Gold-news-letter-first-for-2015

Pathways to a prosperous future

Pathways to a prosperous future

We all look forward to creating a financially secure future. But how do you build security for tomorrow without sacrificing your lifestyle today – especially if you have a family to raise or a mortgage to manage?
There are many pathways to a prosperous future for you and your family. Your long-term strategy is likely to include everything from cash, managed funds and shares to the family home and your super. So it makes sense to follow the lead of the investment professionals and look at all your assets as a diversified portfolio.
By thinking about your assets as a portfolio, rather than a collection of separate investments, you can hone your strategy and make sure you’re getting the right overall balance between risk and return.
Getting the right balance
Most investors understand that there’s a trade-off between risk and return, with higher growth assets generally involving more risk. But what you might not realise is that the right mix of investments can give you better returns without driving up your overall risk. That’s because different asset types tend to rise and fall at different times, so the right combination can help you profit from the rises while cushioning the impact of the falls.
Your adviser can help you with how you should combine your assets to help achieve your objectives.
So it’s important to take a close look at all of your investments and think carefully about the role they play in helping you build your portfolio.
Investing in bricks and mortar
For many of us, the family home is a large part of our personal wealth – and we invest a large proportion of our income, and our lives, in paying it off.
The current record-low mortgage rates are a great opportunity for property investors, whether you’re looking to get a foothold in the market, grow your property portfolio or simply pay off your home faster.
But while property can be a great long-term investment, it is only one part of your portfolio. While it’s great to have a roof over your head, the value locked up in your home is hard to access, unless you plan to downsize down the track. Especially if you need funds in the meantime for things like the kids’ education. That’s where the other assets in your portfolio come into play.
Investing in shares
History shows that shares are an outstanding long‑term investment, despite the short‑term ups and downs. Over the long‑term, Australian shares have outperformed most other investment options. With the benchmark S&P/ASX 200 returning 9.58%1 a year for the five years to August 2013, it’s an enduring – if sometimes volatile – way to grow your money.
And it’s also worth considering investing in global shares. With the Australian sharemarket accounting for only 2.3% of the global sharemarket in August 20132, investing in global shares can provide additional diversification and investment opportunities.
You can invest in shares directly or through managed funds. For more information on the best way to access the sharemarket, speak with your financial adviser.
Get instant diversification with managed funds
Managed funds are a great way to take advantage of the benefits of a diversified portfolio without the effort of constructing it yourself. Because your money is pooled with contributions from other investors, you can draw on a wider range of opportunities. This may include bonds and other assets that can be hard for individual investors to access, such as large infrastructure projects like airports or energy production plants. And with a huge range of funds to choose from, it’s easy to find a fund with an appropriate balance of risk and return for your strategy – whether you’re looking to grow your money over the long term, earn an income today, or something in between.
Invest tax-effectively with super
When we think about our investments, we too often forget about super. Yet your super is likely to be your biggest asset after the family home.
Like a managed fund, super isn’t a separate asset type, but a vehicle for investing across a range of different assets. One of the main differences is that super can be extremely tax-effective.
Generally, you’ll pay less tax when you put money into super – less tax on your investment returns and less tax when you take it out. So compared with a non-super investment, super can give you more value from every dollar you invest.
For example, making salary sacrifice contributions lets you add to your super from your pre-tax salary. Instead of being charged your normal tax rate, these payments are taxed at just 15%. So if your normal tax rate is more than 15%, you’ll effectively get more for your money than if you had invested from your after‑tax income.
Similarly, earnings in super are taxed at a maximum of 15%. And if you are over 60 years of age when you access your super, any lump sum or income payments you receive will usually be tax-free.
However, while super may be one of the most tax-effective investments, it must be preserved until you reach your ‘preservation age’ – this means for most of us you can’t access it until you reach at least 55 years of age (and up to age 60 for others).
So it makes sense to treat super like any other investment and give it the attention it deserves. That means thinking carefully about your super investment options and ensuring you’re managing them actively to achieve the outcome you need.

1 Source: http://au.spindices.com/indices/equity/sp-asx-200.
2 Source: World Federation of Exchanges http://www.world-exchanges.org/statistics/monthly-reports.


This may contain general advice.  General advice is prepared without taking into account your objectives, financial situation or needs, and because of this, you should, before acting on the general advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs and if the advice relates to the acquisition of a particular financial product for which a Product Disclosure Statement (PDS) is available, you should obtain the PDS relating to the particular product and consider it before making any decision whether to acquire the product.

Being prepared for surprises

 



Being prepared for surprises – good and bad – is a smart financial strategy

While none of us can predict the future, we can do a lot to lessen the shock that can arise from unexpected events and emergencies at any time of life. For retirees relying on investments for day-to-day living, having a contingency plan means you’ll be prepared for any surprises that could derail your financial security and lifestyle goals.
Your financial plan has you on the right foot, but it can be a good idea to make sure you have a sufficient safety net to protect your retirement income, and other long-term investments, from one-off or cascading personal life events that can crop up at any time, which especially affect people at or after retirement. Examples include sudden illness, an accident or disability, the death of a spouse, or those same events affecting close family members such as children, siblings or aging parents. It’s also not unusual for changes to superannuation benefits or pensions to affect retiree expenses.
Other surprise expenditures that can interrupt your income stream might be emergency repairs to your home and investment properties due to everyday wear and tear or a severe weather event; maintaining the family car; or if a beloved pet racks up a large bill from the veterinarian. Having a savings safety net can also come in handy should you need to help out a relative, such as a son or daughter losing a job, or suffering unexpected health or life costs.
Your financial plan may already include a savings safety net – if so, that’s great news. However if you set your plan in place some time ago, you may want to consider talking to your financial planner to ensure that you have enough flexibility in case of a rainy day. Insurance provides another form of safety net, helping you to deal with unexpected losses. From general insurance covering fire, flood and theft of property and vehicles to life insurance that provides important financial support to a family, many of us take a set and forget approach to our policies. But take the time to review your protection, checking that values are still up to date, perhaps organising for new quotes on policies, and making sure that you are covered for the events of concern to you.
Mind the gap
Preparing for events that may never happen can be overwhelming, but it’s really a matter of managing the gap between enough funds to cover your retirement goals, and a safety net of savings to protect those funds. That’s the ideal scenario, but many retirees and those approaching retirement are carrying more debt than ever before. Average mortgages and other property loans held by people approaching age 65 have more than doubled since 2002, and credit card debt is up 70 per cent, according to a report by Kellyresearch.1 The report also shows that “increases in wealth through rising asset values, easy credit, and higher earnings” have led to a higher standard of living for working households.2 But a higher standard of living based on debt is unsustainable. That’s why retirees need to be careful about debt liability and having a focus on building up superannuation to the detriment of other forms of saving, because both approaches lock up funds that may need to be accessed quickly. That’s where contingency planning comes in. I can review your current situation, take an objective look at your assets, savings and the level of risk you’re comfortable with, and then collaborate on a tailored strategy to help you.
1. Household savings and retirement: Where has all my super gone? A report on
superannuation and retirement for CPA Australia by KELLYresearch, October 2012.
2. Ibid.
This may contain general advice.  General advice is prepared without taking into account your objectives, financial situation or needs, and because of this, you should, before acting on the general advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs and if the advice relates to the acquisition of a particular financial product for which a Product Disclosure Statement (PDS) is available, you should obtain the PDS relating to the particular product and consider it before making any decision whether to acquire the product.

Why it's never too late for financial advice

Why it's never too late for financial advice

It’s difficult to stay up to date with the economy and global financial markets, not to mention laws and regulations, all of which can affect your financial situation and life keeps changing too and with that, our financial needs and goals. Planning for the long term is a good way to manage these changes and ensure we can keep our finances on track. A financial adviser can help you do just this.
An adviser can get your finances organized, keep you up to date and help you grow your wealth. A financial adviser can analyze your financial circumstances and recommend strategies, which will make best use of your entitlements, such as Centrelink pensions and government contributions to low income earners. Tax can be a complicated issue and tax implications vary substantially, depending on where you are in life. For example, have you thought of the benefits of salary sacrificing? A financial adviser can help you navigate through these issues.
Circumstances change and an adviser can help you restructure investments, to best provide for your family. A plan that allows you to leave a legacy according to your wishes and one that accounts for your beneficiary’s personal circumstances. An adviser will review any existing personal insurance arrangements you or your family may have and recommend the policies best suited to your short and longer term needs.
If you have old super accounts still open, you may have insurance cover you’re not even aware of and for which you are still paying premiums and general cash management and budgeting, reviewing the management of your day-to-day finances and recommending strategies to help you save more effectively, or better manage your borrowings.


This may contain general advice.  General advice is prepared without taking into account your objectives, financial situation or needs, and because of this, you should, before acting on the general advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs and if the advice relates to the acquisition of a particular financial product for which a Product Disclosure Statement (PDS) is available, you should obtain the PDS relating to the particular product and consider it before making any decision whether to acquire the product.