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Health Insurance…yes or no?

All / 22.08.2019

Health Insurance…yes or no?

The argument has been waged for many years – do I take out health insurance or do I invest the same amount each year and if I get sick, the money will be available (and it’s earning me interest!)?

As with any type of insurance the decision is a personal one. Many people go without car, home or life insurance, thinking that the money is better spent or invested elsewhere… they are willing to take that risk. But how many of us have actually sat down and weighed up the differences between taking out health insurance or not, particularly with the government penalties on those not covered by a private health fund?

Could this be you?

Paul is a 30-year-old family man who pays $2,000 per year for basic health cover. By age 70 he would have contributed around $200,000 (adjusted for inflation). For this amount, he and his family are covered for hospital (with elective surgery) and ancillary medical costs, although still subject to his insurer’s hospital excess.

If Paul and his wife decided to cancel their health fund insurance and invest the $2,000 per year, assuming the $2,000 is indexed at 4% pa and the investment returns 7% pa, by age 70 their investment would be worth around $786,000! They would have to pay all of the costs of having a doctor of their own choice, in a hospital of their choice plus any other associated specialist costs. Paul will also pay the Medicare Levy Surcharge on his taxable income, which can be thousands of dollars (see below).

$786,000 sounds much better in your pocket than giving away $200,000 for something that will never usually cost that much… but how many of us are prepared to put away that amount of money and never touch it? That’s the tough question.

The Medicare Levy Surcharge

If you earn over $90,000pa as an individual or $180,000pa as a family and don’t have private health insurance, you will be charged the Medicare Levy Surcharge as outlined in the following table:

 No change Tier 1Tier 2Tier 3
Single threshold$90,000 or less $90,001 - $105,000$105,001 - $140,000$140,001 or more
Family threshold$180,000 or less$180,001 - $210,000$210,001 - $280,000$280,001 or more
All ages0.0%1.0%1.25%1.5%

If you’re a high-income earner this could amount to a hefty sum and wipe out any potential tax refund at the end of each year (or you may even have to pay extra tax).

But it still might be worth sitting down and doing your sums. Another option is to take out the most basic hospital cover and invest the difference you would be paying for full private health cover in your “own health fund”. Then when you get your tax refund, add that to your growing kitty. You might not end up with as much as the above case study, but if you’re willing to work out the difference, you might still be well ahead.

Insurance should be seen as just that – Insurance. We always hope we won’t need it but it’s there in case we experience unforeseen emergencies.

There are always alternatives and their associated upsides and downsides. In the end, the decision is up 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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The benefits of investing in yourself

All / 15.08.2019

The benefits of investing in yourself

A growing number of Australians are choosing to return to study as mature-age students. Perhaps caught in the hamster-wheel of mortgage and family, furthering their education wasn’t an option when they were younger.

But that was then.

Harriet had long fancied setting up a home-based book-keeping business. But being a single mum, raising her two daughters and working part-time in a clothing store, kept her too busy for anything else.

After her girls left home to begin their own lives, Harriet enrolled in a book-keeping course at her local TAFE. She’d put her own goals on hold for almost twenty years and now she was finally able to achieve them.

Older people return to study as mature-aged students for a number of reasons. Perhaps, like Harriet, they’re fulfilling a dream, that due to various lifestyle or family commitments, they’ve had on the back-burner for a while.

Some wish to update their skills and gain confidence at work, qualify for a job promotion or pay increase. Many seek a complete career change or something to keep them busy in retirement.

Take Ed, for example. After a thirty-year banking career, Ed was approaching retirement. Though he looked forward to finishing full-time work, he couldn’t see himself doing nothing at all.

After chatting with some local real estate offices, he discovered their regular need for a handyman to perform odd-jobs on properties they manage.

Happily for Ed, on 28 November 2018, the federal government announced an expansion of its Adult Australian Apprentices Incentive – a program supporting employers who engage a mature age (over age 25) apprentice.

Ed had always loved working with his hands, so he quit his job at the bank and began life as a mature-age apprentice. By retirement, he planned to achieve a trade qualification and enough work experience to set up a part-time handyman business.

Harriet and Ed are not alone. In fact, so many mature-age Australians are furthering their education that the federal government is a major sponsor of the National Skills Week.

This is a national event held in August each year, for the promotion of activities that align with adult learning, along with a support program for those preparing to return to education.

The federal government also provides financial support for mature-age Australians seeking to further their education along certain study paths. The list of eligible courses covered is extensive. See the Funded Course List at www.education.vic.gov.au for further information.

Additionally, government study loans are available through the Higher Education Loan Program (HELP) which has a range of loan schemes to help with various study costs.

You’re expected to begin repaying your HELP debt – even if you’re still studying – if you’re earning above a certain amount. Repayments are between 4% and 8% of your income, depending on how much you earn, and will be calculated through the income tax system.

So whether you’re wishing to enhance and update your existing skills, embark on a new career or simply learn something new, the opportunities are endless. Start by checking out local TAFE colleges for course guides.

And if you’re living remotely or don’t fancy a classroom environment, consider studying online. You’ll be amazed – and inspired – by the range of online courses available. Further, they are often cheaper than face-to-face courses, enable you to schedule study around other commitments and provide interaction with teachers and fellow students.

Perhaps that long-held dream of working an archaeological dig isn’t out of reach after all! The world is bursting with possibilities; and we’re never too old to explore them!

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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Will there always be an age pension?

All / 07.08.2019

Will there always be an age pension?

With all of the talk about the need to be self-sufficient in retirement it’s not surprising that many people assume that the government-funded age pension will be phased out altogether sometime in the future. But will it?

Both sides of politics have committed to retaining the age pension “for those in need”. The age pension is means tested using both an income and an assets test – the test that pays the lowest pension is the one that is used.

Conclusion – The age pension will remain, but not for everyone

There are two other aspects to the government’s retirement income policy – compulsory superannuation and tax-concessional voluntary superannuation. Following the increase to the assets test thresholds in January 2017, many people now qualify for only a part pension. Meaning, the general rule still holds – as you build more super, you will qualify for less age pension.

One aspect that people don’t consider is the age when a pension becomes payable. Historically, it has always been age 65 for men, and since 1995 the qualifying age for women progressively extended to age 65.

With people now living longer lives, the age pension may be payable for 20 to 30 years – a very long-term commitment for governments. This raises the question “why 65?”

The answer to this question suggests another key issue in the provision of the age pension. It all goes back to Otto von Bismark, the German Chancellor in the 1880s. He introduced state funded “accident and old age insurance” – the first pension scheme in the world. This standard was followed throughout the rest of Europe and eventually the world.

His actuaries nominated age 65 as when the “old age insurance” would be payable. This was at a time when the average life expectancy of a German male was 44. A very small percentage of the population could expect to receive the pension and they were not likely to receive it for long.

In 2010 the government considered the question of ‘why 65?” and the age pension age was increased. Starting from 1 July 2017, the qualifying age for both men and women increases by six months every two years. From 1 July 2023, the qualifying age will be 67.

With increasing “grey power” as our population ages, it would be political madness for any government to even consider abandoning the age pension. Instead, fewer people are likely to qualify at a later age for a shorter period.

This is all the more reason to continue to build your own superannuation nest egg and become self-sufficient in retirement

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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The 9 golden rules of investing

All / 01.08.2019

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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Could a tree-change work for you?

All / 25.07.2019

Could a tree-change work for you?

Cleaner air, less traffic, open spaces, lower cost of living…did we mention less traffic? There are any number of reasons to consider a tree change, but if you’re serious about leaving the bright lights behind, better do your homework first.

Housing affordability

Buying a home is more affordable in the country, and that goes for renting too.

In Wodonga on the Victoria-NSW border, you can rent a 4 bedroom, 2 bathroom, modern family home for around $390 per week. You’d pay around $610 for a similar home in Melbourne’s Glen Waverley.

You could buy a 4 bed, 2 bath home on a 1,000 square meter block in Orange for just over $500,000, while a similar dwelling 250 ks up the road in Hornsby, Sydney could set you back over $1 million.

While property is generally cheaper to rent or buy in the country you’ll need to consider other factors such as council rates.

Some regional municipalities cover large areas – that equates to a lot of maintenance with fewer residents. This means council and water rates can be pricier than in the city.

Another point to think about is bushfire zoning. If you’re in a high-risk area, insurance premiums can be more costly. When building a house in a bushfire-prone area you may be required to modify your building plans to accommodate the area’s fire rating. This will increase the cost of your project.

Make sure you do your sums. Talk to local councils about rates and levies. If buying land, read your Section 32 carefully and be aware of all zoning requirements.

Work

Government incentives encourage industries and businesses to move to regional areas. As employment opportunities in regional areas grows, so too does the economic well-being of its towns.
This flow-on enables local governments to build and maintain community infrastructure such as parks and family-friendly spaces and resources, such as libraries, transport and shops. All of this provides a wide range of employment opportunities.

It’s a good idea, to check the job-market in the area, and if possible, have a job lined up before you make any final decisions.

Could you make it work?

Holidaying and living are two separate things. Try not to make the mistake of assuming an idyllic getaway will be your perfect permanent tree-change.

On holiday you’re relaxed; you’re not a taxi for your kids’ weekend activities, you’re not harried by housework, school and work pressures.

If you’re serious about moving to the country and you’ve a location in mind, do your due diligence. Start by researching the following:

  • Schools
    • primary/secondary/tertiary
    • adequate facilities and teaching resources
    • good range of subjects
    • good location
  • Medical
    • hospitals, doctors, dentists
    • ambulance service
  • Community
    • kids/adults sporting clubs
    • library
    • public transport
    • local theatre or art group
    • swimming pool
    • well-maintained parks and gardens
  • Entertainment
    • bars, restaurants, cafes
    • theatre or cinema
    • shops

Australians are blessed with an abundance of wide-open spaces. If you’re dreaming of a tree change, do your research and draw up a plan; your dream could become reality.

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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Why it just got harder to get a home loan

All / 18.07.2019

Why it just got harder to get a home loan

Anyone applying for a home loan these days will find that there are more hurdles to jump than has recently been the case. So why is it harder to get a home loan? And what can you do to improve your chances of getting a loan?

The Royal Commission

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry that concluded in early 2019 discovered a number of lax lending practices by some of Australia’s biggest lenders. Of particular concern was that some banks failed to verify the living expenses of home loan applicants. In many cases this lead to people receiving loans that they were unable to repay. The Royal Commission also revealed that one of the bank regulators, ASIC, did little to punish misconduct, so there was little incentive for banks to comply with their legal obligations.

In response to the Royal Commission ASIC promised greater scrutiny of lending practices and lenders began to ask for a lot more information when assessing home loan applications. They now require detailed proof of both income and expenditure at a level that many people may find intrusive.

Bigger deposits

The decline in home prices in Australia’s major cities mean that buyers don’t need to borrow as much for a given property, which should make it easier to get a loan. However, falling prices create a greater risk for the banks, and one way to reduce this risk is to require a higher deposit, extending the time it takes to save that deposit.

Stringent stress testing

Even before the Royal Commission the prudential bank regulator, APRA, introduced a requirement that banks check on their borrowers’ ability to service their loans if there is a significant increase in interest rates. While it might be possible to borrow at an interest rate of less than 4% per annum (pa), the banks need to check that the loan is still affordable at an interest rate of more than 7% pa, thus reducing the amount that can be borrowed.

Being prepared

The main response to this more difficult lending environment is simple, but that doesn’t make it pleasant. Unless you are able to increase your income, you’ll need to save more. Inevitably, that means spending less:

  • Apps such as TrackMySPEND from MoneySmart can help you track your spending and make it easier to work to a budget.
  • Keep detailed records of saving and spending. You will be asked for them come loan application time.
  • Start early. You are more likely to be successful in your home loan quest if you can show a consistent history of saving and responsible spending spanning years rather than months.
  • Shop around. By all means start with your regular bank, but also check out what the non-bank lenders and mortgage brokers can offer.

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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Tax rules do not treat all income equally

All / 11.07.2019

Tax rules do not treat all income equally

Anyone who has completed their own tax return will know that the tax office treats different types of income differently. Bank interest is recorded in one section, dividends from shares in another and managed fund distributions somewhere else. And unless you are taking a pension or lump sum from your super, you don’t need to include your earnings on those funds at all.

Returns from investing in shares and property – in particular – come with some real tax benefits. The trick is to make sure you take advantage of them.

Understand the rules

The most common tax benefits are:

  • Franked dividends from Australian shares – these represent a tax credit of up to 30% for tax already paid by the company. But beware, if your franking credit entitlement is over $5,000 the shares must have been held for at least 45 days.
  • A fifty percent discount on the capital gain made from the sale of a personally held asset. Superannuation funds can qualify for a one-third discount. But this only applies where the asset has been held for at least 12 months.
  • Capital losses can be offset against capital gains and the net gain is only payable when the asset is sold. The tax can be deferred for a long time.

Choose who owns the assets

The best tax outcome can be achieved with a low-income earner holding investment assets. They could earn up to $20,542 tax-free, receive a refund of all imputation credits and pay less tax on capital gains. For instance, if an investor on the top marginal tax rate of 47% had a $100,000 capital gain they would pay $23,500 in tax and Medicare. If an investor with no other income had a $100,000 capital gain they would pay $8,797 – a saving of $14,703.

Choose the structure

Superannuation funds have the most generous tax arrangements. If you manage a share portfolio in a super fund, capital gains will be taxed at 10% or 15%, whereas if you held them privately they would be taxed up to 23.5% or 47%.

Imputation credits are especially valuable in a super fund because the fund pays a flat 15% tax and the 30% tax credit can be used to offset tax on other income.

Be smart about timing

The 45-day and 12-month rules are obviously important to maximise tax benefits. Capital gains are only incurred when an asset is sold and capital gains tax (CGT) can be deferred indefinitely. An investment asset can be passed through your estate to future generations and no CGT would be payable.

Superannuation provides special opportunities to avoid CGT altogether. In the accumulation stage of superannuation, the fund pays tax at 15% but once a pension is started, the fund pays no tax at all. A share portfolio or a property can be sold once the pension has started and no CGT would be payable.

The opportunity to invest tax-effectively using some of these methods will vary from one person to the next. Make sure you seek advice about how they relate to your own situation.

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 small business strategies for kick-starting the financial year

All / 04.07.2019

5 small business strategies for kick-starting the financial year

How often do you give your business finances a tidy-up? As another end-of-financial-year rolls by, now is as good a time as any to undertake a bit of housekeeping.

The stresses of running a small business often see us rushing, unprepared, towards June 30th. It’s that time when we draw a line under our business finances for one year, take a deep breath, and plunge into the next.

This year, before holding your nose and leaping into July, why not take a moment to dust off your finances and begin the year with a fresh outlook?

Here are five ideas to get you started.

Insurance

The Australian government’s business website, www.business.gov.au can help you understand your compulsory insurance requirements, along with other cover you should consider, like personal insurances to protect yourself, your income and your family in the event you’re injured or become too ill to work.

Additionally, there are policies to protect your premises, your stock and machinery.

If you’ve had insurance for a while, perhaps shop around and see if there are better deals to be had.

Tax planning

The start of a new financial year is perfect for developing a forward strategy. To get organised, and stay organised, throughout the coming year start by understanding your industry’s regulatory obligations and entitlements. Look at government concessions, asset write-offs and deductions.

Stay up-to-date with compliance responsibilities like, Single Touch Payroll, effective from 1 July 2019.

You should:

  • analyse your profit and loss: monthly, quarterly, annually.
  • track revenue to ensure billing and collecting provides adequate cash flow.
  • calculate the cost of doing business; devote more time to activities that are the most profitable and help grow your business.

Your tax accountant can help you put a system in place that will keep your tax records organised and up-to-date throughout the year. Why not call them to arrange a time to talk it through?

Systems

If you’re doing things a certain way because that’s how they’ve always been done, it may be time to cast a critical eye over your business procedures. Are there :

  • better/faster/more efficient ways of doing things?
  • technologies to simplify processes, e.g.: point-of-sale (POS) systems?
  • process bottle-necks or duplicated steps that can be safely bypassed?
  • ways to automate manual processes like running reports or paying regular accounts?

Business tracking

Staying on top of business performance, trends and cash flow can eliminate surprises by spotting potential problems and identifying supply and demand patterns.

Start by:

  • analysing data from previous years or seasons.
  • looking for peaks and troughs in sales/turnover/productivity.
  • identifying what worked and what didn’t work.

Plan to grow

Once you know where you are, you can look for ways to move forward.

Whatever your business’s growth strategy, be sure you have the resources to support it. Consider whether you’ll need to invest in machinery, supplies or specialist staff?

Now, update your business plan and review it regularly to stay focussed on where you’re heading.

Running your own business is hard work, but it’s also one of the most satisfying things you can do.

Richard Branson once said, “A business is simply an idea to make other people’s lives better.” So, this new financial year, start refreshed and set yourself up to make your life, your family’s life and your customers’ lives better.

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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Is household debt consuming you?

All / 27.06.2019

Is household debt consuming you?

By the end of 2018 Australia had, relative to the size of its overall economy, one of the highest levels of household debt in the world. At 127% of gross domestic product (GDP), our household debt, as a percentage of GDP, had nearly doubled over the last 20 years.

So are Australian households groaning under the weight of oppressive levels of debt? For the most part the answer is no. A major reason for the increase in household debt is that interest rates are much lower than they were 20 years ago, so it’s easier to service larger loans. And over 90% of our household debt is owner-occupied home loans and investment loans.

Good debt, bad debt

Home loans and investment property loans are often referred to as ‘good’ debt because, when used responsibly, they (usually) improve wellbeing and build wealth over the long term. That said, poor choices or unfortunate changes in circumstances – borrowing too much, loss of a job or an increase in interest rates for example – can see ‘good’ housing debt turn ‘bad’.
Another type of bad debt is lifestyle debt. This has a negative impact on wealth because the debt is being used to buy things such as cars and clothes, holidays and groceries – that lose value rather than gaining it. In today’s world it’s easy to accumulate bad debt.

Temptation galore

Credit cards, digital wallets on our phones, payday loans and buy-now-pay-later options all make it easier to spend money, even if it’s money we don’t have. Relentless, targeted advertising, the fear of missing out, the increasing level of peer pressure enabled by social media or just paying for daily essentials are all capable of leading us into spiralling debt.

Is debt consuming you?

Some warning signs that you have a debt problem include:

  • Not paying off your credit card in full each month. This means you will be paying a high rate of interest on the carryover balance.
  • Your total debt is increasing, along with your interest payments.
  • You’re experiencing housing stress. This means rent or mortgage repayments consume more than 30% of your pre-tax household income.
  • You’re using debt to fund basic living costs.

Taking control

How do deal with your particular debt problem depends very much on personal circumstances.

  • Track your spending. Australians buy huge amounts of clothes they don’t wear, food they don’t eat and gadgets they don’t use. For every purchase ask yourself, “do I really need this?”
  • Take out a lower interest rate personal loan to pay off high interest debts such as credit cards. Repay the loan as quickly as possible.
  • If you have a home loan, make sure it has a linked offset account that you use for everyday banking. You only pay interest on the difference between your loan balance and offset account balance so all of your money is working to pay down your loan.
  • Review your home loan regularly. You may be able to refinance at a lower interest rate. Check for all the fees involved.
  • Talk to your financial adviser. They can look at your specific situation and recommend strategies that will put you in control of your debt rather than having debt consume 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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Don’t wait until your 60s to see a financial adviser

All / 21.06.2019

Don’t wait until your 60s to see a financial adviser

Ask most 30 year olds who their financial planner is and the typical response might be ‘huh?’ After all, financial advisers are for older people with plenty of money to invest, aren’t they?

Well, yes, people nearing or in retirement will benefit from sound advice. But so will younger people. With the benefit of having time on their side, and with some help from an adviser, a 30-something can easily establish a wealth creation plan that can deliver a big payoff in the future.

Harness compound interest

It’s been called the most powerful force in the universe, and compounding returns – earning interest on your interest – can deliver dramatic results.

Imagine that, at age 30, you commence a simple savings plan. You contribute $2,000 each year to an investment that delivers an after-tax return of 6% pa. After 30 years you will have contributed a total of $60,000, but your investment will be worth $158,116. The magic of compound interest will have delivered you an effortless $98,116! The longer you go and the more that you contribute the bigger the ultimate balance.

Manage debt

The wrong sort of debt can have a huge impact on your future wealth. High interest debt such as credit cards and payday loans should be avoided if at all possible. Consolidating several debts into one lower interest loan can help get debt under control and save you heaps of interest.

Even with ‘good’ debt, such as a home loan, simple strategies can pay big dividends.

For example, repayments on a $500,000 mortgage at a 4% pa interest rate over 30 years will be $2,146.90 per month. Increase mortgage repayments by $166.67 per month ($2,000 per year) and the loan will be repaid in just under 25 years, saving $80,144 in interest.

In these examples the savings plan delivers the bigger result due to the higher interest rate. However, paying down the mortgage is a low risk strategy. The higher return from a long-term savings plan is likely to come with a higher level of risk. An adviser can help you find your investment risk comfort zone.

Where will the money come from?

While many people in their 30s can easily find a couple of thousand dollars a year for savings and debt reduction, for other that’s not such an easy task. However, significant savings may be hiding in plain sight. For example, the average Australian household throws away over $1,000 dollars’ worth of food every year. There’s half the target already. Buying lunch each day can easily cost over $2,000 a year. Taking lunch from home occasionally could easily provide the rest.

Don’t forget protection

Regardless of age, bad things can happen. The financial consequences of death, illness or disability can be devastating, and the younger you are the bigger the potential impacts. How will your retirement look if you’re no longer able to earn an income or contribute to super?

Most Australians have much less life and disability insurance than they need. Your adviser can help you ensure that your family’s wealth creation plans are well protected.

Who’s your financial planner?

Simple savings plans or increases in mortgage repayments are simple strategies that anyone can put in place. However, we live in a complex financial environment, and expert advice can really help you make the most of the wide range of opportunities available. This includes choosing the right savings structures (superannuation or non-superannuation), and investment products that suit your resources and priorities. A planner can also help you find hidden savings, and run the numbers to help you choose between different strategies.

Ready to meet your financial planner? Just 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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