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April 2007 |
In this issue:Women…planning for your future The Great Australian Dream – just |
Hello and welcome to this quarter’s edition of Common Cents. We trust that it finds you and your family well.
Have you heard of the phrase: "Super Season"? Perhaps in the context where your team wins the premiership, or if you are looking forward to Spring after a long cold winter, but have you ever heard it in relation to your money?
If you haven’t, then rest assured in the next few months you are bound to.
The 'Superannuation Season' is nearly upon us and, thanks to the Federal Government, this season – almost more than any in the past – is going to be HUGE!!
Superannuation is often one of those subjects that is good to discuss when you can’t go to sleep or when you have done the weather and the latest sports results to death. But, can I say, that has all changed!
In this edition of Common Cents, we take a look at Superannuation in some depth, plus to further entice you, we have linked to our website information about all of the changes which you need to know.
But of course, for all of you who have now checked the weather for tomorrow and wondered which teams are playing on the weekend, we haven’t forgotten you – and in this edition you also will find something of interest! Sofie Standfort of KFG Debt Solutions presents an article on ‘family leveraging’, while KFG Financial Planner Steph Jones takes a look at financial planning issues for women. We also have the next instalment of “The Real Sea Change”.
So, enjoy this edition of CommonCents – and please don’t forget to contact us if you need to discuss your financial circumstances. We’d love to see you.
Scott Kirkwood
Managing Director
‘Super Season’
The proposed changes to superannuation are set to transform the retirement landscape.
No longer is it the unloved investment option that we all have, but aren’t quite sure why we have it. In fact, superannuation is fast becoming the vehicle of choice for long-term wealth creation.
The latest changes, which include tax-free retirement benefits from the 1 July 2007 for people over the age of 60, have opened up a range of ways to minimise your taxation and set you and your family up for a long and comfortable retirement.
Let’s look at the key changes that take effect from 1st July 2007:
- Reasonable Benefits Limits will be abolished.
- All super benefits will be tax-free if received at age 60 or over.
- The tax treatment of super benefits received before age 60 will be simpler and, in some cases, more generous.
- Death benefits from super will generally be taxed in a more concessional manner.
- Income stream investments will be more flexible.
- Employer Eligible Termination Payments will generally need to be taken as cash.
- Limits applying to ‘deductible’ super contributions will be simplified.
- Super will be more attractive for self-employed people.
From 20 September 2007:
- The Assets Test for Age Pension benefits will be more generous.
- The 50% Assets Test exemption will be removed for new ‘complying’ income streams.
For more information click here or contact your KFG Wealth Management Adviser who will explain in more detail how you can benefit from this ‘Super Season’.
Super ‘Hot Tips’
We have loads more information on our website about the new Superannuation changes, including some “Hot Tips” you may wish to consider.
- Super large contributions …read more
Selling an investment property? Have a large amount of money coming your way, or sitting around in an investment? Quick! - When can a pay cut lead to a pay rise? …read more
When you sacrifice some of your salary into super. - Leave loved ones less taxed …read more
All death benefits paid from your super fund will be tax-free for dependants from 1 July 2007, and generally taxed at 16.5% for non-dependants. (Currently there is a cap on tax-free benefits). - Take a pension before 20 Sept 2007, qualify for another …read more
You can still use Term Allocated Pensions to maximise your social security entitlement…but only until 20 September 2007. - Roll that ETP early …read more
Considering retirement? Or taking redundancy? It might be worth doing before 1 July 2007.
Women….planning for your future
Steph Jones, KFG Financial Planner writes, “Growing up in a small country town, my plan for the future was simple – finish High School; go to University; graduate and work for a few years; meet someone and get married; then live happily ever after. It was not necessarily my dream, just my expectation of how life would be.”
The reality is that life takes many twists and turns along the way, and you may find it doesn’t quite go according to the expectations you had as a 17 year old.
While some may find this scary, I have found it quite liberating. Social trends are changing, and it is now quite common for women to be unmarried in their 30’s, using their 20’s to focus on travel and building a career.
Of course, along with this social change has come a financial change. Increasingly, women are beginning to set the foundations early to start creating wealth for their future. Not content with spending all they earn, women are choosing to invest or purchase a home, to make their money work for them and gain independence. This forms a solid foundation for their future, and provides freedom to achieve their goals and dreams. Independence is key; and financial independence provides options and alternatives and the ability to choose some of the steps necessary to achieve your goals.
As a financial planner, I now see the long-term significance of making healthy, sound financial decisions in my own life and in that of my clients. This subject is one that is personally and obviously professionally close to my heart.
Here are some of the lessons that I have learnt:
Don’t leave all financial decisions up to your partner/husband. Understand that financial management is equally as challenging for a man as it is for women.
The sooner you commence some type of financial plan the better. Make time your advocate not your enemy.
Financial plans need not be complicated – often the simplest of plans are the most effective.
Like the three golden rules of property: location, location, location; the three golden rules of wealth creation are: save, save, save. Don’t worry about the amount – start saving now!
Be honest with where things are at, and where you would like them to be.
Seek advice and be open to sharing your goals, fears, challenges and aspirations. This is really important in creating a plan that is right for you.
If you would like to discuss your financial situation further, please contact us on
(08) 8415 2700 or at infowm@bernielewis.com.au
The Great Australian Dream – is it just a mirage for first homebuyers?
With the value of houses higher than ever before, even after the latest easing, young first home buyers are starting to believe that the dream of owning their own home is nothing but a mirage.
However, we have found that in many cases the dream can become a reality, when clients understand the power of ‘Family Leverage’.
Sofie Standfort, KFG Debt Solutions Specialist explains further…
Many of our clients have found the strategy of ‘Mum and Dad’ becoming a guarantor for their children has allowed their children to tap into ‘Family Leveraging’ and create a position for homes to be purchased.
Becoming a ‘Family Guarantor’ is no longer the scariest thing in the world for a parent when the responsibility is fully understood and their position is properly managed. They now are able to provide a range of financing options that can help their children get into the property market sooner.
But what is a family guarantor?
It is where both the borrower and parents help secure and even sometimes fund the loan and /or repayments together.
Along with Christmas, sport and holidays, surprisingly the subject of home ownership is discussed around the kitchen table in most households.
Our research from dealing with hundreds of clients shows that parents are being called upon to assist more and more to bridge the affordability gap. Without this, younger first homebuyers stand little chance of getting past the first step.
The advantage for the parent is:
- Helping their children get into the property market without having to automatically give them any funds;
- Having their child move out of home with some security;
- Having their child move out of home …. full stop…(you think we are joking…!).
The advantage for children is:
- Establishing themselves and getting into the housing market sooner with little or no deposit;
- Increasing the options on the size and location of the property by borrowing more money than they could on their own;
- Saving considerable money, literally thousands of dollars in mortgage insurance;
- Moving out of home with some security;
- Moving out of home …. full stop…(you think we are joking…!).
Of course, this option is not for every family. However, we have found that it is a strategy that can work – with the right management and discussions that can protect the parents financially first and foremost, but at the same time can substantially assist and help to establish the children. That is why we call it ‘Family Leveraging’.
If you would like to understand more about ‘Family Leveraging’, please contact Sofie Standfort on (08) 8415 2727 or at infowm@bernielewis.com.au
KFG Debt Solutions operates as an independent business from KFG Wealth Management and is not licensed through GWM Adviser Services Pty Ltd.
“Super: What’s Going On?” – an event not to be missed
Are you concerned about superannuation?
Are you heading towards retirement and unsure what it’s all about?
Have you heard something about changes taking place and need to know more?
As you know the Federal Government has legislated changes that start 1 July this year. These changes are perhaps the most significant in the history of superannuation and retirement planning.
To know more, attend our Super Strategies Overview Seminar where you will hear 5 key tips on navigating your way through these changes and maximising your retirement.
There is no cost in attending the seminar, but seats are strictly limited so bookings are essential.
When: Tuesday 8 May 2007, 7pm sharp
Where: Sebel Playford Hotel, 120 North Terrace, Adelaide
RSVP: Contact the KFG office on (08) 8415 2700 to reserve your place
My Rewards Booklets
The new My Rewards booklets are out now, so if you have not yet received your copy, contact us on (08) 8415 2700 or at infowm@bernielewis.com.au.
In our last edition of CommonCents we met Max and Gloria who moved to Bribie Island from Brisbane and found a thriving community of retirees.
This edition finds them both getting more involved in their local community and even travelling a bit, but then they are confronted by a real medical emergency…. read more.
Some important considerations when thinking about your sea change…
- As you get older, you’re more likely to need health services than when you’re younger.
- Outer metropolitan areas and high growth areas tend to have shortages in doctors, physiotherapists and rehabilitation facilities such as pools and gyms.
- Don’t count on the government building a facility just because the population has increased. And don’t forget, contact us at KFG if you are thinking about that “sea change” and want to consider your financial options.
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Harry Baumeister is well known to many of our clients. Here we put Harry under the spotlight to find out just a little more about one of KFG’s senior financial planners. |
CC: How long have you been in the financial services industry?
HB: Too many – rather not say! (CC: decades?!)
CC: How did you get into financial planning?
HB: I actually started out in banking. Initially, banking was great – basically, if you look after your customers and get to know them, they eventually do more business through you. But I felt the environment changed - it became very profit-driven and impersonal. Then I found KFG. To me, KFG was all a bank should be doing for you and more!
CC: What do you like most about being a planner?
HB: I like to help people with their finances and show them how they might be able to do better. Also I see huge problems for the young, the huge debt levels they are running into - we need to educate them now before it’s too late!
CC: What types of people do you think benefit from seeing a financial planner?
HB: All types – singles, couples, retired, business people. Most people are too busy just coping with ‘life’, so they need some assistance. Some people are just not good with money and desperately need help and besides, things, situations keep changing. It is impossible for the average person to keep up with it all.
CC: Tell us about your worst moment of being a financial planner?
HB: Markets falling. Although you can’t do anything about it, you can’t help but feel the same pain that the clients do (besides, my money is doing the same thing!)
CC: Tell us about your favourite moment of being a financial planner?
HB: There are lots of special moments. It’s great when clients come in saying, ‘Harry, I’m earning more money in retirement then when I was working!’ That’s great.
Also when you do projections for clients after their many years of hard work and “Wow, your money in retirement will last you until you’re 100!” I love that.
And coming up with new and ‘exciting’ investment options, especially now more is available to the average investor (i.e. you don’t need $100,000 plus)
CC: What do you do when you're not planning for everyone else?
HB: Like most people I have my ‘stress releases’. Footy, running and cycling, holidays and family
CC: What do you think is the biggest challenge facing people today regarding their finances?
HB: We all lead such busy lives, modern life is just too hectic, we can’t be experts in everything and we all need help.
Planning for the future with the Government changes, new investments all the time and record debt levels are getting harder. Young people especially need help and guidance.
I believe we are good at what we do here at KFG, and we can help people make a big difference.
You may recall that we shared breakfast and some Christmas cheer with Garry and Grace in December last year.
This year, Grace has just recently started her reception year - a new adventure that she has been looking forward to for some time. KFG was privileged to help Grace with her preparations and with her schooling needs.
We wish Grace all the very best in this exciting new stage in her life, and know she'll make lots of new friends. And we promise not to tell her that Dad occasionally peeks in at her classroom window - still keeping a watchful eye over his little girl…
The Investment Review & Outlook for March 2007 is available by clicking here.
Australian economy
The RBA has forecast year-ended inflation to fall to 2.75% in 2007 and 2008, down from their November forecast of 3%. The RBA statement came after lower than expected December quarter inflation figures. Read more
Australian shares
The ASX fell 250.1 points, or a total of 4.1%, during the last week of February after the Shanghai index lost 8.8% on February 27. Read more
Global economy
Reports of impending China government crackdowns on illegal margin lending and intervention to slow the economy resulted in a 9% one-day drop in the Shanghai Index, which caused drops around the world. Read more
International shares
Global equity markets looked set for another strong performance before coming unstuck at the end of the month with a big sell-off in the global stock markets. Read more
Whether it is just for a quick chat or to make an appointment, you can contact us by telephone: (08) 8415 2700, fax: (08) 8415 2701 or on e-mail: infowm@bernielewis.com.au.
Even better, drop in and see us at Level 6, 13 Grenfell Street, Adelaide. We really do have great coffee!