Everyday we make choices that affect our level of wealth, from our spending habits to our investment choices. We often blame our low pay or high bills for not being able to get ahead but the truth is that wealthy people usually have the same financial habits in common. These habits don't require a degree in economics in fact most of them are just common sense.
1. Spend less than what you earn
2. Save your money (aim for 10% of your income)
3. Invest wisely - make sure you get sound professional advice, most people are not stockbrokers.
4. Borrow wisely - make sure you have good debt (debt that is used for an asset) not bad debt.
5. There is no such thing as a get rich quick scheme - if it is too good to be true then it probably is.
6. Be patient - If you can't get rich quick then get rich slowly!
7. Insure yourself - no matter how clever we are with our money we cannot always control what is going on in our lives. Accidents happen and people do get sick and these events can mess up our plans, having a contingency plan in place to avoid losing your income or having to sell off your assets is just good sense.
If you follow these very simple rules you should be able to build your personal wealth, and while money is the most important thing in life it gives you a greater choice of what you can do in life.
Showing posts with label finances. Show all posts
Showing posts with label finances. Show all posts
Tuesday, June 1, 2010
Wednesday, May 5, 2010
Are you ready for tax time?
With the end of the financial year just around the corner, now is the time to make sure your financial affairs are in order. There are a number of smart strategies you could consider to help you streamline you finances and minimise your personal tax liability.
Insurance Premiums - Some insurance premiums, such as those for income protection are generally tax deductible as an expense incurred in earning your income.
Work Related Expenses - Don't forget to keep any receipts for work related expenses such as uniforms, training courses and learning materials, as these may be deductible for tax purposes.
Prepay Margin Loan Interest - If you have a margin loan, you can prepay up to 12 months interest in advance (subject to prepayment rules). You can claim a tax deduction for the prepayment in this financial year, further reducing your taxable income.
Tax Deductions for Investment Expenses - Expenses you incur while earning assessable investment income may be a tax deductible. These expenses can include fees for financial advice, account keeping and management fees and interest payments on margin loans. Claiming a tax deduction for these expenses could reduce your assessable income for the financial year, although not all expenses are immediately deductible. your tax adviser can help your determine what can be claimed.
Review Ownership Structure of Investments - Transferring the ownership of your investments to your self managed super fund (if your fund accepts this) or to your spouse, could reduce the tax you pay on future investment income and capital gains. However, these transfers have capital gains tax implications so you should seek tax and legal advice from a qualified professional before proceeding.
Managing Capital Gains - It's important to assess if you have made any capital gains or losses from your investments. The most common way you make a capital gain (or capital loss) is by selling assets such as real estate, shares or managed fund investments. Managed funds also distribute capital gains which you must report. The Australian capital gains tax system is quite complex so it's important to consult with your tax adviser.
Contributions to Super - Contributing to your super can be one of the most tax effective ways of building your retirement savings. However you need to be extra careful not to exceed your concessional contributions cap and incur excess tax.
The government limits how much you can contribute to super in any one year. The annual contributions caps as of 1 July 2009 until 30 June 2012 are:
- $25,000 per year for pre-tax contributions (concessional) if you are under age 50 on the last day of the financial year. If you're aged 50 or over on the last day of the financial year, a transitional cap of $50,000 per financial year applies until 30 June 2012 (commencing the year you turn 50).
- $150,000 per year for after tax contributions (non concessional) or $450,000 over a three year period if you are under 65 in the financial year the contributions are made.
If you currently have a salary sacrifice or transition to retirement strategy in place, or are self-employed and make personal deductible super contributions, you should speak to your financial planner to discuss whether you can boost your contributions this financial year or review your current arrangement.
If you would like to know more about which end of year tax strategies may be appropriate for you, you should contact your financial adviser. If you dont' have a financial adviser you can call our office on 02 4925 6125 Monday to Friday. In conjunction with your tax adviser, we can work with you to ensure you are taking advantage of any available tax concessions and that your investments are structured in the most appropriate way.
Disclaimer: This general advice has been prepared without taking into account your particular financial needs,, circumstances or objectives, and is based on Financial Wisdom Limited's understanding of current law as at 14 April 2010. While every effort has been made to ensure the accuracy of this information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication. We are not tax agents and this article is not intended to be taken as taxation advice.
Wednesday, April 28, 2010
TIPS FOR SUCCESSFUL INVESTING
Article by Anthony Brodie Dip FP, AIMM, JP Certified Financial Planner
1. Know what your goals/objectives are:
The first thing to ask yourself is, what are you trying to achieve? This will have a vital bearing on the types of investments you should choose. Are you investing to increase your income now, or is your aim to achieve capital accumulation for the future? Or maybe something in between?
2. Know your time frame:
Are you investing to buy a home in 2 or 3 years, or do you want to build up assets for your retirement over 10 to 20 years? The assets that a prudent investor would select as short-term investments are quite different from those that would be selected for long-term investments.
The long term investor can take risk of having more funds invested in volatile investments like shares, because any downturn will in time have an upswing. However, the short term investor who invested ins shares may be faced with a depressed market at precisely the time when the funds are needed. Generally speaking, to get the best results you should aim to invest for the medium to long term if you you are investing in growth investments such as shares and property.
3. Know your risk tolerance:
It's no good choosing high risk/high return investments if you are going to lie awake at night worrying about them. Be realistic and take a sensible approach based on your goals and time frame/s. Do not expect a high return if you have all your funds invested in mostly fixed interest and cash. This is one area where real assistance is required.
4. Diversify:
Don't put all your eggs into one basket, in other words diversify your investments by spreading them between an appropriate number of experience investment managers and the major asset classes (ie shares, property, cash, short term securities, fixed interest securities). Usually all markets don't move in the same way at the same time, so if one asset class experiences a decline, chances are that the other classes will generally maintain their value.
5. Develop a strategy:
If an investment strategy has been based on quality advice, it will be appropriate for your circumstances for many years and won't need to be altered if market conditions change. A common mistake is to forget about the strategy when market conditions change, that is some investors seeing the share market moving up are tempted to move all their money into shares. If shares fall they then want to sell. These investors try to time their investments to match turning points in the market and very often they only achieve the opposite. Investors who sell when the market falls often only succeed in crystallising a loss. Because they are out of the market chances are that they may miss the next rally. There is an old saying "It's not timing in the market that matters, but time in the market that counts".
6. Always seek good advice:
Always talk to an experienced and qualified Financial Planner about an investment strategy that will suit your circumstances. The time he spends in reviewing your financial objectives, discussing your options and developing your investment strategy will probably be the best investment you ever make.
Disclaimer: This article is no substitute for financial or investment advice and should not be read as such nor relied upon as such. You should seek your own professional advice tailored to your individual investment objectives, financial situation and particular needs.
If you would like further information or would like to arrange an appointment with Anthony Brodie by calling mobile 0425 234 234.
1. Know what your goals/objectives are:
The first thing to ask yourself is, what are you trying to achieve? This will have a vital bearing on the types of investments you should choose. Are you investing to increase your income now, or is your aim to achieve capital accumulation for the future? Or maybe something in between?
2. Know your time frame:
Are you investing to buy a home in 2 or 3 years, or do you want to build up assets for your retirement over 10 to 20 years? The assets that a prudent investor would select as short-term investments are quite different from those that would be selected for long-term investments.
The long term investor can take risk of having more funds invested in volatile investments like shares, because any downturn will in time have an upswing. However, the short term investor who invested ins shares may be faced with a depressed market at precisely the time when the funds are needed. Generally speaking, to get the best results you should aim to invest for the medium to long term if you you are investing in growth investments such as shares and property.
3. Know your risk tolerance:
It's no good choosing high risk/high return investments if you are going to lie awake at night worrying about them. Be realistic and take a sensible approach based on your goals and time frame/s. Do not expect a high return if you have all your funds invested in mostly fixed interest and cash. This is one area where real assistance is required.
4. Diversify:
Don't put all your eggs into one basket, in other words diversify your investments by spreading them between an appropriate number of experience investment managers and the major asset classes (ie shares, property, cash, short term securities, fixed interest securities). Usually all markets don't move in the same way at the same time, so if one asset class experiences a decline, chances are that the other classes will generally maintain their value.
5. Develop a strategy:
If an investment strategy has been based on quality advice, it will be appropriate for your circumstances for many years and won't need to be altered if market conditions change. A common mistake is to forget about the strategy when market conditions change, that is some investors seeing the share market moving up are tempted to move all their money into shares. If shares fall they then want to sell. These investors try to time their investments to match turning points in the market and very often they only achieve the opposite. Investors who sell when the market falls often only succeed in crystallising a loss. Because they are out of the market chances are that they may miss the next rally. There is an old saying "It's not timing in the market that matters, but time in the market that counts".
6. Always seek good advice:
Always talk to an experienced and qualified Financial Planner about an investment strategy that will suit your circumstances. The time he spends in reviewing your financial objectives, discussing your options and developing your investment strategy will probably be the best investment you ever make.
Disclaimer: This article is no substitute for financial or investment advice and should not be read as such nor relied upon as such. You should seek your own professional advice tailored to your individual investment objectives, financial situation and particular needs.
If you would like further information or would like to arrange an appointment with Anthony Brodie by calling mobile 0425 234 234.
Thursday, September 3, 2009
PLANNING FOR THE INEVITABLE
- In Australia the average life expectancy is now 81.4 years.
- In the last 12 months 116,000 couples were married, but over 47,000 were divorced.
- 10% of Australian workers are currently unable to work due to a disability or illness.
- 1 in 5 Australian adults will suffer from mental illness.
- 7.4 Million Australians are overweight.
- 100% of Australians will DIE!
I know, it seems like such a morbid thought but like the saying goes "There are only two certainties in life - Death & Taxes". It is funny though that something that is so certain makes us so uncomfortable to discuss with our loved ones, yet we all will have to face our own mortality sooner or later (later I hope)!
Most of us have seen the Will kit ads or the funeral plan and life insurance ads and even ads for the local funeral home. If you are like me they make you feel a little uncomfortable - like it is their personal responsibility to remind us all that death must conquer all. Just as I am getting comfortably deluded that my happy life will go on forever just as it is - proves that insurance salesman are human after all!
Our natural aversion to thinking about our own death often means we a unprepared and leave a mess for our families to deal with after we are gone. This is why it is important to consider Estate Planning.
WHAT IS ESTATE PLANNING
Estate Planning is planning for the process of passing on our assets and possessions to our beneficiaries and planning for their future with out you. It involves creating a Legal Will that reflects the wishes of how you would like your assets distributed and a Financial Plan that ensures your wishes can be met. If you are a business owner there are a whole lot of other issues that also need to be considered such as succession of the business and how any debts will be paid.
WHAT IS A WILL
A will is a legal document that sets out who received your assets after you die. It may also include your wishes regarding your funeral arrangements and appoint a guardian for any dependents under 18 years of age left without a parent. Your solicitor can help you draft a legal will and if necessary will work with your financial advisor to make sure the appropriate structures are in place to carry out those wishes.
THINGS TO CONSIDER IN ESTATE PLANNING
Have you considered your family's need for immediate funds following your death?
Does your estate have sufficient funds to meet your family's future income needs?
Does your estate have sufficient funds to clear any accrued debts?
Do you need to consider personal risk insurance to fund any short fall in your estate to meet your wishes?
Do you have a current and effective Will?
Have you chosen a responsible and trustworthy executor?
Have you considered the timing of the distribution of funds?
Have you taken steps to minimize the risk of you will being challenged?
Have you appointed guardians for your children?
Have you decided who to grant powers of attorney to?
Have you identified capital gains or any other tax issues?
Have you considered whether certain beneficiaries should receive an income stream as opposed to a lump sum?
Does the trust deed of your superannuation fund pay your beneficiaries a lump sum or a pension?
Do you need to make a binding death nomination to ensure your superannuation benefits pass to your intended beneficiaries?
Have you considered if you want to protect your assets if your spouse remarries after your death?
Have you allocated special bequests for valuable items such as jewellery and family heirlooms?
Have you noted any special arrangements, such as care for a disabled child or a child from a previous relationship?
Have you considered how your business or business partnerships will survive you?
As you can see Estate Planning is much more than just a Will. Most people are suprised by just how long this list is, but it is important to think about all of these things and to seek qualified professional advice from your solicitor and financial planner.
It is unfortunate but many family feuds have started with the death of a loved one who had no estate planning or an inadequate will. If you really love your family then take the time to make plans. Dealing with the death of a loved one is hard enough without all the worry and uncertainty.
Please remember this is intended for general information purposes only and should not be construed as financial, taxation or legal advice. Before acting on the basis of this information, you should consider the appropriateness to your own objectives, financial situation and needs. I recommend that your obtain qualified legal advice.
Subscribe to:
Posts (Atom)