When you pass away, hospitals and funeral directors will ask a lot of questions that your family may not have the answers to. If you’re prepared and organised, you can provide them with many of the answers in advance. We know sharing your funeral wishes and end-of-life admin with your family isn’t the most uplifting topic of conversation. But it can make the process of passing away far less stressful to the ones you leave behind.

Six ways to get organised

Getting organised early can eliminate some of the difficult conversations your family may have to deal with later. Here are six things you can do now:

Have a Will and ensure it’s up to date. Surprisingly, just over half of Australians don’t have a Will.

• Consider an Advance Care Directive. It’s a way to say what healthcare treatments you would like to have or refuse if you’re ever in a position where you’re seriously ill and unable to make decisions about your treatment.
• If aligned with your wishes, join the organ donor register.
• Check that the beneficiaries nominated in your super and insurance are still current.
• Keep the records for all your bank accounts, investments, and assets in one place so it’s easier for someone to sort through them and find relevant information.
• Put easy-to-access money aside to pay for your funeral or buy a funeral bond, since it takes a long time to process your estate. Funerals are estimated to cost between $4,000 and $15,000

Talking to specialists

Sometimes extra planning and financial advice is needed to ensure that your assets are passed into the right hands in the most efficient and tax-effective way.

It’s important that your Will is clear, complete and not open to legal challenge. Estate planning advice may be required in cases of divorce, remarriage and blended families to protect the interests of vulnerable family members and to ensure that your wishes are carried out.

Talk to your financial adviser about these things. They can also suggest anything you may not have thought of.

Getting the conversation going

Sharing your preferences provides those you leave behind with the comfort and certainty of knowing they are carrying out your wishes. It might make for an awkward conversation, but it’s better to discuss things over a family dinner than in an emergency room.

Here are a few topics you might want to discuss:

• Who do you want to be the guardian of your children?
• Who will take care of your pets?
• If you have an extended stay in the hospital, do you have a preference about which hospital you want to go to?
• What type of funeral do you want? Would you prefer a cremation or a burial? Do you have any preferences for the venue, flowers, music or readings?
• What are your preferences for your valuable or significant belongings?

Give the Integra team a call or book a meeting here and take the first steps to get your estate plan underway.

Source: Colonial First State

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If your work is stressful, consider whether you could reduce or change your responsibilities. For jobs that are physically demanding, do you have the option to shift into a role that is less hands-on – such as training others, workplace safety or compliance monitoring?

Or, if the idea of extending out your retirement date is unappealing, another option could be taking some time off. If you have accrued a lot of annual or long-service leave, then the financial impact may be negligible.

Three smart super strategies

Making changes to your super can help you get your plans back on track so you can achieve your retirement goals. Here are some strategies that can boost your super or minimise your tax in your final years of working.

1. Make additional contributions. You can add more to your super using either your before-tax salary or your take-home pay. The most common ways to do this are by salary sacrificing, making a tax-deductible personal contribution, using some of your unused concessional cap from previous financial years in a catch-up contribution, or using the bring-forward rule to make a large, one-off contribution to your super.

2. Transition-to-retirement (TTR) strategy. A TTR strategy lets you access some of your super while you’re still working. It’s only available for people who are aged 60 or above. The most common way to use this strategy is to continue working full-time and salary sacrificing into super while drawing a tax-free income from your TTR pension. So while you’re growing your super you’re also paying less tax in the lead up to retirement.

3. Review your asset allocation: Seek financial advice to review how your super is being invested to meet your retirement needs.

Try a different kind of work

If you’re not enjoying your work, or your work has finished up, then consider lifting your gaze towards something new:

Learn. Flexible learning options have never been more accessible or plentiful. They can also be very affordable, with low cost or free courses bringing easy learning within reach. The time it will take you to complete a course is a small investment for the benefit of undertaking more satisfying work.

Start a business. Business ownership is a popular option for 8% of Australians aged between 50 and 64. What’s more, if you start a business as an older person, you have a better chance of success than if you’d started at an earlier stage of life. This is because you’ve accumulated valuable work experience, built broad and deep professional networks, and developed life skills, wisdom and resilience that could help your business succeed. It’s important to remember that starting a business requires upfront capital investment and there are risks involved in running a business, so it’s best to seek professional advice before you do so.

Career coaching. If you want to change what you do for work, a career coach can help you explore your options and advise you on your next step.

Get a sounding board

When you have plans in place, it is unsettling when they are disrupted. Your financial adviser can explore your options with you, advise you on the impact of different strategies and recommend away forward. So it’s important to check in with them, especially before you make any changes to your super.

Give the Integra team a call or book a meeting here and set yourself on the right pathway to financial freedom.

Source: Colonial First State

The post Rethinking retirement appeared first on Integra Financial Services.

• It caused a massive health crisis claiming at least 1.5 million lives, with many countries seeing at least two waves.
• It kept many confined to their homes and shut down big chunks of economies, driving the biggest fall in economic activity since the end of WW2 if not the Great Depression, with major economies seeing peak to trough falls in GDP of 10% to 20% and the Australian economy contracting by 7.3%. This saw unemployment surge and inflation plunge.
• Share markets had 35% or so plunges in February/March, commodity prices collapsed with the oil price going negative at one point as investors sought out safe havens like bonds.
• And it, or rather the poor management of it, lost President Trump the US election (even though he denies losing).

The pandemic also increased tensions with China and is likely to leave a longer term mark with a further set back to globalisation, more social tensions, bigger government and public debt, the risk that massive money printing eventually results in higher inflation, faster structural change due to an accelerated embrace of technology, more consumer caution and a lower population in Australia due to the hit to immigration.

However, while 2020 is a year many of us would prefer to forget and coronavirus continues to wreak havoc in much of the world, the end result for economies hasn’t been as bad as had been feared back in March and April. This reflected a combination of:

• An unprecedented and rapid fiscal stimulus that protected businesses, jobs and incomes;
• Debt forbearance schemes that headed off defaults;
• The massive monetary stimulus that saw interest rates plunge;
• Social distancing which has helped contain the virus enabling some reopening – albeit better in some countries (eg, Asia, Australia and New Zealand) than others.

This enabled economic activity to bounce back faster than expected through the second half as restrictions eased, even though it wasn’t always smooth (eg, in Victoria or in Europe and the US) and we still have a way to go to full recovery. As a result, investment markets also performed far better than feared.

Source: Thomson Reuters, Morningstar, REIA, AMP Capital

• While share markets plunged in March during the early stages of the pandemic, they then rebounded thanks to massive fiscal stimulus and reopening, low-interest rates and bond yields that made shares cheap as well as good news on vaccines that enabled investors to look forward to further recovery in 2021.
• This all drove solid returns in global shares with Asian and US shares (which were boosted by a relatively a high exposure to IT and initially health care stocks which benefitted from the pandemic) outperforming. The more cyclical Japanese and European markets underperformed.
• Australian shares also unperformed due to the greater cyclical exposure of the Australian share market.
• Government bonds had reasonable returns as yields fell in response to central bank rate cuts and bond-buying along with safe-haven demand – which drove capital growth.
• Real estate investment trusts had negative returns as a result of a hit to property space demand and rents.
• It was the same story for unlisted commercial property and infrastructure, although industrial property did well.
• Home prices fell 3% around mid-year but then started to recover as low-interest rates, government support measures and reopening swamped the hit to immigration, weak rental markets and higher unemployment. Houses, outer suburbs & regions benefitted from “escape from the city.”
• Cash and bank term deposit returns were poor as the RBA cut the cash rate to just 0.1%.
• After a pandemic driven plunge to $US0.55 in March the $A rose reflecting higher commodity prices and a falling $US.
• Due to reasonable share returns but weak property and infrastructure returns balanced super funds have so far seen low but positive returns – but this followed a strong 2019.

2021 – recovery

Just as 2020 was dominated by the pandemic and this determined the relative performance of investment markets and stocks, 2021 is likely to be dominated by the recovery. This in turn will have a profound effect on investment markets. There are four reasons for optimism. First, massive fiscal and monetary stimulus is still feeding through economies with very high saving rates indicating pent up demand that can be spent once confidence improves, which will also help offset the wind-down of some support measures like JobKeeper in Australia.

Second, the news on vaccines is positive. While uncertainties remain, by end 2021 or early 2022 there is a good chance the world will be approaching a degree of herd immunity.

Third, a new US president in Joe Biden should usher in a period of more stable and expert-based policy-making in what is still the world’s biggest economy. In particular, it will likely head off a return to trade wars that could have wreaked havoc in 2021. A more diplomatic US approach to resolving differences with China could also help Australia move down a path to resolving its own differences with China.

Finally, Australia along with NZ has navigated 2020 remarkably well, controlling coronavirus far better than most comparable countries and seeing its politicians and institutions work well together. It also led to structural reforms that may help future growth (e.g., property tax reform in NSW, IR reform nationally).

The combination of vaccines, policy stimulus and pent-up demand is expected to see a supercharged cyclical rebound in global GDP of around 5.2% and 4.5% in Australia in 2021. This is likely to see strong double-digit rebounds in profit growth.

Inflation is likely to remain weak, reflecting still high levels of spare capacity which in turn means interest rates will remain low. While this is not good for those relying on bank interest, it benefits the household sector as a whole (with debt exceeding bank deposits) & corporates, eases the servicing of high public debt levels and makes shares cheap. So, in a way we remain in the sweet spot of the investment cycle with improving growth but low rates. In Australia, the cash rate is expected to end 2021 at 0.1% but there is still a risk of more quantitative easing.

Implications for investors

Shares are at risk of a short-term correction after having ran up so hard recently and 2021 is likely to see a few rough patches along the way (much like we saw in 2010 after the recovery from the GFC), but looking through the inevitable short term noise, the combination of improving global growth and low-interest rates augurs well for growth assets generally in 2021. In particular, we are likely to see a continuing shift in performance away from investments that benefitted from the pandemic and lockdowns – like US shares, technology and health care stocks and bonds – to investments that will benefit from recovery – like resources, industrials, tourism stocks and financials.

• Global shares are expected to return around 8% but expect a rotation away from growth heavy US shares to more cyclical markets in Europe, Japan and emerging countries.
• Australian shares are also likely to be relative outperformers helped by better virus control, enabling a stronger recovery in the near term, stronger stimulus, sectors like resources, industrials and financials benefitting from the rebound in growth and as investors continue to drive a search for year yield benefitting the share market as dividends are increased resulting in a 4.4% grossed-up dividend yield. Expect the ASX 200 to end 2021 back around 7200.

Source: Bloomberg, AMP Capital

• Ultra-low yields & a capital loss from a 0.5-0.75% or so rise in yields are likely to result in negative returns from bonds.
• Unlisted commercial property and infrastructure are ultimately likely to benefit from a resumption of the search for yield but the hit to space demand and hence rents from the virus will continue to weigh on near term returns.
• Australian home prices are being boosted by record-low mortgage rates, government home buyer incentives, income support measures and bank payment holidays but high unemployment, a stop to immigration and weak rental markets will likely weigh on inner-city areas and units in Melbourne and Sydney. Outer suburbs, houses, smaller cities and regional areas will see stronger gains in 2021.
• Cash and bank deposits are likely to provide very poor returns, given the ultra-low cash rate of just 0.1%.
• Although the $A is vulnerable to bouts of uncertainty about coronavirus and China tensions and RBA bond-buying will keep it lower than otherwise, a rising trend is still likely to around $US0.80 over the next 12 months helped by rising commodity prices and a cyclical decline in the US dollar.

What to watch?

The main things to keep an eye on in 2021 are as follows:

• Coronavirus and vaccines – problems with vaccines or their deployment could result in ongoing waves of new coronavirus cases & slower recovery than we are assuming.
• US politics – a Democrat victory in Georgia’s January 5 US senate elections would risk more of a leftward tilt under Biden, although conservative Democrat senators will limit this. Trump could also try to throw a spanner in the works.
• China tensions – we expect a shift to a diplomatic approach here but there is a risk of misjudgement on either side which could start to slow our longer-term economic growth rate.
• Inflation – we are assuming it remains weak but if it rebounds faster than expected it will mean faster increases in bond yields and downward pressure on asset valuations.
• The hit to immigration in Australia – it’s hard to see 700,000 less immigrants out to mid-2023 having no impact on inner-city Sydney and Melbourne property prices.

Source: AMP Capital – Oliver’s Insights

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We’ve seen volatile share markets, slashed dividends on bank stocks, record-low interest rates and sectors like airlines, tourism and traditional retail struggling to survive. On the other hand, online shopping and e-commerce have surged, and more people are saving now than before the pandemic.

During this uncertainty, many people have found their financial adviser to be a critical source of guidance and a valuable sounding board. In many cases, the adviser-client relationship has been a long-term connection. It’s built over many years and based on trust and confidence that the adviser has the client’s best interest at the centre of every decision.

Demand for advice doubles

The financial advice industry is full of examples of clients reaching out to their advisers in recent months, leveraging these long-term relationships at a time of worry and crisis.

Recent research from the Investment Trends 2020 Financial Advice Report showed three in four financial advice clients had been in contact with their adviser to discuss the impact of the COVID-19 pandemic.

Advisers are also fielding an unprecedented number of calls from potential clients who are confused by the current markets and understand they need help.

The instability of recent times has undermined the confidence of those who are retired or are about to retire, with many wondering if they’ll be left with enough superannuation savings for a comfortable retirement. But those who have a long-term relationship with their adviser can rely on the fact their adviser knows them well, understands their unique circumstances and life goals, and can deliver advice tailored to them.

Advice for different life stages

Financial advice can be helpful at a range of life stages, not just when thinking about retirement. Some common things advisers can help navigate financially are:

• saving for and preparing to buy your first home
• getting married or starting a family
• budgeting and money management
• growing wealth
• estate planning
• planning for retirement
• retirement and aged care.

Advisers can help with practical advice in all these scenarios. But more importantly, they can help you focus on your financial priorities and goals and create a plan to achieve them.

Life’s journey has many twists and turns and points at which priorities change. For many people, it’s a journey best navigated not only with partners, family and friends but with a trusted financial adviser by their side.

Give the Integra team a call or book a meeting here and set yourself on the right pathway to financial freedom.

Source: AMP

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Last year Australians spent about $1000 each for Christmas on presents, decorations, travel and charity donations. For 28 per cent of us, this expenditure meant using credit cards or buy now pay later (BNPL).ⁱ

While many will use credit again this festive season, the current economic circumstances may make us think twice about our spending. It’s not just what you spend, but how you spend that could make all the difference.

So, if you plan to use credit to help manage your Christmas spending, what are the options?

Buy now, pay more later?

Even before COVID, more and more people were turning away from the traditional credit card and opting instead for a buy now, pay later payment method. BNPL providers in Australia include companies such as Afterpay and Zip, but there are many more.

The use of BNPL may be due to convenience or an aversion to debt, or a bit of both.

In a recent report, the Australian Securities and Investments Commission (ASIC) found BNPL transactions jumped by 90 per cent to 32 million in the 2018-19 financial year.ⁱⁱ

Meanwhile, the number of credit card accounts fell 7 per cent in the 12 months to March 2020 from 14.6 million to 13.6 million.ⁱⁱⁱ

But for those who still use a credit card, it is estimated that more than 2 million Australians have gone over their limit since March this year as the economic slowdown takes its toll on household finances.^iv

Initially, BNPL was popular with millennials, but over time more baby boomers and Gen X have opted for this form of credit which boasts that it is interest-free. Compare that with interest on credit card balances which are mostly in double digits and can even be as high as 20 per cent.

But don’t be fooled.

Watch for fees

There may be no interest rates on buy now pay later, but there are fees and these can quickly add up.

All BNPL providers have slightly different terms and conditions, but fees may include:

• Late fees of up to $15 a month,
• Monthly account keeping fees of up to $8 a month
• Payment processing fee of $2.95 every time you make an extra payment
• Establishment fees can range from zero to $90.^v

Of course, that does not mean you should avoid buy now, pay later offerings. If you meet all your payments on time, then it can be a useful form of credit. The key is to be cautious.

For instance, do not run up debt with multiple providers. Not only can that prove expensive, but it can also be difficult to manage. It can soon become expensive if you have late payment fees to pay to several providers.

ASIC research found one in five BNPL users missed payments in the 2018-19 financial year. This translated into fee revenue of $43 million for providers, a jump of 38 per cent over the year and financial hardship for 21 per cent of users. As a result, ASIC said some people were cutting back on meals and other essentials or taking out additional loans to make BNPL payments on time.

Bank alternative

Now the big banks are meeting the challenge of BNPL to traditional credit cards head-on, with the launch of interest-free credit cards and partnerships with BNPL providers.

While the new interest-free credit cards have no interest charges or late fees, they typically have a minimum monthly payment and a monthly fee in months where you don’t make a transaction.

Finding money for everyday items, let alone festive spending has become a juggle for many this year. The gradual transitioning away from support payments such as Job Keeper and Job Seeker won’t make things any easier.

Whatever your financial circumstances, if you monitor your money carefully and make changes to your expectations, then there is no reason why this festive season can’t be just as good this year as last. One of the lasting benefits of 2020 may well be that it makes us more proactive about managing our money wisely.

Managing your money during the Festive season can get overwhelming. Give the Integra team a call or book a meeting here.

i https://www.finder.com.au/australias-christmas-spending-statistics

ii https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-280mr-asic-releases-latest-data-on-buy-now-pay-later-industry/

iii https://www.afr.com/companies/financial-services/credit-cards-slump-as-customers-shift-to-buy-now-pay-later-20200512-p54s4z

iv https://www.finder.com.au/press-release-october-2020-over-the-limit-pandemic-pushes-2-million-aussies-beyond-credit-means

v https://moneysmart.gov.au/other-ways-to-borrow/buy-now-pay-later-services

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While it hasn’t received much publicity, increasing numbers of Australians are using charitable trusts to give in a more planned and tax-effective way.

The turning point came in 2001 when the Howard Government introduced the Private Ancillary Fund (PAF) with the aim of encouraging more individual and corporate philanthropy. PAFs are charitable trusts that can be used by an individual or family for strategic long-term giving.

Since then, the number of PAFs and the amount of money contained in them has grown steadily. In early 2018, JB Were reported that there were 1600 PAFs, housing $10 billion and distributing $500 million a year.ⁱ

Claiming a tax benefit

According to Philanthropy Australia, in the 2015-2016 financial year 14.9 million Australians collectively donated $12.5 billion to charities and not-for-profits (NFPs).ⁱⁱ The median donation was $200 and 4.51 million taxpayers claimed for a ‘deductible gift’ on their tax return, highlighting that you don’t have to be wealthy to live generously.

Though donations to appropriately accredited charities and not-for-profits are tax-deductible, the figures indicate two-thirds of taxpayers don’t bother to claim. It’s well worth keeping track of receipts so you can claim when you think that, for example, a single donation of $5000 to a charity or NFP in a financial year will reduce your taxable income by $5000.

A core principle of tax-deductible philanthropy is that the giver shouldn’t stand to receive any material benefit. For example, if you buy tickets in a raffle run by a charity you can’t claim a tax deduction on the cost of the tickets. In order to receive a tax deduction for your donation, the recipient must also be registered as a deductible gift recipient (DGR).

There are many ways to be charitable but the impact on your tax bill will vary depending on how you go about it.

A more sophisticated approach

These days, people who want to take philanthropy to the next level with an ongoing, tax-effective approach have a variety of trusts to choose from.

The Private Ancillary Fund

PAFs are the best-known of the new breed of trusts. The money placed in a PAF is tax-deductible and assets in the fund aren’t subject to income or capital gains tax (but do qualify for franking credits).

Let’s say a dentist sets up a PAF and gifts half his $500,000 annual income into the fund where it’s invested in a diversified portfolio. The dentist’s taxable income now drops to $250,000. What’s more, no tax is paid on the returns made on the $250,000 that has been invested in the PAF. The dentist has to distribute a minimum of five per cent of their PAF’s net asset value annually, or a minimum of $11,000. After meeting that requirement, the dentist has a relatively free hand about which charities to support and how much they receive.

The Public Ancillary Fund (PuAF)

PuAFs work the same way as PAFs but operate on a larger scale. For example, 10 dentists may set up a PuAF to finance the building of dental hospitals in Africa. As well as gifting part of their incomes, the 10 dentists can (in fact, are obliged to) invite the general public to make tax-deductible donations to their PuAF.

Testamentary Trust (or Will Trust)

These are used by individuals wanting to leave money in their will to a specified charitable purpose. The two advantages of this type of trust are that the trustee(s) can distribute the income generated by the trust in a way that minimises the tax burden of beneficiaries, and the assets in the trust can’t be accessed by parties such as creditors and the divorcing partners of a beneficiary.

Smart selflessness

Like many parts of the economy, the charity sector has been ‘disrupted’ in recent years, with a stronger focus on donor engagement.

Organisations such as Effective Philanthropy and Effective Altruism have emerged to analyse how the charity dollar can be best spent. While crowdfunding platforms such as GoFundMe have emerged to facilitate, for example, the funding of individual medical procedures.

As a result, many philanthropists have gone from simply writing cheques to directing – or at least monitoring – how their money is spent.

Your contribution is most likely to be well spent if you donate it to an organisation that defines its mission clearly, has measurable goals, can demonstrate concrete achievements and is transparent about its finances (e.g. has annual reports available on its website).

Few people give to get a tax deduction but by supporting good causes in a tax-effective manner you can achieve a bigger bang for your philanthropic buck. If you would like to know more about tax-effective giving, give us a call.

Take a step in the right direction by putting the right structure in place to support your charitable donations. Give the Integra team a call or book a meeting here.

i https://www.strategicgrants.com.au/au/free-resources/blog/19-blog-kate/280-grantseeking-donor-giving

ii http://www.philanthropy.org.au/tools-resources/fast-facts-and-stats/

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With the Reserve Bank reducing interest rates to record lows and not anticipating a rise until 2024, it’s more important than ever to ensure your retirement savings are working as hard as possible.

One way to do that is by taking advantage of super, which offers valuable opportunities to tax-effectively rebuild your retirement savings.

Reducing your tax bill

If you make super contributions by setting up a salary sacrifice arrangement with your employer, for example, you can potentially reduce your tax bill while also boosting your super.

By diverting some of your pre-tax salary into super rather than taking it as take-home pay, your money will be taxed at 15 per cent, rather than your marginal tax rate.

Investments made through super also enjoy a concessional tax rate of only 15 per cent on any investment earnings. This compares with tax at your marginal rate, which could be as high as 47 per cent (including the Medicare Levy), on investment earnings outside super.

Claim a tax deduction

You are also able to make personal super contributions on which you claim a tax deduction.

Previously only available to the self-employed, this strategy is now available to everyone. It allows you to claim a tax deduction in your annual tax return for eligible voluntary contributions into your super account made during the financial year from your after-tax earnings.

Providing you stay under the annual concessional contribution limit (currently $25,000 a year), this can be a useful way to cut the amount of income you pay tax on.

Play catch-up with your contributions

If you have less than $500,000 in your super account, you may consider making carry-forward concessional contributions. If you haven’t fully used your annual concessional contributions caps since 1 July 2018, you may have some unused cap amounts that you could use to make a larger contribution this financial year.

Unused concessional cap amounts can now be carried forward for up to five years.

Consider non-concessional contributions

If you have more funds available and are closer to retirement, you might also consider making a non-concessional (after-tax) contribution into your super account to boost the amount you have in the run-up to retirement.

Generally, you can contribute up to $100,000 a year in after-tax money. Not only is the tax on investment earnings on these contributions only 15 per cent, but they boost the income you can enjoy tax-free in retirement.

If you have a larger amount available, from an inheritance or selling an asset, for example, you could even consider making a bring-forward contribution of up to $300,000 in a single year if you are under age 65.

Get the government to contribute

Another opportunity for eligible low to middle-income earners is to make a personal after-tax contribution of up to $1,000 and potentially receive a co-contribution of up to $500 from the government. The co-contribution amount will vary depending on your income and the number of contributions you make, but it can be an easy way to increase your super balance.

Another tax strategy to consider if your spouse or de facto partner earns less than $40,000 is to make an after-tax contribution into their super account. You could be eligible for the maximum tax offset of up to $540 if you make a contribution of at least $3,000 into your spouse’s super account, provided they earn $37,000 or less. The tax offset tapers off as your spouse’s income increases before cutting out at $40,000.

Strategic review of asset allocation

As super is a structure for investing, not an investment in its own right, it might also be a good time to take a closer look at the mix of assets in your super.

After COVID-induced market volatility, and with historically low-interest rates, your allocation may have drifted away from your strategic plan.

With the right advice, tax-effective super strategies offer an easy way to rebuild your retirement savings and achieve your overall wealth creation goals.

If you would like to discuss your super or investment strategy, call us today.

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This has been magnified by a digital media where everyone is vying for attention and the best way to get this attention is via headlines of impending crisis. This all adds to uncertainty and potentially erratic investment decisions. Against this backdrop, there are some key things for investors to keep in mind in order to be successful.

Make the most of the power of compound interest

The best way to build wealth is to take advantage of the power of compound interest and have a decent exposure to growth assets. Of course, the price for higher returns is higher volatility but the impact of compounding higher returns from growth assets is huge over long periods.

Don’t get thrown off by the cycle

Investment markets constantly go through cyclical phases of good times and bad. Some are short and sharp, some can spread over many years. The trouble is that cycles can throw investors off a well-thought-out investment strategy that aims to take advantage of longer-term returns. But they also create opportunities.

Invest for the long term

Looking back, it always looks obvious as to why things happened. Looking forward no-one has a perfect crystal ball. Usually, the grander the forecast the greater the need for scepticism as such calls invariably get the timing wrong or are dead wrong.

This has been evident throughout the coronavirus pandemic with all sorts of forecasts as to what it would mean, most of which provided little help in actually getting the market low back in March let alone the rebound. For most investors, it’s best to get a long-term plan that suits your level of wealth, age, tolerance of volatility, etc, and stick to it.

Diversify

Don’t put all your eggs in one basket. Having a well-diversified portfolio will provide a much smoother ride. For example, global and Australian shares provide similar returns over the very long term but in the March quarter, this year global shares in Australian dollars fell less than half as much as Australian shares.

Turn down the noise

After having worked out a strategy that’s right for you, it’s important to turn down the noise on the information flow and prognosticating babble and stay focussed.

The trouble is that the digital world we live in is seeing an explosion in information and opinions about economies and investments. But much of this information and opinion is of poor quality. Don’t waste too much time on individual shares or funds as it’s your high-level asset allocation that will mainly drive the return and volatility you will get.

Buy low, sell high

The cheaper you buy an asset (or the higher its yield), the higher its prospective return will likely be and vice versa, all other things being equal of course. So as far as possible, it makes sense to buy when markets are down and sell when they are up. Unfortunately, many do the opposite; buying after a big rally and selling after a collapse which just has the effect of destroying wealth.

Beware the crowd at extremes

It often feels safe to be in a crowd and at times the investment crowd can be right. However, at extremes the crowd is invariably wrong – whether it’s at market highs like in the late 1990s tech boom or market lows like in March.

Focus on investments with sustainable cash flow

If an investment looks too good to be true it probably is. By contrast, assets that generate sustainable cash flows (profits, rents, interest) and don’t rely on excessive gearing or financial engineering are more likely to deliver.

Take a step in the right direction and give the Integra team a call or book a meeting here.

Source: AMP Capital

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Some worry about placing a burden on their loved ones, others can’t afford the services they need. This year in particular with coronavirus health concerns for the elderly, many people who were looking to move into an aged care facility may have decided to stay home instead.

For those who might be weighing up or delaying moving into an aged care facility this year, these Government-funded care programs may be of interest.

Commonwealth Home Support Program

For those who are having trouble with everyday tasks and needing a little extra help, the Commonwealth Home Support Program might be useful.

The program is available to anyone aged 65 or older (50 years or older for Aboriginal or Torres Strait Islander people). It’s also open to anyone on a low income or homeless and 50 years or older (45 years or older for Aboriginal and Torres Strait Islander people).

It’s not a free service. You may need to help pay for the cost of services if you can afford it, but you won’t need to pay the full cost.

The program covers services such as meals and other food services, help with showering and grooming, help with medicines, health and therapy services and respite care.

Home Care Packages

Another government-funded service provides a higher level of support for older people living in their own homes.

Home Care Packages are for older people with more complex care needs. The package will help fund and organise many of the same services covered by the Commonwealth Home Support Program but you’ll need to be assessed first to determine your level of need. There are four levels ranging from basic care to high care.

The assessment will also consider how much you can contribute to the cost of your care. There are two types of fees:

• A basic daily fee (up to $10.75).
• An income-tested fee (up to $30.86 per day) is applicable for some. If you have to pay this fee, there are annual and lifetime limits on how much you can be asked to pay.

Where to begin?

Once your level under the Home Care Packages has been assessed and funding has been allocated, it’s up to you to choose a service provider in your area from an approved list on the Home Care Packages website. The government then pays the provider a subsidy to arrange the care that suits you.

Look for flexibility

The providers of Home Care Packages might all be following the same regulations set by the government, but they’re a mix of private and not-for-profit organisations and all operate quite differently, says Dana Sawyer, CEO of My CarePath, a private service that provides advice on aged care options.

Sawyer says it’s important to find a provider that is flexible and “will actually deliver true consumer-directed care”.

Everyone’s needs are different, says Sawyer. “For example, you might have someone who will need assistance every morning to shower, dress and get ready for the day. But once they’re up and going, they’re pretty good for the day and they can manage on their own. So, they’ll need an hour of service every day.

“Whereas someone else might live with a partner or family member who helps with showering and dressing. But the helper needs a break, so they might need someone to come in for three hours twice a week so they can go out to shops,” she says.

Understanding the financial intricacies of Home Care Packages is also important, says Sawyer. Providers charge different case management and administration fees, which comes out of the government funding allocated to you.

“Often we find people are in a very vulnerable position when they’re looking at aged care services. They may have had a fall or a hospital admission, or suddenly realise they can’t cope at home or even worse, there may be abuse happening within the home,” she says.

The thing to remember is that there is plenty of help available – both private and government-funded.

Take a step in the right direction and give the Integra team a call or book a meeting here.

Source: Colonial First State

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And while that’s all led to a whopping 76% of us believing it’s more important than ever to plan for a secure financial future, we still don’t know what that means when it comes to retirement.

The first step is figuring out how much you need. Once you know the figure you’re aiming for, how much you currently have, and how many years you are away from finishing work, you can put a plan in place to help you reach your retirement savings goals.

Ways you might consider doing this include:

• Topping up super with additional contributions. (Be aware of contribution caps).
• Replacing any super that’s been accessed through the COVID early release of super scheme.
• Paying down personal debt like loans or credit cards.
• Making additional home loan repayments so you own your home sooner.

Consolidating your super accounts so you aren’t paying multiple fees. (Check you don’t lose important insurance benefits or won’t be charged an exit fee first).

Plan to protect retirement savings

COVID has made us pay closer attention to how our retirement savings are invested and some people may have seen their super balances drop. If you’ve got 15 or more years before you retire, chances are, your balance will likely have time to recover with the usual long-term market movements. But there’s no guarantee, and it doesn’t mean you can just sit back and relax.

It’s worthwhile checking what type of superannuation investment product your retirement savings are invested in. Diversified or balanced options can help offer some protection against volatile market swings because they’re made up of assets other than shares, like buildings and other infrastructure (although these are still susceptible to fluctuations).

One of the most important things to do is avoid making hasty decisions. Do your research, and if possible speak to your financial adviser if you’re wondering whether it’s the right time to switch investment options or move your super from one fund to another. There may be a risk of locking in losses or unfavourable tax components that could have a significant impact on the kind of retirement you’d like.

Don’t bank on working for longer

Given what we’ve seen with COVID and the economy, it’s hardly surprising 30% of people said they were worried about sequencing risk – a market crash or downturn which significantly reduces the value of super savings. And if that happened, over 50% of us say we’ll work for longer to build our retirement savings back up.

However, that might not be a failsafe backup plan. ABS data shows that of the people who retired in 2018-19:

• 21% had to stop working due to sickness, injury or disability
• 11% retired because they were made redundant or couldn’t find work

Add to that the average retirement age was just 55.4 years, working for longer to top up your super isn’t an option for everyone.

Educating yourself and taking control of your financial future can help alleviate concerns about retirement. Having a plan and feeling financially prepared can give you peace of mind. You spend your life working hard, and deserve to feel excited, not anxious, about retirement.

Take a step in the right direction and give the Integra team a call or book a meeting here.

Source: AMP

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