What’s The Latest On the Australian Property Market?

According to HSBC, the latest property prices for Australian Capital Cities are broadly positive as shown in the following summary table:

Capital City Median Price* Percentage Growth
Darwin $520,000 2.9%
Brisbane $445,000 2.8%
Sydney $610,000 14.1%
Canberra $520,000 0.0%
Hobart $326,000 2.1%
Melbourne $515,000 9.9%
Adelaide $397,000 3.1%
Perth $515,000 7.6%

*Median prices are based on sales over the three months to Feb 2014 and is the combined median for houses and units. Percentage growth is calculated on the change in the RP Data-Riskmark Home Value Index between 28 Feb 2013 and 28 Feb 2014. Source: HSBC 2014

The following link provides additional information and a good summary of regional property markets in Australia (click to view or type into your browser).

http://pages.e.rpdata.com/regional-markets-take-their-lead-from-capital-cities-in-2013/

Low interest rates and a shortage in the supply of housing seems to be driving house prices upwards and while these two driving factors remain unchanged the momentum could continue but perhaps not at the same rate. Another big risk to property price momentum would be a major deterioration in the Australian economy with an associated rise in the unemployment rate.

http://www.financialaviceshop.com.au

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Estate Planning Is More Than Just The Once Off Exercise Of Making A Will

I am always amazed when I hear statistics about the number of people who die without a Will each year.  The legal term for dying without a Will is to die intestate.

There is one certainty in life: we will all die one day.  Strangely, many people do not make the necessary arrangements to ensure their estate is distributed efficiently and in accordance with their wishes.

If you die intestate, your estate is distributed in accordance with a formula that differs between States and Territories.  Importantly, some assets such as your superannuation (and any insurance held within your superannuation fund) are not always included as part of your Estate and can be distributed at the superannuation Trustee’s discretion unless you have a valid Binding Death Nomination in place.

Dying Intestate and without binding instructions on your superannuation fund Trustee for example may not be a great idea for most people.  In this scenario, monies could be distributed in a way that is not consistent with your expectations, to a number of people in your immediate/extended family and in a way that is inefficient from a tax perspective.

Another area where people do not always plan properly is for a future scenario where they lose mental capacity (eg Dementia etc).  Depending on your State or Territory, there are legal documents such as Enduring Powers of Attorney and Enduring Guardianships that are designed to give permission for others to act on your behalf if you are unable to make decisions for yourself in the future.

So what’s the bottom line……think, plan and act for the future while you have the mental capacity to do so.  When you are thinking, planning and acting to get your affairs in order, always seek appropriate professional advice to make sure everything is done properly, in accordance with your wishes, and to try and ensure arrangements cannot be contested and overturned in the future.

Importantly, once in place your arrangements need to be regularly reviewed as circumstances and wishes can change, and superannuation Binding Death Nominations often lapse after three years.

www.financialadviceshop.com.au

When You Set Out To Receive Advice, Be Aware There Are Three Important Sets Of Fees

When initially seeking advice, always ask to clarify three sets of fees: The initial advice fee, the Implementation Fee (if Applicable) and the likely cost per annum for your ongoing Investing, Advice and Service.

 1.     The Cost Of The Initial Advice. 

While this is an important cost, the Initial Advice Fee cost is not the largest cost you will experience over your investing lifetime.  Unfortunately, it is usually the only cost you are considering when you are first seeking advice.

To give you an idea of the scope of this fee, it could be between $200 and $10,000 or more.

At The Financial Advice Shop we try hard to keep this capped at $1,650 (assuming recommendations are implemented in full) and it could be substantially lower depending on the complexity of your circumstances.

 2.     The Cost To Implement The Recommendations

With the Banks and many other organisations you may find that the Financial Advice Fee is very low but can be shocked to find an excessive Implementation Fee to implement the recommendations.

Avoid being shocked by asking about this fee before committing to pay for Financial Advice.

To give you an idea of the scope of this fee, it could be between $0 and $10,000 or more.

At The Financial Advice Shop we ensure this fee is $0 in relation to investments.

3.     The Cost Of Ongoing Investing, Advice And Service

By far the biggest cost associated with  receiving advice over your lifetime is the cost of Ongoing Investing, Advice and Service.

This fee is likely to relate to the amount of money invested but to give you an idea of the scope of this fee, it could be between $1,000 per annum. and $20,000 per annum or more.

At The Financial Advice Shop this fee is a set fee based on the services being provided and does not relate to the amount of money being invested.  Ongoing Investment, Advice and Service packages start from $3,300 p.a. and move higher from
there depending a number of factors.  Discounts can apply so discuss this in detail with your Financial Advice Shop adviser.

Summary

It is not until you properly understand these three sets of fees that you will be in a position to properly assess all Financial Planning Advice Options you are considering.

Make sure you are not tricked into receiving Financial Advice that has a low cost for the initial advice but later you find the implementation and ongoing future costs are astronomical.

If you are currently receiving Financial Advice, check your ongoing fees and satisfy yourself they are reasonable.

www.financialadviceshop.com.au

When it comes to personal insurance, what people currently have is not usually enough!!

A recent report by Rice Warner highlighted some important observations when it comes to insurance: The conclusion: on average Australians are dramatically underinsured.

Many people take the time to insure their home and their car, but most do not properly appreciate the scale of the insurance requirements when it comes to protecting family income due to a death, disability or extended period unable to work.

The report highlighted some important findings.  For example: a couple aged 40 with children could require the following insurance to maintain their family’s standard of living in full:

  • Life Insurance of up to 15 times annual family income
  • Total and Permanent Disability Insurance of up to 15 times annual family income
  • Income protection to provide an important aspect of insurance needs for a family

It is estimated that the total cost to Government as a result of underinsurance is:

  • $47 Million per annum due to Life Insurance underinsurance
  • $1.26 Billion per annum due to Total and Permanent Disability underinsurance
  • $247 Million per annum due to Income Protection underinsurance

Think carefully about the insurance needs of you and your family, get some sound advice and make sure you or your family do not become a sorry Centrelink statistic.

www.financialadviceshop.com.au