Intellichoice Financial Planning

How to understand the ins and outs of a self-managed superannuation fund

2011-07-28T15:52:00.000+10:00

A self-managed superannuation fund (SMSF) can be a vehicle to help you take full control of your retirement with property, but David Hasib of Chan and Naylor says investors must know what they're in for prior to setting one up:
1. To set up a viable SMSF it's wise to have at least $200,000 in your existing superannuation fund otherwise the costs of administering the fund (minimum $1000 annually) can make the exercise unviable.

2. Your SMSF must be classified as a complying Australian superannuation fund.

3. You must become a trustee of the SMSF - this means you're responsible for managing the fund and only access it according to the law.

4. You must set up and execute an appropriate investment strategy with the assistance of SMSF professionals.

5. You must always comply with the sole purpose test in the fund to maintain tax concessions are available (eg. buying a holiday home to occupy is in most cases a no-no).

6. Always keep assets separate from personal affairs.

7. Follow the superannuation and tax rules in the trust deed, which are set up and updated by an SMSF professional.

8. Know your restrictions - what you can or can't do (eg. borrowing and lending).

9. Know what retirement planning strategies you can use to achieve your goals and objectives.

10. Do you need to outsource? Know what you're truly capable of doing and what you should outsource (eg. tax returns, administration, reporting and auditing). If you're satisfied you have what it takes to set up a SMSF then you need to: set up a trust, choose to be a regulated fund with tax file number and Australian Business Number, write your investment strategy, then set up the trust bank account. The rest is history.

For more information about self managed super funds, speak to one of the financial planners at Intellichoice today.

Tax break for savings to benefit millions of Australians

2011-07-14T17:59:00.000+10:00

More than five million Australians will earn more interest on their savings in banks, building societies and credit unions, under a government proposal to halve the tax paid on the interest they receive.

Instead of paying $160 in tax on $10,000 of savings in a bank account that earns 5 per cent interest, the Australian taxpayer will only have to pay $80 in tax on the interest earned in 2012-13.

Under the present system, all interest earned on savings is taxed. The interest is considered additional income, which is added to the taxpayer's annual earnings.

With the proposed changes, the taxpayer will be given a tax rebate of 50 per cent on the interest earned.

The importance of property

2011-05-30T13:58:00.000+10:00

A recently released report by global real estate firm Knight Frank and Citi Private Bank highlights the important part that property plays in the lives of the wealthy.

The report looks at the property habits of those who have fortunes of more than $100 million and found that these wealthy individuals have 35% of their wealth in property.

After their own business they see property as their most important investment and are currently more likely to invest in property than any other asset class.

Reasons for investing

2011-05-05T21:56:00.000+10:00

When considering your investment be sure that you understand your reasons for purchasing an investment property.

Remember that you are investing to secure your financial independance, which means you want to create a passive income and build equity.

Many people try to pick the market cycle but never actually buy anything because it is not the "right time".

It's important to plan for the future and not get so caught up in the process that you could end up failing to act.

It's extremely important to get moving and do something as the cost of doing nothing can be very expensive.

The ideal time to buy is when it is right for your individual circumstances and when the opportunity presents itself.

Once a decision is made, act quickly and with confidence.

The second half of this year will bring many opportunities ; the question is, is it the right time for you?

Three quarters of us are in credit card debt

2011-03-07T20:12:00.000+10:00

One of the myths of the credit card market is that only a minority of cardholders carry a balance on their cards from one month to the next.

In fact the opposite is true.

According to Reserve Bank credit card figures, the “revolve rate” on cards is 72% (the revolve rate is the finance industry term for cards that carry a credit balance from month to month).

Consumers spent an average of $15,963 on their credit cards over the past 12 months and carried an average account balance of $3,234.

And whilst spending on cards increased by a fairly modest 3.3 % over that 12-month period, balances still increased by 6.9% - which means we are reining in our spending on cards but accumulating more debt.

Customers with multiple credit cards should always pay off the one with the highest interest rate first.
Alternatively they should consider consolidating the debts into a low rate card through a balance transfer offer, or consolidate into a personal or home loan.

For assistance with managing your debt or if you would like more information about debt consolidation loans, speak to one of the financial consultants at Intellichoice today on 1300 55 10 45.

Financial wellbeing index Q3

2011-02-19T18:52:00.000+10:00

The Financial Wellbeing Index measures people's financial wellbeing in relation to six focus areas. Here are the key findings in Quarter 3 (September – December 2010)

Aussie households have reported feeling less comfortable across the six focus areas of: credit card and mortgage debt, savings, investments, household income and the ability to pay bills.
Aussies have shown determination to stay on top of their mortgages, with 49% of households with a mortgage making additional loan repayments.
Credit card debt has increased substantially – up 24% from Q2 to Q3.

the over reliance on credit cards is a worrying trend and we encourage everyone to look to savings as a way to buffer against unexpected costs.

For assistance with budgeting, setting up a savings plan or financial planning for a secure future, speak to one of the financial planners at Intellichoice today.

Budget for Success

2011-02-04T22:03:00.000+10:00

Keen to save more and make a big dent in your mortgage?

By budgeting better, you can reach your goals sooner. Here is a guide to get your New Year started in the right direction.

1. Record your expenses

Carry a notebook around with you for a month and write down everything that you spend money on and the amount. Don’t forget daily coffees, magazines, eating out, etc. Record it all.

This will show you how much you’re spending and may prompt you to realise how much you spend on non-essential items.

2. Calculate your income and expenses

Calculate how much income you make after tax every month and write this figure down. There are a number of good budgeting tools available on the internet to help you easily track your expenses. If you can’t find one, just use a notepad.

Divide your expenses into those that are essential (for example, groceries, bills and transport costs) and those that are non essential (for example takeaway food, entertainment and indulgent purchases) and calculate how much these cost you each month. For example, if your quarterly electricity bill is usually $450, you will need to divide this figure by three to get monthly cost of $150.

When this is done, subtract your expenses from your monthly income. This will show you whether you are spending beyond your means or whether you have some cash to spare.

3. Change your spending habits

To free up some cash to make extra repayments on your home loan or achieve or financial goals, you will need to scrutinise how much you are spending and work towards reducing this amount.

The non-essential expenses column is the first place to start cutting back, If you are spending a lot on takeaway food, start eating at home more often and pack your lunch to take to work.

If your petrol costs are high, consider taking public transport or walking if possible. Perhaps you could invest in a bicycle so you save money and gain a health benefit at the same time.

4. Stick to your budget

Once you have allocated a budget to each of your expenses, stick to it. If you have budgeted to spend $60 a month on eating out, make sure you don’t spend any more.

It will take discipline, but by following your budget you could cut thousands of dollars interest off your loan and pay your mortgage off much sooner.

Savings Tips

Here are some savings tips to help you on your way:

Have an easy access cash account for everyday needs with a debit card attached
Save a fixed amount of money every pay in a separate account
Save your pay rises, bonuses or special payments or tax refund
Put your change into a savings jar at the end of each day
Pay your mortgage fortnightly and pay an extra 5-10 per cent on your mortgage every month
Budget a specific amount for leisure, mortgage repayments and personal expenses
Make extra superannuation contributions from your pre-tax salary otherwise known as salary sacrificing.

Time for Super

2011-01-31T20:40:00.000+10:00

The average Australian spends 2,555 hours a year sleeping and around 910 hours a year watching television.

So shouldn’t we be spending more than half an hour a year thinking about our super?

When the average Australian sets out to buy a car, they may spend weeks weighing up their options. Buying a house sometimes takes months, or even years, of searching, planning and saving.

Even smaller financial purchases such as stereo, DVD player or computer take more than a couple of hours of shopping around.

And yet recent research revealed that the majority of people spend less than 30 minutes a year thinking about what is usually the biggest investment they have after their home - their super.
So what’s to think about?

Many people think of superannuation as a “set and forget” part of their lives - their employer sets it up and puts money into it on their behalf and it’s not something they have terribly much control over. However, this is something of a misconception.

Even though your employer contributes money to your fund, superannuation is still your savings for your retirement. You are still able to control things such as which investment option your money is invested in and how much you contribute yourself.

It’s therefore worth taking the time to find out about your options within your super fund and thinking about how you can make them work for you.
Are you in the right investment option?

Most funds offer different investment options so you can choose the one that most closely meets your needs and retirement objectives.

If you haven’t already made a choice then your money is normally invested in the default or balanced option.. This may turn out to be right for you, but you’ll need to spend some time finding out about it and comparing it with other options on offer before you decide.

To help make a considered decision, look at:

How comfortable you are with receiving returns that are different to what you expected
How long you have until retirement
Whether you need to see financial advice.

Once you are happy with the option you have selected, make a note to review it at least once a year to see if it still meets your needs.

Will you have enough?

That’s a big question. First you need to work out how much will be enough to live the life you want in retirement. Whether you’ll have that amount depends on how much super you have now, how much is being contributed to your account, the fees being charged, the returns on your super and how long you have until you retire.

There are calculators on many of the big funds’ websites that can help you to work this out.

How do you contribute more?

If you think that you won’t have enough, you can help make your super grow by adding to the contributions your employer makes. You can do this from before-tax income (salary sacrifice) or from after-tax income. A benefit of making after-tax contributions to your super is that, if you are eligible, the Government may give you a helping hand by making a co-contribution. To find out more about the co-contribution, visit www.ato.gov.au/super.

Do you have more than one super fund?

If you have more than one super fund, consider consolidating them all into one account. This can also help to grow your super because you’ll only be paying one set of fees and insurance premiums.

Before you go ahead check the exit fees, any extra benefits and the insurance arrangements of the funds you’ll be rolling out of. Sometimes the fees can be so high that it may be best to leave your money where it is. Also, your insurance arrangements may cease, or provide a different type of cover.

If you think you have more than one super account but you’re not sure how to track them down, try www.unclaimedsuper.com.au or the Tax Office’s SuperSeeker at www.ato.gov.au/super.

Do you have insurance through your super fund?

Chances are that, unless you specifically said no to insurance when you joined the fund, you will have at least minimum disability income protection and death insurance. But is it enough to meet your needs?

The first step is to find out what cover you have now and then think about whether the amount of benefit that may be paid would cover all the expenses you need it to. Although taking out insurance through you super fund is generally cheaper than purchasing it directly, keep in mind that the premiums for insurance through your super fund come out of your super account so increasing your premiums will impact on your super balance.

What other benefits does your fund offer?

Many superannuation funds offer access to other products and services, including financial products you can use long before you retire. These products may include low cost banking products, managed funds with no entry or exit fees, financial planning services and discount health insurance.

Aussies lose track of a third of their cash - every week!

2011-01-15T08:15:00.000+10:00

A survey commissioned by Visa shows Australians cannot account for $59 cash a week (that's $3,068 per person a year) - more than double the international average in the survey.

Where does the cash go?
In Australia, consumers who lost track of their cash said they were more likely to "mystery spend" (meaning spending cash they can't account for) while purchasing food and groceries (44%), socialising (40%), leisure shopping (38%), buying snacks (30%), or dining out (24%).

It's easier to keep track of where you're spending your money if you have a budget.

Australians attitude to debt and savings - a recent survey

2010-12-15T12:27:00.000+10:00

A recent survey conducted by RaboDirect has found the following stats:

About 74% of respondents believe paying off their debt is the best way to save money
One in five credit card holders worry about not paying off their bill in full each month, yet one in six are happy to make purchases knowing they cannot pay for it in the interest free-period.
About one third of survey respondents consider their financial situation has worsened in the last year and have taken steps as a result. They have cut back on luxuries, such as dining, entertainment and holidays, and some have also considered their day-to-day shopping habits.
The survey also found that 28% of Australians say their savings would only last two months if they lost their job
Just over one in ten (13%) have no savings at all. This paints a worrying picture at a time of the year when the job market traditionally slows down.
Low interest transaction accounts are the most popular home for ‘savings’ with 46% of regular savers putting money in their transaction account (representing 41% of total savings in last six months). This is despite the fact that interest paid on these accounts is negligible and often eaten away by fees

Below are some tips for better financial management:

Set a budget and revisit it regularly and adjust as necessary to match personal/financial needs or changes to your finances. eg got married, started a family or got a new job
Spend less than you earn!
Pay off your most expensive, non deductible debt, first eg credit cards
Regularly check that your financial products (such as your mortgage loan, transaction and savings account, insurance, credit cards etc.) suit your needs and offer the best value
Have your salary paid directly into a high interest savings account rather than leaving money idle in a low-interest bearing account
Seek help early if things get out of hand - speak to a financial advisor for more help

Savers can save $330 by switching

2010-12-08T20:37:00.000+10:00

Savings account holders can save up to $330 by switching to a better account. According to consumer group Choice, nearly 80% of Australians had not considered switching banks in the last two years.

Choice's Better Banking campaign director Richard Lloyd said "that's what the major banks rely on, they rely on lots of Australian consumers staying where they are and that's when you get hit by high fees, poor interest rates and unfair terms." What we're saying today is `consumers don't wait for the government's reform package ... if you take simple steps now you can give yourself an early Christmas present'.''

Mr Lloyd continued by saying that smaller banking sector players were usually those offering the best deals and consumers should not be nervous about moving to smaller finance institutions as they were regulated in the same way as banks. Federal Treasurer Wayne Swan said: "I'd encourage every Australian family to check out the range of products on offer and compare them to the big banks.''

Two thirds of Australian's don't have enough money

2010-11-01T13:12:00.000+10:00

Almost two thirds of Australians think they do not have enough money. According to an online poll published in News Limited newspapers, approximately 61% of respondents said they were not happy with their finances. Approximatley 35% of survey respondents said they were happy with their financial situation, while 4% said they are not sure.

If you would like help saving or budgeting, speak to one of the financial planners at Intellichoice on 1300 55 10 45.

How to get the best from your super

2010-10-10T12:50:00.000+10:00

We know superannuation can seem boring, but putting good strategies in place now could make a big difference to your future. And getting your super sorted doesn't need to be time consuming or hard work. Here are some quick and easy tips to help get you on your way.

1. Find lost super
Did you know that there's more than $13 billion of lost super in Australia? That's a lot of money and there's a chance some of it's yours. It's easy to search for your money via SuperSeeker, the Australian Taxation Office's (ATO) online search tool. After all, if you lost a $100 note, you'd spend at least a few minutes looking for it, so why not spend a little time finding your lost super? Go to www.ato.gov.au and follow the links to SuperSeeker to search for your lost super.

2. Consolidate yoru super and save on fees
And once you've found any lost super, don't burden yourself with multiple fees and bundles of paperwork by having several super funds. It makes sense to roll it all into one super fund. Fewer fees and less paperwork!

3. Exercise your right to choose
So now that you have all your super in one place, make sure you choose where it's invested. Super funds nowadays have many different investment options that members can choose from. So no matter what stage of life you're at or what your investment goals are, your super fund will have an investment option that's right for you. Alternatively, speak to your financial adviser for professional help and they'll be able to assist you in deciding on an investment option that suits your needs.

4. Make the most of profesional advisers with the right expertise
After you've done all this, and if you'd still like an extra helping hand getting your super sorted, why not use the professional services of a financial adviser from Intellichioce? For a completely low fee, our team of qualified financial planners can help you grow your wealth and help you get on track to a comfortable financial future. Call 1300 55 10 45 for an obligation free financial meeting with one of our financial advisers.

5. Ensure you're insured
Life insurance is unlikely to be a big priority if you don't have a family, but what would happen if you couldn't work due to injury? You probably have insurance cover as part of your super, but you should check that it's enough. It's also worth noting that income protection premiums are generally cheaper if taken out through your super, but again, make sure that it's enough and meets your requirements.

For financial advice on superannuation or insurance, speak to a financial planner at Intellichoice today on 1300 55 10 45 or visit www.intellichoicefp.com.au for details on the various services offered.

Cash investments popular among investors

2010-07-20T09:19:00.001+10:00

Self managed super fund (SMSF) investors have led the market in adopting online savings accounts and term deposits with 29% per cent of self managed super assets moving to cash between 2008 and 2009 - during the GFC.

Post GFC, cash is still maintaining its popularity among some investors. A UBank survey of customers in March 2010 revealed that a third of SMSFs have more than 50% of their funds in cash.

Some of the returns available on cash rates have been quite attractive with the Reserve Bank of Australia increasing interest rates.

Planning for retirement

2010-07-14T15:09:00.000+10:00

Working out the best way to build your nest egg for retirement is never easy, but many agree that relying on superannuation alone is not enough.

According to the Westpac ASFA Retirement Standard, a retired Australian couple needs to earn more than $51,727 a year to live 'comfortably' or more than $28,080 a year if they want to live 'modestly'.

Investing in property is one way to help fund a comfortable retirement that allows you to pursue the interests, hobbies and activities of your choosing.

Here are 5 strategies for successfully using property investment to build wealth for retirement.

1. Think long term
Retirement strategies are all about investing money wisely over many years, building wealth through compound interest and re-investment. Think long term and have a realistic game plan that has built in buffers to ensure you remain in a comfortable position in future years.

2. Aim for capital gains
It is the capital gains that make property investing so attractive for retirement, so buy your property with capital growth in mind. This means choosing a home with resale potential that is of maximum appeal to tenants. Property experts often recommend new-built family homes because they usually have fewer maintenance costs, are attractive to the ideal tenant, and are tax effective for the investor.

3. Diversify
Property should play a big part in your investment portfolio but avoid putting all your eggs in the one basket. Diversify and spread your risk among a number of different sectors including property, shares or managed funds.

4. Consider taxation laws
Rental income may be taxed at a higher rate than superannuation unless you set up your own super fund and acquire property via your fund. Seek expert advice to best understand taxation laws and make the most of superannuation concessions.

5. Start now
It's never too soon to start planning for your future. While you are still working and have equity in your home, now is the time to use property investment as a way to optimise your financial security for the time when you plan to put your feet up!

For help on planning on retirement having an income stream during retirement, speak to one of the financial planners at Intellichoice on 1300 55 10 45 or email info@intellichoice.com.au.

Term deposits outperform shares

2010-07-14T11:39:00.000+10:00

Cash investments have delivered far better returns to investors over the last three years than the sharemarket has. The average annual rate of return over the last three years from a one year term deposit has been 5.6%. The average annual return from ASX200 companies over the last three years has been minus 6.6%. Average dividend income for shares has been between 3.4% and 5.5%, which has been offset by some large capital losses.

Choosing a broker when you want to invest in shares

2010-07-13T10:51:00.000+10:00

If you are thinking of trading in the shares market, you will need to use the services of a broker. There are two main types of brokers available to you, full service (advisory) and non-advisory (execution-only) brokers.

A full service broker is able to offer you advice on buying and selling shares and other exchange traded instruments such as options and CFDs, provide market research and structured tailored investments for your long term portfolios. As a full service broker is able to offer many services you would generally expect to pay a higher brokerage fee to buy and sell financial products.

On the other hand a non-advisory broker, commonly an online provider, offers no personal advice or recommendations and only provides a trade execution service. Consequently you would generally expect to pay a lower brokerage fee to buy and sell shares, and they are a popular choice for investors who are confident in making their own trading decisions.

Whether you are an active private trader or a long term investor there are many questions that you may need to ask before deciding which broker will best suit your needs.

What type of services do you require from a broker?
Full service offering research and advice, access to investment opportunities in company floats, and financial planning or an online service accessed via phone or internet, offering low cost trading, and straight through order entry.

How much do brokers charge?
Typically brokers will charge a flat fee for transactions below $10,000 and then a percent value of the trade for higher amounts. Often discounts can be negotiated for high volume clients.

Are regular newsletters or share market information available?
Both full service and non-advisory brokers will often provide daily and weekly newsletters recommending sectors and stocks that are performing. These can be provided either by email or by access via the broker’s website.

Do Brokers conduct workshops?
Brokers will often provide workshops on how to use their execution platform, and trade in different types of financial products.

When you select a broker you should ensure that you receive a Financial Service Guide (FSG), a Product Disclosure Statement (PDS) and a Client Agreement detailing the products and services that are being offered to you, and the applicable terms and conditions of trading, by that broker before you open your trading account.

For more information about investing in shares and other investments, speak to one of the financial planners at Intellichoice today on 1300 55 10 45 or visit www.intellichoicefp.com.au.

Creating an investment portfolio

2010-07-07T10:24:00.000+10:00

Before investing in shares there are many questions you have to ask yourself before you put together an investment portfolio with your financial planner.

Are your investments going to be long term or short term?
Are you looking for a return in the form of income and long term capital growth or a short term return in the form of a large capital growth?
What is your tolerance to risk? Are you prepared to risk some of your investment capital for the opportunity to make higher returns?

If you are looking for income and long term capital growth then you should look at stocks that have a proven long term business model and pay good dividends. These stocks are referred to as Value Stocks and would be considered to have a lower risk profile. Their share prices gain over the long term and pay dividends every 6 months providing you with an income. Many stocks within the Infrastructure sector would be considered Value Stocks.

If you are looking for short term capital growth then you should consider stocks that are just starting their growth phase. These are usually new companies that are just starting production or expansion. These stocks are referred to as Growth Stocks and would be considered to have a higher risk. Many stocks within the Energy, Material and Health sectors would be considered Growth Stocks.

Don't put all your eggs in the one basket - investing evenly across Value and Growth Stocks can create a diversified investment portfolio with a medium risk profile. An educated investor can achieve both short and long term capital growth and create an ongoing income by receiving dividend payments.

The difference between a good and bad investment portfolio is always about education and knowledge. The educated investor will always look to buy stocks at discount prices and introduce simple hedging strategies to maintain the profitability of their investment portfolio during volatile times.

To find out whether investing in shares is right for you, speak to one of the financial planners at Intellichoice today on 1300 55 10 45 or visit www.intellichoicefp.com.au.

The other side of Lending – Mortgage Schemes

2010-07-05T11:10:00.000+10:00

Investing in a mortgage scheme
“I wish to get a better rate of return on my money and don’t really mind having an indirect exposure to property as the underlying asset class.'

That's roughly how a mortgage scheme (also called mortgage funds) works, except it involves three extra features:

More than one person contributes money to the scheme;
Investors' money is pooled together or used in a common enterprise for scheme members; and
Scheme members give up day to day control over how the scheme operates.

Like any investment, you face risks. Your returns will be affected by the ups and downs of property values and interest rates. You also rely on the skill and honesty of scheme managers and property valuers to find borrowers who can pay on time, with adequate security.

In the past, most mortgage funds have operated successfully. Some, regrettably, got into disastrous financial trouble; either because the managers lacked the skill to manage mortgages, especially when some of the borrowers failed to pay, or they lent too much money on optimistic valuations or risky development properties. A handful of operators defrauded investors.

Watch your margin of safety
Risk in mortgage lending lies in the gap between the value of the property and how much of that value is being lent to the borrower (described as the loan-to-valuation ratio). The closer the amount lent to the value of the property, the higher the risk that you might lose part of your investment. A $60,000 loan for a property valued at $100,000 represents a conservative 60% loan-to-valuation ratio, but a $95,000 loan on the same property represents a much riskier 95% loan-to-valuation ratio.

What type of scheme can you choose?
Mortgage schemes, or mortgage funds can be set up in different ways. You can choose:

Pooled mortgages, where all investors share in all the mortgages. You therefore take your share in all the income and spread the risks across all the mortgages that the scheme manages. LOW / MEDIUM RISK
Contributory mortgages, where you choose which mortgage(s) you invest in. Your mortgage(s) may pay a different income from other mortgages in the scheme. Your risk depends on the quality of the borrowers to whom you have chosen to lend. MEDIUM RISK
Debenture or mortgage companies, where you invest in shares or debentures issued by a company that invests in mortgages. Here, you are really becoming a shareholder in, or lender to, the company, which in turn owns the mortgages. Check whether the mortgages are pooled or linked to specific properties. HIGH RISK.

What type of scheme managers can you choose?
All scheme operators must treat investors honestly. At present you will find these types of scheme managers:

Managers of registered schemes must operate the scheme through a public company that holds an Australian Financial Services Licence and comes under ASIC regulation. (You can check this licence free of charge through the ASIC website or contact the ASIC Infoline by email infoline@asic.gov.au or ring 1300 300 630.) The scheme must have a constitution, a compliance plan and a product disclosure statement that you can inspect. It must also have proper internal procedures for handling complaints, and be a member of an authorised external dispute resolutions scheme.
Managers of industry supervised schemes must be supervised either by the Law Society of NSW or the Law Institute of Victoria. First, get a copy of the rules set by each body, then make sure any scheme you are considering is abiding by the rules before you invest.
Directors of mortgage debenture companies must operate through a public company. They must act honestly and diligently, but require no licences or complaints schemes. The directors are free to choose whatever operating systems they like so long as they obey general company law.
Managers of unregistered and unlicensed schemes must restrict their scheme to 20 people or less and must not be in the business of promoting schemes. Unregistered schemes are not regulated by anybody. You are on your own. Check everything and everybody involved.

What should you choose?
Mortgage schemes may suit your needs and circumstances. Choose the scheme and the manager that suits your own knowledge and experience. If you possess no expertise in this area, you should seek appropriate financial advice.

For more information about mortgage schemes and whether they suit your needs, speak to one of the financial planners at Intellichoice today on +61 7 3624 1900 or email info@intellichoice.com.au. Alternatively, visit www.intellichoicefp.com.au.

Investing in mortgage funds: getting more from your money, without the heartache

2010-07-02T11:20:00.000+10:00

We have all heard a million times that every investment has risks and there is a risk-return trade-off.
So, is there any simple, easy to understand investment for people wanting stable and reliable returns?

Among the four asset classes - Cash, Fixed Interest, Property, and Shares - cash investments are considered to carry the lowest risk, and will generally pay the lowest return. Shares, on the other end, are regarded as the highest risk investment, but have the potential to provide a much higher return.

So, if investors are looking to get their money working a bit harder for them, and getting more than the interest paid by the bank, but they don’t want to take up as much risk as with buying an investment property, they may place their money in a fixed interest investment. That’s where mortgage funds fit in.

Yes – their asset class has a lower risk profile than property investment!

Mortgage funds are less volatile than some other investments: that means that they are designed to provide reliable income payments, preserving the initial capital invested. Not all fixed interest investments can do the same. In fact, despite the name, fixed interest can fluctuate in value: for example, as interest rates go up, bonds value goes down, and so do returns of fixed interest funds invested in bonds. Mortgage funds behave exactly the opposite way: as interest rates go up, returns also go up. So, rates going up become something to look forward to, for a change!

Let’s not forget the importance of diversification: some people do want to take extra risk and invest in property or shares, but how to insure against times when markets are not doing so well? There is no such insurance policy out there, but keeping part of the portfolio invested in a mortgage fund may provide a solution to that.

For example, the graph below shows the performance of a mortgage fund (The La Trobe Australian Mortgage Fund), against the downturn periods of the Australian stock market, over a 10 year period. The mortgage fund had strong positive returns, at the same periods when the Australian stock market was experiencing negative returns.

An article in the Australian Financial Review (October 2008) headed "Cash, property shine as shares crash and burn", suggested that investments in cash or property over the last 10 years had come close to, or even potentially outperformed, the return from equities over the same period. The volatility in the share market that we have seen in recent times has eroded many of the gains made in equity investments prior to the 'global financial crisis'.

On the other side, it has also been argued that over a very long period of time – 25 or 30 years – investing in shares provides superior returns, even with market downturns like the one we have just experienced.

But what if you just don’t have another 30 years to invest? What if you are close to retirement and may need to delay it if the market goes down? Or what if you are saving, for example, for your children’s education? They can’t just “wait a couple more years” to go to school!

In that case, a more conservative option may be more suitable for you.

So, what about the recent debate about mortgage funds?

The word “mortgage”, in investments, hasn’t had very good publicity recently. But it is important to clarify a couple of things, when talking about them.

First, mortgage funds are not those mortgage-backed securities that you have been hearing about! Mortgage-backed securities are much higher risk investments, which have been linked to the GFC.

Second, not all mortgage funds have frozen redemptions in the past year. The ones that did were offering investors the option of taking money out at anytime. They effectively borrowed short and lent long. When the government issued the bank guarantee, many investors felt safer with the banks, and they all tried to get their money out of mortgage funds at the same time. However, investors’ money is used to offer finance for mortgages, sometimes lasting 30 years. As a consequence, managers had to refuse redemptions requests. The lesson learned here is that mortgage funds should match as best as possible the investment term with the mortgages term. Those that did, are still open and continue to provide stable monthly returns.

Intellichoice has a working relationship with La Trobe to offer our clients the opportunity to invest and growh their wealth in a safe manner. The La Trobe Australian Mortgage Fund Pooled Mortgages Option, for example, has never restricted redemptions, has always had only a one year term option, and is currently returning 7.50%, monthly income. That’s why it has been awarded “Best of the Best” in Money Magazine.

For more details about mortgage funds and whether it is a suitable investment tool for you, speak to one of the financial planners at Intellichoice on 1300 55 10 45 or email info@intellichoice.com.au. Alternatively, visit www.intellichoicefp.com.au.

Get your finances in shape

2010-06-30T11:48:00.000+10:00

Get your finances in shape. Use this simple checklist to assess how healthy your financial management is.

Do you know how much money is going out and coming in?Use a budget planner to easily track your finances
Do you have a financial plan for the next year, five years? A financial plan will help you reach your short, medium and long term goals
Do you have enough funds for a rainy day? We recommend that you have equal to about three months in savings for those emergencies
Pay extra on your home loan so you decrease the amount of interest you pay each month and it helps you pay off your home loan sooner
Get the best available rate on savings. Do your research and find savings accounts with high interest rates. Make compound interest work for you
Pay off your credit cards in full each month. You could also consider getting a debt consolidation loan to pay off all your high interest credit cards

For more tips on savings, budgeting and keeping your finances fit and healthy, speak to a financial planner today on +61 7 3624 1900 or email info@intellichoice.com.au. Visit www.intellichoicefp.com.au.

Do you need to update your salary sacrifice arrangement?

2010-06-29T10:53:00.000+10:00

Salary sacrifice not only boosts your super balance, but it can also reduce your accessable income and therefore, the income tax you pay. By salary sacrificing, you may be able to reduce the total tax you pay and increase your super contributions without impacting your take home pay.

It is important each year that you reassess your salary sacrifice arrangements to ensure you are getting the best benefits available.

Differing circumstances may affect how much you can salary sacrifice. For example, if you have had a pay increase in the last 12 months, it may be beneficial to increase your salary sacrifice contribution, which in turn will minimise your payable income tax.

However, please be aware that the government has now reduced the before-tax contribution limit and if you breach the cap applicable to your age, you may be liable for excess tax.

The annual individual limit on before-tax contributions known as concessional contributions (eg. employer Super guarantee or salary sacrifice) is $25,000. However, if you turn 50 at any time between 1 July 2007 and 30 June 2012, you will be able to contribute up to $50,000 (not indexed) of before-tax money from the financial year you turn 50, until 30 June 2012. After this date, the limit will be $35,000 for everyone.

For the self-employed, this cap applies to personal contributions you make for which you claim a tax deduction.

Over the years, salary sacrifice has proven to be one of the most popular and effective wealth accumulation strategies available in Australia. Conditions do apply and we recommend you discuss this strategy with your financial planner to see if this is suitable for you.

For more information about salary sacrifice, call 1300 55 10 45 or email info@intellichoice.com.au. Alternatively, visit www.intellichoicefp.com.au for more details.

Tax cuts deliver savings

2010-06-28T11:03:00.000+10:00

The third and round of tax cuts from the 2007 election begin this week, which will deliver significant savings to Australian workers. Wage earners on an income of about $59,000 will save $450 in tax this year, or $8.65 per week, compared with last year.

People earning between $55,000 and $60,000 per year will save $1,350 in total, compared with three years ago, while those earning $100,000 will save $500 or $9.62 per week.

Treasurer Wayne Swan said average workers have had their taxes cut by 20% since Labor came to power.

Investing in property

2010-06-24T09:39:00.001+10:00

Last week, we looked at how investing in shares can impact on your cash flow. This month, we will address the impact property has as an investment.

Research shows that the median house price in Brisbane in 2000 was $173,000, rising to $445,562 by 31st December 2009. This equates to a rise in capital value in the last 10 years of 257.5%!

The question I hear a lot is “What about the Global Financial Crisis – hasn’t that stopped that growth?”

The simple answer is No.

Over the past 12 months, Brisbane house prices have risen by 12.1%! Wouldn’t you want to get growth like that on your money and if you did, wouldn’t you like to get a tax advantage at the same time?

Borrowing to purchase an investment property is one way of take advantage of those tax benefits. However, when borrowing, there are three types of investment gearing you can accomplish – positive geared, neutrally geared or negative geared.

A positively geared investment is when the income generated (rent and depreciation deductions) are greater than the outgoings (interest payments on the loan and property maintenance costs). A neutrally geared investment is when the income is equal to the outgoings and negatively geared is where the income is less than the outgoings.

There are pro’s and con’s to each option and it depends upon your long term strategy, incomes and goals as to which is your best choice.

To give you an example of the benefits of property, one of my clients was paying about $26,950 in tax prior to the purchase of an investment property. After buying an investment property and taking into account depreciation deductions and other tax entitlements, his tax liability was reduced to $20,736 – a reduction/savings of $6,213.40.

Remember that arranging correctly structured and priced finance is a specialist job and a quality broker is worth their weight in Gold, so find someone highly recommended. If you are having trouble with this, let me know.

Time is running out if you are planning to make investments while reducing your tax liability before June 30th. Remember, this is all about leaving the workforce one day, so implementing your structure sooner rather than later needs action now.

If you are concerned or just keen to get moving on something we are here to help. Speak to one of our certified financial planners on 1300 55 10 45 or email info@intellichoice.com.au. Visit www.intellichoicefp.com.au for more details.

What stops people from getting financial advice?

2010-06-21T11:43:00.000+10:00

There is always the temptation to do it yourself when it comes to your finances, but the truth is that without specialist financial planning knowledge, you may not reach your financial goals.

Many people put off getting quality financial advice because of things they may have heard. In most cases, they are nothing more than myths.

Based on commission only - WRONG
Financial advice provided through Intellichoice is not based on commission and you can be assured that our qualified financial planners will always be honest and provide unbiased advice. There is no conflict of interests and any recommendations we make for growing your wealth is in your best interests.

High cost of getting financial advice - WRONG
Our unique and innovative financial solution offers everyone, regardless of age and income level, to enjoy financial freedom and pay very little or nothing for any financial advice received through Intellichoice when compared to industry standard. We are very upfront about our fees so you know exactly where you stand at all times. Find out more about our low fee financial planning service by calling 1300 55 10 45 or email info@intellichoice.com.au.

Get rich quick - too good to be true investments - WRONG
If it’s too good to be true, it often is! Financial planning is not about getting rick quickly. Through good advice and informed investment decisions, your financial planner will help build your wealth over an appropriate time frame and in a safe manner that is in your best interests.

Invest in shares only - WRONG
We listen to your needs and provide unbiased and professional advice to help grow your wealth in a safe way. Our holistic approach to creating wealth is to take into account the amount of risk you are willing to take and provide investment strategies (either through property, shares, cash, managed funds, superannuation or mortgage funds), that will help you meet your goals in a safe manner.

Glorified sales people – WRONG
Anyone can go and sell cars, mobile phones or computers, but Australian financial planners are subject to rigorous licensing, education and ongoing professional development standards. The financial planners at Intellichoice are accredited with two of the largest licensees in Australia, which regulate ethical and professional codes of conduct in the financial services industry.

To find out more about getting quality financial advice and how a financial planner from Intellichoice can assist you to grow your wealth and have a comfortable retirement, call 1300 55 10 45 or email info@intellichoice.com.au.

Make sure you pay your credit card bill in full

2010-06-21T10:29:00.000+10:00

Did you know that the minimum monthly repayment demanded by the credit card issuers do not even cover the interest charged? Many banks lower the minimum repayment to below the interest charged so that interest gets charged on interest.

If you are late by one day in making a credit card repayment, interest could be charged back to the date of purchase, negating any interest free days. That can apply even if a partial payment is made. If you don’t pay your credit card bill in full and on time, your next interest free period may be taken away.

If you need help budgeting, managing debt or need a debt consolidation loan, speak to one of the financial planners at Intellichoice for further assistance. Call +61 7 3624 1900 for more details.

How do investments impact on you - Shares

2010-06-16T10:55:00.000+10:00

Shares grow in value over time. Most text books will say that you will require somewhere between 10 and 15 stocks to obtain a diversified portfolio of shares so you can spread your exposure and reduce your risk.

For example, on 31st December 2001, you purchased 9 stocks - Flight Centre, Commonwealth Bank, James Hardie, John Fairfax, Billabong, Qantas, Ten Network, Telstra and Woolworths - to the value of $83,542.40 and you held those stocks until 31st January 2010.

This share portfolio would have increased in value to $111,278.60 - an increase of 33%.

This is good news, but it is not the entire story.

On top of the underlying growth of your investment and the income you receive from your shares (in the form of dividends), do you know how your investments will impact on your tax return?

A simple strategy, such as gearing can make your money work for you and help reduce your tax. Gearing relates specifically to the money you borrow to fund your investments.

Below is a simple scenario showing the difference between investing and not investing.

Based on an income of $50,000 pa with no other income or deductions, you would currently be paying about $9,600 in tax, inclusive of the Medicare levy.

However, if your investment strategy takes into account gearing, the amount of tax you would pay would be reduced to approximately $7,575 – a saving of about $2,025 in tax, while at the same time, your net income increases by $3,033.

The points to highlight are:

1.    Investments will reduce your tax liability
2.    Geared Investments will create a tax saving

Where to from here? Many of our clients are becoming aware that the end of financial year is looming. As shown above, it is important that you speak with a knowledgeable financial adviser on the best strategy for your circumstances to reduce your loss to the tax man.

For more information, visit www.intellichoicefp.com.au or speak to our financial planners on 1300 55 10 45 or email info@intellichoice.com.au.

Disclaimer: This column is provided as general advice only and does not take into account your personal objectives, financial situation and needs. You should always carefully consider these matters and discuss them with a financial planner before you act.

Seek SMSF advice

2010-06-15T13:34:00.000+10:00

A self managed super fund (SMSF) may have many benefits, for example, it will give you more control over the fund's investment strategy, there is a lower tax payable and all self managed super funds are protected from bankruptcy and other legal claims, but many Australians don't understand the time, risks and costs involved in operating a SMSF.

A survey conducted by TNS found that more than half of Australians thought you could establish a SMSF with a balance of $50,000 or less. One quarter of respondents thought a balance of $5,000 would be enough to set up their own SMSF.

As a note, if you have less than $200,000 in super, the admin costs would probably make setting up a SMSF uneconomical. You can also expect to pay $1,000 to $1,500 a year on running your own super fund.

There has been an increase in the number of self managed super funds being set up, suggesting that Australian's want to exercise more control over their super. However, research shows that only a third of people consult a professional financial planner to decide whether a SMSF is suitable for their needs.

So if you are thinking of setting up a DIY super fund, please seek advice from a professional financial planner first to ensure that this is the best option for you. Factors such as time, money in administering a SMSF and whether you have the desire and ability to manage the fund for the long term all need to be taken into account. For more information about SMSF's, speak to one of the financial planners at Intellichoice today on 1300 55 10 45.

$50,000 needed for an adequate lifestyle in retirement

2010-06-09T12:01:00.000+10:00

A recent survey has found that almost 50% of respondents in Australia were confident they would have enough superannuation in retirement. Respondents to the survey also said they would need about $50,000 a year to maintain an adquate lifestyle in retirement. Almost three-quarters, including retirees, said they were in favour of the government's policy of increasing compulsory super from 9% to 12%.

Getting professional financial advice

2010-06-07T12:44:00.000+10:00

Financial advice is a process that will help you meet your goals and dreams through the property management of your finances. Whether you are looking at buying a property, manage and pay down your debts, save for your children's education, build wealth or plan for retirement, getting good, professional and quality financial advice will help you implement a financial plan in order for you to reach those goals.

There are many ways to get information about handling your money, such as newspapers, money or investing magazines, the Internet, friends and family. However, finance and building your wealth is a complex area and you should seek advice from a certified financial advisor. Just as you would go to a doctor or lawyer for their expertise in their area, you should also do the same when it comes to your financial wellbeing.

So how do you know that the financial advice you get is of high standard?

According to the Australian Financial Planning Association (FPA), getting quality and professional financial advice should be based on the following, which your financial planner should go through with you.

Identify your life goals - short, medium and long term
A financial planner will become acquainted with your financial background, including your income, debt levels, commitments (for example, home loan or personal loan repayments etc)
Understands your current situation, needs and what you want to achieve now and in the future
Prepares a financial plan based on your needs and goals and implements strategies that address your attitude to risk
Identifies suitable investments and insurance plans for your situation
Provides annual reviews for your financial plan to ensure it still suits your needs and financial situation

Good quality financial advice will help you in many ways including:

Gives you greater control over your financial future
Provides you with a long-term relationship with an expert that will help you reach your goals and is on hand to answer any concerns or issues you may have
Good quality financial advice will give you a realistic picture of your financial future and how to reach your goals in a safe way
Provides you with clear information on how to manage risk

Many people may think it is better to do it themselves and not seek professional financial advice, but the truth is that without professional financial planning knowledge, you may not reach your goals or reap the full benefits.

Many Australian retired couples currently live on less than $20,000 per annum, so make sure you have enough enough for a comfortable retirement. Speak to a qualified financial planner today on 1300 55 10 45 for an obligation free appointment at no cost to you, normally worth $500.

Money saving tips

2010-06-02T10:27:00.000+10:00

The RBA may have held interest rates for now, but many analysts say we are set for another 2 rate rises by the end of the year and even more in 2011.

Rising petrol and food costs and the threat of sky rocketing inflation means we need to find ways to make the dollar go further.

Follow the link below and read the article for some easy and practical ways to help ease the financial pressure.

http://www.intellichoicefp.com.au/managing-debt/69-money-management-resources/352-living-large-when-times-are-lean.html

If you need help with budgeting, savings or managing your debt, speak to one of the financial advisors at Intellichoice today on 1300 55 10 45.

Australians not planning for retirement

2010-05-31T11:07:00.000+10:00

Millions of Australians are relying on as little as $322 a week on aged pension when they retire. This is because they have not planned their future properly.

The typical Australian aged 55 - 64 years will have $51,000 at retirement, but they do not realise they will need about $500,000 to fund an income of $38,000 a year for a modest lifestyle.

Make sure you speak to a financial planner about having a comfortable retirement. Don't leave it too late - call 1300 55 10 45 and seek professional advice from a financial planner about having a retirement income stream.

SMSFs spur property investment

2010-05-28T13:29:00.000+10:00

Australians are increasingly using self managed super funds (SMSF) to invest in property rather than shares.

According to accountancy firm Chan & Naylor, 'increasing awareness of the potential of SMSFs to borrow and invest is creating new demand for residential property. It seems Australians feel comfortable with property as an investment class,' said CEO Sal Carrero.

Since the GFC, many Australians are questioning whether they could invest their own money better than what their super fund was doing, and this is one of the reasons why SMSFs are growing in popularity.

Furthermore, SMSFs are no longer just reserved for the wealthy, with a minimum of $150,000 super savings enough to set up your own self managed super fund.

If you are interested in setting up your own self managed super fund, need assistance with a SMSF investment strategy or would like more information, speak to one of our experienced financial planners first on 1300 55 10 45 or email info@intellichoice.com.au. Intellichoice also has experienced mortgage brokers to assist with a SMSF home loan if you are looking at buying property through your diy super fund.

What is a self managed super fund (SMSF)?

2010-05-28T10:55:00.000+10:00

A self managed super fund (SMSF) is a specialised superannuation trust that can be established for up to four people, for the sole purpose of providing retirement benefits to its members. A SMSF if you own superannuation fund, where you have control of what investments your super fund invests in.

A SMSF needs to have:

A trust deed: This establishes what the super fund can or cannot do. The trust deed needs to be reviewed regularly to make sure that it is up-to-date.
A trustee: All members of the fund have to be trustees. You can act as individual trustees, or appoint a company as a trustee, in which case all members need to be directors. Speak to a financial advisor about which is suitable for you.
An investment strategy: An SMSF investment strategy sets out what the SMSF will invest in and addresses risk, return, diversification, liquidity, cash flow and asset allocation. Seek professional financial advice from a trusted financial advisor first for details on setting out our investment strategy for your super fund.

There are currently over 400,000 SMSFs in Australia and in March 2009, there was nearly $300 billion invested in self managed super funds. This represents about 32% of the whole superannuation industry's investments.

But before you set up a SMSF, you need to take the following into consideration:

If you have decided to appoint a company as trustee, you will need to register the company to be the trustee and obtain an SMSF trust deed. This can cost you from $800 to $1,500.
You need to apply for a Tax File Number, an Australian Business Number and establish a bank account in the super fund’s name
Once this has all been completed, you might like to think about rolling over your existing super accounts into your SMSF. You can also change your payroll details, so that your employer can contribute into the SMSF.
Appoint an accountant and auditor to prepare your SMSF accounts, tax return and audit every year.
Once your SMSF has been established, you need to manage it and its investments and keep proper records of all transactions. This will be essential if your SMSF is ever audited by the Tax Office.
At least in the beginning, you should consider getting advice from a professional financial advisor.

Before you set up a self managed super fund, we recommend that you speak to a qualified financial advisor first to ensure this is the best option for you. Our financial planners are available to answer any queries you may have and help set up your SMSF and investment strategy. Call 1300 55 10 45 or visit www.intellichoicefp.com.au for more details.

Lower income households likely to miss payments

2010-05-26T10:02:00.000+10:00

A new study by credit reporting agency Dun & Bradstreet has found that one in four Australian households indicated they would most likely miss mortgage payments if they found themselves short on cash. The study also found one in three said they will pay bills late in the coming year.

The Consumer Payment Priorities Study, released by credit reporting agency Dun & Bradstreet, revealed many Australians are unaware of the consequences of paying late bills.

More than half of survey respondents said they would be more likely to pay their accounts on time if they knew late payments would be listed on their credit report.

Many people do not realise that a payment can currently be listed on an individual’s credit record if it is 60 days overdue. However, new credit reporting laws which have already been accepted by the Federal Government will allow payments to be listed on an individual record if they are just one day late.

The study also reveals that younger Australians and those in lower income households are more likely to pay their bills late in the year ahead. One in five (21%) older Australians (aged 50-64 years) indicated they will pay at least one bill late – this compares to one in three for the two younger groups (18-34 and 35-49 years).

Approximately 30% of people in high income households ($80,000+) said they expect to pay late in the year ahead, as compared to 37% for households earning les than $80,000.

If you are having problems managing debt, need help with budgeting or have problems with your mortgage, speak to one of the finance advisors at Intellichoice today. Our mortgage brokers can help with a home loan review to ensure your home loan is still the best deal for you. Intellichoice also has professional financial planners to assist with debt consolidation, budgeting and a savings plan.

Reduce your tax

2010-05-25T09:41:00.000+10:00

It's almost the end of financial year in Australia and we have put together some tips for you to consider to minimise your tax.

http://www.intellichoicefp.com.au/financial-advisor/72-financial-planning-resources/353-reduce-tax-tips-and-tricks.html

You can also speak to a financial planner for more tips on reducing your tax but building wealth at the same time.

Should I have my own self managed super fund?

2010-05-24T11:33:00.000+10:00

There are essentially 2 benefits to having your own self managed super fund (SMSF):

1. Cost
Self managed super funds (SMSF) can be very cost effective. A SMSF will cost you anywhere in the range of $1,500 to $2,500 each year to maintain. In addition, there are a number of fixed costs that don't increase regardless of the size of your super fund. For example, the cost of auditing your SMSF and preparing the fund's tax return will still cost the same regardless whether you have $250,000 or $2 million in the super fund.

2. Control over your SMSF
You can control what your SMSF invests in and when you invest, subject to the fund's investment strategy and the technical rules about SMSF investments.

Please remember that a SMSF is not for everyone and we recommend that you seek professional advice from a financial planner first before setting up your own SMSF. A financial planner will be able to advise whether a SMSF suits your needs or whether using an industry superannuation fund or a retail super fund may still provide you with sufficient flexibility and cost-effectiveness.

Benefits of SMSF borrowing

2010-05-18T15:07:00.000+10:00

Below are some key benefits of using your self managed super fund (SMSF) to acquire shares, managed funds or property.

Maximises the wealth effect in the SMSF in times when assets of the fund are rising.
The borrowing can be for a short time period or for a period of up to 20+ years (if related party financing is used) allowing it to be structured to the underlying circumstances of the fund members.
SMSF members and related businesses can act as lenders as long as all lending is at arm’s length
It increases the flow of non-contribution style funds into the SMSF particularly where the members of the super fund have used up their contributions capacity. Care must be taken to ensure that there is a genuine borrowing and not a contribution arrangement, otherwise the Commissioner may deem the borrowing to be a non-concessional contribution.
Future income and capital gains on underlying assets are taxed concessionally in a SMSF and may even be tax free where the assets are held for pension purposes.

If you are thinking about setting up a self managed super fund or would like to speak to a qualified financial planner about a SMSF investment strategy, speak to Intellichoice today on 1300 55 10 45. Intellichoice has experienced mortgage brokers who can assist with SMSF loans.

More Australians are struggling with debt

2010-05-17T11:52:00.000+10:00

According to a study by Veda Advantage, one in five Australians are struggling to repay their debt. The biannual Australian Debt Study also found that more than 80% of Australians are worried about their ability to make debt repayments over the next 12 months.

The survey also found that one in seven Australians have missed a minimum bill repayment in the past three months – up from 12% in September 2009. Of those who had missed a repayment, one in ten Australians are looking to take on more debt in the next six months.

A Veda Advantage spokesperson said “this is the highest level of debt stress in the past two and a half years of this study.”

If you are struggling with debt and need help with managing debt, budgeting or debt consolidation, speak to a qualified financial planner at Intellichoice today on +61 7 3624 1900.

Gov’t changes good for SMSF borrowers

2010-05-14T09:30:00.000+10:00

Budget changes to self managed super funds (SMSFs) will create greater certainty around borrowing to invest in shares and property.

Accountancy firm Chan & Naylor, has backed government measures that will bring greater clarity on borrowing requirements.

“SMSFs are highly effective investment vehicles which should be encouraged and promoted by the government as a means of bolstering national retirement savings and reducing the dependency on government for retirement income,” said chief executive Sal Carrero.

Mr Carrero added that taxpayers with non-complaint SMSFs risk being stung by penalty fees, audits and tax office scrutiny.

If you would like more information about a SMSF and investments, speak to one of the experienced financial planners at Intellichoice on +61 7 3624 1900. The financial planners at Intellichoice will work out with you whether a SMSF is the best option for you based on your needs. Intellichoice can also assist with SMSF loans to purchase investment properties.

Strategies to reduce your tax

2010-05-10T12:02:00.000+10:00

The two certainties in life are death and taxes.

We do not have a crystal ball to allow us to see when we are going to die, however we do know when our tax is due. The end of the financial year is 30 June 2010. Unlike death when sometimes you are not prepared, you can prepare yourself for the tax man.

In the 2006–07 income year, individuals had $18.8 billion refunded or otherwise paid out after they lodged their income tax return, and $13.5 billion was required to be paid by other individuals to meet their annual tax liabilities.

Were you one of those individuals who contributed $13.5 billion to the federal government because you were not prepared? Or were you someone who felt you should have received a better or bigger tax refund?

What can you do?

Determine now, your anticipated earnings for this financial year – wages, commission, bonus, sale of goods or services.
Complete an estimate of your tax liability – understand how much you are going to pay.
Assess your long term goals and determine if you are happy to continue contributing to the Australian Taxation Office or would you be better off contributing to your own long term investments. In other words have the tax man pay off your debts.
Contact a financial advisor to assist in developing a long term strategy to reduce your tax liability and more importantly to help you create wealth.

Examples of some products that can help you reduce tax and at the same time build wealth include:

Property investment – tax deductible items include interest on borrowings, council rates, body corporate fees, maintenance, management expenses and depreciation.
Shares – tax deductible items include interest on borrowings and franking credits
Managed Funds – tax deductible items include interest on borrowings, deferred income and franking credits.
Superannuation – salary sacrifice, salary packaging and tax deductions available for self-employed individuals.

For more information about ways to reduce your tax payable, or to book an obligation free appointment with one of our qualified financial planners, call +61 7 3624 1900.

Pay down bad debt and focus on the good debt

2010-04-21T10:25:00.000+10:00

Many Australians are struggling to repay their debts. According to The Australian, many more are dealing with rising interest rates easily because they have made provisions for the higher repayments, or never lowered their repayments when interest rates were falling.

Experts recommend that bad debt (incurred when a person buys things that depreciate in value, such as a car, shopping or a holiday) needs to be repaid as fast as possible. This type of debt does not help you to increase your wealth. Furthermore, interest rates on credit cards or personal loans can attract between 9 - 20% in interest charges. Good debt on the other hand, such as a mortgage to buy a house, or a loan to make an investment can increase wealth because the assets may rise in value.

If you need help consolidating debt, budgeting, debt management or would like more information about building wealth, speak to one of the financial advisors at Intellichoice today on +61 7 3624 1900.

Aussies are still wary of credit

2010-04-19T10:21:00.000+10:00

Despite increasing confidence about the economy, many Australians are still reluctant to increase their credit card debts.

"People are still more inclined to use their own money to make purchases rather than put it on credit," Commsec chief economist Craig James said.

Datamonitor senior analyst Harry Senlitonga said use of Visa and Mastercard debit cards was up 30% in the past 12 months, compared to 6.69% for credit cards. "Debit scheme cards give consumers the best of both worlds - accessibility of a credit card and they allow the consumer to use their own money," said Mr Senlitonga.

New tax break for savers

2010-04-16T10:11:00.000+10:00

The federal government is considering a new savings scheme that will encourage more people to put money away for years into high interest rate bank accounts. The idea is believed to come from the Henry Tax Review, which is yet to be released by the government.

The new savings scheme could offer significant tax breaks for savers - similar to a superannuation’s tax break which gives super investors a low tax rate of just 15%. Some taxpayers now pay 50% tax on the interest earned on their savings.

Intellichoice Financial Planning ties up with one of Australia's leading investment management groups

2010-04-14T14:17:00.000+10:00

Intellichoice Financial Planning is proud to announce an alliance with one of Australia’s leading mortgage investment management group, La Trobe and offer clients the opportunity to invest in Australia’s best Mortgage Fund, as voted by Money Magazine.

A mortgage fund essentially takes investors’ money and uses it to make loans secured by mortgages or buy existing ones. You as an investor receive the net interest payments on those mortgages. These loans can be secured by mortgages over retail, commercial, industrial or residential properties.

Darin Hindmarsh, Managing Director of Intellichoice says ‘investing in a mortgage fund can consistently earn you between 7% and 15% depending on the degree of risk.’

‘This rate of return compares very favourably when compared with other forms of investments. For example, the average return on government bonds is 1.6% and 3.4% based on 1 year and 5 years respectively.’

Intellichoice has formed a relationship with La Trobe because of the strength and stability of their mortgage fund options. Their Pooled Mortgages Option has been recognised as Australian Best Mortgage Fund by Money Magazine, winning the 2010 Best of the Best Award.

A unique feature of the La Trobe Fund is their ‘Select Investments’ which means before you invest, you and your Intellichoice financial planner can review the details of the borrower and the proposed loan, including investment term, interest rate and payment terms together before you make the decision to invest or not.

‘A great feature of investing in a mortgage fund through our alliance partner is that you only need a minimum investment of $1,000, so you have all the advantages of being “the bank”, without having to fund the entire mortgage’ says Hindmarsh.

To find out more about mortgage funds and whether this is the best investment option for you, speak to one of the financial planners at Intellichoice today on +61 7 3624 1900.

Deposit rates still at record highs

2010-04-14T10:19:00.000+10:00

Savers can still benefit from historically high term deposit and savings account rates.

Term deposit rates in Australia are now over 7% at some banks and credit unions.

A bumpy ride for 2010?

2010-04-13T14:09:00.000+10:00

That is what it may feel for some of us over the next twelve months according to sources at UBS. With the amount of deleveraging (big word for not being able to refinance debt) in the markets overseas, it will obviously cause a lot of jitters globally. What it means to you and I is the markets are more volatile over the coming year.

What are you doing to counter this? Well it seems over four hundred thousand Australians have decided the managing their own future through self managed super funds (SMSF) is the way to go. This may in part come from the belief that if anyone is going to lose your money it may as well be you! Not an entirely unfair statement considering that SMSF’s outperformed the major funds by 3% last year.

It may be worth recalling exactly what the different super funds are available and quite simply you have three options:

1.    Retail Funds/Master Trusts
These types of superannuation funds are owned by Banks and major fund managers. They have more investment options with less exposure to alternative assets. Alternative assets are direct property, infrastructure etc. The benefit of more choice is that the individual can tailor an investment strategy aimed at achieving their long term goals. Colonial First Choice as an example, has a choice of 106 options.

2.    Industry Funds
These super funds are generally not for profit funds established for the benefit of the members. They have limited investment options. For example, AustSafe has 9 choices.

3.    Self Managed Super Funds (SMSF)
As the title states these are super funds where the individual makes the investment decisions in line with government legislation. Generally the individual feels they have control and can achieve a better outcome than the so called professional.

What is best for me?
There are enough options to make Super and preparing for the future a confusing situation. However, more and more people are paying attention to this particularly due to the ups and downs we have experienced over the past eighteen months and the likelihood of more volatility to come.

The super fund that best suits you will depend on issues such as age, your acceptance or understanding of volatility, your investment strategy and also time to retirement. As with many things in life there is not a one size fits all option. We strongly suggest you review your current arrangements sooner rather than later as Super will affect many aspects of your financial future.

If you need help with superannuation or if you are thinking of setting up your own self managed super fund, speak to one of the financial planners at Intellichoice today on +61 7 3624 1900.

Bank fees cost $50/week

2010-04-12T10:04:00.000+10:00

Bank fees are costing the average Australian about $50 per week. Even low income earners, (on $50,000 and below) are paying about $30 per week in bank fees and charges.

According to new research from the Australia Institute, in 2009, the Commonwealth Bank, Westpac, National Australia Bank and ANZ racked up $35 billion in profit. Bank charges were being passed on by businesses in their prices to customers and could be costing households more than $50 a week.

In the year to September 2009, banks earned fees and commissions worth $19.829 billion. The Australian Bankers Association disputed much of the report and said bank profits were largely derived from superannuation, insurance, institutional transactions, and offshore activity.

Gen Y not coping with debt

2010-04-01T09:00:00.000+10:00

Generation Y, (people born between 1980 and 1994), have developed a reputation for not being responsible with money says social researcher Mark McCrindle.

McCrindle says that there has been a big rise in the number of 19 year olds declaring bankruptcy. Many Gen Y’s make good income but waste their money on cars, clothes and leisure/entertainment and are not concerned with investing for their future.

For help with debt management, debt consolidation or budgeting, speak to a financial advisor at Intellichoice today on +61 7 3624 1900.

10 things I hate about you (things you don't want to hear from your financial planner)

2010-03-24T16:28:00.000+10:00

You will have to work longer
You need to save more
You have to live on less
You need to take more risk
Your family won't be covered in case something happens to you
It's not financially viable for me to help you at this stage (I'm not earning enough commission out of you)
You have to get another part-time job
Invest in shares only
Property is not a good invetsment
Do as I say, not as I do (my portfolio took a dive)

All this can be avoided by speaking to a financial planner at Intellichoice who will help you find the right mix of financial strategies. Have peace of mind if the market declines, but you can also reap the rewards when the market is moving higher.

Visit www.intellichoicefp.com.au to view our range of financial planning services or make an obligation free appointment normally worth $500 with our financial planner. Call 1300 55 10 45 to find out how we can help you achieve your financial goals.

Benefits of a self managed super fund

2010-03-22T11:14:00.000+10:00

A self managed super fund (SMSF) is one of the most popular and effective forms of investment and wealth creation available to Australians. There are many benefits to a self managed super fund, including control over the investments you choose to invest in, flexibility and the taxation benefits offered by the government. The benefits of a SMSF has led to an increase in the number of Australians who choose to manage and control their own super fund. Reports suggest that there are currently more than 350,000 self managed super funds with an overall 700,000 members.

The other benefit of a self managed super fund is that it helps offer an optional retirement saving mechanism thus giving the investor greater flexibility and control over the investments. The funds also enable you the ability to choose from the wide range of investment and strategies that are currently available in Australia. For example, through your self managed super fund, you could invest in cash, shares, bonds or property.

Self managed super funds offers the investor the chance to take advantage of tax benefits. DIY super also accept rollovers from other existing superannuation funds. In addition, they allow one to decide the amount of funds that one can contribute to the self managed super fund. The super fund also enjoys concessional tax rates which apply to the realized capital gains so long as the SMSF has held the assets for at least 12 months. The concessional tax rate of 15 % is applied to the deductible contributions and income held by the self managed super fund.

Self managed super funds allows an investor to change an administrator without the need for paying penalties or exit fees. Also, upon the death of the investor, the dependants of the fund member are in a position to receive the whole balance of the account tax free. The premium payable for total incapacitation insurance and death is tax deductible so long as it is paid through the DIY super fund. The cheques from the funds can only be signed by a member of the funds making self managed super a safe investment haven for most Australians. The funds also offer an inexpensive and simple structure especially for investors who wish to invest as couples.

The other benefit of self managed super funds is that they are cheaper to establish and run compared to other normal super funds. They are also a more flexible investment option compared to commercial and retail funds as they allow you to invest in property, cash, bonds, mortgage investments, shares, private equity and fixed interests. The self managed super fund allows an investor to invest in a wide variety of financial instruments that would not be available through traditional super funds.

To find out more about self managed super funds, speak to our financial planner today on +61 7 3624 1900. Through Intellichoice Financial Services, our mortgage brokers can also help you buy property through your self managed super fund with a SMSF home loan.

Pros and cons of a debt consolidation loan

2010-03-19T13:05:00.000+10:00

If you have multiple credit card debts, car loans and personal loans and making minimum repayments each month is causing you stress, then you should consider a debt consolidation loan. Before you take out a debt consolidation loan, we recommend that you first speak with a financial advisor to ensure this is the best option for you.

Below are a list of pros and cons for debt consolidation loans:

Advantages of a debt consolidation loan

One payment to make: Making a single repayment each month is so much easier and less stressful for you. It makes it easier to manage your finances
Reduced interest rate: The interest rate on a debt consolidation loan will be much lower than the interest rate on your credit cards
Lower monthly repayments to make: As the interest rate on your debt consolidation loan is lower, the amount you pay each month will also be lower
Only 1 creditor: You only have to deal with one creditor instead of multiple creditors.

Disadvantages of a debt consolidation loan

It may be easy to get into debt again: As all your debt has been consolidated into the one loan, it might be tempting to start using your credit cards again or continue bad spending habits that got you into debt in the first place
Longer time to pay off your debt
You may end up paying more over the long term: As the debt consolidation loan term is longer, you may end up paying more interest to clear your debt

Before you get a debt consolidation loan, you should realistically look at the pros and cons to determine if this is right for you. Speak to one of the financial planners at Intellichoice for more information about debt consolidation loan and how we can help you with budgeting and managing debt.

Credit card traps

2010-03-17T09:58:00.000+10:00

Differences in the way interest on credit card balances is calculated can cost consumers big dollars. Consumer group Choice found that two consumers with exactly the same transaction history and exactly the same outstanding balance of $2,000 could be paying either $10 in interest or $45, depending on the credit card they are using.

If you one day late or pay less than the minimum required repayment, most credit cards will charge you a full rate of interest on the full balance going back to the date of the original transactions, with no interest free days applying. If you fail to pay your bill on time, most cards will not give you any interest free days on new purchases either.

Superannuation investors turn to property

2010-03-16T10:17:00.000+10:00

Superannuation investors are more likely to put any extra money they have into property rather than superannuation, a new study conducted by the Australian Institute of Superannuation Trustees has found.

According to the survey, approximately 43.6% of superannuation investors would buy an investment property, while only 22.4% would put more money into their super fund.

The survey also found that women were more likely to go for property, while men were much more likely to invest directly in the sharemarket. Only one-third of the consumers surveyed said they were satisfied with their super fund’s investment performance.

If you are thinking of setting up a self managed super fund (SMSF), speak to one of the financial planners at Intellichoice on +61 7 3624 1900 for more information and to find out whether a SMSF is right for you. Intellichoice can also help you buy property through your self managed super fund with a SMSF home loan.

What happens to your super if you die?

2010-03-12T10:36:00.000+10:00

Superannuation is an excellent way to invest for your retirement. The Australian government has provided some great tax concessions, which make super one of the best long term investment vehicles. Your savings grow because money is paid in regularly, which your super fund invests at low rates of tax. But what happens to your super if you die?

Dependants
If you die while still a super fund member, the super company must normally pay your death benefit to one or more of your dependants or your estate.

'Dependants' could include your spouse, children, people with whom you had an 'interdependent' relationship or those who depend on you financially. We recommend that you ask your super fund for more details. If the super is paid to people who are not your dependants, it may be taxed.

Nominations
Most super funds let you nominate who you want your death benefit paid to, either as a 'non-binding' or 'binding' nomination.

A 'non-binding nomination' just guides the trustee, who still has the final say, especially if you have dependants, but you nominate someone who does not depend on you. The trustee is not required to follow the instructions in your will.

A 'binding nomination' will bind the trustee, and lets you name:

a dependant, or
your 'legal personal representative', who must distribute your benefit according to your will or according to law if you have no will.

Make sure that you keep these nominations up to date, for example, if you marry, re-marry or have children.

For more information about superannuation, speak to one of our financial planners at Intellichoice on + 61 7 3624 1900.

Planning an affordable family holiday

2010-03-12T10:19:00.000+10:00

During the school holidays, we find that many families plan short getaways – either to spend quality time together or just to keep the children occupied. Below are some tips on keeping your travel expenses low, yet still ensuring a great time for everyone!

Search for deals
Do not miss out on the many online opportunities to find great bargains. You can use online travel sites to search for the lowest airfare, hotel rates and car rental rates, as well as great entertainment deals. It is also a good idea to check specific airline sites too, as they may be advertising specials that are not included on the other sites.

Pick the package
Before booking any part of your trip, check out travel packages available from the airlines or hotel chains. It is often possible to find low-priced packages that include both hotel and airfare, and admission to local attractions as well. However, remember that these packages may not always be the cheapest deals. Compare and check all the details and make sure that what you are getting is worth what you are paying.

Be flexible
Uncertain exactly where you would like to go? Then plan your trip around the best deals available. Sites that specialize in low-cost travel usually advertise specials to certain locations - as do many airlines. If the location sounds like somewhere you would enjoy exploring, you could save a great deal on your trip. It's also a great way to explore new places you may never have thought or know about.

Choose a destination location
Want to save money on gasoline and admission costs for various attractions during your holiday? Pick a hotel that has a pool, playground, nearby hiking or other on-site activities. In addition, many hotels offer suites with their own kitchens. While these may cost more than regular rooms, the savings on take-aways and dining out may more than offset the higher price.

Explore the great outdoors
Camping is not only a fun family activity, it is also a cheaper way to travel. There are campgrounds and cabins at national parks all around Australia and they offer an inexpensive way to explore these locations. Outdoor holidays are a great departure from the usual routine and make it possible for your children to get away from the television and computers and enjoy nature. In many cases, they are much less rustic than you might imagine. There are also many activities available and great sights at the national parks.

For more information about budgeting, or for other ideas on saving money, speak with one of the financial planners at Intellichoice today on +61 7 3624 1900.

Flood insurance

2010-03-09T11:26:00.000+10:00

Major floods across Australia in the past couple of years have raised strong community concerns about the extent and availability of cover for flood damage in house and contents insurance policies. The effects of flood can be devastating and may result in the loss of homes or in extensive water damage to buildings and contents. It is therefore vital that consumers understand exactly what their insurance policies do and do not cover.

Most home and contents insurance policies exclude cover for flood damage - this exclusion must be made clear in the policy documents. However, your home insurance policy will probably cover you for stormwater and possibly rainwater damage. Insurance companies generally define these events differently. It is imperative that you check with your insurance company if you are unsure whether your existing policy covers damage caused by storm and/or flood. Ask them to clearly explain that part of your insurance policy where flood cover, or flood exclusion, is contained. This will allow you to work out whether to change your insurance policy if you need insurance for flood damage.

It has become common for some insurers to provide cover against ' flash flooding', that is, when the damage to your property occurs within 24 hours of the rain that caused the flood. This cover may be optional (you have to pay more, and it may only cover you for a smaller amount eg 20% of the sum insured).

If you would like to find out more about home and contents insurance that includes flood, speak to one of our financial advisors on 1300 55 10 45 for more details.

Aussies in debt again

2010-03-08T09:43:00.001+10:00

Australian households are returning to their debt fueled lifestyles after a year of austerity and paying down their debts. According to the Reserve Bank of Australia, personal loans and card debts have been rising for the last four months.

Approximately 25% of Australians expect to increase their debt within the next three months according to a survey by Dun & Bradstreet. Economist Shane Oliver from AMP Capital says people are less worried about their jobs and therefore more prepared to take on debt.

Aussies value their weekends more than being rich

2010-03-08T09:41:00.001+10:00

More than half of Australians value their weekends more than being a millionaire.

According to an online poll published in News Ltd newspapers, 55% of Australians would not give up their weekends and work 7 days a week, even if it meant they would be millionaires within ten years. Approximately 44% of respondents said they would give up their weekends for financial gain.

Save money while you travel

2010-03-04T12:31:00.000+10:00

While you are travelling overseas, it is even more important to make your money go as far as possible. You do not want to face a huge credit card bill when you return from your overseas adventure, but you also do not want to miss out on once-in-a-lifetime opportunities while you are away. We have provided some tips on how to make your dollar go further while abroad.

Staying in touch
Use email to keep in contact with family and friends. Internet cafés (including laundries and libraries) can be found everywhere. Using "global roaming" on your mobile phone can be expensive. Alternatively use International Calling cards so you can control how much you spend

Get plugged in
If you are taking your mobile phone, laptop, razor or hairdryer, you will need an adaptor – buy one before you leave home as they will be cheaper here and will save you the time of finding a shop that supplies one when you reach your destination.

Banking from far away
ATMs are plentiful overseas but be wary of the transaction costs the overseas banks will charge. Use Internet banking if you need to check your account and move money about.

Online bookings
Finding well-priced accommodation is also quite easy in many major foreign cities using discounted travel websites.

Check local bargains
Often there are significant price differences between home and overseas. For instance, a camera may be cheaper in Italy but a haircut is a lot more expensive.

Take the bus/tram/train/subway
Do not try to drive and park in major cities. If you think driving into Australian cities is difficult and expensive, you should try Europe. The best plan is to drive to the outskirts of the city, park and catch public transport. It will also be an experience for you to try public transport when overseas and you will be able to take in the sights without the stress of having to navigate around a strange city.

Eat where the locals do
Many prominent eateries are tourist traps. Take a stroll up the back streets and you can often find excellent food at a fraction of the price.

You never know - if you save money as you go, you could afford to extend your holiday for another few days, or even weeks!

Money saving tips for the kitchen

2010-03-01T15:34:00.000+10:00

1.    When in doubt, make soup. Make a big batch of your favourite veggie soup, then do something different to it each time you serve it - blend some curry spices, add tomatoes, throw in some lentils, add bacon bits, serve with grilled garlic bread. (They were all different options, but you could do them all at once if you were really hungry).
2.    Self-preservation - There is growing interest in home preserving, baking, curing, brewing, sausage making etc.
3.    Listen to your grandmother - Turn off taps when you're done, save string, re-use bags and bottles, put lids on your saucepans (saves 20% energy and speeds everything up), and cut out waste. Think twice before you toss anything out. Greeks cook beetroot greens and toss in olive oil, Turks stew broad beans pods and serve with yogurt and dill, Chinese dry mandarin peel and add to stews for fragrance and flavour.
4.    Grow Your Own - Funny how we're turning back to growing our own fruit and veg. Even if it's just a pot or two of herbs you can keep on the windowsill of a flat, you will suddenly feel completely self-sufficient.
5.    Eat with the seasons - Because it's in season, it's more abundant, because it's more abundant it should be cheaper. Even if it isn't, it's better value because it's fresher and tastier. It also means the producers haven't had to find new ways of preserving shelf life and storage.
6.    Send the food processors broke - Not the ones you plug in and whiz, but the middleman who buy fresh unprocessed foods and do things to them, offering them to you with extra flavours you don't want or need. Instead, buy the fresh, unprocessed food yourself and keep your own 'processing' to a minimum, e.g. buy whole fish and whole chicken rather than fillets and pieces - you'll get better quality, and learn how to fillet and joint like a chef. Whole lettuces last longer than bags of mixed leaves, and unwashed is cheaper than washed. Don't buy ready-made vinaigrette, breadcrumbs, pre-chopped vegetables and pre-grated cheese. It's money down the drain, when you can do it yourself and save.
7.    Love your leftovers - Throwing food out is throwing money out. If you do have leftovers, take it for lunch the next day.
8.    Steak. Get over it - A plateful of vegies and pulses with a little bit of red meat is a lot cheaper than a plate of meat with a little veg and a lentil. Striking a better balance is better for your pocket and for your overall health. Make fish, chicken and meat go further by adding beans, lentils, chickpeas and rice. Turn your meal - planning around so that the most expensive ingredient is the 'flavouring' rather than the main event.
9.    Use eggs and cheese for protein, nuts and seeds for fibre and crunch, and yogurt and avocado for richness. And return to something as beautiful as a great steak-and-red-wine dinner to the special status it deserves... crave it, look forward to it, and enjoy the hell out of it. Just not every second day.
10.    Cook your own 'take-away' - Love pizzas? Learn to make your own, or use pita breads as the bases, and get some help from the kids with doing the toppings so everyone has their own. Are you a burger person? Try cooking salmon burgers, chicken burgers, or normal burgers with a bit less meat and more of your other fillings, such as beetroot, avocado, tomato, cheese and lettuce. Craving Greek/Lebanese? Cover the table with little dishes of dips, breads, raw vegetables, herbed rice, and skewers of home-made lamb or tuna souvlaki.
11.    Freeze - It's a fabulous feeling knowing you have tubs of chicken stock, pumpkin soup, chicken curry, Bolognese sauce, good bread, etc in the freezer. Frozen bananas make a great instant ice-cream - just soften and whiz.
12.    Buy ten get one free - Beware of the supermarket bonus offers, which often tempt you into buying two for one of something you didn't really want in the first place.

For more savings tips, speak to one of our financial advisors at 1300 55 10 45 or visit www.intellichoicefp.com.au for more details.

Seeking financial advice

2010-02-25T09:42:00.001+10:00

When it comes to your financial future and your superannuation, the advice of a good financial planner should not be underestimated.

Financial planners can help you make the most of your current financial situation, provide financial advice on tax issues related to your investments, and help you lay the foundation for your retirement. However, after the failure of Storm Financial and Opes Prime, the spotlight has been placed on the shortcomings of the financial planning industry and you may be wondering how best to evaluate the financial advice you receive.

When you seek financial advice, it is important to know that your financial advisor has the appropriate skills and experience and that the dealer group he or she is associated with has the ability to deliver the ongoing services you require.

The following questions may be useful in helping you to assess the merits of a financial planner:

1.    Do they have a Financial Services Guide?
All financial planners are legally required to produce a Financial Services Guide (FSG), which gives you an easy to understand explanation of their fee structure and the services they offer. The FSG should enable you to make an informed decision about whether you want to use their services.

2.    Are they, or their company, licensed by the Australian Securities and Investments Commission (ASIC)?
An authorised financial planner must meet the knowledge, skills and integrity standards required by ASIC.

3.    What are their qualifications and experience?
Check that the financial advisor has appropriate qualifications, preferably at least a Diploma of Financial Planning. Ask how long they have been a financial planner and the types of clients they typically work with.

4.    Are they a member of a professional association?
We strongly advise that any financial planner you use is a member of the Australian Financial Planning Association (FPA), the Institute of Chartered Accountants in Australia (ICAA) or the Certified Practising Accountant (CPA). The FPA is the professional body for financial advisers in Australia, while ICAA and CPA are the professional bodies for Accountants in Australia. Members are bound to adhere to Codes of Ethics and strict operating guidelines to protect clients’ rights.

5.    What services do they offer?
Does the adviser only offer investment advice, or do they offer total financial solutions, including insurance, tax, estate planning and so on. Do they have formal ongoing review services? Do they offer investment administration services?

6.    How are they paid for their services?
Find out if they operate on a flat fee, brokerage or commission basis. Ask them to explain all upfront, ongoing and exit fees which might be payable by you (directly or indirectly).

When seeking financial advice, always remember it's your money you are investing. Take the time to evaluate your financial planner's advice and don't be afraid to ask questions. To find out more about the services that a financial planner can offer and how they can help you build wealth, call 1300 55 10 45 or visit www.intellichoicefp.com.au

Intellichoice financial planning - new design

2010-02-24T14:55:00.001+10:00

We have just revamped the Intellichoice financial planning website. Please visit our new website to view our various financial services and products on offer. We aim to provide our users with educational and useful information on financial planning, debt management, superannuation, retirement planning and more.

SMSF’s turn to term deposits

2010-02-17T09:17:00.001+10:00

Many investors with self managed super funds (SMSF) are choosing to put all their funds into one asset class – most often this is cash.

As investors get older, they are more concerned with capital protection and move away from balanced portfolios with about 70% of assets in growth investments (for example property or shares) and 30% in defensive investments (for example, cash). About 20% of SMSF’s had all their funds in one asset class, most often thisis cash assets such as bank deposits and term deposits.

Understanding your role and responsibilities with a self managed super fund: Part 4

2010-02-15T17:28:00.001+10:00

Complying with the super and tax laws is your responsibility, even if you use a super or tax professional, or a financial planner. So it’s important you understand what you need to do.

As a trustee for a self managed super fund, your duties and responsibilities include:

making sure the fund’s sole purpose is to pay retirement benefits to members
accepting contributions and paying benefits (pension and lump sum) according to the super and tax laws
making investment decisions and complying with any restrictions
ensuring an approved auditor is appointed for each income year
completing administrative tasks, such as lodging annual returns and record-keeping
reviewing and updating the super fund’s trust deed and investment strategy

If there are any changes to your SMSF, you will need to inform the ATO within 28 days. These changes may
include any of the following:

trustees
directors of the corporate trustees
members
contact details (contact person, phone and fax numbers)
address (postal, registered or address for service of super fund notices)

To avoid penalties, make sure you understand and comply with your duties and responsibilities under the super and tax laws. If you don’t comply, the ATO can:

impose administrative penalties
make an agreement with you to rectify the problem
make your super fund non complying (which means your super fund loses its tax concessions)
disqualify you as a trustee
prosecute in the most serious of cases.

Investing your fund’s money
Being a trustee of an SMSF gives you more flexibility when it comes to investing your super fund’s money. Unlike some other super funds, you can choose the investments for your fund, so long as you invest according to the following:

the super fund’s trust deed
the investment strategy
the super laws

While the super laws don’t tell you what you can and can’t invest in, they do set out certain investment restrictions you need to comply with.

For example, unless an exception applies, trustees generally can’t:

lend the fund’s money or provide financial assistance to members and their relatives
acquire assets from related parties of the fund including – fund members and their associates – all the fund’s standard employer-sponsors and their associates
borrow money on the super fund’s behalf (certain instalment warrant arrangements are allowed) lend to, invest in or lease to a related party of the fund (including related trusts), more than 5% of the fund’s total assets
enter into investments on the fund’s behalf that are not made or maintained on an arm’s length (commercial) basis

Appointing an approved auditor
You need to appoint an approved auditor to audit the super fund each year. An approved auditor will:

examine your fund’s financial statements
assess your overall compliance with the super laws.

An approved auditor needs to be a registered company auditor or a member of certain professional organisations. They need to follow professional auditing standards that require the audit to be conducted independently. An SMSF professional may help you fi nd an approved auditor. Before the annual audit, you or your SMSF professional needs to prepare information about your accounts and transactions for the previous income year. This information is then sent to the approved auditor. The auditor will provide you with a letter of engagement confi rming they accept the appointment and the scope of the audit. You need to give the auditor any further documentation they request so they can audit your fund.

Once the approved auditor has completed your super fund’s audit, they will provide you with the following:

an audit report
a management letter, which summarises the findings of the audit and any action taken or proposed by the trustees

You need to have an auditor’s report before you lodge your fund’s SMSF annual return. The law requires that you appoint your auditor at least 30 days before the annual return is due to be lodged. To ensure you lodge on time, you need to allow enough time for your auditor to conduct the audit.

The auditor will also notify the ATO if one of the following occurs:

find you’ve breached certain super laws
have concerns about your fund’s financial position.

Your annual responsibilities
As a trustee there are some things you need to do each year under the super and tax laws. There are also some things you need to do to make sure your super fund complies with the law and it operates effectively.
Use the following checklist each year to make sure you meet your annual responsibilities.

Aussies paying off the credit cards

2010-02-15T09:36:00.000+10:00

Australian credit card holders are paying off their card debts faster than ever before.

According to new figures released on last Friday by Mastercard, approximately 70.8% of card debt is currently accruing interest, the lowest level in more than one year. Consumers are also more reluctant to make cash advances on their cards, wth cash advances falling 13% compared to one year ago. The growth in credit card limits has also slowed to just 3.5% in 2009 - down from 12% the year before.

Women get left with the debts

2010-02-15T09:32:00.000+10:00

Women are most often the victims of relationship debt, or sexually transmitted debt, which are the names given to debts that are left over after a relationship breaks down.

Most partnership debt is initially racked up by the man in a relationship according to a new study by credit reference service Veda Advantage.

Relationship debt is also a problem in families and between friends. The consumer law action centre recommends getting independent advice before committing to a joint loan or providing security for someone else’s loan.

Managing your self managed super fund's investments: Part 3

2010-02-05T10:47:00.001+10:00

One of your key areas of responsibility is to manage your super fund's investments. You have certain duties and responsibilities when making investment decisions. They are designed to protect and increase your member's benefits for retirement.

Your investment strategy

You need to prepare and implement an investment strategy for your self managed super fund (SMSF) and review it regularly. The investment strategy needs to reflect the purpose and circumstances of your super fund. You will also need to take the following into consideration:

investing in a way to maximise member returns taking into account the risk associated with the investment
diversification and the benefits of investing across a number of asset classes (for example, shares, property and fixed deposit) in a long-term investment strategy
the ability of your super fund to pay benefits as members retire and pay other costs incurred by your super fund
the needs of members (for example, age, income level, employment pattern and retirement needs).

The investment strategy should set out your investment objectives and detail the investment methods you will adopt to achieve these objectives. You will need to make sure all investment decisions are made according to the investment strategy of your super fund. If in doubt, we recommend that you seek investment advice from a professional financial planner.

SMSF restrictions

Super laws place restrictions on the types of entities your super fund can invest in or with, and the entities that your fund can acquire assets from. Investment restrictions exist because they protect fund members by making sure fund assets are not exposed to undue risks, for example a business failing.

Loans or financial help to members or a member’s relative

You can’t lend money or provide direct or indirect financial help (including the provision of credit) from your super fund to a member, or a member’s relative. For example, using super fund assets to guarantee a personal loan would contravene this investment restriction.

A member or a member’s relative means any of the following:

a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of that individual or of his or her spouse
a spouse of that individual or of any individual specified above

Borrowings

You can only borrow money in very limited circumstances. The circumstances include:

borrowing money for a maximum of 90 days to meet benefit payments due to members or to meet an outstanding surcharge liability. The borrowings can’t exceed 10% of your fund’s total assets
borrowing money for a maximum of seven days to cover the settlement of security transactions if the borrowing does not exceed 10% of your super fund’s total assets. You can only borrow to settle security transactions if at the time the transaction was entered into it was likely that the borrowing would not be needed
borrowing, using instalment warrants or instalment warrant like arrangements that meet certain conditions.

Acquisition of assets from a related party

You can’t acquire assets for your SMSF from a related party of your fund. However, there are limited exceptions to this rule where:

the asset is a listed security (for example, shares, units or bonds listed on an approved stock exchange) and the asset is acquired at market value
the asset is business real property and acquired at market value
the asset is an in-house asset, but the level of your super fund’s in-house assets does not exceed the threshold for SMSFs of a maximum 5% of total fund assets, or is an asset specifically excluded from being an in-house asset.

A related party of a fund covers all members of your fund and associates, and all standard employer-sponsors of your super fund and their associates.

In-house assets

An in-house asset is a loan to, or an investment in a related party of your fund, or an investment in a related trust of your fund. An asset of your fund that is leased to a related party is also an in-house asset. In general, as a trustee you are restricted from lending to, investing in or leasing to a related party of your fund more than 5% of your fund’s total assets.

There are some exceptions, including for business real property that is subject to a lease between your super fund and a related party of your fund. There is a limited exemption for certain investments in related non-geared trusts or companies.

Investments need to be made and maintained at arm’s-length

Any time your SMSF makes an investment, it needs to be made and maintained on a strict commercial basis. This is referred to as an investment at arm’s-length. The purchase and sale price of fund assets should always refl ect a true market value for the asset. Income from assets held by your fund should always refl ect a true market rate of return.

Investing in business real property

You need to ensure the level of investment in business real property still meets the investment strategy of your
fund, including diversifi cation of assets, liquidity and maximisation of member returns in your fund. A fund with 100% investment of assets in business real property could have some problems meeting these requirements. As with other super fund investments there can’t be a charge over an asset (that is a loan or covenant).

For more information about self managed super funds and whether this is the best option for you, speak to a financial planner at Intellichoice on 1300 55 10 45. We can also assist with a SMSF loan to buy property through your super fund.

Investors confidence surges in 2009

2010-02-02T09:17:00.002+10:00

Investors are not deterred by the current rising interest rate environment. According to ING Investment Management’s quarterly Investor Dashboard Sentiment Index, Australian investor sentiment is up 124% in the last 12 months, highlighting the rapid improvement in economic and financial conditions.

More than 80% of Australians surveyed believe their economic situation has improved, and the early prognosis for 2010 looks rosy, with more than 70% of Australians expecting the economy to improve over the next three months.

Similarly, 67% of Australian investors expect an increase in property prices - a 6% jump on last quarter’s results. The survey records the opinions of more than 3,500 mass affluent investors from 12 countries across the Asia Pacific Region.

Aussies plan to boost savings this year

2010-02-01T09:51:00.000+10:00

More than three quarters of Australians who participated in an online poll by News Ltd newspapers plan to increase their savings in 2010. Approximately 76% of respondents said they would build their savings this year, while 35% said they would not be adding to their savings in 2010.

If you are planning on adding to your savings in 2010, speak to one of the financial planners at Intellichoice on 1300 55 10 45 for tips and strategies.

Preparing to set up your self managed super fund: Part 2

2010-01-29T17:08:00.000+10:00

You’ll need to choose the best way to structure your self managed super fund (SMSF) so it complies with the law and suits you and the other members’ circumstances.

Once you’ve decided to set up an SMSF, you need to:

decide on the type of trustee for your fund (a company or up to four individuals)
make sure you (and the other members) are eligible to be a trustee
check the residency requirements your fund needs to meet to be a complying fund and receive tax concessions.

Structuring your self managed super fund (SMSF)

For your super fund to be an SMSF, it needs to meet several requirements under the super laws.

The requirements are different depending on whether your super fund is one of the following:

a corporate trustee
individual trustees
a single member.

If your super fund has individual trustees, it’s an SMSF if all of the following applies:

it has four or less members
each member is a trustee
no member is an employee of another member, unless they’re related
no trustee is paid for their duties or services as a trustee

If your fund has a corporate trustee, it’s an SMSF if all of the following applies:

it has four or less members
each member of the fund is a director of the company
each director of the corporate trustee is a member of the fund
no member is an employee of another member, unless they’re related
the corporate trustee is not paid for its services as a trustee
no director of the corporate trustee is paid for their duties or services as director in relation to the fund.

Single member funds

It is possible for you to set up your super fund with only one member. If you have a corporate trustee for a single member fund, the member needs to be one of the following:

the sole director of the trustee company
one of only two directors, that is either

related to the other director
not an employee of the other director.

You can also have two individual trustees. One trustee needs to be the member and the other needs to be one
of the following:

a person related to the member
any other person who does not employ them.

A trustee or director can’t be paid for their services as a trustee or director in relation to the fund.

Types of Trustees

Once you understand how you can structure your self managed super fund, you need to decide on the type of trustee you’ll use.

You can choose either one of the following:

a corporate trustee
up to four individual trustees.

A corporate trustee is a company incorporated under the law that acts as a trustee for the fund. Generally, to
be an SMSF, all directors of the company need to be members and all members need to be directors of the
company. If you already have a company, you may choose to use it as trustee.

Your choice of trustee will make a difference to the way you administer your fund and the types of benefi ts it can pay, so you need to make sure it suits your circumstances.

When making your decision, we recommend you:

discuss your trustee options with an SMSF professional
consider the benefits and costs of each type of trustee (for your situation).

Trustee eligibility

In most cases, all members of the SMSF need to be trustees, so it’s important to make sure all members are eligible to be a trustee. Generally, anyone 18 years or over and not under a legal disability (such as a bankrupt, minor and people with a mental impairment) can be a trustee of a super fund unless they’re a disqualified person.

A person is disqualifi ed if one of the following applies:

they have ever been convicted of an offence involving dishonesty
they have ever been subject to a civil penalty order under the super laws
they are considered insolvent under administration
they are an undischarged bankrupt
they have been disqualified by a regulator (for example, by us or APRA).

Penalties can apply if you act as a trustee while disqualified.

A company can’t be a trustee if one of the following applies:

they are a responsible officer of the company (such as a director, secretary or executive officer) is a disqualified person
they are a receiver, official manager or provisional liquidator has been appointed to the company
action has started to wind up the company.

You’ll need to declare that you and the other trustees or directors, aren’t disqualifi ed when you register your fund with us. In certain circumstances (such as minor dishonesty offences) a disqualifi ed person can apply to us in writing for a waiver.

Minors

Generally, members under 18 years of age can’t be trustees of a super fund. A parent or guardian can be a trustee for a member who’s under 18 years of age and does not have a legal personal representative.

Having a resident fund

To be a complying super fund and receive tax concessions, your fund needs to be a resident regulated super fund at all times during the income year. This means your fund needs to meet the defi nition of an ‘Australian superannuation fund’ for tax purposes.

If your fund is a non-complying fund, its assets (less certain contributions) and its income are taxed at the highest marginal tax rate.

If a member moves or travels overseas for an extended period, this may affect the residency status of the super fund.

For more information about setting up a self managed super fund to to find out whether this is a suitable option for you, speak to one of the financial planners at Intellichoice on 1300 55 10 45.

Aussies put bills on credit cards

2010-01-29T13:46:00.000+10:00

Approximately 40% of Australians will rely on credit cards to pay essential bills this quarter. Debt collection agency Prushka said many householders had overspent in the lead-up to Christmas. There has been a 25% lift in the amount of work going to debt collectors.

Reserve Bank figures show consumers spent more than $20 billion on credit and charge cards in November 2009, pushing the average credit card account balance to $3196. According to a Dun & Bradstreet survey, 56 per cent of 18 – 35 year olds expected to use credit cards to pay some of their bills, up 11 per cent on the previous quarterly survey, while nearly half of all families with children thought they'd be paying bills with credit cards - up 8%.

Setting up a self managed super fund: Part 1

2010-01-22T16:20:00.001+10:00

Setting up a self managed super fund (SMSF) is about more than taking steps to get it started. You also need to make important decisions about how to structure and run your super fund.

We recommend that you seek professional financial advice before setting up your own super fund. However, we hope to help you gain a better understanding of the essentials by:

Helping you understand how you can structure your super fund
Provide the steps you will need to take to set up your super fund and start operating it
Explain your obligations and responsibilities towards running and operating your self managed super fund
Show you where to go for more information

Setting up and operating a self managed super fund (SMSF) is a major financial decision. The responsibility for running the fund and complying with the law rests solely with you as trustees. While SMSFs are great for some people, they don't suit everyone. Managing your own super fund takes time, knowledge, skill and money, so before setting up a SMSF, you should speak with an experienced financial planner who will provide you with more information on what's involved in managing your own fund and what it means to be a trustee.

You need to:

consider whether you have the time, knowledge and skill to manage your own super and whether you have the assets and money to make the fund viable
compare the costs and benefits of running an SMSF with other retirement saving options
make sure you're setting up the fund, solely to pay retirement benefits to members

When you set up an SMSF, you will take on the role of either a trustee or a director of a company that is a trustee (called a corporate trustee).

A trustee is a person or company that holds and invests the fund's assets for the benefit of the members' retirement. As a trustee/director, you will be responsible for the following:

running the fund
making decisions that affect the retirement interests of each fund member, including yourself

You will also need to comply with all super and tax laws to ensure that the super fund is entitled to tax concessions and members' interests are protected.

You will also need to

act in the best interests of all fund members when you make decisions
manage the super fund separately from you own financial affairs
ensure the money in the super fund is only accessed where the law allows it

Being a trustee gives you the chance to actively manage your own super and make your own investment choices, but it also brings responsibilities. All trustees and directors are equally responsible for managing the fund and making decisions - even if one takes a more active role in its day-to-day running.

Remember that managing your own super fund is a big responsibility and it's important that you make sure it's the best option for you. You can speak to a financial planner at Intellichoice on 1300 55 10 45 for more information about SMSFs. They will be able to work out with you whether this is the best option for you based on your goals and current financial circumstances.

Couples keeping separate accounts

2010-01-19T09:03:00.000+10:00

Many young couples are choosing to keep their finances separate and not even operate a joint account to pay for a mortgage in both of their names. Most however, have three accounts - one joint account and two separate accounts.

A Relationships Australia survey found that financial difficulties were nominated as a cause of relationship problems by 40% of people across all income levels. Conflict over money was nominated as a major reason for separation on 35% of divorces.

So sharing savings – and particularly debt - isn’t a decision to take lightly.

Investors still have lots of cash

2010-01-19T09:01:00.000+10:00

Investors with self-managed superannuation funds (SMSFs) have increased their allocation to equities from 32% in December 2008 to 42% in December 2009 and reduced their allocation to cash.

According to a Multiport survey, over the last six months SMSFs reduced their cash holdings from 28% to 22%.

"The cash built up over 2008 and remained that way in the first half of 2009, then commenced a shift into equities in good correlation to the rising market over recent months," Multiport chief executive John Mcllroy said.

"The average SMSF still has cash of around $190,000 ready to invest, so there is room for further substantial changes in market participation if greater stability is seen in sharemarkets."

Bank and investor taxes to be slashed

2010-01-18T10:33:00.000+10:00

Australia will buck the international trend towards higher taxes on banks and financial institutions and lower financial services taxes under new government proposals unveiled by Minister for Financial Services Chris Bowen on last Friday.

Mr Bowen launched a report into making Australia a regional hub for financial services and increasing the nation’s exports of financial services saying Australia stands out as a safe haven for international investors.

The report recommends the removal of withholding tax on interest income earned by foreign banks in their Australian branches. The report also highlighted that tax law does not allow investors in a unit trust to gain a tax benefit from losses.

Other tax breaks and incentives for fund managers and banks were also suggested by the government commissioned report by former Macquarie Bank CEO Mark Johnson and Treasury officials.

Meanwhile US President Barrack Obama unveiled plans on Friday for a new punitive tax on the US banking system to collect almost $100 billion from institutions to recoup taxpayer money used to bail out banks during the global financial crisis.

Mr Bowen launched a report into making Australia a regional hub for financial services and increasing the nation’s exports of financial services saying Australia stands out as a safe haven for international investors.

The report recommends the removal of withholding tax on interest income earned by foreign banks in their Australian branches. The report also highlighted that tax law does not allow investors in a unit trust to gain a tax benefit from losses.

Other tax breaks and incentives for fund managers and banks were also suggested by the government commissioned report by former Macquarie Bank CEO Mark Johnson and Treasury officials.

Meanwhile US President Barrack Obama unveiled plans on Friday for a new punitive tax on the US banking system to collect almost $100 billion from institutions to recoup taxpayer money used to bail out banks during the global financial crisis.

Australian wealth survey report

2010-01-15T14:38:00.000+10:00

The New Year is almost 2 weeks old and, sadly, many New Year resolutions have already been broken. Amidst the activity and, hopefully, relaxation of the holiday season, it is worthwhile to consider where the last two years have taken us and what is likely to lie ahead for investors in 2010.

The Global Financial Crisis and investors

As 2008 dawned and it became clear that the world faced a genuine financial crisis, many were thrown into panic. Underlying weaknesses in even advanced economies like the USA and the UK were thrown into stark relief. Massive stimulus packages and record low interest rates could not stem the bleeding. Investment banks Bear Sterns and Lehman Brothers collapsed and AIG - once the world's largest insurer - went to the brink.

As the bad news continued, dramatic measures were taken to protect Australia. In February 2009, the Federal Government's AU$42 billion stimulus package was passed in the Senate. Perhaps even more significantly, between August 2008 and February 2009, the Reserve Bank of Australia slashed official cash interest rates by 4%.

This did not stop the announcement in March 2009 that Australia experienced a negative growth of 0.5% in the first quarter - something not seen in Australia in the past 8 years. Furthermore, although growth in the following quarter was slightly positive (thereby avoiding a technical recession), economists were quick to point out that this was largely caused by a decrease in imports and an increasing population, rather than a more productive economy.

As could be expected, investors in more volatile asset classes were hit hard by all of these developments. The S&P/ASX 200 stock market index lost nearly half of its value between late 2007 and early 2009, effectively losing an entire decade's worth of growth. Stories abound of people being forced to abandon retirement plans and of retirees forced to return to work to cover the shortfall in their retirement savings.

Wealth survey reports

All this has caused many Australians to question the adequacy of their retirement plans. In late 2009, Citibank released its 'Australian Wealth Survey'. Among its findings was the worrying fact that around one in two Australians are not confident that their retirement savings will be sufficient to provide for a decent lifestyle post-work. This correlates with the similar findings in the 2009 AMP.NATSEM Income and Wealth Report that many retirement funds will not last for the length of the average retirement.

So where to for investors?

Business collapses have, of course, been occurring since the beginning of time and stock markets will always be subject to dramatic swings. But having an adequate savings and investment strategy is imperative if we are to enjoy a decent lifestyle in retirement.

Investors, particularly those nearing retirement, need to be able to access stable and reliable investment options. In doing so, they should never forget the three immutable rules of investing:

Rule 1: Never put all your eggs in one basket
Rule 2: A higher rate of return always equals higher risk
Rule 3: Getting rich slowly will never go out of fashion.

Intellichoice - a reliable investment partner

At Intellichoice, we are committed to helping you increase your wealth in a safe and fairer way. We ensure that there is no conflict of interests and any recommendations we make for growing your wealth is aligned with your goals and gives you peace of mind.

For more information about our services and how we can assist you with retirement planning, speak to our financial planners at 1300 55 10 45 or visit http://www.intellichoicefp.com.au/.

5 steps to choosing the right account

2010-01-15T11:56:00.000+10:00

There are five steps to choosing the right bank account that will suit your needs and not cost too much in fees and charges.

Step 1 - Assess your needs
Step 2 - Weigh up fees
Step 3 - Ask about waivers
Step 4 - Does it meet your needs?
Step 5 - Look into add-ons

Some banks waive monthly fees if you deposit your salary, package your home loan or do a lot of business with the bank. Add-ons such as an online saving account may help you save for that big purchase.

Increasing wealth means higher rates

2010-01-14T13:00:00.000+10:00

The per capita wealth of Australians is almost $46,000, up $6,500 in the past three months, according to research from CommSec.

"Financial wealth now stands at the highest levels in two years and further improvement can be expected in 2010, although probably not at the same pace witnessed in the past three months,'' CommSec chief economist Craig James said.

Per capita wealth slumped nearly $20,000 as the global financial crisis took hold. That trend is now reversing.

"The improvement in financial wealth, together with higher house prices and a stronger job market will support consumer spending in 2010,'' Mr James said.

The Reserve Bank highlighted the surge in household wealth in its recent decision to lift interest rates.

Aussies lose $3K per year

2010-01-13T10:45:00.000+10:00

Australians cannot account for $59 in cash each week – around one third of their total cash spend and one of the highest proportionately in the world, according to a new survey commissioned by Visa.

The international research surveyed more than 12,000 adults in 12 markets around the world (including 1,003 Australian consumers) asking respondents to estimate their “mystery spending,” or the cash they spend but cannot account for every week.

The survey shows that Australians cannot account for $59 a week, 34 percent of their total $176 cash spend a week and equivalent to $3,068 per person each year.

Credit card debt sneaking up

2010-01-12T09:33:00.000+10:00

The average credit card balance is AU$3131.00, slightly higher than it was one year ago, according to new data from the Reserve Bank. Approximately 72% of that balance is accruing interest for the cardholder because it wasn’t paid off within the interest free period.

Last year, the average credit card balance was AU$3127 – of which 71% was accruing interest. While debit card use is increasing, analysts say in dollar terms, credit cards still dominate the market.

If you would like help with budgeting, savings and managing your credit card debt, speak to a financial consultant from Intellichoice today.

Retiring early is a thing of the past

2010-01-11T09:29:00.000+10:00

Retiring early was an option in the boom years of double-digit returns on superannuation. That all halted in 2008, when the financial crisis hit. That meant people in their 50s and 60s were rewriting their life plans to include a lot more work and a lot less retirement.

Super bounced back a lot in 2009, but people are still not retiring in the same numbers as in the past, says Rob Brooks, chief executive of big industry super fund Vision Super.

"The global financial crisis has had a real impact on confidence, two consecutive years of losses, but members are now starting to see their accounts come back. One thing that has happened is benefit payments to members are right down. You can talk to any super fund and I think they will say the same thing - benefit payments are right down because people just aren't retiring."

Not only are members of super funds not retiring and withdrawing money from super, they are not putting money in either. "Over 2009, we did also see a lot of people cutting back on voluntary contributions, but that is starting to come back now," Mr Brooks says.

3 tips to get your debts under control

2010-01-07T09:17:00.000+10:00

Finding a solution to controlling your debts means looking at your lifestyle and being prepared to make some changes. Below are 3 tips to help you take control of your money and debt.

1. Get rid of your credit cards

With all the unsolicited offers of easy credit, loans, store cards and credit cards that come through your letter box every day, getting into debt has become so easy.

If you have store cards or credit cards, get rid of them! Store cards in particular have high interest rates
Get into the habit of using cash instead of reaching for your credit card to pay for items
Do you really need that item? Think before you purchase

2. Get disciplined

Stop overspending. Before you buy that new outfit, wait a day to find out if it is something you really need. Putting time and space into the equation can often make you realise that you don’t need that new outfit after all – even if you want it.
Never impulse buy. Separate life’s necessities from your wants and desires so you can keep impulse buying in check.
Write down what you spend. Use a budget planner so you can see where your money goes. Seeing it on paper can make you realise where you are going wrong, and help discipline your spending habits.
The key to any debt management solution is budgeting and repayment plans. Commit as much money as you can to paying off debts with high interest rates.

3. Be pro-active

Firstly pay off debts with high interest rates or that put your home or assets at risk.
Find an independent financial adviser to help you formulate a debt management strategy.

For independent financial advice or to get more information on debt management, visit www.intellichoicefp.com.au or speak to one of our financial advsiors by calling 1300 55 10 45 or email info@intellichoice.com.au

New year resolutions add to wealth

2010-01-06T10:33:00.000+10:00

Turning your financial goals into new year resolutions increases the chances of success by up to ten times according to new research from the United States.

The US researchers found that almost half of the people who turned their plans and goals into a new year’s resolution had reached their goal or were still on track with it six months later. Less than five per cent of people who had goals for the year but did not make them into a specific resolution were still on track with their plan.

However, experts warn that the resolutions must be very specific to bring any worthwhile benefit. It won’t work to simply resolve to “cut back on debt” for example.

Popular new year resolutions include saving money – experts suggest setting up an automatic savings plan with direct debits – and paying off debts – experst recommend paying the high interest credit cards off first.

For more information or help on savings plans, budgeting, debt management or consolidating debts, speak to one of the financial advisors at Intellichoice today.

A guide to salary sacrificing

2010-01-05T09:44:00.000+10:00

Salary sacrificing some of your pay to superannuation can be a very tax-effective way to increase your reitrement savings and also reduce your income tax liability. The amount you sacrifice into your super is essentially deducted from your assessable income, which may reduce your income tax liability.

Instead of paying tax at your marginal rate on the money, when you salary sacrifice your pay to super, it becomes a taxable contribution received by the fund. The contribution (plus any future income earned from the investment) is generally taxed at a minimum rate of 15%.

Because of the generous tax concessions, the government restricts concessional contributions (which include superannuation guarantee, salary sacrifice and personal concessional contributions).

An employer can contribute to super on your behalf and claim a tax deduction for an unlimited amount, but if your concessional contributions exceed $50,000 in a year, you'll pay tax at 31.5% (in addition to the 15% tax paid by the super fund) on the excess. You'll receive the tax bill but you'll be allowed to withdraw money from you super fund to pay it.

If you're 50 or older at any time to 30 June 2012, your concessional contribution limit is $100,000 (instead of $50,000) beore excess tax is charged. The $100,000 limit applies for each year you're over 50 until 30 June 2012,w hen it reverts back to $50,000.

Things you should consider
Don't salary sacrifice funds you think you may need before you retire. If you're younger, it may be more beneficial to pay off non-deductible debt (such as your home loan) instead.

If you're older, the reverse could be true. Generally, salary sacrificed funds will have been taxed at 15% and once you retire you can access the funds tax-free and pay off oustanding debts. Make sure you have a written agreement with your employer before making contributions.

If you would like more information about salary sacrifice or whether this is the best option for you to have a financially secure future, speak to one of the financial advisors at Intellichoice first. They will be able to recommend an option that suits your needs based on your current financial circumstances. Speak to one of the financial planners at Intellichoice by calling 1300 55 10 45 email info@intellichoice.com.au or visit www.intellichoicefp.com.au for more details on the various services and products on offer.

Kick start your finances for the new year

2010-01-04T10:58:00.000+10:00

The Christmas break and the quiet January period is the perfect time to get your financial affairs in order.

It can be hard to set time aside during the year and have a good hard look at your finances. That's why the New Year period is ideal as there are usually less distractions and work pressures. While the prospect of getting lost in all the paperwork might seem daunting, it is well worth the effort to review your personal finances and think about what goals you want to achieve and what you want your financial future to look like. Remember, small changes in the way you manage your money now can have big results in the long term.

It can be overwhelming knowing where to start, but below are three key areas where you can start straight away.

Set up a budget
There's nothing complex about doing a simple budget. You can use the free budgeting calculator on the Intellichoice financial planning website to get an idea on your income and expenses and where your money goes.

Check that your debts are under control
While using a credit card can be more convenient then using cash, expenses can quickly add up. You should pay off your credit card in full each month, but if you can't do that, at least try to pay off the minimum amount due so you don't get charged a late payment fee.

If you have too many credit card debts or personal loans, speak to one of the financial planners at Intellichoice about a debt consolidation loan. A debt consolidation loan is a single loan that combines all your debts into one, leaving you with just one repayment.

Review your super
While retirement might seem a long way off, your superannuation is likely to grow into the biggest asset you own after your house. That's why it is important to make sure that you are still on track to achieve your retirement goals. One of the simplest things you can do is to make sure that all your super funds are consolidated into one - so you don't have to double up on super fees etc. You can also speak to one of the financial consultants at Intellichoice about finding lost super.

For more information on how Intellichoice can help you achieve your financial goals for the new year, call 1300 55 10 45 or email us directly on info@intellichoice.com.au.

ATO targets trust distributions to private companies

2009-12-18T09:21:00.000+10:00

The Australian Taxation Office yesterday released a controversial draft Taxation Ruling, TR 2009/D8, in relation to the application of Division 7A to unpaid present entitlements. That is, distributions declared, but not paid, between a trust and a private company. Such unpaid entitlements will exist in almost every situation where a corporate beneficiary is utilised.

To date, most advisors have acted on the understanding that unpaid present entitlements were not considered to be a “loan” for the purposes of Division 7A. This was on the basis that there was no debtor/creditor relationship and instead the value of the distribution represented a new trust relationship.

However, in TR 2009/D8 the Commissioner has taken the view that, where there is a private company with an unpaid present entitlement to a trust, there will only be rare situations where this will be excluded from the operation of Division 7A. This is on the basis that most of these unpaid present entitlements will be considered loans.

We note that this draft ruling suggests it is providing an interpretation of the law as it has applied since 1997, and as such, the Australian Taxation Office considers the ruling would apply retrospectively.

Given this view is significantly different to the common view, what should your clients do now?

The ruling has only been issued in draft form at this stage. The final ruling may vary significantly from this draft. Further, it may be a long period from its release in draft format to its finalisation given the controversial nature of the ruling and the industry opinion (common in both the accounting and the legal professions) that it is overly stringent.

Our current advice is to be aware that this may be an issue to contend with in the future and be careful in structuring current transactions and with how trust distributions are dealt with in each future year. At this stage, we do not suggest that you amend prior returns to declare any historical unpaid present entitlements which you believe may be caught by the newly published opinion of the Australian Taxation Office. These issues may be a concern to be dealt with once the finalised opinion of the Australia Taxation Office has been released, together with any guidance on how to address currently existing issues.

Should you have any questions in relation to the above or other taxation matters, please speak to your financial advisor or solicitor.

Benefits of budgeting

2009-12-16T10:33:00.000+10:00

A budget is the most fundamental and most effective financial management tool available to you. Regardless whether you are earning thousands of dollars a year, or hundreds of thousands of dollars a year, it is an extremely important tool used to give you an understanding on how much money you have to spend, and where you are spending it.

Budgeting is about planning. And planning is crucial to produce a desired result. A builder would never start work on a new house without a blueprint. You would not get in a car for a cross-country road trip without a map. The same should also be applied when it comes to your money, yet many of us find ourselves in the situation where we make, spend and invest money without a plan to guide us.

A budget is one way for you to plan, organize and control your financial resources. It can help you set and realize goals, and decide in advance how your money will work for you.

The basic idea behind budgeting is to save money up front for both known and unknown expenses.

Seven Benefits of Budgeting

1. It lets you know what is going on
Personal budgeting allows you to know exactly how much money you have, how your funds are being allocated, how they are working for you, what your plans are for them, and how far along you are toward reaching your goals. Knowing about your money is the first step toward controlling it.

2. Control
A budget is the key to enabling you to take charge of your finances. With a budget, you have the tools to decide exactly what is going to happen to your hard-earned money - and when. You can be in control of your money, instead of having your money limit what you do.

3. Organization
A budget divides funds into categories of expenditures and savings. It can also provide further organization by automatically providing records of all your monetary transactions. They can provide the foundation for a simple filing system to organize bills, receipts, and financial statements.

4. Communication
If you are married, have a family, or share money with anyone, having a budget that you both (or all) create together is a key to resolving personal differences about money handling. A budget is a communication tool to discuss the priorities for where your money should be spent, as well as enabling all involved parties to "run" the system.

5. Take advantage of opportunities
Knowing the exact state of your personal monetary affairs, and being in control of them allows you to take advantage of opportunities that you might otherwise miss. Have you ever wondered if you could afford something? With a budget, you will never have to wonder again - you will know.

6. Extra time
All your financial transactions are automatically organized when it comes round to the end of the financial year. Being armed with such information saves you time digging through old records.

7. Extra money
This might well be everyone's favourite benefit. A budget will almost certainly produce extra money for you to do with as you wish. Hidden fees and lost interest paid to outsiders can be eliminated. Unnecessary expenditures, once identified, can be stripped out. Savings, even small ones, can be accumulated and made to work for you.

To learn more about managing a budget, speak to a financial advisor from Intellichoice about a savings and debt management strategy to help you achieve your financial goals. Please feel free to use the free budgeting calculator to get started on managing your money.

Avoid a January credit card hangover

2009-12-15T11:24:00.000+10:00

Christmas is usually a time of extra spending, between all of the gifts, functions, food and travel, so it can be all too tempting to charge a little Christmas cheer to your credit card. However, help is at hand: if you’re keen to avoid waking up with a hectic credit card hangover in the new year, follow these tips...

Tip 1: Make a list and check it twice
Ever wandered into a shop with a specific purpose, and then walked out an hour later with four bags full of goodies you never knew you wanted? Part of it is psychological: once you’ve picked up one item and committed to the purchase, you know you have to go through the “hassle” of paying, so you’re more likely to throw in a couple of impulse items on the way to the register. Resist the urge and stick with your list; you’ll feel so much lighter for it.

Tip 2: Pay with fantastic plastic – the other kind
There’s a slight thrill that goes with paying by credit card: you get to walk away with your new goods and you don’t have to hand over any cash, so the whole transaction almost feels like you’re using play money. Paying with cash, on the other hand, is a much more realistic experience. You immediately experience the repercussions of your purchase – ie, less money in your wallet – which gives you a clearer picture of your spending habits.

Tip 3: Lower your credit limit
Do you have a high credit card limit, or an extra credit card that you keep “in case of emergencies”? At Christmas time we tend to get a little busy and stressed, so it can become harder to distinguish between “emergency purchase” and “cocktail dress that would be perfect for my work Christmas party!”. Consider chopping the credit limits right down to the bare minimum so you can avoid temptation. If you don’t have it, you can’t spend it.

Tip 4: Avoid store cards
Around the silly season, many department stores offer interest-free promotions so you can do all your Christmas shopping under a “buy now, pay later” scheme. The catch? Store cards typically have higher interest rates than standard credit cards once the interest-free period comes to an end: in some cases, rates can go as high as 29%.

Tip 5: Be creative with gifts
Rather than spending hundreds or thousands of dollars on countless Christmas presents, organise a “Secret Santa” program with your friends or family, so that each person only has to buy one present. Alternatively, give the gift of time or favours: some ideas might include car washes, hair cuts, babysitting, home repairs, home cooking, gardening or cleaning.

Super funds to get simpler

2009-12-15T11:14:00.002+10:00

Australian workers will have their superannuation guarantee payments from their employer sent to new, no-frills, low fee, default super funds under a plan outlined by the federal government’s superannuation system review.

The review proposes that the superannuation industry be overhauled because most people do not take an active interest in their superannuation. Super funds currently cost too much and provide too many investment options to provide low cost super to most people who do not take an interest in their super.

About 90% of workers are currently being placed in default funds chosen by their employer or as prescribed in industrial awards.

Tips for coping with interest rate rises

2009-12-09T13:06:00.000+10:00

With the interest rate rises of recent times, it is timely to reflect on how to make some adjustments to compensate. Here are some tips to reduce the household expenses without affecting your lifestyle.

Insurance
Having your insurance for the car and the household with the same provider can earn you a discount.

It is also always a good idea to shop around each year to check that you are still getting the best and cheapest coverage. Changing the excess and restricting the drivers to people aged over 25 can also make a difference.

For health insurance, again you should assess the level of cover as well as your provider. For example, there may be extras you are paying for that you never use.

You can also speak to one of the financial advisors at Intellichoice about finding you an insurance policy that suits your needs and circumstances. They will do all the research and legwork for you and find you an insurance policy that is best for you.

Petrol
Buy petrol on a Tuesday. According to the ACCC, petrol is usually cheapest on

Tuesdays in Australia’s metropolitan cities, except for Perth, where it is cheapest on Mondays.

Grocery Shopping
Reduce the number of trips to the grocery store to once every week or fortnight and stick to a reasonable budget each time. Also make a shopping list before you go to the supermarket and this will help you to avoid impulse buying. Meal planning also helps you focus on the things you really need.

Store displays
Do not assume that the in-store displays, particularly at the end of the aisles and at the checkout are on special – compare their price with the same items that are not being promoted. Look up and down the shelves. Note that the more expensive items tend to be right in the line of sight, while cheaper or supermarket-own brands tend to be located on the higher or lower shelves.

No-name brands
Try no-name/generic and supermarket-own brands for staples, like sugar, salt and flour – they tend to be hard to pick from branded equivalents.

Treats and snacks
Buy treats and snacks in the supermarket instead of going to the convenience store.

Telecommunications
Telstra and Optus provide discounts if you have three or more telecommunication accounts with them.

VOIP
Voice Over Internet Protocol is quickly becoming a popular alternative for your home phone. It uses the internet to drastically reduce call costs.

Electricity/Gas
If you consolidate your gas and electricity to the one provider you can receive a 5% discount. Some providers also offer a ‘switching discount’ such as $50 off your first bill.

Think about installing a solar hot water system. Whilst the initial outlay (approx $3,500-$4,500) is more than your standard system, both the Federal and some State governments offer rebates, which can take $1,000-$2,000 off the cost.

Depending on your home’s location and water consumption, this could reduce your water heating costs by up to 80%.

BYO lunch
BYO lunch. If you bring your own lunch to work three to four times a week, you could save over $500 per year

Personal loans & Credit cards
Personal loans and the rates on offer can be renegotiated, especially on cars. For example, if you have a loan on your car that was arranged by the dealer you could be paying 5-8% more interest than necessary – so it is recommended that you shop around.

Credit card rates can also range from 9.95% to 18.99% and it is usually membership reward schemes, cash advances and other offers that bump up the rate. Work out what you really want from your credit card and change it to a lower rate card where possible.

If you have a few personal loans or credit card debts, we recommend that you speak with a financial advisor from Intellichoice about consolidating all your debts into one - you may end up paying a lower interest rate and save money at the same time.

All of these suggestions will have little or no impact on your lifestyle. However, taken together, the savings can be significant and can more than offset the recent interest rate rises.

Wealthy investors look to expand their property portfolio

2009-12-08T10:28:00.000+10:00

Confidence in the real estate sector is returning among high-net-worth individuals according to new survey from Barclays Wealth.

According to the Barclays Wealth survey, over the next two years, 35% of respondents said they plan to increase the proportion of their portfolios dedicated to real estate, excluding their primary residences.

The average allocation to real estate among respondents was 28% internationally and 23% in the US. Investors in nine out of ten countries expect to increase their allocation to real estate by 1% to 4% over the next two years, raising the global average allocation to 30%.

Investors who plan to increase their real estate stakes believe that the asset class holds better long-term prospects than other more complex financial instruments, which many blame for igniting the financial crisis. Additionally, thanks to the recent turmoil in nearly all real estate markets around the world, investors believe there are many bargains to be had in the property sector.

According to the report, investors are less enthusiastic about commercial real estate, due to rising unemployment rates worldwide, but 45% of respondents believe there are significant opportunities in residential markets, although tight credit markets are inhibiting their ability to take advantage.

The survey found that more than three-quarters of respondents predominantly invest in their domestic market. However, when asked what other markets are attractive to them right now, the US ranked number one, followed by China, the U.K and India, in that order. US real estate is particularly appealing because of recent price declines, the falling dollar and long-term positive prospects for the US economy.

The report, commissioned by Barclays Wealth and written by the Economist Intelligence Unit (EIU), was based on a survey of more than 2000 individuals in 10 countries with over $800,000 in investable assets.

Plan for Christmas debt now

2009-12-07T16:09:00.001+10:00

Credit card debts are expected to soar in the next few weeks as consumers stock up for Christmas. Financial counsellors warn that February is often a month of misery for many as they try to deal with debts racked up over the summer.

Debt ratings agency Veda Advantage recommends that consumers set a spending limit and stick to it. “We are not saying don’t use your credit card, that is what they are there for, to spread out lumpy purchases like Christmas – but plan your repayments before you go out and spend the money.”

We have also included some tips to help you save money during Christmas, yet keeping it fun for the whole family.

Make it fun
Christmas shopping shouldn't be a chore. Variations of gift exchanging include:

Secret Santa - If you have a group that’s keen on the idea, Secret Santa can be a fun and inexpensive way to participate in the holiday season on a minimal budget
Gift Themes - Choose a theme — travel, computers, food, whatever — and encourage everyone in the group to base their gifts around it
Draw names - This is an excellent way to cut down costs while still participating in a gift exchange. You can draw another person’s name from a hat and give this person a nice gift. This is similar to secret santa

Do it yourself gifts
Homemade gifts demonstrate caring, creativity and passion.

A hand-assembled collection of gourmet salts, complete with written description of each.
Biscuits, cakes, muffins
Art. (Do you dabble in photography? A framed print of your nephew is a great gift for your sister-in-law.)
Home-made jams and jellies
Hampers for example a cheese and wine hamper, or a hamper made up of someone's favourite foods including chocolates, fudge, shortbread and jams

Other ideas

Send postcards or a letter instead ofChristmas cards
Save your children’s (or grandchildren’s) holiday crafts and artwork from school each year and use the artwork as Christmas decorations for around the house or on the Christmas tree
Cuting up old Christmas cards can make wonderful gift tags too

If you require assistance with debt management, budgeting or savings plans, please speak to one of the financial planners at Intellichoice today to get you back on track.

Australian pensioners to face poverty

2009-12-01T09:26:00.002+10:00

New research has shown that Australians have only saved enough money to last just three or four years into retirement. This lack of wealth creation looks set to have many Australians facing the unenviable situation of experiencing a life of poverty in their old age.

Not only is the average Australian working less and living longer, but they are also not doing enough to provide for themselves in retirement – approximately 85% of men and 92% of women are now expected to live 20 years beyond the age of 65.

The recently released report from AMP also states that almost 60% of men are leaving the workforce before reaching the age of 65. Due to these circumstances, AMP has called on the government to raise the super guarantee (SG) from 9% to 12%.

Australians have very high retirement expectations but are not saving enough to even afford a comfortable retirement let alone one that meets their expectations.

Research has found that the savings of those retirees currently aged 65 and over - an average of $107,500 for men and $81,600 for women - are only enough to last three years for women and four years for men. According to AMP, those that retire on average earnings would need $40,475 each, per year, for a comfortable retirement.

This shows that people need to take charge of their future financial security.

If you would like to find out more about planning for retirement and how you can create wealth in a safe way, speak to one of the financial advisors at Intellichoice.

Super cap stimulates property interest

2009-11-30T16:18:00.001+10:00

According to Archicentre, the building advisory service of the Australian Institute of Architects, the Federal Government's move to cap superannuation contributions at $50,000 has stimulated interest in renovation and investment in negatively geared property.

In the latest Archicentre Consumer Sentiment Poll of over seven hundred respondents, approximatley 72% of respondents said they would be putting their extra funds into property. Approximately 40% said they would invest in renovation of their own home, while 32% said they would invest in a negatively geared property. Approximately 28% said they would use their extra funds by investing in shares.

Michael Cooper, Tasmanian State Manager of Archicentre said that with many Australians planning to top up their superannuation with equity in the family home or investment properties, the current rising house prices will have a significant impact on the lifestyles of hundreds of thousands of Australians.

The added bonus for people investing in the family home is that once completed and sold it is not subject to capital gains tax and they can enjoy the new renovations."

Mr Cooper said whilst this is a time of opportunity, people renovating their homes need to ensure they do their homework in relation to renovation and design to ensure they are in fact adding value.

"People purchasing an investment property can run into financial difficulty if they do not carry out a thorough inspection of the property", he warned.

"Last year, one out of three homes which underwent the independent pre-purchase inspection by Archicentre had faults which required attention allowing prospective buyers to factor in the costs of repair before making a bid.

"People who buy a 'lemon' are often confronted with unplanned borrowings to fix problems such as plumbing, wiring, rising damp and roof problems which can run to tens of thousands of dollars of extra funds cutting directly into the level of the superannuation returns."

According to Mr Cooper, the best defence against the loss of value in the family home as a superannuation asset is to get a professional, independent assessment of the property before purchasing and of any renovation before commencing.

For more information on how we can help you build your wealth through safe investments and still lead a comfortable retirement, speak to one of the financial advisors at Intellichoice.

A guide to self managed super

2009-11-27T09:54:00.001+10:00

Do it yourself super via a self managed super fund (SMSF) is becoming an increasingly popular choice for investors who want to have control over how their super is invested.

What is an SMSF?
An SMSF is a trust where money or assets are held and managed on behalf of up to 4 members to provide benefits for their retirement. All members of an SMSF must be trustees of the fund or directors of the fund's corporate trustee (subject to certain exceptions).

Why should you establish an SMSF?
There are three key reasons for establishing your own super fund: control, flexibility and investment choice.

As a trustee of your self managed super fund, you decide on your fund's investment strategy and choose what your fund's assets are invested in. You can invest in almost anything and tailor your fund's investments to suit your specific needs - although it is subject to some limitations and legal restrictions.

Like all super funds, an SMSF receives concessional tax treatment. The top tax rate for the investment earnings of your SMSF is 15%. It's important to note that this tax concession is only available if your fund complies with all the rules and regulations that apply to SMSFs (a complynig fund).

Rules and obligations of an SMSF
As a trustee, you need to consider your fund's investment philosophy. Investing successfully takes time, effort and discipline.

How will you spread your money to manage risk? How long will you give an investment to prove itself? What's an acceptable rate of return? How much risk are you willing to take with members' retirement savings?

Another important consideration is your fund's performance - how is it performing relative to other funds after expenses? If it's not doing better, or at least as well, you may want to consider using a professional to manage your super fund.

Rules and obligations that apply to a self managed super fund are complex and even if you employ a financial advisor to help you with an investment strategy, compliance and administration, you will still be legally responsible for making sure your fund complies with all the rules under superannuation law.

Some of the rules and obligations include:

1. Sole purpose test
The sole purpose of your super fund must be to provide retirement benefits to your fund's members. If you use your fund for other purposes (such as running a business), your fund may be considered non-compliant and you risk losing the 15% maximum tax concession.

2. Compliance
Some key areas of compliance for an SMSF relate to:

in-house asset rules
conducting all transactions at arm's length
borrowing (or gearing) in super
acquiring assets from related parties
separation of assets

3. In-house asset rules
You can't lend to (or invest in) a related party or related trust of the fund, or lease an asset of the fund to a related party of the fund, if the total of the related party investments or assets being leased is worth more than 5% of the market value of the fund's total assets.

4. Arm's length requirement
The arm's length requirement means that if you lease any asset that belongs to the fund to a related party, it must be at a commercial rate. Any asset purchased must be for market value.

5. Gearing in super
There is a general prohibition of borrowing in super, although certain exceptions do apply. You can, however, borrow funds (use gearing) to invest within an SMSF in certain limited circumstances. Gearing, where appropriate, may help you to accelerate the level of savings you have in super for your retirement. but you still need to consider the risks associated with gearing and the loan must be established on a 'limited recourse' basis.

6. Acquiring assets from related parties
the trustees of SMSFs in general are prohibited from acquiring assets from related parties of the SMSF. This rule generally prohibits such parties from selling most assets to their SMSF, or from contributing assets in-specie. Some assets such as listed securities (shares, units or bonds listed on the approved stock exchange) or business real property are exempt from this rule.

7. Seperation of assets
Your super fund must maintain its assets seperately from those of a business involving one or more of your trustees. If a trustee were to hold assets in their own name instead of the fund, the fund risks losing the asset if that trustee is declared bankrupt or if their business goes into receivership.

8.Investments
Tho help ensure that the assets of an SMSF will be available to provide retirement income, SMSFs are restricted in the investments they can make. However, one concession that SMSFs enjoy is their ability to invest up to 100% of the fund's assets in business real property.

While there are no restrictions on SMSFs investing in collectibles, such as art, members can't benefit from the investment prior to reaching their preservation age (for example, a trustee shouldn't display a piece of art belonging to the fund in their home or office).

9. Fiduciary responsibilities
Meeting fiduciary responsibilities is also important, particularly in relation to your SMSF having its own bank account, rather than banking being done through personal accounts of one or more of the trustees, and not overdrawing that account.

Aside from the initial set-up costs, the cost of sound administration of an SMSF, including compliance with all the regulations, generally means that fund members collectively need a minimum amount of between $200,000 and $250,000 to invest for an SMSF to be worthwhile.

We recommend that you speak with a financial advisor from Intellichoice to discuss in detail what super options are available and whether a self managed super fund is the best solution to meet your investment needs and circumstances. Call us on (07) 3624 1900 or email us and one of our financial planners will be only too happy to answer your queries.

Young people in perpetual debt

2009-11-18T10:44:00.001+10:00

Generation Y (people aged under about 30 years of age) are likely to have more problems paying off debts than young people have had in the past. An increase in part time work and a fall in hours worked means they have less means to repay debt.

Often, a young person’s first debts today are likely to be ‘perpetual debts‘ such as credit cards and HECS, whereas in the past a young person’s first debt was more likely to be a fixed repayment schedule loan such as a car loan.

Being in perpetual debt is no longer something that many people think should be avoided.

"I don't think Gen Y has really had a great deal of experience in managing money and finances, or in establishing good savings practices," says KPMG demographer Bernard Salt.

"I am really quite concerned about their ability to manage all of this."

We recommend that you should have a plan to bring debt under control and debts with higher interest rates, such as credit cards, should be paid off first. If you require assistance with managing your debt, budgeting or need a debt consolidation loan, speak to one of the financial planners at Intellichoice. Please feel free to use our free budgeting calculator on the Intellichoice website for help managing your finances.

Australians keen to invest in property

2009-11-17T09:34:00.001+10:00

More than 70 per cent of Australians over the age of 25 believe the time is ripe for property investment in Australia.

According to Citibank’s Australian wealth survey, 74% think now is a good time to invest in property, while 40% believe it is a bad time to invest in shares.

Citibank’s Andrew de Graaff said Australians were beginning to see property as relatively risk free.

“While a lot of people are saying now is a good time to buy and invest, it is another thing to actually do it,” he said.

Australia's property prices have held relatively firm while overseas markets, particularly in the US and Britain, plunged.

If you are looking at investing in property, speak to the financial advisors at Intellichoice about ways to grow your wealth in safe and relatively risk-free investments. We will be able to advice on an investment strategy that suits your short, medium and long-term goals.

A guide to managing debt

2009-11-16T10:22:00.001+10:00

If you have a number of debts from various sources, there are ways to reduce or better manage them. We recommend that you speak with a financial advisor first, who can recommend the best option that suits your needs. Below are just some of the strategies you could use to better manage debt.

Budget
Take the time to complete a budget planner. A budget will help give you an idea of where you're spending your money, where you can potentially cut back and how much is left over after you've paid all your regular bills and living expenses. If you find that your income is greater than your expenses, you can use the extra money to pay off your debts.

Pay off higher-interest loans first
Credit cards or personal loans tend to have a higher interest rate, so it makes sense to repay these first. Pay at least the minimum monthly amount. We recommend that you budget carefully and try to keep money aside for extra repayments.

If you have more than one loan, make extra payments on the loan with the highst interest rate first. Once that has been paid off, focus on the next highest interest rate loan.

Reduce your mortgage
Any extra repayments you make on your home loan will reduce the interest you pay in the long run, potentially reducing your mortgage term by years. Before you make any extra payments on your home loan, check with your lender first, as some may charge you for paying more than you should or paying out the loan early. You should also check that your lender allows you to withdraw money from your home loan as this will give you peace of mind that you can get back any extra you've paid you need to, for example, to pay for emergency bills.

Combine your debts with a debt consolidation debt
Consider a debt consolidation loan to repay all your debts. This will make life simpler for you as you only need to make one payment each month now. And if the loan has a lower interest rate than your other debts, you save money.

Use your home loan redraw facility
Another option is to redraw funds from your home loan to pay off your personal loans or credit card debts. Home loans generally have lower interest rates, so redrawing money to pay off your outstanding debts will result in you paying less interest and having a lower overall repayment.

If you can maintain the monthly repayment at the amount you were paying on the individual debts, you'll reduce the loan even quicker.

You could also use your redraw facility as a savings account. Instead of keeping money in your bank account or a cash trust where you pay tax on the interest it earns, you'll reduce the amount of loan interest you pay while still having access to your money.

For more information on how to manage and pay off your debts quickly or if you need help with budgeting, speak to a financial advisor from Intellichoice on 1300 55 10 45. They will be able to recommend that best option for you based on your circumstances and needs.

Do you have appropriate insurance cover to meet your family needs if anything happens to you?

2009-11-11T11:42:00.002+10:00

By world standards, Australians are financially sophisticated. Between us we have almost one trillion dollars invested in superannuation and one of the highest rates of share ownership in the world.

But did you know that:
- In 2009, over 9,000 Australians will be diagnosed with leukaemia, lymphoma and myeloma. That’s one every hour
- Every year, 8,000 Australians discover they have melanoma, and 1,000 die each year. Australian five year survival rates are the highest in the world
- Yesterday, 32 women were told they have breast cancer. 32 women will be told today…and tomorrow...Approximately 88% will survive
- Heart disease affects 2 out of 3 families
- 400 Australians are paralysed by spinal cord injury each year. Their average age is 25. Long-term care costs exceed $500 million annually
- An estimated 106,000 new cases of cancer are diagnosed each year
- Each year, around 4,400 parents with dependent children die
a stroke occurs in Australia every 11 minutes, resulting in 48,000 strokes each year

Unfortunately, many Australians don't think that any of the above could apply to them. Studies have found that around 80% of Australians are underinsured. Don't take the risk. If you had an accident and were not able to work, or if you died due to some unforeseen event, your partner and family would be faced with the burden of debt.

Research on Australian attitudes to life insurance also revealed some startling information about the Aussie psyche.

41% would sell the family home
47% would look to the broader family for financial support.
49% said that their partner would have to go back to work or continue to work
63% would use their superannuation

Don't take unncessary risks and make sure that your family is adequately protected. You can speak to the financial advisors at Intellichoice about our range of insurance policies, including car insurance, home contents and landlord insurance, life insurance, and insurance for your business.