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Do You Want A 100 Percent Return On Your Investment?

Thu, 03 May 2012 04:22:00 GMT

If you earn less than $31,920 this financial year and 10% or more of your income comes from employment or carrying on a business, you may be eligible to get 100% return on a $1,000 contribution to super before 30 June 2012.

The Government’s offer won’t last forever as there are plans to change the way the Government Co- Contribution is calculated or whether it will exist at all in the future.

If you meet the criteria above (plus a few others e.g. being under the age of 71) and you contribute $1,000 as an after tax contribution to a complying super fund the Government will match this with a $1,000 payment into your super fund.

If you earn more than $31,920 it’s not all bad news, you may still be eligible for some Government Co- Contribution. Once you earn above $61,920 unfortunately Julia thinks you earn too much and you are not eligible for this benefit.

If you want more information on eligibility please contact the office on (02) 4023 4139.

Kind regards,

Gavin Murray

I Don't Like Caps!

Mon, 02 Apr 2012 05:00:00 GMT

Over 50? You May Not Like This.

The Government has announced that, from 1 July 2012, individuals aged 50 and over with total superannuation balances below $500,000 will retain a higher concessional cap. This cap will be $50,000 in 2012-13 and then the amount of the standard cap plus an additional $25,000 in subsequent financial years.

There still appears to be no draft legislation introduced, and with the absence of any amending legislation in this area means that the standard concessional cap of $25,000 will apply regardless of age from 1 July 2012.

Why would the Government Do This?

The Government announced on 2 May 2010, as part of Stronger, Fairer, Simpler: A Tax Plan for our Future that it would deliver substantial improvements in retirement savings and a fairer distribution of superannuation tax concessions. As part of this plan, individuals with low superannuation savings will be allowed to make additional ‘catch up’ contributions close to retirement to improve the adequacy of their retirement savings.

I, like many others seem to be failing to see where there is ‘fairer distribution of super tax concessions’. I am not certain who is benefiting from this legislation.

This financial year the cap for over 50’s is $50,000. They are taking this away and saying now only people over 50 with balances below $500,000 can continue with the current cap. No one has actually gained any benefits or further super tax concessions, benefits have been taken away.

The most common question I am getting from clients is - “Does the Government really want us to save for retirement? This legislation would suggest not. “

The word getting around is that the purpose of this proposed legislation is that less super contributions means more personal tax collection for a ‘Government in the red.’

How will they administer this proposed legislation? They do not know, and I do not know. They have put forward a few different options in a consultation paper released in February so we will wait and see.

If you are not sure if this is relevant to you, get in touch via phone or email, and as new information comes to light I will be sure to keep you updated.

Regards,

Gavin Murray

P (02) 4023 4139

Is My Term Deposit Guaranteed?

Wed, 21 Mar 2012 00:17:00 GMT

Mr Swan Changes The Rules

On 11 September 2011, the Treasurer, Wayne Swan, released the much awaited details on the revised Government guarantee on deposits (officially called the Financial Claims Scheme or FCS).

From 1 February 2012, the new deposit guarantee “permanent cap” was reduced to $250,000 and will continue to apply per person per Authorised Deposit-taking Institution (ADI).

What About Existing Term Deposits?

Term deposits already in existence as at 10 September 2011 will continue to be covered up to $1m until the earlier of the scheduled maturity date or 31 December 2012.

What Could You Do At Maturity?

Revisit your term deposit portfolio and decide if you want to make changes. For instance you may decide to spread your term deposits across various providers ensuring a maximum $250,000 is deposited with each institution.

I Want To Take My Money Out Of Super And Put It Into Term Deposits

This seems to be a common conversation for people at the moment.

Good news, there is no need to take the money out of super, as term deposits are readily available inside many super products. Earnings from term deposits inside super are taxed at a maximum 15% for people in accumulation phase and tax free for people in pension phase.

If you want to find our more contact the office on (02) 4023 4139.

I Hurt My Knee

Thu, 15 Mar 2012 00:31:00 GMT

That Fateful Day in August 2011

Like many people I know, I enjoy the odd recreational game of sport on the weekend for socialising and exercise. Since I started playing sport at the age of 5 I had not suffered any major injuries besides the odd hamstring. However in August 2011 this all changed when I tore the Anterior Cruciate Ligament in my right knee. At the time I didn’t realise how serious the injury was so I have been going on with life ever since and simply putting up with the pain. Hopefully the pain comes to an end when I get surgery later this month. My biggest concern is what happens with work?

Luckily I work in an office job that requires me to endure very little physical activity besides getting up to go to the printer. I do think to myself this could have been a lot worse, what if this was an even more serious injury?

It could have been worse

By this I am referring to people that do have a job that requires physical activity such as builders, plumbers or people that travel a lot for work. How would they have coped? Particularly those who are self employed without employer leave entitlements.

No longer bullet proof

Sadly, I have to admit that I am no longer bullet proof as I once thought at a young age, and as time goes by and my financial responsibilities increase I feel comfort in knowing that if my situation was worse my income is protected. Yes, it costs me money like any other type of insurance but income protection is the one thing that supports me in what I do every day from buying a coffee to paying the mortgage.

What about Private Health?

Whilst some costs are covered for my surgery with Private Health, there is still a big gap for me to pay on top of normal day to day living costs. Not to mention the Physio I will need for weeks after surgery. It all adds up.

Whilst I am sure my wife would relish at the idea of supporting us both financially, the reality is being self employed I could probably only go for a maximum 2-3 weeks without income. That doesn’t take into account additional medical costs.

I want you to think about your own situation, how long could you last without income if you get injured or become ill?

If you would like more information on protecting your income please give me a call on (02) 4023 4139 begin_of_the_skype_highlighting (02) 4023 4139 end_of_the_skype_highlighting or email me gavin@lifepathadvisers.com.au

The Commission Debate - Part 1

Wed, 11 Aug 2010 09:33:00 GMT

Over the past years Financial Advisers have come under much scrutiny for the way we get paid. I have been in the Industry for over 8 years now and I have previously worked for companies that charge and collect fees in various different ways.

I have spoken to many colleagues over this time and there seems to be a concern amongst many advisers, particularly those who have been in the industry for some time (even dating back to the old Life Agent days) that their business is being stripped away by this decision remove all commissions from Investment and Superannuation products. I think we need to be careful here and acknowledge that there are advisers who do take commissions and they are providing sound advice to their clients.

Don't get me wrong, I am not ignorant to the fact that there are still advisers out there doing the wrong thing, but there are also plenty of other professionals like Real Estate Agents, Accountants and Solicitors doing the wrong thing by their clients at times. We are not alone there.

I do not believe the issue here is how we get paid; it is transparency as to how we get paid and improving financial literacy. All fees and commissions must currently be disclosed inside an advice document in writing to the client. If an adviser recommends a product where they are paid 3% upfront commission upon placing an investment, as a consumer I would like to know why this product and what other options are there? Whether clients are aware or not there is actually a section in the advice document which should explain the adviser's rationale behind product selection. It is our responsibility to explain this rationale to you which I believe is currently not being done very well and this is where the issue starts. It would be interesting to see how Storm Financial justified their recommendations.

One positive thing that has come out of this whole debate over commissions is that it has created differentiation in the market, where consumers have more choice. If a consumer is not comfortable with the way an adviser is remunerated and they feel this may cause a conflict of interest in the advice process, there are plenty of advisers out there, me being one, who do not take commissions on Super and Investment products.

So what about the future? I think a few things need to happen moving forward.

The Financial Planning Association (FPA) and the Government need to spend more money on improving financial literacy and awareness amongst Australians, getting them to understand the value of advice and that you have to pay for good advice.
Upfront Financial Planning advice fees need to be 100% tax deductible. This may encourage people to seek a plan from more than adviser if the fees incurred are 100% tax deductible.

For Lifepath Advisers, it is business as usual as we are not really affected by the removal of commissions on Super and Investment products. I see this as an opportunity for our Industry to really focus on the strategy which I believe makes the big difference for people in the end, not the product.