Seniors Finance
Reducing fund fees
Do you have managed funds on which you are paying a trailing commission of more than $300 per year? Changing to the TrailCap™ program can result in a rebate on these fees – better in your pocket than an adviser’s?
TrailCap™ is a program offered by InvestSmart the online managed funds broker. As the fund manager, InvestSmart receives commissions for any managed funds purchased. Both entry fees and 50% of trailing commissions (above $300) are then rebated to the investor. For those investors paying thousands in trailing commissions, this is a simple way of minimizing costs on these investments, and offers a particularly useful tool/saving for those who are managing a DIY Super Fund. You can move your funds online (by downloading a broker nomination form) or ask for more detail and/or complete the transaction by telephone.
Budgets made simple
One of the best ways of simplifying your life is knowing where your money’s coming from and where it’s going to. With a robust budget, you can be a little more prepared for the unexpected.
You may have tried to budget in the past and failed, it is one of the hardest things to do, especially when you have a limited income. Setting a goal, no matter how small, will give you a focus and make sticking to your budget a little easier. Being honest with yourself about how much you spend on extras is also vital, and don’t kid yourself you can do without them, you’re sure to fail if there’s nothing to look forward to.
The Australian Government have a useful website with tips and tools for creating a successful budget. You can find out how to get started, how best to succeed and use the online budgeting tool to make managing your money simpler.
As well as having useful information online, you can download or order a copy of the handbook, Understanding Money. To get your budget started and be on your way to financial freedom, visit Understanding Money.
Credit card safety
With a huge amount of credit card transactions occurring during the Christmas shopping period, it’s easier for fraudsters to slip through banking security nets. The Australian Bankers’ Association (ABA) has called for all card holders to be more vigilant.
Simple actions may protect you from becoming pray to criminals who make a very healthy living out of credit card fraud. Never reveal your PIN or password to anyone, banks will never ask for this information. This may seem self-explanatory but when an authoritive voice asks for personal details, it’s all too easy to be taken in and give them what they ask for.
Check your bank statements thoroughly as the quicker you advise your bank of any discrepancies, the quicker they can act and the more likely they are to catch the culprit. Don’t get caught up in the rush at Christmas, and no matter how busy the checkouts are, always make sure your card is returned by the cashier and placed safely in your purse or wallet.
For more details on how to protect yourself from credit and debit card fraud this Christmas, visit the Australian Bankers’ Association.
Medicare claims
When looking after grandchildren, whether for a short or extended period of time, there’s a good chance you may incur some medical costs.
Medicare can help with claiming back these charges and it’s as simple as producing any receipts to your local Medicare office. Many doctors will bulk bill for children but if they do issue you with an account, Medicare will help you with the claim and although the child must be registered with Medicare, he or she does not need to be included on your card.
For more information on claiming medical benefits, visit Medicare.
Keep your bonus safe
With the Government about to pay out pre-Christmas bonuses to needy Australians, telemarketing companies have the phones at the ready to try and get you to part with your cash!
David McMahon, a leading voice messaging and marketing strategist has come up with five top tips to stop the telemarketers.
1. Buy and answering machine. Telemarketers want to talk to real people and are likely to hang up and move on to the next one.
2. Hang up. On most telephone exchanges, hanging up for 20 seconds will disconnect the call.
3. Never get angry with the telemarketing operator. They’re only doing their job, a firm but polite no thank you will suffice.
4. Register on the Do Not Call Register. This is free, simply visit www.DoNotCall.gov.au.
5. Pre-recorded message. If you receive a pre-recorded message, press 9. You should then receive a message saying your number has been removed.
For more information on David McMahon, visit www.mediasolutions.com.au
Getting the timing right
Working to the day we die may appear to be the only option for those of us affected by falling house prices, higher debt and the stockmarket slump. But even if we are now going to work longer than first planned, it doesn’t stop us understanding how timing our move from full-time work can maximise savings.
When should you consider slowing down and how can you afford it? In
Getting the timing right,
AboutSeniors financial guru, Richard Sheargold, suggests ways of structuring superannuation and work income, so that taking life a little easier may not be such an unachievable goal. We've even included an easy
budget planner in this downloadable PDF so you can work out what you have – and how far it will go!
Fee saving accounts
Some of us may be unaware how much we’re charged for transactions on our bank account. Being fee savvy can save a substantial sum of money.
Many financial institutions have basic accounts available to concession card holders that charge low or nil account fees, or offer a monthly rebate to cover transaction fees. As these accounts offer little or no interest, they may not be suitable for a savings account, but not having to pay individual fees every time you use an ATM or make a branch withdrawal, can save you a fortune.
Your financial institution will be able to provide a breakdown of transaction charges that apply to your account every month. The Australian Bankers’ Association Inc (ABA) has a very handy table which details the fees charged by each institution on their concession card transaction accounts. For an easy-to-read breakdown of transaction fees, visit ABA.
Live on less
Sometimes it seems as if there is no respite from increasing financial pressures. This week in our downloadable PDF how to Live on less, founder of The Cheapskate Club, Cath Armstrong, gives you tips for cutting costs and saving money. She shares how cutting back and saving a little can even help you achieve a debt-free existence or early retirement. Simple changes can make a difference and allow you to afford the occasional treat, definitely worth the effort.
Boost your coffers
The time to take stock of your finances and maybe even earn a few extra dollars is now. We’ve rounded up some of our favourite sites for making and saving money.
GoSwitch – If you’re lucky enough to live in Victoria, Queensland or South Australia then your energy market has been deregularised, meaning there are savings to be had on your fuel bills. Simply have at hand your latest fuel bills and head to GoSwitch to see what you can save, or for some great fuel saving tips – http://www.goswitch.com.au
Banks.com.au – Fees are par for the course when it comes to credit cards, bank accounts and loans but you can always make sure that you only pay fees that are absolutely necessary. Banks.com.au gives you the tools to compare credit cards, transaction accounts, loans, investments and more – http://www.banks.com.au
Fido – the watchdog website of the Australian Securities and Investments Commission will keep you advised of the latest scams to be aware of, give you tips on how to make your money work best for you, advise you how to find unclaimed money in Superannuation and bank accounts and have lots of useful financial calculators help keep your money in your pocket – http://www.fido.gov.au
Ebay – Most people have bits and pieces lying around that they no longer use and just hold on to them because it’s the easiest thing to do. Make your preloved treasures work for you by auctioning them on EBay. Simple to do, just upload a photo, add your description and wait for the money to roll in. Remember, one man’s junk is another’s treasure! – http://www.ebay.com.au
EmailCash – Make money online by completing surveys, entering competitions, carrying out tasks, clicking through to websites and shopping. It does take time to accumulate enough points to get any kind of cash back but if you have the time, or enjoy doing these things anyway, then you may as well get paid for it – http://www.emailcash.com.au
SmartSaver – save money on everyday items, life’s little treats such as takeaways and DVD hire or the services of a tradesman if you live in New South Wales, Victoria and Western Australia. SmartSaver allows you to search for discount coupons in your area and print them off, every little helps – http://www.smartsaver.com.au
Are you entitled to rent assistance?
Australians who are living in a retirement village (or planning to move to one) may be entitled to Centrelink rent assistance.
Centrelink rent assistance is available to those who are on a low income and rent in the private rental market. This may include retirement village accommodation, so if you are currently living in a retirement village, or planning to move to one, it is important to factor in any rent support to which you may be entitled. Your entitlement can be affected by the entry contribution you pay. If this amount is below or equal to $124,500, depending upon your weekly rental, you could be eligible. The rules vary for those in aged care where an accommodation bond is payable, as apposed to an entry contribution. Read about your rights and responsibilities here or phone the specific service lines below:
Retirement services - 132300
Disabilities, sickness and carers - 132717
TTY for those who are deaf-impaired - 1800 810 586
Compare and save
The new financial year is good time to evaluate how your money is working for you. Simple changes to credit cards, bank accounts and even superannuation can save you money.
People have different needs when choosing credit cards, superannuation and banks. Using independent, online comparisons can help give a clearer picture of what’s available. Remember to always read the Product Disclosure Statement (PDS) or seek independent financial advice before signing anything.
Perhaps you need credit cards that offers interest free days, no annual fee or a low interest rate. Compare Credit Cards Australia lets you search for the card that best suits your requirements, and gives you a quick comparison on what’s available on the market. For more information, visit the website.
Superannuation can be a minefield, with very few of us actually understanding what charges are made by our fund, how different investment strategies can benefit us and what a difference extra contributions can make. FIDO, the website of the Australian Securities and Investment Commission (ASIC), has a handy calculator that will help you work out if your superannuation fund is working best for you. For superannuation comparisons, visit the ASIC website.
Banks can seem to be life’s necessary evils, with many people gritting their teeth at charges levied by our financial institutions. Changing banks needn’t be the difficult, drawn out process it used to be and a simple check on what else is available may save you time and money. For a comparison on transaction accounts, check out www.banks.com.au.
Friendly tax
Tax time is just around the corner but don’t despair, with our simple handy tips, you can make the taxman work for you.
For years you have dreaded tax increases and cursed the amount of your hard-earned money you’ve had to “give away” to the ATO. Financial strategist, Louise Biti, explains in Your Life magazine how you can Make tax your friend.
Switch and save
The price of everything is on the up, and up, and to balance the household budget, savings need to be made where they can. With energy prices on the rise, check that you are not paying too much.
GoSwitch offers energy consumers living in Victoria and South Australia the chance to compare energy plans, and make sure they have the best deal on offer. In 2002, the energy market was deregulated, supposedly delivering lower prices to consumers. However, actually comparing prices between companies is no mean feat, with an estimated 50% of households paying standard industry rates, the highest there is.
GoSwitchis free and easy to use. Simply type in a few details from your last energy bill and in a few minutes you will be provided with a list of companies supplying your area, ranked in accordance with price. There is no risk involved in switch retailers, as all companies are regulated to ensure standards of service.
Already launched in Victoria and South Australia, GoSwitch will be available to consumers in Queensland and NSW in the coming months. With the average household spending $1,800 on energy bills each year, any savings will be welcome.
Keep your money in your own pocket and check out the savings you could make.
Tax ready
With less than a month to go this financial year it’s now or never if you want to take advantage of some end of financial year smart tips.
Your actions in the remaining days of this financial year will not only secure some last minute tax relief but set you up for the financial year ahead. Just because you may be rushing for the end of this year, doesn’t mean you can’t be early for the next.
Below are the best tips from Dante DiGori, Technical Manager - Business Support, ClearView Retirement Solutions
Pre-retirees
· If you are self-employed an opportunity to increase your tax-deductions should not be missed. This can be easily achieved by making a contribution into your superannuation fund. However, don’t forget about the contribution limits (concessional (deductible) contributions limited to $50,000, however, for those aged 50 – 74 this limit is $100,000 until 2012).
· Pre-paying next year’s expenses NOW (before 30 June) is a great way of increasing your income tax deductions for 2007/08. The following expenses can be used to achieve this additional tax deduction:
· Interest on an investment loan
· Premiums for your income protection policy and
· Membership subscriptions for trade and professional bodies
· For people (employees and self-employed) earning between $28,980 and $58,980 this financial year the government will match your personal after-tax contribution with a maximum government co-contribution of $1,500 available for people earning less than $28,980.
· Look to set up a salary sacrifice arrangement with your employer from 1 July 2008 to contribute to your superannuation, which will boost your retirement savings and reduce your income tax for next financial year.
· Review ownership of assets and look to change/adjust ownership of assets to a lower and non-income working person as this will help reduce income tax payable on income earned by these assets.
Retirees
· Reduce Capital Gains Tax (CGT) liability on assets sold during 2007/08. There are two options available to help you achieve this:
· Making a contribution to your superannuation fund and claiming a tax deduction on the contribution (note: you need to be retired and aged under 65 or aged 65 – 74 and meet the 10% rule test). The deductible contribution can reduce your taxable income and therefore decrease your personal income tax liability as a result of the capital gain. Please note contribution limits apply
· Using capital losses realised from the sale of assets either this financial year or from previous financial years.
· Defering income until next financial year can benefit you by applying the deferred income to the lower tax rates/brackets that take effect in 2008/09. For example deferring the receipt of interest income from a term deposit by having it mature in July rather than June and holding off the sale of an asset until the new financial year – this is especially beneficial for people transitioning to retirement next year.
· Pre-paying next year’s interest on an investment loan NOW (before 30 June) is a great way of increasing your income tax deductions for 2007/08.
· Taking advantage of tax offsets/rebates that are available. Some are automatically calculated by the tax office (such as Senior Australian Tax Offset (SATO) and low income tax offset) while others must be claimed such as the medical expenses tax offset and spouse contributions offsets.
· Medical expenses tax offset can be claimed by an individual whose net medical expenses paid exceed $1,500 during the financial year. The offset is calculated as 20% of the amount above the threshold.
· A spouse contribution tax offset can be claimed when you make an eligible spouse contribution on behalf of your spouse. The offset is 18% of the first $3,000 contributed which provides a maximum $540 offset (to receive the maximum offset the receiving spouse must have assessable income plus reportable fringe benefits of less than $10,800. The offset is reduced to NIL once the receiving spouses income is $13,800 or greater).
For more on maximising your tax offset, or investing for the future, visit www.clearview.com.au
Expert advice just a click away
A new service developed by the Financial Planning Association will give Australians access to general financial advice at no cost.
“Ask an Expert” is an online question and answer facility to be launched during Financial Planning Week (19-25 May 2008). A panel of expert financial planners will answer consumers’ emailed questions on financial matters as wide-ranging as superannuation, savings and investments, managing tax and retirement planning”, said FPA chief executive officer Jo-Anne Bloch.
“We believe that Ask an Expert can fill a gap by providing information about financial matters which will enable people to make more informed decisions, or take the next step towards getting personal financial advice. The service will be trialed for one month to assess demand, with a view to continuing on a long term basis.
“The answers given by our panel will be limited to general advice which does not take into account the personal circumstances of those asking the questions. Consumers will be encouraged to seek personal financial advice from professional financial planners where appropriate.
“Our panel of experts is made up of Value of Advice Award winners who are Certified Financial PlannerTM professionals.
“People using this web-based service will receive a response directly and, every month, selected questions and answers will be posted on the FPA website so that others can benefit from the knowledge shared.
To “Ask an expert” go to www.fpa.asn.au and click on the link. To find a professional financial planner who is a member of the FPA click on “Find a Planner”.
Online budget planner
To help you start, ClearView Retirement Solutions has created a range of free online financial tools. These calculators help you understand how much you’ll need in retirement and plan for the future in just a few minutes.
Calculators range from a simple budget planner for determining your current cost of living, to a tool for estimating your superannuation entitlements at retirement.
Planning is an important part of good financial management. Taking steps to control your finances today could make a long-term difference to your savings and investments.
ClearView’s calculators include:
• Budget planner – This simple tool is useful for determining your current cost of living while helping you decide how much you can save.
• Income in retirement calculator – This tool helps you to estimate your income requirements during retirement. As a rough guide, you should target a retirement income of 50-70% of your pre-retirement salary. This is because many costs you would incur normally would no longer apply.
• Capital investment monitor – Want to know how much you’ll have to invest at retirement? This simple tool helps calculate your total wealth (such as superannuation payout, savings, and sales proceeds) less major expenditures such as renovations, motor vehicle purchases and overseas trips.
• Superannuation estimator - This calculator allows you to see how much your superannuation benefits may be worth at retirement and how much you could need to save to reach your desired level of income.
• Money longevity time line – This simple calculator provides a projection of how long your savings could last in retirement based upon your weekly income needs.
• Estate planner – A useful tool if you’re near retirement. It helps you to determine how much money you can receive during retirement while providing for dependants or family.
• Salary sacrifice comparison – This calculator enables you to compare the difference between salary sacrifice versus post tax contributions into superannuation.
Planning is an important part of good financial management. Taking steps to help control your finances today could make a long-term difference to your savings and investments.
To start using the calculators, simply go to the ClearView website at http://www.clearview.com.au
Finance makeover
At this time of year most people are asking themselves how to achieve their financial goals. Maybe stock-take of your financial position is in order and there are four 4 easy steps to get you back on track.
1. Taking stock
You need to know what you have, what you owe and then decide where you can cut back or how much you can save for that special purchase. We know it’s a frightening thought but do it step by step and it won’t seem so daunting. If you’re going to succeed, you need a realistic benchmark, a clear understanding of where you are financially.
You’ll need to gather your credit card and bank statements and bills for the last three months. On a piece of paper or spreadsheet, set up three columns, essential (rent, water, electricity, etc), discretionary (needed items but could spend less on) and impulse (don’t need at all). Now list all the money you’ve spent on these items over the last three months and total them. This will give you a good idea of where your money is going. Calculate each category as a percentage of your total expenditure and if your impulse buys are more than 30% of your total expenditure, then you probably need to re-evaluate your relationship with money.
For a useful home budgeting calculator, click here.
2. Cut the costs of your banking
$5 a month in account fees may not seem like much but over the years it all adds up, especially if you have more than one account or use ATM’s that don’t belong to your financial institution.
You need to ascertain how much you’re actually paying in bank fees. Go through your bank statements for the last three months and total all fees charged, you’ll be surprised! Next, got to you bank and ask what they can do to lower your fees, it maybe that a different type of account incurs less fees. Remember, you’re their customer and it pays to shop around and find out what other banks are offering, some offer fee rebates to pensioners or those on low incomes, and if they can’t match or better what is being offered elsewhere, be prepared to switch banks. Also, banks do make mistakes so it pays to check your statements carefully.
Even if you only manage to safe a few dollars each month, it’s better in your pocket than theirs!
For a comparison of carious financial institutions accounts and their fees, click here.
3. Do you really need it?
Always ask yourself this question before buying something and if possible, sleep on the idea of purchasing it before you do, you’ll find that 80% of the time you don’t buy it.
Spend one day a week without your credit card and when you’re comfortable doing this, make it two, its surprising how quickly you’ll get used to paying cash and not buying unnecessary items. Also, ask your financial institution if it offers a Visa debit card linked to your account, that way instead of buying things on credit, you’re actually using your own money but have the convenience of a Visa card.
Look at how you pay your credit card balance and what fees are charged by your provider. If you pay off your total balance each month then make sure you are not charged and annual fee and if you have an outstanding balance each month, look for a card that offers the lowest interest rate and the most interest fee days each month.
For a comparison of credit card fees, click here.
4. Know when to ask for help
If you have more debt than you can handle or are struggling to meet the minimum repayments on your borrowings, then its time to ask for help. It may make you feel uncomfortable at first to discuss your financial position with a stranger but it will empower you with the knowledge and confidence to tackle your problem and more importantly, help get you out of the financial hole you’re in.
Financial counsellors do not charge a fee or have a conflict of interest with credit providers, they can help you negotiate payment terms that should be easier for you to manage and help you budget your money more effectively. They are Government funded although you may be able to find one through your church or community organisation.
Centrelink also offers a Financial Information Service, and although it does not provide specific financial advice, it will help you understand terminology, financial tools and assist with making sense of financial services, products or planning.
To find a financial counsellor in your area, click here or for more details on Centrelink, click here.
Get your financial act together
ClearView Retirement Solutions has issued its five tips for home equity release loans, also known as reverse mortgages, to combat a widespread lack of knowledge about how this growing new means of retirement income works.
ClearView stresses that it is crucial for people to consider whether home equity release loans are a good solution for both their lifestyle and financial needs and recommends that people opting for a home equity release loan consider the following:
1. How to take a home equity release loan – lump sum or draw down.
Instead of taking a lump sum, in some circumstances, drawing down a home equity release loan through periodic payments may be a better option to help protect access to the age pension. In addition, the level of debt rises progressively rather than in one large hit.
2. Making the choice between variable or fixed interest rate
This is where good financial advice is vital to better understand the interest rate environment and the connection between personal risk profile and the interest rate option that best suits individual circumstances.
3. Understanding what the family has in mind
Some older people are reluctant to talk to their adult children about the possibility of obtaining a home equity release loan because of fears they might be seen to be ‘spending the inheritance’. It can be better to have the conversation because children may well be happy knowing that their parents’ financial wellbeing has been addressed.
4. Keeping the ‘taxman’ at bay
It is tempting for people to take a home equity release loan in a single lump sum payment, which is then invested and the interest earned used for income. The taxman might also be ‘interested’ in the interest earned and want tax payments. It could be better to take a home equity release loan in periodic draw down payments to supplement other income because the draw downs are not subject to tax.
5. Home equity release loans can be great but so can the alternatives
Home equity release loans are likely to soon attract more attention from the ‘baby boomer’ generation in particular. As with every other financial decision, it is important to look at the alternatives – these include downsizing the home, entering into loan agreements with adult children or the Pension Loan Scheme administered by Centrelink and the Department of Veteran Affairs.
To learn more about ClearView, click here or call 132 976.
Useful financial websites
The FIDO and Understanding Money government websites are a useful resource for up-to-date information and to educate and empower yourself in money matters.
FIDO is the consumer arm of The Australian Securities and Investments Commission (ASIC). The website is an excellent source of money tips and advice about investments and other financial products. And should you be concerned about any written, telephone or online scams, then FIDO can help.
The ‘Understanding money’ website can help you with important financial basics such as budgeting and controlling your credit card spending, as well as offering information on superannuation, reverse mortgages and retirement planning. And to find out where you’re money blood pressure is at, check your financial health now.
Godfrey’s deeming rates
Q. As far as the Aged Pension goes, do the deeming rates apply to financial investments even when those investments are non-income producing?
For example, shares in an unlisted public company which pays no dividends and whose shares are not saleable? Centrelink is reducing my pension, which seems totally illogical and unfair. I have asked Centrelink and the appropriate Minister to confirm that is the case and to comment, but I cannot seem to get anyone to give me an answer.
A. Deeming is done on all financial assets regardless of whether they provide you with a return. You could have money in a non-interest bearing cheque account and Centrelink will still deem it to be earning income. If you had held BHP for the past 12 months and received 70 per cent in return you would still be deemed at the Centrelink rates. Remember that direct property is not deemed and Centrelink use actual rental income as the assessable income.
Result – happiness
Charles Dickens had it right (see quote above). It seems ‘Spend less than you earn’ is a forgotten (or ignored) principle these days. But it does also seem harder to do.
There are, of course, myriad small things you can do to keep the ledger in the black. But sometimes we can’t get inspired with new options. Simple Savings website offers a long list of great ideas for saving. The stories of others who have counted their pennies and collected thousands in relatively short amounts of time are sure to motivate. It may be that changing a few spending habits and/or looking for ways to make something instead of buying it creates a feeling of possibility rather than turning you into Scrooge. Find out more
Get a bonus
If you are working on past retirement age, you may be eligible for the Pension Bonus Scheme, which offers a payment amount based on the fact that you have deferred claiming the Age Pension. Sound good?
The amount you receive is dependent on various factors, including your marital status plus other qualifying factors. A word of advice: it’s important to register as soon as possible to get the most out of this opportunity. Read more now
The costly perils of bonding
ClearView Retirement Solutions has warned retirees who may be planning to relocate into aged care facilities could face higher costs as a result of imminent changes to Centrelink’s aged care assets test.
From 20 September 2007, retirees will no longer be able to exclude money held in complying income streams, commenced after this time, such as term allocated pensions from the assets test.
ClearView has urged caution because the changes could lead to hostels and nursing homes that use the test to calculate accommodation bonds and daily care fees, imposing substantially higher charges.
ClearView technical manager, Helena Gibson, warned of the potential for retirees to lose significant sums of capital and its ability to generate income. ClearView has suggested a possible solution. Depending on their particular circumstances, retirees could restructure their assets to reduce living costs significantly and increase their retirement choices in the process.
“The cost of aged care in Australia can be considerable,” says ClearView technical manager, Helena Gibson. “For many people, entering a hostel or nursing home can mean selling a large portion of their assets including the family home.
“Effective retirement planning involves being aware of specific events and issues. Taking action before the 20 September deadline can make a significant difference to a retiree’s finances and future quality of life.”
Accommodation bonds are negotiated prior to entering a hostel or nursing home. The size of the bond is based on an individual’s total assets including their home, car and superannuation. There is no upper limit on the bond amount. However, care facilities must leave an individual with at least $33,000 in assets.
As of 1 July 2007, where a hostel bond exceeded $132,000, individuals might also be liable for higher fees for basic daily care. Below is an example of the benefits of investing in a complying income stream.
Rose, a widow aged 72, has been assessed as needing hostel care. Her only assets are $100,000 in superannuation and $100,000 in shares. If she continues her current asset arrangement, the accommodation bond could cost her up to $167,000. She may also need to pay a higher basic daily care fee of $38.35, or an extra $2,767 annually. For bonds less than $132,000, Rose would only pay $30.77/day.
If Rose invests her super money into a complying pension before 20 September, the amount she reallocates will be ‘hidden’ when calculating the bond amount.
As Rose only has $100,000 left that is assessable, the maximum bond she could be charged is $67,000. Rose would also benefit from income received from her pension and lower basic daily care costs.
In addition to lower hostel costs, if people invest in a complying pension before 20 September, they will qualify for a 50 per cent exemption on the value of their investment – from the Centrelink assets test. The assets test encompasses most assets excluding the family residence. Retirees may receive benefits including eligibility for a full or part pension and the Pensioner Concession Card, which provides benefits including discounts on prescription medicines and a utilities allowance. Call ClearView on 132 976 or click here for more information.
Before making a decision about a complying income stream product you should consider the relevant product disclosure statement. Helena Gibson is a representative of ClearView Financial Management Limited. The case study has been created to illustrate a specific concept. The calculations are real given the stated circumstances and are current as at 1 September 2007.
Your buddy
If you own a motorhome that you don’t use 365 days of the year, perhaps you’d consider renting it out? Soon you’ll be able to register your vehicle with Hirebuddies and let them do the rest.
You may not want to sell your vehicle or it may not be worth it to sell, but the income you receive from renting could come in handy. An added bonus could be that you receive a personal income tax benefit by being able to claim an annual depreciation amount. Plus you might discover you actually have a front or back yard as your motorhome or caravan is once more doing what it was made to do – travel the open road.
Hirebuddies is well-established in the UK but registration for Australian vehicles will be available from 1 August 2007. For more information click here
The Australian Taxation Office is reminding people that from 1 July 2007, new rules will apply regarding disclosure of your tax file number (TFN) to your superannuation fund.
The new rules mean that super funds or retirement savings funds without members’ TFNs will not be able to accept personal contributions, i.e. the contributions made from take-home pay. If this is relevant to you, check your superannuation member statement to see if your fund has your TFN. If not, you’d be well advised to let them know, so you can keep depositing that extra little bit. Find out more
Tax time checklist
Independent financial adviser, Richard Sheargold, offers a seniors-specific checklist in the lead up to the end of financial year.
If you are still working and paying tax then here are a few tips before 30 June 2007.
1. Ensure that you have maximised your super contributions for your spouse to get the tax rebate. Your spouse must be earning less than $13,800 to get the rebate.
2. If you have large lumps of money/assets then you should consider the $1m undeducted contribution window that will close after 30/06/07
3. If you work for yourself (sole trader), ensure that you have contributed as much as possible (up to your age based limit) to super to gain the tax deduction...assuming you don’t need the income for other purposes. This will also reduce your taxable income and may help you to get the Government’s co-contribution.
4. If you are receiving an allocated pension then this is the time to think about the amount you receive each year and make an appropriate adjustment.
New pension calculator
FIDO, the consumer website for the Australian Investments and Securities Commission (ASIC) has launched a new online pension calculator, which incorporates the new superannuation rules, effective 1 July.
The new super rules will affect your pension, and a new pension product called an ‘account-based pension’ will be available. If you are thinking about purchasing this new pension, the FIDO calculator lets you see how long your money may last.
You can see what may happen if you take out an initial lump sum and see what how long your money will last if you take out different amounts of income each year. You can also compare various account-based products to see how they might affect regular income payments you receive during retirement.
Of course, you need to consider your own personal circumstances and for a final decision, get expert advice. To go to the new calculator click here
Banks explain fees
Have you ever been slugged a fee for late payment of a credit card? The Australian Banker’s Association (ABA) has announced it will publish more information for consumers to learn more about ‘exception fees’, which are bank fees on personal accounts, such as credit card late payment and account overdrawn fees.
Some banks offer accounts for customers receiving government benefits, which don’t charge exception fees or which reduce the cost of these fees.
The Australian Securities and Investments Commission (ASIC) have joined in the discussion, saying they will closely monitor the level of disclosure to customers about these fees to make sure they are fully and clearly explained to consumers.
The aim is to give consumers the best possible information and also to regulate consistency of communication so that customers can better compare products. For more information about the ABA, click here
Identity fraud
Stay safe online with a great website which can assist you to protect your identity from unscrupulous types who want to steal personal data. The information aims to arm consumers with simple, practical tips on how to be streetwise in cyberspace.
The website is a joint project by the Australian Banker’s Association (ABA), the Australian High Tech Crime Centre (AHTCC) and the Australian Securities and Investments Commission (ASIC). You’ll find tips to protect yourself from people finding out your personal details, including credit card or bank account numbers. You can also take an online quiz to find out your personal security risks, plus there’s helpful information on subjects such as ‘If your wallet or handbag is stolen’ and ‘How to check your credit file’.
And remember: never give out your online or telephone passwords. Banks will never ask for such information via email. To go the website click here
New Skype call plan
Skype is an inexpensive telephone service which works through a high-speed internet connection. Australians will soon have the chance to sign up to a domestic Skype call plan and pay a monthly subscription and connection fee, but no timed call charges.
Skype uses either a personal computer, a cordless handset (configured to a broadband modem) or certain mobile phones with Wi-Fi capability. Each user can call other Skype users and there is no charge.
There are per call connection fees for Skype users if they are calling regular telephone lines or mobile numbers, but the approximate cost will only be 6.5 cents. The monthly fee for a ‘Skype Pro’ plan is set to be less than $8 a month and will include free voice mail. There are other options, such as a ‘SkypeIn’ number, which allows calls to be received from regular phones, but that might incur a charge.
It’s early days with this new technology, but it could be the cheapest way to keep in touch with those globe-trotting grandkids! For more information, click here
Protect your dollars online
Electronic banking is a blessing and a curse. It’s quick, and relatively easy, but most people confess to wondering how safe they are as they click online and reveal what is essentially private information to a cyberspace database. The FIDO consumer watchdog site is addressing these concerns with ten tips to safer online transactions.
These tips include detail on reading the dreaded terms and conditions, checking statements, making a claim and guarding your PIN codes. Read them here.
The Australian Securities & Investments Commission has also produced a plain language guide to the EFT code, Using electronic funds transfer: your rights. read it online or get a free copy of the brochure by contacting Infoline on 1300 300 630 or by email to
More Retirement Dollars
New research shows that Australians could be almost 25 per cent better off in an industry super fund. Over a 40-year working life, this could mean having more than $127,000 at retirement.
Unlike many retail funds, industry funds have lower fees and don’t pay commissions. Check your super company’s ‘net benefit to member’ figure, which takes into account fees, commissions and taxes as well as investment returns to members. The ‘net benefit to member’ figure gives you a simple way to compare what super funds can do for you over the long term.
Go there
Protect Yourself
Another new website is all about protecting your financial identity in everyday life. It’s packed with practical information and tips about staying secure – in the home and online.
The Australian Bankers’ Association (ABA), the Australian High Tech Crime Centre and the Australian Securities and Investments Commission (ASIC) have worked together on this website with the aim of helping prevent cyber-crime and arming individuals with a few simple ways they can help themselves keep their financial information safe.
You can even take an online quiz to find out how safe your current practices are.
Go there
Credit Card Scam
Telephone scammers are getting more and more devious. @boutSeniors has been informed by a subscriber that this caller does not ask for your card number; in fact, they already have it. It may be worth reading this – it’s too easy to be taken off guard by someone who sounds genuine and above board.
The scam works like this:
Person calling says, “This is [name], and I’m calling from the Security and Fraud Department at VISA [or Mastercard]. My Badge number is 12460. Your card has been flagged for an unusual purchase pattern, and I’m calling to verify. This would be on your VISA card which was issued by [name of bank]. Did you purchase an Anti-Telemarketing Device for $497.99 from a marketing company based in Arizona?”
When you say “No”, the caller continues with, “Then we will be issuing a credit to your account. This is a company we have been watching and the charges range from $297 to $497, just under the $500 purchase pattern that flags most cards. Before your next statement, the credit will be sent to [gives you your address], is that correct?”
You say “yes”. The caller continues, “I will be starting a fraud investigation. If you have any questions, you should call the 1-800 number listed on the back of your card (1-800-VISA) and ask for security. You will need to refer to this Control Number. The caller then gives you a six-digit number. “Do you need me to read it again?”
Here’s the important part on how the scam works. The caller then says, “I need to verify you are in possession of your card”. He’ll ask you to “turn your card over and look for some numbers”. There are seven numbers; the first four are part of your card number, the next three are the security numbers that verify you are the possessor of the card. These are the numbers you sometimes use to make internet purchases to prove you have the card. The caller will ask you to read the three numbers to him. After you tell the caller the three numbers, he’ll say, “That is correct, I just needed to verify that the card has not been lost or stolen, and that you still have your card. Do you have any other questions?” After you say “No,” the caller then thanks you and states, “Don’t hesitate to call back if you do,” and hangs up.
You actually say very little, and they never ask for or tell you the card number. But after we were called on Wednesday, we called back within 20 minutes to ask a question. Are we glad we did! The REAL VISA Security Department told us it was a scam and in the last 15 minutes a new purchase of $497.99 was charged to our card.
What the scammers want is the three-digit PIN number on the back of the card. Don’t give it to them. Instead, tell them you’ll call VISA or Master card directly for verification of their conversation. The real VISA told us that they will never ask for anything on the card as they already know the information since they issued the card! If you give the scammers your three-digit PIN Number, you think you’re receiving a credit. But by the time you get your statement you’ll see charges for purchases you didn’t make, and by then it’s almost too late and/or more difficult to actually file a fraud report.
If this happens to you, file a police report. The police say they are taking several of these reports daily!
Finance Resources
Australian Securities and Investment Commission
ASIC’s consumer watchdog site, FIDO, has advice on shares, investment basics, managed funds, master trusts and wrap accounts, superannuation, insurance, deposit accounts, scams, email fraud, company information, making complaints, getting good advice, and a great deal more readily accessible information. Available on the site is their Financial Information Directory which has information on over 300 Australian websites, pamphlets, brochures, kits, and other resources about financial products and services.
Go there
Also available on the site is the ASIC publication "Don’t Kiss Your Money Goodbye," a step by step guide to choosing the right financial adviser. On FIDO you can now read "Don’t Kiss" online or download an A4 version which has been specially prepared for easy printing:
Go there
10 tips for safer electronic banking is another valuable guide from ASIC’s FIDO.
Go there
And if you never seem to have enough money, try FIDO’s Budget Planner.
Go there
Australian Investors’ Association
"Investors Helping Investors." Activities of the AIA cover most aspects of investing: the main asset classes; portfolio management tools; and some of the structures (superannuation, trusts etc). Many members want to learn more about investing; some want to share their experiences with others; and some want to see that the individual investor gets a "fair go".
Go there
Australian Shareholders’ Association
The ASA protects and advances the interests of all investors. Its vigilance and persistence in matters such as related party transactions, the disclosure of remuneration and executive option scheme performance hurdles have contributed to significant improvements in the corporate governance of Australian companies. Members are encouraged to attend regular information meetings in Sydney, Melbourne, Brisbane, Perth and Adelaide. Investor Relations Committees meet regularly to monitor company activities.
Go there
Department of Family and Community Services
FaCS and the National Information Centre on Retirement Investments, Inc. (NICRI) have jointly written "Investing Money - Your Choices" to help you understand your options so you can get the best from your savings and investments both before and after you retire.
Go there
Complaints
If you need help to make a complaint about a financial institution please check our Advocacy and Dispute Resolution page.
Go there
Counselling and Financial Difficulty
- The Australian Government funds community organisations to provide free financial counselling services to low income earners who are experiencing financial difficulties. Find out about the Commonwealth Financial Counselling Program (CFCP) and other financial counselling services, and see the directory of organisations providing CFCP services:
Go there
- Centrelink’s Financial Information Service offers counselling. See below.
- Telstra has an "Access for Everyone" package for those in financial difficulty. It offers free or discounted ways to maintain contact with friends and family, and be contactable for employment, emergency or medical needs. Find out about the services and their eligibility criteria:
Go there
FaCS Booklet
FaCS also publishes Australian Retiree - Your Choices, which is designed to help self-funded retirees, including those living on superannuation, maintain their chosen retirement lifestyle. This booklet is a starting point for finding out about information or assistance from federal, state or territory governments and community support groups. There is information on the very wide range of the programs, services and options on offer. You can download this booklet entitled Australian Retiree - Your Choices
Go there
Financial Institution Information
- Australian Credit Union Network
Prepared by Credit Union Services Corporation (CUSCAL) which represents 88% of credit unions in Australia this site tells you about credit unions. You can also access the credit union directory and find a credit union by locality, and there is a listing of credit unions with web sites.
Go there
- Authorised Deposit-taking Institutions
For a complete list of ADIs go to The Australian Prudential Regulation Authority (APRA) site. It lists banks, building societies, credit unions, other ADIs and ADIs in liquidation. Here you can confirm if an organisation is authorised to take deposits.
Go there
- Banking
The Australian Consumers’ Association publication "Choice" has some useful articles on "Everyday Banking and Savings." Here’s some practical advice in easy-to-understand articles, including: - Cash management trusts: get more from your cash.
- How to vote with your feet (changing banks).
- How to get a better deal from your bank.
- Electronic banking.
Go there
- Bankchoice
Detailed info on home loans, personal loans, credit cards, term deposits, debentures, internet banking, bank fees and rates, calculators, tips and tricks, advisory articles, and more.
Go there
- CANNEX
Comprehensive comparative information on a wide variety of financial products including cash management accounts, term deposits, mortgages, credit cards, secured and unsecured personal and small business loans, margin loans, bonds and debentures. Links to InfoMediaries such as AFR, BRW, ninemsn, Telstra and others. The site also has a listing of links to many financial institutions. Mortgage and savings calculators are available from this site.
Go there
Financial Information Service
Centrelink’s Financial Information Service is a free and independent service available to anyone. You do not have to be getting a payment from Centrelink to use this service. Find out how this service can help you:
Go there
Financial Planning
- Financial Passages Online
This site welcomes you with: "financial passages is the complete site for all you need to know about money!" It has some excellent sections for Seniors and those planning their retirement, including: - Living in Retirement, which looks at retirement income streams, pensions and annuities - in fact, everything over 55’s need to know to make the most of retirement.
- Planning for the Future, a comprehensive financial guide for people facing redundancy.
Go there
- Financial Planning Association of Australia (FPA)
General information on financial planning, choosing a financial planner, understanding risk, search for an FPA member.
Go there
- Investment Advisers
All investment advisers must be licensed by the Australian Securities and Investments Commission (ASIC). Generally the license is held by a company who appoints authorised representatives. You can check ASIC’s web site for investors to see if a person is an authorised representative (go to "Check ASIC’s Databases" from the link below), and for other investment information:
Go there
- National Information Centre on Retirement Investments
NICRI is a free, independent, confidential service which aims to improve the level and quality of investment information provided to people with modest savings who are investing for retirement or facing redundancy. Changes not only occur to investment products but to legislation, social security and veterans’ affairs rules and taxation laws. The role of NICRI is to help provide up to date independent information to assist people to make the best possible investment decisions they can. NICRI operates a free telephone service for anyone needing information on investment products, to discuss their financial situation or to obtain details on where to find further assistance. Also, there are leaflets on many financial topics available for downloading from their web site. Go to "Publications":
Go there
Freecall1800 020 110
"Australia’s premier retirement planning and lifestyle journal." This national colour magazine for seniors has articles of interest, ability to subscribe, and growing data base for those planning and entering retirement.
Go there
- Wealth Creation
This 35 page booklet introduces long-term strategies used to build wealth. It is designed to improve your understanding of investing. Setting yourself on the path to financial independence involves more than owning a parcel of shares or buying an investment property. This is one of of a series of 11 booklets produced by the Credit Union Services Corporation (CUSCAL)
Go there
Home Loans - eChoice
An independent and free service which finds the best deal for a home loan or car insurance for you. Answer a few simple questions and their technology and people will do the rest. There are 19 lenders participating in mortgage lending and 10 in the insurance panel.
Go there - The online version of "Your Mortgage Magazine" has just about everything you could want to know about essential mortgage information, mortgage comparison tables updated daily (these include the real interest rate), tools and calculators for all manner of things dealing with mortages and the home, links in the finance field, and stories of interest.
Go there
Managed Funds Commonwealth Securities
From this Commonwealth Bank site you can search and compare over 200 unlisted managed funds, compare performances and view fund profiles.
Go there
Understanding Money
The Australian Government website, ‘Understanding money’, contains useful and easy-to-navigate information on a full range of money matters. You can also order a free booklet or find out about free seminars in your area.
The website offers information topics from how to start getting your financial house in order to specific advice on budgeting, retirement planning and managing debt. There are also useful tools such as budget and loan calculators, advice on where to go for complaints disputes, and insurance and other consumer related advice, such as what to look for when choosing a mobile phone. Some of the information is packaged in groups around issues such as ‘Losing your partner’, ‘Getting a windfall’, or ‘Losing your job’.
It’s easy to find what you’re looking for and there are many useful links to related organisations . There’s something for everyone, so it’s perfect for pre-retirees, retirees, young adults starting out or anyone going through a change in life circumstances which is affecting their financial situation.
Go there
Savings To Be Made
MoneyMinded is a new free online financial education program designed for everyday Australians. Designed by the ANZ and financial counselors it was created in response to research which revealed the lack of financial literacy.
Visitors to the site can learn about planning and saving (including how to budget, set goals and avoid spending traps) in the Planning & Saving online tutorial.
They can also learn about everyday finances, loans and credit, superannuation and investment basics.
ANZ conducted research into Australia’s financial literacy which indicated that 20% of people with the lowest financial literacy were over-represented by:
- those with lower education levels;
- those not employed;
- people with lower incomes;
- low savings and;
- people at both extremes of the age profile (18 - 25 and 70 +).
ANZ initiated the development of the original MoneyMinded Workshops as part of its commitment to address the issues identified in the ANZ financial literacy survey. Over 5,000 Australians participated in the MoneyMinded Workshops across Australia. The program has since been re-devolved to cater for all Australians through the online course.
MoneyMinded online was developed by ANZ’s Corporate Affairs and Community Relations teams in conjunction with an external provider - The Learning Group - and contributions from financial counsellors. The program meets the Australian Financial Literacy Foundation’s Essential Elements eligibility and assessment requirements.
Interestingly, despite our increasing life expectancy, very few people have actually worked out how much they need to save for their retirement - highlighting the need for further financial education.
Go there
Credit Offers
Do you frequently receive offers from your bank – or banks – for increased credit limits on your Visa or MasterCard? I received yet another personally addressed letter the other day, offering me a $4000 increase in the credit limit. I don’t know who to respond to, as the letter is from ... well….no one really, just “Consumer Finance”. And it made me start wondering if we do indeed have a problem with household debt, whether such letters were responsible, or perhaps whether the appropriate regulatory body (ASIC) should consider the moral issues attached to such easy access to finance.
It’s difficult to resist such offers if you have a large bill due, or might like to buy something special – and it’s easy to ignore the fact that the money will need to be paid back – with interest. So my small protest at having this debt promotion foisted upon me was to tear up the letter of offer, write no thanks on one of the pieces, and to shove them all into the postage paid envelope and put it in the mail. It’s bad enough when these potential traps are sent to income earning adults, but I am aware of 18-year-olds also being offered thousands of dollars of credit, based on very little real earning power. Dear ANZ, Westpac, CBA and NAB, it’s time you followed through on the marketing messages of how much you care … and stop sending offers of easy credit to those who can’t afford it.
Email your thoughts here
Tax
The Australian Tax Office (ATO) has made a few changes to superannuation splitting, capital gains tax and the medical expenses tax offset. And as a senior, you may be able to pay less tax this year. Sound good?
Want to pay less tax? You may be eligible for the senior Australians tax offset, which allows you to earn more income before you have to pay tax and the Medicare levy. In some cases you may not have to lodge a tax return any more. The ATO website has information on eligibility and an online calculator.
Go there
If you make a super contribution directly to your spouses account, you may now be able to claim a tax offset, provided your spouse's assessable annual income plus fringe benefits is less than $13,800. That's not the same as if you make a personal contribution to your own super fund and split part of that to your spouse's account.
If you have a self-managed super fund, you may have received returns of capital (or non-assessable amounts) in respect of listed company shares you own. This could affect your tax as shares may make capital gains which must be declared in your 2005–06 tax return.
Thinking of some cosmetic surgery? Or having your teeth done? Be aware that payments for cosmetic operations which don't get a Medicare benefit and dental treatments which are solely cosmetic no longer qualify for the medical tax offset.
Choosing an Adviser
ASIC’S tips for choosing a financial advisor
The Australian Securities and Investments Commission (ASIC) has offered six useful strategies for consumers in search of a financial adviser. These are a summary of the information contained in the free booklet, Getting Advice , which ASIC has jointly produced with the FPA.
Many people feel that they want or need financial advice, but find the hardest thing is knowing how to choose the right financial adviser. Mr. Greg Tanzer, ASIC’s Executive Director of Consumer Protection, offered the following tips for choosing a financial adviser:
- Deal only with professional financial advisers and planners who hold an Australian financial services licence (AFSL), which is provided by ASIC. Otherwise, they must be employed by, or authorised to represent, a business that is licensed by ASIC. This can be checked on ASIC’s consumer website, FIDO or by phoning ASIC’s Infoline on 1300 300 630.
- Think about your financial situation and what financial goals you want to achieve. For example, do you want to save for a comfortable retirement or pay for your children’s education? This will help you work out whether you need financial advice, and if so, what you want advice about.
- If you decide you need professional advice, talk to family, friends or work colleagues to see if they can recommend anyone to you. Organisations such as the Financial Planning Association (FPA) or CPA Australia can also refer you to a member financial adviser in your local area.
- Speak to a few financial advisers from different firms before deciding who to get advice from. Ask each one to send you their financial services guide, which they must produce by law. Check if the services offered suit your needs.
- Ask about the financial adviser’s experience and qualifications. If you have a particular financial goal, then it makes sense to choose a financial adviser with expertise in your particular area.
- Always ask about what the advice will cost. Expect to pay for professional advice. Some financial planners operate on a flat-fee basis, whilst many others receive commissions if you invest in particular financial products. This has the potential to create a conflict of interest between what’s good for you and what’s good for the financial planner. Good financial planners will always put your interests first.
- Find out whether there are any restrictions on the financial products that the financial adviser can recommend. Some advisers are limited to financial products issued by the organisation they work for, or their parent company. Unless you’ve decided that you especially want one of those financial products, this won’t necessarily suit your needs. Even if the product is suitable, there may be other less expensive alternatives that are just as good or even better.
Copies of Getting Advice can be downloaded from ASIC’s consumer website, FIDO or by calling ASIC’s Infoline on 1300 300 630.
ASIC Helps You Rate Risk
The Australian Securities & Investments Commission (ASIC) has launched a risk and returns calculator to assist people to compare the return offered by a proposed investment with the relevant sector of the overall market, to see if there are any obvious danger signs.
Returns which are higher than the current going rate involve higher risks which potential investors need to understand. The calculator is designed to give consumers a feeling for what is a reasonable rate of return and a reasonable time to hold various types of investments, so they can make better-informed choices.
The calculator covers cash or fixed interest assets for income, property or shares for capital growth, or a balanced option of 30 per cent income and 70 per cent growth that is commonly used by super funds. It offers simple, tailored messages relating to an investment proposal, based on advice ASIC has obtained from licensed actuaries’, ASIC’s Greg Tanzer says.
“It will especially help people who are just starting to invest or who have limited experience’.
@boutSeniors roadtested the calculator by entering a property investment which would return 12% over a three year period. The verdict? FIDO says “Your proposal is high risk, stop and reconsider” and then goes on to explain why.
Test it yourself here.
The calculator is not designed to replace the need for a qualified professional, just to help people assess risk.
Imagine
The hours you waste comparing deals for electricity or phone services could be better spent enjoying the time such technology is supposed to free up. A new company claims to be able to simplify the process and save you time and money.
You don’t need to read the statistics to know that frustration levels quickly rise when trawling through the myriad of offers for essential services or being put on hold for what seems like hours as you wait to ask a simple question. Somewhere there’s a feeling that you might be able to get a better deal if you just had some inside information.
Imagine Essential Services is a new Australian company that provides consumers with tailored, personal advice on essential services including gas, electricity, telecommunications and even petrol. You join as a member – for free. Imagine’s licensed advisors make their money through commissions paid to them by the service providers.
You talk to one person only, so you don’t have to re-tell your circumstances to a different consultant every time you call. Your personal advisor will meet with you,
look at your current usage habits and how much you pay, then come back with a new, more efficient plan for how to streamline your services and save money. Ask them as many questions as you want before you decide. There’s no obligation to take their recommendations, but if you do, the advisor can help you through the service provider change over, which can also be an involved process.
Visit Imagines website which is loaded with information.
Go there
Phone 1300 Imagine
Low Cost Credit
BankWest Retail Chief Executive, Mr. Chris Whitehead, believes that consumers are seeking a card which is easy to get, easy to use and, importantly, easy to understand, with research showing Australians wanting a low rate credit card without expensive programs and perks that many people don’t need or use.
Strong growth is expected in the low rate credit card market in Australia. Approximately 20% to 25% of U.K. and U.S. credit cards are classed as low rate, while in Australia, that figure is 12%. Market observers estimate the low cost credit card segment in Australia will reach similar levels as Britain and the U.S. over the next three to five years.
Features of the new card are:
- Ongoing interest rate: 8.99% p.a.
- Up to 55 days interest free
- Annual fee: $49
- Introductory balance transfer offer:
- 2.99% for first six months
- Cash advances: 19.99% p.a.
The BankWest Lite MasterCard is available for new and existing customers.
Go there Phone 13 17 20.
Retirement Calculator
Allocated pensions are a popular form of retirement income streams which can be purchased with superannuation. They can also be a highly tax-effective method of accessing your super. But comparing them is often a nightmare. So you can evaluate how different product fees affect the regular income payments you receive in retirement, ASIC has developed an online allocated pension calculator.
Available on the FIDO website the allocated pension calculator looks at varying factors, including fees and investment strategies, on the amount you can draw down and how long this income stream might last. @boutSeniors test drove the calculator and found it fairly challenging. Make sure you download the seven-page PDF explaining how the calculator works before you try it out. If you are already receiving an allocated pension you will need your latest member statement or annual benefit statement.
If you have yet to purchase an allocated pension, you will need the most recent product disclosure statement in order to extract the information on management and adviser fees and costs etc. If you’re not the full bottle with financial services, nor an accounting guru, we suggest that you use this calculator in good company – such as your family accountant.
Test it for yourself and tell us your thoughts.
Working over 70 – Do the Dollars Add Up?
For those who wish to work beyond the age of 70, there appears to be a penalty, with employers no longer required to pay the guaranteed super contribution on their behalf. This would seem to work against the need for retention of older workers.
This penalty was the subject of a recent article by Anne Lampe in The Age money section, which gives an excellent summary of what older workers are dealing with.
Go there
Spending the Kids Inheritance?
Although people may be attracted in theory by the idea of bequeathing a house or money to family or friends when they die, new research in Britain has found that two out of three adults with the means to make a bequest say they plan to enjoy life and not worry too much about leaving a legacy.
Results of the first-ever national survey of attitudes to inheritance, carried out for the Joseph Rowntree Foundation, show that people tend to take a relaxed view. Even among pensioners, a majority reject the idea that older people ought to be careful with their money, so they can bequeath something when they die. Little more than a quarter of those with the potential to make a bequest say they will deliberately budget to do so. For more information [see doc inheritance]
The study, by Karen Rowlingson of Bath University and Stephen McKay of Bristol University, also reveals widespread misunderstanding about liability for inheritance tax. Although the tax was highly unpopular, only a small minority of those surveyed knew it had been levied on just 6 per cent of estates during the previous year.
The study, based on interviews with a representative national sample of 2,000 adults found that:
- Almost half (46 per cent) had inherited something, but most of the sums involved were small. The 5 per cent who had inherited £50,000 or more were for the most part already affluent.
- The most common source of inheritance was parents (39 per cent), followed by grandparents (31 per cent). White owner-occupiers from the professional classes were the most likely to receive a bequest, especially one of much value.
- More than half those interviewed thought it unlikely they would inherit any property. But 14 per cent expected to do so and another 14 per cent thought it likely. Younger people with home-owning parents had the greatest expectations of an inheritance.
- While the vast majority (85 per cent) said they would like to be able to leave a legacy, half strongly agreed that older people should ‘enjoy their retirement and not worry about leaving an inheritance’. Another 38 per cent tended to agree.
- Nine out of ten people reported having the potential for them to leave a bequest. Most of them thought it was very important (15 per cent) or fairly important (50 per cent) to leave an inheritance. Yet 67 per cent agreed they would ‘enjoy life and not worry about bequests’ compared with 28 per cent who accepted they would ‘be careful with money to leave bequests’.
- People in their 50s were least convinced of the need to budget for inheritance. However, even among people over 80, a majority (54 per cent) thought it more important to enjoy life than worry about leaving a legacy.
- There was more support among men (21 per cent) than women (16 per cent) for the view that older people should budget in order to bequeath. But Black (35 per cent) and Asian (52 per cent) people were much more likely to agree with this than White interviewees (16 per cent).
Australian Taxation Office
For those struggling with tax returns, there is a free service by volunteers accredited by the ATO. Operating from different community centres, volunteers can assist with tax returns ( Paper or Electronic Lodgement ) for people on low incomes, Managed funds, Shares, Capital Gains / Loss & also Rental Properties depending on the accreditation of the volunteer. Volunteers will be contactable via the ATO in July.
The Tax Office’s website provides current reliable information about tax issues. You will find a range of publications, tools and calculators to help you get your tax right.
You can also phone the Tax Office on 13 28 61 between 8am and 6pm on weekdays.
Savings Made Simple
Do you know the secret to saving money? Simply saving more, and spending less is often the best answer to funding your retirement. A website devoted to ideas on how to save more is an excellent starting point for those keen to stretch their income for more information. Subscribe to the free newsletter, The Secrets to Saving Money in Australia, and check out the budget tip sheets on the site. The website also has an abundance of archived information on past hints to save dollars. Highly recommended.
Go there
Seeking a Tax Agent
The ATO has reminded Australians who use a tax agent to prepare their return to check that the agent is registered. This reminder comes after two companies were sentenced in the Downing Centre local court for breaches of the Tax Act and fined over $8,000. You can check if your tax agent is registered simply by checking online.
The companies H L & Associates Pty Ltd & H Lal & Associates were found guilty of falsely advertising as registered tax agents and charging clients a fee to prepare tax returns.
Only a registered tax agent can charge a fee to prepare and lodge your return, so it’s important to check you are using a registered tax agent. A list of registered agents can be found at www.tabd.gov.au. This website also contains a list of the responsibilities and obligations of a tax agent - a handy checklist for the service you receive. You can also check with the Tax Agents’ Board on 1300 362 892.
A loan from the government? You’re joking!
Australian Securities and Investment Commission
ASIC’s consumer watchdog site, FIDO, has advice on shares, investment basics, managed funds, master trusts and wrap accounts, superannuation, insurance, deposit accounts, scams, email fraud, company information, making complaints, getting good advice, and a great deal more readily accessible information. Available on the site is their Financial Information Directory which has information on over 300 Australian websites, pamphlets, brochures, kits, and other resources about financial products and services.
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Also available on the site is the ASIC publication "Getting advice", a step by step guide to choosing the right financial adviser. On FIDO you can now read "Don’t Kiss" online or download an A4 version which has been specially prepared for easy printing:
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10 tips for safer electronic banking is another valuable guide from ASIC’s FIDO.
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And if you never seem to have enough money, try FIDO’s Budget Planner.
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Australian Investors’ Association
"Investors Helping Investors." Activities of the AIA cover most aspects of investing: the main asset classes; portfolio management tools; and some of the structures (superannuation, trusts etc). Many members want to learn more about investing; some want to share their experiences with others; and some want to see that the individual investor gets a "fair go".
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Australian Shareholders’ Association
The ASA protects and advances the interests of all investors. Its vigilance and persistence in matters such as related party transactions, the disclosure of remuneration and executive option scheme performance hurdles have contributed to significant improvements in the corporate governance of Australian companies. Members are encouraged to attend regular information meetings in Sydney, Melbourne, Brisbane, Perth and Adelaide. Investor Relations Committees meet regularly to monitor company activities.
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Counselling and Financial Difficulty
- The Australian Government funds community organisations to provide free financial counselling services to low income earners who are experiencing financial difficulties. Find out about the Commonwealth Financial Counselling Program (CFCP) and other financial counselling services, and see the directory of organisations providing CFCP services.
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- Centrelink’s Financial Information Service offers counselling. See below.
- Telstra has an "Access for Everyone" package for those in financial difficulty. It offers free or discounted ways to maintain contact with friends and family, and be contactable for employment, emergency or medical needs. Find out about the services and their eligibility criteria:
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Centrelink’s Financial Information Service is a free and independent service available to anyone. You do not have to be getting a payment from Centrelink to use this service. Find out how this service can help you:
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- Australian Credit Union Network. Prepared by Credit Union Services Corporation (CUSCAL) which represents 88% of credit unions in Australia this site tells you about credit unions. You can also access the credit union directory and find a credit union by locality, and there is a listing of credit unions with web sites.
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- Authorised Deposit-taking Institutions. For a complete list of ADIs go to The Australian Prudential Regulation Authority (APRA) site. It lists banks, building societies, credit unions, other ADIs and ADIs in liquidation. Here you can confirm if an organisation is authorised to take deposits.
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- Bankchoice. Detailed info on home loans, personal loans, credit cards, term deposits, debentures, internet banking, bank fees and rates, calculators, tips and tricks, advisory articles, and more.
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- CANNEX. Comprehensive comparative information on a wide variety of financial products including cash management accounts, term deposits, mortgages, credit cards, secured and unsecured personal and small business loans, margin loans, bonds and debentures. Links to InfoMediaries such as AFR, BRW, ninemsn, Telstra and others. The site also has a listing of links to many financial institutions. Mortgage and savings calculators are available from this site.
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Financial Planning
- Financial Passages Online. This site welcomes you with: "financial passages is the complete site for all you need to know about money!" It has some excellent sections for Seniors and those planning their retirement, including:
- Living in Retirement, which looks at retirement income streams, pensions and annuities - in fact, everything over 55's need to know to make the most of retirement.
- Planning for the Future, a comprehensive financial guide for people facing redundancy.
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- Financial Planning Association of Australia (FPA). General information on financial planning, choosing a financial planner, understanding risk, search for an FPA member.
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- Investment Advisers. All investment advisers must be licensed by the Australian Securities and Investments Commission (ASIC). Generally the license is held by a company who appoints authorised representatives. You can check ASIC's web site for investors to see if a person is an authorised representative (go to "Check ASIC's Databases" from the link below), and for other investment information:
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- National Information Centre on Retirement Investments. NICRI is a free, independent, confidential service which aims to improve the level and quality of investment information provided to people with modest savings who are investing for retirement or facing redundancy. Changes not only occur to investment products but to legislation, social security and veterans' affairs rules and taxation laws. The role of NICRI is to help provide up to date independent information to assist people to make the best possible investment decisions they can. NICRI operates a free telephone service for anyone needing information on investment products, to discuss their financial situation or to obtain details on where to find further assistance. Also, there are leaflets on many financial topics available for downloading from their web site. Go to "Publications":
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Freecall 1800 020 110
- "Australia's premier retirement planning and lifestyle journal." This national colour magazine for seniors has articles of interest, ability to subscribe, and growing data base for those planning and entering retirement.
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- Wealth Creation. This 35 page booklet introduces long-term strategies used to build wealth. It is designed to improve your understanding of investing. Setting yourself on the path to financial independence involves more than owning a parcel of shares or buying an investment property. This is one of of a series of 11 booklets produced by the Credit Union Services Corporation (CUSCAL)
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Home Loans
- eChoice. An independent and free service which finds the best deal for a home loan or car insurance for you. Answer a few simple questions and their technology and people will do the rest. There are 19 lenders participating in mortgage lending and 10 in the insurance panel.
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- The online version of "Your Mortgage Magazine" has just about everything you could want to know about essential mortgage information, mortgage comparison tables updated daily (these include the real interest rate), tools and calculators for all manner of things dealing with mortages and the home, links in the finance field, and stories of interest.
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Managed Funds
Commonwealth Securities. From this Commonwealth Bank site you can search and compare over 200 unlisted managed funds, compare performances and view fund profiles.
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Scams
There are all together too many people seeking to trick you into parting with your money. Fortunately there is plenty of good advice about scams and how you can protect yourself. Don’t ignore it!
- Australian Securities and Investment Commission’s (ASIC’s) consumer site covers scams and swindlers, overseas offers by phone, investment seminars, spam scams, and lots more.
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- Consumers Online is the Australian Government’s one stop shop for consumer information.
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- The Hard Sell is the latest weapon in the consumer battle against scammers. It is a 54-page free guide from the Queensland Department of Fair Trading which is designed to help consumers identify common scams and deal effectively with high pressure sales techniques in a variety of situations. It offers tips on how to recognise scams and hard sell tactics, provides an outline of what the law says about these tactics, case studies, and information on where consumers can go for help if they are targeted. You can download it.
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- Internet Scambusters, find out about the latest scams and archived earlier ones. Also covers credit card fraud, spam, viruses and more.
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- National Consumers League’s National Fraud Information Center. This US site covers all manner of frauds, including internet fraud, telemarketing fraud and fraud against the elderly.
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- Scamwatch is a site of the Australian Ministerial Council on Consumer Affairs (MCCA). It’s very easy to navigate and find out about pyramid schemes, amazing offers and demands, investment scams, door-to-door scams, medical scams (such as weight loss and miracle cures), internet fraud, and self employment schemes (make heaps of money with little effort).
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- Some state government Consumer and Fair Trading departments web sites have comprehensive information on scams.
- See the NSW Office of Fair Trading website Scam Smart with comprehensive information on how cheats try to get your money and how to avoid getting caught.
- Also see the Queensland Office of Fair Trading. The site also highlights current scams.
- Mail scams (fraudulent schemes using the post) are common and come in a variety of forms. Scammers tend to target older people. Find out how to avoid mail scams and how to help others: Queensland Office of Fair Trading.
- It’s also worth visiting the SA Office of Consumer and Business Affairs where there are details on the scams in South Australia, and you can be sure they are in other states and territories as well.
Share Market
- Australian Stock Exchange Limited. The ASX operates Australia’s primary national stock exchange for equities, derivatives and fixed interest securities and facilitates capital raisings for unlisted companies. There are comprehensive details about the equity (share) market, options, warrants, and other markets including interest rate, plus market statistics, company information including web address, floats, and investor courses and services. Check share prices online.
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- BrokerChoice is part of the InfoChoice site which offers a range of online broker product features with tables and tools to help you choose the one that’s best for you. InfoChoice offers many other comparisons including financial institutions’ products, margin lending, warrants, local phone call comparisons, mobile phones, airline fares, and information for the rural sector.
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- Investor, ninemsn’s site with comprehensive details on market reports and news, share quotes, charts and company information, managed funds, help to find an investment, and more. The site also has links to other ninemsn finance sites such as the TV program "Money".
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- InvestorWeb. This website was launched in January 1998 as a showcase for InvestorWeb’s quality Shares and Managed Investments research. It has comprehensive information on markets, shares, funds, property trusts, investment advice, and a great deal more.
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- Superstar Investor "provides descriptive summaries and more than 20,000 links to the best investing sites on the Internet." It’s a US site but it covers the world with plenty of links to resources in Australia. Superstar Investor provides easy access to business and financial news, online broker ratings, interactive charts, U.S. and international stock indexes, technical analysis, and lots more besides.
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Taxation - Are You Paying Unnecessary Tax?
TOP 10 Tax Return Errors and Most Forgotten Deductions
Tax time is just around the corner, but it is highly unlikely that Australians will claim all the tax deductions they’re entitled to according to new survey results from Count Wealth Accountants. The company surveyed its network of more than 450 accounting practices Australia-wide asking them to rank the top 10 most forgotten deductions and offsets and the top 10 most frequent errors people make in tax returns. Count performed a similar survey in 1999 and the current results show that Australians are continuing to make many of the same mistakes. Capital Gains Tax and depreciation matters both ranked highly as common tax errors. In this year’s survey, 68% of respondents named omitting interest as the number one tax error – a repeat of the 1999 survey. This includes any interest earned from a bank account, credit union or building society. It is a challenge to keep up to date on deductions, and if you feel you are not abreast of new information, you should seek professional guidance.
From the 2005 survey:
Top 10 Most Common Errors in Tax Returns
- Omitting interest
- Capital gains/losses incorrect or omitted
- Omitting investment returns
- Understating income
- Depreciation - fittings rental properties
- Depreciation - income producing buildings
- Dividend imputation franking credits incorrect or omitted
- Home Office Expenses
- Borrowing costs - negative gearing
- Travel between home and work (if not usual place of employment)
Top 10 Most Forgotten Deductions and Offsets - Depreciation - income producing buildings
- Medical expenses tax offset
- Postage/phone calls relating to investment advice
- Depreciation - fittings rental properties
- Borrowing costs - negative gearing
- Travel to investment seminars
- Income Protection Insurance (sickness & accident)
- Travel between two separate work places
- Investment advice (ongoing, not initial)
- Travel between home and work (if not usual place of employment)
