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Retirement: it’s time to get busy living!

All / 10.04.2019

Many people eagerly anticipate retirement. Others view its approach with trepidation, worried over how they’ll fill their days.

Bob retired from work in his early sixties and, deciding he was way too young to retire from life, downsized his suburban home for a country lakeside retreat. He bought a little boat, adopted a shelter-dog and got busy.

The local volunteer fire service deemed him past firefighting age, so Bob helped by cleaning the station and equipment. During emergencies, he was an important member of the team manning relief centres and distributing food and drink to the firefighters.

At home, he grew vegetables and revisited the hobbies of his youth: re-learning the guitar and painting landscapes. Summer afternoons found Bob and his dog out on the boat. During winter Bob did odd jobs around his cottage.

His children complained that he was never around, but Bob had worked since he was fifteen and had been hanging-out for retirement. He’d planned for it, dreamed about it, and now he was living it.

Australians are living longer; it’s not unreasonable to assume you’ll be retired for 20 or 30 years. Not sure how you’ll fill all those days? We have a few ideas to kick-start your new life.

Learn/Teach something

Do you have skills and talents you can share with others? Are you interested in learning from others in return? The University of the Third Age (U3A) may be your kind of group.

Located all over Australia, U3A groups meet regularly to provide learning and engagement for older people and disabled younger people. Organisers run structured courses with professional leaders or casual knowledge-share sessions conducted by group members or invited guests.

Look up the U3A in your area or visit www.u3a.org.au for information.

Become an Olympic athlete

Return to your favourite sport or learn a new one. Sports like archery and golf are Olympic sports! It’s true, and organisers of the 2020 Tokyo games are considering including bowls as well. Or closer to home, you can begin preparing now to enter the Pan Pacific Masters Games on the Gold Coast in 2020.

Write your memoirs

Everyone has a story to tell – yes, even you! You may think your life is rather ho-hum, but your children and grandchildren might disagree. Many independent publishers will help you produce a beautiful memoir with a short print run, perfect for family and friends.

Community

Feel like giving something back? The Australian Men’s Shed Association is a body that supports the health and wellbeing of men. It’s a terrific organisation for retirees with academic or practical skills to share through events and learning activities. To find a Men’s Shed near you, go to www.mensshed.org for details.

If that’s not your thing, or you’re the wrong gender, consider helping 4-legged friends at your local animal shelter. Love children? What about becoming a “Pyjama Angel”? Full details can be found on the Pyjama Foundation website www.thepyjamafoundation.com. Or check out your community notice board for local opportunities.

If retirement has snuck up and caught you unprepared, think about what you enjoy doing, what your skills and interests are and get busy. You’ve still got a lot of living to do – and finally, it’s all about you!

 

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

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

All / 10.04.2019

Financial planning. That’s for people with lots of money to invest, isn’t it?

Not necessarily.

Sure, investment planning is an important part of financial planning, but underpinning the whole process of creating wealth in the first place is having a good financial strategy.

For many people that strategy is taking each day as it comes and letting the future look after itself; but in a complex and ever-changing world, isn’t a more active approach a good idea?

Each of us has specific needs and desires, of course, but there are a number of common challenges that we need to think about when developing our financial strategies.

Stage of life

Baby boomers (born 1946-1964) are moving into retirement in droves so Gen X (1965-1976) is taking on the mantle of being the great wealth accumulators. For the most part, this generation has their strategies in place: pay down the mortgage, contribute to super, maybe buy an investment property, and wait for the kids to leave home.

Generationally, it’s millennials (1977-1995) who face the greatest challenges in developing a financial strategy. Younger millennials are just embarking on careers and the focus is, understandably, on having a good time. Many feel priced out of the housing market, and while the ‘gig’ economy promises greater work flexibility, this comes with reduced job security and often no employer superannuation contributions. Then there’s the challenge of balancing starting a family with establishing a career. All up there’s a lot to plan for.

Gender

The path to income equality is a slow and frustrating one. In general, over their working lives, women continue to earn significantly less than men. This is largely due to time out of the workforce to look after children.

However, progress is being made, and an increasing number of women are earning more than their partners. Having Dad take time off to look after the kids then becomes a viable financial strategy. On top of that, the gig economy, and technology in general, is opening up more opportunities for stay-at-home parents to earn a decent income.

Relationship breakdown

Sadly, many long-term relationships and marriages end, and the emotional and financial costs can be high.

This isn’t an issue that anyone wants to think about, but is obviously a trigger for developing a new financial strategy. This is particularly important when children are involved, and expert help will likely be needed.

Inheritance

More wealth is being transferred from older to younger generations than ever before, and thanks to superannuation, this trend can only grow.

Receiving an inheritance is often the event that leads many people to seek financial advice. While the focus may be on creating an investment plan, this is an ideal time to look at the broader financial strategy to make the most of any inheritance.

Never too soon to start

The upshot is that pretty much everyone can benefit from having a financial plan. It doesn’t need to be complicated and you can get the ball rolling yourself. A simple savings plan or paying off credit card debt can be good places start.

But to make the most of your situation it’s a good idea to talk to a financial adviser.

A qualified adviser can help you understand our complex financial environment and what you need to know to work out the likely outcomes of different strategies.

Ready to take control of your finances? Give us a call and let’s 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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8 Common Financial Mistakes People Make In Their 30s

All / 10.04.2019

Climbing the career ladder, perhaps buying a home and starting a family – the 30s are an exciting stage of life. However, the decisions made now can make a big difference to future financial wellbeing, and with so much going on it is understandable, even inevitable, that the best decisions won’t always be made. So what are the common financial mistakes that 30-somethings should be alert to?

  1. Buying an expensive car

New cars plummet in value when driven off the showroom floor, and the higher the price tag the greater the fall. Buy with borrowed money and you’re paying interest on an asset of diminishing value.

Settling for what you need in a car, rather than what you want, can add hundreds of thousands of dollars to your future nest egg.

  1. Living on plastic

If you don’t pay off your credit card balance in full each month, you’ll be paying a high rate of interest on the carryover balance. Over time, the growing interest bill makes it increasingly difficult to clear the debt. If not used carefully, buy-now-pay-later schemes can also become something of a debt trap.

It might sound boring, but the antidote is to save up for the things you want to buy, and to avoid going into debt for consumer items.

  1. Forgetting to save

A rule of thumb is to save at least 10% of your income, but saving even a small amount is better than doing nothing. And in your 30s you have time on your side.

For instance, when Nicole turned 30 she started to put away $200 per month at an interest rate of 5% per annum (after tax). By the time she’s 60 her savings will grow to $166,452. If she waits until she is 40 to start her savings plan she will accumulate just $82,207 – less than half!

  1. Focusing only on the money

On the other hand, it’s possible to be too fixated on the money – working too hard, snapping up investment properties like it’s a competition. This may be a hard habit to break, but working on some current lifestyle goals and finding some balance can deliver a different type of reward.

  1. Getting caught up in investment fads

Tulips, alpacas, ostriches, the tech boom, crypto-currencies. Investment fads have come and gone, making fortunes for a few, but big losses for many. It pays to heed tried and true rules such as only investing in things you really understand, and diversifying investments to reduce risk.

  1. Not insuring your most important asset

No, it’s probably not the house. For most 30-somethings your biggest asset is the ability to earn an income. Most health-related absences from work are due to illness or non-work related injuries – things that are not covered by worker’s compensation. Income protection insurance can replace much of the income lost due to accident or illness. However, it’s a complex product so seek expert advice.

  1. Still feeling bullet-proof

Sadly, death and disability can strike at any age. Now is the time to make a Will. Investigate powers of attorney and health directives. If the worst happens, these documents will make it easier for your loved ones to settle your affairs.

  1. Being too hard on yourself

Let’s face it. We’re all human, and we all make mistakes. Unfortunately, if we beat ourselves up about a mistake we have made it may compound the problem. The sour taste of a bad investment, for example, might put us off making a good investment.

That would be a pity because the 30s is a decade of huge potential. Good advice now can help you unlock that potential.

 

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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MLC Federal Budget Highlights (Infographic)

All / 03.04.2019

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What the 2019 Federal Budget means for you

All / 03.04.2019

On Tuesday 2nd April 2019, the Government handed down the 2019-2020 Federal Budget.

The focus of this budget is a plan for a stronger economy and securing a better future. From a financial planning and wealth perspective this is positive news and the changes are minimal compared to prior years, not to mention largely positive in nature.

We have provided a brief budget summary which further explains the budget, discusses the changes and implications.

Please remember that these changes are proposals and may or may not be made into law.

The summary can be found here.

We hope that you find the attached article informative and if you have questions or concerns regarding your personal circumstances please do not hesitate to contact us on 02 6621 8544.

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Federal Budget 2019-20 Summary

All / 03.04.2019

Bryan Ashenden from BT Financial looks at the implications of the 2019 Australian Federal Budget from a financial planning perspective.

If you have questions or concerns regarding your personal circumstances please do not hesitate to contact us at TNR Wealth on 02 6621 8544.

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It’s Easy Being Green

All / 08.03.2019

With more and more people realising the importance of caring for the planet on which we live, it’s not surprising that many are looking for investments that make a positive impact on our environment, our communities, and our children’s future as a whole.

Investor concerns now range from the environmental implications of a company’s activities, to how it treats its workforce and the communities in which it operates, and to how ethically the company is governed.

These concerns are usually wrapped up under the description of Socially Responsible Investing (SRI), or Environmental, Social and Governance (ESG). A number of managers offer specific SRI funds.

Shades of Green

There is a wide range of SRI funds, and they use different methods for weeding out undesirable investments, or identifying desirable ones. For example, some managers use a negative screen to exclude things like alcohol, tobacco, gambling or uranium mining. These funds are sometimes described as ‘light green’. Another form of ‘light green’ fund is those that apply a ‘best of class’ approach. Such a fund might still invest in mining companies, but only the ones with the best environmental record.

Other funds apply positive screens, specifically looking for companies that are trying to make the world a better place as well as generate a return for shareholders. These include renewable energy companies, cosmetics companies that don’t use animal testing, or property companies that specialise in sustainable development. Funds that operate a positive screen are considered ‘dark green’.

Other colours

Green isn’t the only colour when it comes to socially responsible investing. Non-environmental concerns are important to many investors who want to avoid any involvement in companies associated with alcohol, tobacco, gambling or armaments. Corporate governance and social equity issues are also a factor for some investors.

If you are interested in learning more about socially responsible investing, talk to us about the many options available.

Note: past performance is not an indicator of future results.

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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8 common mistakes before retirement and how to avoid them

All / 08.03.2019

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Compounding: it’s simply MAGIC!

All / 08.03.2019

Forget about location, location, location being the key to a good investment outcome. For now, let’s think of the most important ingredient as being regular, regular, regular!

A regular savings plan can turn small amounts of money into a sum that can take you closer to your dreams much faster. All that’s needed is time and discipline.

For example, let’s see what happens to an investment starting with just $100 and adding $100 each week from your regular income. Table 1 shows what the investment value would reach after five years and up to thirty years. In this example, we have assumed that the investment pays a return of 5% per annum (paid quarterly).

  5 years 10 years 15 years 20 years 25 years 30 years
5% return $29,598 $67,454 $116,037 $178,386 $258,402 $361,092

Table 1: Regular savings plan of $100 per week compounding monthly.

The results show that a regular savings habit can turn small sacrifices into real outcomes.

To budget or not to budget
Think about what you might have to do in order to save $100 per week to add to your investment. Maybe instead of eating out every week, make it a special monthly event. Taking lunch to work is a big saver – or you could cut back on your coffee purchases if you’re a regular at the local café. Review essentials such as your mobile phone plan and utilities to get better deals and direct that extra cash straight to your investment.

It might sound picky, but in return for this self-restraint you can see what can be achieved:

  • the $29,000 in 5 years might go towards a deposit on your first home or an overseas holiday;
  • the $67,000 in 10 years might contribute to your young children’s secondary or tertiary education; or
  • the extra $258,000 in 25 years might help you to retire more comfortably or earlier than you thought you could.

Any of these goals would seem to make your small sacrifices extremely worthwhile in the long run. And remember to write down your financial goals as early as you can because it’s much easier to make those sacrifices if you know what they are helping you to achieve.

Reducing expenses is not the only way to find a spare $100 each week. Another good time to start a savings plan is when you receive an increase in your disposable income from a new job or a pay rise. Before you spend the extra money, put it away.

The trick is to start soon
Everyone’s ability to save is different. If you can’t save $100 every week, the above figures are still worthy of your attention. For example, if you can save $50 per week simply halve the results in Table 1. Conversely, if your savings capacity is higher, multiply the figures.

The results also demonstrate the effect of time and compounding returns on the value of your investment. The sooner you start, the less you need to save in order to achieve the same outcomes.

The difference 10 years can make!

Christine plans to retire in 20 years from now so she starts saving an extra $100 per week for this goal. Based on our simple calculations she might expect to have an investment of around $178,000 to add to any other superannuation or retirement benefits she has at that time.

Christine’s twin Ben also plans to put down the tools in 20 years, but he is confident that he can save more money than his sister. So Ben ignores any type of retirement planning for the next 10 years. He then saves twice as much as Christine – $200 per week – for the last 10 years of his working life.

Assuming a 5% return on the investment, the difference is staggering. By starting 10 years earlier, Christine will have saved just over $178,000 compared to Ben’s outcome of $134,743.

Even though his regular savings amount totals exactly the same as his sister ($104,000 over the period of the investment), Christine has benefited from the compounding investment returns on her money over a longer period of time, earning an extra $44,000 in interest – or better known as “free money”!

Another way to look at it is that Ben would need to save $265 per week for the last 10 years of his working life (a total of $137,800) to end up with the same outcome as Christine.

And finally…
The examples we have used here are aimed at highlighting the benefits of time and discipline when it comes to investing in a regular savings plan. To keep things simple, we have not taken into account other factors that will impact on the outcomes you can achieve, such as taxation, fees and differing investment returns. These factors are nonetheless important and will need to be considered when you are deciding on the type of investment you choose for your regular savings plan.

Higher-interest savings accounts, managed share funds and superannuation are just a few ways to implement a regular savings plan like the one we have examined here (although you won’t find any at call bank accounts that pay close to 5% at present!). The type of investment that is best for you will depend on your own specific circumstances, including your goals, timeframes and attitude to risk (volatility).

You can start a compounding savings plan on your own or talk to us – we can show you more options to help you achieve your dreams sooner.

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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New rules for credit cards: what do they mean for you?

All / 06.03.2019

The name John Biggins may not sound familiar, but the banking industry has much to thank him for. Mr Biggins, a Brooklyn banker, was the brains behind the very first credit card in 1946. Known as the Charg-It card, it led to Diners Club membership cards and store cards, revolutionising the way everyday people shopped.

Australia began with store cards, Diners Club and American Express, but in 1974 when the Bankcard was launched, we really jumped on board.

Today we have almost 16 million credit cards in circulation, a fact that has caused successive governments to regulate, and further-regulate, their use.

The latest regulatory changes came in July 2018 when the federal government banned credit card providers from inviting customers to increase card credit limits. Designed to protect card users, additional rules came into force on 1 January 2019.

Here’s a round-up of the main ones:

  • Applications for new credit cards or credit limit increases must be assessed on the applicant’s ability to repay the entire credit limit within three years.
  • Customers can request to cancel accounts or reduce credit limits online. If the request is made by phone or otherwise, providers must assist without question.
  • Card providers are banned from retroactively applying interest charges on card balances where the full statement balance is not paid.

These reforms are likely to result in reduced card limits, potentially impacting those applying for a balance transfer, but more about this later.

According to the Reserve Bank of Australia (RBA), in November 2018, Australians made 250 million card transactions totalling $29 million – up by 10 million transactions over the previous 12 months.

This is possibly due to increasingly popular tap-and-go technology. We’re ‘tapping’ everything from lattes to doctor appointments, often losing track of purchases along the way.

When using credit cards for quick personal loans beware the fine print! Card loans may offer reduced interest rates, but missed payments can result in interest rates reverting to the card’s higher rate.

Credit card balances can quickly blow out and take years to pay off.

Let’s do some maths.

Assumptions:

  • Card balance: $5,000
  • Interest rate: 18%
  • No fees or further purchases

By paying the minimum monthly amount ($102 then decreasing), it would take 33 years to pay off at a total cost of $17,181 (including $12,181 interest)!

You’re right in thinking that’s an extreme – you wouldn’t take 33 years to pay off $5,000 but we wanted to highlight how interest can get out of hand.

If you’re already in card trouble:

  • Consider making an additional payment of say $50 per month.
  • Balance transfers work well provided you meet your payment obligations during the low/interest free period. Note that new credit limit regulations may reduce the amount you can transfer to a new card.
  • By consolidating multiple credit cards into a personal loan or mortgage, the interest rate will be lower and you’ll only have one payment per month. This may cost more in the long run so consider professional help to do the sums.

Maintain control by:

  • Checking statement transactions for accuracy.
  • Being aware of your credit rating. You’ll find a list of credit score agencies on moneysmart.gov.au.
  • Using only one buy-now-pay-later plan at a time, and using the app’s tracker to monitor spending.
  • Keeping tap-and-go receipts.
  • Seeking advice from your financial adviser about budgeting for your financial position.

From humble beginnings, the credit card became the world’s most widely-accepted form of currency – some countries no longer use cash at all!

We Australians are becoming increasingly cashless, but while enjoying the advantages of plastic, remember to always manage your cards wisely and maximise their benefits – not their credit limits.

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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