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Intergenerational Wealth News

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How to protect your assets from expensive mistakes

How to protect your assets from expensive mistakes

Protecting yourself from frivolous creditors and lawsuits is becoming an increasingly common concern. Here we outline some of the ways you can insulate your assets. 

Check your insurances
Liability insurance is a must if you want to safeguard your assets in the event that you need to pay compensation.

 

Lawsuits
Lawsuits can arise for a range of reasons from personal injury to financial loss resulting from any products or services you provide. You can choose from three key types of cover – public liability insurance, professional indemnity insurance and product liability insurance. Seek advice from your financial adviser or insurance broker to determine which, if any, of these are suitable for you.

 

Separate business and personal assets
If you are a business owner and your family home is held in your name, it may be at risk from bankruptcy or litigation procedures. One way to protect your home is to give majority ownership of the home to a person who is not an owner of the business, typically a spouse. The business owner generally retains some interest in the home, however, to ensure the asset is not dealt with without his or her authority.

 

It is also important that the spouse does not having any dealings in the business, for example guaranteeing loans.

You should also know that the trustee in bankruptcy will consider other factors to determine the bankrupt’s interest in the house and if you transfer your home to your spouse for no consideration or for less than its value, before bankruptcy, the trustee in bankruptcy can in some cases reverse the transaction.

 

Create a trust
Trusts can be beneficial asset protection strategies, as you are transferring ownership of an asset away from yourself and into a legal structure, so the asset is not yours to lose in the event you are sued. Anthony Lieu, Lawyer at Legal Vision, says trusts also provide a degree of flexibility. “Just as each family is different, each discretionary or family trust is also different. Trusts generally take their rules and operation from the trust deed, so each trust will have to abide by a different set of rules,” Lieu says.

 

Summary
Structuring your assets the right way is one of the most important things you can do to protect your hard-earned wealth. As these strategies can be complex, always seek the help of a professional such as your financial adviser, lawyer or accountant.

 

All it takes is some professional help. Talk to us today on (03)9326 1594.

This editorial and the information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. The views expressed in this publication are solely those of the author; they are not reflective or indicative of Licensee’s position, and are not to be attributed to the Licensee. They cannot be reproduced in any form without the express written consent of the author. RI Advice Group Pty Limited ABN 23 001 774 125, AFSL 238429.
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Intergenerational Wealth Monthly Market Wrap October 2019

Intergenerational Wealth Monthly Market Wrap for October 2019

Risk assets faltered 

  • The rally from December resumed with most equity markets up for the month.
  • Global shares were up 2.3% and 2% in hedged and unhedged terms, respectively.
  • Domestically, Australian shares underperformed international markets this month with 1.8% performance in September.
  • Bellamy’s Australia (ASX: BLA) benefitted from a takeover bid by Chinese firm Mengniu at a 59% premium to its last trading price with investors receiving a fully-franked special dividend as part of the proceeds if it is accepted by FIRB. Western Areas Ltd (ASX: WSA) benefitted from a looming nickel market deficit following the surprise Indonesian move to halt exports from December this year.
  • The Australian dollar (AUD) rose slightly against major currencies on the prospects of US-China negotiations as well as interest rate cuts by the Federal Reserve and European Central Bank (which reduced the relative attractiveness of the US Dollar and Euro).
  • Fixed income assets struggled slightly as investors became concerned over changes to the Bank of Japan bond purchasing programme and optimistic on the trade war front between the US and China following confirmation that the talks would proceed. This saw a rise in bond yields globally that resulted in negative bond returns for the month for both domestic fixed income and international fixed income.

With mixed economic news…

Globally

  • US-China trade tensions flared up with new US tariff threats realised in early September with more waiting in the wings.
  • These fears have abated somewhat with the restart of trade negotiations between China and the US in October.
  • Global business surveys pointed to weaker manufacturing growth with the Markit Global Manufacturing PMI remaining in contractionary territory. However, both US and Chinese results suggest a short-term bounce in activity although the outlook remains uncertain. European weakness continued and raises the chances of European recession with the German Manufacturing PMI at levels last seen exiting the GFC in June 2009.

Locally

  • The Reserve Bank of Australia (RBA) cut interest rates in early October ahead of market expectations with the next cut anticipated early next year.
  • Retail sales disappointed expectations with 0.4% growth during August (consensus: 0.5%) following a flat July result.
  • The NAB Monthly Business Survey for September suggests subdued business conditions will continue in the near term. A – 0.35% reading on the Westpac Leading Index also suggests
    weaker growth in the near term.
  • At this stage the combination of RBA rate cuts and government stimulus has seen some response from the consumer, but sentiment has weakened further.
  • The Westpac-MI Index of Consumer Sentiment fell to 92.8 in October, its lowest level since July 2015. This suggests further efforts may be required to encourage consumer spending.
  • The unemployment rate rose to 5.3% driven by a stronger participation rate (if participation remained constant it would have fallen to 5.1% instead).
  • We have seen property markets strengthen following the RBA rate cuts. In its Financial Stability Review the RBA appears to be comfortable over any risks from spurring house price growth by cutting rates.

Major asset class performance

Currency markets

Disclaimer: This report is prepared by IOOF Research for RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429. RI Advice Group Pty Ltd is part of the IOOF group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate (“IOOF”). This report is for financial adviser use only – it is not to be distributed to clients. The information in the report may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of RI Advice Group Pty Ltd. This report is current as at the date of issue but may be superseded by future publications. RI Advice Group Pty Ltd and/or its associated entities, directors and/or its employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this report, or may provide services to the companies referred to in this report. This document is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of RI Advice Group Pty Ltd and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. This report has been prepared in good faith and with reasonable care. Neither RI Advice Group Pty Ltd, IOOF nor any other person makes any representation or warranty, express or implied, as to the accuracy, reliability, reasonableness or completeness of the contents of this report (including any projections, forecasts, estimates, prospects and returns and any omissions from this document). It is important to note that investments may go up and down and past performance is not an indicator of future performance. To the maximum extent permitted by law RI Advice Group Pty Ltd, its related bodies corporate and their respective officers, employees, representatives and associates disclaim and exclude all liability for any loss or damage (whether foreseeable or not foreseeable) suffered or incurred by any person acting on any information (including any projections, forecasts, estimates, prospects and returns) provided in, or omitted from this report. For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process. 

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What is cash flow management? Cash flow management is not a budget.

What is cash flow management? Cash flow management is not a budget.

Choosing a financial adviser & the value of professional advice

What is cash flow management? Cash flow management is not a budget. It is a mechanism by which you manage the flow of income and expenses to empower you to meet your non-discretionary obligations (e.g. bills, living expenses, mortgage etc), and enable you to understand discretionary spending patterns which ultimately provide a framework and define a balance between debt management and wealth accumulation. Cash flow management is about providing our clients with quality, strategic financial advice.

A sensible structure may include: Main Hub account, Savings account, Loans, Mortgage, Bills account, Weekly account, Irregular spending

The benefits of a sound cash flow management plan
• It provides a defined structure and promotes saving towards your wealth accumulation goals.
• An educational experience which highlights good vs. bad debt and differentiates between discretionary and non-discretionary spending.
• Establishes a plan that balances your survival vs lifestyle pendulum, reducing your stress and promoting peace of mind. It is not about a restrictive budget.
• Ultimately a good cash flow management plan will give you a goal to strive towards.

We can help
We don’t like to complicate your financial advice.
We can get you sorted, organised and on to a tailored a solution that is appropriate for you.
Your path to financial wellbeing starts with a simple phone call.

If you would like more information, please call us on (03) 9326 1594

The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on it without first obtaining professional advice specific to your circumstances. | ABN 23 001 774 125 AFSL 238429. RI Advice Group Pty Ltd | ABN 23 001 774 125 AFSL 238429 | www.riadvice.com.au RI Advice is a company within the IOOF Group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decisions based on this document, you should assess your own circumstances or seek advice from a financial adviser
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You understand the value of professional advice but do your friends & family?

You understand the value of professional advice but do your friends and family?

Choosing a financial adviser & the value of professional advice

Finding an adviser that suits you, A good financial adviser will help you set your financial goals and create a plan to achieve them.

Maybe you or people you know:

 

Are talking about retirement
Is thinking about retiring in the next 12 months
Is aged 55 or over and is still working
Has an elderly parent requiring aged care assistance
Has adult children still living or just leaving at home
Have some responsibility to look after grandchildren each week
Are “grey nomads” or planning extensive travel
Downsizing house or thinking of a “sea change”
Talks about having to work longer or retire later

 

Are seeking a new financial planner
Mentioned their old planner retired and unhappy with replacement
Worried about maintaining lifestyle in retirement
Looking for someone they can trust and “peace of mind”
Looking for guidance, advice or “second opinion”
Upset or distressed by market downturn
Has complained about bad previous financial advice
Complains current advisor has “gone missing”
Is uncertain about the current market and its direction

 

Might need a helping hand
Concerned about the current market (e.g. super, fund “freezes”)
Starting a business and now too busy to deal with personal finances
Has previously been a “DIY” investor but now needs some advice
Want to enjoy retirement, not manage finances
Wants to start investing but is wary of shares/market
Wondering if they have enough set aside for retirement
Unsure about how much longer they need to work for
Work hard but complain they “can’t get ahead”

 

Have a specific issue to address
Changing family circumstances – marriage, children, divorce
Received a redundancy payment or inheritance
Have mentioned a large upcoming tax bill (e.g. CGT)
Recently received an inheritance, redundancy or lottery win!
Self employed and talking about selling their business
Is considering selling an investment property
Have recently started a new job, career or promotion
Might need advice with Centrelink entitlements

 

Analysing all these issues and structuring the most effective solution takes some skill to organise and an understanding of how all the factors interrelate, so don’t go it alone.

Contact Intergenerational Wealth to arrange a no obligation meeting at one of our offices or we can organise a home/business visit.

We can help
We don’t like to complicate your financial advice.
We can get you sorted, organised and on to a tailored a solution that is appropriate for you.
Your path to financial wellbeing starts with a simple phone call.

If you would like more information, please call us on (03) 9326 1594

The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on it without first obtaining professional advice specific to your circumstances. | ABN 23 001 774 125 AFSL 238429
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Get financially fit – Personal financial management & case study

Your personal financial management just got simpler!

Have you:

• Given up managing your personal budget?
• Seen your savings disappear on unplanned expenses?
• Become frustrated trying to repay your debts?
• Struggled to save for your impending retirement?
• Given up on your dreams?
• Shuffled money around to make ends meet?

The RI Advice cash flow management plan can help you to understand where all your
money goes.

What is cash flow?

 

Effective cash flow management is about knowing where all your money goes and simplifying your income and expenses so you can see exactly what is spent, when, and on what. Through efficient management of your finances you can take control of your financial life and be confident that the structure you put in place today will help you manage your finances now, and in to the future.

 

• Understand where you spend your money
• Structure your finances so your money is in the right place at the right time
• Set up a guilt-free spending plan
• Find the money that you think you have lost

 

How can professional advice help?

 

Working with a professional financial adviser can help you to see the gaps and opportunities in your financial management plan. Knowing what is happening with your money is not enough. You need to know how to make it work harder for you!

 

A qualified, professional adviser will:

 

• Understand who you are, what is important to you and how to help you so that the advice given is relevant and achievable
• Examine your financial strengths and weaknesses and invest the time into implementing a strategy that is appropriate for you
• Show you that whether you have a little or a lot, it is never too late to set up a good financial management plan
• Empower you to take control of your finances.

We can help
We don’t like to complicate your financial advice.
We can get you sorted, organised and on to a tailored cash flow solution that is appropriate for you.
Your path to financial wellbeing starts with a simple phone call.

If you would like more information, please call us on (03) 9326 1594

The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on it without first obtaining professional advice specific to your circumstances. | ABN 23 001 774 125 AFSL 238429
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The power of regular investing

The power of regular investing

One of the world’s most admired investors, Warren Buffett, is famous for saying “Don’t save what is left after spending; spend what is left after saving.”

While this approach may not always be possible, investing even just a small amount regularly can make a big difference over the long term.

If you are accumulating wealth…

When looking to start building your investments, one of the easiest ways to get started is through a regular investment plan into a managed fund.

There is a managed fund to suit different risk profiles, with most offering the ability to have a regular amount, starting at $100 per month, invested automatically.

This approach means you will get used to not having the extra money, while you watch your investment balance grow.

This type of strategy is popular if you have a particular savings goal, such as a home deposit, starting a new business or taking an overseas holiday.

If you have a family…

Many new parents immediately start thinking about the ways to save for their children’s future education expenses.

One tax effective way to do this is through regularly investing in an insurance bond, which is similar to a managed fund but taxed differently.

Insurance bonds allow you to put in up to 125% of your previous year’s contribution, with earnings taxed at a flat 30% – which provides an immediate tax benefit if your tax rate is higher than this.

However, the real benefit with insurance bonds is if you hold it for more than 10 years, as all withdrawals from the bond are then tax free.

The sooner you start, even if it is just a small amount, the better off you will be when it comes time to pay hefty school fees.

If you have a mortgage…

With home loan rates now at all-time lows, making additional payments can help reduce interest and clear your mortgage earlier than if interest rates were higher.

From an investment perspective, if your home loan rate is currently 4%, then that is the after-tax return that you receive on any additional payments.

This is much higher than the rates offered by savings accounts or term deposits.

You can take this “investment” idea one step further by setting up an offset account linked to your mortgage.

Each time your salary is paid into your offset account, you are effectively “investing” in your home, as the balance in your offset account helps to reduce the amount of interest you pay.

If you are a pre-retiree…

Increasing your contributions into super, on top of what your employer already provides, is an easy and tax-effective way to increase how much you will have for your retirement.

This can be done through salary sacrifice, where additional super contributions are taken out of your gross income before tax is calculated. Another option is to make a personal deductible contribution into super. As the name suggests people can claim a tax deduction on their personal contribution. To be eligible to claim a deduction on personal contributions it is necessary to complete a ‘notice of intent’ to claim a deduction, speak to your adviser for more details on reporting requirements.

The current rules allow you to contribute up to $25,000 as a concessional contribution. Concessional contributions include your super guarantee, salary sacrifice and any personal deductible contribution.

If you didn’t use your full concessional contribution cap last financial year, you may be eligible to carry forward any unused amount this financial year thus increasing your concessional cap for the current financial year above $25,000.

How we can help – even through market turbulence

Investing regularly can have a positive impact on your financial situation, no matter your income or age.

With movements in investment markets and interest rates, we are used to managing market turbulence by creating an investment strategy that, over time, will help you to meet your long-term financial goals and objectives.

If you would like more information, please call us on (03) 9326 1594

This editorial and the information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. The views expressed in this publication are solely those of the author; they are not reflective or indicative of Licensee’s position, and are not to be attributed to the Licensee. They cannot be reproduced in any form without the express written consent of the author. RI Advice Group Pty Limited ABN 23 001 774 125, AFSL 238429. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 | www.riadvice.com.au
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Where did all the money go?

Your personal financial management just got simpler!

Have you:

• Given up managing your personal budget?
• Seen your savings disappear on unplanned expenses?
• Become frustrated trying to repay your debts?
• Struggled to save for your impending retirement?
• Given up on your dreams?
• Shuffled money around to make ends meet?

The RI Advice cash flow management plan can help you to understand where all your
money goes.

What is cash flow?

 

Effective cash flow management is about knowing where all your money goes and simplifying your income and expenses so you can see exactly what is spent, when, and on what. Through efficient management of your finances you can take control of your financial life and be confident that the structure you put in place today will help you manage your finances now, and in to the future.

 

• Understand where you spend your money
• Structure your finances so your money is in the right place at the right time
• Set up a guilt-free spending plan
• Find the money that you think you have lost

 

How can professional advice help?

 

Working with a professional financial adviser can help you to see the gaps and opportunities in your financial management plan. Knowing what is happening with your money is not enough. You need to know how to make it work harder for you!

 

A qualified, professional adviser will:

 

• Understand who you are, what is important to you and how to help you so that the advice given is relevant and achievable
• Examine your financial strengths and weaknesses and invest the time into implementing a strategy that is appropriate for you
• Show you that whether you have a little or a lot, it is never too late to set up a good financial management plan
• Empower you to take control of your finances.

We can help
We don’t like to complicate your financial advice.
We can get you sorted, organised and on to a tailored cash flow solution that is appropriate for you.
Your path to financial wellbeing starts with a simple phone call.

If you would like more information, please call us on (03) 9326 1594

RI Advice Group Pty Ltd | ABN 23 001 774 125 AFSL 238429 | www.riadvice.com.au RI Advice is a company within the IOOF Group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decisions based on this document, you should assess your own circumstances or seek advice from a financial adviser. Examples are illustrative only and are subject to the assumptions and qualifications disclosed. RI Advice is not a registered tax agent. You should consider the appropriateness of this information having regard to your individual situation and seek taxation advice from a registered tax agent before making any decision based on the content of this document.
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A look at minimalism

A look at minimalism

A look at minimalism

Living a simpler and less cluttered life is a concept that is gaining fans around the globe. Here we look at some of the key trends.

Tiny living

Rapidly growing global populations mean our homes are getting smaller – from micro apartments to tiny houses. Yet living small does not have to mean living in a cramped space, with designers increasingly focused on maximising every inch of space.

There are many design elements that can be used to maximise space. In high density European cities, like Paris where living spaces are usually very small, people often have madeto-measure, full-height joinery to store as much as they can and leave the rest of the floor empty. You can see more bedrooms that double as living and dining spaces, the use of mezzanine floors in smaller spaces and multi-function furniture.

Caravan and boat architecture have also become a source of design inspiration, using spaces for multiple functions.

Mindful consumption

Australian consumers tend to have high consumption habits, yet we seem to be increasingly concerned with our health and the environment, which is helping to drive a trend towards more mindful purchases.

If you are aiming to become a more mindful consumer, here are some tips to get started:

• Shop for locally produced and made products instead of imported goods.

• Buy secondhand from charity shops or online listings. Older or vintage items are usually better quality and will last longer.

• Choose eco-friendly goods made from recyclable materials.

Decluttering

According to lifestyle blog Becoming Minimalist, there are many benefits to owning fewer possessions – less to clean, less debt, less to organise, less stress and more money.

One method of decluttering your home is the ’12-12-12 Challenge’. Find 12 items to throw away, 12 items to donate and 12 items to be returned to their proper home.

Our living, shopping and lifestyle habits have moved on considerably from the 80s and 90s when conspicuous consumption was the norm.

Today’s consumers are discovering that living with less can not only help the environment and our pockets but can also help to reduce our stress levels too.

Please note: This editorial and the information within, is of a general nature only and neither represents nor is intended to give specific advice on any particular matter. This publication does not contain tax advice and it is recommended that you speak with a tax specialist about your circumstances. We strongly suggest that no person should act specifically on the basis of information contained herein but should obtain appropriate professional advice on their own personal circumstances. The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice’s position and are not to be attributed to RI Advice. They cannot be reproduced in any form without the express written consent of the author. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. Materials are published by RI Advice Group Pty Ltd. ABN 23 001 774 125 AFSL 238429. The information in this publication is current as of July 2019
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How reading books can do wonders for your wellbeing

How reading books can do wonders for your wellbeing

Too busy to read a book? Learning about the powerful benefits of reading might convince you to make time.

You’ve probably heard countless times how reading books helps improve literacy and aids in learning, but that’s just scratching the surface. There’s so much more to gain from reading, such as improved wellbeing and greater life satisfaction. Studies have shown that people who read for pleasure are happier with their lives.1 But how exactly can reading boost wellbeing?

 

Reducing stress and depression

One of the most significant benefits of reading is its ability to help reduce stress and depression.

“A study found that survey participants who read regularly for pleasure experience fewer feelings of stress and depression than nonreaders, who are 28 per cent more likely to report feelings of depression.”2

Reading regularly has been shown to help people enter a pleasurable state that reduces anxiety.

 

Boosting emotional intelligence

Reading may deepen emotional intelligence, thanks to the broad range of perspectives you get when you read. For example, reading fiction can help you understand complex relationships and interactions. And by reading about the experiences of diverse characters, you can place yourself in their shoes, honing your ability to empathise with others.

 

Enhancing social ties

Reading may also improve your social connectedness or sense of belonging. According to one report, individuals who read feel closer to their friends and community than lapsed or non-readers. It found that individuals who read for just half an hour a week are 52 per cent more likely to feel socially included than those who have not read in the past week. They’re also 72 per cent more likely to have greater community spirit.3

 

Improving sleep

Another great benefit of reading is that it can lead to a good night’s sleep by helping you relax and forget negative thoughts. It can also act as a calming activity that lets your body wind down and get ready to rest. A good book is also a great reason to put that phone or tablet aside.

 

Increasing longevity

If you’re still not convinced to bury yourself in a book, this might do the trick: reading books could help you live longer. A study shows that book readers have a ‘significantly greater’ chance of living longer than those who read only newspapers or magazines. It found that book readers’ risk of dying prematurely decreased by 20 per cent compared to non–book readers.4

 

Get reading
Reading is an activity where you have everything to gain. It’s great for your mental, emotional and social wellbeing – and your longevity. So maybe it’s time to pick up a book.

1. Booktrust, 2013, Booktrust Reading HabitsSurvey 2013, accessible at: https://www.booktrust.org.uk/globalassets/resources/research/1576-booktrust-reading-habitsreport-final.pdf
2. Quick Reads and Josie Billington, 2015,‘Reading Between the Lines: the Benefits of Reading for Pleasure’, accessible at: http://manuscritdepot.com/documentspdf/GalaxyQuick-Reads-Report-FINAL%20.pdf
3. Ibid
4. Bavishi, A, Slade, M & Levy, B, Yale University School of Public Health, July 2016, ‘A chapter a day: Association of book reading with longevity’, accessible at: https://www.sciencedirect.com/science/article/abs/pii/S0277953616303689

Please note: This editorial and the information within, is of a general nature only and neither represents nor is intended to give specific advice on any particular matter. This publication does not contain tax advice and it is recommended that you speak with a tax specialist about your circumstances. We strongly suggest that no person should act specifically on the basis of information contained herein but should obtain appropriate professional advice on their own personal circumstances. The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice’s position and are not to be attributed to RI Advice. They cannot be reproduced in any form without the express written consent of the author. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. Materials are published by RI Advice Group Pty Ltd. ABN 23 001 774 125 AFSL 238429. The information in this publication is current as of July 2019
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Protect the lifeblood of your business

Protect the lifeblood of your business

Cash flow can make or break your business, so why not safeguard it?

Cash flow problems put many business owners on edge. According to a recent survey, nearly 80 per cent of owners of small and medium enterprises (SMEs) said cash flow issues caused them the most sleepless nights. It estimated that poor cash flow cost the SME sector more than $234 billion in 2017.1

So how might you improve your business’s cash flow – and hopefully sleep better at night? Here are some practical tips.

Building a cash reserve

Cash flow is the lifeblood of any business. To ensure that it makes and doesn’t break your business, it’s important to build a robust cash reserve. This may help you meet your financial obligations in difficult times, and importantly, enable you to take on opportunities to grow your business.

Separating business and personal money

This may seem an obvious point, but some small business owners make the mistake of mixing business and personal money. By keeping your finances separate, you may develop a better understanding of your business’s cash position, and ensure that you don’t spend money meant for your business on personal expenses.

Getting paid on time

If your business hasn’t been actively pursuing unpaid invoices, you may want to make it a practice – and have a strategy – to regularly chase up payment. Finding ways to encourage prompt payment may help. For example, could you offer a discount to early payers?

Controlling business costs

Controlling costs is also key to maintaining a healthy cash flow.

“Taking stock of your business expenses regularly can help you identify areas where you can cut costs without sacrificing growth.”

This may include reviewing your suppliers and negotiating better rates with them.

 

Protecting your business

Cash flow management isn’t just about ensuring that your business will have money to pay suppliers, lenders and employees. It’s also about protecting your business income in case you or your key employees aren’t able to work and bring in revenue.

By taking out business expenses insurance, you may help ensure your business can meet its running costs if you are too ill to work. This insurance plan may provide a monthly benefit to cover your overheads until you can return to work.

What if a key person in your business is unable to work, meaning you lose revenue? Taking out key person insurance could be a viable solution for covering the losses. It offers a monthly benefit to help replace the revenue lost while the key person is incapacitated.

Working with a professional

Getting income protection policies for your business involves choosing a waiting period and understanding the types of expenses that can be covered, so it’s a good idea to seek advice. Your professional financial adviser could tailor your insurance plans to your business’s cash flow protection needs, safeguarding what you’ve worked so hard to build.

1 Scottish Pacific and East & Partners, October 2018, ‘SMEs flag higher revenue growth, but prospects could be dampened by declining property market and cash flow issues’, accessible at: https://www. scottishpacific.com/media-releases/smesflag-higher-revenue-growth-but-prospectscould-be-dampened-by-declining-propertymarket-and-cash-flow-issues

After all, you’re investing to achieve goals, not returns. To learn more, speak with us.

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