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Investors maintained a healthy risk appetite for much of October, which enabled major share markets to make further progress. Movements in the US set the tone, with the S&P 500 Index rising to fresh all-time highs during the month. Towards month end, however, subdued results from some of the largest technology firms in the US saw markets reverse direction and close the month slightly lower. Returns from bond markets were also negative. Despite a 0.50% cut to the Federal Funds rate in September, investors remain concerned that inflation could creep higher – especially if Trump pursues expansionary fiscal policies after becoming President. Treasury yields rose sharply – dragging bond valuations lower – as some of the interest rate cuts anticipated in the US for 2025 were removed from consensus forecasts. US Initial estimates suggested the US economy grew at an annual rate of 2.8% in Q3. This was marginally below expectations and was a slowdown from Q2, but nonetheless highlighted the resilience of the economy. Growth was supported by strong consumer spending, with encouraging demand for both goods and services. It seems discretionary expenditure was underpinned by a buoyant labour market and the associated impact on consumer confidence. Payrolls data showed that more than 250,000 jobs were created in September, which was more than 100,000 ahead of forecasts. Employment growth in October – released at the beginning of November – was much less strong. The labour market will therefore remain very closely monitored in the months ahead, as investors try and work out the likely interest rate path. For now, inflationary trends seem quite persistent. The Core PCE measure showed consumer prices still rising at an annual rate of 2.7% in September, which makes it less certain that policymakers will lower interest rates aggressively in the near term. Rate cuts are still anticipated both this year and next, but consensus forecasts now indicate official borrowing costs will settle around 3.5% by the end of 2025, rather than 3.0% that was anticipated at the beginning of October. Australia No formal Reserve Bank of Australia meetings were scheduled in October and so official interest rates were unchanged at 4.35% during the month. Policymakers will meet once more before the end of this year and continue to monitor incoming economic data to gauge whether changes in monetary policy settings are warranted. The ‘trimmed mean’ measure of inflation showed consumer prices rising at an annual rate of 3.5% in Q3. This was down slightly from the prior quarter, but was still above the Reserve Bank of Australia’s 2% to 3% target range. With inflation still running above target and given ongoing strength in the labour market, few observers are expecting interest rates to be lowered any time soon. Australian unemployment remained at 4.1% in September and more than 60,000 jobs were created over the month. New job adverts also increased, suggesting the unemployment rate could remain low for the foreseeable future, in turn exerting upward pressure on wages. Against this background, policymakers might even consider raising borrowing costs further, rather than lowering them as many homeowners and businesses are hoping. New Zealand Interest rates were lowered by 0.50% at the Reserve Bank of New Zealand’s October meeting, following an initial 0.25% cut in August. The annual inflation rate fell to 2.2% in Q3, down from 3.3% in Q2 and 4.0% in Q1, highlighting the extent of the moderation in pricing pressures. There appears to be excess capacity in the New Zealand economy following a recent slowdown, increasing the case for lower borrowing costs. Europe At 0.9% year-on-year, GDP growth in the Eurozone came in higher than expected in Q3. Acceleration from Q2 was supported by another strong contribution from Spain. Growth in Germany and France, the two largest economies, was also above expectations. The Olympic Games provided a boost in France, while there was an encouraging improvement in activity levels in Germany. Recent commentary from European Central Bank officials suggests policymakers are increasingly confident they are winning the fight against inflation. In turn, interest rates were lowered by 0.25% during the month; the third cut in the past five months. It seems almost certain that borrowing costs in the Eurozone will be lowered further in the months ahead. The release of the new Labour government’s first Budget was the main focus in the UK. As anticipated, the Chancellor outlined plans to raise an additional GBP40 billion through taxation in order to improve the country’s budget deficit. Asia Interest rates were lowered in China, as officials in Beijing tried to boost borrowing and investment. The one-year loan prime rate – used as a reference for consumer and business lending – was cut by a further 0.25%, following an earlier 0.10% cut in July. Separately, there was an unexpected improvement in Chinese manufacturing data following five months of deterioration. This raised hopes that recent stimulus measures may be feeding through to the real economy. The increase in factory output also supported a steady improvement in business confidence, which augurs well for investment. In Japan, the latest commentary from central bank policymakers suggested the Bank of Japan will continue to rise interest rates if the inflation target is met. Officials are expecting 2.5% inflation for the 2024 year and annual GDP growth of 0.6%. Australian dollar The revised outlook for US interest rates meant the US dollar fared very well. The greenback enjoyed its strongest month of performance in two years and appreciated against almost all major currencies worldwide, including the Australian dollar. The AUD depreciated by around 5% against the US dollar over the month. This move lifted returns from overseas assets for local investors. While returns from global shares were negative in local currency terms, e.g. they added value in AUD terms owing to currency market movements. Australian equities Australian shares lost ground in October, following five consecutive months of gains. Volatility in commodity prices, owing to ongoing geopolitical tension in the Middle East and mixed economic data from China dampened sentiment. Company news … Read more

As value returns to market favour it’s time to check in on your portfolio – but not all value exposure is created equal. A notable comeback in value stocks over the past six months is an important reminder for investors to reassess their portfolio allocations. Value stocks, which typically trade at a discount to their intrinsic value and offer higher dividend yields, were long overlooked by a market fixated on growth during an extended run of low interest rates. But as market conditions normalise during 2024, value is making a strong comeback. Most people are still underweight value – but we are certainly seeing more interest. The narrowness of the market is a major risk and asset owners are starting to recognise that markets are at all time highs and 65 per cent of the return last year came from eight stocks. Herd mentality It’s time for investors to take a closer look at portfolios to ensure appropriate exposure to value stocks as world markets continue the normalisation process. Not all value exposure is created equal – there has been a striking drift away from traditional value investing even among some value managers. There has been a bit of a herd mentality in the numbers. There is a persistent concern among some investors about missing out on potential growth rallies, particularly in AI–related stocks. This leads to rapid swings in the market when positive news emerges. But right now, value is outperforming growth. Changing fortunes It can be easy to forget how quickly markets shift mood. In 2022, tech leaders fell heavily on the prospect of rising interest rates, sending the MSCI World Index down 18 per cent, the World Growth Index down 29 per cent, and the AI Index slumping 36 per cent. That was a value cycle. People realised that tech is cyclical and interest rate sensitive. Then from the 2023 through to the first months of 2024, growth was back on – narrow market, AI–driven, Goldilocks momentum – but the underlying economic and monetary backdrop had not changed. It was a distorted market where the Magnificent Seven drove about 62 per cent of return during 2023. Since February this year, value stocks are outperforming again. We’re in a different environment now. Value generally outperforms in a normalised inflationary and interest rate environment. Falling rates may boost value stocks Be cautious against the commonly held view that falling interest rates will boost growth stocks again at the expense of value stocks, noting that in the last rate cut cycle, value outperformed. Rates will come down much slower than they went up. That will provide good opportunity for disciplined managers to continue to win and value to continue to do well. There is a correlation between rising rates and value doing well because the financial sector benefits. But it is equally true that as rates come down, cyclical value stocks benefit. Interest rates coming down generates housing starts, housing starts help construction and appliances and other things that are typically in that cyclical value area. As auto loan rates come down, more cars will be bought. But importantly, there has to be an eye as to why rates are coming down. A slowing economic cycle will present different opportunities and outcomes versus a reacceleration of economic growth. So, it could be argued that you can win in both rising and falling rate environments. It really just depends on where you place your bets during the interest rate cycle. Source: Perpetual

You don’t have time When you’re juggling your job with your personal and family life, it can be challenging to carve out time in your schedule to really sit down with your finances. As a result, it’s easy to feel that they are slipping out of your control. You find yourself putting off big financial decisions because they feel overwhelming, drawing time and energy away from work, family and relationships. A financial adviser can work with you by researching your options and advising on a course of action that help you work toward your goals, instead of putting them off. You find investments confusing With so many investment products on the market, how can you be sure you’re getting a good return for the risk that’s involved? If you’re trying to make sense of it all by yourself, a financial adviser can clarify the concepts for you, with in depth knowledge around investments and markets. They’ll help you review your current situation and goals and get an understanding of your appetite for risk. Then they’ll work with you to create an achievable plan and match you with quality investment solutions that suit your circumstances. And even better, they can identify investment opportunities that you might not have otherwise found out about. You’ve been through a major life event Financial and personal lives are complex and interconnected – when a major life event occurs, it has a ripple effect across your finances. For example, when you get married or move in with a partner, you might want to merge finances and redefine your shared financial goals. From buying a home and starting a family to changing jobs or retiring, a financial adviser can help you before, during and after. They’ll help you understand the financial implications, then work on building or adjusting your financial plan to ensure you stay on track. You’re about to make an important purchase While you make financial choices like these every single day, there may be times in your life when you are presented with a more significant decision. For example, you may come into an inheritance, or receive a bonus at work or a redundancy payout. In these cases, there is a strong temptation to splurge the cash. It can be hard to know the best way to make the most of this money: should you pay off your mortgage, boost your super or invest it for the future? That’s where a financial adviser comes in. They’ll walk you through your options and what they mean for your situation, so you can feel confident in making the best possible financial decision. You’re feeling stressed about money One major reason why people choose to work with financial advisers is for the peace of mind it gives them and their families – particularly if they’re experiencing financial stress. Financial stress can happen to anyone, no matter their age or background. It can have a profound and lasting impact on your health and relationships. An adviser can help you analyse your finances and figure out where you can make changes to improve your financial situation. They can also help you consider important questions, like how you and your loved ones would cope financially if you were unable to work for a while due to an accident or illness. They can make sure you have a financial safety net in place and proactively help you prepare for major life events that could impact your finances and goals. With a strong financial plan, you can recover from a small setback that risks derailing your finances. Source: Colonial First State

Some of us may help provide assistance to our ageing parents or other relatives in the future. That time may bring a range of emotional and physical challenges. Planning ahead may help relieve stress down the track. Here are three suggestions that may make a difference. Talk about your parents’ future It may not be an easy discussion, but knowing what your parents want can help later. Ask them about the type of care and living arrangements they want. Find out about the different types of care they can afford. Think through whether you will be able to physically and mentally offer the support they require. This is an important but often overlooked consideration. It also helps to establish trigger points. Being unable to manage a garden or a dementia diagnosis and clear signs of memory loss may be time to change care arrangements. This process is about helping your parents to state their wishes while they still can. They can also take this information to specialists, such as their financial advisers, accountants and lawyers. Knowing this information can also help you plan ahead if you need to offer financial support. Setting up a power of attorney and enduring guardianship You never know what circumstances life may send your parents’ way that mean someone else needs to take care of them or their finances. At some point, some of us might not be able to go to a bank or make an informed decision about our care. Which is why appointing a power of attorney and setting up enduring guardianship documents can be important. This is a trust relationship, and your relatives should carefully consider the right person to appoint. It’s also important not to leave this until it’s too late. It’s difficult for someone suffering from mental deterioration to provide informed consent about changes to their finances. Setting up these documents before problems arise can protect ageing relatives and their families. Establishing clear records of finances and assets Finances and assets are a sensitive topic, which could be tough to discuss. This is understandable, but you can still help them plan by encouraging them to set up clear records of what assets or debts they have, as well as contact details for institutions they use along with details about any financial advisers, accountants, lawyers and other specialists with which they have relationships. Having clear documentation can also help down the track. For example, it can ensure any debts are attended to and avoid unexpected debt collection notices for bills that would have been covered at the repayment time if you’d known about it. Or it can help to identify funds to cover medical expenses or nursing care when needed. Being prepared can offer you and your relative’s confidence about their options for whatever the future brings, even if it feels confronting at first. It can also make difficult times a little less challenging. There is a range of tools offered by state trustees and government websites like MoneySmart to help with budgeting and estate planning. Speaking to financial advisers and lawyers can also help. Source: BT

Just as it is vital to invest in the financial planning, retirement planning must also focus on that other precious commodity – time. We live in an era of increasing longevity, and we have the opportunity to redefine the concept of retirement and create our own path forward – which may include working in some form. Having the option to retire is recognised as a significant career and life stage, and it can produce mixed feelings. At times throughout life you are likely to have initiated, pursued or welcomed change related to work, home, family, friendships, travel. You may have viewed these changes in a positive way – onwards and upwards! Any feelings of uncertainty are likely to have been pushed aside in pursuit of the exciting development. For those who will soon have the option to retire, the next step may feel very different. It can feel like the end of an era. Navigating change can feel challenging. Our brains are wired to treat uncertainty as a threat. A useful response is to identify what we can control. For example, maintaining a healthy habit and listening to some favourite music are just two ways you can calm that part of your brain that wants to activate a sense of fear and anxiety. Research suggests it is not change that we fear, it is the sense of loss that we fear. In this context, we may fear the loss of daily routine, loss of work community and networks, loss of identity, loss of purpose, possibly the loss of being part of something bigger. The good news is you can be proactive in navigating change and you can start well before you leave work. Here are three examples. First, a major change is likely to relate to who you’re spending your time with. You may assume you will spend more or all of your time with your partner. A question to consider is have you ever spent this much time together? It’s important to discuss each other’s expectations. Even if you don’t yet know exactly how you want to spend your time, identify whether you would each want to have your own interests and your own circle of friends, as well as shared interests and friends. Second, you may assume that you will spend more time with your grandchildren. It’s important to discuss your hopes with the parents of your grandchildren to check whether you all share similar expectations. If this is not the case, it can be a heartbreaking discovery at a time when you are already feeling the effects of change, so have this conversation well before you retire. Third, if you are planning to move house and possibly downsize, consider the changes involved. Will you be living in a new community? Will you have new neighbours, and be living at a new distance from friends and family? If you are planning to do this soon after leaving your work role, consider how much change you want to deal with at once. Even though you may view this as a positive development in your life, a lot of change at once can feel overwhelming. When it comes to identifying how you want to spend your time, it can be hard to know where to start. It can be tempting to fill your days with busyness. Start by considering the following: First, consider what role (if any) work will have in your life. Second, check your mindset. We often view retirement as an ending. Yet if we potentially have 20 or more years ahead of us, we can choose to see this as a magnificent opportunity to start something new. Third, we live in an era in which we have so many options for how we spend our time, so explore the broadest range of options. This doesn’t have to involve an extravagant lifestyle. You may decide to retire, unretire, travel, continue learning, teach others, pursue a passion, start a business, write a book – all of the above. People ask, ‘what makes a successful retirement?’ Arguably, the key to thriving is to spend as much time as possible in ways that are meaningful to you. The challenge is to identify what energises you, so you are genuinely loving life. The good news is you don’t need to work this out alone. That’s where a coach can help. We can’t control every aspect of life – we know there will be challenges at times, and that finances have a significant influence, but when you look back on your life at some future stage, how do you want to feel about how you have spent your time? What would a fulfilling life look like for you? That’s success – for you. Source: Money & Life

Looking for higher returns than cash in the bank with less volatility than shares and property? With interest rates generally considered to be at or near their peak, fixed interest investments, such as bonds and other credit investments, may offer an attractive ‘middle ground’. Interest rates represent the cost of borrowing money. They affect how much you earn from your savings and how much you pay for your debts. When interest rates are high, you can earn more income from your savings but it costs more to service your debt. Conversely, when interest rates are low, the cost of servicing debt is lower but so is the income you can earn from your savings. Interest rates in Australia followed a generally downward path following the Global Financial Crisis in 2008, reaching historic ultra low levels of 0.10% during the COVID-19 pandemic. However, since 2022, Australians have witnessed the most rapid increase in official cash rates of the past 20 years. Australian cash rate target Interest rates likely to stay higher for longer With inflation in Australia remaining persistently high and ‘sticky’ in recent times, the Reserve Bank of Australia (RBA) is expected to keep interest rates fairly high in the near future. For investors holding high levels of cash this has been welcome news, as these savings are now generating higher levels of interest income. Although this is being eroded to some extent by headline inflation that has remained generally above 4% since it peaked at more than 8% in December 2022. The potential for higher returns while protecting capital For those investors looking for less volatility and risk, traditional fixed interest (otherwise known as bonds) and other credit investments can offer an attractive ‘middle ground’ of higher returns than cash with lower volatility than shares, and consistent income. Examples of this include investments in government or company issued debt securities (or bonds), and emerging opportunities in private credit. Bond prices move inversely to interest rates, meaning that when interest rates rise, bond prices fall, and vice versa. While this dynamic can cause losses during a rising interest rate environment (as was the case in 2022 and 2023), it is a widely accepted view that the current interest rate cycle in Australia is close to a peak. Fixed interest securities (bonds) now offer the advantage of a higher yield, and the potential to protect investor capital if interest rates decline due to a softening economy. In contrast, many other credit investments are at a floating rate – meaning their returns follow interest rates, although they may also provide a better return or yield than cash investments. New opportunities in credit markets The current economic and interest rate environment offers some very interesting opportunities in fixed interest and credit markets, both globally and in Australia, and across publicly traded and private markets. Private credit, or capital lent to companies by non traditional lenders such as private investment funds, may offer investors attractive, risk adjusted returns. These types of investments are higher risk than cash and in some cases less able to be converted to cash quickly, but they may also offer higher interest payments than their cash equivalents. Do your homework The current interest rate environment has revealed and in some cases created some compelling fixed interest and credit opportunities However, it is always critical to do your own homework on underlying investments and their creditworthiness, and asset backing and diversification remain important. Higher returns usually come with higher risk, so consider consulting a financial adviser to find a balance that suits your individual needs and preferences. Source: Colonial First State

Books can spark our imaginations, transport us to new worlds, and let us explore other times and other minds. They’re also an invaluable tool for learning. Here are some ideas to help kids of all ages learn about money and start developing their financial literacy. Kids aged 4-6 At this age, many kids will be starting to understand that money – in the form of cards, phones, or notes and coins – can be used to buy things, but how these transactions take place may still be a little mysterious. Money-themed picture books can help to simplify financial concepts in a way that kids can relate to, exploring what money is and where it comes from, spending, budgeting, and saving, and touching on important life skills like delayed gratification, patience, knowing the difference between needs and wants, and setting goals. Look for Sid and Jan Berenstain’s The Berenstain Bears’ Dollars and Sense and The Berenstain Bears’ Trouble with Money; Cinders McLeod’s 4-book MoneyBunny series, starting with Earn It!; and Sue Graves’ Money Matters series. Kids 7-12 Once kids start reading for themselves, there is a range of practical activity books that can help them learn about money through games, activities and puzzles – while practising their maths skills too. You’ll also find books that cater to kids’ fascination with becoming a millionaire. David M. Schwartz’s If You Made A Million introduces the concept of interest, while James McKenna, Jeannine Glista and Matt Fontaine’s How To Turn $100 Into $1,000,000 offers financially precocious 10 to 12 year olds an introduction to finance, investing and starting a business, along with true stories of how real people became millionaires. Australia’s own Barefoot Investor, Scott Pape, has Barefoot Kids, with projects, stories, rewards and stickers to get kids earning, saving, investing and giving – many of these books discuss the importance of giving money to charity or other causes. Teens Older kids can start learning how to manage money for themselves through pocket money (which they may or may not need to “work” to receive) and part-time jobs. Introduce your kids to the idea of setting savings goals for the things they want, and teach them tricks and tools that make saving easier. Teaching your children how to manage money will help them to set and achieve goals and live the life they want – even if they don’t make it as a 12-year-old millionaire. Source: TAL

Moving into residential aged care can be an uncertain and overwhelming experience for everyone involved. On top of the personal and emotional challenges, there are a number of important decisions to make including which facility is most suitable for your loved one, what fees will they be required to pay and what to do with the family home. This article outlines the steps to helping someone enter aged care as well as the fees that may apply; and addresses some of the key things to consider when it comes to the family home. There are generally five steps to follow when it comes to planning for residential aged care. Step 1 – Get care needs assessed Before a person can move into a residential aged care facility, they will need to have their lifestyle and health needs assessed by an Aged Care Assessment Team (ACAT) member. ACAT members are usually doctors, nurses and social workers who specialise in aged care. They will ask a series of questions to determine whether your relative requires full time residential aged care or another type of care. The assessment is free and can be done at home, a health centre or hospital. To find your nearest ACAT visit the Government’s My Aged Care website or call 1800 200 422. Step 2 – Find an aged care home A list of aged care homes is available on the My Aged Care website. An ACAT member can also assist in finding a suitable aged care home in your area. Local Government Departments or third party placement companies may also be able to assist in locating an appropriate facility. All facilities are different, so consider visiting a few to determine which is the best for the person’s needs. Not all facilities will have vacancies but it’s worth asking whether you can be placed on a waitlist. Step 3 – Work out the costs for aged care While some aged care costs are generally partly funded by the Government, the person affected may need to pay a number of fees, some of which are determined by their income and assets. These fees may include: Accommodation fees Accommodation payment ·         Payable as a refundable lump sum or equivalent daily payment or any combination of both (method of payment determined by resident). ·         You may be eligible for Government assistance in paying this fee. Ongoing care fees Basic daily fee ·         Generally payable by all residents for all days in care. ·         85% of full Basic Single Age Pension (regardless of your actual Age Pension entitlement). Means-tested fee ·         May be payable based on a formula that takes into account your relative’s income and assets. ·         Subject to change if circumstances change. ·         Annual and lifetime caps apply. Extra services fee ·         Payable if your relative opts to receive extra services and amenities. ·         Additional daily amount, set by facility.   Step 4 – Apply for an aged care residence To apply for an aged care facility, you will need to complete a specific form and decide if you want to disclose your relative’s income and assets. You aren’t required to provide this information to the facility, but if you don’t, the person won’t qualify for government subsidies, meaning they will have to pay the full cost of care. If you choose to disclose their financial information, you can send it directly to Centrelink who will determine the fees. Depending on their situation, you may need to fill out a specific form if they receive income support, for example. Centrelink will then inform you and the facility of the fees, without sharing your personal financial details with the facility. Step 5 – Move into aged care Just before the person moves into aged care, you will be provided with an Accommodation Agreement. This is a legal document which sets out the terms of their residency, their rights and responsibilities, and the rights and responsibilities of the aged care facility. You will need to inform the aged care facility within 28 days of them entering care, whether you will pay a refundable lump sum, daily payments, or a combination of part lump sum and daily payments for their accommodation. What to do with the family home When moving into aged care, some important decisions may need to be made regarding the home. Contrary to what many people believe, you don’t have to sell the family home to pay for aged care, as facilities must offer lump sum, daily, or combined payment options. Seek professional financial advice if you lack sufficient funds as there may be ways around it. If the property has always been the person’s principal place of residence, it is generally exempt from CGT when sold; if retained and not rented, it remains CGT exempt indefinitely, but if rented for more than six years continuously, CGT may apply if it is sold. Renting their home can provide income to help with aged care costs, but it may require preparation expenses, a trusted person to manage it, and they could pay income tax on the rent. Any decisions you make regarding the main residence could impact the person’s current or potential social security entitlements. Their property will not be assessed by Centrelink for the monthly aged care means test if certain eligible people, such as: their partner, their immediate family member who has lived there for at least five years and receives government support, or their carer who has lived there for at least two years and receives government support continue to live there. If none of these people occupy the home when the monthly means test is applied, a portion of its value will be included in their assessable assets. Rental income (after deductions) is always assessed for the income test. If you sell the home, the sale proceeds will generally be assessable under the aged care means test rules. Age Pension entitlements When moving into aged care, it’s important to notify Centrelink so they can update benefits, determine eligibility for accommodation subsidies and calculate … Read more

It’s lucky Aussie homeowners are a pretty resilient bunch. All the interest rate rises over the past couple of years have delivered a serious reality check, leaving variable rate home loans higher than they’ve been for a generation. So you need to get your home loan working as hard as possible particularly if your fixed rate loan is about to reach the end of its term and you’re facing a sudden increase in repayments. The good news is there are ways you can set up your home loan to pay less interest in the long run and take years off your mortgage. Here are a few quick tips to get your home loan working harder. Set up an offset account  If you haven’t already, check if you can link an offset deposit account to your home loan. An offset account operates like a transaction account but it reduces the interest you pay as interest is only charged on the mortgage balance less the offset balance. You can set up offset accounts for big ticket items like holidays, a car purchase or renovations or even everyday necessities like shopping and bills. The combined balance of all your offset deposit accounts will reduce the interest payable on your loan. You can also connect a visa debit card to your offset account that operates like an everyday account and makes it easy to withdraw your funds. Take advantage of your redraw facility Some home loans offer a redraw facility to access extra repayments you might have made. If you have unexpected expenses, it’s worth checking if you have available funds on your home loan that you could request to redraw. You’ll just need to remember this could extend the life of your loan so you end up paying more interest in the long run. Consolidate other debt into your home loan You’ll generally find the interest rate on your home loan is lower than the interest on your credit cards or personal loans. So if you have any debt, you could transfer this to your home loan so you don’t pay as much overall interest. Change your repayment amount Creating a budget could help you get across how much income you’ve got coming in, how much you need for the essentials and where the rest of your money might be going. This will help you identify if there’s any room for movement and if you could potentially repay a little extra. Change your repayment frequency Paying fortnightly instead of monthly, for example, can make a big difference to the interest you pay in the long run. Change your repayments to principal and interest Making principal and interest (P&I) repayments can reduce your outstanding loan balance and lower the amount of interest you’ll pay over the life of the loan. But don’t forget switching to P&I can increase your regular repayments. Renegotiate your interest rate If you see a lower rate with another provider,  contact your current provider for a better deal. Consider whether to refinance If you’re having cashflow challenges, you could think about refinancing to reduce your repayments but bear in mind this could mean extending your loan term. Source: AMP

The Government has proposed a number of changes to the support available for ageing Australians at home, as well as in residential aged care services. The changes will apply from 1 July 2025. Why are the changes happening? With the number of Australians over the age of 80 expected to triple over the next 40 years, the sustainability of the aged care industry is under threat. In 2022/23, 46% of aged care providers made a loss from aged care accommodation.1 In 2023, the Aged Care Taskforce was established to explore these issues and to make recommendations on how to improve the sustainability of the sector. Their final report was released in March 2024 where a number of recommendations were made for the Government’s consideration. The proposed changes adopt several of the Aged Care Taskforce recommendations. At a high level, the proposed changes seek to ensure that those who can afford to contribute towards the cost of their care do so. Government support will be targeted those who are not as financially secure. The changes also seek to increase investment in the aged care sector to improve the facilities available to residents. Will the changes impact me if I’m already in residential aged care? The changes will only impact new aged care residents entering care from 1 July 2025. The ‘no worse off’ principle ensures that if you’re receiving care before 1 July 2025, you will continue to have your fees determined under the existing rules, unless you leave aged care or move to a new aged care provider. Will the changes to fees impact private aged care facilities? Private aged care facilities are not governed by the aged care rules that apply to Government subsidised aged care facilities. Instead, the fees payable are agreed between you and the private facility. Therefore, the proposed changes to fees do not impact private aged care providers. Will the changes increase the cost of residential care? If your income and/or assets are above certain levels, you may need to contribute more to the cost of your care if you enter care from 1 July 2025. The actual increase in your personal contribution to the cost of your care will depend on your personal circumstances. The Government has confirmed that it’s expected that half of all new residents entering residential care from 1 July 2025 will not pay more under the new system. Specifically: no ‘fully supported’* resident will contribute more 7 in 10 receiving the full Age Pension will not contribute more, and 1 in 4 part Age Pensioners will not contribute more. *A fully supported resident is a person who has income and assets below set thresholds and is eligible to have their accommodation fee and most of their ongoing care fees covered by the Government. Can you give me any case study comparisons to help me understand how much fees could change from 1 July? The Government has released a handout with case studies that show how the fee contribution may change for people who are full Age Pensioners, part Age pensioners and self-funded retirees. You can access these case studies by clicking here.     Will the Government still contribute to the cost of aged care? The Government will continue to pay the majority of aged care costs for all aged care residents. However, the amount that they will contribute for each person will change to ensure that those who need financial support most are able to access aged care services in a sustainable way. The amount you will need to contribute towards the cost of your care, and the amount that the Government will contribute on your behalf is determined based on your circumstances at the time you enter care, and for some fees, may vary after you enter care, including if your financial circumstances change. Services Australia and/or the Department of Veterans’ Affairs will calculate the Government support that you’re eligible for (paid directly to the facility as a subsidy) when you complete the assessment process at or just before entry to care. Should I aim to enter care before 1 July 2025? There are a number of considerations when determining the right time to enter care. This includes: completing the assessment process to confirm that you’re eligible for support in a residential aged care facility (based on factors such as your health, mobility and support needs), and availability of the room of your choice at a facility that meets your needs (including any lifestyle, care, religious, cultural or geographical needs). Moving into residential aged care is a significant change for many people and it can be an emotional time for everyone involved without making rushed decisions. Often, a lot of planning is required, and you may be able to optimise your overall outcomes by seeking advice from professionals such as financial advisers, accountants and solicitors to ensure that all your affairs are in order. It’s also important to consider that the Government is also focussing on expanding the in-home support available through a new ‘Support at Home’ program, to assist ageing Australians to stay in their homes for longer. Support will be available for differing levels of care and support needs and could be an option to help you retain your independence at home. Before you make any decisions, it’s important to talk to someone about your circumstances and how these changes could impact you financially and your lifestyle. Residential aged care fees At a glance, what’s changing? Residential care fees are broken down into ‘accommodation fees’ and ‘ongoing care fees’. The proposed changes impact accommodation fees as well as ongoing care fees. What’s an accommodation fee? You can think of the accommodation fee as the cost of the room. You can choose to pay this fee as a lump sum amount (often referred to as a ‘bond’ or ‘refundable accommodation deposit’ or ‘RAD’). Alternatively, it may be paid as a non-refundable daily fee (referred to as a ‘daily accommodation payment or contribution’). Currently, when you leave … Read more