Australians not planning for retirement

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

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)?

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.intellichoice.com.au for more details.

Lower income households likely to miss payments

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

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?

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

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

1. Maximises the wealth effect in the SMSF in times when assets of the fund are rising. 
2. 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. 
3. SMSF members and related businesses can act as lenders as long as all lending is at arm’s length
4. 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.
5. 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

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

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

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?

1. Determine now, your anticipated earnings for this financial year – wages, commission, bonus, sale of goods or services.
2. Complete an estimate of your tax liability – understand how much you are going to pay.
3. 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.
4. 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.