. Dispirited, Jules and Paul couldn’t even dream about another holiday. They were left depressed and servicing a loan that impacted their lifestyle for years to come.

Conversely, Alex and Tony returned from their big trip refreshed and debt-free.

With proof that it works, the couple drew up a new budget and savings strategy a few weeks after getting home. Having ticked Europe off the list, they’re eagerly anticipating their next adventure in South America. We’re looking forward to following their travels on Facebook!

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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Attention: SMSF Trustees

All / 13.12.20170 comments

When it comes to retirement funding, over one million Australians have established Self-Managed Super Funds (SMSFs) to take more control over this crucial stage of their lives. However, SMSF trustees take note – to protect your and your fellow members’ best interests, there are strict rules governing SMSFs which, if broken, attract strong penalties.

The basis of all superannuation law is that every super fund must meet the “Sole Purpose Test” – it exists solely to fund retirement (or to pass to dependents if the member dies).

SMSF trustees whose funds are not fully compliant will incur the financial wrath of the ATO as follows:

A rectification direction requires the trustee to rectify a breach within a specified timeframe and provide evidence to the ATO of completion in accordance with SMSF regulation.

An education direction requires the trustee to undertake a specific course on SMSF compliance to ensure he/she has a better understanding of a trustee’s obligations and responsibilities and to prevent future breaches. This course must be completed with a specified timeframe and proof of completion provided to the ATO. Failure to comply will result in a $1,050 fine.

An administrative penalty applies to those breaches that have previously gone unpunished. Trustees will be fined based on the following breaches of the Act. It is important to note that these fines cannot be paid from the SMSF – they come directly out of the trustee’s own pocket.

Section & Rule Administrative Penalty
s.35B – failure to prepare Financial Statements $2,100
s.65 – prohibition on lending or providing financial assistance to members and their relatives $12,600
s.67 – prohibition on super fund borrowing, except as permitted, eg. limited recourse borrowing arrangement $12,600
s.84 – contravention of In-House Asset rules $12,600
s.103(1) & (2) – failing to keep trustee minutes for at least 10 years $2,100
s.103(2A) – failure to maintain a s.71E election, where applicable, in relation to a fund with an investment in a pre-11/8/99 related unit trust $2,100
s.104 – failing to keep records of change of trustees for at least 10 years $2,100
s.104A – failing to sign Trustee Declaration within 21 days of appointment and keep for at least 10 years $2,100
 

s.105 – failing to keep member reports for 10 years

 

$2,100

s.106 – failing to notify ATO of an event that has significant adverse effect on the fund’s financial position $12,600
s.106A – failing to notify ATO of change of status of SMSF, eg. fund ceasing to be a SMSF $4,200
s.124 – where an Investment Manager is appointed, failing to make the appointment in writing $1,050
s.254(1) – Failing to provide the Regulator with information on the approved form within the prescribed time upon establishment of the fund $1,050
s.347A(5) – Failing to complete a form with requested information provided by the Regulator as part of the Regulator’s Statistical Program $1,050

The ATO has the power to make a fund non-compliant, disqualify trustees, or instigate civil or criminal charges for more severe breaches.

Freedom always comes at some cost but given that these rules are put in place to protect your investments that will fund your retirement, adhering to them will ensure you and your family are the ones who ultimately benefit.

If you have any questions or concerns about your SMSF, please contact your licensed financial adviser or SMSF specialist.

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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5 Ways to give your Christmas a makeover

All / 06.12.20170 comments

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Millennials & Money – your unique needs

All / 01.12.20170 comments

If you entered the world between 1980 and 1996 you’re part of the “millennial generation”. You’ve grown up in an age of unprecedented abundance and incredible technical innovation, and as a group, enjoy a greater wealth of opportunity – professionally, socially and recreationally – than any previous generation. Many goods and services have never been cheaper in real terms, allowing you to live more for today than adopting your parents’ and grandparents’ single-minded focus on buying a home and saving for retirement.

Career or a combo?

That’s not to say you don’t face challenges. Increased employment casualisation, short-term contracting, and the threat of automation, can potentially threaten your job security. Or you might actually embrace a ‘come and go’ career, interweaving periods of work with stints of travel, child-raising or volunteering. Indeed, many millennials are discovering that the whole concept of work versus recreation is becoming blurred. With a computer the primary tool of trade in many professions, you may be able to work just as easily from a spare bedroom in Berlin or Barcelona as in Parramatta or Perth.

Medical advances promise a long and healthy life, meaning you may not even intend to ‘retire’, choosing to work for as long as health allows.

Is home ownership that important?

Some millennials find it liberating not to be tied down to one place by a mortgage and a heap of stuff, however the likelihood is that if you haven’t bought a house already, you still aspire to the great Australian dream of home ownership. This is a real challenge particularly for younger millennials and may involve unacceptable compromises such as living a long distance from work. But attitudes to long-term renting are changing. While Australia has yet to develop both the culture and cooperative ownership structures that make life-long home rental the norm in some countries, it’s a sure bet that enterprising millennials are working to change that. In any case, renting can be an economically viable alternative to buying.

There’s an app for that

Whether it’s finding a meaningful job, financing a new venture through crowd funding, borrowing through P2P platforms, finding a house or just a room, or even looking for love, you know where to find the apps. Still, with the mass of opportunities that have arisen from greater connection and changing social attitudes, life is in many ways more complicated than it was for your forebears.

Let’s talk about money

Managing money is no exception. For a start, there’s the challenge of working out what the right balance is between funding a desirable lifestyle now and saving for medium and long term goals. Once that’s decided there are the questions of how to save and where to invest. The Internet is awash with information and advice, with much of it of a high standard. Unfortunately, this is balanced by a vast amount of misinformation and an abundance of shonky investment offers, making it difficult to distinguish the good from the bad.

Fortunately, help is at hand. We’ve made it our business to understand the wants and needs of all generations. There is more to life than saving for retirement and maximising entitlement to the age pension. If you have that millennial feeling and need some advice on how to manage your unique financial needs to get as much out of life as possible, check out our website or find us on Facebook and LinkedIn, then contact us for a chat.

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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Baby budgeting

All / 24.11.20170 comments

Baby budgeting

Welcoming a new family member is exciting but with so many aspects of your life changing, when it comes to your finances some forward planning can make the transition so much easier.

Fortunately, babies allow several months to prepare for their arrival and can be easy to get caught up in the excitement. When making preparations it’s important to have all of Bub’s needs ready; but is equally important for Mum and Dad to be financially organised.

It’s wise to conduct a review of your financial affairs as early as possible, even before you start your family. A good idea is to draw up a “baby-budget”. Do this by listing all household income and expenses under three columns: before pregnancy, during pregnancy and after pregnancy.

This allows you to see and compare your financial position at the different stages you’re going to experience.

If you have difficulty keeping track of incidental spending you’re not alone – many people can’t account for where their money goes. To help, ASIC has developed an app you can download from its Money Smart website, www.moneysmart.gov.au called TrackMySpend. It suggests using this app for two weeks prior to completing your baby-budget and reports that people are often surprised by the results.

Determine your entitlements

At least one parent will probably take time off work and the potential reduction of household income can be daunting. Understanding your support entitlements upfront can relieve some of the worry.

The federal government offers eligible parents up to 18 weeks Parental Leave Pay. Centrelink has a Paid Parental Leave comparison estimator on its website, www.humanservices.gov.au. This tool will estimate your entitlement and enable you to determine the best option for your family.

If you decide to return to work after Bub arrives, you may qualify for government assistance with the cost of childcare. The Department of Human Services can provide information about your eligibility. Again visit www.humanservices.gov.au.

Planning = less stress

People often set up a savings strategy for key life events like buying a home, a major holiday or retirement. Having a baby is more than a key event – it is life-changing – yet few people consider saving for it.

Your financial adviser can assist you in creating a practical household budget and set up a savings plan that will help cover large or unexpected costs. At this time you should also consider life insurance to protect your family’s future.

Planning ahead will provide peace of mind and place you in the best possible position to welcome the newest member of your family.

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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Buying your kids a home – good idea or bad idea?

All / 17.11.20170 comments

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The art of downsizing

All / 09.11.20170 comments

The art of downsizing

The kids have finally left home and now you’re rattling around in a house way bigger than you need. If it’s time to think about downsizing, there’s more to it than simply selling one house and buying another. Here are a few things to consider.

Tax-free gain

Selling a large house and buying a townhouse or unit, perhaps in a more affordable suburb, can free up a significant sum of money which you could use to help fund your retirement or take that dream international holiday. But before you get too excited by your potential windfall, remember to take into account expenses such as agent’s fees, removalist costs and stamp duty on the new property. This will give you a better idea of how much additional cash you are likely to be left with.

Generally, any capital gains on the sale of the family home are exempt from capital gains tax (CGT). However, if the home has been used for income-producing activity, such as running a business or letting out a room, then a portion of the gain may be subject to CGT.

On the upside, downsizing may reduce your living costs. New homes are usually more energy efficient, and cost less to heat and cool than older housing stock.

Centrelink considerations

The family home is exempt from Centrelink’s age pension asset test. If qualifying for a full or part age pension is important to you, you may not want to free up too much cash when downsizing.

Indeed, some retirees actually dip into their savings to buy a higher value home. Their aim is to reduce their assessable assets and maximise their pension entitlement. This isn’t always a good idea as it increases the risk of being caught in the ‘asset rich, cash poor’ trap.

Super boost

As an incentive to downsize, the federal government has proposed that from July 2018 Australians over the age of 65 will be permitted to make a contribution to super of up to $300,000 each ($600,000 for a couple) from the proceeds of selling their home. The amount will be treated as a non-concessional (after-tax) contribution, and exempt from the usual restrictions. But this proposal has yet to be legislated.

For most people under 65, super may also be a desirable destination for most of the money freed up by downsizing. Make sure that any contributions fall within the relevant limits.

Emotional cost

While the financial benefits of downsizing can be considerable, moving house is amongst life’s most stressful events. This is particularly the case when you are giving up a home full of family memories, and parting with many prized possessions to fit into a smaller space. Just being aware that you may face an emotional reaction is a start, but be open to seeking professional support if moving does bring on a bout of the blues.

Seek financial advice

Downsizing has both financial and lifestyle dimensions, and you’ll want to make the most of any profits you realise. Talk to your financial adviser before you get the real estate agent in. He or she will work with you to craft a short-term strategy to help ensure your downsizing experience supports you in achieving your long-term 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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Don’t change for the sake of change

All / 02.11.20170 comments

Don’t change for the sake of change

I can almost guarantee that I’ll get asked more often during summer if it’s a good idea to switch super funds.

The source of this unique research? Barbecues! It appears that one of the most popular topics during these summer social events is superannuation. Friends sharing their good or bad tales about the balances of their retirement funds seem to trump sports talk at the great Aussie outing these days.

So what do I say when a client asks me if they should change their super fund because their friend’s fund seems to be “doing much better” than theirs? It’s the same response I give when a client tells me their mate has “made a killing” out of investing in one asset, such as property, and they want to get in on the act. I ask them questions…

Switching super funds can be quite costly and as no two clients’ needs are exactly the same, there is no guarantee that a different fund would perform any better.

Let’s look at a few of the key questions to be answered before a switch should be considered:

  • Does the new fund provide investment options suitable to your circumstances?
  • What is the cost of transferring?
    • Are there exit fees from the current fund?
    • What are the entry fees into the new fund?
    • What are the ongoing fees of the new fund?
  • What has been the long-term performance compared to your current fund?
  • What retirement income options does the new fund provide?
  • Will it provide appropriate insurance cover at the right cost?
  • And after all is said and done, what benefits will you achieve from a change?

Once we’ve worked through these initial questions, we go more deeply and sometimes a change might be appropriate.

So the next time you’re at a barbie and the talk swings around to super, listen carefully to others’ experiences by all means, but it’s important to remember that your choice of super fund needs to be driven by what’s best for you.

Superannuation mirrors life, it’s constantly changing, so if it’s time for a review, give us a call.

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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Planning Ahead for the “Sandwich Generation”

All / 26.10.20170 comments

Planning Ahead for the “Sandwich Generation”

Are you taking care of elderly parents? Do you still have adult children living at home? Do the words ‘meat’ and ‘sandwich’ strike any chords with you? You could be a member of the “Sandwich Generation” without realising it!

Sandwich Generation refers to people who are ‘sandwiched’ between caring for elderly parents and adult children still living in the family home.

As a society we are living longer but unfortunately longevity comes at a cost.

It’s not uncommon for older people to become the primary carer for elderly parents. Caring for someone is difficult emotionally, but can also affect the household finances as work hours are reduced or careers cut short to accommodate carer responsibilities.

At the other end of the spectrum, adult children pursuing higher education are continuing to live in the family home longer than previous generations as the costs associated with moving out prohibit them from achieving their independence.

Additional financial pressures

People with elderly parents and adult children all living in the one home, often find themselves in an unexpected financial situation. At a life stage when most are planning to downsize their homes, the Sandwich Generation is forced to consider other options such as renovating to increase space or provide more privacy. No longer are “Granny flats” inhabited by older family members; now it’s the kids who have taken over these coveted domains.

Of the three generations potentially living under these arrangements, only one is usually in the position to pay for expansions, yet the retirement strategies of these people hadn’t anticipated issues such as late-life mortgages.

For those already in this situation, a range of government services is available. Contact My Aged Care on 1800 200 422 or visit  www.myagedcare.gov.au

Looking ahead

Financial advisers are helping a growing number of clients create strategies for managing these future financial pressures. Already highlighted is a current lack of trauma and disability insurance. This will provide a lump sum to cover costs if a critical illness is brought on by the extra stress of these situations, placing the in-between generation in a better position to manage this phase financially and emotionally.

Other strategies to start considering now include:

  • dollar cost averaging to grow savings,
  • increasing superannuation contributions,
  • nominating superannuation beneficiaries,
  • establishing powers of attorney and maintaining wills.

Your financial adviser can discuss these and other individual strategies with you to determine the most appropriate for your current situation and your future needs.

As housing costs increase and we continue to live longer, the pressures of multi-generational accommodation will affect today’s younger generations, tomorrow.

The key to achieving financial security is planning. Speak to your financial adviser about the right strategy for you; it’s never too early, and it’s certainly never too late either.

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.
Read More >>
 
  • Service your future regularly

    Most of us take for granted that we have to get our car serviced regularly. It’s not something we look forward to, but we know we have to do it – or it will let us down when we most need it. A regular review of your financial plan is just as important – and […]

  • Holidays without financial baggage

    We all need something to look forward to and for many members of Generation X the lure of discount airfares and package deals are irresistible; others have luxury holidays high on the agenda. And why not? We all love a holiday and what’s more, happiness, apparently, is not just in the holiday itself, but in […]

  • Attention: SMSF Trustees

    When it comes to retirement funding, over one million Australians have established Self-Managed Super Funds (SMSFs) to take more control over this crucial stage of their lives. However, SMSF trustees take note – to protect your and your fellow members’ best interests, there are strict rules governing SMSFs which, if broken, attract strong penalties. The […]

  • 5 Ways to give your Christmas a makeover

  • Millennials & Money – your unique needs

    If you entered the world between 1980 and 1996 you’re part of the “millennial generation”. You’ve grown up in an age of unprecedented abundance and incredible technical innovation, and as a group, enjoy a greater wealth of opportunity – professionally, socially and recreationally – than any previous generation. Many goods and services have never been […]

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