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Latest news Buying an investment property Is an investment property the right choice for you in retirement? What you need to know about buying an investment property Buying a rental property is a very popular investment in Australia. For many investors, the appeal of owning an investment property is linked to their familiarity with this asset class – most of us either own or rent a house, apartment or villa. Over time, a quality, well located property could generate long term growth and decent income returns. Houses and units may be easier to understand as an investment than many other assets such as shares and bonds, yet owning an investment property is not a licence to print money. There are risks and costs budding landlords need to consider. The costs of having an investment property include property management fees, legal charges, mortgage interest payments and landlord insurance. You may also need to consider whether you could service the costs of owning the investment property if a tenant decides to move on and you’re left with a vacant property. If you’re not sure you could cope financially, you might need to rethink your investment strategy. Likewise, you need to be aware real estate prices can take a tumble. Downsizing to buy an investment property Downsizing into a smaller property or moving to a more affordable location could be a worthwhile way to help finance your retirement lifestyle. It can be a valuable strategy for empty nesters, some of whom may find maintaining a big and empty family home no longer makes sense financially or from a lifestyle perspective. By downsizing to a more affordable property such as an apartment or townhouse, you could unlock any significant capital tied up in the family home. With this extra capital, you may have the financial freedom to invest in either an investment property or another asset class. Before you make a move, be sure to speak to a financial adviser to determine whether a downsizing strategy is right for you. Take advantage of downsizer rules Downsizer rules may help older Australians who sell their family home to invest some of the proceeds into superannuation. From 1 July 2022 the eligibility age for downsizer contributions was reduced to 60 and from 1 January 2023 it is reducing further to 55. Under these rules, if you’re in the suitable age range you may make after-tax or non-concessional contributions into superannuation of up to $300,000 for an individual or up to $600,000 for a couple from the proceeds of selling your principal residence. The usual contribution caps of $110,000 per year ($330,000 under the bring forward rule) don’t apply and it doesn’t matter what your super account balance is (you would usually only be able to make after-tax contributions if your total super balance is less than $1.7 million on the previous 30 June)1. Understanding the costs of buying/selling a property The costs of buying a property include stamp duty for the property transfer and for the registration of your mortgage. Stamp duty is charged by state and territory governments so the amount you will pay depends on the location of the property and its price. To find a stamp duty calculator appropriate to your state, or territory, visit the ASIC Money Smart website. When buying property, you should also factor in the cost of pest and building inspections, which vary depending on the size and location of the property. Also don’t forget if you can save a deposit worth more than 20 percent of the value of your property you may not be required to paying lenders mortgage insurance (LMI). LMI is generally charged by a lender if your deposit is less than 20 percent of the value of the property. LMI enables lenders such as a bank or a credit union to lend you a larger percentage of the purchase price. The cost of LMI may be included either upfront or in your loan repayments so it’s spread out over the term of the loan. If you’re selling your current home and buying an investment, you’ll probably sell through a real estate agent and this means paying the agent a commission on the sale. Agents in your area will have different fees, so be sure to shop around. There are also legal costs for the transfer of a property from a vendor to a buyer. You’re likely to need the professional services such as a conveyancer to legally transfer ownership of the property you are buying or selling. Your conveyancer will also conduct property and title searches to ensure the seller is legally entitled to sell the property. There may be some minor charges for completing these searches, in addition to the conveyancer’s professional fee. There may be a range of fees levied by your lender such as application, valuation and settlement fees. Make sure you ask your lender or mortgage broker about these fees. Once you secure the property, you may also need to take out landlord insurance. This is insurance that may protect the building and its contents and cover if the tenant defaults on his or her lease obligations. How much can I borrow? To estimate what you can borrow to buy an investment property, you could use a mortgage or home loan calculator to help translate the loan amount into a corresponding monthly payment. Calculators give you the luxury of playing with interest rates, deposit amounts and loan term to help you figure out what may be affordable. They can be useful tools to crunch some numbers and get a ballpark estimate. Though it’s worth noting that many calculators won’t give a complete picture of all costs and it may be worth considering advice from a financial adviser before making any financial decisions. Once you know your borrowing power, you’ll have a better idea of what your next step will be. You’ll know whether you can afford an apartment or house near the CBD or out in the suburbs. How … Read more

Reverse mortgages are home mortgages that work in the opposite way to a normal home mortgage. Instead of interest and capital being repaid over a fixed term, there are no repayments. Rather interest is capitalised until repayment which takes place when either the home owners sell the property or the home becomes vacant because the owners have either died or moved into an aged care facility. Most lenders allow earlier repayment of loans, although early repayment fees may apply. This type of loan has appeal to older people who are asset rich but cash poor. It can be used to supplement cash flow for lifestyle purposes or to fund accommodation payments where one member of a couple moves into an aged care facility and the spouse remains in the home. The loan can be taken as a lump sum, a regular income stream, a line of credit or a combination of these options. To ensure a reverse mortgage is a limited recourse facility, it’s important the loan agreement includes a no-negative equity provision that limits liability to the value of the property. This is important as the capitalisation of interest increases the outstanding loan balance over time. On 18 September 2012, the Federal Government introduced a statutory ‘negative equity protection’ on all new reverse mortgage loans to ensure lenders providing limited recourse reverse mortgages cover this risk by imposing a conservative loan to value ratio. How much can you borrow? As a rule of thumb, the older you are the more you can borrow, as the reduced life expectancy offsets the impact of capitalisation of interest on the outstanding loan balance overtime. As a general guide, you need to be at least age 60 to borrow and the loan limit is likely to be 15-20% of the value of the home. This increases by 1% per year of age above 60. ASIC’s MoneySmart website contains useful information on likely costs and other aspects of reverse mortgages. It includes a reverse mortgage calculator to illustrate the effect a reverse mortgage may have on the level of equity in the home overtime, plus the potential impact of interest rates and house price movements. Social security treatment An attraction of reverse mortgages is the favourable treatment they receive from both the Department of Social Services and the Department of Veterans’ Affairs when means testing eligibility for benefits. Where the loan (which for means testing purposes are referred to as home equity conversion loans) is drawn down as a lump, the first $40,000 if unspent (e.g. if deposited into a cash account) is an exempt asset for a period of 90 days. If after that time it has not been spent, it becomes an assessable asset. Whilst exempt under the assets test for a period of 90 days, the $40,000 is subject to deeming under the income test from day one. Amounts drawn down are not treated as income, instead being subject to the deeming rates if unspent. This treatment is pursuant to Section 8(4) and 8(5) of the Social Security Act 1991 (SSA) which exempt the first $40,000 of the loan from the income test and Section 8(11) of SSA which exempts amounts in excess of $40,000 from the income test. Amounts drawn down are also exempt from the aged care means test (asset test portion) that is used to assess whether a resident is required to contribute towards the cost of their accommodation and medical care. Structuring a reverse mortgage loan as regular drawdowns to fund living expenses rather than a fully drawn loan at the outset, has the dual benefit of minimising the impact of the capitalisation of interest and avoiding a reduction of age pension entitlements. What are the benefits of a reverse mortgage? Ability to access home equity, without selling the property to supplement cash flow for living expenses. Potentially favourable treatment under social security and aged care means testing. What are the risks of a reverse mortgage? Interest rates are generally higher than average home loans. If the interest rate is fixed, the break costs to terminate the loan may be high. Debt can increase at a reasonable rate due to capitalisation of interest (especially if variable in times of rising rates) which reduces the amount available to leave as an inheritance. Similarly, if the loan has been taken out for current life style needs, this will reduce the remaining equity available to fund future needs such as aged care accommodation payments.   Source: BT

Between March 2021-22, inflation in Australia rose by 5.1%. Meanwhile, wages only rose by 2.4%1. With the bare essentials becoming – well, expensive, it’s not surprising that many people are looking for new ways to save money or increase their income. The good news is there are steps you can take—and actions to avoid—that can help you navigate this period of high inflation, for however long it lasts. Here are some of the best ways to manage rising inflation: Continue investing Investing a portion of your income is one way you can keep up with, or even outpace, inflation. While rising interest rates or falling sharemarkets may cause many people to second guess themselves when making investment decisions, it’s important to stay focused on your long-term goals and avoid being influenced by short-term market volatility. Having a diversified investment plan—money invested across many asset classes and in many industries—may help to cushion you from major sharemarket falls. Find ways to reduce your expenses Everyday bills Shopping around for the best deals on your home loan, electricity and insurance, can end up saving you hundreds of dollars over the long-term. You may also want to consider cutting down on subscriptions or memberships you don’t use, and make sure you’re getting all the concessions you’re entitled to such as rebates and pensioner discounts. Home loans Official interest rates are predicted to continue rising throughout the year, so if you have a home loan that isn’t on a fixed interest rate, you’ll need to factor in increased repayments to your budget. Electricity Consider using some of these energy saving tips: Check out government and council rebates to reduce your energy bill Switch to energy efficient lightbulbs Consider installing solar panels: while costly initially, this can save thousands of dollars over the long-term Water savings: install a water efficient showerhead and only run the dishwasher on a full load Only heat and cool the rooms you’re using and use a timer Unplug unused electronics Hang-dry your laundry rather than using a dryer Groceries While food might be a necessary expense, there are ways to save without compromising quality. Meal planning is a simple way to get better at grocery shopping to reduce wasting food. You could also consider finding recipes that use the same ingredients as you’re more likely to use up an entire bag of vegetables or a fresh bunch of coriander. You may also want to consider growing your own vegetables. Petrol While we can’t control global oil prices, you can plan clever ways to reduce costs. Request to work from home a few days a week Ride your bike to work and get the benefit of a good workout Use public transport – if you live in a city or town with a decent public transportation system, this alternative is a great option to cut down on commuting costs Carpool – if you have colleagues who live in the same area, you could split the driving between you. Consider ways to increase your income Although there isn’t always a quick or easy way to increase your income, there are options for earning extra cash to cover more immediate expenses. Passive income is a great way to earn money with little effort. This could include things like buying an investment property, investing in shares, bonds or fixed-income, starting a business on the side or even creating your own social media content. You can also find an extra source of income outside of your 9-to-5 job by: renting out a room or parking space pet sitting dog walking online tutoring or driving for a rideshare service. Lastly, while it may not be easy to increase your pay overnight, you could consider ways to use your job performance and rising inflation to get a promotion or salary increase.   Source: Insignia Financial

When it comes to life stages, we’re all different. Some of us are all set up with a mortgage, a steady career and possibly even kids in our mid-20s, while others are footloose and fancy-free well into our 30s. Some of us are fortunate enough to have a bit of spare cash to put into super or other investments in our 40s, while others are focusing more on paying the bills and putting food on the table. And some of us enter our 60s with the kids long gone and the home loan paid off, while others still have a bit of a way to go before we can really put our feet up in retirement. So it can be difficult to generalise. But AMP’s 2022 Financial Wellness report says that most working Australians fit one of seven profiles when it comes to their personal finances. Younger Australians just starting out in their careers are more likely to be in a state of disinterested bliss, as finances take a back seat to other priorities – after all, life’s for living! A bit later on in life, with a mortgage and potentially kids, more of us are security strivers or guilty risk-takers. Then nearer retirement we tend to be more cautious spenders or – if we’re lucky – confidently affluent. Getting to grips with your finances Whatever stage you’re at in life, there are things you can be doing to get on top of your finances and put yourself on track to create your tomorrow. In your 20s you should probably… Start budgeting and managing your cashflow – the right spending choices now can set you up for life. Pay off bad debt Fast track credit card and personal loan repayments. Start a regular investment plan Keep disciplined using direct debit and re-invest your earnings. Kick start your super Find out if you can get a Government bonus of up to $500 a year. Consider bringing your money together in one account. Consider a more aggressive investment mix – you’re in for the long haul. In your 30s you should probably… Pay off bad debt Fast track credit card and personal loan repayments. Consider consolidating your debts/super fund/account/bank accounts. Start a regular investment plan Keep disciplined using direct debit and reinvest your earnings. Get financial advice on borrowing money to invest for the potential to magnify your returns. Take out adequate insurance – life cover, disability and income protection. Be smart with super Consider bringing your money together into one account. Consider a more aggressive investment mix, or one that suits your risk profile more closely. Put in extra for you and your spouse Find out if you can get a Government bonus of up to $500 a year. Create a will In your 40s you should probably… Pay off bad debt Fast track credit card and personal loan repayments Consider consolidating your debts/ super fund/accounts/bank accounts. Start a regular investment plan Keep disciplined using direct debit and re-invest your earnings. Get financial advice on borrowing money to invest to potentially increase your returns. Check your insurance and who it will be paid to. Be smart with super Consider getting money together into one account Consider a more aggressive investment mix, you still have a long term investment horizon Put in extra for you and your spouse Find out if you can get a Government bonus of up to $500 a year. Review your will for your changing circumstances. In your 50s you should probably… Get financial advice on how to pump up your super savings as you approach retirement. Review your risk profile and make sure your investments still suit. Get financial advice on borrowing money to invest to potentially increase your returns. Check your insurance and who it will be paid to. Review your will for your changing circumstances. When you reach 57 you should probably… Take advantage of higher limits for concessional super contributions. Get financial advice on accessing your super to consider: continue working to tax effectively boost your super reducing your work hours and accessing super to supplement your income delaying retirement until at least age 60 for tax-free access to super. Get financial advice to help you take advantage of government benefits. Review your will for your changing circumstances. And in your 60s you should probably… Revisit your budget Look at all the extra ways you can cut back on spending to give your finances a final boost. Consider the Government’s Work Bonus and if you want to earn a little extra income. Set up an emergency fund to cover any unplanned bills. Get financial advice on accessing your super Look at refreshing your arrangements each year to increase your income payments and contributions to further boost your super. Maximise Government benefits: by structuring your income and assets appropriately by opening an annuity. Accelerate your super savings, if you’re still working, consider Maximising your after-tax contributions while you’re still under 67. Contributing up to your tax-deductible limits. Making last-minute contributions. Making a downsizer contribution. How an annuity can give you guaranteed income for critical expenses. Release other wealth Consider downsizing strategies. Consider reverse equity for changing circumstances. Review your will for your changing circumstances. Ask the experts Deciding what changes to make to your finances isn’t always straightforward, so, if possible, speak to your financial adviser about the best options for you. It starts with super… When times are tough it’s understandable to focus on your day-to-day needs. After all, you need to put food on the table and keep paying the bills. But as probably your biggest asset after the family home, super is the cornerstone of your long-term finances. So it could pay to get on top of your retirement savings…and taking control in one area of your finances could make it easier to start getting to grips with more pressing challenges like budgeting and saving. Source: AMP

Wondering what responsible investing is all about? You may have heard about socially responsible investing – or possibly sustainable investing. Whatever the name, here’s what it means in practice. We spend a large part of our lifetime saving for retirement, with around 10 per cent of our pay packet heading straight for our superannuation fund. It’s little wonder then that we take a second glance at our super balance when the stock market takes an untimely dive. Yet it’s not our only concern these days. In addition to wanting a healthy balance, more and more of us are hoping that our hard-earned contributions are being put to good use – to address environmental concerns and support a better society. That’s where responsible investing comes in. Thanks to its holistic approach, many of us are well positioned to achieve both. Investing in the best of the best Responsible investing – also known as socially responsible, sustainable or ethical investing – takes into account a company’s financial performance as well as how it treats people, society and the environment. The underlying idea is that companies can generate a positive return for wider society as well as positive financial returns for an investor’s portfolio. How this is achieved in practice though can differ considerably. A case of avoidance The foundations of responsible investment lay in faith-based organisations who in the 19th century started to simply avoid investing in certain activities e.g. the Quakers and alcohol. Nowadays, it might be that an investor will exclude specific sectors from their investment portfolio that they consider unethical or otherwise misaligned with their values. This is otherwise known as applying a negative screen. At the same time, investors may wish to gain exposure to a specific sector if it upholds their particular values or ethics. The use of positive screens therefore ensures an investor’s portfolio has an exposure to business which is aligned to their values such as renewable energy or specific social benefits. While this may be problematic for superannuation funds to carry out given the diversity of their members, there’s an opportunity to tilt portfolios towards certain socially accepted principles. For instance, more and more funds are looking to include environmentally friendly companies in their investment portfolios in recognition of society’s growing concern around climate change. Incorporating ESG A more common practice is for investors to formally incorporate consideration of Environmental, Social and Governance factors into their investment decision making. For example, a company may be assessed on a whole swag of environmental issues, such as its carbon emissions and the degree to which it’s polluting the air or degrading the land. Then there are the social issues to consider. Among other things, these include the company’s working conditions and how committed it is to supporting its local community and customers. A company will also be judged on its corporate governance – essentially, how well the company is managed. This looks at factors like the diversity of the company’s board members, how much it pays its senior executives (and whether it’s justified) plus, very importantly, how transparent it is as a company. The idea is that identifying when these factors are materially important to the business, both as a risk or an opportunity enhances the investment decision. This can both help protect against risks such as unsustainable business models and also identify opportunities to invest in companies that have great business opportunities in solving problems. Ultimately this can result in both enhanced investment returns and more holistic outcomes. Getting active Another approach to responsible investing is known as active ownership or stewardship. One of the key pillars of the United Nations’-backed PRI (principles of responsible investing), it focuses on investors addressing any perceived failings in how a business is managed, whether through direct engagement with its Board of Directors, proxy voting, or other external advocacy. Direct engagement is where investors sit down with the company’s management and voice their concerns. MLC, for example, was one of a number of investors that approached Meta’s Facebook in 2021 about its newsfeed algorithm. There was concern that it was configured in a way that meant individuals were only four or five clicks away from violent content – or (in the case of Instagram) just a few clicks away from impossibly perfect lives that were detrimental to teenagers’ mental wellbeing. As a result of investor pressure, the company put 200 programmers on to reconfigure the algorithm and now releases a quarterly incidents report that monitors how much inappropriate content is picked up and banned before it goes viral. In a clear win, the number of such incidents has jumped from 12 million to 20 million a year.  Next steps Super funds will usually adopt a variety of approaches to responsible investing. So, if you have a lifetime of savings in super, it’s a good idea to understand the approach your particular fund takes.       Source: IOOF

What does climate change mean for your super balance? It’s impossible to ignore the issue of climate change in 2022. And certainly, if you’re invested in the markets, you wouldn’t want to. One reason to pay close attention could be that you hope to invest in line with your beliefs and values, supporting those carbon-reduction and environmentally sustainable practices and solutions that will help make the world a better place for your children and grandchildren. But there’s another reason – one that holds weight from a purely financial perspective. The fact is, rising temperatures, climate-related policies and new technologies are presenting financial risks and financial opportunities. And while some are in the more distant future – such as the fate of ski resorts in a warmer world – others are nearly upon us. Think of the implications of Europe’s ban on new petrol and diesel cars by 2035. Or the rise in drought-tolerant crops in Australia. Avoiding risk and embracing opportunity are critical to the long-term health of your investment portfolio, and also to your super balance. Physical investment risk explained There are two kinds of investment risk when it comes to climate change. The first is the physical risk – the impact more frequent severe weather events can have on businesses and the economy at large. Beyond their capacity for physical destruction, fires and floods can disrupt a company’s vital supply chains. For example, many businesses in the Hawkesbury region of NSW ground to a temporary halt this year, cut off from transport links once more as the Windsor Bridge in Western Sydney was again blocked by flood waters. On a larger scale, the global pandemic has demonstrated just how vulnerable many international businesses are to an unexpected pause in essential supplies. That’s why it’s important for investors to consider the individual companies, whole sectors and entire countries that have the fortitude and adaptability to sidestep such issues – to survive and even thrive. Take Australia’s agricultural industry. There you will find farmers who have leased part of their land to a solar farm, their sheep grazing among the solar panels. On top of providing an alternative income, this approach is also increasing the quality of wool, according to early results. Transition investment risk explained The second kind of climate risk is known as ‘transition risk’. Perhaps more concerning in the short-term, it’s associated with transitioning to renewable forms of energy. This is becoming ever more relevant as many countries, including Australia, sign up to a net-zero emissions target by 2050. With this target just three decades away, the UN-supported Principles for Responsible Investment state that meeting it will require an immediate cessation of new gas and oil exploration, a rapid adoption of renewable energy and a huge shift in production methods and consumption patterns. That’s going to impact a lot of businesses, resulting in some clear winners and losers. For an investor, it will be a matter of assessing the likelihood of a company with an old business model becoming rapidly irrelevant or the very real risk of having stranded assets within an investment portfolio. Those that are wholly dependent on fossil fuels are clearly vulnerable – mining and electric utility companies being notable examples. But businesses and even sectors that are indirectly affected might also be left behind, including those that supply parts and services to these businesses. On the upside, any sector that is part of the large-scale deployment of enabling technologies, materials and services will be well placed to benefit from the rapid change to net zero. So too will be companies that take the lead in adapting to a carbon-constrained economy. Investing in the future In a world that’s rapidly shifting and adapting, there’s no doubt that the power of many will play a huge and vital role in our future success – both as investors and individuals.   Source: IOOF

Scams robbed Australians of more than $2 billion last year Australians lost a record amount of more than $2 billion to scams in 2021, despite government, law enforcement, and the private sector disrupting more scam activity than ever before, the ACCC’s latest Targeting Scams report reveals. The report compiles data from Scamwatch, ReportCyber, major banks and money remitters, and other government agencies, and is based on analysis of more than 560,000 reports. Reported losses to all organisations totalled almost $1.8 billion, but as one-third of victims do not report scams the ACCC estimates actual losses were well over $2 billion. Investment scams were the highest loss category ($701 million) in 2021, followed by payment redirection scams ($227 million), and romance scams ($142 million). “Scam activity continues to increase, and last year a record number of Australians lost a record amount of money,” ACCC Deputy Chair Delia Rickard said. “Scammers are the most opportunistic of all criminals: they pose as charities after a natural disaster, health departments during a pandemic, and love interests every day.” “The true cost of scams is more than a dollar figure as they also cause serious emotional harm to individuals, families, and businesses,” Ms Rickard said.  Based on reports to Scamwatch in 2021, women reported the most scams but men lost more money than women, and men’s losses to investment scams were double women’s losses. In culturally and linguistically diverse communities, women had slightly higher losses than men. People aged 65 and over reported the highest losses, and reported losses steadily increased with age. In 2021, Scamwatch received record levels of reports and losses from Australians that may have been experiencing vulnerability or hardship. People with disability made twice as many reports compared to 2020, and their financial losses increased by 102 per cent to $19.6 million. The number of reports by Indigenous Australians increased by 43 per cent between 2020 and 2021, and reported losses increased by 142 per cent. People from culturally and linguistically diverse communities experienced an 88 per cent increase in losses last year compared to 2020. “The increasing number of reports by people experiencing vulnerability is a very worrying trend. Everyone from government, to banks, and digital platforms needs to do more to address this,” Ms Rickard said. “The ACCC is particularly wanting banks to match payee information in pay anyone transactions. This has been shown to have a real impact in countries that have done so.” ACCC research presented in the report shows that scams are almost ubiquitous in Australia today. Ninety-six per cent of respondents had been exposed to scammers in the previous five years, and 20 per cent had fallen victim. Of those who lost money, 56 per cent were unable to recover any of it.   Source: ACCC Scamwatch

Reviewing your personal insurance policy: when, why and how Insurance works best when you have the right level of protection for your situation and as your life changes, so might your insurance needs. You should consider reviewing your cover whenever your situation changes, like: taking on a mortgage to buy a property having children getting married upsizing or downsizing your home getting a pay rise or take a pay cut starting a business experiencing a change in your health or lifestyle paying off your mortgage stopping supporting financially dependent children joining a new super fund that may provide automatic insurance cover These milestones mark important times to review your insurance, including the amount of cover you have and whether your beneficiaries (those who will receive your insurance in the event of your death) are up to date. How to review your insurance: Step 1: Read your insurance contract Refer to your product disclosure statement (PDS) and read it to fully understand what you’re covered for (death, disability or injury for instance) and compare this against what you’d ideally like to be covered for. Step 2: Check the insurance policy expiry date Check if your insurance policy has an expiry date, and if so, make note of when it is so you’re not caught off guard. It can be a good idea to set yourself a reminder a month or two before it’s due so you can contact your insurance provider ahead of time. Step 3: Know your beneficiaries An insurance beneficiary is the person, or people, who will receive your insurance payout in the event of your death. It’s important to make sure your beneficiaries are up to date so your money ends up in the right hands. Step 4: Check if you have enough insurance To help you work out the right level of insurance cover consider the following questions. How much money would your family have if you were to pass away or become disabled? Consider the amount of money you have in super, savings, shares and other assets, and existing insurance policies as a starting point. How much money would your family need if you were to pass away or become disabled? Consider the size of your mortgage and any other debts you have, as well as other costs such as childcare, education and day-to-day expenses you may be covering. The difference between these figures should provide some guidance on the amount of insurance cover you may want to have. However, you might need to compromise between what you’d like and can afford. Step 5: See if you have any other insurance policies Like many Australians, you may have insurance through super. So, it’s a good idea to check this against other policies you might have outside super. Then compare your cover, check whether you have any insurance double ups – if you have more than one super account with the same type of insurance, you may be paying for more insurance than you need. Something to note on your TSC (temporary salary continuance) insurance, you’ll most likely only be able to claim up to 75% of your pre-disability income, regardless of whether you have TSC cover within multiple super accounts. Step 6: Compare insurance providers If you’re not sure whether you’re getting the best deal, you might want to compare providers. Remember, there are other considerations to take into account aside from reduced premiums, such as what level of cover you get, any exclusions (like the treatment of pre-existing medical conditions) and waiting periods. Also keep in mind if you do cancel your insurance, you might lose access to features and benefits, and you might not be able to sign back up at the same rate or with the same level of ease. It’s also important to disclose your situation to your insurer honestly, or the policy might be invalid if you do need to make a claim. Step 7: Reduce or manage your insurance premiums If affordability is a major concern, speak to your super provider or insurer depending on what type of insurance you hold, to find out how you can manage your premiums without losing your policy. You might be able to: reduce the amount you’re insured for change how often you make a payment (If you don’t hold insurance inside super) adjust your waiting and benefit periods. Source: AMP

Is it time to spring clean your finances? Springtime is a time of renewal, a chance to enjoy the sunshine and the opportunity to rejuvenate the garden. The same also applies to our finances. It’s a good idea to regularly review where your money is invested to ensure your portfolio remains relevant to your needs and expectations. Where your money was invested two or three years ago may no longer be appropriate to your needs, particularly if you have experienced a change in your life circumstances, such as a new job, new mortgage or perhaps you may be thinking of winding down with retirement in mind. In addition to life events, factors beyond our control such as rising interest rates and escalating inflation are placing great pressure on many households’ ability to meet the increasing costs of utilities, groceries and rent or mortgage repayments. When we take time to review our financial resources, outgoings and investments it can present opportunities we may not otherwise have identified. Opportunities that could save you money or lead to better investment returns in the future. It’s why we recommend at least an annual review of your financial circumstances and future outlook. And as we look forward to some warmer, sunnier weather there’s no better time to get started. Contact us today to find out how.

How interest rate rises could affect you With interest rates increasing for the first time in many years, its effects will be felt by all Australians, not just those paying off their homes. In this article we address how interest rate increases may affect you, depending on your circumstances, and possible ways to manage it. Super members and retirees Super members Interest rate rises can affect your super balance depending on how your retirement savings are being invested. As opposed to increasing like a bank account that’s paid a constant interest rate, the value of your super changes in line with the assets of the investment options in which your super is invested. So, it can go up and down. While this can be unsettling, it isn’t necessarily a cause for concern if you’re a long-term investor who’s still some years from retirement. From what we’ve seen in the past, share markets bounce back eventually. Making changes to how your super is invested based on short-term volatility may therefore increase the risk that your super balance fails to meet your retirement goals. Retirees As for retirees, if their retirement savings are invested in defensive assets – such as fixed interest and cash – they may see an improvement in their returns over the longer term. Homeowners and potential homeowners Homeowners Unfortunately for homeowners paying off a variable interest rate loan, they will see an increase in their mortgage repayments when interest rates rise. In an environment where interest rates look to be rising, you may want to consider fixing at least some portion of your mortgage. This may also give you a better handle on your finances each month to budget effectively for your other living expenses. Prospective buyers For people looking to get into the property market, the rate rises may provide greater opportunity as it often slows the growth of property prices. This is due to there being less demand and more supply. It may however, impact your borrowing capacity as you’ll need to show you can repay the loan based on the higher interest rate. Investors Shares   In terms of the impact on share markets, from what we’ve seen in the past, even if investors experience volatility in the short-term, markets eventually recover with time. Rate rises can therefore provide investors with more opportunity to buy while prices are low. Property Rising interest rates can slow down the property market by reducing demand. They can also reduce the borrowing capacity for investors and borrowers. Fixed interest investments For those holding fixed interest investments such as government and corporate bonds, interest rate increases may reduce the value of bonds. This is because the capital value of bonds generally fall as interest rates rise. Australian dollar When interest rates fall, the Australian dollar usually weakens making Australian commodities and exports more affordable for offshore buyers. But generally, when rates rise the Australian dollar strengthens. This is because overseas investors are attracted to a higher yield, driving up demand for Australian currency. Savers Interest rate rises are generally good news for people with savings or using savings to supplement another source of income such as a pension. Term deposits offer higher returns too and can help to reduce volatility in an investment portfolio as they’re less sensitive to interest rate changes. How you can prepare yourself for future rate increases When reviewing your finances, consider building a buffer for further rate increases that might affect your mortgage repayments. It may also be worth looking at consolidating your debts and renegotiating your current interest rates to protect yourself from future increases. When it comes to your super, see if you’re still happy with the investment options you’re invested in. If not, consider speaking with a financial adviser. Their job is to help you with every aspect of your financial lifesavings, insurance, tax, debt—while keeping you on track to achieve your goals.     Source: IOOF