Innholdsfortegnelse for November 2015 i Money Magazine

LETTER OF THE MONTH Travellers can save even more I am writing to point out savings realised from using specialist price comparison websites. Also by doing a little bit of due diligence readers will be able to reap more savings on their travels. Our family likes to stay in nice accommodation without paying high rates. Years ago this required doing a lot of research but now specialist price comparison websites have been really helpful in saving both time and money. With increased competition in booking online travel, however, we have recently found that by doing an extra simple step we can save even further. This extra step takes into consideration the “best price guarantee” offered by a hotel before making a booking. After recently using cheapstay.me to compare prices, we…

STRATA LIVING STORIES Stephen Raff ACE BODY CORPORATE RRP $29.95 Strange thinks can happen in strata-titled apartment blocks. Now there is a whole book on the highs and lows of strata living – “an insider’s guide to the weirdest, wackiest and downright hilarious things residents do”. Stephen Raff is the CEO of Ace Body Corporate Management, which looks after more than 60,000 units in Australia. His book is based on real cases that have been sent it by people in the strata sector, accompanied by amusing illustrations. There’s the resident who hosed down a couple who were making too much noise being intimate; complaints about a woman who like to garden naked; and someone caught using common power to keep the dead body of a relative refrigerated. Jokes aside, the…

The trouble with some income pensions, known as account-based pensions, is that they are invested so conservatively that retirees receive an extremely low income. RetireSmart, a new product from Australian Catholic Superannuation, tackles this by providing two investment “buckets”: one for cash and the other for growth assets. The shares and property in the growth bucket produce dividends, interest and capital gains and generate a consistent income stream. RetireSmart is designed to help address the risk of outliving your money. It invests the member’s account balance into two years of cash for secure short-term income. The income from the growth investments is put back into the cash bucket to fund regular pension payments. If the balance in the cash bucket rises above three years’ worth of pension payments, the excess…

There can be few feelings more dispiriting than the realisation that you’ve made a mistake on your tax return after you’ve lodged it. There are a number of common errors people make. Many forget to include income such as interest from a bank account or from a previous job; deductions such as motor vehicle or rental property expenses; income from sources such as trusts, investments and capital gains; and additional information relating to the Medicare levy or surcharge. Whatever the reason, the last thing you want is to have the ATO getting in touch to audit you because it has spotted a discrepancy. Thankfully, it is possible – and increasingly easy – to make changes to your tax return after you’ve lodged it. The ATO allows you to amend your…

John certainly has the foundations for being able to retire in a comfortable position, with his two-pronged approach to building wealth inside and outside super. The most glaring weakness in John’s current strategy lies in his back-up plan. His current strategy revolves around his continued ability to generate an income; as such it is imperative that his first priority should be to protect this. He should consider the benefits of holding his income protection insurance outside super if his cash flow permits. Broadly speaking, his financial plan should focus initially on the repayment of non-deductible debts – the loan on his principal residence, for example. If it is his intent to acquire a second property that will subsequently become his principal residence, his long-term mortgage strategy could be enhanced by…

Craig must shape his portfolio for ... Income for the long term Q I am 58 and my wife is 56. We would like to retire in two years. At present we are with REST Core Strategy. We would like to transition to the pension phase with about $800,000 for myself and $230,000 for my wife. Do we stay with the default option or go with a more balanced option. We would be happy with an annual income of $50,000. Do you have any other suggestions? At present we are both working part time with a combined income of about $45,000. A $1 million-plus in super is quite an achievement but you need to remember that there is a high probability of at least one of you (and hopefully both)…

Where do we start in buying a property? My partner and I live in a remote area in north-western Australia. I am a 26-year-old female earning $59,000 a year and my partner is a 24-year-old male earning $180,000pa. We have no debt, no assets and own our car outright. Work pays for most of our expenses and we spend only about $1500 a month. This gives us the ability to save $10,000pm. Since moving here nine months ago, we have saved $115,000 in a high-interest account and are awaiting our tax refunds of $14,000. We would like to invest in the property market in our home state of Victoria but we are not sure where to begin, who to speak with or whether it is a good time to buy.…

The starting point for all income investors is what they can earn risk free. At the moment you can almost earn 3% in an essentially risk-free term deposit. In other words, you could earn $20,000 risk free if you invest around $667,000 in term deposits. The question is whether you have $667,000. And that $20,000 is before tax. If you have less capital, you’ll need a higher yield and the game becomes a trade-off between yield and risk. Australian government bonds will yield about 1.8%pa to 3.4%pa. Corporate bonds are a specialist product. One of the best operators in our market is FIIG. It will tell you on its website that a portfolio of bonds can yield up to 5.78%. Then come mainstream hybrids, which have running yields from 3.2%…

A home owner should pay off their mortgage as quickly as possible – even if it’s only one day earlier. To explain: interest payments on an owner-occupied home are not tax deductible. But if you pay off that home – even one day earlier– and then borrow against that home for investment purposes, then the interest on the debt becomes tax deductible. For a wage earner paying 37¢ in the dollar tax (earning between $80,000 and $180,000) the difference between the effective interest rate is between 4.5% after tax for an owner-occupier loan or 2.97% after tax for an investment loan. So the correct strategy for any smart working person is to make it their business to repay their home loan in full and then to reborrow for investment purposes.…

Don’t you love that feeling of elation when setting up your SMSF, rolling over your funds, taking control of your life and being the master of your own destiny? It’s matched only by that overwhelming feeling of “now what the heck am I going to do?”. It’s a common dilemma with SMSF trustees, so don’t worry too much if you’re feeling this way. What you do need to do is get on the front foot and start thinking like a fund manager. This is also a good time to review why you set up the SMSF and what your initial plans were in running it. Most large super funds invest clients’ funds based on risk profile. For example, if you are conservative you should have more of your fund invested…

PUTTING ASIDE THE RIDICULOUS fees, including surcharges, the unconscionable interest rates and the fact that plastic can take longer to repay than a home loan, there are six other things that annoy me about credit cards. Here’s hoping that the Senate inquiry into cards, which is due to release its findings later this month, finally puts some of these absurdities to rest. Limits on balance transfers This is one of those traps you don’t know about until you apply. Balance transfer cards often have a limit on the amount you can transfer. In most cases, it’s a percentage of the new card’s limit. Sounds crazy, I know – after all, the whole idea of these cards is supposedly to get you out of debt. So if you’ve got a $10,000…

SOMEONE HAS SMASHED INTO your car, which puts it off the road for some time. This common scenario has given car hire companies the chance to come up with a service where they provide you, the driver whose car is in the garage for repairs, with a like-for-like replacement while your damaged vehicle is off the road. Why don’t I know about this? Like ride-sharing Uber, this is a fairly recently service introduced by some car rental companies which know how reliant we are on our wheels. These companies, whose brands include itwasntmyfault, Not At Fault, Compass Claims and Acorn Rentals, don’t advertise but can be readily found online by searching for not-at-fault car rental services. Mostly the availability of this service spreads through word of mouth. According to Compass…

Given the regulatory crackdown on lending to investors, those who want exposure to property may need to explore other options, such as Australian real estate investment trusts (A-REITs). Property is a great asset for long-term portfolios. A real asset, producing rental income, is a fantastic hedge against inflation. But liquidity and transaction costs are big issues for direct property investors, as well as the ability to achieve a suitable level of diversification in the asset class. A-REITs can be a good alternative to address some of these issues. As listed securities, they enjoy all the advantages of equities, including the ability to trade whenever the market is open with relatively low transaction costs. A-REITs can provide access to different classes of real estate, such as commercial, retail and industrial, and…

THE MAIN PURPOSE of the family home is to provide shelter. But it can do much more. Once you have built up some equity in your home you can use it to kickstart an investment portfolio to build wealth. Of course, this strategy isn’t for everyone because it involves some risks. In fact, ASIC’s MoneySmart website advises against it, saying if the investment turns bad and you can’t keep up with your loan repayments, you could lose your home. “Some folks just cannot mentally allow themselves to use the equity in the family home because of the traditional values that property holds for them. But for many it is the only equity they have to use to invest in other asset classes, whether it be shares, funds or indeed property,”…

Contact us To send a letter to the editor, write to Money, GPO Box 4088, Sydney NSW 2001 or email money@bauer-media.com.au For all inquiries and letters, please include name, address and phone details. Letters may be edited for clarity or space. Because of the high number of letters received, no personal replies are possible. How to get Money 1 Subscribe to Money: Phone: 136 116 Online: magshop.com.au 2 Subscribe to the Money digital edition for your iPad at magshop.com.au/digital/subscribe/moneydigital 3 Visit our website moneymag.com.au and sign up for our free weekly newsletter. You’ll get our top money stories plus exclusive finance tips. www.twitter.com/moneymagAUS…

IT HAPPENS SO OFTEN THERE MUST BE a pattern. A young person – usually a woman in their late 20s or early 30s, either expecting a child or with a young family already – says: “We're thinking about buying a new house.” My response: “That's great news.” “We think we need somewhere bigger for the family to grow up.” “Of course,” I say. “But I wanted to ask you, how can we structure it so we can hang on to our apartment?” “Why do you want to do that?” is my standard response. “Well, it’s such a good apartment and we would really like to hang on to it as well. We really love it.” And here’s where my furrowed brow starts to worry them. “Why would you want to…

HOW WOULD YOU LIKE AN EXTRA $300,000 over nine years in your super fund without too much effort? On my TV show a few weeks ago, Adam Gee from SuperRatings suggested that only 5% to 7% of those eligible for a transition-to-retirement (TTR) pension have one. I was astounded! My anecdotal evidence from the self-managed super fund (SMSF) industry, seminars and prospective clients suggests that figure is about 20%-30% of pre-retirees, so to hear it was just 5%-7% of retail, industry and corporate funds clearly illustrates just how many billions of dollars pre-retirees forgo just by not understanding this massive super opportunity. If you’re 56-64 and still working, you are likely to be eligible to commence a TTR income stream from your super fund that could add an additional $150,000…

Australian real estate investment trusts (A-REITs) had a strong 2014, outperforming much of the market, but this year they have drifted lower. With the US set to increase official interest rates, some investors are expecting prices to fall further. Despite that backdrop, many property companies and A-REITs have been performing solidly, and we still think there are opportunities for investors seeking both yield and value. Here are six attractive stocks: Stockland (ASX: SGP) A strong housing market and improvements at Stockland’s retail shopping centres are driving profit growth. APN Property Group (APD) APN is benefiting from the growth in superannuation savings and renewed interest in income assets. It is forecast to distribute about 2¢ per security over the next 12 months. Arena REIT (ARF) Arena has performed exceptionally well since…

IF STOCKMARKET PRICES WERE generated by an algorithm that combined fundamental factors alone, we could invest with some certainty. But things aren’t that easy and, as has become apparent from the relatively rapid 17% drop in the market in the past few months, share prices are not a function of fact but a function of a rather ethereal commodity called sentiment. And, like it or not, the mortal investor cannot contain it in maths. One of the interesting features of this sentiment factor is that, unlike a fundamental algorithm based on facts and assumptions, sentiment is the distillation of thousands of human reactions which are dictated by genetically unique information contained in the two twisted strands of DNA biomolecules inherited by each and every investor. Good luck trying to guess…

THE ONE-YEAR FORWARD PE (price-earnings) ratio for the S&P/ ASX 200 Index has been on a rollercoaster recently. I’d like to try to put a framework around the market movements to more broadly understand the thinking around the volatility. At the start of 2010, the ratio of what the market was willing to pay for its earnings base was about 15 times, which fell to 12 in 2011-12 over concerns about Europe. But as that passed, the PE ratio quickly rose and market participants were sufficiently comfortable to push it as high as 16-17. If we go back a bit further, we find that, since 1970, the market has traded, on average, within a PE ratio range of 14-15 times. Today it is just shy of 15. So what should…

Where would you invest $10,000? It’s a question that’s been answered by some of Australia’s top money experts. Paul Clitheroe tips BHP Billiton, Peter Switzer says an exchange traded fund such as the SPDR S&P/ASX 200 while Ross Greenwood has his eye on Ramsay Health Care among others. Volatility breeds opportunities and as we were going to the printers there was plenty of that. The S&P/ASX 200 continued its upward momentum on the back of international gains. Hard to believe that only a couple of weeks earlier (September 29) the market was down to 4918.40. SQM Research predicts that house prices are set to ease to their slowest pace since 2012, with Sydney cooling quickly. First-home buyers may finally have time on their side. Even if the Reserve Bank does…

Businesses that service Australia’s superannuation industry were paid a staggering $30 billion in fees in 2014-15. Who gets this money is revealed in a report by independent research firm Rainmaker Information for Industry Super Australia. The biggest chunk goes to trustee offices and administration, which received $10.2 billion (34%). The second-largest beneficiaries are investment managers, which reaped $7.7billion (26%). Group insurers that sell their life, total and permanent disability and income protection insurance to super funds got $7.1 billion (24%). Financial advisers walked away with $4.1 billion in fees (14%). Asset consultants – the experts that tell super funds where to invest – received $500 million (2%). To safely keep securities, super funds use secure custodial services, which also received $500 million. What is revealing about the study is that…

It is never easy to lose a loved one. Bereavement is an extremely difficult time, and it can also trigger substantial changes in the way you manage your finances. As with all major life changes, it is important to notify the Department of Human Services quickly so that we can determine the payments and services that best suit you. If you are currently receiving a Centrelink payment you may be eligible for bereavement payment if your partner, child or person you were caring for dies. If your partner has recently died, you may be eligible for a bereavement allowance, which is a short-term payment that provides financial support while you adjust to your changed circumstances. Our financial information service is a useful resource to discuss options and provide information you…

The future is all about minimalism, right? One device can and should be able to do it all. Well, thanks to the new AmpMe app, your smartphone will have one more function – a speaker system. The app connects to your sound cloud and creates a unique party playlist that can be shared with anyone in the room. Other users can connect to your playlist, and sync up automatically to whatever is playing. A single synced-up phone may sound a little weedy but when a group of phones start playing in unison, the effect is like a sound system. If you’re heading to the beach with a big group, ditch the bulky portable speakers. With AmpMe, you can consolidate your listening experience using every smartphone in the party. And if…

FACT FILE Mark McDonald, 23, co-founder of software development company Appster. Lives in company apartments in Melbourne, San Francisco and Gurgaon, India. Ernst & Young southern region Entrepreneur of the Year award in the technology category. First job paper round, aged 12. “I hated every minute of it.” AT AN AGE WHEN most are kickstarting their careers, Mark McDonald is at full throttle. The software development and consulting company he co-founded now employs 300 on three continents and is attracting revenues of $2 million a month after just four years. With Josiah Humphrey – who he met over the internet when they were young teens – McDonald launched Appster using a precocious strategy to make a mark. Paying $6000 a month, the pair took a year’s lease in Melbourne’s prestigious…

The Sydney market appears to be at least 80% through its current growth cycle so I wouldn’t buy today expecting massive short-term growth. However, I believe that Waterloo is a well-positioned growth market and apartments close to the CBD will become an increasingly in-demand asset, so there should be very good capital gain available to John over the life of his ownership. The condition of the apartment is not as important a consideration as the condition of the building and its common areas. An apartment can be quickly and cost-effectively updated. However, it’s a much harder job to have all owners aligned to maintaining common areas in the highest possible state. If the common areas are in good condition and presentation, I wouldn’t worry too much that the apartment is…

Di and Al had decided to retire early. Di was 59 and Al 50. They stopped working and downsized their home. Their objective was to be able to go camping and fishing as they chose and spend more time with their families, in particular their grandchildren. They had started without any forward planning or professional advice. While they felt they had enough capital to live on, they soon found that their cash flow, primarily from interest, was not enough to adequately sustain their preferred lifestyle and they had no access to Centrelink benefits. In addition, their income of $2375 a month was incurring some tax. With cash in the bank, a small investment portfolio and relatively low super balances, Di and Al were concerned about falling interest rates and sought…

Saving for the kids’ education is a really good idea but it needs to fit into your overall life plan. I would love to tell you that we did exactly that for our three kids – but we didn’t. I started my company, ipac, in 1983; we had no kids at that stage. Much to our joy they came along in 1987, 1989 and 1994. In 1987, when our son was born, education was a key issue for us. However, while ipac was going well, my pay – as is the case for so many small-business people – was very low. In 1989, our first daughter was born. Interest rates on our mortgage peaked at 18.75% later that year, so we concentrated on not losing our home. When our second…

For every investment property I buy, I try to have three ways it will make me money: buying below the market; renovating to add instant value and push up the rent; and choosing an area with above-average capital growth. This is my Trid3nt Strategy. To help me find where to buy for $50 a week or less I have called in Jacob Field, the founder of Ripehouse and Residex. Ripehouse’s software analyses all the areas in Australia to find Sweet Spots that outperform other streets in that suburb by more than 20%. There are further filters for high rental demand , excellent yield, low public housing and accessibility to prime infrastructure. Having chosen 10 Sweet Spots, I then examined these against Residex’s predictions for capital growth. As capital cities are…

In the first instance, make a household budget that clarifies how much you need to live each month. Then create separate bank accounts for living and saving. You must “pay yourself first” with a direct debit on your salary into a savings account that is different from your living account (which you spend and pay bills with). Set a target amount that you need for the house deposit and a deadline. Let’s say you’re three to five years away from the purchase. Take 90% of the deposit goal and divide it by the number of months between now and that point. Now you have the amount you add into savings each month. But what should you invest the savings in to make your money work as hard as you do?…

YES The ARA and a group of retailers are engaged in a review of the general retail industry award 2010 (GRIA) with the view to reducing the costs for retailers who trade on Sundays. Our position is based on the changing lifestyles of Australians who have indicated they consider Sundays to be a normal shopping day. Analysis by the Shopping Centre Council shows that between 2009 and 2014, Sundays had the highest growth in customer foot traffic to shopping centres. The ARA is proposing a reduction in Sunday penalties from double time to time-and-a-half. While we would like to see penalty rates reduced, we do not want to see them removed completely. Instead, we’re seeking a compromise that allows for more sustainable rates so retailers can afford to provide more…

AS A SMALL BUSINESS-OWNER, you’ll require banking products such as credit cards, business loans, online savings and transaction accounts to manage cash flow – unless you have vast personal wealth. Mozo director Kirsty Lamont says the banks are competing in the sector with more available credit and competitive rates. “There’s often a significant difference to the costs of business banking accounts, whether it’s a credit card, loan or everyday transaction account,” says finder.com.au founder Fred Schebesta. For example, Commonwealth Bank’s Netbank Saver has a promotional offer of 2.85% on balances up to $5 million, while CBA Business Online Saver offers 1.4% for $10,000-plus. A transaction account and credit card “are two simple tools to manage cash flow and expenses,” says Lamont. “Credit cards are often used to manage expenses by…

A LITTLE BIT OF EXTRA cash can go a long way. If you saved $50 each week, you could buy a top-of-the-line home entertainment system by the end of the year. If you saved $100 a week, you could have enough in 12 months to take your loved one to Paris. Another $50 a week on top and you could buy yourself a pre-loved jet ski for Christmas. Saving can be hard after covering everyday expenses but, thanks to the internet, there are plenty of quick and simple ways to earn some pocket money without leaving the couch. Passive income is traditionally derived from investments such as property, stocks and bonds. But these days you don’t have to spend a mint to make a mint. It’s all about sharing what…

For property price growth outside the big cities, statistics suggest that coastal areas are set to boom. Western regions, on the other hand, appear to be languishing, due to the mining industry’s woes. CoreLogic Data shows that the outer-metropolitan areas of NSW and Victoria have experienced strong growth, with the Illawarra in NSW and the Western District in Victoria both surging by 12.2% in the past year. In NSW, the Hunter and Great Lakes regions experienced price increases between 5.7% and 8.8%, reflecting the sea change pattern. In Victoria, the Wimmera mining region had the biggest price fall, down 7.4%. Mining territory also suffered in Queensland, where Mackay and Gladstone prices fell 9.5% and 10.2% respectively. The strongest growth area in Queensland was the Gold Coast, up 7.1%. Western Australia…

This is a very simple question but one that can sometimes have a pretty complex answer. First, have you logged on to your super account recently? If not, now is the time to register for online access to your primary account. While you are at it, why not visit the tax office’s SuperSeeker website. Here you can search for your lost super in less than a minute but make sure you have your tax file number handy. It will let you see any lost super accounts you have. Some super fund websites offer a search facility and the myGov website can also be used for a lost super search. Once you have found all your accounts, it pays to do some research to figure out which one you want to…

THE SAVAGE AND UNPREDICTABLE nature of the sharemarket’s gyrations has been disconcerting for SMSF retirees. It underlines the importance of holding sufficient cash to see you through even the most prolonged period of turbulence. Integral Private Wealth principal adviser David Simon says volatility is part and parcel of investing and you should have cash for at least two years set aside. “You need to ensure that you can withstand volatility without having to sell shares prematurely in order to fund pension income or other requirements,” he says. “You may also want to take advantage of markets like this.” He says an extra three years of fixed interest investments would be ideal. “History tells us that a downturn in the sharemarket can last up to five years and in rare circumstances…

Healthcare spending is set to increase to 5.7% of GDP by 2054-55, according to the Treasury department’s 2015 intergenerational report, and there are plenty of projects creating new impetus for reform of funding arrangements for healthcare providers. Despite a relatively benign 2015 federal budget, the government moved to freeze indexation on rebates for general practitioners and signalled a sweeping overhaul of the Medicare Benefits Schedule (MBS). The MBS is the government’s primary funding scheme for primary care medical service providers and an overhaul will potentially affect more than 5500 items in primary care. We expect service companies with economic moats – and less reliance on government funding – to prove more resilient to the reforms. Therefore, we view these as best positioned for investors seeking long-term exposure to the attractive…

Your guide to the super data Australians have two main investments – their home and their superannuation. Super may not be as riveting a topic but it’s just as important for your financial security. SuperRatings is a totally independent Australian superannuation research company. It is the leading source of superannuation information to the Australian media and is renowned for its timely commentary and opinions on the various superannuation funds available. Calculators, fund comparisons, fund ratings, news and expert opinion can be found at www.superratings.com.au. The data in these tables compares some of the most popular super funds. They are a mix of industry funds, master trusts and government funds. Industry funds are set up by employer associations and unions; many are offered publicly, some have restricted membership (NP). Master trusts…

REGULAR READERS of this column will know that I am an optimist. Frankly, I find it hard not to be. Now this is not the place for too much chat about sperm production in males and other distinctly non-money subjects, but medical scientists tell me that the chances of any of us being here are about zip. I appreciate that zip is not a very technical term but the sort of chance we have of the right sperm meeting the right egg seems to be along the lines of one in 18, followed by a little more than 400,000 zeros, close enough to zip for me. Yes, very horrible things happen to people due to plague, pestilence, illness, wars and general human nastiness. But the fact of the matter is…

It is a question that has intrigued social researchers and behavioural finance thinkers for decades: does gender really influence the way people invest? From Rice Warner’s analysis of some 10 million-plus superannuation member accounts in Australia, it appears that men are significantly more likely to invest in a choice option than women. Some 26% of males invest in a choice option, compared with 21% of females. What is driving commonality across the sexes when we might assume some wider variance in expected investment behaviour? One explanation is that couples co-ordinate investment decisions across both super accounts. This only requires one member to be engaged in their super and investing in similar options across both accounts. Plausible enough. However, it is impossible to test the hypothesis because funds do not know…

This is a straightforward product that has taken a smart approach to prolonging capital because outliving their savings is a big risk for many retirees. What is missing is a growth option focused specifically on high-income investments. There is no upfront cost and the investment fee for growth is 0.63% and for cash 0.09%. The admin fee is $1.50 a week plus 0.25% of the account balance. The fund takes care of payments and investments but offers flexibility so you can enjoy your retirement.…

Despite the dirty diesel scandal, demand for Volkswagen diesel models in the US has remained surprisingly steady. In early October VW suspended sales of its 2015 diesels but there were still about 500,000 cars on the secondhand marklet. Bloomberg reports that while sales at VW dealerships have fallen by between 8% and 14.5%, the popular private car sales site CarGurus.com reported a 0.6% price drop in VW diesels while Carlyspo.com saw a 0.3% drop – a difference of only about $US30 ($40). Prices on TrueCar.com were even higher than they were before the scandal, with the site posting a 13% mark-up on 2015 models. Property crowdfunding A new managed investment scheme from DomaCom offers crowdfunding investors a slice of the property pie for an initial outlay of just $20,000. Each…

NAME: John Pickrell STATUS: 37-year-old author of Flying Dinosaurs: How Fearsome Reptiles Became Birds who wants to organise his super and buy a home. QUESTIONS: Should John buy the apartment he is renting in Sydney? Which super fund should he choose, between REST and Media Super? Which fund has the best income protection insurance? He is in the balanced investment option but should he choose a different one given his age? SOLUTIONS: If you buy the apartment, hold it for the long term for capital growth. The fees of the two super funds are similar but REST has had a stronger investment performance. Also REST has good long-term income protection insurance up to age 67. You are on track for a comfortable retirement but consider increasing your salary sacrifice amounts…

In terms of fees, both REST’s and Media Super’s fees for a $92,000 account balance are competitive and less than the industry average. To give an idea, the average fee across all products is 1.25% or $1145. It should be noted that the returns, net of fees and taxes, are also important when reviewing your fund. This is something that REST has excelled at in recent years: its return of 7.5%pa over the past 10 years to August 31 is the highest of all the funds in SuperRatings’ SR50 Balanced Index. It is well ahead of the median return for balanced options, which was 6.1%pa during the same period. Insurance is one of the most challenging areas of super to understand and compare across funds. This is because super funds…

If you’re a few years off retirement and you haven’t got enough money, then I’d conclude that being money smart is not your long suit. I know some financial planners overcharge and create plans that suit them more than their clients but there are some good ones out there and you should do some research and find out how you can improve your potential retirement situation. What you need is a set of objective eyes to ensure you’re using the rules and tax concessions available to you. For example, are you salary sacrificing? Are you on a transition-to-retirement pension, which, if you’re over 55, can take your tax on super to zero? Other questions are: • Are you in the right super fund? • Should you be in a self-managed…

It’s important to know that the success of any property investment is not driven by price. It’s a mistake to think that the more you pay for a property the better it will perform. In fact, the reverse can often be true. As the value of a property rises, there will be fewer people in the market who can afford to pay for it, and so less pressure on it to sell and so rise in value. In addition to this, the relative rental yields tend to reduce as the value of a property rises into the higher categories. It’s not unusual to find more affordable properties generating rental yields of, say, 5% to 6% while those properties in higher price brackets may return a disappointing 3% to 4%. So…

Three in every 100 households have a go at starting a business each year. That’s a lot – nearly 300,000 – meaning entrepreneurship, or sometimes “buying a job” as they say, is alive and well in our exciting country. Fewer than a half of these new businesses will be active businesses; the rest will be for investments or non-operating for the time being. There are 2.1 million businesses in Australia. The list makes interesting reading: • More than 60% of businesses have no employees other than the owner(s). • The most common-sized business employs one to four people, with revenue less than $200,000. • Around half the new businesses will survive for only three years –a bit sobering. • Around half survive for five years – more encouraging. • The…

Technological disruption may be affecting our financial services industry in more ways than one, as a new cyber security report reveals that nationwide credit fraud has risen by almost 60% in the past two years. Veda’s 2015 cyber fraud report shows that, in the past year alone, cases of online credit application fraud have increased by 33%, as criminals using hacking techniques more frequently to steal sensitive information from computers, mobile phones and social media accounts. But we’re not exactly doing our best to deter hackers. The report says that as a culture, we’re incredibly relaxed when it comes to cyber security: 66% of users surveyed admitted they didn’t regularly change their online passwords, 44% said they didn’t use secure websites when making online transactions and 30% claimed to have…

APART-TIME JOB IS ESSENTIAL for children, no matter how busy, bright, shy or disorganised they are. Not only does it teach them about money, it also develops a range of other attributes: skills in communication, problem solving and time management. It expands their world as they meet different people and make new friends. It can even impact the career they choose. But finding a first job is tough because it is competitive. It is common for employers to hold recruitment sessions, where applicants are assessed as they talk about themselves and play team games. It is always best to apply early, before a school or university breaks up. I have sent my kids off – rather reluctantly – with their résumés to the local shops. One summer holidays, one of…

NEIGHBOURS ARE GETTING together to sell their homes as development sites – potentially doubling, or more, the value. It highlights the drive to make big profits from property. The nine owners of cottages on Holdsworth and Canberra avenues in Sydney’s St Leonards, who recently sold their properties for a total of $66 million, five times their homes’ value, were acting like developers by amalgamating a site. This trend is taking off but opportunities are limited. Some will prosper but some will be disappointed. For example, some owners in Sydney’s north-west Hills district, who expected extensive areas to be rezoned as high rise, had a setback when the council restricted the rezoning to council-owned land in its draft plans. But at least the Hills owners will not lose everything if they…

Australian Communications &Media Authority 1300 850 115www.acma.gov.au Australian Competition andConsumer Commission 1300 302 502www.accc.gov.au Australian Securities andInvestments Commission(ASIC) Local call: 1300 300 630www.asic.gov.au Australian SecuritiesExchange 131 279www.asx.com.au ASFA 1800 812 798 (outside Sydney)9264 9300 (Sydney)www.superannuation.asn.au CPA Australia Listing of accountants1300 737 373www.cpaaustralia.com.au Credit & InsuranceOmbudsman Service Financial complaints1800 138 422www.cio.org.au Do Not Call Register If you want to reducetelemarketing calls1300 792 958www.donotcall.gov.au D&B For a copy of your credit report1300 734 806www.dnb.com.au Fair trading/consumer affairs ACT (02) 6207 3000NSW 133 220NT 1800 019 319QLD 137 468SA 131 882TAS 1300 654 499VIC 1300 558 181WA 1300 304 054 Financial Counsellors 1800 007 007www.financialcounsellingaustralia.org.au Financial Ombudsman Service Financial disputesfree call: 1300 780 808www.fos.org.au Financial PlanningAssociation Listing of financial advisersCall: 1300 626 393www.fpa.asn.au Human Services Formerly CentrelinkFamilies: 136 150Pension advice: 132 300www.humanservices.gov.au Legal…

The market volatility of the past few months has highlighted the critical importance of a written investment strategy for SMSF trustees – and that they stick to it. Graeme Colley, director of technical and professional standards at the SMSF Association, says when markets fluctuate to the degree they have, rattling investors, a written, long-term investment strategy not only gives trustees peace of mind but it should also remind them that super is all about the long term. “It provides them with an important reference point at the very time when people are liable to panic because the markets, especially the equity markets, are falling sharply. When you consider an SMSF fund has, on average, about one-third of its assets in Australian shares, the reassurance the investment strategy provides cannot be…

THE EUROPEAN Central Bank strategy of pumping cheap money into the region’s economy via a quantitative easing program, signalled early in the year and started in March, was initially a big boost to markets. The region’s shares enjoyed their best start to a year in almost two decades, with the Euro Stoxx 50, the leading blue-chip index for the euro zone, reaching a seven-year high in April. But since then it has tumbled about 19% in the wake of problems in Greece and later worldwide concerns about China’s falling growth. The broader S&P Europe 300 Index, which measures the performance of 350 leading companies in continental Europe and the UK, has fared better, falling just 9.04% in the September quarter. The Greek meltdown and generally weaker economic conditions in Europe…

SINCE THEIR HIGHS AROUND April this year, shares have had a rough ride, particularly through the September quarter as the US Federal Reserve and worries about global growth rattled investor confidence. A good place to start deciphering the sharemarkets is the seasonal patterns in share price movements. Typically the period from May to September is the weakest of the year. However, October is known as a “bear killer” month, as it often sees price falls bottom out ahead of seasonal strength going into the year’s end and the new year. Along with a more positive seasonal pattern in the months ahead, there are fundamental reasons for a resumption of the cyclical bull market in shares: • Shares became cheaper as a result of their falls. This is particularly evident in…