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Disclaimer: the information and any advice provided in this article has been prepared without taking into account your objectives, financial situation or needs.  Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to those things.

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Disclaimer: the information and any advice provided in this article has been prepared without taking into account your objectives, financial situation or needs.  Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to those things.

Is there a goal you want to accomplish, but just cannot find the time to start it? It might be something trivial like, to reduce the amount of TV watching, or time spent browsing the Internet. It might be, to become an early riser, or to quit drinking alcohol, or to start a home business. Whatever it is, what is keeping you where you are instead of reaching your desired destination?

I have several such targets in my life that I often think about, but rarely take action on. Each time I’m reminded of one of them, I would guiltily say, “I really should do [blah]”, and then forget about it until the next time guilt creeps back into my head.

One such target I have is to exercise, I’ve been talking about wanting to get in shape for about two years now, I even setup an arbitrary goal of doing a triathlon to get me excited. I did start go running shortly after setting that goal, which lasted for about a week, before I became distracted with another target.

I like to think of myself as a pretty disciplined and motivated person – I mean, I write about this stuff! But, something about this particular target has been very psychologically challenging for me to take consistent action on. And I want to understand it.

Overcoming the mental blocks and actually taking action towards this outcome has been my focus over the past few weeks. I am proud to announce that I have been doing 5-mile walk-runs, every other day, successfully for fourteen days now.

I’m confident that since I have kept it up for two weeks, then surely, I can keep it up for a month. And if I can consistently do it for a month, I will have habituated the activity into my daily rhythm and be able to keep it up indefinitely.

The point of this article isn’t about running, but rather, extracting lessons from achieving a goal, and applying them to other areas of our lives.

Analysis of ‘why it didn’t work’
Looking back over past failed attempts at this target, I realised that I didn’t have enough reasons to keep myself motivated, thus I wasn’t fully committed to making the change. Here are some observations.

1. Excuse: ‘I don’t have enough time’
I used to assume that I was working too much and simply did not have the time. Well, I’ve come to learn that ‘I don’t have the time’ is the biggest lie we can tell ourselves to justify for the lack of action towards activities that can [sometimes] significantly improve the quality of our lives. If we added all the time we spend on unimportant and not urgent things – like web browsing or TV watching – we would have the time, easily. We do have the time!
I used to tell myself, ‘When I leave my day job, I will have much more time to pursue the things on my lists, which I don’t have time for now.’ Things like exercising.
You’d think, now that I’m in a position to create my own schedule (or lack thereof), surely, I should have enough free time to exercise. Well, ladies and gentlemen, I still don’t have enough time. It’s become obvious that without a measureable target and a reasonable plan, life has a way of magically inserting random (often unimportant) activities to fill up our day. The same items on my list while I had a day job are still on the list.
We don’t have time for things, until we create time for these things. If something is important enough to us, we will find the time, regardless of how busy we are. End of story.
It’s a matter of finding the compelling reasons why something is important to us – enough of a nudge to drive us to lasting change.

2. Focus on pain
The more I focused on the uncomfortable factors associated with exercise, the less motivated I became, and the more excuses I made to skip workouts – before I stopped completely.
Here are my favourite excuses to justify not exercising:
• It’s hard! I can’t breathe.
• My leg hurts
• It’s cold outside
• It’s raining (I do live in Seattle, after all)
• It’s late, if I go jogging, I wont have enough time to do X.

3. Lacked motives to action
Although I kept telling myself that I should go jogging, I wasn’t fully clear on why I wanted it. I wasn’t overweight, and didn’t have an explicit incentive to get active. I didn’t have the motives to justify the necessary action for a vaguely defined goal.
Did you know that we will do more to avoid pain than we will to gain pleasure? In this case, the affects of not doing it, was not painful enough to drive me to get it done. In my mind, the pain of doing was greater than the pain of not doing.

4. Language, focus & priority
The goal was a should and not a must. ‘I should go jogging’, I would say, when it’s better to say ‘I must go jogging, in order to gain the energy I need’. When something is a should, it is wishful thinking, and we don’t get it done. When something is a must, it becomes a priority that deserves our attention. Because the target was a should, I never gave it the focused attention necessary for it to become a reality.

The art of change: From desire to result
The actual change happened very quickly – the moment I decided to change instead of thinking about it, and silently beating myself up for not doing it, I just did it. It was beautiful!

Sometimes, the best motivators are the ones we find when we hit a personal low point. My low point came a few weeks ago, when I realised that I hadn’t been outside for seven days straight (Eeeek!). I felt groggy, my body was aching, my energy level was low and I felt a slip in my grip on clarity.
When my clarity is threatened, I start to take notice. I now had a strong motive. I got up instantly and went for a run – a long one.

The system of OPA
OPA is a trick I picked up from Tony Robins, which when applied, will assist us in achieving the results we desire. It stands for:
• Outcome (O) – Having a clear vision
• Purpose (P) – Focus on results and purpose
• Action (A) – Create a massive action plan for meaningful results
Let’s expand on these and apply them to the jogging example.

O, Outcome
Most of us have vague ideas on what we want. WE know roughly the direction we want to go, but because we aren’t clear on the vision of our destination, we get pushed into whichever direction the wind is blowing. Without a vision, we will obsess over ‘the how’, and will often overanalyse and fail to take action, or take ineffective action.

In the jogging example, ‘wanting to go jogging’ is not the ultimate vision. The ultimate outcome I am seeking is actually mental clarity and physical energy. One activity that contributes to this outcome is regular exercise. Additionally, because I am focused on the desired outcome and not on the how, I have realised that there are other things I can do which will contribute towards this outcome, such as deep breathing, swimming and yoga.
What is the ultimate vision for what you want? Be specific in describing the outcome you desire.

P, Purpose
Knowing what we want isn’t enough to give us the push towards massive action. We must know why we want it. Why is it important that we achieve our desired result? When we achieve this outcome, what will it bring us? Without strong enough reasons, we simply will not be moved into action.
In the jogging example, my reasons for wanting mental clarity and physical energy are:
• To feel physical wellbeing. To live fully and consciously.
• To have the clarity to write articles that serve others. To empower and inspire readers towards a fuller life with more joy and passion.
• When I have energy, I can get more out of my day. I can do more activities which will benefit my personal wellbeing, and in turn make more contributions to others.

Why must you achieve the target outcome? What are the reasons most important to you? What does achieving the outcome mean for you?

A, Action
Armed with your clear vision of the outcome and with the burning reasons why it is important to you, come up with an action plan for achieving the results you seek. Once you have your action plan, take one small action immediately. Then commit yourself towards taking some action regularly (everyday, if possible) towards your target. Regardless of how small the action may seem, it will move you one step closer to your outcome, and – importantly – help build the momentum you will need to reach your destination.
In addition to knowing what you want, why you want it, and having a battle plan, the following are tips to overcome potential pitfalls on the road to lasting change.

• Quantify & measure – What gets measured gets managed. It’s important to be able to quantify results, so that we can evaluate our improvements and effectiveness. For my jogging example, I got the Nike sport kit for iPod nano – which allows me to measure distance ran, duration and calories burnt. Once I had the numbers after each workout, I just wanted to beat them! As if playing a video game and trying to beat the top score.

• Know your excuses – List out all the excuses you’re known to use in order to avoid action for a particular result. Now come up with an antidote for each excuse. Even without an antidote, at least, now you’re aware of which excuses might come up, and you’re ready to ignore them. For myself, ‘I am committed to going jogging every other day, regardless of weather, or how late in the day.’

• Focus on one target at a time – When we try to focus on many results at the same time, rarely will we succeed. When we focus on one thing at a time, we can devote our undivided attention and energy on realising the single result, thus giving it a higher chance of actualisation. Move on to other targets only after we’ve successfully reached or habituated the current target. I’ve found it helpful to write the targeted outcome on a piece of paper, and posting it on a wall where I can see it regularly.

• Change your language – Turn ‘should’ into ‘must’. The language we use carries with it energy. Notice that if you must do something, suddenly you feel a sense of urgency and priority? What is that thing that you’ve wanted to complete, and if you got it done will improve the quality of your experience? Now say, ‘I must do , because it will give me .’ See how much more energy this sentence has, versus ‘I really should do .’

• Consistency – When cultivating a new habit, consistency is more important than quantity. Have you noticed that when we skip a routine activity even once, it’ll be harder to get back into it? And the more we skip, the easier it is to skip it again the next time. Before we know it, we no longer have the habit with which we’ve worked hard to create.

• Fun ingredient – Find ways to make the experience fun and enjoyable. For example, I will listen to motivational audio books or personal growth seminars when I run, and it really enhances both experiences. This added enrichment to the running experience, makes me look forward to the activity.

• The 30 day challenge – If you can repeatedly do an activity for 30 days, it will become a habit, and will integrate automatically into your routine. Take it one step at a time, first commit yourself to following something for 7 days, then extend it to 14 days, then 21 days and 30 days. If you can do it for 30 days, you can likely continue it indefinitely (if you want to).

• Change your questions – If you’re not getting the kind of results you’re looking for, perhaps it’s the questions you are asking yourself. Ask questions which lead to possibilities instead of limitations. Here are some examples of the limiting questions vs. more resourceful alternative:
• Why can’t I do this? Vs. How can I make this work?
• Why can’t I make more money? Vs. How can I add even more value?
• Why is this happening? Vs. What can I do to help change this?
• How can they do this to me? Vs. How can I use this?
• What is wrong with my life? Vs. What am I grateful for?

Parting words
We are the ultimate author of our life story. Within each of us, we hold the power to change anything in our lives, and in doing so, experience more joy and fulfilment. Lasting change starts with a change in the way we think – a clear vision for our desired results, meaningful reasons why we must have them, and building momentum towards massive action to make our visions a reality.

With meaning, understanding, awareness, and conscientious planning, we can turn massive responsibilities into actual possibilities, we can incorporate healthy habits, we can realise dreams, and we can live more deliberately and intentionally shape our own destiny.

Thank you for listening to my jogging story and allowing me to share my own life victories, regardless of how trivial they may seem. Through observing this experience, the jogging example accentuated some simple fundamental principles of achievement that can be applicable to other outcomes in our lives. I wish you success!

Tina Su, http://thinksimplenow.com/motivation/how-to-achieve-anything/

1. Set up a holiday fund
Whilst relaxed on holidays, it’s often tempting to impulse buy, and this is much easier when you have easy access to your savings account or your credit cards! If you have a tight budget, you might wish to open a separate account that holds the amount of money you are intending to spend whilst on holiday – or perhaps even slightly less – so that you know you have a buffer. Once your holiday’s over, you could even keep this account open as a holiday-planning fund for your next trip.

2. Use travel tax concessions
Travelling overseas? You may be entitled to tax concessions under the Tourist Refund Scheme where you purchase items close to the time of travel. This applies to certain goods you buy in Australia and take out of Australia. Your total purchases must be over $300 and bought within 60 days of travel and you’ll need your receipts as proof of purchase. So, if you have been considering buying a new phone or tablet, and you’re planning to go overseas soon, perhaps now is the time.

3. Consider using a Travel Money card
Travel money cards are a convenient way to carry money and use foreign currencies whilst travelling and can help provide certainty around holiday spending. Funds held on travel money cards are fixed into an exchange rate the day you purchase the card, meaning that you can plan with confidence. If you are travelling to multiple countries, you can also add several different currencies to your card, instead of clogging up your wallet with different denominations of cash. The card can be used online and in-person and usually can be accessed from a wide range of ATMs worldwide. Some cards also have benefits attached such as earning reward points, which could be used to pay for other holiday expenses. Plus the travel money card is not linked to your savings account, which means if it gets stolen you are less likely to risk your savings. The fees on these cards tend to vary and some charge commission on the currency change, so it is worthwhile to do some research before making a decision.

4. Suspend services at home
Before you leave, think about whether it’s worth your while suspending memberships and services, particularly if you’re planning a long holiday. It is likely that you won’t be using several of the services you normally would access from home, whether it’s your utilities, internet or your gym membership. Depending on your circumstances, it may also be worthwhile suspending private health insurance if you are well covered by travel insurance. And be careful to double-check your mobile phone talk and data arrangements to ensure no nasty surprises!

5. Time your flight purchases
Whether you are travelling domestically or internationally, flight costs inevitably differ based on the days and times you choose to travel. Domestic flights are commonly cheaper mid-week and prices for international flights can change based on varying factors such as events happening at the destination country around the time of your arrival. Do your research; significant savings could be gained from changing your travel dates by just a few days.

6. Review your credit card rewards
If you’ve been collecting reward points from credit card spending, check to see what discounts are available to you. These might result in savings for your holiday, for example, upgrades or discounts on flights, accommodation, dining or car hire in certain cities and give you extra cash for that one thing that you just can’t do without.

After a long working year, your holiday certainly should not be spent ‘checking the books’ or worrying about every little cost. Tying up your financial loose ends for the year, along with having a clear budget and using the tips listed above should make for a stress-free holiday season.

Please feel free to share these useful tips with your family and friends; they just might thank you for it!

Written and accurate as at: Oct 30, 2015

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances. Liability limited by a scheme approved under professional standards legislation

Let’s start with CGT
Determining your capital gains tax (CGT) liability when bequeathed assets are eventually disposed of can be a real headache. To avoid potential problems always determine and document whether the assets were acquired by the deceased before or after 20 September 1985.

It is a good idea to obtain an accurate valuation as at the date of death if retained assets were acquired before 20 September 1985, because any future CGT liability will be determined by the increase in value from that date (known as the ‘cost base’).

Also it is important to know how the gifted assets are classified for CGT purposes. Generally these assets will be divided between collectibles, personal use assets and other assets. Some special, but limited, CGT exemptions can apply to ‘collectibles’ and ‘personal use’ assets. These exemptions are also based on their ‘cost base’.

Collectibles vs personal use assets
Valuations are particularly important for any assets or objects categorised as ‘collectibles’. If the market value of a collectible (including antiques) at the date of death was less than $500 than any capital gain will be disregarded. A similar, but much higher exemption applies to ‘personal use assets’ of up to $10,000.

‘Collectibles’ are defined as artwork, jewellery, antiques, coins or medallions, rare folios, manuscripts or books, postage stamps or first day covers that are used or kept for personal use or enjoyment.

‘Personal use assets’ are non-collectible assets, other than land or buildings, used or kept for the personal use or enjoyment of the deceased. An item of personal furniture would normally fall into this category, unless it is determined to be ‘antique’, for tax purposes. In this latter case it will fall into the ‘collectible’ category.

When an antique is not an antique
Unfortunately the word ‘antique’ for the purposes of determining if they should be treated as ‘collectibles’ or simple ‘personal use assets’ is not clearly defined in the Income Tax Acts. However, a tax ruling (TD 1999/40) has been issued to clarify this point. To quote from the tax ruling: ‘An ‘antique’ for the purposes of the Income Tax Assessment Act is to be determined according to ordinary concepts and usages. It is
generally recognised that an antique is an object of artistic or historical significance that is of an age exceeding 100 years’.

The point at which an asset is deemed to be an antique for CGT purposes relates to when it is disposed of, not when it is acquired. For example, this means that if Tom retained a fine piece of furniture that was 96 years old when acquired, it would not be deemed to be an antique at that time (it would merely be a personal use asset). But if he sold the very same piece five years later (when it was 101 years old) it would be deemed to be an ‘antique’, and as such it would be categorised as a ‘collectible’ asset for CGT purposes.

This business about ‘antiques’ might all seem a bit complicated. However, the key point is that it may be very useful to ascertain the relative age of any old and valuable furniture. You can see that this can have a significant impact on the tax position. As a practical proposition it is often much easier to gather such information (perhaps from the deceased’s records) soon after death, rather than try to determine the age of an antique many years later when you are planning to sell the item.

Generally, it is not necessary to obtain a valuation for tax purposes, if the deceased acquired an asset on or after 20 September 1985. This is because the ‘cost base’ for the beneficiary will be the same as that of the deceased’s. Similarly the beneficiary is taken to have acquired an item as a collectible or personal use asset. To explain, let’s take our example further. Say Uncle Reg had acquired a rare old book (a collectible) for $2,000 in 1997. Tom, as his beneficiary, would have been gifted a collectible. In future he would use this $2,000 to determine how much gain, and hence how much CGT that will apply, if and when he sold the book.

You can appreciate that while a valuation at the date of death may not be required, it is still necessary to find out what the ‘inherited’ cost base is for future reference. Again that tends to be easier to do sooner rather than later.

Protecting gifts
Valuation and related information about the cost of asset purchase will be useful in determining the level of insurance required. Valuable assets need to be cared for by the executor during the estate administration period and insurance protection against theft, fire and other damage should be considered. Beneficiaries need to be ready to take over this responsibility and reviewing insurance protection may be prudent.

Estate issues tend to be complex and can become even more difficult to deal with over the passage of time. So, if you or members of your family become an estate beneficiary, always seek professional advice.

Do you or anyone you know need advice? Please contact David Graham today 03 8560 3188 for a confidential chat and make sure your ‘gift’ is managed effectively.

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances. Liability limited by a scheme approved under professional standards legislation

How To Save and Invest For Each Decade Of Your Life
Our goal in this post is to make sure that you get the right foundations in place to save and invest to secure your financial future. We give you key financial goals to aim for in each decade of your life along with general tips and guidance.

In your 20s – Developing good money habits
Your 20s are a time for learning, gaining experiences and living off modest earnings. This is no excuse not to start saving, actually quite the opposite! Now is the time to be very savvy with your money. It is vital that you get into good financial habits now, as they become the foundations of future financial life.

Good habits for your 20s:
• Paying off credit cards in full every month – if you can’t afford to do this, you can’t afford a credit card
• Spending less than you earn
• Contributing to a savings program every time you get paid
• Making sure you have a safety net of funds
• Regularly tracking your cash-flow – income and expenses
• Educating yourself about money
• Taking advantage of lower costs. For example, if you are still living at home, put aside what you would otherwise pay as full market rates for rent and food
• Starting to carve out a career and not just a job
• Developing short, medium and long-term financial goals and be accountable to them.

The biggest mistake at this stage of your life is falling into a debt spiral. It is so easy to splurge with a credit card that will see you paying large fees and interest. Once you find yourself lumped with debt and few growth assets, it becomes difficult to get ahead.

**Best Tip** – Save first, spend later. By saving a portion of your salary (before you spend a cent) and putting it into a long-term savings account, you will immediately see your savings grow.

In your 30s – Locking in your foundations
Turning 30 is a critical milestone. You know that it’s time to shift your focus from the party life and start building a sound financial life. Chances are, the regular bills are much higher than in your 20s, but are compensated by the additional salary you now earn. If you are taking on family responsibilities, this will be a major cost that only seems to inflate with each passing month.

With the extra financial responsibilities, it’s hard to see beyond the next payday, but deep down you know you must.

In your 30s you will need to consider:
• Insurance, especially income protection
• Paying down mortgages/debts (or starting a mortgage)
• Education funding for the kids
• A bigger safety net if things go wrong
• Implementing a budget plan and your retirement plans.

**Best Tip** – Find the right financial planner.
In your 30s, it is difficult to digest the financial responsibilities, which is why most people don’t ever get around to making a decent financial plan. This is where a good financial planner can make a positive difference.

In your 40s – Peak earnings
The 40s is the peak earning period for most people. Expenses can be high, especially if you have children at school and still have a mortgage. You should be building a good portfolio of investments and own equity in your home.

You are also at your most vulnerable time in life. One slip up here and your financial life could be over. If you lose your ability to earn an income, those bills won’t stop and you could be forced into selling assets, such as your home. If you are not careful, you could get wiped out like many people did during the Global Financial Crisis (GFC).

What people in their 40s should do:
• To avoid being financially wiped out when something goes wrong, you need to take on some risk management, starting with insurance. Income protection, life insurance and crisis cover are vital!
• Make sure you review your financial and investment plan
• Have a tight budget on those expenses that easily blow out such as schooling, holidays and utility bills
• Your retirement planning should start taking greater priority. You need to get it on target to ensure a comfortable income at retirement.

By now, you’ve no doubt built up a nice portfolio of assets and are at the peak of your earning potential. There will be greater financial responsibilities, like children and mortgages and this is where your money goes.

The key is to balance a budget against a lower income expectation; this strategy will give you more funds to save. Many people make the big mistake of upping their lifestyle expenses to meet new incomes, often referred to as ‘lifestyle creep’. The danger is, when your income drops it is very hard to drop the lifestyle expenses.

Most recommendations for people in their 40s would focus on reducing debt. At the time of writing (2015), the cost of debt is very low and not showing signs of getting much more expensive for a few years to come. The key aspect with debt is to make sure the expensive debt is paid off, usually the credit card debt and personal loans. Make sure you have your home loans under control and by all means, pay them down fast.

**Best Tip** – Know your big expenses from minor irritations.
This means tracking your expenses and understanding what they mean. For example, we can find ourselves driving all over town to get the cheapest fuel in a brand new car. The depreciation (loss of value) on that new car over the first year will be far greater than any small savings in fuel.
To put this in perspective, a $40,000 new car will likely drop in value by $8,000 in the first year – That’s $154 dollars a week!

In your 50s – Securing your retirement plan
This is the time to start winding down. Yeah right, I hear you say! For most people, winding down will be the last thing on their list. With mortgages still needing to be paid and expenses incurred from your children still a bother, your 50s can be a stressful decade.

It isn’t all bad news though. If you have been on track with your savings and investments you will have your mortgage paid off (or close to it). You will also have a portfolio of investments to fall back on.

There is a big trap that most people fall into during their 50s, one that’s rarely talked about – enforced early retirement.

The Australian Bureau of Statistics shows that most people retire early due to ill health and/or the inability to maintain employment.

As most people plan to retire in their 60s, retiring earlier than planned would be a severe financial cost, so have a ‘Plan B’.

Your goals in your 50s should be:
• Clear all of your debts
• Save as much money in your early 50s as possible in case you are forced into early retirement
• Review your insurance. You may be able to reduce life insurance and look at boosting trauma/crisis cover.

**Best Tips** – Keep educating yourself and build a great circle of contacts for your profession/industry.
Keeping up your skills will be vital to maintain employment. Staying in touch with key employment contacts will assist you if the time comes to find new employment. It is often said that most jobs are given to people ‘in the know’.

60s and over – Reaping your rewards
If you haven’t retired, you should be pretty close to it. But then again, you might be one of those people that will never fully retire, preferring to have that work routine as a mainstay to your daily life.

Time is against you for saving more funds for retirement, but on the upside, your major life expenses of mortgages and children should be behind you. It is a time for contemplation and making the right financial decisions that will see you have a stress-free retirement.

There are some major traps to avoid in retirement so let’s look at these first:

Major traps to avoid
• Getting ripped off – Unfortunately, this age group are a major target for fraudsters. So remember, if an offer sounds too good to be true, it usually is. If you don’t understand an offer, don’t take it and always get any offers checked by a licensed professional
• Not spending money – Rather counter intuitive, but hey, you have worked hard and saved some money, so go out and enjoy it. Most retirees remain too conservative and never really enjoy what they have worked so hard for. You should also consider doing things when you physically can. Between the ages of 60 and 75, you are still likely to have the mobility to get around, so make use of it.

What to do in your 60s and beyond:
• Invest for growth – Just because you have made it to retirement, does not mean you should become a very conservative investor. With life expectancy rates growing every year (we’re all living longer), you will need your retirement nest egg to last for more than 30 years. To protect the buying power of your portfolio over this time period, include growth assets such as shares and property in your portfolio
• Make every use you can out of the social security system – There are many benefits available from the Government but it can be complex. Talk to friends and family who have recently retired and your financial adviser. Between them, you will soon learn what’s available
• Securing long-term accommodation – Start looking at the options and get familiar with the services and fees. Too many people shy away from retirement home options, but there are so many great opportunities out there. The trick is long term planning, as many of the good retirement homes will have a waiting list.

**Best Tip ** – Enjoy life!
No matter what financial shape you are in, make sure you do what you can to enjoy the lifestyle you can afford.

The Wrap Up For All Ages

Good habits die hard

The most important aspects of a good financial plan are built upon the foundations of very strong money habits that are learned from an early age. Building upon the key habits of not spending more than you earn along with managing your debts, will keep you out of trouble.

Your end goal is to build a sound portfolio of investments by seeking professional advice and using your own insights. By improving your investment education and discipline, this will take you to the level of financial security currently occupied by the minority of the population.

For more information about how we can help you, please feel free to contact the financial planning team by calling 8560 3188 for a confidential chat.

Please note – We haven’t provided ‘specific financial goals’ to target as they vary greatly from one person to the next.

The Information in this article has not taken into account your financial situation, needs or objectives. Before acting upon any advice, you should consider whether it is appropriate for you. This article has been sourced from www.humblesavers.com

Some of the more common alternative strategies may include:
1. Investing in your own name
2. Using the money to reduce a personal mortgage
3. Topping up superannuation.

Factors such as your timeframe until retirement, your tax-bracket and whether you’ll need to access the money in the future will all impact on which savings strategy is most suitable for you.

There are a number of general advantages and disadvantages to these strategies that you may wish to consider before making a decision:

The advantages of reducing a home loan are:
• Peace of mind in knowing that the home loan balance is reducing and progress is being made towards becoming debt-free.
• Reducing debt frees up cash flow, which you can use to implement other investment and savings strategies.
• Repaying non-tax deductible debt as quickly as possible helps to reduce the overall interest expense on the loan.
• As the value of the home increases so too will the equity available in the home, which could be used for future investments, borrowings or to renovate or purchase other assets such as an investment property.
• The family home is a capital gains tax-free investment.

The disadvantages of reducing a home loan are:
• Home loan repayments are made from after-tax dollars. For example, if your marginal tax rate is 32.5% this means that for every $100 earned, you have just $67.50 to repay on your home loan *
• Potential for opportunity cost when returns from investments or superannuation are higher than the interest you are paying on your mortgage.
• Not all home loans have a redraw facility, which means that you may not be able to redraw money, should you need to access it in the future.
• Some home lending providers do not allow for additional repayments or early repayment of a home loan without penalty.
* Tax rate doesn’t take into consideration Medicare levy, offsets or rebates.

The advantages of investing are:
• Ability to diversify savings by investing in a range of asset classes such as cash, fixed interest, shares and property.
• Option to access the funds if required by making a withdrawal from the investment when needed subject to exit costs, fees and capital gains tax.

The disadvantages of investing in your own name are:
• Investment must be made from after-tax dollars.
• Returns from any investments owned in a personal name will be subject to tax at marginal tax rates.
• Tax may apply to any capital gain made on the investment. No discount will be available if the assets are bought and sold within a 12-month period.

The advantages of investing in super are:
• Superannuation is a tax-effective environment. Earnings are taxed at a maximum of 15%. You can read more about taxation and superannuation funds here.
• If you’re self-employed, you may be able to claim a tax-deduction for contributions of up to $30,000 if you are under age 50 or $35,000 if over.
• Boosting super will increase the capital you may have available in retirement.
• Salary sacrificing to superannuation allows you to use pre-tax income to make a contribution. This is a tax-effective way to build your savings for the future. Contributions are taxed at 15%, which may be less than your marginal tax-rate.
• If you use your after tax income to make a contribution to super then no contributions tax is payable.
• If you earn $49,487 or less and make after tax contributions to superannuation, you may be entitled to the Government’s Co-Contribution scheme.

The disadvantages of investing in superannuation are:
• Superannuation is a long-term investment and money invested is generally not accessible until you reach your preservation age and have retired from the workforce.
• The performance of the superannuation fund will depend on the investment option/strategy selected for the fund. If the fund has a large exposure to growth assets such as shares or property then the investment returns may fluctuate in line with market movements.

Selecting the best option will depend on your personal situation and individual goals and objectives. There is no “one size fits all” approach to decide whether to direct spare cash to invest, reduce a mortgage or to top up super. As these strategies can be complex in nature and everybody’s situation and goals are different, it pays to seek professional advice. And remember that it doesn’t have to be one or the other; often a combination of strategies can also work well.

For more information and to have a confidential chat, please contact David Graham, Senior Financial Planner, 03 8560 3188.

Written and accurate as at: May 11, 2015 Current Stats & Facts

According to a survey conducted by the Australian Bureau of Statistics (ABS), almost one in five Australians over 45 years of age who intend to retire, plan to retire from the work force at 70 years and older.

So why are people deciding to delay retirement? A decision to do so is not always made for financial reasons. Many other social and personal factors may influence whether someone is ready to give up work. Often a person may choose to defer their retirement because the decision to do so gives them:
• More time to save for their retirement. The years immediately prior to retirement are often some of the best years in which to accumulate wealth as typically people are child and mortgage free.
• Less retirement years to finance. With the average life expectancy on the rise, delaying retirement can mean that there are fewer years to have to financially provide for in the future.
• Social Interaction. For many people their main social interaction is with their colleagues and peers. Giving up work can seem socially isolating and potentially lonely.
• A sense of purpose. Staying employed can often provide a way for people to achieve goals, receive recognition for their efforts and to be part of a team.
• A way to give back. Many people approaching retirement have many years’ experience, knowledge and skills that can be passed onto the younger generation and workers. By continuing to work or volunteer people can leave a legacy or support the community that supported them in their career.
• A sense of security. Switching from a regular pay day to having to support yourself or rely on Government funding or pensions can be major mindset change for some. The security offered by secure employment can be hard to let go of.
• A way to stay physically and mentally fit and healthy. Staying active can help people to feel better longer.
• A source of pleasure. As much as many people can’t wait to retire, others enjoy their jobs and find contentment and pleasure from being employed.

While retirement may not be planned for some, unfortunately, we don’t always have the luxury of being able to plan the exact timing of our retirement and sometimes people can be forced into an early retirement as a result of factors that are out of their control such as:
• Deteriorating health and physical wellbeing leading to inability to perform their job.
• A downturn in the economy or recession leading to retrenchments and redundancies.
• Technological advances and industry changes making jobs and roles obsolete.
• Age Discrimination and replacement of older workers with younger ones.
• Obligations to look after a spouse, sibling, parent or child needing care.

Whether considering retirement or planning to postpone or defer it, it remains important to still prepare financially and save for the future. It is true that the Australian superannuation system is designed primarily for our retirement years in mind, but superannuation is simply a tax-advantaged savings fund that can’t be accessed until a fixed point in the future. That point is typically either ‘preservation age’ or age 65 (whichever comes first). Those working past age 65 can generally access super and use the money any way they choose.

There are many advantages to building your superannuation whether you plan to retire or not. The biggest incentive is that superannuation is tax-effective. Investment earnings are taxed at 15% whilst in accumulation phase and 0% once a pension is commenced. Withdrawals from superannuation after the age of 60 are tax-free.

By accumulating wealth in superannuation you are tax-effectively preparing for the future. A superannuation “nest egg” can provide more than just a retirement income stream, it also provides options to those who wish to continue working, in the form of a safety net and financial security.

For more information about how we may be able to help you, please contact David Graham, Senior Financial Planner, 8560 3188 for a confidential chat.

Please feel free to share this article with a friend, family member or anyone else you think may also get value from it, thank you.

Written and accurate as at: May 11, 2015 Current Stats & Facts

The most common financial risks that retirees face include:

Risk No.1: Investment Risk – the possibility of lower than expected returns affecting the level of retirement savings and future income generated. If retirees are too conservative and do not invest to grow a portion of their retirement capital then they face the risk of withdrawing more than they earn and may result in having to rely on other income sources such as the Age Pension sooner.

Risk No. 2: Inflation Risk – the possibility of high inflation which increases the cost of living and forces retirees to spend more of their capital than expected. It’s vital that income is designed to keep pace with inflation to ensure retirees can continue to meet rising costs. Past inflation data can provide some help in estimating retirement needs, but there is no guarantee that future inflation will match historical experience. Many investors try to own some assets whose value may grow in times of inflation. However, this sometimes results in trading inflation risk for investment risk.

Risk No. 3: Sequencing Risk – also referred to as timing risk. This is the possibility of negative returns at or near retirement affecting the market value of investments, which cannot be recouped because of the requirement to draw down to fund living costs.

More recently, the Global Financial Crisis (GFC) put strain on many people planning retirement as the market downturn reduced their superannuation savings and retirement capital. This also meant that some retirees were faced with the necessity to delay retirement, transition to retirement by working part time, or reducing their retirement income expectations.

Risk No. 4: Expenditure Risk – the possibility of unplanned costs and lump sum expenses in retirement which reduce retirement savings and future income levels. Unplanned costs can easily arise in retirement and highlights the importance of having a buffer and some cash savings set aside in the case of emergencies. Overspending is just one of the common mistakes retirees can make. Here are some others.

Risk No. 5: Legislative Risk – changing social security, taxation and superannuation legislation.

With changing Governments comes changes to legislation. This can sometimes represent uncertainty for retirees and pre-retirees, but illustrates the need for the regular review of a retiree’s financial plan to ensure appropriate strategies are in place to manage tax, income and eligibility for social security and associated concessions.

Risk No. 6: Longevity Risk – the possibility of running out of money due to living longer than expected. This is potentially the biggest risk facing retirees. Many retirees use life expectancy figures to plan how long their money may last. Unfortunately no one has a crystal ball when it comes to how long they may need their capital to last and these figures are just an average at retirement. You may end up surviving well past your life expectancy and even end up doing triathlons in your 90s, like this guy!

On average, women live longer than men and wives outlive husbands in most cases. Longevity has increased over time. Any medical breakthroughs could bring additional improvement. In theory, retirees want to make sure their money will last a lifetime without cutting back on expenditures or reducing their standard of living. In practice, unexpected events may make this very difficult.

Conclusion
Whether pre or post retirement, everyone can benefit from a comprehensive retirement plan and ongoing financial advice to regularly review and monitor their situation, cash flow and retirement needs and ensure they live a long, healthy and happy retirement. Call David Graham today on 8560 3188 to find out what risks you may experience and how to manage those.

Written and accurate as at: Jun 09, 2015 Current Stats & Facts