The losers from the budget measures include those deemed to be high income earners and corporates.

Taxation Changes

Medicare low income thresholds

The Medicare low income thresholds will increase to $19,404 for individuals and $32,743 for families for 2011-12. The additional amount of threshold for each dependent child or student will also increase to $3,007.

The Medicare levy threshold for single pensioners below Age Pension age will increase to $30,451 for 2011-12. This ensures that pensioners below Age Pension age do not pay the Medicare levy when they do not have an income tax liability.

From 1 July 2012, the low income threshold for pensioners below Age Pension age will be fixed at the level applicable to seniors entitled to the Seniors Australian Tax Offset (SATO) as part of the merger of the pensioner tax offset into the SATO, which was announced as part of the Clean Energy Future Plan household assistance package.

Changes to tax rates for non-residents

The personal income tax rates and thresholds that apply to non-residents’ Australian income will be adjusted. From 1 July 2012, the first two marginal tax rate thresholds will be merged into a single threshold. The marginal rate for this threshold will align with the second marginal tax rate for residents (32.5%) and will apply to all taxable income below $80,000.

A non-resident with Australian taxable income of $80,000 is currently subject to tax of $23,630. This will increase to $26,000 ($80,000 x 32.5%) from 1 July 2012.

From 1 July 2015, the same marginal rate will rise from 32.5% to 33% (again aligning it with the second marginal rate for residents at that time).

Changes to the net medical expenses tax offset

A means test will be introduced for the net medical expenses tax offset (NMETO) from 1 July 2012.

For people with adjusted taxable income above the Medicare levy surcharge thresholds ($84,000 for singles and $168,000 for couples or families in 2012-13), the threshold above which a taxpayer may claim NMETO will be increased to $5,000 (up from $2,060currently) and indexed annually and the rate of reimbursement will be reduced to 10% (down from 20%) of eligible out of pocket expenses.

Those with income below the surcharge thresholds will be unaffected.

This offset is very valuable for clients in aged care facilities with a tax liability as the majority of aged care fees qualify as eligible medical expenses.

Mature age worker tax offset

The mature age worker tax offset (MAWTO) will be phased out from 1 July 2012 for taxpayers born on or after 1 July 1957. Access to the MAWTO will be maintained for taxpayers who are 55 or older in 2011-12.

The maximum offset of $500 is currently available for mature age workers with net income from working between $10,000 and $53,000.

Dependency tax offsets consolidated into one

The Government will consolidate eight dependency tax offsets into a single, streamlined and non-refundable offset that is only available to taxpayers who maintain a dependant who is genuinely unable to work due to carer obligation or disability from 1 July 2012.

The offsets to be consolidated are the invalid spouse, carer spouse, housekeeper, housekeeper (with child), child-housekeeper, child-housekeeper (with child), invalid relative and parent/parent-in-law tax offsets.

Standard work related deduction

The Government has announced it will not proceed with the standard deduction for work-related expenses which was announced in the 2010-11 Budget.

Schoolkids Bonus

The existing Education Tax Refund (ETR) for school expenses will be replaced with a ‘Schoolkids bonus’ from 1 January 2013. Each year, families will receive a Schoolkids bonus worth $410 for each primary school child and $820 for each child in high school.

The payment will be automatic and paid upfront, twice a year, in January and July. This means that parents will not have to keep receipts to receive a payment as with the current ETR system. The bonus will be available to families receiving Family Tax Benefit Part A and young people in school receiving Youth Allowance and some other income support payments.

For 2011-12, the ETR will be paid to all eligible families as a lump sum payment in June ahead of time, meaning that parents will not have to keep receipts or make claims in their tax return this year.

50% discount for interest income

The 50% tax discount for interest income announced in the 2010-11 Budget will not proceed. The measure was to provide a 50% tax discount on up to $1,000 of interest earned.

Removal of capital gains tax discount for non-residents

The 50% capital gains tax (CGT) discount will no longer be available for non-residents on capital gains accrued after 7.30pm on 8 May 2012. The CGT discount will remain available for capital gains accrued prior to this time where non-residents choose to obtain market valuations of assets as at 8 May 2012.

Capital gains tax and loss relief to facilitate super reforms

Amendments will be made to ensure income tax considerations do not prevent mergers of superannuation funds or transfers of existing default members’ balances and relevant assets in the transition to Stronger Super and MySuper.

From 1 June 2012 to 1 July 2017, optional loss relief will be available for mergers of complying super funds on the same terms and conditions as the former temporary loss relief that applied from 24 December 2008 to 30 September 2011, with some exceptions, including an optional roll over for capital gains and appropriate integrity provisions.

From 1 July 2013 to 1 July 2017, an optional roll-over and loss relief will also be made available for capital gains and losses on mandatory transfers of default members’ balances and relevant assets to a MySuper product in another complying superannuation fund.

This measure does not apply to Self Managed Super Funds

Capital gains tax – broadening the exemptions for certain compensation payments and insurance policies

Minor extensions to the CGT exemptions for certain compensation payments and insurance policies will be made with effect from 2005-06. The measure will disregard CGT consequences where a taxpayer receives compensation, damage or certain insurance proceeds indirectly through a trust. This will ensure that the taxpayer has the same CGT outcome as a taxpayer who receives such proceeds directly.

It also ensures that insurance policies owned by super funds that were treated as being CGT exempt prior to the 2011-12 Budget changes to compensation payments and insurance policies, continue to be CGT exempt.

Company tax cut

The proposed measure to lower the company tax rate from 2013-14 (to 29%) and to implement an early start to the company tax rate cut from 2012-13 (to 28%) for small business will not proceed.

The Government has been unable to progress this measure through the Parliament and will direct some of the savings to a loss carry back arrangement for companies.

Company loss carry-back

Companies will be allowed to ‘carry back’ their tax losses so they receive a refund against tax previously paid. Currently, businesses are only able to carry forward their tax losses to offset future profits and reduce future tax liabilities.

From 1 July 2012, companies will be able to carry back up to $1 million worth of losses to get a refund of tax paid in the previous year. From 1 July 2013, companies will be able to carry back up to $1 million worth of losses against tax paid up to two years earlier. This will provide a cash benefit of up to $300,000 a year. This will be available to companies and entities that are taxed like companies and apply to their revenue losses only.

The government will release a discussion paper on this measure shortly.

Business instant write-off

From 1 July 2012, small business will be able to immediately deduct the cost of any new business asset costing less than $6,500 for as many assets as they purchase. Businesses will also be able to write-off assets costing $6,500 or more in a single pool (15% in the year they are purchased and 30% in each subsequent year).  From 1 July 2012, small businesses will be able to instantly write off the first $5,000 of the cost of a new or used motor vehicle.

Increase in managed investment trust final withholding tax rate

The managed investment trust final withholding tax rate will be increased from 7.5% to 15% from 1 July 2012. This reverses a 2009-10 Budget decision to lower the tax rate from 30% to 7.5%.

Superannuation Changes

Deferral of higher concessional contributions cap

The start date of the higher concessional contributions cap will be deferred by two years, from 1 July 2012 to 1 July 2014.

Under the higher concessional contributions cap measure, individuals aged 50 and over with superannuation balances below $500,000 will be able to make up to $25,000 more in concessional contributions than allowed under the general concessional contributions cap.

For 2012-13 and 2013-14, all individuals will be able to make concessional contributions of up to $25,000 as permitted under the general concessional contributions cap. In 2014‑15, the general cap is likely to increase to $30,000 through indexation, and the higher cap would then commence at $55,000.

Reduction of higher tax concession for concessional contributions of very high income earners

From 1 July 2012, individuals with income greater than $300,000 will have the tax concession on their concessional contributions reduced from 30% to 15% (excluding the Medicare levy).

The definition of ‘income’ for the purpose of this measure includes taxable income, concessional contributions, adjusted fringe benefits, total net investment loss, target foreign income, tax-free Government pensions and benefits, less child support.

If an individual’s income excluding their concessional contributions is less than the $300,000 threshold, but the inclusion of their concessional contributions pushes them over the threshold, the reduced tax concession will only apply to the part of the contributions that are in excess of the threshold.

‘Concessional contributions’ for the purpose of this measure include employer contributions (superannuation guarantee and salary sacrifice contributions) and personal contributions for which a deduction has been claimed. For members of defined benefit funds (funded and unfunded), it will include notional employer contributions.

The reduced tax concession will not apply to concessional contributions which exceed the concessional contributions cap and are therefore subject to ‘excess contributions tax’.

Employment termination payment tax offset

From 1 July 2012, only that part of an affected employment termination payment (ETP), such as a golden handshake, that takes a person’s total annual taxable income (including the ETP) to no more than $180,000 will receive the ETP tax offset.

Amounts above this whole-of-income cap will be taxed at marginal rates. The whole-of income cap will complement the existing ETP cap ($175,000 in 2012-13, indexed) which ensures that the tax offset only applies to amounts up to the ETP cap.  The ETP tax offset ensures that ETPs up to the ETP cap are taxed at a maximum tax rate of 15% for those over preservation age and 30% for those under preservation age. Existing arrangements will be retained for certain ETPs relating to genuine redundancy (including to those aged 65 and over), invalidity, compensation due to an employment-related dispute and death.

Social Security Changes

Liquid assets waiting period

From 1 July 2013, the maximum reserve amount will increase for the liquid assets waiting period for recipients of particular income support payments. Liquid assets are assets in the form of cash or those which can be easily converted into cash, including shares and term deposits.

A single person without dependents will now have an increased maximum reserve amount of $5,000, while a person who is a member of a couple and/or has a dependent child will now have an increased maximum reserve amount of $10,000. The change will affect applicants for Newstart Allowance, Youth Allowance, Sickness Allowance and Austudy payments.

New income support supplement

Commencing on 20 March 2013, an ongoing, non-taxable payment will be made to recipients of Newstart Allowance, Sickness Allowance, Youth Allowance, Austudy, ABSTUDY, Special Benefit, Parenting Payment Single, Parenting Payment Partnered, Transitional Farm Family Payment and the Exceptional Circumstances Relief Payment to assist with the cost of living pressures.

The new supplement will provide $210 per annum for eligible singles and $175 per annum for each member of an eligible couple. The supplement will be paid in two instalments, in March and September each year.

Australian working life residency

From 1 January 2014, Age Pension recipients who are overseas for more than 26 weeks will be paid their maximum entitlement of pension only if their Australian Working Life Residence (AWLR) is 35 years or more, rather than 25 years as applies under current arrangements. Pension recipients with less than 35 years AWLR will be paid a proportional rate.

Pensioners overseas on the date of implementation will not be affected by this change unless they return to Australia for at least 26 weeks. In addition, all partnered pensioners residing overseas will be paid based on their own AWLR rather than their partner’s AWLR.

Portability of Australian Government payments

From 1 January 2013, the period of time that people who travel overseas will continue to be paid will be reduced from 13 to 6 weeks for most income support and family payment recipients.

Beneficiaries who are outside Australia on the date of implementation will retain the 13 week portability of their payments until they return to Australia. The Age Pension will be excluded as it can be paid overseas indefinitely, once certain criteria are met. Some payments such as Parenting Payment and Family Tax Benefit also have a requirement which means that the portability period is not reset until the person has returned to Australia for a period of 13 weeks. This return period will also be reduced to six weeks. This measure affects the following payments and benefits: Disability Support Pension, Parenting Payment, Carer Payment, Carer Allowance, Widow B Pension, Wife pension, Widow Allowance, Partner Allowance, Youth Allowance (student), Austudy, Mobility Allowance, Telephone Allowance, Pension Supplement, Utilities Allowance, Seniors Supplement, Clean Energy Supplement, Low Income Supplement, Concession Cards, Family Assistance, and Paid Parental Leave. Family Tax Benefit Part A payments above the base rate will be reduced to the base rate after 6 weeks of a temporary absence from Australia.

Change to age of eligibility for Family Tax Benefit Part A

From 1 January 2013, the eligibility for Family Tax Benefit (FTB) Part A will be limited to young people under 18 years of age or, where a young person remains in secondary school, the end of the calendar year in which they turn 19.

Individuals who no longer qualify for FTB Part A may be eligible to receive Youth Allowance subject to usual eligibility requirements.

Increasing the rate of Family Tax benefit Part A

From 1 July 2013, the maximum payment rate of FTB Part A will increase by $300 per annum for families with one child and $600 per annum for families with two or more children.

For families receiving the base rate of FTB Part A, the increase will be $100 per annum for families with one child and $200 per annum for families with two or more children.

Aged Care measures

Means testing

From 1 July 2014, a new income test will be introduced for Home Care packages. Under these arrangements, full pensioners will not pay any income-tested care fee, while part pensioners will contribute up to a maximum of $5,000 a year, and self-funded retirees up to $10,000 a year, for their care. Care recipients will continue to pay a basic fee of up to 17.5% of the basic Age Pension.

From 1 July 2014, income and assets tests will be combined to strengthen the means testing arrangements that currently apply to residential care. An annual cap of $25,000 will apply to care contributions in residential care. Care recipients will continue to pay a basic fee, currently up to 84% of the basic Age Pension.

Aged care recipients will not contribute more than the cost of their care. In addition, a lifetime cap of $60,000 will be applied to both home care and residential care contributions. The lifetime and annual caps will be indexed.

Residents in permanent care in an aged care home as at 30 June 2014 and all respite residents will not be affected by these changes.

Few details have been provided on how this new test will apply but it appears that aged care fees will increase for part pensioners and self-funded retirees. However, as income will continue to be assessed under Centrelink rules, annuity strategies will still be relevant to minimise fees.

Accommodation supplement

From 1 July 2014, for aged care homes that are newly built or significantly refurbished from 20 April 2012, the maximum rate of the accommodation supplement will be increased from $32.58 to $50.00 a day (in current prices). In addition, all residentsentering permanent residential aged care from 1 July 2014 will have the choice to pay for their accommodation through a fully refundable lump sum payment, periodic payments, or a combination thereof.

Providers of residential aged care services will be required to insure any accommodation bonds that they hold for residents entering care on or after 1 July 2014.

A capped number of aged care places that will allow residents to purchase higher level amenities and hotel-type services will be released. The Government component of the extra services fee will be abolished for residents who enter care after 1 July 2014.

These are all yet to be legislated measures and announcements however if you have any questions with regards to your current arrangements please do not hesitate in contacting me at the office 1300 772 643.

Globally we have continued to see the US Economy provide a moderate recovery with their Gross Domestic Product Growth around the 2.5% level for the current income year.  The trend is continuing with positive signs in the job market and manufacturing areas which is also being assisted by a weaker US dollar at the moment.

While this growth continues there is further expectations by global economists that the Federal Reserve in the US will embark on QEIII (Quantative Easing mark 3 or further stimulus payments to ensure that the growth continues).  This is generally seen as a positive sign globally as this will provide further liquidity and enhance equity and commodity markets around the world.

The US and global shares are up around 12% calendar year-to-date and Australian shares up 7% (Australian shares are up but still behind the rest of the world thanks to relatively higher interest rates, the strong Australia Dollar and worries regarding China).  Although this is the best first quarter returns from the Australian Share market for 2 years we are still down slightly for the financial year to date.

There is still risk in the broader global economy and we are keeping an eye on the happenings in Italy, Spain and France to ensure that the positive signs out of the Euro Zone are sustainable as well as watching developments from China particularly around money supply growth (this is an indicator to availability of funds and in turn positive economic growth) and we also will be watching for further movements in the Australian Dollar.

Overall it seems things have settled in the markets with some further resolution with the european debt issues however we are still going to see some further range trading until we have more solid signs from the world economy in the shorter term.

Refund of excess Concessional Contributions

On Thursday 1st March 2012, the Government introduced legislation focusing on the refund of excess concessional contributions (the ones where you get a tax benefit).  The introduction of the legislation provides certainty for people who exceed the concessional contribution limits by less than $10,000 for any financial year from 1 July 2011.  Remembering that the responsibility sits with you as the members of the fund not your employer or the ATO.

The refund of excess concessional contributions less than $10,000 will apply to contributions made into superannuation from 1 July 2012.  Consistent with the draft legislation announcement, the refund of the excess concessional contribution will continue to operate on a once-off basis and effected clients will need to include the refunded amount within their personal income tax return for the financial year in which the contribution was made.

If you exceed the $10,000 limit you will not gain access to this refund mechanism and will need to rely on the current process of applying to the Australian Tax Office to have the excess concessional contributions disregarded or re-allocated to another financial year.

The ATO will use its current excess contributions processes to give effect to refunds and these will only be offered to a client when the ATO has done its preliminary assessment.

This could be years after the actual contributions were made. If the client accepts the offer, the ATO will serve a release notice on the super fund for 85 per cent of the excess concessional contribution (net of contributions tax) and the super fund will pay that amount to the ATO.

The ATO process is to then:

•   includes 100 per cent of the concessional contribution in the individual’s assessable income
•   applies a 15 per cent rebate for the tax already paid by the super fund
•   refunds the contribution net of any additional tax payable.

This change should not mean that you disregard your super contribution strategy, you should ensure that you understand what you have in place and what the contribution limits are.

Confirmation of non-indexation of the Concessional Contribution Limits

As announced within the Mid Year Economic and Fiscal Outlook on Tuesday 29th November 2011, the Government will delay indexation of the $25,000 concessional contribution limits until 2014/15 where it is expected it will increase to $30,000.

The concessional contributions limits has been $25,000 since 2009/10 when the original limit of $50,000 was halved.  Consequently there has been no indexation of the concessional contributions cap since caps were introduced in 2007/08.

Our view is that this needs to be reviewed to ensure people focus on their retirement savings without restriction!

Catch up Concessional Contribution Limits

No news is not good news! – Isn’t it?!

The transitional concessional contributions limits of $50,000 applying to clients age 50 and over during a financial year is set to expire at 30 June 2012.  To date, no legislation has been released (or tabled within Parliament) for the proposed ‘catch up’ concessional contribution limits for clients age 50 and over who have less than $500,000 in superannuation.

The Government has advised it is committed to following through with the proposed extension of the $50,000 limits, however they have referred it to a new consultative body, the Superannuation Round table, to advise on implementation issues. The issue is currently under discussion.

Lets hope that get an act on with this process as if current timing is anything to go by we will be at 30 June 2012 in no time at all!

As always if you have any questions with regards to your specific setup or situation please do not hesitate in contacting our office 1300 772 643.

 - Scott and the Money Mechanics Team.

Scott Malcolm (scott@money-mechanics.com.au) is Director of Money Mechanics a fee for service advice firm who are authorised to provide financial advice through PATRON Financial Advice AFSL 307379.

The information provided on this article is of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs.  Before acting on this information you should consider its appropriateness having regard to your own objectives, financial situation and needs. 

The Federal Government through ASIC – the Australian Securities and Investment Commission have some great online resources which you can use to plan for your savings, retirement or debt reduction.

Cash Flow Planner – Budgeting Tools:

Check out the link here.

Savings Planner – How much do you need to put away?

Check out the link here.

Mortgage Calculator:

Check out the link here.

Superannuation and Retirement Planning:

Check out the link here

Credit Card Debt Calculation:

Check out the link here.

These can be a great way to get the bigger picture on your current setup and arrangements.  If you need assistance with mapping this out further contact our office 1300 772 643 or info@money-mechanics.com.au.

2012 is the Chinese year of the dragon.  It is said to be a year full of promise and change!  A great time for business and moneymaking!

With this in mind, here are a few tips to help you get ahead this year.

Set Your Goals

One of the most common (and commonly broken) New Year’s resolutions is to save more money.  But nobody saves money for the love of saving money.  To make this resolution stick you need to first know what you’re saving for and how it is tied to your values in life!  Money on it’s own is just a means to an end, not the end itself.

Set some measurable and meaningful goals with deadlines and remind yourself regularly of what you’re really working towards.

Your Cash Flow Matters

Often people who earn good money complain that they don’t know where all their money goes.  In order to have money, you need to know what you’re spending.

Determine how much income is coming in, how much is being spent, where it goes and how frequently. Then work out how much you need to achieve your goals.  The key is to ensure your cash flow plan is both realistic and sustainable. Give yourself a little room to still enjoy life and remember to reward yourself when your goals have been achieved (without breaking the bank of course!)

Get the Best Deal

One of the simplest ways to make more money is to always get the best deal.

Review your mortgage and check the interest rate you’re paying. The Reserve Bank has been decreasing rates lately to help reduce any negative effects of the European debt crisis.

Are you getting the best deal? Compare interest rates and the mortgage features that are important to you, and don’t forget about the exit fees. While you’re at it, shop around for the best deal on your electricity, gas, mobile, internet and insurance.  Check out www.privatehealth.gov.au for a free comparator to your health insurances!

Are you protected? Do you have a back up plan?

Speaking of insurance – do you have enough?

Life inevitably changes and your level of insurance may no longer be adequate for your circumstances. Income protection is often the most overlooked type of insurance but it covers you if you’re sick or injured and temporarily unable to work. It can ensure your living expenses such as rent, mortgage, household and medical bills can still be met and what’s more, it’s completely tax deductible. Review your insurance today and get the right level of cover.

Check your Super

If you have multiple super accounts, you’re probably paying multiple fees. Consolidate your super and check that you haven’t exceeded the $25,000 cap on super contributions for people under 50. You don’t want to be slapped additional tax after all that super saving!  From 1 July 2012 the contribution limits will change for those over 50 so watch this space to ensure you are within the limits.

Get Empowered

Make 2012 a year for more education and greater understanding around your money.  Whether it’s reading some finance blogs, subscribing to one of the consumer finance magazines (www.moneysmart.gov.au), doing a short course to increase your financial IQ or coming to see us regularly – the more informed you are, the better your decisions will be.

For more information and specific advice for your needs please contact us.

I found this today during my facebook and twitter readings and just had to share it – these are not my words but WOW!!

- Scott 18 January 2012

By Bronnie Ware
For many years I worked in palliative care. My patients were those who had gone home to die. Some incredibly special times were shared. I was with them for the last three to twelve weeks of their lives. People grow a lot when they are faced with their own mortality.

I learnt never to underestimate someone’s capacity for growth. Some changes were phenomenal. Each experienced a variety of emotions, as expected, denial, fear, anger, remorse, more denial and eventually acceptance. Every single patient found their peace before they departed though, every one of them.

When questioned about any regrets they had or anything they would do differently, common themes surfaced again and again. Here are the most common five:

1. I wish I’d had the courage to live a life true to myself, not the life others expected of me.
This was the most common regret of all. When people realize that their life is almost over and look back clearly on it, it is easy to see how many dreams have gone unfulfilled. Most people had not honoured even a half of their dreams and had to die knowing that it was due to choices they had made, or not made.

It is very important to try and honour at least some of your dreams along the way. From the moment that you lose your health, it is too late. Health brings a freedom very few realise, until they no longer have it.

2. I wish I didn’t work so hard.
This came from every male patient that I nursed. They missed their children’s youth and their partner’s companionship. Women also spoke of this regret. But as most were from an older generation, many of the female patients had not been breadwinners. All of the men I nursed deeply regretted spending so much of their lives on the treadmill of a work existence.

By simplifying your lifestyle and making conscious choices along the way, it is possible to not need the income that you think you do. And by creating more space in your life, you become happier and more open to new opportunities, ones more suited to your new lifestyle.

3. I wish I’d had the courage to express my feelings.
Many people suppressed their feelings in order to keep peace with others. As a result, they settled for a mediocre existence and never
became who they were truly capable of becoming. Many developed illnesses relating to the bitterness and resentment they carried as a
result.

We cannot control the reactions of others. However, although people may initially react when you change the way you are by speaking honestly, in the end it raises the relationship to a whole new and healthier level. Either that or it releases the unhealthy relationship from your life. Either way, you win.

4. I wish I had stayed in touch with my friends.
Often they would not truly realise the full benefits of old friends until their dying weeks and it was not always possible to track them down. Many had become so caught up in their own lives that they had let golden friendships slip by over the years. There were many deep regrets about not giving friendships the time and effort that they deserved. Everyone misses their friends when they are dying.

It is common for anyone in a busy lifestyle to let friendships slip. But when you are faced with your approaching death, the physical
details of life fall away. People do want to get their financial affairs in order if possible. But it is not money or status that holds the true importance for them. They want to get things in order more for the benefit of those they love. Usually though, they are too ill and weary to ever manage this task. It is all comes down to love and relationships in the end.
That is all that remains in the final weeks, love and relationships.

5. I wish that I had let myself be happier.
This is a surprisingly common one. Many did not realise until the end that happiness is a choice. They had stayed stuck in old patterns and habits. The so-called ‘comfort’ of familiarity overflowed into their emotions, as well as their physical lives. Fear of change had them pretending to others, and to their selves, that they were content. When deep within, they longed to laugh properly and have silliness in their life again. When you are on your deathbed, what  others think of you is a long way from your mind. How wonderful to be able to let go and smile again, long before you are dying.

Life is a choice. It is YOUR life. Choose consciously, choose wisely, choose honestly. Choose happiness.

Source :http://www.ariseindiaforum.org/nurse-reveals-the-top-5-regrets-people-make-on-their-deathbed/

A good overview on the Aussie Dollar, Share Market and Property markets.

Any questions with regards to your current setup and arrangements contact our office today 1300 772 643.

In October we saw a rebound in share markets driven by a combination of improved economic data out of the US and signs Europe is heading towards a “comprehensive” response to its sovereign debt crisis.

Saving the Eurozone

After some delay, Europe has finally announced a range of measures.  The downside with most policy is that much of the detail is yet to be worked out so it looks more like a work in progress than the final solution.  Keep in mind that this is the third attempt by Europe to get its debt problems under control so continue to watch this space as we are not out of the woods yet but things are starting to look a little better.

So what are the measure that have been agreed by the Eurozone?

• A 50% reduction for private investors in Greek bonds.

• A program to recapitalise banks thought to require around €106 
billion, with banks given till mid-2012 to get core capital ratios up to 9% (after writing sovereign bond holdings down to market levels), after which they have to rely on their governments or lastly the European Financial Stability Facility (EFSF) for funding.

• A scaling up in the firepower of the remaining funds in the EFSF (of around €200 billion) to around €1 trillion, by using it to provide first loss insurance on sovereign bonds and associating it with a special purpose investment vehicle which would buy bonds issued by struggling countries such as Spain and Italy, with funding hopefully coming from non-European sovereign wealth funds, the International Monetary Fund (IMF) and private investors.

Measures ‘to further integrate fiscal policy’

The latest set of measures goes further than those before and should help to head off a near-term meltdown. Europe has accepted the reality that Greece is insolvent (with its debt to gross domestic product (GDP) ratio projected to grow to 180% of GDP next year), 
so it has moved to further reduce Greece’s debt burden and protect banks as well as other countries in the process. 
  However, just like with financial planning, having a plan is one thing, but implementation is another.

The powers that be in Europe haven’t done too well on this front over the last 18 months and it is no guarantee this will end of the European debt crisis.

Where to From Here?

We are at least starting to move in the right direction.  US economic data has picked up some pace recently, consistent with growth of around 2-2.5%.  This is not great, but is also not recession territory, which was feared a month ago.

Overall, the economist around are becoming more confident that the global recovery will continue with around 3% global growth next year, with 1% in advanced countries and 5% in the emerging world. This is sub-par but not in recession territory which is comforting.

Since early October share markets are up by around 10 – 12%.
A further bout of short-term weakness cannot be ruled out and the ride is likely to remain volatile.

There is value in the share markets (particularly in Australian shares) with grossed up franking credits, dividend yields still high at 6-7%.  For financials and blue chip stocks, dividend yields are even higher than this up to 8 -9%.  This is well above bank term deposit rates and means share values only need to rise by 3% per annum or so to provide pretty attractive returns for long term investors.

This added to the interest rate cut today to 4.5% and income producing shares with the right time frame view can be an attractive strategy for long term income needs.

US economic data has improved with solid September quarter profit results.  
Europe is far from out of the woods, but is moving to substantially reduce the risk.  After the September quarter, which is normally the weakest quarter of the year, October often marks an important turning point ahead of some strengthening into year–end. So far, it looks to be the same this year.

My advice still stands for clients to follow a goals based investment approach and ensure they have clarity around their timeframes and need for income and or growth based investment returns.

There are opportunities around at the moment but we will continue to see this volatility.

If you need assistance in exploring these further talk to a professional but most importantly start your journey to being free around your money and creating wealth with understanding.

Scott Malcolm (scott@money-mechanics.com.au) is Director of Money Mechanics (ph: 6257 5557) a fee for service advice firm who are authorised to provide financial advice through PATRON Financial Advice AFSL 307379.

The information provided on this article is of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs.  Before acting on this information you should consider its appropriateness having regard to your own objectives, financial situation and needs. 

Follow these tips to emerge in the new year debt free.

Set a cash flow plan

First take some time out to review your current finances.  Determine how much you can realistically afford to spend without going into debt for it!  Remember to include gifts and entertainment as well as all the small things that come with the season like cards, stamps, decorations, food and travel.  Next make a list of everyone you plan on giving a gift to and decide how much you want to spend on each person.  Finally check that the total figure you want to spend is not beyond your means.  You may need to reduce the amount you’re able to spend on each person or reassess the number of people on your list.  Or some more creative gifts to give that don’t cost you money…

Start early

Before you know it, Christmas will be upon us. In fact, most of the shopping centers have already started spruiking their Christmas wares.  By shopping early, you can look out for sales and great deals for later in the year.  You also have time to comparison shop rather than last-minute shop; where your panic to pick up something (anything) will usually mean spending more.  Also check out the online stores that may require some delivery time but will get you a great discount!

Look for savings and incentives

If you choose to use your credit card, look for any rewards or discounts that may be available through your credit provider.  Also try to shop online first as you’re less likely to impulse shop and can easily compare prices across various websites. There are plenty of online retailers that offer savings across a number of product categories such as fashion, skincare, make up, fragrances, books and electrical appliances. You can also find discounts through online community classifieds, auctions and daily deal sites.

Remember who you’re shopping for

When you’re shopping for family and friends, it’s very easy to find things that will be just perfect for yourself. This is a very common mistake that is sure to break your budget. Christmas shopping isn’t a ‘one for you, one for me’ deal. Don’t buy it. If you really need to have it, wait until after the holidays when it’s more likely to be on sale.   Or do what a few of my clients do and shop for next Christmas during the post Christmas sales!

Stick to your plan

Remember that a deal is not a deal if you can’t afford it. Once you reach your budget limit, stop.

Save early

Get off the overspending merry-go-round by saving early for next year. As soon as the holiday season is over, determine next year’s Christmas spend and set up automatic direct debits into a dedicated Christmas savings account. You’ll be all set by the time the department stores bring out their tinsel again.

If you need assistance on how to manage debt and build a savings plan, talk to a professional but most importantly start your journey to being free around your money and creating wealth with understanding.

Scott Malcolm (scott@money-mechanics.com.au) is Director of Money Mechanics (ph: 6257 5557) a fee for service advice firm who are authorised to provide financial advice through PATRON Financial Advice AFSL 307379.

The information provided on this article is of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs.  Before acting on this information you should consider its appropriateness having regard to your own objectives, financial situation and needs. 

This Stanford graduation speech Steve presented in 2005 resonates with the financial life planning approach we use with clients and some perspective on life – well worth the 14 minutes – RIP Steve Jobs.