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Intergenerational Wealth News

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The Government’s stimulus package in response to the Coronavirus

The Government’s stimulus package in response to the Coronavirus

PDF Version Download – Government Stimulus update (March 24 2020) igwealth

The Government’s stimulus package in response to the Coronavirus

In response to the economic impact of the Coronavirus, the Government has announced a number of initiatives to help individuals and businesses at this uncertain time.

 

 The changes include accessing some of your super if you’re in financial stress, tax concessions for small businesses and changes to social security benefits.

Below is an overview of the initiatives and changes that may help you.

During these uncertain times, professional financial advice is even more important. Financial advisers look at your current circumstances and recommend the most appropriate course of action for you and your family.

 

Superannuation initiatives

 Early access to super

If you are under financial stress, you may be able to access up to $10,000 of your super before 1 July 2020 and another $10,000 after 1 July 2020, for a limited time. The ATO is likely to start accepting applications from mid-April.

You may be eligible for early access to your super if you are either:

  • unemployed
  • eligible for a Jobseeker payment, Youth Allowance payment for job seekers, Parenting Payment (including the single and partnered payments), special benefit or farm household allowance.

Or, if, on or after 1 January 2020, you:

  • were made redundant
  • had your working hours reduced by 20% or more
  • are a sole trader and your business was suspended or you experienced a reduction in
    business turnover of 20% or more.

These payments are tax-free and not treated as income under the Centrelink income test.

 

Support for retirees

To help you if you’re a retiree, the minimum pension payments you are required to withdraw from your account-based pensions or similar product will be temporarily reduced by 50% as follows:

 

Age Default minimum drawdown rates (%) Reduced by 50% in 2019/20 and 2020/21 income years (%)
Under 65 4 2
65-74 5 2.5
75-79 6 3
80-84 7 3.5
85-89 9 4.5
90-94 11 5.5
95 and older 14 7

 

Social security payments and changes

Tax-free lump sum payments

From 12 March 2020, you may be eligible to receive up to two, separate, tax-free $750 lump sum payments if you receive one or more Centrelink payments or concession cards as shown in the table below.

A single person may receive up to $1,500 and couples may receive up to $3,000 from the first and second payments.

You do not need to apply for these payments, Centrelink will automatically allocate this to you depending on your eligibility.

Eligible for up to 2 x $750 lump sums Likely to receive the first lump sum and will receive the Coronavirus Supplement instead of the second lump sum
·         Age pension

·         Disability support pension

·         Carer Payment

·         Widow B Pension

·         ABSTUDY (Living Allowance)

·         Austudy

·         Bereavement Allowance

·         Newstart Allowance

·         Family Tax Benefit (includes Double Orphan Pension)

·         Carer Allowance

·         Pensioner Concession Card holders

·         Commonwealth Seniors Health Card holders

·         Veterans Service Pension; Veteran Income Support Supplement

·         Veteran Compensation Payments (includes lump sum payments)

·         War Widow pension, and Veteran Payment

·         DVA PCC holders

·         Disability Pensioners at the temporary special rate

·         DVA income support pensioners at $0 rate

·         DVA Gold Card holders

 

·         Parenting Payment

·         Wife Pension

·         Jobseeker Payment

·         Youth Allowance Jobseeker

·         Partner Allowance

·         Sickness Allowance

·         Special Benefit

·         Widow Allowance

·         Farm Household Allowance

Note: The payments will not be treated as income for Social Security, DVA and Farm Household Allowance purposes.

These payments will be automatic, with the first $750 payment is due from the 31st March and the 2nd $750 payment is due from the 13th July, 2020.

 

Social security recipients

Any change in circumstances that is not a result of COVID-19 will be assessed under the ordinary rules and may impact your entitlement. All changes should be reported to Centrelink or DVA.

  • Child Care Subsidy: For COVID-19 and non-COVID-19 related absences, your child can no longer attend child care but you’re still charged a fee from your childcare provider, you may still receive the subsidy for up to 42 days of absence. This applies also to non-COVID-19 related absences. If your activity hours change, you don’t need to update your activity tests where it is due to a requirement to self-isolate, or if you’re on leave.
  • Youth Allowance (student): For students, activity requirements will be amended if they are unable to attend studies due to the virus.
  • Newstart or Jobseeker: Flexible options to recipients with mutual obligations (for example Newstart or Jobseeker recipients who usually need to be actively looking for work, volunteering, or doing some paid work) will be provided. This may apply where you’re unable to satisfy these requirements because you’re self-isolating, or you’re a primary carer, caring for a child whose school has closed, or a disabled adult whose day service closes. You may receive an exemption from this requirement without a need for medical evidence.
  • Students and trainees: If your education provider closes or reduces your study load, or you’re self-isolating at home, your payment won’t change. You must remain enrolled in study and have a plan to return and must tell Centrelink if this doesn’t apply to you.

For more information visit https://www.servicesaustralia.gov.au/individuals/subjects/affected-coronavirus-covid-19

 

If you are affected as a result of COVID-19 you may be eligible for a benefit

You may be eligible to apply for a payment if you’re unable to work, are in isolation or hospital, or you need to care for children as a result of COVID-19. If you apply for a social security benefit or concession card and your claim is related to COVID-19, some of the ordinary eligibility rules may be waived.

 

Coronavirus Supplement

From 27 April 2020, if you are eligible (see table above) you will be automatically paid the Coronavirus Supplement. The Coronavirus Supplement is a $550 fortnightly payment for six months.

Other income support during the six-month period:

  • Waiving the asset test for Jobseeker Payment, Youth Allowance Jobseeker, and Parenting Payment.
  • The income test will continue to apply to the other payments you receive.
  • The one-week ordinary waiting period, liquid assets waiting period, seasonal work preclusion period and newly arrived residents waiting period will not apply during this period. These waiting periods will also be waived if you are currently within these waiting periods.
  • Income maintenance periods and compensation preclusion periods will continue to apply as payments received by an individual are treated as income.

If you wish to make an application please go online to your myGov account or phone Centrelink (please note waiting periods are currently high).

 

Reduced deeming rates

From 1 May 2020, the upper deeming rate for income in excess of the income threshold will reduce from 3% to 2.25%, and the lower deeming rate from 1% to 0.25%.

 

Situation Deeming Rate
Single 0.25% on the first $51,800 of your investment assets, plus 2.25% on your investment assets over the amount of $51,800
Couple 0.25% on the first $86,200 of your combined investment assets, plus 2.25% on your investment assets over the amount of $86,200

 

These reductions reflect the low interest rate environment and its impact on the income from savings. Also, people who are currently receiving part pensions and less than the full rate of income support may receive increased entitlements.

 

Account Based Pension – Account Balance

If you have an account based pension, it is important for you to check your account balance that is being assessed by Centrelink to ensure it reflects the current balance. If the account balance reflects a higher balance as it was extracted before the recent share market falls, you may need to update your account balance with Centrelink.

 

ATO relief for tax obligations

Similar to the tax relief that was provided to bushfire victims, the ATO will provide relief for certain tax obligations for taxpayers impacted by the coronavirus outbreak on a case-by-case basis. Relief includes the ability to defer payment of certain taxes for up to six months and allowing businesses to vary pay as you go (PAYG) instalment amounts to zero for the March 2020 quarter.

The ATO Emergency Support Infoline on 1800 806 218 or COVID-19@taxissues@ato.gov.au.

 

Tax benefits for small businesses

Increasing the instant asset write-off threshold for small businesses

From 23 March 2020 until 30 June 2020, if you own a small business with aggregated annual turnover of less than $500 million (increased from $50 million) you may be eligible for an instant asset write-off on assets of up to the value of $150,000 (from $30,000).

From 1 July 2020, this threshold reduces to $1,000 (for businesses with less than $10 million turnover).

The measure applies to new or second-hand assets first used, or installed ready for use, between 12 March 2020 until 30 June 2020 (inclusive). Certain assets are excluded, for example, horticultural plants and capital works deductions.

The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.

This initiative will mean an additional 5,300 businesses who employ around 1.9 million Australians will be able to access this concession for the first time.

Supporting apprentices and trainees

From 1 January 2020 to 30 September 2020, if you are an eligible employer you can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).

An eligible employer must have less than 20 full-time employees. The apprentice or trainee must be in employment with the business as at 1 March 2020.

You can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

 

Boosting cash flow for employers

From 12 March 2020, if you own an eligible small or medium business, the Government has announced a maximum payment of $100,000 and a minimum payment of $20,000, to help with cash flow in order to keep operating, pay bills and retain employees. Not -for-profit organisations and charities are also included.

The ATO will pay this as an automatic credit to the business upon lodgement of your business activity statement. If this means you are eligible for a tax refund, the ATO will pay the refund within 14 days. You don’t need to fill out any new forms and the payments are tax free.

For more information visit https://www.business.gov.au/Risk-management/Emergency-management/Coronavirus-information-and-support-for-business/Boosting-cash-flow-for-employers

 

Workplace Laws

To find out more about workplace entitlements and obligations if you’re affected by the outbreak of coronavirus please visit Coronavirus and Australian workplace laws at www.fairwork.gov.au/ Temporary relief for financially distressed businesses

 

For owners or directors of a business who are currently struggling due to the Coronavirus, the ATO will tailor solutions for their circumstances, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.

We’re here for you

We believe these initiatives are well-considered by the Government and are for the wellbeing of all Australians and the Australian economy. If you are or your business is struggling during this unprecedented time or you have any questions, please contact our practice.

Disclaimer:

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser. You should obtain and consider a copy of the Product Disclosure Statement available from us or your financial adviser, before you acquire a financial product.

Please note: inTouch 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 February 2020.
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Intergenerational Wealth Monthly Market Wrap March 2020

Intergenerational Wealth Monthly Market Wrap for March 2020

Flight to safety globally

  • Global shares fell -8.5% and -4.9% in hedged and unhedged terms, respectively. Emerging markets were relative outperformers (only down -1.6%) with COVID-19 (a.k.a. coronavirus) outbreaks outside of China and their economic impact a driving concern for global share markets.
  • Domestically, Australian shares underperformed international markets falling -7.7% in February. This was driven by weakness in the Energy and Technology sectors with economic growth concerns seeing oil prices fall 13.1% during the month.
  • The Australian dollar (AUD) fell against major currencies by -1.9% attributable to expectations of weaker Chinese growth from the coronavirus and weaker domestic economic data.
  • Fixed income assets rallied with growth concerns from the virus outbreak outside of China the key driver.
  • Another factor was expectations of further interest cuts domestically and internationally (if rates fall on cash in a savings account a bond offering a fixed rate becomes more attractive with investors buying and pushing its price higher. This saw a continuation of positive returns for both domestic fixed income and international fixed income.

As the coronavirus outbreak figured prominently on investor radars…

Globally

  • Global business surveys softened with the JP Morgan Global Manufacturing PMI falling into contractionary territory (pointing to weaker economic growth).
  • Spikes in COVID-19 notably appeared outside of China with South Korea, Italy and Iran now prominent hotspots.

Locally

  • Australian economic growth for the December quarter surprised slightly at 0.5% (consensus: 0.4%) thanks to weaker import spending and stronger inventory and consumption (driven by sales events such as Black Friday).
  • The RBA cut the cash rate by 0.25% to a new low of 0.5% citing concerns over the coronavirus economic impact.
  • The virus outbreak is expected to have a notable impact on economic growth with Tourism Australia citing a 10% decline in bookings from China following Australian government travel bans until early March.
  • The labour market disappointed with the unemployment rate rising to 5.3%, some 0.8% higher than the RBA target of 4.5%

Major asset class performance

 

Asset classes 1 month
%
1 year
%
5 years (p.a.) %
Australian shares -7.7 8.6 6.2
Global shares (hedged) -8.5 4.4 6.9
Global shares (unhedged) -4.9 15.6 10.2
Global small companies (unhedged) -6.3 6.5 8.8
Global emerging markets (unhedged) -1.6 8.3 6.8
Global listed property (hedged) -8.1 2.2 4.1
Cash 0.1 1.3 1.9
Australian fixed income 0.9 9.0 4.4
International fixed income 1.2 9.3 4.5
Source: Bloomberg & IOOF, 28 February 2020

Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD

Please note: Past performance is not indicative of future performance


Currency markets

Exchange rates At close on 29/2 1 month
change
%
1 year
change
%
USD/AUD 0.65 -2.6 -8.2
Euro/AUD 0.59 -2.1 -5.4
Yen/AUD 70.4 -3.0 -11.0
Trade weighted index 57.0 -1.9 -6.1
Source: Bloomberg & IOOF, 28 February 2020. All foreign exchange rates are rounded to two decimal places where appropriate.

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

Disclaimer: This report has been prepared by the IOOF Research team for RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429. RI Advice Group Pty Ltd 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 report is current as at the date of issue but may be superseded by future publications. 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 may be used on the express condition that you have obtained a copy of the RI Advice Group Pty Ltd Financial Services Guide (FSG) from the website. 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 report 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. RI Advice Group Pty 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 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 document (including any projections, forecasts, estimates, prospects and returns and any omissions from this document). To the maximum extent permitted by law RI Advice Group Pty, 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. General Advice Disclaimer: The information in this report is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this report, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before you acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance.


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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Retirees and insurance

Retirees and insurance

Retirees and insurance

If you have retired and think the days of reviewing your financial plans are over, think again. Now is the time to review your entire plan in-line with your new lifestyle and pay particular attention to any insurance cover in place.

Policies expire

People often take out insurance while they are working to protect their dependants if they are injured and can’t work, or they die prematurely.

However, when you reach a certain age, such as retirement, some policies may expire. It’s important to work with your financial adviser to keep your policies current and appropriate for your stage of life.

Insurance options

Term life insurance, or death cover, provides a lump sum payment if the life insured dies or becomes terminally ill. The lump-sum payment received may go towards paying off debts, providing for education or allowing beneficiaries to continue to live in the family home.

 

Is this included in my Super?

It could be, but you need to check and be sure that it matches your individual needs. Life insurance included by default within Super can be very limited.

When does it expire?

Usually around age 99, but check your individual policy cover.

Total & Permanent Disability (TPD) insurance is paid in a lump sum if the life insured becomes permanently disabled  because of an accident or illness. The insurance payment may cover medical expenses, living expenses, home modifications or pay off debts.

 

Is this included in my Super?

It can be, but you need to check and be sure that it matches your individual needs as default TPD included with Super can be very restrictive and definitions of ‘total and permanently disabled’ vary significantly.

When does it expire?

Generally at age 65, which can coincide with retirement, so you should speak to your financial adviser about the type of cover you may need in retirement.

Trauma insurance covers a major illness or injury, such as a stroke or car accident. It covers specific medical conditions and is paid out in a lump sum that can be used for any purpose, such as living or medical expenses. Trauma cover can be paid even if you can still work and you can buy a policy even if you are not working.

Is this included in my Super?

No, it is not, you need a standalone insurance policy.

When does it expire? Typically, at age 70.

Income protection insurance covers loss of income if the life insured becomes disabled due to an accident or illness and cannot work. Typically, these types of policies pay 75 per cent of the insured person’s income but there are many variations in their terms.

Is it included in my Super?

Default income protection included with Super can be very restrictive in terms of the amount of cover, when it commences, how long it lasts and the definition of disability that must be met.

When does it expire?

Typically, at age 70.

What about my super balance?

There are usually additional rules for policies held within a superannuation fund, and once you reach a defined age you may no longer be able to make contributions.

If your insurance is through your super fund, the premiums are deducted from your super account balance so once you are retired or have attained age 65, if you cannot contribute to superannuation, the deduction of the premiums can take a hit on your account balance which your financial adviser can work through with you.

To renew, or not to renew?

Life insurance coverage through super usually ends at the age of 65. When deciding whether to continue your life insurance cover, you may wish to consider such things as outstanding debts, mortgage repayments, the impact on dependents and the type of retirement lifestyle your superannuation fund can provide.

In most instances your insurance needs decrease with age and the range of relevant policies diminishes. However, some policies allow you to extend for a fee.

Funeral insurance plans

Retirement may be the time to consider taking out a funeral plan to cover funeral expenses when you pass away. Insurers offer age-based policies with premiums that start lower and gradually increase, or fixed policies with premiums that remain static1.

Ready to review?

Each person’s circumstances are different and if you are unsure what insurance policies you need, talk to  your financial adviser who can help work through your options now, and in retirement.

1 www.moneysmart.gov.au/insurance/funeralinsurance

Please note: inTouch 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 February 2020.
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Forty and fabulous

Forty and fabulous

If you are in your 40s and feeling like your financial fitness could do with an overhaul, then make 2020 the year to do it!

 

These days your 40s is mid-life, given the average age expectancy for men is 84.7 years and for women it is 87.3 years1. Rather than have a mid-life crisis and blow all your hard-earned savings on something that will only bring momentary enjoyment, how about sitting down with your financial adviser to take a good look at your finances and decide how financially fit you really are?

 

Assess your financial fitness

  • In your 40s you may have a number of large expenses and conflicting priorities.
  • Do you may have a mortgage (or two)?
  • Do you own your car or lease it?
  • Are you considering a career change or reducing your working hours to look after family? How will this impact your salary?
  • Are you a small business owner with a lot of debt tied up in the business?
  • Are you a parent juggling to pay school fees, extra-curricular activities, clothes, toys, excursions?
  • Do you have ageing parents who are contemplating their aged care needs and the costs?

 

Looking at your whole financial picture and using financial modelling tools can help assess how financially fit you really are.

 

You’ve done the fitness test, now what?

Get a plan! If you don’t have a financial plan, it’s time to get one. A financial plan is designed to identify areas you can target to boost your savings and take a long-term view of your financial health. A financial adviser can work with you to develop and implement a realistic plan that considers your financial goals and objectives.

 

How fit is your super?

Aside from owning your own home, your superannuation can often be your biggest financial asset.

 

A quick super health check may help you increase your retirement savings. By looking at your investment options, your risk profile and whether you have multiple accounts that can be consolidated, then making some tweaks, you’re already winning.

 

Super can be a bit boring to think about, but your financial adviser is knowledgeable in this area and can help you better understand how to better align your super to your overall financial goals.

 

Pump up retirement savings

Your 40s can be peak earning years, particularly if you have been in the same job for a long time or have returned to full time work after family or career breaks in your 30s.

 

Recent data from the Australian Bureau of Statistics highlights that employees aged 45 to 54 earned an average weekly income of $1,544.20, the highest of all age groups. 2

 

This may be the decade to divert some of your savings into your superannuation through salary sacrificing to build your nest egg during in your peak earning years. Be sure to do your homework and speak with a financial adviser to find out what your options are.

 

 

Mo’ money, mo’ problems

If your 40s are your peak earning years, then you should be living it up, right? You could, but is it sensible and sustainable? How would you feel if you suddenly didn’t have as much disposable income and had to scale back your lifestyle?

 

Having a sensible plan and a realistic view of your overall financial position can help you set and maintain financial goals now, and into the future.

 

Scale up your investments

You’ve got the plan, you’ve established you may be in your peak earning period, how do a few investments sound?

 

If you decide to start an investment portfolio, or increase your current level of investment, keep in mind that it’s important to work with a financial adviser who can source and explain the different investment options and how they align to your financial objectives and risk profile.

 

Shares, bonds and Exchange Traded Funds generally have a long-term time horizon, so it’s prudent to get advice before diving in.

 

Ready, set, go

Your 40s are a great time to really look at your finances and set, or re-set, your financial goals. Talk to your financial adviser. Secure your future. Make 2020 your year!

 

For help contact your professional financial adviser today.

1 https://www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/life-expectancy
2 https://www.abs.gov.au/ausstats/abs@.nsf/mf/6306.0
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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There are plenty of ways to supersize your super

There are plenty of ways to supersize your super

Would you like to supersize your super and take full advantage of all those lovely tax benefits that only super can offer? Who wouldn’t? The good news is there are plenty of ways to do this. If you know about them.

That’s where professional advice comes in:

 

Pre-tax contributions – could save around 20% in tax right off the bat.

Government co-contribution – up to $500 each per year.

Spouse contributions – up to $540.

Catch-up concessional contributions – up to $100,000 per couple.

The Downsizer contribution option – up to $600,000 per couple.

Small business one-off contribution – up to $1.515M*

And let’s not forget investment options, including geared investments, over the long term these can make an enormous difference to the size of your super.
Don’t want to miss out on these and many other opportunities? Not sure how and when to act on them? Simple.

Get professional advice.

Professional advice – quite possibly the most valuable investment you‘ll ever make.
* Current as at October 2019

For help contact your professional financial adviser today.

Please note: inTouch and informtion in this editorial 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 October 2019.
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Intergenerational Wealth Monthly Market Wrap February 2020

Intergenerational Wealth Monthly Market Wrap for February 2020

Investor sentiment was mixed

  • Global shares were down -0.4% and were up 4.3% in hedged and unhedged terms, respectively. Emerging markets were relative underperformers (up 0.1%) driven by coronavirus concerns over the impact on China.
  • Domestically, Australian shares outperformed international markets rising 5% during January. This was driven by strong performance in the Health Care and Technology sectors.
  • The Australian dollar (AUD) fell against major currencies by -3.6% attributable to expectations of weaker Chinese growth from the coronavirus and weaker domestic growth from the bushfires.
  • Fixed income assets rallied with growth concerns from the virus outbreak in China the key driver. Another factor was the rise of geopolitical tension in the Middle East between Iran and the US. A US airstrike (in response to rising Iranian-linked attacks in Iraq) killed Iranian general Qassem Soleimani. This saw a retaliatory rocket strike from Iran on airbases with US troops and has since seen an uneasy stalemate emerge.
  • In this environment of virus fears and geopolitical tension, investors sought safe haven assets with bond prices rising (and yields falling) during January resulting in positive returns for both domestic fixed income and international fixed income.

As other risks cast a shadow on the global economy…

Globally

  • Global business surveys continue pointing to an uptick in growth with the JP Morgan Markit Composite Global PMI at a nine-month high.
  • The UK formalised its EU exit at the end of January with focus now on a formal trade agreement over the next 12 months.
  • The US and China signed a “phase one” trade deal in mid-January as expected.
  • The Iranian and virus fears prompted concern about China and global growth.

 

Locally

  • Bushfires continued into January with firmer expectations of a drag on growth during the March quarter of -0.2% according to some estimates.
  • The coronavirus outbreak and weaker Chinese demand for Australian exports is also expected to be a drag on growth.
  • The labour market has continued to hold up comparably well with the RBA staying firm on rates in early February despite these near-term risks. However, given these risks growth is likely to underperform their forecast (2.75%) for another year.

Major asset class performance

Asset classes 1 month
%
1 year
%
5 years (p.a.) %
Australian shares 5.0 24.7 9.3
Global shares (hedged) -0.4 17.9 10.0
Global shares (unhedged) 4.3 28.3 12.4
Global small companies (unhedged) 2.0 20.8 11.5
Global emerging markets (unhedged) 0.1 13.1 7.7
Global listed property (hedged) 1.3 11.6 5.8
Cash 0.1 1.4 1.9
Australian fixed income 2.3 9.1 4.3
International fixed income 1.8 8.1 4.1
Source: Bloomberg & IOOF, 31 January 2020

Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD

Please note: Past performance is not indicative of future performance

Currency markets

Exchange rates At close on 30/11 1 month
change
%
1 year
change
%
USD/AUD 0.67 -4.7 -8.0
Euro/AUD 0.60 -3.6 -5.1
Yen/AUD 72.5 -4.9 -8.4
Trade weighted index 58.1 -3.6 -5.7
Source: Bloomberg & IOOF, 31 January 2020. All foreign exchange rates are rounded to two decimal places where appropriate.

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

Disclaimer: This report has been prepared by the IOOF Research team for RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429. RI Advice Group Pty Ltd 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 report is current as at the date of issue but may be superseded by future publications. 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 may be used on the express condition that you have obtained a copy of the RI Advice Group Pty Ltd Financial Services Guide (FSG) from the website. 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 report 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. RI Advice Group Pty 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 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 document (including any projections, forecasts, estimates, prospects and returns and any omissions from this document). To the maximum extent permitted by law RI Advice Group Pty, 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. General Advice Disclaimer: The information in this report is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this report, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before you acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance.
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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Coronavirus outbreak and economic impact

What do we know so far?

• Since late December 2019 a new coronavirus strain, the 2019-nCov virus, began to emerge from Wuhan, China.

 

• The outbreak has been predominantly focused in China with a total of 20,624 confirmed cases and 427 deaths reported, but the number is growing each day.

 

• Outside of China there have been 188 confirmed cases of the virus, and the death of one man who had recently been in Wuhan.

 

• The outbreak has prompted border closures from several neighbouring countries and travel bans on Chinese citizens within Australia in an attempt to stem the outbreak from spreading further.

 

• The border closures and travel bans have prompted concerns over global economic growth and weakness in China specifically, and more generally in the rest of Asia.

 

• Despite Australian equities performing well in January, China-exposed sectors such as resources and tourism have notably underperformed.

 

Why did the outbreak affect markets?

Investors fear that the virus outbreak will further weaken a slowing Chinese economy and the consequences of this for countries dependent on Chinese growth, such as Australia. There are fears this will continue to weaken global trade, investment and ultimately, company profits.

 

Potential implications for your portfolio

• Growth concerns and fears over the weakness in China have benefitted bonds and assets unhedged to the Australian dollar.

 

• Our portfolios, as of the most recent SAA review, are between 30-40% hedged. These exposures will have benefitted from the recent changes compared to a neutral 50% hedging position.

 

• Weakness in international share markets has been largely restricted to emerging markets with US shares flat during January (and Chinese shares down 6.7%).

 

• The model portfolios have exposure to Emerging Markets through our International Equity Managers. Emerging Markets do not form an excessive allocation so any underperformance for clients will be limited.

 

What we expect

At present the outbreak is being gradually contained so we believe that in the near-term the impact on the economy will be minimal, reflected mostly in a weakness in the March quarter and, potentially the June quarter of this year also.

 

Ongoing updates on the virus may contribute to market volatility throughout the coming months and the scale of the economic shutdown is likely to see poor economic data released in upcoming months. We have seen a weakness in trade and production as activity has softened recently.

 

Ongoing monitoring and action

As we continue to watch the situation unfold and monitor local and international markets, we will advise if any ongoing fluctuations in share market prices warrants changes to portfolio allocations to increase defensiveness and lower risk.

 

Authorities also stand ready to commit to further stimulus with the People’s Bank of China committing to injecting further liquidity over the weekend. Locally, the Reserve Bank of Australia can cut interest rates further if it anticipates weaker labour markets with the Federal Government also engaging in disaster recovery spending to offset the impact of the recent bushfires.

 

For now, we suggest that investors stay the course. We will provide further updates if this view changes. If you have any questions or concerns about any of the content in this article please contact your Financial Adviser to discuss.

RI_Flyer_Coronavirus-Feb2020

Source: John Hopkins CSSE https://gisanddata.maps.arcgis.com/apps/ opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6 (Date accessed: 4 February 2020)

RI Advice Group Pty Ltd ABN 23 001 774 125, AFSL 238429. The information (including taxation) provided in this video or document is general information only and does not constitute personal advice. 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.
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Take control of personal finances after a divorce – 6 Steps

Practical ways to take control of personal finances after a divorce

The key to managing finances after a divorce is getting organised early. This article provides some tips on taking control at the right time.

Divorce can be one of the most financially stressful experiences of an individual’s life. The key to taking control is to get organised early. Acting quickly to arrange accounts, update details and make financial plans may help those in the process of divorce or about to be divorced start the next phase of their life with more peace of mind.

 

The following six steps can be a good place to start.

1. Get organised

2. Close joint accounts

3. Review your finances

4. Change wills, etc.

5. Create a new budget

6. Reach out

1. Get organised

It’s important to keep track of key dates, such as when the separation occurred. It’s also a good idea to inform the post office if one party moves out, so they can continue receiving mail at the new address.

 

Next, both parties should gather all financial information, making sure there are copies of all documents. They should also write a list of all financial and property assets, liabilities and policies, making a note of whose name each document is registered under.

 

These may include:

• bank, brokerage or investment accounts
• credit cards
• vehicle registration
• life, health, home, car and other insurance policies
• utility bills for electricity, gas, internet and phone
• property documents such as deeds, mortgage papers and home loan details
• recent tax returns and tax file numbers
• superannuation account details
• wills and estate plans
• rental agreements or leases.

 

2. Close joint accounts

Close any joint accounts as soon as possible, it’s important to close accounts or credit cards that are in both parties’ names, and cancel any redraw facilities. This will protect the finances of each individual and ensure no more debt accumulates.

 

Each party can then open an account in their own name, which only they can access. They will also need to redirect any income that previously entered a shared account into this new account.

 

3. Review your finances

The parties will need to update any remaining accounts, loans or policies so they are registered in just one individual’s name. Some areas that may require

updating include:
• Insurance: It’s crucial to update insurance policies as any individual not named will not be covered. This individual will need to make sure that they have other cover in place that is adequate and affordable for their needs. Also, remember to update any nominated beneficiaries on new or existing policies.
• Loans: The person whose name is on a loan agreement is responsible for any debt, regardless of changed personal circumstances. It’s vital for the necessary party to remove their name or for both individuals to pay off the loan.
• Superannuation: Superannuation is a significant financial asset. Any nominated beneficiaries of the parties’ retirement nest eggs will need to be updated.
• Rent and Utilities: Updating rental agreements and utilities will also be crucial, as the listed person may be left with damage or unpaid bills to cover.

 

4. Change wills, etc.

Remember to change your will, Powers of Attorney and beneficiaries. Many Australians don’t realise that divorce can affect their will. Different states have different laws. It is vital to update wills to reflect new circumstances as soon as possible.

To be valid, a will needs to be signed by two witnesses. Drawing up a will can be complex so it may be best to consult a solicitor, trustee and or your financial adviser who may be able to provide preliminary advice and or refer you onto a trusted professional.

 

5. Create a new budget

It can take time to adjust to relying on only one income. Creating a budget and financial plan if you do not already have one is an important step.

Your financial adviser can assist you in addressing this early on, which should make it easier to track expenses and feel confident that bills and payments will be covered.

 

6. Reach out

Divorce can be a difficult time. Getting in touch with family and friends, as well as nearby support services, are positive ways to seek a helping hand.

There are many online government resources, as well as legal aid services and counsellors who can provide assistance.

 

Your financial adviser may also be able to help by providing timely advice on how to make financial decisions and put in to place a long term financial plan which can assist you in getting back on track.

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 October 2019.
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Nominating your super beneficiary

Nominating your super beneficiary

Nominating your super beneficiary is something you have most likely been asked to do if you have a superannuation fund.

But, super fund trustees can only pay your super death benefit to eligible dependants* or to the legal personal representative (LPR) of your estate. If you haven’t elected a valid beneficiary the super fund trustee generally decides who your super goes to.

There are important things you should be aware of regarding super dependants.

 

Who can you nominate as a super dependant?

Spouse

A spouse includes a legally married spouse or de facto spouse, both same sex and opposite sex. A spouse can be a person you’re legally married to but  stranged or separated from. So, if you haven’t formally ended a marriage, your husband or wife is still considered your dependant under superannuation law. And, while you can’t be legally married to two people, it is still possible to have two spouses – a legally married spouse and a de facto spouse.

 

Child

A child includes an adopted child or a step-child. Even though a step-child is included in the definition of a child, if you end the relationship with the natural parent or the natural parent dies, the child is no longer considered your step-child. However, they may still be considered a financial dependant or
in an interdependency relationship with you and could therefore continue to be a beneficiary of your super.

 

Financial dependant

Generally, a person is financially dependent on you if the level of support you provide them is ‘necessary and relied upon’, so that if they didn’t receive it, they would be severely disadvantaged rather than merely unable to afford a higher standard of living.

 

Interdependency relationship
Two people have an interdependency relationship if they live together and have a close personal relationship. One or each of them must also provide a level of financial support to the other and at least one of each of them needs to provide domestic and personal care to the other.

Two people may still have an interdependency relationship if they do not live together but have a close personal relationship. For example if they’re separated due to disability or illness or due to a temporary absence, such as overseas employment.

Who is not a dependant?

A person is not a dependant if they are your parents or other friends or relatives who don’t live with you and who are not financially dependent on you or in an interdependency relationship with you.

If you do not have a dependant you should direct your super to your LPR and prepare a Will which outlines your wishes.

 

Legal personal representative

An LPR is the person responsible for ensuring that various tasks are carried out on your behalf when you die. You can nominate an LPR by naming the
person as the executor of your Will. Your Will should outline the proportions and the people you wish your estate, including your super, to go to. For assistance in how to nominate your super beneficiaries your financial adviser will be able to help.

* In this article a dependant refers to a ‘SIS dependant’ which is an eligible person under the Superannuation Industry (Supervision) Act 1993 that a member may nominate as a beneficiary.
Source: Australian Executor Trustees

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

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 October 2019.
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Strategies for dealing with market volatility – Personal Situation

Strategies for dealing with market volatility – Personal Situation

Although market volatility is out of your hands, it may affect your personal financial situation.

Determining how to use it to your advantage is the key, but without advice, you may not even realise that changes or opportunities exist.

 

Talk to your adviser

An appropriate amount of risk in your investments may give you the confidence to stick with your financial plan even when the market takes an unexpected dip.

But a knee-jerk reaction may cause you to sell when prices are low, rather than hold onto an investment that may rebound and recover.

Regularly checking in with your adviser may help you keep your financial plan in sync with all the changes in your life.

Talk with your Financial Adviser who will work with you to develop a financial plan that’s specifically tailored to your needs.

 

For help contact your professional financial adviser today.

Please note: inTouch and informtion in this editorial 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 October 2019.
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