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When scammers come back for more!

All / 24.01.2019

Most victims of scams can never recover their lost money, but by taking immediate action it’s possible to reduce the damage and avoid yet another danger – the follow-up scam.

Despite public awareness of scams, the perpetrators’ methods are becoming increasingly sophisticated and otherwise savvy people are falling victim.

It’s almost impossible for victims to get their money back because most of the fraudulent companies are international, placing them outside of Australian Government jurisdiction.

However, the following steps may help to minimise the financial loss, and make it harder for these criminals.

  1. Contact your bank.

Do this as soon as you become aware of being scammed; quick action may be able to stop money transfers. At the least your bank will be able to close your account or cancel your card so that the scammers won’t have further access.

  1. Report the scam.

It’s very important to stop the scam from spreading by identifying the scammers and warning other potential victims. On the Australian Competition & Consumer Commission’s (ACCC) website www.scamwatch.gov.au there is an online form and phone number to report scams.

  1. Beware of follow-up scams.

Follow-up scams focus on people who have already been scam victims because the perpetrators see them as an easy target. Look out for the following clues:

  • You receive an offer to swap your investment for another one in order to recover your losses.
  • You receive an offer to buy your shares at a premium provided you pay a fee to have “restrictions” on the shares lifted.
  • Someone offers you assistance to locate the person that originally scammed you but you must pay travel and accommodation costs.
  • Anyone claiming assistance recovering your losses for a fee. Often they’ll explain this fee is a tax, deposit or a refundable insurance bond.

If you have become a victim of a scam and are subsequently contacted for these or any other reason you feel is suspicious, you should immediately cease any discussion with the person and report the call or email.

With so many scams in operation and growing on a daily basis, it pays to stay informed. The www.scamwatch.gov.au website is continually updated and is a good place to visit regularly. Improving education and awareness is the best way to beat this scourge.

 

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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10 Common Financial Mistakes Before Retirement

All / 24.01.2019

Many of us would like to think that ‘older’ means ‘wiser’, but when it comes to money that isn’t always the case. The complexity of Australia’s superannuation and pension systems doesn’t help. The upshot is that there are a number of common mistakes that retiring and retired Australians make.

What are those mistakes and how might you avoid them?

 

  1. Underestimating how much you need

The Association of Superannuation Funds of Australia’s (ASFA) Retirement Standard calculates that a “comfortable” retirement for a couple costs $60,604 per year. For singles the figure is $42,953 per year. To fund these levels of income, the ASFA calculates that a couple will need a nest egg of $640,000, and a single $545,000 at retirement[1]. Less than that and retirees become increasingly reliant on the age pension.

In 2015-2016, the average total superannuation balance for households headed by someone aged 60-64 was around $337,100 – well short of enough to fund a “comfortable” retirement.

  1. Retiring too early.

Australians retiring today can expect to live until their mid-80s. For retirees in their mid-50s, that means finding a way to pay for a further 30 years of life.

The obvious solution to retiring too soon is to work longer. This provides a double benefit: it extends the savings period allowing a greater sum to be saved, and delays the point where withdrawals start to eat into accumulated funds.

Many people may also overlook the social benefits of work. They end up

bored, and then could face the challenges of trying to re-enter the workforce as an older worker, or taking an extra risk by starting a business.

  1. Not topping up super.

Making additional contributions into the tax-favoured superannuation environment can really boost super savings. Strategies involving salary sacrifice, spouse contributions and government co-contributions should all be in play well before retirement. Within the allowable limits of course.

  1. Investing too conservatively.

A common view is that retirees should dial back on their investment risk by allocating more of their savings to cash and fixed interest, and less to shares and property. However, even 10 years is a long-term investment horizon, let alone 20 or 30. Cutting too far back on growth assets early in retirement may see savings dwindle too quickly.

  1. Withdrawing super as a lump sum.

Superannuation can be withdrawn as a lump sum after retirement, and if you are over 60 it’s all tax-free.

But what then?

Common choices are to take that big trip or renovate the home.

Of course you’ll want to celebrate your retirement, but if you’re thinking of dipping into your savings in a big way, make sure you understand the potential implications for your future lifestyle.

Another option is to invest outside of super. This may be entirely appropriate. However, don’t forget that if you are over 60 and your super is in the pension phase, earnings and capital growth will be tax-free. Investing outside of super may see you paying more tax than you need to.

  1. Expecting too much age pension.

Just because you’ve decided to retire doesn’t mean the government is ready to give you an age pension. To begin with you need to reach pension age, which is between 65 and 67 depending on your date of birth. If you haven’t yet reached your pension age, you’ll need to fund your lifestyle until you do.

Then there is an assets test and an income test. Too many assets (not including the family home) or too much income and the amount of pension you can receive will start to fall, eventually to nothing. It’s important to remember that these tests apply to the combined assets and income of a couple. If your partner is still working you may receive little or no pension.

  1. Forgetting to plan your estate.

If you don’t have a current Will, haven’t granted someone you trust an enduring power of attorney, or made a binding death benefit nomination for your superannuation, you’re likely to leave a big headache for whoever will manage your affairs if you become incapacitated or die. The solution? Talk to a lawyer who specialises in estate planning matters sooner rather than later.

  1. Overlooking preservation age and conditions of release.

You can retire any time you like. You may even be able to access some of your super if you have an unrestricted, non-preserved component. Otherwise you need to meet a condition of release. This usually requires reaching preservation age, which is between 55 and 60, again depending on date of birth. If you’re under the age of 60 it also means ceasing gainful employment with no intention to being gainfully employed again. Between 60 and 65 it is sufficient just to cease an employment arrangement. All funds can be accessed from age 65, regardless of employment status.

One way to access super after reaching preservation age but without retiring is to start a Transition to Retirement pension. However, this must be paid as an income stream. Lump sum withdrawals are not allowed.

  1. Carrying debt into retirement.

It can be hard enough keeping up mortgage, car finance or credit card interest payments even when you’re working. It can become a real burden in retirement.

Where possible, do your best to pay down debt. It may help to consolidate debts and pay off one loan at the lowest possible interest rate. Downsizing your home may also allow you to start retirement debt-free.

  1. Paying for unnecessary insurance.

Free of debt and without financial dependants, you may not need to maintain the same level of life and disability insurance you once required. Also, premiums can become expensive as you get older. The run up to retirement is an ideal time to review your insurances, a task best done under the guidance of your financial adviser.

Invaluable advice.

While the expectation may be that life should get less complicated as you get older, this short list reveals that’s not always the case. Many of these mistakes come with a high price tag but can be avoided by seeking professional advice.

Your financial planner will be able to assess your specific circumstances and help you develop a plan for your retirement. But don’t wait until you actually retire. As you can see, it’s never too early to start planning.

 

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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Infographic – Work-Life Balance

All / 17.01.2019

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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Infographic – 10 Tips to Have a debt free holiday

All / 14.01.2019

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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Managing CGT in a Self-Managed Super Fund

All / 19.12.2018

When you dispose of an asset and make a capital gain, you may be liable for extra tax. There is no separate tax rate for capital gains. Instead, some or all of the capital gain is added to your assessable income and taxed along with your other income at your marginal tax rate.

Capital Gains Tax (CGT) – generally speaking

The CGT system is very complex but in general terms, for individuals, the capital gain can be discounted by 50% if the asset is held for at least a year. This means the effective tax rate is 23.5% for those on the highest tax rate. There is no discount for assets held less than one year. For companies, there is no discount and the full capital gain is taxed up to the maximum company tax rate of 30%.

Tax on superannuation funds works in the same way as that applying to individuals. However, when a super fund disposes of an asset, it qualifies for a one-third discount if the asset was held for at least a year. Super funds are taxed at a flat rate of 15%, so this means the effective tax rate is 10%.

Minimising CGT

There are extra advantages in a Self-Managed Super Fund (SMSF).

The major benefit is that you can plan when to dispose of an asset taking into account the effective tax rate. This may mean, for example, that if you have invested in a share that has appreciated rapidly, you may hold it longer to qualify for the one-third discount.

Another advantage is that you can control the amount of capital gain made in a year and match it against capital losses to minimise the net capital gain.

The lower tax rates in super mean there is a lower “tax cost” of selling before a year has passed. The maximum tax rate will be 15% rather than 47% if the asset was held as an individual or 30% in a company.

Trustees of many SMSFs find that the lower tax rate in super helps them to focus on buying quality assets rather than worrying about how much tax may be payable.

Eliminating CGT

As stated, superannuation funds pay tax at 15%, however, once a super fund starts paying a pension or other income stream, the assets are not taxed at all. All income and capital gains are exempt from tax.

If your fund holds a large asset like a property, the capital gain may be significant and the potential tax cost could deter you from selling. In a SMSF, you control when you dispose of the asset. For example, disposal of the asset once a pension has started can eliminate capital gains tax.

Of course, tax is not the only issue when making investments but it can “add cream to the cake” if it can be reduced or legally eliminated. If appropriate to your personal circumstances, a SMSF may provide excellent opportunities to do just that.

The rules governing SMSFs are very strict, so always seek professional advice to determine if you might benefit from these or other opportunities within those rules.

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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Ensuring your voice is heard

All / 19.12.2018

When you’re here to supervise your worldly affairs, your voice, which reflects your current views, is heard, and more often than not, heeded. But when you’re not here, what voice will be heard? Will it be your most recent voice; an old voice from several years ago; or the voice of government legislation? Unfortunately, all too often, it is voice number two, or worse, three.

 

If your Will and other estate arrangements have not recently been reviewed, you risk your voice not being heard. If you have overlooked making a Will, the government decides how your estate is to be distributed. This reinforces the importance of keeping all of your estate arrangements current.

That said, even with the best of intentions the most up-to-date Will in the world can be challenged. There have been countless real-life court dramas involving high profile public figures engaging in claims and counter-claims following the death of a wealthy relative. Some of us have experienced similar emotional intensity, anguish, and even bitterness. We must always remember that people change, form new relationships, and take advice from different sources whose motives may not always be pure.

In ensuring your voice from the other side will be heard and heeded, the Will remains the centrepiece of estate planning, but with life insurance and binding nominations for superannuation, there are additional tools you may not have thought of.

The insurance option

A policy taken out by a person on their own life and owned by that person forms part of their estate to be distributed in accordance with their Will, and thus subject to challenge. But, and here is the feature which can make insurance such an important part of sound estate planning. A policy which nominates someone other than the life insured as the beneficiary does not form part of the estate and is quite separate from the Will – and not subject to challenge.

What this means is that if there is even the smallest possibility that your wishes may not be carried out after you’re gone, it might be a good idea to seek professional advice about the value of a life insurance policy.

The super solution

It is widely believed that superannuation is included in an estate and dealt with through a Will. Not so. The trustee of your superannuation fund determines how your super is paid upon your death. You may identify a “preferred beneficiary” however the fund trustee can override this decision at its discretion. If you don’t want this to occur, you should complete a ‘Binding Death Benefit Nomination’.

Binding Death Benefit Nominations

Superannuation legislation allows you to specifically nominate, with certainty, who will receive your super following your death.

These nominations must be in writing and clearly state the names of beneficiaries and any split details between multi-beneficiaries. Some funds offer non-lapsing binding nominations however, many binding nominations must be renewed every three years and are only valid if you nominate a dependant, eg. your current spouse (including de facto), or your child of any age, or a person financially dependent upon you at the time of death. You may also nominate your estate.

Binding nominations are still relevant if you have a self-managed super fund. Even though you have the final decision on how your super is managed whilst you are alive, it is crucial to ensure your trustee/s (who may also be family) continues to fulfil your wishes after you die.

To ensure it’s your own voice that takes final control of what you have worked hard for in this lifetime, consult an estate planning specialist or talk to your financial adviser.

 

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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Does the value of the Aussie dollar affect you?

All / 18.12.2018

You might think that only importers and exporters pay attention to the value of the Aussie dollar, but movements in the exchange rate affect us all.

After peaking at US$0.81 in late January 2018 the Australian dollar fell as low as US$0.70 in October. It also fell against a number of other currencies.

A falling Aussie dollar makes it more costly to travel overseas and increases the local cost of imported goods. On the upside, it makes many of our exports less expensive for foreign buyers, giving a boost to our farmers and other exporters.

The reverse applies in the case of a rising dollar, but movements in exchange rates don’t just influence our living costs. Most people with superannuation will have a portion invested in overseas assets, and changes in currency values can also influence the performance of retirement savings – a lower dollar boosts the local value of our overseas investments while a higher dollar has the reverse effect.

So what are the main influences on exchange rates? Ultimately it comes down to supply and demand, and that can be determined by a number of things:

  1. Interest rates. Imagine an Australian investor earning 1% interest on her money. She looks across the Pacific and sees that she can earn 2% in the USA. Here’s an opportunity to double her income! To do so she needs to buy US dollars, increasing demand for the greenback and thus increasing its value against the Australian dollar. Exchange rates respond very quickly to both actual changes in official interest rates, and to expectations of where interest rates in different countries are heading.
  2. Commodity prices. From wheat and wool, to iron ore and natural gas, Australia produces a wealth of commodities. When demand for materials falls less money flows into Australia, and with decreased demand our dollar falls in value.
  3. The economy. If the economy is doing it tough the Reserve Bank of Australia may drop interest rates to encourage borrowing and stimulate investment. This takes us back to item 1. A weak economy relative to other countries attracts less overseas investment, causing the local currency to fall.
  4. Elections and referenda can create a climate of economic uncertainty that investors, on the whole, don’t like. However, if the market thinks that a more business-friendly government is likely to be elected, this could boost the value of our dollar.
  5. In times of market volatility and global political upheaval, investors flock to the US dollar as a ‘safe haven’ currency. Most other currencies, including ours, usually fall relative to the US currency.

But it’s not that simple

Other things can influence currency values, such as speculation or central bank intervention. There’s also a lot of interaction between the influences outlined above. For example, strong commodity prices may give a boost to the economy, which leads to higher interest rates. Throw in some political uncertainty add a touch of speculation and things quickly become very complicated.

Armies of analysts are employed to sift through massive amounts of data in their attempts to figure out where different currencies are headed. However, given all the complexities it is perhaps no surprise that they often arrive at very different conclusions.

So will the Aussie dollar rise or continue to fall? History suggests flipping a coin may provide as useful an answer as following the opinions of ‘experts’.

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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Everything you wanted to know about buying a home

All / 18.12.2018

Ready to make the leap from renting to buying a home? Well, before you begin the search for your perfect home there are lots of questions to find answers to. Here are some of the big ones.

Do you need to own your home?

For most people home ownership remains part of the great Australian dream, but that’s changing. Renting offers greater flexibility and can be an economically viable alternative to buying. Weigh up the pros and cons first to see if you really want or need to own your home.

If the answer is a definite yes, then…

What repayments can you afford?

To answer this question with any certainty you really do need to do a budget. This should show you exactly how much money is coming in, how much is going out, and how much is left to service your mortgage. Your budget will identify what you are spending money on and may reveal areas where you can save more. If your plans include starting a family at some stage, factor in the likely drop in income.

How much can you borrow?

Once you know how much you can spend on mortgage repayments you need to work out the size of the mortgage these repayments will support.

Plug your repayments into the mortgage calculator at www.moneysmart.gov.au. Use an interest rate of at least 7% per annum. While you may be able to borrow at a much lower rate, and therefore afford a larger mortgage now, banks are required to check that borrowers can comfortably service their loan if there is a significant rise in interest rates. The figure currently set by the government regulator (APRA) is 7%, but some lenders use even higher figures.

What’s it really going to cost?

Aside from the purchase price, buying a home comes with a whole lot of other costs, some upfront and many ongoing.

Stamp (or transfer) duty is usually the biggest of these. Remember to allow for it when setting your purchase limit. Conveyancing, loan establishment fees and removalists are other upfront costs.

Buying an apartment or unit? Body corporate fees will need to be paid. These, along with other ongoing costs such as council rates and insurance premiums must be included in your budget.

If this purchase will be your first home, check out details on first home buyer grants in your state or territory here www.firsthome.gov.au. Stamp duty concessions may also be available. Combining these initiatives can save you tens of thousands of dollars. Make sure you understand the conditions that apply, such as limits on the value of the property. If eligible for a grant, factor this into your calculations.

What deposit do you need?

While you may still find lenders willing to loan up to 90% of the value of a property, 80% is a more likely and sensible limit. That leaves you to come up with 20% of the purchase price plus upfront costs.

Have you saved your deposit, or do you still have some way to go? If the latter, review your budget to see how much you can save. Then set some savings goals and document how you will achieve them.

What’s your savings record?

Your lender will want to see your bank account and credit card statements. Do they reveal a good savings history and responsible use of debt; or the habits of a reckless spender with a poor credit rating? If it’s going to take time to save your deposit, it’s not too late to build a good savings history that will impress your lender.

Try to clear current debts as quickly as possible. Cancel any unnecessary credit cards, and consider cutting back the spending limit on other cards. When you apply for a mortgage your lender will include your credit card limits, not the actual balances, in their calculation of your current debt.

Do you know how mortgages and interest rates work?

If not, start learning from independent sources.

Get as much information as possible from the lender, with details of all the fees that apply – including any early repayment charges (yes, you can be charged for paying off your mortgage early!). If the loan comes with any ‘sweeteners’ or other features, make sure you understand them and any potential costs. Understand comparison rates and their limitations.

Aside from the purchase price, the biggest influence on how much your home will eventually cost you is the interest rate. On a $400,000 mortgage at 4% per annum over 25 years with monthly repayments (and ignoring fees), you’ll end up repaying a total of $633,404 of which $233,404 is interest. At an interest rate of 7% that interest bill rises to $448,135! [1]

Fixed or variable?

Your lender may offer you the opportunity to fix the interest rate on at least a portion of your loan for up to five years. A fixed rate will be an advantage if interest rates rise. If they fall, you’ll end up paying more interest than if you opted for a variable rate on the entire loan. Investigate the option of splitting your loan between variable and fixed rates.

Interest rates tend to rise when the economy is strong, unemployment low and the inflation rate is increasing. They tend to fall when the opposite conditions prevail. That said; it’s extremely difficult to predict future interest rate movements. Should rates fall, you may face significant fees on any early repayment of the fixed component of your mortgage.

How can you reduce your interest payments?

Your interest is calculated on your outstanding loan balance, so anything you can do to reduce that balance will help reduce your total interest bill. Many loans offer a linked 100% offset account. The balance in your offset account is subtracted from your outstanding loan amount when the interest is being calculated. It therefore makes sense to keep as much of your spare cash as possible in your offset account.

As financial circumstances allow, you could increase your mortgage repayments to pay off the loan sooner. Using the previous example of a $400,000 loan at 4% interest, if you paid it off in 20 years rather than 25, the interest component would be only $181,741, a saving of more than $51,000.

Another option is to make fortnightly or weekly repayments, rather than monthly.

Ready to buy?

Be aware that it is now more difficult to get a loan due to lender and regulator concerns over high levels of household debt. However, there are still plenty of lenders to choose from, including your current bank, other banks, non-bank and online lenders. It can pay to shop around, whether you do it yourself or use a licensed mortgage broker.

When it comes to applying for a loan be prepared to provide your lender with a lot of information – pay slips, credit card and bank statements, and details of your assets and any debts you have. Then, before you start visiting open houses, consider seeking pre-approval from your intended lender. Be aware that pre-approval may not guarantee that your loan application will be successful, particularly if it’s an instant appraisal based solely on the information you provide. Check with your lender what their pre-approval actually means. If it’s a full assessment it will provide you with more certainty when making an offer. Even then, pre-approval may not protect you if, say, the property is unacceptable to the lender. Also be aware that making multiple pre-assessment applications can affect your credit rating.

Do you understand everything, including all the fine print?

If not, ask questions and seek independent advice. Never, ever, sign a blank form. Make the right decision the first time as the costs of switching lenders can be high.

What insurance cover do you need?

You’ll obviously insure the house and contents, but what other insurance cover do you need? With your ability to make mortgage repayments dependent on you earning an income, income protection insurance should be a high priority. Life and disability insurance should also be considered. And yes, these premiums all need to be included in your budget calculations.

Need advice?

Buying a home is one of the biggest financial steps you’ll ever take. It’s also a complex process, and seeking good financial advice at the outset can deliver rewards down the track.

When the ink is dry it’s time to crack open that bottle of bubbly and celebrate getting your foot in the door of home ownership.

[1] Figures obtained from https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/mortgage-calculator#!how-much-will-my-repayments-be

 

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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What are you signing up for?

All / 18.12.2018

How many times have you downloaded a new app or connected to free Wi-Fi and agreed to the terms and conditions without giving them a second glance? In your rush to gain access to the must-have service you may end up agreeing to scrub public portaloos.

Of course, most companies who come up with absurd terms and conditions have no intention of enforcing them. Rather, the intent is to highlight the fact that most people don’t read the agreements they readily sign up to. In many cases that won’t have any significant consequences. Most businesses seek to be fair in their dealings with customers. However, in the case of legal and financial contracts, failure to read and understand the terms and conditions can prove costly.

What to look out for

When signing up for anything that will cost you money or expose you to other potential harm, it is important to read and understand everything you are agreeing to. Here are 10 key items to look out for:

  1. Is the contract in plain English? It should be. Too much legal jargon may be a warning that the provider is trying to hide something.
  2. What are the costs involved and when and how are payments to be made?
  3. What other charges apply, for example, late fees? Are they fair and reasonable?
  4. What is the term of the contract? Is it ongoing or a fixed length? What happens at the end of the contract? Will there be ongoing costs?
  5. When and how can you terminate the contract? What will it cost?
  6. When and why can the provider terminate the contract?
  7. Are refunds available? For example, if you cancel an insurance policy will the unused premium be returned to you?
  8. What personal information do you need to provide? Is it reasonable? How is it safeguarded? Will it be shared or sold to a third party? Is sharing your personal information necessary for the provider to deliver their service?
  9. Are liability disclaimers reasonable?
  10. Can you complain? Who to?

What protections are there?

For a contract to be binding a number of rules apply.

For example, those entering into a contract must intend for it to be binding. That should probably allow you to leave the toilet brush and rubber gloves at home. Nor can a contract be enforced if it contains an agreement to do illegal things or breach other legal requirements.

In consumer contracts there are also protections against unfair contract terms that disadvantage a consumer. Further rules apply to credit contracts.

As for the liability waivers that are common when signing up for an adventure activity, if you are injured while undertaking the activity you may still be able to sue the operator. This is an area where expert legal advice is required.

Even in plain English, terms and conditions make for pretty dull reading and they may still be difficult to understand. If you are unclear about what you are signing up to, don’t sign. Seek clarification from the contract provider. And if significant sums of money are involved or if it’s a credit contract, obtain qualified advice.

If you’re wondering why we keep referring to portaloos, this was a clever experiment www.purple.ai/blogs/purple-community-service/. Have you ever read the terms before using free WiFi?

 

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

 

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

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How much do we need to retire?

All / 06.12.2018

How much do we need to retire?

The question of how much a person needs to have saved before confidently launching into their retirement years very much requires an individual answer. Each one of us lucky enough to reach the brink of those golden years will feel a lot better doing so with some assurance that we’ve squirrelled enough away to be comfortable in retirement.

The answer to the above question is made all the more complicated by several unknown factors, as no-one knows, for example, how long they will live or what medical necessities could surface to strain the coffers.

Some guidance is available however from Super Guru, a website run by the non-profit Association of Superannuation Funds of Australia (ASFA). Super Guru releases a “retirement standard” every quarter. This is a benchmark for the annual budget needed by Australian individuals and couples to fund either a “comfortable” or “modest” standard of living in their post-work years.

The updated quarterly figures reflect inflation and provide an objective outline of the budgets that singles and couples would need to spend to support their chosen lifestyle.

Super Guru’s release of figures up to 30 June 2018 shows that the super accumulation balances needed for a “comfortable” retirement are $545,000 for singles and $640,000 for couples. In annual pension payout terms, this equals $42,953 and $60,604 respectively. Details of what these amounts mean for spending capacity are shown in the table on the following page.

By way of comparison, note that the government Age Pension base rate (before payment of supplements) is $21,222 for singles and $31,995 for a couple. “The Age Pension is designed to provide a ‘safety net’ for those who do not have enough superannuation or other financial resources to provide an adequate retirement income. So the Age Pension works in conjunction with superannuation,” Super Guru says. “Most people – women in particular – will continue to be eligible for a full or part Age Pension, supplemented by whatever superannuation benefits they receive.”

ASFA notes that as people age, their spending requirements also change. It estimates the net impact of the various factors at play mean that by age 85 annual budgets would reduce by around $1,000 a year for “modest” lifestyles, and $5,000 a year for “comfortable” lifestyles.

As far as measuring what these different lifestyles entails, Super Guru has produced the following comparison table  (and includes a retiree taking the Age Pension only)

ASFA’s estimate for retirement savings

 Comfortable lifestyleModest lifestyleAge pension
Single$42,953 a year$27,425 a year$21,222 a year
Couple$60,604 a year$39,442 a year$31,995 a year
MaintenanceReplace kitchen and bathroom over 20 yearsNo budget for home
improvements. Can do repairs
but can’t replace kitchen or
bathroom
No budget to fix home
problems like a leaky roof
AppliancesBetter quality and larger
number of household items
and appliances and higher
cost hairdressing
Limited number of household
items and appliances and
budget haircuts
Less frequent hair cuts or
getting a friend to cut your
hair
Air ConditioningCan run air conditioningNeed to watch utility costsLess heating in winter
Eat OutRestaurant dining, good range & quality of foodTake out and occasional cheap restaurantsOnly club special meals or inexpensive takeaway
InternetFast internet connection, big
data allowance and large talk
and text allowance
Limited talk and text, modest
internet data allowance
Very basic phone and internet
package
ClothingGood clothesReasonable clothesBasic clothes
TravelDomestic and occasional overseas holidaysOne holiday in Australia or a few short breaksEven shorter breaks or day trips in your own city
HealthTop level private health insuranceBasic private health insurance, limited gap paymentsNo private health insurance
VehicleOwning a reasonable carOwning a cheaper more basic
car
No car or if you have a car
it will be a struggle to afford
repairs
LeisureTake part in a range of regular leisure activitiesOne leisure activity infrequently, some trips to the cinema or
the like
Only taking part in no cost or
very low cost leisure activities.
Rare trips to the cinema

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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