Six EOFY tips to make sure your finances are in order

End of Financial YearEnd of Financial Year is in full swing so it is the time to get focused on your money life admin before 30 June ticks over.

Our top tips for end of financial year this year are:

 

1. Check your capital gains / loss position

We have had another positive year in investment markets. This means if you have sold any investments you may have triggered a capital gain. Implementing a strategy prior to 30 June could result in paying less tax on these gains.

 

2. Boost any income deductions on your investments

If you know you have earned more income this year than in the past (from the sale of an asset or maybe a voluntary redundancy payout) consider prepayment of interest on any investment loans you may hold.  This could also lock in some protection from a future rate rise this next 12 months.

 

3. Consider additional contributions to Superannuation

This financial year was the first year that anyone under age 65 who makes a personal contribution to super can elect to claim this as a tax benefit.  If you haven’t salary sacrificed as a PAYG Employee or if you are self employed.

Adding some extra money to super and claiming this as a deduction (make sure you let the super fund know of your intention) can be a great way to boost your tax deductions while investing in your longer term future!  It could make a lifetime of difference.

Make sure you stay under the $25,000 Concessional Contribution Limit (this includes anything that your employer has paid into super on your behalf).

 

4. Review your Income Protection Insurance

If you are like most Australian’s you are probably under insured.  Life gets busy and life admin is not always top of mind.

For most people the ability to continue to earn income if they are unable to work based on accident or illness is paramount.  Having an income protection policy in place can transfer this risk.

Setting up a new policy or reviewing an older one and prepaying the premium for the next 12 months before 30 June could give you a tax deduction before the end of financial year.

 

5. Get your receipts in order

Start to review your past expenses for the year.  My accountant has me well trained to have all my receipts in order for the business and for me personally so I can maximise any deductions.

If you haven’t got them in order start now, or get yourself setup for next financial year.

Check out some of the funky storage apps on your phone which can be a great way to track expenses and receipts! (Shoeboxed, DropBox and even the Australian Taxation Office app has a easy way to stores these)

 

6. Work related Tech Update

If you have been saving to upgrade your home office computer, laptop or tablet (the ones you use to track your investments and do your tax or work from home) you could buy a new one before the end of financial year to boost your deductions in the current year.

Talk to your accountant about depreciation and make sure you keep a log of time spend working from home to back up your claims.

 

Happy End of Financial Year!  If you need assistance with any element of your money life, contact our office 1300 772 643.

 

Seek out further advice and start your journey to being free around your money and creating wealth with understanding.

 

Scott Malcolm has been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics.  Money Mechanics is a fee for service financial advice firm who partner with clients in Melbourne, Canberra and Sydney to achieve their life and wealth outcomes. We 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. 

 

Federal Budget 2018

As a pre-election year Budget this year there are some tax benefits being provided as well as some small tweaks to the tax, super and social security system

We have provided some of the highlights to Budget 2018, so grab your morning coffee or tea and if you have any questions please do not hesitate in contacting us at the office.

Before reading the below note that these are only announcements and will require passage through Parliament before being legislated.Read more

My 2 Cents on the Royal Commission Into Financial Services

I am proud to be a financial advisor however the Royal Commission into the sector is highlighting a number of issues including the conflict that banks and investment managers have when they create a distribution network within their businesses aimed at generating profit.

Many planners I know who work in the banking system (aligned to the big banks and investment managers) are ethical but also have their hands tied when it comes to selection of product for their clients which puts the focus on ‘sales’.

Personally I have never worked in the banking system and have only worked with non-bank or non-institution aligned businesses. We still have a list of product but our research team is always open to review anything in market that may have benefit to clients.

Don’t tarnish the whole system with the same brush as you read the horrible stories out there. There is a massive difference between ‘advice’ and ‘sales’ in the financial services system and hopefully the outcome of the royal commission results in the whole industry being ‘advice’ and ‘client’ focused rather than ‘sales’ focused.

As Financial Advisers we work in a very privileged space with people in often a very vulnerable space as the money system we have all been born into is not always easy to navigate.

If you are engaging in the advice process, ask plenty of questions, interview more than one adviser, and get a clear guide on fee structure and start your journey to being free around your money.

After 17 years in the industry I have so many positive stories and outcomes that the right advice can change people’s lives for the better just as the Royal Commission is showing the wrong advice can do just the opposite!

 

Where to From Here?

My view is that we will likely see the big banks take a review on provision of financial advice and hopefully this will change the landscape to ensure more advisers are client strategy focused and less about the sales approach.

If you have any questions about our business or approach as always I am only a phone call or email away.

 

Scott Malcolm has been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics.  Money Mechanics is a fee for service financial advice firm who partner with clients in Melbourne, Canberra and Sydney to achieve their life and wealth outcomes. We 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. 

Healthy isn’t a fad or a trend – make it part of your lifestyle

This month we have a special blog from our client and food and fitness friend –  Jane Norcott – Jane specialises in anti-inflammatory foods and plant based nutrition. She is a keen organic gardener and cook, animal advocate and lover of life with 20 years healthy lifestyle experience.  She loves sharing her knowledge, inspiring and educating others on how to live life with energy and vitality through developing lifelong healthy habits.

 

Jane’s philosophy focuses on continual lifelong development as she works towards supporting the wellbeing of others through empowerment, sharing her knowledge and passion for life.

 

Making the decision to kick old unhealthy habits and rev up a new and/or improved healthful lifestyle is one of the most important decisions that you’ll make! Kick starting healthy habits will add energy and zest to your life! And guess what it doesn’t have to be complicated!
~Healthy isn’t a fad or a trend – it’s part of your lifestyle~
GET STARTED
~You’ve got to move it, move it~
It doesn’t matter what level of health and fitness you are currently, remember we all started somewhere and now is your time to get started.
Find an activity that YOU like or rather LOVE to do, and get moving! Walking, stretching, hiking, swimming, rock climbing or dancing in your living room! Science has proven that moving and being physically active increases those feel-good hormones, lifts your mood and expends energy. And the outcome of moving is going to be a healthier body and mind.
Incidental exercise also counts and is easy to include into your everyday life. A few easy tips include: parking further from work and walking, getting off the bus a few stops earlier, taking stairs, leaving your car at home and ride – this one will also save you some money!!
HAVE A GOAL
~Without a goal there is no focus~
Your first healthful action is to set some goals – and I’m talking about realistic goals that you can commit too!
Write a short list of 3 to 4 unhealthy habits that you would like to kick to the curb and replace these with 3 to 4 healthy habits that you have decided MUST be in life.
Look at your list every morning to set that healthy tone for your day. Use your list for the next 3 to 4 weeks to get into your new healthier routine and once you smashed these goals replace them with new ones – then repeat the process and load up on those new healthy habits.
DON’T RUST AWAY
~Load up on antioxidant rich foods~
If you don’t want to rust away (oxidise) then include the right fuel into your daily nutrition. This includes every vegetable and fruit you can get your hands on, and the more colour the better! Make sure you are including fresh, seasonal foods to every meal.
Looking to include some of the most powerful foods into your day? Then you got to get your hands on those greens and berries. Although I do recommend a variety, the greens and berries are the BIG GUNS in terms of nutrient density. Veggies and fruits also contain loads of water, so the more you eat the better hydrated you’ll be!
NEGATIVE TALK IS SO LAST YEAR
~Seek support and ask for help~
It’s ok to feel stuck and not be sure on how to kickstart your new healthy habits. This is were support comes to the rescue!
Building a supportive community is one of the most powerful tools you can use. Support comes in many forms including friends, family and work colleagues, personal coaches and attending local support groups.
Let these amazing people around you know that you are ready for a healthy change and that you need some support. You’d be surprised at how many people are there to help you and most likely they would love to join you on your new and improved healthful lifestyle!
Lastly remember that building habits can take time and this is where longevity comes into play – so be
patient and give yourself time!
If you are looking for more food and fitness tips you can visit Jane’s website: http://janenorcott.com  – you’ll find a heap of FREE recipes and fitness programs!
Jane is a qualified Nutritionist and Fitness Coach and also provides personal one-on-one coaching.

 

Property Investment and Your SMSF?

Australian’s generally love property ownership.  Directly held property makes up approximately 19% of all Self Managed Super Fund (SMSF) assets, indicating that many trustees consider it’s an important and significant part of a diversified portfolio.  There are numerous strategies and ways for property to form part of an SMSF’s investments and each must be carefully considered.

Investment strategy first!

Before any investment decision, it is imperative and a legal requirement that you as an SMSF trustee must consider your investment strategy. Your strategy framework should detail such things as how much exposure you would like to the property market, the form of exposure and how appropriate it is for your current circumstances. A well-diversified portfolio is essential to provide income for retirement and spread investment risk so that any single asset class, such as property, does not dominate your SMSF risk and returns.

Direct investment

A common form of property exposure is direct investment into a property. This can be in the form of either a residential property or commercial property. When purchasing a property with an SMSF’s cash there are some important considerations that must be worked through including:

  • Your asset allocation and diversification.
  • Potential rental income and property expenses.
  • How close you are to retirement and the need for liquid assets to pay pensions.
  • Unless the property is a business real property (BRP) you or your related parties cannot use the property:
    • If the property is BRP you may be able to work from the premises which is owned by your SMSF.
    • You may also be able to utilise the small business CGT concessions and contribution limits.

Limited Recourse Borrowing Arrangements (LRBA)

SMSFs may also invest in property through an LRBA. These are complex borrowing structures which allows SMSF trustees to take out a loan from a third party lender. The SMSF trustee then uses these funds to purchase a property to be held on trust. The lender only has recourse to the property held in the trust – this is why the loan is “limited recourse”.

An LRBA should only be utilised when it is the right structure for your SMSF on the basis of SMSF Specialist advice. Some very important considerations in addition to the ones above include:

  • Can your SMSF maintain the loan repayments over a long period of time considering asset returns, interest rates, liquidity, and contributions caps?
  • Evaluating set-up costs and structures.
  • Is your property valuation accurate?
  • You cannot use borrowed money to improve the asset or change the nature of the property at any time.
  • Do you meet the strict bank lending requirements?
    • Typically, lenders require the SMSF to have a minimum of net assets of $200,000 or more and for the loan to have a loan to value ratio below 70%.

Indirect investment

Another way to gain exposure to property for SMSFs is through indirect investment. This can include listed invested vehicles such as, listed investment companies and exchange traded and unlisted property funds and syndication. Managed investment trusts are also a common investment for SMSFs to gain exposure to property. Investing indirectly may suit your SMSF needs more than a purchase of a property because it is relatively simple and most likely will not require a large amount of capital. It also allows your SMSFs to get exposure to large value properties such as office blocks, shopping centres and industrial properties that would otherwise be out of reach.

Our Rules

 

Before diving into any investment make sure that you seek out advice and confirm that it meets your needs and objectives.

If you want to discuss these options further or get a second opinion on your current strategies contact our office today.

Seek out further advice and start your journey to being free around your money and creating wealth with understanding.

 

Scott Malcolm has been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics.  Money Mechanics is a fee for service financial advice firm who partner with clients in Melbourne, Canberra and Sydney to achieve their life and wealth outcomes. We 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. 

Market Volatility

Renewed volatility in markets has awoken the media from its summertime slumber.

Everyone has an opinion about what caused this latest bout of volatility in markets, coming after a long period of relative calm. But the key point for long-term investors is that markets are volatile by nature. Stocks go up and down as information and expectations change. Sometimes, this happens very gradually. Other times it happens more suddenly.

What you can be sure of is that everyone is an expert after the fact. A few weeks ago, you might have heard experts saying markets were in party mode, fuelled by a cocktail of accelerating global growth, strong earnings and low inflation. Now, they say this was an accident waiting to happen as central banks take away the punchbowl of low interest rates. Well, which is it?

The point is there are any number of reasons markets may rise or fall on a given day. It may be fun to speculate about the drivers, but ultimately it makes little difference if you are a long-term investor. And reacting impulsively to daily market movements is almost always counter-productive.

Increasing market volatility is essentially an expression of uncertainty. Markets move on new information which is incorporated into prices immediately. Those prices reflect the aggregate views of millions of participants, so unless you have information that no-one else is privy to, you are unlikely to get an edge by trying to time your entry and exit points.

What matters for individual investors is whether they are on track to meet their own long-term goals detailed in the plan designed for them. Unless you need the money next week, what happens on any particular day is neither here nor there. It is the long-term returns that count.

As to what happens next, no-one knows for sure. That is the nature of risk. In the meantime, you can protect yourself against volatility by diversifying broadly across and within asset classes, while focusing on what they can control – including your own behaviour.

For those still anxious, here are seven simple lessons to help you live with volatility:

  1. Don’t make presumptions.

    Remember that markets are unpredictable and do not always react the way the experts predict they will. For instance, you’ll see economists on the TV every night talking about what might happen when Europe or Japan eventually raise interest rates. But even if you could pick the turn, you still don’t know how markets will react. It’s pointless to speculate.

  2. Someone is buying.

    Quitting the equity market when prices are falling is like running away from a sale. When prices fall to reflect higher risk, that’s another way of saying expected returns are higher. And while the media headlines proclaim that “investors are dumping stocks”, remember someone is buying them. Those people are often the long-term investors.

  3. Market timing is hard.

    Recoveries can come just as quickly and just as violently as the prior correction. In 2008, the Australian share market fell by nearly 40%. Some investors capitulated, only to see the market bounce by more than 37% in 2009 and rise in seven of the eight subsequent years. The lesson is that attempts at market timing risk turning paper losses into real ones and paying for the risk without waiting around for the recovery.

  4. Never forget the power of diversification.

    When equity markets turn rocky, other assets like highly-rated government bonds can flourish. This limits the damage to balanced fund investors. So diversification spreads risk and can lessen the bumps in the road.

  5. Markets and economies are different things.

    The world economy is forever changing and new forces are replacing old ones. This applies both between and within economies. For instance, falling oil prices can be bad for the energy sector, but good for consumers. New economic forces are emerging as global measures of poverty, education and health improve.

  6. Nothing lasts forever.

    Just as smart investors temper their enthusiasm in booms, they keep a reserve of optimism during busts. And just as loading up on risk when prices are high can leave you exposed to a correction, dumping risk altogether when prices are low means you can miss the turn when it comes. As always in life, moderation is a good policy.

  7. Discipline is rewarded.

    Market volatility can be worrisome, no doubt. The feelings generated are completely understandable. But through discipline, diversification, keeping focused on progress to your goals and accepting how markets work, the ride can be more bearable. At some point, value re-emerges, risk appetites re-awaken and for those who acknowledged their emotions without acting on them, relief replaces anxiety.

Federal Budget 2017

After the massive changes to superannuation which begin from 1 July 2017 and which we are all still trying to digest and implement this year’s Federal Budget is light on big changes, but as they say the devil is always in the detail!

This is a little bit of a lengthy article but we have provided some of the highlights to Budget 2017, so grab your morning coffee or tea and if you have any questions please do not hesitate in contacting me at the office.

Before reading the below note that these are only announcements and will require passage through Parliament before being legislated.Read more

Super Changes – What You Need to Review Before 30 June!

With end of Financial year just around the corner it is time to review and upskill about the new financial lingo in the Superannuation System and how these changes will impact you.

While the Federal Government keeps using the Superannuation System to balance the Federal Budget, you need to keep a flexible approach.Read more

Business Builders – Scott Malcolm talking Small Business Cash Flow with David Koch

Check out the podcast from our chat with David Koch on Business Builders 30 March 2017.

All about the importance of Small Business owners paying themselves first and strategies to build your salary into the business.Read more

Whip Your Financial Paperwork Into Shape

We are excited to have a guest blog from our friend and professional organiser Virginia Wells!  Talking about keeping your financial paperwork sorted and clutter free!Read more

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