The Financial Advice Shop April 2014 Newsletter

Click on the following link to review our latest newsletter

https://financialadviceshop.files.wordpress.com/2014/04/the-financial-advice-shop-newsletter-april-2014.pdf

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Why Many Suggest Investors Sell In May And Go Away!!!

Did you know, that on average the worst months of the year for the Australian sharemarket are May and September, and the best months are December and March?

Additionally, there seems to be statistical data to support the view that the best performing months are outside of the May-October period while the worst are within.

Clearly trying to time the sharemarket moves the focus from investing to speculating but it is good to know what the statistics suggest. Having said that, I am always very wary of statistics as data can be manipulated to give any desired outcome by selecting the most suitable timeframe to create an significant observation.

Time will tell what the remainder of this year holds for sharemarkets as no-one really knows, but there are not too many investment analysts saying the Australian sharemarket is materially undervalued. This might suggest there is more risk to the downside than the upside in the short term so expect some volatility.

The bottom line is that you should always seek professional advice before making any investment decisions.

Not sure what this all means?……………….at least you know who to contact.

http://www.financialadviceshop.com.au

It Is Time To Review Your Salary Sacrifice To Superannuation For The Remainder Of This Financial Year!!

With only two months to go before the current financial year is over, it is a good time for everyone to review their superannuation contributions.

If you have been making regular contributions throughout the current financial year, check you are going to maximise contributions against your relevant contribution cap without exceeding the cap (remember that your employer superannuation guarantee contributions count toward your concessional contribution cap).

If you have not made any superannuation contributions in the current financial year but can afford to make some, it is not too late to start. To get started straight away, talk to your financial adviser and then implement their recommendations through your employer.

Salary sacrifice to superannuation is a great way to save tax effectively for your retirement and the sooner you start, the sooner you can start to relax about retirement.

Some people have told me they are concerned about salary sacrificing into superannuation because they believe the sharemarket is too risky. The reality is that you choose how much risk you want to take with your superannuation investments so take an interest and be proactive!!

If risk worries you, choose a more conservative investment selection but don’t let risk be the reason why you are not salary sacrificing into superannuation. If you are paranoid about risk and want to be ultra conservative you can always choose a “cash” option and remember, the tax benefit of undertaking salary sacrifice each year is likely to be materially greater than any returns you are expecting from the monies invested.

Not sure what this all means?……………….at least you know who to contact.

http://www.financialadviceshop.com.au

Ageing Men And Heights: A Deadly Combination!!

When it comes to taking silly risks, ageing men sometimes test the limits.

When it comes to ageing men who are clients I have a simple rule that I suggest to all of them: when you turn 60 you should stay off ladders. It is not a rule that has any guarantees but it is a rough age to start to draw a line in the sand.

I have lost count of the number of times I have been told stories of retired men having near misses while up on the roof of their house, trimming branches in the back yard or doing other “manly” things while helping out neighbours. I have also lost count of the number of times I have been advised of serious injuries, permanent disabilities and even death.

While many men are reluctant to admit it, as they age their ability to react and make quick judgements deteriorates. Additionally, bodies do not seem to mend as well when they are injured later in life and if someone suffers a head injury it can be a massive game changer.

I strongly believe there is great value in retirees getting younger professionals in to clean gutters, paint eves, trim branches and do other maintenance that requires the use of ladders or other climbing equipment. Let someone else take the risk and think of it as an investment rather than an expense.

Your health is something that can be taken away from you without notice so think very carefully about what you are thinking of doing and the consequences if something goes wrong. If you think a bad outcome is unlikely but that outcome could be catastrophic, guess what? Don’t do it!!

The message here is very simple: It is silly and unnecessary to take big risks in retirement.

http://www.financialadviceshop.com.au

Rotary International Four Way Test

Rotary International have an excellent Four Way Test that they apply in their commitment to integrity. It is a test that can easily be applied to everything we do.

The Four Way Test was created by a Rotarian and is as follows:

Of the things we think, say or do……

1. Is it the TRUTH?

2. Is it FAIR to all concerned?

3. Will it build GOODWILL and BETTER FRIENDSHIPS?

4. Will it be BENEFICIAL to all concerned?

Is It Possible For A Couple To Put Over $1.38m Into Superannuation In The Next Three Months?

We tend to hear a lot about superannuation contribution limits and the severe penalties for exceeding the limits but let’s have a look at contribution limit possibilities and how generous they really are!!

If we combine this financial year’s contribution cap and next financial year’s expected contribution cap for a couple who are both under age 65 at the time they make their contributions, it is theoretically possible for that couple to make non concessional contributions totalling $1.38m ($690,000 each). For most people, that is well above their capabilities or needs.

Don’t be fooled by the simplicity of this commentary……get the timing of the contributions wrong or if there are issues with previous superannuation contributions to consider then there would be extremely severe financial penalties (like a tax bill of over $250,000 each!!). Do not even consider this without professional advice and assistance and there is also a chance the May 13 Budget could throw everything out the window so watch this space.

In addition to these contributions there are also concessional contribution caps which means more money could theoretically be put into super if it made financial sense.

So the point to this article is very simple….. if you need to put large amounts of money into super, don’t take any risks. Get advice and get it right.

Not sure what this all means?……………….at least you know who to contact.

http://www.financialadviceshop.com.au

Will The May Budget Change The World As We Know It?

The Coalition Government seems to be sending out the message that as a Nation we have to make some really tough decisions and as a result the Budget to be handed down on May 13 could be ground breaking.

Centrelink entitlements including the Age Pension are clearly under review and we could see some serious policy changes like assessing part of the Family Home when determining entitlements.

The reason the Government might act on Age Pension entitlements is simple really. The Government currently spends ~$40b p.a. on Age Pension entitlements and this is projected to blow out to $70b p.a. over the next decade if nothing changes. The assessments are currently reasonably generous for some perceived “wealthy recipients” and the Government might decide that this needs to change.

There are already big changes coming through in Aged Care from 1 July 2014 and there could be also be further changes to things like Superannuation, so watch this space.

It has not been widely reported but there are already planned changes underway to the way new Superannuation account based pensions (Allocated Pensions ) will be treated in Age Pension assessments from 1 January 2015. What is not being widely reported is that it could affect anyone who changes their account based pension provider after 1 Jan 2015 (eg an existing age pensioner who moves their superannuation account based pension investment to a cheaper pension provider post 1 Jan 2015 could be negatively affected by the changes).

As always, with change there are likely to be opportunities for those who seek early advice.

Not sure what to do?……………….at least you know who to contact.

http://www.financialadviceshop.com.au