Finance for every life stage

The life journey

We understand that financial goals will shift as each client’s situation changes to serve their current needs. Some needs will be long-term. For instance, saving for retirement takes place across decades. But that doesn’t make shorter goals, such as saving for a deposit on a home, any less challenging. Knowing what financial milestones to target and when, will help finance brokers ensure that they respond to a client’s needs as they arise.

finance-every-life-stage

  Stage 1 – Getting onto the property ladder – purchasing the first home

Housing affordability generally in Australia has become, and will continue to be a significant issue for local property buyers. In particular those looking to buy in the Sydney and Melbourne markets, now two of the least affordable major metropolitan markets in Australia.

While home ownership rates in Australia have been in gradual decline for a few years now, the rate of decline has occurred much faster in younger households (such as the 25-34 year old age bracket). In Melbourne and Sydney the rapid rise in house prices has significantly outstripped income growth, meaning a bigger deposit is required. In our current low-wage growth environment combined with rapidly increasing house prices and low levels of housing on the market, this is easier said than done.

More and more young Australians are relying on the “Bank of Mum & Dad” for their first home deposit and will continue to do so, therefore like any “Bank”, it is important that Mum & Dad’s investment is secured ensuring their generosity does not go up in smoke.

Stage 2 – Getting Hitched

Once upon a time in towns and suburbs across Australia, couples were hitched in local churches and receptions were held in back yards or neighbourhood halls or even local footy clubs. It was a pretty simple affair, for family and a few good friends.

But today’s weddings are more outlandish trends consisting of, just to name a few, tropical island destinations, photo booths, drone photography, celebrity chef-designed menus, trendy food vans, and even photo shoots the day before the nuptials.

There are statistics and surveys that identify the average cost of a wedding in Australia and they can range from anywhere between $36,000 and $65,000.

So how much can a wedding cost?

 wedding-cost

If the Bride and Groom are lucky enough to have either or both sets of parents contributing to the cost, then it’s relatively simple to sit down and determine what funds are available to pay for the convoy of motorbikes and the luxury cars for the bridal party and a plane towing a sign of congratulations.

However, if they are amongst the many Australians who are getting married later in life, they are not relying on their parents – but rather on their disposable incomes and reasonable equity in their homes. They are part of a growing normality in 2016.

 

 Source:  La Trobe Financial

‘The Donald’ – from the Trump Train to the White House

I expect you would have seen the news regarding Donald Trump’s seemingly ‘improbable’ victory in the U.S. Presidential election. Love him or hate him, Trump’s victory is effectively middle America’s retribution against the political establishment.

You may be wondering what on earth happened to financial markets overnight. For example, the U.S. share market looked like it was going to tank, but in the end, closed the day higher. You wouldn’t want to be the person who hit the sell button based on the news at the time.

Trying to ‘time’ such volatile markets only highlights that having an investment strategy based on reacting to news headlines probably isn’t going to help in building long term wealth.

The reaction in markets (and even more so, the media) reminds me of the Brexit vote by the British people to leave the European Union in late June. While there are fundamental differences between the two (i.e. that a presidency is not permanent), some parallels can be drawn – a divisive campaign, an unexpected result and palpable fear about what the future holds.

Like Brexit, it is near impossible to measure what the outcome immediately means for the country’s citizens, let alone for the economy and financial markets. What we can measure however, are valuations in investment markets. Your portfolio is driven by long-term valuation-driven investing, which means we’re not peering into a crystal ball and trying to predict the outcome and implications of elections.

Summary

While it may feel uncomfortable to read the headlines when you pick up the newspaper, the rollercoaster ride in financial markets is nothing new. On this occasion (as in the past), I encourage you to look through the market noise and panic and remain focused on the bigger picture.

As long term, valuation driven investors, with a focus on the preservation of capital, it is my belief that under or overvalued markets will return to their fair value, or what they are really worth, over time.

Negative sentiment and heavy selling, often driven by fears of what might happen, have historically created the best opportunities for value investors. From your current conservative positioning we’ll continue to monitor markets and look to buy quality assets that are ‘on sale’ using your higher levels of cash that are held for times like these.

Your portfolio is well positioned to take advantage of any investment opportunities that may arise from irrational investor behaviour in this period of uncertainty. While we should never wish for markets to crumble, we stand ready to profit from any such opportunities that present themselves.

 

Source:  Morningstar

Have a question about retirement? You’re in good company!

When I speak with people who have either retired, or are planning to retire in the near future, there are some similar themes that emerge when it comes to the financial side of things.

There appears to be five key questions that regularly come up in the conversation.

Will we have enough money to enjoy our retirement?

Many people have an idea about what they would like their retirement to look like – where they would like to live, how they will spend their days, the type of car they would like to drive, and the places they would like to visit.

However not many people have considered just how much their ideal lifestyle will cost.

Sure, the government will pay the age pension, however that does not allow you to have a particularly ‘flamboyant’ lifestyle.

The maximum age pension for a single person is just $22,804 p.a., and for a couple it is $34,382 combined. To put this into context, the poverty line for a single person in Australia is $426 per week (pw), or $22,152 a year.

The latest figures in the Retirement Standard published by the Association of Superannuation Funds of Australia show that a modest retirement lifestyle costs a single person $23,767 per annum (pa), while the cost for a couple is $34,216. By contrast, a single person wishing to enjoy a comfortable retirement lifestyle will spend just on $43,000 – when a couple will be shelling out close to $60,000.

Will I ever be able to retire?

For those wishing to maintain more than a basic retirement lifestyle, some form of continued participation in the workforce after ‘normal’ retirement age is a decision some will be willing to consider in order to fulfil their retirement dreams.

However, undertaking work that generates an income in retirement doesn’t necessarily mean working the 9-to-5 grind from Monday to Friday. Work may be part-time, casual or seasonal. For some it may even mean self-employment – taking a hobby or a skill and turning it into a small business.

Retirement becomes a trade-off. If we have dreams of a certain lifestyle but don’t have the means to support it, it will either be a case of trading down our lifestyle – nobody wants to do that – or find a way to afford it.

In addition to providing a source of income – ongoing workplace participation provides a social outlet (and also helps to keep individuals mentally in check!).

What about the increasing costs of health care as we age?

It is a fact that as we age; we become more reliant on the health care system, and that all costs money.

For those who are eligible for a part or full age pension (approximately 2.5 million Australians) the Pensioner Concession Card provides access to a range of services including bulk-billed doctor’s visits, access to hearing services, reduced cost of pharmaceutical items, and a range of other concessions.

Even if you don’t qualify to receive an age pension, self-funded retirees of age pension age may be eligible to receive a Commonwealth Seniors Health Card which can also provide concessions for health care and pharmaceutical items.

We need to understand what benefits we are entitled to. Sadly, many Australians are missing out on accessing benefits and services that are freely available simply because they are unaware of their entitlements.

What if I run out of money?

This is a very real concern for many people as we don’t know just how long we are going to live, and that makes planning very difficult.

With life expectancy in Australia steadily increasing, retirement is likely to span 25 to 30 years for many. With the money we do have it must last a very long time.

Recent research has found that many Australians are actually under spending in retirement so as to ensure the money lasts.

Managing the retirement budget requires some careful planning. Some very good advice is available to assist in that process.

Even if you were to run out of money, the age pension is there to provide a safety net. Most Australians will be entitled to receive the age pension at some point during their retirement.

The government rightly expects people to use their own financial resources first, before drawing on the public purse. As a result, and as a consequence of an ageing population, we can expect to see government policy being tightened more to restrict the age pension, and other government welfare payments to those truly in need.

And that might include raising the age of entitlement at which we can begin receiving the age pension.

Will I be able to leave a legacy?

Being able to leave a legacy to children and grandchildren is something that many people earnestly aspire to. But, at what cost?

There are many stories of people living in poverty simply so they preserve their modest savings to pass on to the next generation who, are often living a far more luxurious lifestyle than their parents ever imagined.

While being able to leave something for the next generation is a noble ideal, I am sure that a significantly large proportion of potential beneficiaries would prefer to see their parents enjoy their retirement years.

Leaving a legacy would be wonderful ideal, but would your kids want you living on baked beans for the rest of your life? There has to be some balance.

Enjoying a comfortable lifestyle, and being able to afford it, is a very fine balancing act.

There is no simple answer, but perhaps the lesson is to start planning as early as possible, understand what entitlements are available, and seek the appropriate advice.

 

Source:  Peter Kelly – Centrepoint Alliance

Aged Care Alternatives

What is Agedcare Alternatives?

Agedcare Alternatives is a free information service that helps older people, their carers and families, to find an understand information about aged care services.

Agedcare Alternatives offers you a personalised, face to face consultation at our centre, or answers your enquiries via telephone or email.

There is no fee charged for this service.

 

What can we help you with?

Agedcare Alternatives can provide you with information regarding a wide range of services offered by aged care organisations, including:

  • In-home care and support
  • Therapy services
  • Respite for carers
  • Retirement living
  • Residential care
  • And much, much more

 

“My Aged Care”

Agedcare Alternatives can provide information about “My Aged Care”, the Commonwealth Government entry point to aged care services.

We have volunteer Options Guides that can assist you, when required, to access the My Aged Care contact centre. We can support you through the registration process and initial screening interview, enabling you to access more support services.

 

Volunteer ‘Option Guides’

Agedcare Alternatives is supported by fully trained volunteer ‘Options Guides’, who are available to help people with:

  • Access and understand information about aged care services
  • Identify their options, choices and the various pathways available
  • Link to My Aged Care if this is person’s preference

 

How you can access Agedcare Alternatives?

Phone us on 8271 3888, email info@agedcarealternatives.net.au, or visit our information centre at 1/445 Fullarton Road, Highgate.

Our offices have easy access, plenty of close car parking and a friendly and comfortable environment.

We also provide outreach services at a number of locations. Call us to find out if we will be in an area near you.

Feel free to visit our website www.agedcarealternatives.net.au

 

 

Source:  Agedcare Alternatives