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Intergenerational Wealth News

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Do you need to review your insurance?

Do you need to review your insurance?

When a family experiences financial difficulty due to loss of income when an immediate family member becomes seriously injured or ill, it’s an extra stress at an already difficult, busy and emotional time. This is why appropriate insurance cover is a key consideration in any financial plan.

 

Some types of insurance cover can be held within your superannuation fund, and some must be standalone insurance. Holding insurance within super may allow you to fund your insurance premiums tax effectively, reducing the effective cost of your insurance premiums.

Some clients also like the convenience of using their superannuation to fund their premiums rather than affecting their own cashflow.

However, you need to remember that this will reduce your superannuation benefit and consider how this impacts your retirement plan, and overall financial plan.

 

Other considerations

Some insurance within super will expire when you turn 65 or 70, depending on the cover.

You don’t want to be caught out if you are close to this age so it is sensible to review your insurance cover regularly with your financial adviser who can let you know when the plan needs to change.

 

What super can be held within super?

Not all types of insurance can be held within your superannuation fund. Generally you can pay premiums for life, total and permanent disability (TPD) and, income protection insurance through your superannuation fund.

Whilst this can be an effective way to manage your cashflow, you need to check the type of cover is appropriate for you and will provide you with enough cover for life events that you may need to claim for. You also need to be aware of any super balance and contribution requirements by legislation, to keep your insurance within super active.

 

Seek professional advice

A Financial Adviser can determine whether holding insurance inside superannuation is appropriate for you. They can work out what you need, what it will cost, and the most appropriate way to pay the premiums.

They can set up regular review meetings with you to go through any changes in circumstances so that the plan can be tweaked accordingly.

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

Market volatility and your portfolio

Take a long-term view
Investment results tend to vary more widely when you just consider the returns over a period of one year.
Ten-year returns are generally much more stable and a lot more predictable as can be seen in the chart below.

Impact of reacting to short-term noise
Volatility is part of investing, and whilst we can avoid it, there’s typically a price to pay for doing so in the form of lower expected returns over the long term.

The chart below shows the impact different strategies have had on an investment portfolio over the previous 15 years.

As you can see, this example shows the volatility (Dark Green line) – larger moves both up and down – but highlights that by remaining ‘invested’ over the long term has resulted in a significantly higher portfolio balance at the end of the period.

The GFC was an uncomfortable investing experience, much like today’s environment. However, a well-diversified portfolio protected investors during the drawdown (this example portfolio fell by ~26% at its lowest, whilst Australian shares fell as much as 47%) and remaining in the market helped investors enjoy significant gains over the past decade.

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

This editorial and the information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. The views expressed in this publication are solely those of the author; they are not reflective or indicative of Licensee’s position, and are not to be attributed to the Licensee. They cannot be reproduced in any form without the express written consent of the author. RI Advice Group Pty Limited ABN 23 001 774 125, AFSL 238429. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 | www.riadvice.com.au
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Intergenerational Wealth Monthly Market Wrap April 2020

Intergenerational Wealth Monthly Market Wrap for April 2020

Flight to safety globally escalated

  • Global shares fell -13.4% and -8.3% in hedged and unhedged terms, respectively. Emerging markets were relative underperformers (down -10.9%) as they were caught up in a flight to liquidity (cash) by investors seeking safe-haven assets instead. An oil price war triggered by Saudi Arabia also impacted emerging markets with their greater dependence on energy and other commodity exports.

 

  • Australian shares underperformed global shares, falling -20.7% in March. This was driven by weakness in the Energy (down 38%) and Property (down 35.3%) sectors due to the fall in oil prices and the expected cost of the coronavirus-induced lockdown for landlords respectively.

 

  • The Australian dollar (AUD) fell against major currencies by -4% attributable to expectations of weaker global growth from the coronavirus as well as the two interest rate cuts by the RBA. Rate cuts make our currency less attractive to hold due to the lower interest income.

 

  • Fixed income assets struggled with the sell-off in corporate bonds offset the gains in government bonds. This saw slightly negative returns for Australian and international fixed income.

 

  • The weakness in corporate bonds was due to the fears of economic recession and a flight to safety response among investors. This saw prices of corporate bonds fall substantially (global corporate bonds hedged to AUD fell 7.2% during March) dragging overall benchmark returns lower.

As the likelihood of a coronavirus-induced recession increased…

Globally

  • Global business surveys softened with the JP Morgan Global Manufacturing PMI remaining in contractionary territory (pointing to weaker economic growth).
  • Coronavirus cases continued to grow substantially particularly in Europe and the USA with Italy, Spain and New York City now prominent hotspots.
  • Major stimulus programs accounting for trillions of dollars have been enacted across the world to counter the likely recessionary impact.

Locally

  • The RBA cut the cash rate by 0.5% from 0.75% to a new low of 0.25% by month-end citing concerns over the coronavirus outbreak’s recessionary implications.

The Australian government has committed to tens of billions in stimulus through increased welfare payments and a new business support payment to cover wage costs from May.

Major asset class performance

Asset classes 1 month
%
1 year
%
5 years (p.a.) %
Australian shares -20.7 -14.4 1.4
Global shares (hedged to AUD) -13.4 -11.1 3.9
Global shares (unhedged) -8.3 4.4 8.1
Global small companies (unhedged) -15.7 -9.7 4.6
Global emerging markets (unhedged) -10.9 -4.5 4.2
Global listed property (hedged to AUD) -23.4 -24.5 -1.5
Cash 0.1 1.2 1.8
Australian fixed income -0.2 6.8 4.2
International fixed income -1.7 5.6 3.9
Source:  Bloomberg & IOOF, 31 March 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 0.61 -5.9 -13.6
Euro/AUD 0.56 -5.8 -12.1
Yen/AUD 65.9 -6.3 -16.2
Trade weighted index 54.7 -4.0 -9.6
Source:  Bloomberg & IOOF, 31 March 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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Life is expensive, and that’s not changing

Life is expensive, and that’s not changing

If you are worried about the rising cost of living expenses and are not seeing any wage increases, then it’s time to get organised with your finances, set a realistic budget, work out what you can do without and where you can invest to save.

 

The increasing cost of goods and services – from food and housing to transport and utilities – is a reality most Australians have to face every day.

Data from the Australian Bureau of Statistics (ABS) shows that living expenses for employee households were up by 1.3 per cent in September 2019 compared to September 2018, and up 2 percent in the year previous. Self‑funded retiree households and age pension recipients, living costs rose by 2.3 per cent and 2.2 per cent respectively from September 2017 to 2018 and was up another 1.9 and 1.7 per cent respectively from 2018 to 2019.[1]

If more money is going out, but no more is going in, should you be tightening your budget? Let’s take a look at some possible strategies.

 

Take a good look at large expenses

Most of us have read the anecdote of how much money we can save if we cut out our daily trip to the local café. But do we really want to do away with small treats that help us get through the day? And do we want to stop supporting local businesses? If your answer is NO, then skip straight to your large expenses. The ABS reports that the top three expenses in Australian households’ is on housing, food and drinks, and transport.[2]

Mortgage – can you negotiate a better rate? How much extra could you pay off each month to reduce the time until you are mortgage-free?

Second car – do you really need it? Can you use public transport or a bicycle? It might take a bit of getting used to, but a lot of expense can be saved.

Food – we all need to eat, but how much do you really spend on food? Being more organised with your shopping list and meal planning can help reduce your grocery bill when you eat what’s in season, buy in bulk and reduce food waste. Whenever you find something going mouldy in the fridge, how many dollars are you throwing into the bin?

Entertainment – how often do you eat out, go to the movies, take the kids on a social outing that costs a small fortune? Look out for free activities and think of ways to make the most of your local services. Pack a picnic lunch and you will also save big there.

 

Lifestyle fatigue

Research shows that Australians spent $145 billion on lifestyle goods and services in 2017.[3] There could be potential here to save big. For example, could overseas holidays be replaced with something closer to home? It would reduce travel expenses and support the local economy. Can you search online for second hand items for your home rather than always buying something new? How many clothes do you really need? Lifestyle items are nice to have, but what is the long-term benefit? By being more diligent, you can still enjoy a few luxuries but also divert some savings into investment vehicles to save for your retirement.

 

What else?

Once you have looked at ways to trim large expenses start looking at what you can do with your savings, such as investment vehicles. Your financial adviser can help you figure out which are most aligned to your financial goals.

You can also try to supplement your income by selling unwanted goods, taking up a second job or looking at your skill set to see if you can make some extra money on one-off jobs, projects, hobbies and tutoring.

With the cost of living rising year on year, it’s worth taking a look at how you can keep your income and expenses aligned to your long-term goals. And your financial adviser can help. Speak to your financial adviser to see how you may tailor a plan to meet your needs.

 

[1] Australian Bureau of Statistics, September 2019, ‘Selected Living Cost Indexes, Australia’. Accessible at: http://www.abs.gov.au/ausstats/abs@.nsf/PrimaryMainFeatures/6467.0?OpenDocument.

[2] Australian Bureau of Statistics, September 2017, ‘Household Expenditure Survey, Australia: Summary of Results, 2015–16. Accessible at: http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6530.0Main%20Features32015-16.

[3] Mozo, August 2017, ‘Australians eating away savings, spending a whopping $4 billion on food and drink per month’. Accessible at: https://mozo.com.au/family-finances/2-17-cost-of-lifestyle-key-findings-report

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

Income in peaks and troughs

If you have a variable income that ebbs and flows in peaks and troughs it can be hard to stick to a budget and you may be caught out with unexpected expenses. How can you plan for that?

There are many forms of variable income which may apply to retirees, self-employed people, shift workers, freelancers, contractor, part time workers or holiday workers. The fluctuations can make it difficult to manage your finances month-tomonth and you may find yourself a bit short throughout the year. If an unexpected expense arises, you might be scrambling around to get the money you need to pay the bills. This can be stressful to say the least, but we have some tips that you can follow that may help with your money management.

 

Start simple – a budget

Having a budget is crucial to ensuring you have enough money to cover your essential expenses and build up your savings. A budget tracks your spending and factors in your income (including income fluctuations), expenses and financial responsibilities. It may help you set limits for discretionary spending such as entertainment, eating out and unnecessary shopping – to help you stretch your income. Perhaps most importantly, it may stop you overspending on the months you have a higher income!

 

Plan for the unexpected

Everyone needs contingency funds to cover unexpected events such as unforeseen medical costs. But having money tucked away for emergencies is even more important if your income is unpredictable. A contingency fund is designed to help you stay afloat during periods of little or no income.

 

Investment income

You don’t have to fully rely on your job or trade for income. If you have enough savings on top of your contingency fund, you may want to consider investing a portion of your money. Your professional financial adviser could recommend strategies to help you generate an income from your investments which can provide you with a safety net and a little bit more money to play with.

 

Don’t forget your retirement fund

You may not be considering retirement savings when you have a variable income, but it’s vital for your financial security. If you’re looking to bolster your superannuation account, the ‘catch-up’ scheme helps eligible individuals increase their super savings by allowing them to make catch-up concessional contributions. You can ‘carry forward’ any unused concessional contribution cap amounts starting from the 2018-19 financial year for five financial year on a rolling basis.

You may use carried forward unused concessional contributions caps if you had a total super balance of less than $500,000 at the end of last financial year. These amounts can change year-to-year so it’s a good idea to check the rules with your financial adviser who can help you fully understand your contribution options.

 

Consider insurance

Consider taking out income protection insurance to protect you and your loved ones should a sudden illness or injury prevent you from earning an income. Income protection insurance may provide a monthly income while you’re unable to work. But depending on your job, different types of income protection insurance have different benefits and employment requirements.

 

Speak to your financial adviser to see if such a policy might work for you or how you may tailor a plan to meet your income protection needs.

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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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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