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Shift to Shares

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ShiftToSharesOver the last couple of years, a lot of Australians have been wary of risk when investing and have invested in cash or term deposits. But the latest figures show that shares have outperformed cash and property, so is it time to think about different investment options?

 

The Reserve Bank of Australia has reduced the official interest rate several times and it is now as low as it was in 2008 at the height of the GFC when businesses such as Lehman Brothers were collapsing. Mortgage holders have been rejoicing, hoping that the banks will pass on some of the interest rate cuts.

Meanwhile, investors with significant cash or term deposit holdings have been experiencing lower returns.

CASH AND TERM DEPOSITS

With the interest rates so low, six month term deposit rate are now sitting at less than 4 per cent. This has fallen significantly from the high of 2008 when they were around 9 per cent. This means that people who are relying on cash or term deposits to provide income or returns have not had as much discretionary income as they would have liked. The predictions are that interest rates will continue to fall, and if this happens, returns from cash and term deposits are going to continue to fall as well.

PROPERTY

Over the last couple of decades, property was a significant way to generate great returns, but after the GFC confidence fell and there were a lot of forced sales. Over the last 10 years, property has only returned 5.5 per cent*. One of the major deterrents right now is that with the taxes and levies on purchasing a property, the cost of buying is around 6 per cent of the purchase price*. Some experts are predicting property growth to slow even more going forward, saying that the late 90s boom was a once in a lifetime high.

SHARES

Over the last five years the share market has been pretty low, it is down a third from their highs in 2007, but when you look at the ten year return rate of shares it has returned 8.7 per cent, which looks pretty good.*

SO WHAT SHOULD YOU DO?

The key is to look at diversifying across cash, shares and property. You need to understand the historical information, your appetite for risk and where you are in the investment cycle. By balancing long and short term investments with your objectives you will be on the path to success.

We would love to talk to you about the different options to find one that suits your needs.

Source : IOOF

* http://www.news.com.au/money/investing/shares-still-beat-property-and-cash-analysis-finds/story-e6frfmdr-1226545416014

Financial Planning is about much more than retirement

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retirement-3Many people may think financial planning is all about retirement. It’s not. Financial planning is about making the most of what you have – at every stage in life. Whether it’s investing, superannuation or minimising tax; whatever your stage in life, financial planning can make a difference.

 

If you are interested in investing, there are several things you need to consider. For example, how long do you have to invest and how comfortable are you with fluctuations in the value of your investments? We can help you determine your time horizon and risk profile and then recommend the most suitable type of investments to help you realise your goals.

 

What about your super? Is it working as hard as you are? Your risk profile can also be applied to your superannuation investments. It’s a long-term investment, but it’s important to make sure it’s invested in the right way.

 

Limits to the amount of super you can contribute each year ($25,000 in concessional contributions for people under 60 and $35,000 for those aged 60 and over) means the earlier you start, the better. Contributing more to super will not only boost your super balance, it could even reduce the amount of tax you pay!

 

Everybody’s different – different needs, different goals and different circumstances, however, professional financial advice can help you at every stage of your life.

 

We can provide guidance on:

 

  •           Investments, shares, gearing and insurance
  •          Tax-effective superannuation strategies
  •           Centrelink and aged care strategies
  •          Estate planning strategies, and
  •          Portfolio administration.

 

To start planning for a successful financial future, call us today to make an appointment.

 

Source I IOOF

Money coming your way? Don’t waste it, invest it!

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moneybagAre you about to inherit a small fortune? Have you been awarded a sizeable compensation payment or had a serious lottery win? Or maybe you are expecting a retrenchment package? If so, you need to think carefully before you decide what to do with your new found ‘wealth’.

 

Certainly you should consider paying off some of your debt, particularly if it’s getting hard to handle. You may also want to buy one or two useful items to make life more comfortable, but it makes sense to put the bulk of it to work for your future well-being – through investing.

Many Australians see investing as something other people do. They either don’t know how to go about it, or think they need a lot of money to make it worthwhile. Yet investing sensibly gives the average

Australian opportunities to transform ‘windfalls’ into longer term security.

In fact, most of us are investors already, through our superannuation fund which invests in a number of different investment areas, such as shares and property. An increasing number of us are taking a more direct interest, by investing in share offers such as Queensland Rail. There are various ways to invest, and numerous investments competing for your dollars.

So how can you work out what investments are best for you? You really need advice from an experienced professional financial planner who can look thoroughly at your circumstances, preferences and your attitude to risk before recommending investments suitable for your particular needs.

Source | IOOF

Save or Invest? Which comes first

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WHICH COMES FIRST: SAVINGS OR INVESTING??

SaveOrInvestFinancial advisers say clients can save and invest simultaneously, irrespective of their financial situation.

Although this advice might sound like financial boot camp, the principles of this advice lay the foundations for effective cash flow management that will ultimately enable a brighter financial future.

The key is establishing and practicing the art of saving – setting funds aside beyond what is needed to pay bills, groceries, utilities, school fees and repayments.

To do this, clients need to get real about their true costs.

It’s difficult to stick to a budget but you need to be really transparent about spending.

Currently, Australians are saving more money than they ever have in the past 30 years. Since the Global Financial Crisis, there has been a dual trend of increased savings and the willingness by Australians to deleverage or to reduce debt.

This is the opposite of what was happening in the mid-1990s to the mid-2000s when Australians went into negative savings. That is, we spent more than we earned.

Financial advisers say most Australians should aim to save 10-15% of their after­tax savings.

Although this may be difficult in some stages of life, it is more important to stick to the practice of savings rather than the specifics of the amount.

Meanwhile, one of the most beneficial saving strategies continues to be salary sacrificing into superannuation. This allows investors to make more tax- effective contributions to superannuation and is subject to thresholds.

Another great saving strategy is reducing mortgage payments via an offset account. It allows you to use your savings account balance to reduce the amount you owe on your loan.

Stripping out money as soon as you get paid also reduces the likelihood of unaccountable spending.

Although the above strategies may seem quite simplistic, when utilised in a comprehensive financial plan put together by a qualified financial planner and tailored to your specific financial circumstances and goals, the results can be significant.

Source | BT

 

Investment Tips

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We all need to have financial goals. You may want to provide the best education opportunities for your children or you may want to build an investment portfolio so you can live comfortably in retirement. Whatever these may be, saving to meet those goals is important but regular investing is critical.

 

Saving versus investing

Regular saving is a familiar concept; however, saving in your bank account will only give you a few percent per annum in return. Investing can deliver much more.

 

Saving and investing – make your money work harder

 

Clarify your investment goals and set a plan to ensure you save while investing wisely to make sure you can reach them.

 

One of the easiest ways to keep your saving plan on track is to ‘pay yourself first’. Set aside a part of your pay packet for yourself, before you pay anyone or anything else such as bills, groceries, shopping, car, phone, rent or mortgage. By setting aside an amount straight from your bank account when your pay goes in, you can make sure that you get paid regularly and on time. But how much can you afford to pay yourself? Start by making a budget. List all your expenses and then work out how much you can afford to save each month.

 

Invest your savings to grow

The next step is to make the most of your savings by investing them. The type of assets you invest in will depend on your financial needs and objectives.

 

Managed funds are one way to put your plans into action as they pool your savings with many other investors. You can then access a wide range of quality investments which are managed on your behalf.

 

Diversification can also be important. It means spreading your risk across each of the main investment types (shares, property, fixed interest and cash) with an aim to achieve more consistent returns.

 

Power of Compound Interest

Once you’ve set your investment goals and decided where to invest your money, another reason for regularly investing into a managed fund is access to compound returns. Each dollar you invest earns a return. If you reinvest that return, it can earn more dollars, allowing your investment the potential to grow much faster.

 

Turn your savings into earnings

Turning your savings into an investment which can help you to reach your goals does not have to be difficult. With just $1,000 to start, you can make regular investments of $100 or more each month, switched directly from your Australian bank account to a managed fund.

 

Things to start thinking about …

  1. Is your savings account providing you with a competitive interest rate?
  2. Keep your credit card receipts and check them against your monthly statement. How much are you spending?
  3. Put together a savings plan (your personal budget planner).
  4. How much of your income do you save?
  5. Should you get the help of a financial adviser?

Source | Colonial First State