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Intergenerational Wealth – February 2019 Market Wrap

Shares rebound

  • January was a more positive month for investors after December’s volatility, with shares recovering most of their late 2018 losses. Global shares rose by 7.1% and 4.1% in hedged and unhedged terms respectively.
  • US shares, having led December’s decline, performed strongly, ending the month up 7.9%. They were boosted by the US Federal Reserve’s decision to leave interest rates on hold and its dovish communications around future tightening.
  • The longest government shutdown in the US’s history, although now over, may slow GDP growth sooner than had been expected.
  • Economic growth in the eurozone has also slowed, negatively affected by political instability and trade tensions, amongst other factors.
  • The US and China, whose ongoing trade war contributed to market jitters in 2018, may be on their way to an agreement, although relations are still far from cordial.
  • China’s growth is slowing, with poor manufacturing figures and exports also down. There are also concerns about its high corporate debt, currently at 162% of GDP. Careful government policy will be required to manage the transition to a slower economy.
  • The Australian dollar gained ground, ending the month at almost US73c, supported by rocketing iron ore prices and a softer USD.

Major asset class performance (%)

Asset classes 1 month 12 months 5 years (p.a.)
Australian Shares 3.9 1.1 7.1
Global Shares (hedged) 7.1 -4.7 9.6
Global Shares (unhedged) 4.1 3.8   11.0
Global Emerging Markets (unhedged) 5.0 -4.8 8.6
Global Small Companies (unhedged)  6.5 2.0 10.3
Global Listed Property 10.1 8.2 9.6
Cash 0.2     2.0 2.1
Australian Fixed Income 0.6 5.5 4.6
International Fixed Income 1.0 3.3 4.7
Source: JP Morgan & ANZ Wealth, 31January 2019.

Indices: Australian shares – S&P/ASX 300 Accumulation; Global shares (hedged/unhedged) – MSCI World ex Australia Net; Global emerging markets – MSCI Emerging Markets Net in AUD (unhedged); Global small companies (unhedged) – MSCI World ex Aust Small Cap; Global listed property – FTSE EPRA/NAREIT Developed Rental Index ex Australia (hedged); Cash – Bloomberg Bank Bill; Australian fixed income – Bloomberg AusBond Composite 0+ Yr Index; International fixed income – Barclays Global Aggregate Bond Index (hedged).

Currency
Exchange rates At close on 31/12 % change

1 month

% change 12 months
AUD/USD 0.73 3.2 -9.7
AUD/euro 0.64 3.4   -2.1
AUD/yen 79.3 2.4 -10.0
Trade weighted index 61.6 1.5 -6.1
Source: Bloomberg & ANZ Wealth, 31 January 2019. All foreign exchange rates are rounded to two decimal places where appropriate. Please note: Past performance is not indicative of future performance.

The team at Intergenerational Wealth

Disclaimer: This information is current as at 31 January 2019 but is subject to change. This information has been prepared on behalf of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 (“RI Advice”), a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522. Whilst care has been taken in preparing this information, RI Advice and its related entities do not warrant or represent that the information is accurate. To the extent permitted by law, RI Advice and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of capital is not guaranteed. The information is not to be construed as investment or financial product advice and should not be relied upon as a substitute for professional advice. The information provided is of a general nature and has been prepared without taking into account a potential investor’s objectives, financial situation or needs. Before acting on this information, potential investors should consider whether the information is appropriate for them, having regard to their objectives, financial situation and needs. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 is a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522.

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Smart ways to financially get ahead in your 40s

Smart ways to financially get ahead in your 40s

In your 40s and still not financially secure? Don’t fret. You can still catch up.

Being in your 40s often involves balancing different priorities. For example, you may need to care for your ageing parents, grow your career or business, and if you’re a parent, support your children.

With all these responsibilities, it’s easy to neglect your own financial wellbeing, including building your long-term savings. But it’s not too late to try secure your future. Here are some tips to help you financially make the most of your 40s.

Make a plan

If you don’t have a financial plan, it’s time to get one. A financial plan may help you stay on track by identifying your long-term goals and the steps you could take to reach them. Ensure that it’s based on your specific needs and priorities – and is realistic. By working with a professional adviser, you may be able to tailor a plan that optimises your ability to invest and save for the important things.

Grow your savings

Your 40s can be your peak earning years. Data from the Australian Bureau of Statistics shows that in 2016, employees aged 45 to 54 earned $1,479.90 in average weekly total cash earnings, the highest of all age groups. [1]

This may be a good decade then to ramp up your savings and funnel some of your income into your superannuation through salary sacrifice, for instance. But be sure to do your homework and speak with a financial adviser to find out what your options are.

Give your super a health check

Speaking of super, do you know how your account is doing?

A quick super health check may help you increase your retirement savings. For example, by choosing a different investment option or type of risk, you may be able to earn better returns on your super. If you have multiple super funds, consolidating your accounts may mean you could save on fees.

Super can be a difficult subject to get your head around. So it is recommended you consult a professional financial adviser about how you could bolster your super.

Avoid lifestyle creep

People generally have a tendency to inflate their standard of living as they earn more and can afford more things like a better house or car, or more holidays.

While it’s only natural to want the finer things in life, it’s wise not to get caught in a cycle of upgrading your lifestyle. You’ll likely end up with little to no financial gain if your spending rises as quickly as your income. Stick to the plan you’ve developed with your financial adviser and stay focused on your financial goals.

Consider investing more

Your 40s may be a good time to invest more – or diversify your existing investments – to help you grow your long-term savings and try stay ahead of inflation. Although leaving your money in a fixed-income vehicle may reduce your risk of losing money, inflation might erode the value of your capital.

If you decide to invest more, or more aggressively, keep in mind that it’s important to choose instruments that suit your risk appetite and time horizon. Developing a strategy with your financial adviser might make it easier to achieve the return required to reach your financial goals.

Your 40s can be a juggling act of different priorities, but they could also be a great opportunity to set up new, healthy financial habits. By putting these into practice, balancing your financial responsibilities may be that little less difficult.

Seek advice

Getting professional financial advice may help you optimise your windfall. Your adviser can review your finances and work with you on a financial plan based on your needs and priorities, to help you achieve your goals.

[1] Australian Bureau of Statistics, May 2016, ‘Employee Earnings and Hours’. Accessible at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/6306.0vers_and_Nonresolvers.

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Five ways to keep your financial resolutions this year 2019

Five ways to keep your financial resolutions this years 2019

Setting a goal for the New Year? Make it stick to help you secure your financial future.

It’s that time of year when we set new financial goals – or revisit old ones – and promise ourselves we will accomplish them. But many of us struggle to stick to our resolutions. A study of individuals who set a New Year’s resolution found that less than half (46 per cent) reported continuous success at six months.

But you don’t have to give up just after you’ve decided to turn over a new leaf. Here are some practical ways to help you adhere to your resolution.

1. Choose an attainable goal

It’s good to be ambitious, but you are likely to have a better chance of keeping your resolution if you have a smaller, attainable goal.

Using the well-established SMART formula may help you create such a goal. SMART is used to write management targets and objectives, but it could also work for you. It stands for:

  • Specific – make your goal as clear as possible. For example, instead of just intending to boost your superannuation fund, set an amount you want to voluntarily contribute for the year.
  • Measurable – if your financial goal is specific, most likely it is measurable too.
  • Achievable – choose a goal that you can reach in the foreseeable future. Instead of aspiring to save $1 million by the time you turn 40, why not aim to set aside $1,000 a month, giving you $12,000 at the end of every year?
  • Relevant – ensure you really want this goal and that it would benefit you.
  • Time bound – set a timeline for achieving your target.

2. Have a plan

Create a plan that helps you take small but regular steps toward your financial goal. The key is to set specific milestones and a timeframe, monthly or quarterly, for each one. It may be a good idea to consult your professional financial adviser on setting a plan for your unique financial situation and goal.

3. Tell others about your resolution

Tell family members or friends about your resolution or post it on social media. By announcing your goal, you might feel more responsible for attaining it.

4. Track your progress

Regularly record and analyse your progress against your milestones. It may also help to get your financial adviser to check on your progress every so often.

5. Enjoy the process

If you enjoy taking steps to reach your goal, it may be easier to stick to your financial resolution. A study found that when people received immediate rewards, such as enjoyment in doing their tasks, they were more likely to persist to meet their New Year’s resolutions. So give yourself a small reward every time you reach a milestone.

Whether you want to boost your savings or retirement fund, or you want to start investing, your financial adviser may assist you in planning to execution helping you to stay on track to achieve your resolution – so instead of feeling guilty, you’ll feel great.

 

Seek advice

Getting professional financial advice may help you optimise your windfall. Your adviser can review your finances and work with you on a financial plan based on your needs and priorities, to help you achieve your goals.

Contact Us Today 

[1] Norcross, JC, Mrykalo, MS & Blagys, MD, April 2002, ‘Auld Lang Syne: Success Predictors, Change Processes and Self-Reported Outcomes of New Year's Resolvers and Nonresolvers’, Journal of Clinical Psychology. Accessible at: https://www.researchgate.net/publication/11443909_Auld_Lang_Syne_Success_Predictors_Change_Processes_and_Self-Reported_Outcomes_of_New_Year's_Resolvers_and_Nonresolvers.
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Intergenerational Wealth – January 2019 Market Wrap

January 2019 Market Wrap

Welcome to the latest edition of our client newsletter,

Our articles cover a range of topics which we hope you will find interesting. We aim to keep you informed of changes as they happen, but we also want to provide ideas to help you live the life you want, now and in the future.

Shares plummet; bonds rally

  • December was a poor month for share investors as a concerning mixture of rising US interest rates, a slowdown in eurozone business confidence, weaker Chinese growth and rising political tensions saw global markets plummet. Global shares fell 8.3% and 4.3% in hedged and unhedged terms respectively.
  • US shares led the decline with the S&P 500 declining 9.2% during the month, ending the year down 6.2%. Markets have started to worry that the impact of the tax cuts which helped boost growth in 2018 would fade by the first half of 2019.
  • Despite softer economic data out of the eurozone, the European Central Bank ended its quantitative easing programme in December, unwinding its monthly 15 billion euros in bond purchases.
  • Disappointing export, retail and industrial production data from China also dampened markets. While China seeks to stimulate the economy through monetary and fiscal measures, external headwinds such as the ongoing trade negotiations with the US will likely be a source of additional risk.
  • On the positive front, both local and international bonds rallied strongly in December, proving themselves as a good source of diversification in times of market uncertainty.
  • The Australian dollar fell to just above US70c as market volatility heightened, down 3.5% from November.

Major asset class performance (%)

Asset classes 1 month 12 months 5 years (p.a.)
Australian Shares -0.2 -3.1 5.6
Global Shares (hedged) -8.3 -7.6 7.4
Global Shares (unhedged) -4.3 1.5 9.8
Global Emerging Markets (unhedged) 1.0 -5.1 6.6
Global Small Companies (unhedged) -6.0 -4.2 9.1
Global Listed Property -6.8 -4.3 8.0
Cash 0.2 1.9 2.2
Australian Fixed Income 1.5 4.5 4.7
International Fixed Income 1.4 1.7 4.8
Source: JP Morgan & ANZ Wealth, 31 December 2018.

Indices: Australian Shares – S&P / ASX 300 Accumulation, Global Shares (hedged/unhedged) – MSCI World ex Australia Net, Global Emerging Markets – MSCI Emerging Markets Net in AUD (unhedged), Global Small Companies (unhedged) – MSCI World Small Cap ex Australia, Global Listed Property – FTSE EPRA/NAREIT Developed Rental Index ex Australia (hedged), Cash – Bloomberg Bank Bill, Australian Fixed Income – Bloomberg AusBond Composite 0+ Yr Index, International Fixed Income – Barclays Global Aggregate Bond Index (hedged). Please note: Past performance is not indicative of future performance.

Currency

Exchange rates At close on 31/12 % change

1 month

% change 12 months
AUD/USD 0.70 -3.5 -9.7
AUD/euro 0.61 -4.8   -5.5
AUD/yen 77.3 -6.8 -12.2
Trade weighted index 60.7 -4.1 -6.5
Source: Bloomberg & ANZ Wealth, 31 December 2018. All foreign exchange rates are rounded to two decimal places where appropriate.

Please note: Past performance is not indicative of future performance.

The team at Intergenerational Wealth

Disclaimer: This information is current as at 31 December 2018 but is subject to change. This information has been prepared on behalf of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 (“RI Advice”), a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522. Whilst care has been taken in preparing this information, RI Advice and its related entities do not warrant or represent that the information is accurate. To the extent permitted by law, RI Advice and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of capital is not guaranteed. The information is not to be construed as investment or financial product advice and should not be relied upon as a substitute for professional advice. The information provided is of a general nature and has been prepared without taking into account a potential investor’s objectives, financial situation or needs. Before acting on this information, potential investors should consider whether the information is appropriate for them, having regard to their objectives, financial situation and needs. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 is a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522.

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Intergenerational Wealth – December 2018 Market Wrap

December 2018 Market Wrap

Welcome to the latest edition of our client newsletter,

Our articles cover a range of topics which we hope you will find interesting. We aim to keep you informed of changes as they happen, but we also want to provide ideas to help you live the life you want, now and in the future.

Geopolitical events dominate

  • Global shares failed to rebound in November as geopolitical events dominated markets. In unhedged terms, global shares fell -1.8 % but they were up 1.2% in hedged terms due to a stronger Australian dollar.
  • The outcome of the US mid-term elections was widely anticipated with the Democrats taking over the House of Representatives and Republications consolidating their position in the Senate. As a result, the likelihood of the Republicans to extend fiscal stimulus has reduced and markets expect US growth to slow through the course of 2019.
  • Europe had its own political issues. While the Brexit deal was endorsed by EU leaders, markets were unsure whether the UK Parliament will approve it. Also, the Italian budget laws were rejected by the EU as no significant changes were made to the original proposal.
  • Oil prices plunged in November as swelling US inventories more than offset demand.
  • Emerging countries continued to face challenges though the meeting at the G20 between President Trump and President Xi showed some willingness to attempt to ease trade tension.
  • The US 10-year Treasury yield fell back to 3.01% as markets became more concerned about the outlook for global growth and as the oil price fell.
  • The Australian dollar rallied by 3.3% in the month as the minutes from the latest US Fed meeting showed a more dovish shift that pushed the US dollar lower.

Major asset class performance (%)

Asset classes 1 month 12 months 5 years (p.a.)
Australian Shares -2.2 -1.0 5.8
Global Shares (hedged) 1.2 1.9 9.8
Global Shares (unhedged) -1.8 4.2 11.7
Global Emerging Markets (unhedged) 1.1 -5.5 6.6
Global Small Companies (unhedged) -2.4 0.2 11.4
Global Listed Property 3.3 3.7 9.6
Cash 0.2 1.9 2.2
Australian Fixed Income 0.2 2.5 4.5
International Fixed Income 0.5 0.5 4.4
Source: JP Morgan & ANZ Wealth, 30 November 2018.Indices: Australian Shares – S&P / ASX 300 Accumulation, Global Shares (hedged/unhedged) – MSCI World ex Australia Net, Global Emerging Markets – MSCI Emerging Markets Net in AUD (unhedged), Global Small Companies (unhedged) – MSCI World Small Cap ex Australia, Global Listed Property – FTSE EPRA/NAREIT Developed Rental Index ex Australia (hedged), Cash – Bloomberg Bank Bill, Australian Fixed Income – Bloomberg AusBond Composite 0+ Yr Index, International Fixed Income – Barclays Global Aggregate Bond Index (hedged).

Please note: Past performance is not indicative of future performance.

Currency

Exchange rates At close on 30/11 % change

1 month

% change 12 months
AUD/USD 0.73 3.3 -3.4
AUD/euro 0.65 3.3 1.6
AUD/yen 83.0 3.9 -2.6
Trade weighted index 63.3 2.3 -0.5
Source: Bloomberg & ANZ Wealth, 30 November 2018. All foreign exchange rates are rounded to two decimal places where appropriate.

Please note: Past performance is not indicative of future performance.

The team at Intergenerational Wealth

Disclaimer: This information is current as at 30 November 2018 but is subject to change. This information has been prepared on behalf of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 (“RI Advice”), a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522. Whilst care has been taken in preparing this information, RI Advice and its related entities do not warrant or represent that the information is accurate. To the extent permitted by law, RI Advice and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of capital is not guaranteed. The information is not to be construed as investment or financial product advice, and should not be relied upon as a substitute for professional advice. The information provided is of a general nature and has been prepared without taking into account does not take into account a potential investor’s objectives, financial situation or needs. Before acting on this information, potential investors should consider whether the information is appropriate for them, having regard to their objectives, financial situation and needs. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 is a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522

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Intergenerational Wealth – November 2018 Market Wrap

November 2018 Market Wrap

Welcome to the latest edition of our client newsletter,

Our articles cover a range of topics which we hope you will find interesting. We aim to keep you informed of changes as they happen, but we also want to provide ideas to help you live the life you want, now and in the future.

Market volatility returns in October

  • Even though economic fundamentals remained strong, market volatility returned in October with share markets tumbling worldwide. Global shares returned -6.9% and -5.4% in hedged and unhedged terms respectively.
  • The S&P 500 fell almost 7%, leaving the calendar to year gain to only 1.4%. However, the US economy continued to steam ahead with unemployment falling to its lowest level in almost 50 years, which supported consumer confidence. The preliminary 3Q GDP also came in strong, at 3.5% annualised.
  • Things weren’t as rosy in Europe with purchasing managers’ indices continuing to disappoint. Trade tensions have also appeared to affect activities within the region and political concerns in Europe continued to weigh on markets.
  • Concerns around a slowdown in China lingered as trade tensions with the US increased. China’s central bank cut its reserve requirement ratio again in October in an attempt to support bank credit growth.
  • Locally, the latest fall in unemployment rate to 5% was seen positively as it suggests wages may grow more quickly.
  • Both local and international fixed income were flat, returning 0.5% and -0.2% respectively.

Major asset class performance (%)

Asset classes 1 month 12 months 5 years (p.a.)
Australian Shares -6.2 2.9 6.0
Global Shares (hedged) -6.9 2.4 10.1
Global Shares (unhedged) -5.4 9.6 13.4
Global Emerging Markets (unhedged) -6.8 -5.4 6.8
Global Small Companies (unhedged) -8.0 5.9 13.2
Global Listed Property -2.6 3.0 8.1
Cash 0.2 1.9 2.2
Australian Fixed Income 0.5 3.1 4.4
International Fixed Income -0.2 0.2 4.4
Source: JP Morgan & ANZ Wealth, 31 October 2018.

Indices: Australian Shares – S&P / ASX 300 Accumulation, Global Shares (hedged/unhedged) – MSCI World ex Australia Net, Global Emerging Markets – MSCI Emerging Markets Net in AUD (unhedged), Global Small Companies (unhedged) – MSCI World Small Cap ex Australia, Global Listed Property – FTSE EPRA/NAREIT Developed Rental Index ex Australia (hedged), Cash – Bloomberg Bank Bill, Australian Fixed Income – Bloomberg AusBond Composite 0+ Yr Index, International Fixed Income – Barclays Global Aggregate Bond Index (hedged).

Please note: Past performance is not indicative of future performance.

Currency

Exchange rates At close on 31/10 % change

1 month

% change 12 months
AUD/USD 0.71 -2.1 -7.6
AUD/euro 0.63 0.5 -4.9
AUD/yen 79.9 -2.7 -8.2
Trade weighted index 61.9 -0.5 -4.6
Source: Bloomberg & ANZ Wealth, 31 October 2018. All foreign exchange rates are rounded to two decimal places where appropriate.

Please note: Past performance is not indicative of future performance.

Emilio and the team at Intergenerational Wealth

Disclaimer: This information is current as at 30 September 2018 but is subject to change. This information is provided by OnePath Funds Management Limited (OFM) ABN 21 003 002 800 AFSL 238342. OFM is a wholly owned subsidiary of Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522 but is not a bank. The information is general in nature and does not take into account a potential investor’s personal needs, objectives and financial circumstances. This information is not to be construed as investment or financial product advice, and should not be relied upon as a substitute for professional advice. Before acting on this information, potential investors should consider the appropriateness of the information, having regard to their objectives, financial situation and needs. Potential investors should read the relevant Product Disclosure Statement (PDS) available at onepath.com.au and consider whether the particular product is right for them. Although all the information in this document is obtained in good faith from sources believed to be reliable no representation of warranty, express or implied is made as to its accuracy or completeness. Whilst care has been taken in preparing this material, ANZ and its related entities do not warrant or represent that the information, opinions or conclusions contained in this document (“information”) are accurate. To the extent permitted by law, ANZ and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of subscribed capital is not guaranteed. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 is a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522.

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Partnership with Mead Partners Chartered Accountants

Intergenerational Wealth is delighted to announce a partnership with Mead Partners Chartered Accountants

Intergenerational Wealth is delighted to announce a partnership with Mead Partners Chartered Accountants. Mead are specialised accounts who put people at the centre of everything they do.

Mead Partners’ range of services include bookkeeping, business taxation, SMSF and business advisory. If you’re in the market for the highest-level professional advice, get in touch with us to set up a chat today.

About Mead Partners

Mead Partners is about personalised accounting, putting people at the centre of everything they do. Established by ex-Big 4 partner Bob Mead in 1997, Mead Partners was set up with the goal of transforming the ‘business as usual’ approach of accounting by making the complex simple and putting themselves in the shoes of their clients.

Partners John Pititto, Justin Sparks and Shaun Borg continue that legacy today. Mead’s clients know that when they call for advice, they will be treated with professionalism, warmth and care — and receive the best advice possible.

Mead Partners’ specialised range of services include bookkeeping, taxation, SMSF and business advisory. They’re not the ordinary desk-bound accountants — they’ll come out and see their clients in action and get to know their businesses better to serve them best. They’ll always go the extra mile for their clients, whatever the future may bring.

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How to keep your business debt under control

How to keep your business debt under control

Managing debt can help you keep your business out of financial trouble.

Sometimes you can’t avoid debt in a business. You may have to take out a loan, for example, to increase production or expand your business offerings. But piling up a lot of debt may leave your business in financial difficulty or, worse, bankrupt. So it’s vital to manage your debt before it gets out of hand. Here are some practical suggestions to consider.

Keeping tabs on your finances

Understanding your business’s finances is a good first step in managing your debt. Having a record of your creditors and debtors and the amounts involved may help you keep track of your debt.

If tracking your business finances requires more than just a simple spreadsheet, consider using a bookkeeping system to make monitoring your finances easier.

Prioritising debt payments

Once you have a good understanding of where your business stands financially, you can begin to prioritise your debts. This requires identifying which debts you must repay now and which ones you may be able to put off paying or put on a payment plan. You can prioritise debts according to their urgency or the importance of the creditors to your business. Also consider the penalties and interest charges you may have to pay, and the risk to your business credit score.

Paying wages and bills such as rent and electricity is critical to keeping your business running. If you have built good relationships with some of your suppliers, you may want to prioritise them to avoid losing their goodwill or trust by missing payments. Also think about prioritising meeting tax obligations on time to avoid fines and penalties.

 

Negotiating with your creditors

Even after prioritising your debts, it could still be difficult to catch up on payments. It may help to speak to your creditors about your business situation. You could ask if they have any hardship provisions or to have your due date extended.

Talking to your creditors promptly may save you from having to pay more penalties. It could also be a good chance to negotiate for better terms and rates on your business loans.

 

Collecting outstanding payments

You may want to chase outstanding debtors for payment to help improve your cash flow. If you have a long list of debtors, you could prioritise them by going after the biggest accounts first.

If sending friendly reminders to your debtors doesn’t work, perhaps send a letter of demand. As a last resort, consider engaging a debt collection company. Keep in mind this option could strain your relationship with your debtors and may add to your costs.

 

 

Protecting your business

You can also take steps to protect your business from risks that might affect its ability to continue running. Taking out a business insurance policy, for example, could help you better protect key elements of your business and help ensure its continuity. The policy may help you replace lost income and potential lost profits, repay a business debt or maintain cash flow.

Your financial adviser may be able to help determine if business insurance might work for you.

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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Put your financial windfall to good use

Put your financial windfall to good use

Received a large sum of money? There are smarter ways to use it than treating yourself to a new luxury car or watch.

Windfalls such as salary bonuses and inheritances are more common than many people think. An Australian survey showed that 85% of seniors are likely to leave an inheritance for their children, with an estimated $3.3 trillion pledged1.

While coming into a large sum of money seems a good opportunity to build a secure financial future, research has shown that on average, people who receive an inheritance spend about half of it2. So how can you avoid blowing your newfound wealth? Here are some smart ways.

 

Set the money aside

To avoid the temptation of spending the money impulsively, you could put it away temporarily in a deposit account or short-term investment instrument. If you leave the sum aside for one or two months, it will give you more time to plan or engage a professional financial adviser to help you decide how to use the money wisely.

 

Pay off your debts

Using your windfall to clear your debts can put you on a better financial footing. Consider working with your financial adviser to create a budget that considers all your debt obligations, income and windfall. This can also be a good chance to discuss the opportunity to invest and grow your money.

 

Boost your emergency fund

Building up your emergency fund – or creating one if you haven’t already done so – can be another way to make good use of your money. By increasing the fund to cover your expenses for six months, you may be better positioned to handle unexpected events such as a job loss or unforeseen medical costs.

 

Beef up your retirement savings

Making extra contributions to your superannuation may help you optimise your windfall. Whether you make non-concessional contributions or, if you are employed, arrange to have a portion of your pre-tax salary paid to your super, increasing your retirement savings can help you secure your financial future.

 

Fund your personal goals

You may also take this opportunity to build your savings for some of your dreams, such as pursuing higher education or travelling to places on your bucket list. But consider doing this only after you’ve paid off your debts and built up your emergency fund.

 

Give to others

Receiving a large windfall can be a chance to help others in need. If the money came from a loved one, donating some of it to charity may be a good way to honour their hard work to build that bequest.

If you decide to give away some money, consider donating it to an organisation that’s entitled to receive tax-deductible gifts, so you can claim a tax deduction. Don’t forget to keep records of your gifts to give to your accountant at tax time.

 

Seek financial advice

Getting professional financial advice may help you optimise your windfall. Your adviser can review your finances and work with you on a financial plan based on your needs and priorities, to help you achieve your goals.

[1] The Australian Seniors Insurance Agency, January 2018, ‘Inheritance Survey’. Available at: https://www.seniors.com.au/news-insights/inheritance-retirement-survey.

2 The Ohio State University, 2012, ‘Most Americans Save Only about Half of their Inheritances, Study Finds’. Available at: https://news.osu.edu/most-americans-save-only-about-half-of-their-inheritances-study-finds—ohio-state-research-and-innovation-communications/.

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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The five key questions on aged care

The five key questions on aged care

If you are considering aged care for someone close to you, there are five questions you need answered to ensure the best care at the most reasonable cost.

It’s a fact of life that many of us will need to one day face the daunting task of seeking aged care for someone close to us. At first the complexity of dealing with the personal, practical and financial issues may seem overwhelming, but there are positive ways to address these issues and we can help you navigate through them.

 

Question 1 – What are the aged care options?

The degree of care needed is evaluated by an Aged Care Assessment Team (ACAT). ACAT comprises health professionals and social workers and their role is to assess if the person needs assistance services at home or if a move to residential care is needed. In-home care can be arranged through the Department of Health in the form of Home Care Packages and Respite Care Services.

If it appears that independent living is too much of a challenge then they may recommend residential aged care. All facilities provide assistance with daily living needs, such as meals, laundry and cleaning as well as a degree of nursing care. However not all facilities can offer more intensive support for a higher level of care, including full time nursing care. The ACAT assessment will determine which level of care you need to look for so you can then decide on a facility. It is important to take a look first hand, to get a feeling for the standard of care available, any extra services and to start comparing the pros and cons of different aged care homes.

 

Question 2 – What costs are involved?

The costs of residential care as being the most confronting aspect for the uninitiated. Whilst facilities are not government run, the cost of care is partly funded by the government and there are still significant costs to residents.

For instance, all residents will pay a standard resident contribution. In addition there are means tested care fees and residents are also required to contribute toward accommodation costs based on their level of assets and income.

Permanent Residential facilities now use the same structures to calculate fees, however total fees will vary depending on care and any extras that are agreed. All require a form of accommodation payment plus various ongoing care fees.

Resident’s assets and income will be assessed by Centrelink to determine the level of fee and the degree of subsidy made by the government.

Whilst it is not compulsory to undergo a means assessment by Centrelink, if you choose not to do this, then you can expect to pay the maximum, with no government subsidies.

You can of course enter a nursing home with ACAT assessment, but waive the Centrelink assessments – however this may mean that no Government subsidies are forthcoming.

While all these costs may seem difficult to digest, it is vital to seek some advice on strategies to minimise them through correct structuring of assets. There are ways and means to limit fee liabilities so that aged care doesn’t end up costing more than is necessary.

 

Question 3 – What will happen to the family home?

In many cases, the family home will be the major asset involved and once the reality of the costs of aged care start to become apparent, it may seem inevitable that the family home needs to be sold to fund these costs however, the situation with the family home needs to be carefully considered.

If a spouse still remains at home then the value of that home is not assessable for aged care purposes and this may serve to reduce the contribution to accommodation costs and the means tested care fee required by the aged care facility. If the home is left vacant, however, then it is assessable. The question here is whether it is better to sell the home or to retain it and rent it out. There is no simple answer to this; it requires a careful analysis of the resident’s other assets and income. This is one area where we are often able to relieve clients of the worry of making the wrong decision, by providing an objective analysis of where the home can fit into the overall plan for minimising fees and maximising income.

 

Question 4 – What are the impacts on the age pension?

Maintaining age pension entitlements can be a very sensitive area for many people. If selling the family home is being considered, then it is important to factor in how this may affect pension levels, as the proceeds from the sale of the home may fall under the assets test once sold.

It may well be possible to keep the home, rent it out and use the income from this to fund the accommodation costs. Again, there are no simple answers here; it will depend on individual circumstances. The age pension may only be one component of income, so it is vital to consider the total income picture and not just the pension in isolation.

 

Question 5 – How can ongoing income be maximised?

Optimising ongoing income for the aged care resident can be quite a challenge once all the complexities of the aged care regime are taken into account. The need to minimise fees, maximise the age pension, deal with the family home and structure other financial investments will all have an impact on what ongoing income can be generated.

Analysing all these issues and structuring the most effective solution takes some skill to organise and an understanding of how all the factors interrelate.

Don’t go it alone, call Intergenerational Wealth today on Ph:(03)9326 1594 or email info@igwealth.com.au or visit www.igwealth.com.au

 

* Authorised Representative of RI Advice Group Pty Limited (ABN 23 001 774 125), AFSL 238429. This editorial does not consider your personal circumstances and is general advice only. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.
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