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If you want to ensure you’re getting the right amount of super and not paying more in tax than you have to, this list is for you. What you need to know Your bank account details and tax file number You’ll need to give your bank account details to your employer if you want to get paid, so this’ll no doubt be high on your list of things to do. On top of that, you’ll need to provide your tax file number, because if you don’t, you may end up paying a lot more tax on the income you earn. If you need a tax file number, you can apply for one through the Australian Taxation Office (ATO) What super fund you’d like to choose Super is money set aside during your working life to support you in retirement. Further down, we’ll explain how to make sure you’re getting the right amount. Meanwhile, you’ll typically have a choice between your employer’s fund or a fund you select yourself. There are a number of things you’ll want to consider too, such as what fees you might pay, how the fund performs and your investment preferences, which could see you earn more or less money. In addition, super funds generally offer a few types of insurance cover, which you could pay for using your super money, so it’s worth looking into whether this is something you want now or possibly down the track. What tax you’re going to pay on the income you earn You mightn’t be pleased, but you’ll have to pay income tax on every dollar over $18,200 you earn. On top of that, many taxpayers are also charged a Medicare levy of 2%. As for how much tax you’ll pay, this will depend on how much you earn. If you’re lucky enough to receive an annual bonus, you’ll also pay tax on this. What tax you can claim back when tax time rolls around If you spend some of your own money on work-related expenses (uniforms, safety equipment, or education) there is some good news. At the end of the financial year, you may be able to claim some of this money back when you do your tax return. You’ll need to have a record of these expenses, such as receipts, but in some instances if the total amount you’re claiming is $300 or less, you may not need receipts. What’s in your contract and what you’re entitled to An employment contract is an agreement between you and your employer that sets out the terms and conditions of your employment. It’s a good idea to know what’s in your contract should questions ever arise around what you’re actually entitled to. Regardless of whether you sign something or not, your contract cannot provide for less than the legal minimum, set out in Australia’s National Employment Standards. While National Employment Standards apply to all employees covered by the national workplace relations system, only certain entitlements will apply to casual employees. How to read your payslip so you’re across potential errors Payslips have to cover details of your pay for each pay period. Below is a list of what a pay slip typically includes: Your before-tax pay (also known as gross pay) Your after-tax or take-home pay (also known as net pay) What amount of money you’ve paid in tax this financial year The amount of super your employer has put into your super fund HELP/HECS debt repayments (if you have an education loan). Meanwhile, mistakes can happen, so if anything doesn’t look right, chat to your employer first and if you’ve raised an issue you’re not satisfied with, you can also contact the Fair Work Ombudsman. How much super is coming out of your pay package and if it’s correct If you’re earning over $450 (before tax) a month, no less than 10% of your before-tax salary should generally be going into your super under the Superannuation Guarantee scheme. If you’re under 18, you’ll have to be working a minimum of 30 hours per week to qualify, and special rules may apply for certain job types and contractors. For this reason, it’s important you check your payslip and if something doesn’t look right, speak to your boss as soon as possible, or contact the ATO. How to budget and save so you can get what you want in life Budgeting may sound boring, but jotting down what money is coming in, what cash is required for the mandatory stuff and how much cash might be left over for your social life (or saving), could make a massive difference to what you do in life. If you’re paying off debts, or on a more exciting note, want to buy a car or go on a holiday, getting a grip on your cash habits early on could see you have a lot more fun!   Source: AMP

Retirement is an exciting time. It’s the long-awaited reward for a lifetime of work and, if you have the right plans in place, the chance to pursue your dreams free from money worries and concerns. Retirement means different things to different people. For some, it may mean traveling the world, or pursuing a previously neglected passion. While for others, it could mean spending more time with family or friends, volunteering or starting a business. Regardless of what retirement looks like to you, we believe the key to a successful retirement is careful planning. One way to get started is to visualize your ideal retirement and then consider the plans you’ll need in place to make it a reality. Making smart decisions about your money and investments while you are still working and earning an income is a critical success factor. As retirement planning specialists, we can help you to map out a retirement plan that aims to make your future goals a reality while also ensuring you can meet your current financial obligations and commitments today. We can also make sure you make the most of any government incentives along the way and any government payments you may be entitled to once you are happily retired. To find out more, please get in touch.

If there’s one thing the COVID-19 pandemic has shown us, it’s that the unexpected can happen at any time. And, while there are many things in life you can’t control, you can make sure you have enough funds put aside to help you get by. Here’s how to build your emergency savings, even on a budget. As anyone who lost their job overnight due to COVID-19 will tell you, it pays to have cash stashed away for a rainy day. An emergency can happen at any time, for any number of reasons. If it does, your emergency fund will provide a safety net to cover your living expenses until you can get back on your feet. It’s best not to turn to a credit card to get you through an emergency, as credit doesn’t replace your income. It just creates a debt that you’ll need to start repaying almost straight away, whether or not your income is back to normal. Anyone can start an emergency savings fund, even if you’re not a regular saver. Here’s how to build up your emergency savings, the smart way. Set a goal You’ll need to keep enough cash in your emergency fund to cover your living expenses for at least three to six months. For example, if your living expenses come to $3000 a month, you’ll need to keep at least $12,000 in your emergency fund. Plan how you’ll get there Next, think about a realistic timeline for achieving your goal. How long it will take depends on how much extra cash you’re able to put aside each week or month. For example, say you wanted to build your emergency fund within one year. If you needed $12,000 in your fund, that means you’d need to contribute $1000 a month, or roughly $230 a week. Does the figure seem realistic? If not, you can spread the contributions out over a longer time, or find ways to increase your savings. Finding extra pennies If money is tight, you’ll need to go over your budget with a fine tooth comb. Find every possible place where you could tighten up your spending and divert the cash to your emergency fund. Think about cancelling subscriptions you don’t use, or try negotiating a better deal on your services. Cut back on eating out for a while, or don’t buy any new clothes for a few months. Be ruthless to slash your unnecessary spending, so you can put the money towards your emergency fund. Save a percentage of your income Another option is to divert a set percentage of your income into your emergency savings, once your non-discretionary expenses have come out. Whatever you have leftover is your spending money for the month. For example, if you have $150 a week left over after expenses, you could contribute 30 per cent ($50) to your emergency savings fund. Reaching your goal Once you reach your savings goal, and you’re comfortable you can keep yourself afloat for three to six months, you can hit pause on your contributions. At this stage, you might want to divert the money you’ve been putting into your emergency savings into another type of savings, or even start an investment portfolio. Where to stash your emergency savings You want to keep your emergency fund in a separate online savings account that isn’t accessible via a bank card or credit card. Out of sight is out of mind, so keeping it at a different bank to your regular transaction account is even better. Don’t be tempted to invest your emergency savings. Investments by their nature increase and decrease in value over time. The last thing you want is to find yourself in a situation where you’re forced to sell down your investment at a loss, just so you can get access to your emergency funds. Similarly, cash is king when it comes to emergency savings. If you need quick access to the money, it’s easiest to withdraw cash from your bank account. How to rebuild after an emergency If a situation arises where you need to access your emergency savings, go for it, that’s what they’re there for. Once the emergency has passed, and you have an income to rely upon, you can simply top up the fund again and continue along your way. Source: Money and Life

With Aussies living longer than ever, you could be spending many happy years in retirement. But did you know that to maintain your standard of living, you’ll need around two-thirds of your pre-retirement income, for the duration of your retirement? It’s never too early or too late to start taking an interest in your super. Here’s what to focus on at each stage of life. In your 20s Many people join the workforce for real in their early 20s, making this a great time to get the super fundamentals in place. Here are the steps to take: Choose a superannuation fund At this age, there are many years ahead before you’re able to access your super (generally from age 65). Such a long investment timeline means you can consider taking on more risk, as your investments will have more time to recover from any market ups and downs. There’s lots to consider when choosing a super fund, and the level of risk you’re happy to accept is one factor. You’ll also need to consider what the fees are, and perhaps you’d even like to know what your money is being invested in. Consolidating your super If you’ve worked several part time or casual jobs in your teens and early twenties, chances are you may already have more than one superannuation fund set up in your name. Finding and consolidating all of your super into one account is fast and easy using the ATO’s online services. Simply login to your MyGov account, choose ‘ATO’ from the service menu (you’ll need to link it if you haven’t already), and then, once on the ATO site, select ‘Super’. Adding to your super With so many years to go before you retire, it’s worth salary sacrificing a little extra, and adding any windfalls like a bonus or tax return, into your super. The power of compound interest means funds invested in your 20s will be worth much more by the time you retire. In your 30s This is the decade when you’ll really start to see your superannuation take off. As your income rises, so too do your employer sponsored super contributions. This can work wonders for your super balance, especially if you’re able to salary sacrifice a little extra into your super each month. It’s a good time to conduct a super health check and review your strategy to make sure it’s working for you. Compare the performance of your super fund, and check whether you’re on track to having enough super to retire on. You might also like to review your investments with a financial advisor and put a financial plan in place. Personal insurance becomes much more important at this age, as your responsibilities grow. Many of life’s major events happen in your 30s, such as marriage, children and buying your first home! In your 40s With retirement starting to feel more real, your 40s are a good time to focus on paying down debt and ensuring your super balance is on track. Look into how much super you’ll need to retire and check whether you’re going to reach that figure. If not, consider making extra payments, and review your investment strategy with a professional. Your earnings are likely to peak sometime between 45 – 54 years, so you’ll have more income than ever. However, this is often matched by higher expenses (think kids, schooling and a mortgage) as well as unexpected expenses, like health issues and even divorce. So aim to live within your means and put aside a little extra for retirement. Remember, if you’ve taken time out of the workforce to care for children or family, you’ll need to be even more active with your superannuation once you return to work. The good news is you can make up the difference by salary sacrificing and making lump sum contributions to top up your super in later years. If you have any questions at all about preparing for retirement, it really is worth seeking advice from a professional.   Source: FPA Money & Life  

Spending more than what you intended on is a familiar scenario for many people entertaining kids, whether that’s at the movies (you swear you’re bringing your own Maltesers and drink next time), or sporting events (where you often fork out more on hot chips than you do on the tickets). While you know taking pre-packed meals, catching different modes of public transport and checking out free events in your local area are all good ways to cut back on spending, there are also a number of inexpensive ways you could have just as much fun at home at the fraction of the cost. Check out these family activities to do on a budget. Make a night in as fun as a night out The one thing a lot of people miss when it comes to a good family night in is that the kids’ interests are just as important as your own. That’s because your level of engagement will affect theirs, so if you’re going to fall asleep watching Frozen for the 67th time, maybe find something else you can do. Here are some ideas that hopefully everyone in the family can enjoy. Set up a dinner or dessert station The wonderful thing about food is most people love it – whether it’s a fat juicy steak or some kind of vegetarian meal with quinoa – eating is something the majority of us like doing together. So, if you want to keep the kids entertained, while helping them learn a new skill and reaping the culinary benefits at the same time, you could: Help the kids heat up some pizza bases in the oven and set up a station along the kitchen bench with different sauces, cheeses and healthy toppings, so everyone can make their own Help the kids make a giant pancake stack ahead of Saturday night footy (or whatever you’re into) – and get them to add food colouring so you can incorporate your team colours Help the kids make a barbecue delights metre board with a selection of home-made sausages and rissoles, with a variety of roasted potatoes and veggies to have on the side. Create your own gold class experience Line up a selection of healthy snacks, treats and popcorn across the table, and give everyone a cardboard cup so they can make their own munchies mix before the movie starts. Then throw as many pillows on and around the couch as possible, let everyone take their spots and turn the lights down. Have an outback adventure night If you’ve got a tent, pitch it in the backyard for the night and get the kids to help you pack a picnic to have outside as an early dinner. You don’t have to drive anywhere, book in, or share amenities. Meanwhile, if you don’t have access to a backyard, make your own lounge room retreat inside out of pillows, blankets and cushions. And, if you can’t roast marshmallows over a fire you can definitely add them to a hot chocolate instead. Host a no-instructions gaming event No one’s giving board games a bad rap, but they aren’t for everyone, particularly depending on how well people can read the instructions, follow the rules and remember them. A multi-player sports or action video game that someone is familiar with may be preferable. And, if you happen to have a mate with an older system, it might also be a chance to dust off some classics, like Die Hard Trilogy on PS1 or the original Mario Cart on Nintendo. If you do want to do something a little more traditional though, such as trivia or celebrity heads, check out your mobile app store as there are a variety of apps to make game time at home a lot simpler. Sing us a song, you’re the piano man Something else that may be just as popular as food when you’re trying to entertain and ensure everyone has a good time, is music. You could sit around the table making fruit skewers at the same time as you put a play list of family favourites together, or if you’ve got a few performers in the midst, you could pour a few red cordials and put on an in-house karaoke night. Buy a strobe light, you’re one step away from a dance party. Final thoughts A night in definitely has the potential to be just as good as a night out, particularly if you’re trying to cut back on costs. Not only that, you’ve got more time to relax and enjoy each other’s company as you can avoid the traffic, long queues, jacked-up food and beverage prices, and all the impulse buys you may fall victim too as you stroll via shopping malls, stalls and food stands. In the meantime, hopefully you’ve picked up a few good ideas for your next night in that you can enjoy as much as the kids.   Source: AMP News & Insights.

If you have been together for a while though or are edging on making a big financial decision together, having the money talk could make a big difference to whether you go the distance. Understandably, it may not be the easiest topic to broach, so here’s a bit of a checklist as to what you might discuss, depending on what you have planned going forward. Your views on cash management Talk to your partner about your views around spending and saving. Kicking off with a light-hearted conversation, without judgement, can often be a good place to start. You might even want to share some examples of things in the past that may have influenced your current views and behaviours. For instance, your last partner may have spent all their money on beer and takeaway food, while you were often left to cover their share of the bills. Sneaky spending habits if you have any More than one in four Aussies has lied or been lied to about money by a partner, with hidden debt and secret spending two common contributing factors. With that in mind, if there are a couple of common transactions you make that you know you haven’t always been forthcoming about (how many shopping purchases are you really hiding in the car or closet?), now may be a good time to get that out in the open. Your income, expenses, assets and debts Your financial situation is an important one to talk about because even if you’re both earning a decent income (and potentially have some assets behind you), big expenses and potentially thousands of dollars of debt between you may impact any plans you have in the short and longer term. The average credit card balance for instance is around $2,876 in Australia, not taking into account other loans people may have taken out, such as car loans, student loans and through buy now pay later services. Whether you’ve been paying your bills on time If you’ve got a credit card, personal loan, mobile phone plan or utility account, there’s more than likely a credit reporting agency out there that has a file with your name on it. This file, also known as a credit report, will summarise how good you’ve been at paying your bills and making your repayments on time. If you have a chequered history, your report mightn’t read particularly well, and this could affect your ability to borrow money for a range of things, which may include a house for the two of you. What’s on your bucket list now and down the track If one of you has plans to travel, buy property, get married or have children and the other doesn’t, this could raise issues (or perhaps opportunities) for further discussion. What a joint budget and savings plan might look like Committing to something that you both think is fair could go a really long way here. If you’re not sure where to start, a good first step might be drawing up what money is coming in, what money is needed for the mandatory stuff and what may be left over for your social life and savings. Your job security and whether you see a change on the cards If you’re on the verge of quitting your job or are aware of redundancies happening at work, this is probably worth flagging with your partner as well. Your contingency plan if one of you isn’t earning an income Approximately one in five Aussies has no emergency savings to keep them afloat when faced with unforeseen circumstances, so it’s probably worth talking about whether either of you have an emergency stash of cash, personal insurance, or anything that may help you get by through a tough period. If you don’t have a plan b, now might be the time to talk about how you can create one together. Plus, it may reduce the need to rely on high interest borrowing options, such as credit cards or payday loans, which can often be an expensive way to borrow. How you’ll divide costs and or repayments You may decide to tackle this 50/50 or proportionate to each other’s income. That is something you’ll want to nut out before you take on a big financial commitment together, like renting a property together for example. Potential risks that may arise if you merge your money If your partner defaults on a repayment, you may be liable for the amount owing, even if your relationship ends. On top of that, ignorance isn’t an excuse, so if you sign papers you don’t understand, you’re no less liable for any loans or guarantees you may have signed off on. With that in mind, it’s important both of you understand your responsibilities and consider whether you want to put anything you might agree to in writing. Source: AMP

Starting a family or growing one can be exciting, but it can also be expensive. Here are some ways to prepare yourself financially. 1. Make sure you’re across medical expenses Medical costs might include ultrasounds, birthing classes, special tests, vaccinations, and check-ups, so it’s worth jotting these down, so you’ve got an idea of everything that could be coming up. You’ll also want to consider whether you want to have your baby in a public or private hospital, as there may be out-of-pocket expenses with either option, even if you have Medicare or private health insurance. Many private health funds also have waiting periods before you can claim on pregnancy and birth-related costs, so if this is something you’re considering, you’ll want to look into this early. Meanwhile, if you want your child to be covered under a health insurance policy, you may need to do some investigating, as a single or couple policy may need to be extended to a family policy. Consider other upfront and ongoing costs There are things you may need to buy before the baby arrives, in addition to other things you might need on an ongoing basis. This might include things like: car seat and stroller cot and mattress change table and high chair maternity clothes, baby clothes and baby bag food, nappies, bottles and formula childcare Research your employer entitlements Many organisations have their own parental leave policies, which may include various paid and unpaid parental leave entitlements for new mothers and fathers. If you’re unsure, speak to your employer to see if there is a scheme in place and find out what they offer as part of this. At the same time, you may also want to find out if you’re eligible for any annual leave, long-service leave, or regular unpaid leave, if you’re planning to take time off work. When you’re speaking to your employer, it may also be helpful to check the company policy around superannuation. Super generally isn’t paid when you’re on parental leave, so you might want to consider whether you’ll make additional contributions while you’re still working. Explore the government’s paid parental leave scheme With the paid parental leave scheme, primary carers of newborn or adopted children can apply for parental leave payments from the government, which provides the national minimum wage for up to 18 weeks. These payments can be received in addition to any payments your employer pays under its own parental leave policy, if you’re eligible. You can also apply up to three months before your child’s due date, which may help you to better prepare for your time off, as you’ll be able to choose when your paid parental leave period starts. For instance, you may choose to receive this money after you’ve received any employer payments you may be eligible for. Investigate other government assistance options Beyond the paid parental leave scheme, there’s a range of additional support options for families. You may be entitled to other assistance such as Dad and Partner Pay, which provides up to two weeks of government-funded pay, or the Family Tax Benefit, which helps with the cost of raising children. The Child Care Subsidy also provides assistance with childcare fees for eligible families. From 7 March 2022, families with more than one child aged five or under (in childcare) will also get a higher subsidy for their second child and younger children. For more information about payments and services to help with the cost of raising children, check out the Services Australia website. You may also be interested in whether you’re eligible for school subsidies. Create a family budget with the information you’ve collected After you’ve considered the expenses, as well as any entitlements you may be eligible for and how long you may take off work, it’s worth drawing up a budget and starting to put some money aside. When you do this, take into account any existing day-to-day expenses you might have, such as utility bills, groceries, petrol, insurance, rent or home loan repayments, and other debts you might be paying off. You may also want to factor in any additional sources of income (such as investments), and whether you have family that may be able to assist in helping you minimise expenses. For instance, they may provide babysitting for your children. Prioritise your existing debts if you can If you have existing debts, like credit cards, personal loans or a home loan, you may want to consider how you can reduce these debts as much as possible before the baby arrives, particularly as you may encounter other unexpected expenses along the way. Consider your will and broader estate plan If a little person is about to enter your life, who you want to take care of, thinking about your estate plan may also make good sense, noting this involves more than just drawing up a will. It’ll include decisions around who will look after you, and your child, if you’re ever in a situation where you can’t make decisions for yourself, as well as documenting how you want your assets (which may include insurance and super) to be distributed should you pass away. Remember that money isn’t everything If it’s your first baby, while it may be tempting to invest in the most expensive pram, baby clothes, or day care centre for your little one, it’s the love for your child, not the amount you spend on them, that matters. Source: AMP

This year’s Federal Budget covers a range of measures aiming to reduce the pressure from increased costs of living and help more people into homes. Note: These changes are proposals only and may or may not be made law. Personal taxation Cost of living tax offset: The Low and Middle Income Tax Offset (LMITO) will increase, providing an additional $420 to reduce tax payable for eligible taxpayers in the 2021/22 financial year. This offset is non-refundable and available to those earning up to $126,000 per annum. However, individuals earning over $126,000 per annum will not benefit. Further, LMITO was not extended, meaning it will not apply for the 2022/23 or later financial years. Halving of fuel excise: For six months from 12:01am 30 March 2022, the excise on fuel and petroleum-based products will be halved. Whilst not a direct tax, the expectation is this should result in lower fuel prices during this period. Half the current excise on fuel and diesel is 22.1 cents per litre. Indexation of the Medicare Levy thresholds: The Medicare Levy low-income thresholds are indexed each year. From 1 July 2021, the thresholds are expected to be as follows: For singles $23,365 (increased from $23,226) For families $39,402 (increased from $39,167) plus $3,619 per dependent (increased from $3,597) For single seniors and pensioners $36,925 (increased from $36,705) For family seniors and pensioners $51,401 (increased from $51,094) plus $3,619 per dependent (increased from $3,597) Home ownership Affordable housing measures: The First Home Loan Deposit Scheme and Family Home Guarantee allow eligible individuals to purchase a home with as little as a 2% deposit, and the Government will guarantee the loan removing the need for lenders mortgage insurance. Currently, guarantees are limited to 10,000 per year. From 1 July 2022, changes to the existing home guarantee schemes will be made by allocating a total of 50,000 guarantees as follows: 35,000 places under the First Home Guarantee (formerly the First Home Loan Deposit Scheme) 5,000 places under the Family Home Guarantee targeting single parents regardless of any previous home ownership 10,000 places under a new Regional Home Guarantee targeting individuals who have not owned a home in five years who relocate to a regional location and can supply a 5% deposit. The Family Home Guarantee and Regional Home Guarantee places are provided until 30 June 2025, whilst the 35,000 First Home Guarantee places are proposed to continue indefinitely. Business taxation Small business training deductions: The Government is proposing to allow a deduction of 120% of eligible costs incurred in training staff in small businesses (ie businesses with an aggregated annual turnover less than $50 million). Generally, training must be delivered by an external registered training organisation in Australia and is only deductible if it relates to employees. For example, if an employer pays an external training company $5,000 to deliver eligible training to its employees, the employer can deduct $6,000 in its tax return. This measure is proposed to apply from 29 March 2022 to 30 June 2024. Small business technology deductions: Small businesses may be eligible to deduct up to 120% of eligible business costs which support the business adopting digital technologies, such as cloud services or cyber security systems. Eligible expenditure will be capped at $100,000 per financial year and the measure is expected to operate from 29 March 2022 to 30 June 2023. Changes to Pay As You Go (PAYG) instalments: The Government proposes to allow PAYG instalments for businesses to be calculated from approved software systems, based on current financial performance from 1 January 2024, subject to industry feedback. This aims to calculate more accurately withholding rather than having businesses wait until they have lodged a tax return to receive a refund of over-withheld amounts. Increase to JobTrainer: The Government has proposed an additional 15,000 places in their JobTrainer program, which provides free or subsidised vocational training in select industries such as aged care and disability support. Superannuation Continuation of the reduced minimum pension drawdown: The budget proposes to extend the minimum amount that needs to be drawn from account-based income streams to the 2022/23 financial year. This means individuals with account-based pensions or term allocated pensions will be required to draw less from their savings, in line with the current year minimums. Social Security Cost of living payment: Eligible social security recipients resident in Australia will receive a one-off $250 payment in April 2022. Eligible payments include the Age Pension, Disability Support Pension, Carer Payment and Allowance, JobSeeker Payment (and equivalent DVA payments), as well as individuals holding a Pensioner Concession Card or Commonwealth Seniors Health Card. Like previous relief, the payments will not be means tested and will be tax-free. Individuals will only receive one payment even if they receive multiple qualifying benefits. Paid parental leave changes: Parental leave pay is proposed to be combined with Dad and Partner Pay resulting in a single scheme of up to 20 weeks leave which can be shared between parents as they see fit. This leave can be taken at any time within two years of birth or adoption. The new payment is proposed to be subject to an additional household income test designed to increase eligibility. Single parents are also expected to be able to access an additional two weeks of leave. Lowering the Pharmaceutical Benefits Scheme (PBS) safety net: From 1 July 2022, the Government proposes the PBS safety net to come into effect earlier, with 12 fewer scripts being required for concessional patients and 2 fewer scripts for general patients each calendar year before the safety net activates. Once within the safety net, concessional patients do not pay for PBS medicines whilst general patients only pay the concessional co-payment rate (currently $6.80 per script). Source: IOOF

Being more engaged with your super investments could help you make the most of the time you have to grow your wealth for retirement – and navigate share market falls. Depending on your life stage, it can be helpful to remember that you’ll likely have time to ride out changeable market conditions to generate investment returns over the long term. Markets regularly experience volatility for various reasons as we’ve already seen this year, with inflation climbing and expectations rising that the RBA will lift interest rates in Australia and that the Federal Reserve will start to increase interest rates in the US. History shows us that markets do recover from disruptive influences – for example, the Global Financial Crisis. In the decade following the crisis, global share markets recovered and delivered returns of roughly 10% per annum to investors. Last year, markets also experienced volatility due to the Coronavirus, concerns about interest rates and geopolitics. However, investors in share markets were rewarded over the year as markets recovered from the steep declines experienced in early 2020 – with Australian and global shares delivering exceptionally strong returns of 17.5% and 25.8% respectively in 2021. Market volatility can present investors with investment opportunities when maintaining a long-term view of investing. For example, buying into share markets when they’re down (and cheaper) could mean the value of those investments rises when markets recover over time. But this doesn’t mean you should buy anything and everything that’s on sale. A company’s share price may be falling because of other factors (such as a management change) that could erode its long-term potential. It’s important to consider these factors and to be confident that a company’s value will rise in the future. At the same time, it can still be sensible to continue budgeting and saving for a rainy day – particularly in the current environment, where regular day-to-day life may be disrupted. Having a separate savings fund can offer some peace of mind in uncertain times, especially when our day-to-day lives can be impacted at short notice and as we have seen over the last two years. It’s generally recommended that super fund members stick with their long-term strategy and ride out short-term volatility in financial markets. But while investing for super can often require a long-term view, it isn’t a set-and-forget scheme. Retirement may feel like a long time away if you’re navigating and building your finances. Being more engaged with your fund now – even in simple ways – could be helpful later on in life when you do reach retirement. Things you can do include: regularly reading fund updates staying up-to-date on the latest market developments regularly reviewing your super fund to ensure it aligns with your unique risk profile and financial objectives as your personal circumstances change. Source: Colonial First State

The days when ‘green’ investors were the ones who cycled to see their adviser and carried home their investment brochures in a hemp bag are long gone (if they ever existed). Responsible Investing is now the preferred approach for a growing base of investors. As of January 2021, 30% of all professionally managed assets – owned by pension, superannuation and managed funds across the globe – used some combination of Environment, Social and Governance (ESG) or Responsible Investing criteria. That’s around $30 trillion dollars’ worth of assets. Behaving responsibly How did we get here? As often occurs with major trends, there’s a mix of forces pulling in the same direction. Institutions. Many of the world’s biggest managers of money understand the power and attraction of Responsible Investing. That includes the world’s largest for-profit investment management companies, plus huge pension fund managers like California Public Employees’ Retirement System (CALPERS) and the Japanese Government Pension Fund and major charitable foundations like the Ford or Rockefeller Foundations. Generational change. Today, many young people want to invest in a way that aligns with their values. With an estimated $2.6 trillion set to transfer across the generations in Australia in the next 20 years it’s likely a large proportion of that money will be invested responsibly. Sheer weight of money will encourage investment houses to offer a better and wider range of Responsible Investing options. Returns. Perhaps most importantly, as Responsible Investing evolves, there’s more evidence that you don’t need to sacrifice returns. And that’s important. A Perpetual survey of advised High Net Worth investors found 31% wanted their adviser to avoid all companies that do harm to the environment or society. The same amount wanted to invest in the companies that simply generated the best return. A Complex Responsibility? The tide of history – and money – is moving towards Responsible Investing, but attitudes to sustainability and ESG issues are complex. How to invest responsibly – and successfully Now that Responsible Investing is entrenched, the question for many investors is not “should I do it” – but “how do I do it?” Over the past five years we’ve seen a trend away from funds that screen out companies with undesirable features towards an integrated – and active – approach where investment managers consider environmental, social and governance (ESG) factors alongside assessments of the company’s finances, market position and management. A key to this approach is ‘materiality’ – making sure you invest in companies focused on the ESG issues that matter to their business (for example water management for a mining company) rather than just trying to “do good.” Some argue that the Responsible Investing space is an area where fund manager skill can make a real difference. “We think an active approach is more effective in the Responsible Investing segment,” says Sarah Fox, a Senior Research Analyst in Perpetual Private’s investment management team. “For a start, an active approach means we can better manage risk and diversification. More importantly, it’s reductive to focus just on excluding companies that don’t meet our ESG criteria. We’d rather make forward-looking judgements and focus on companies that are changing their approach or innovating and investing in Research & Development to build products and services that have a socially positive effect. As those initiatives gain traction – and are recognised by the market – they can turn into investment returns that really make a difference for our clients.” “The key point for our investors is that the fund managers that own these companies are at the very least generating a market return, but the goal is to beat the market over the long term,” says Sarah Fox. “So we are happy to invest in these funds – not just because they are ESG.” Source: Perpetual