Text Size
Successful investment is not about reacting to market turbulence. It is based on a clear understanding of the long-term nature of wealth creation and how making sensible, unemotional decisions about where and when you will invest. This week we share a downloadable PDF on the Ten Worst Money Mistakes – and how to avoid them written by financial services guru, Louise Biti.
It’s hard to sit tight in a falling stock market, grin and bear it, stay calm. So this week we are offering a useful “how-to” on What to do when the market falls. Written by Dante de Gori, Technical Manager of Clearview Retirement Solutions, it offers a plain-English understanding of how a “steady as she goes” approach to the stock market can result in a more predictable retirement income in a downloadable PDF format. Written before the very sharp falls in recent weeks, it nevertheless shows how you can manage your holdings – even in times of volatility.
Quite often, women are happy to leave the financial dealings of a household to their spouse or partner but it is important for all individuals to empower themselves financially.
The Financial Literacy Foundation has launched a series of Women understanding money information sheets that discuss issues and offer hints, jargon busters and anecdotes about financial issues affecting women at various life stages.
This free initiative is part of the Foundation’s overall Understanding money initiative. For more information, visit Understanding money.
Making the most of your retirement fund can be as simple as ensuring you’re savings are achieving the best interest rates around.
Online financial services company, Artog, has launched a tool that lets you find the highest interest rate for your savings among most of the major financial institutions in Australia. Simply enter the amount to be saved, then Artog will list the accounts available, their interest rates, if there’s a minimum account balance requirement and how often interest is paid.
Find out how much your savings could be making you in interest.
Its official, Australia has avoided recession… just! Actual economic recovery may be some time off, with other western countries battling with their own financial problems. If we listen to the experts, now may be the best time to invest in the share market but who has the courage to do so? Understanding your options may help take some of the fear out of investing. About Seniors downloadable PDF, Asset classes explained, will help you to understand how to spread your risk and reap the benefits.
Voluntary redundancy or early retirement may seem like an attractive option. Tax-free limits may apply to your payment but there are conditions that must be met.
Firstly, to qualify for any tax concessions, your redundancy must be bona fide and meet the criteria set out by the ATO. If it does not meet the criteria, then you can say goodbye to any tax benefits.
Before a payment is tax free up to the limit, your employer (Early Termination Payment) ETP needs to meet all of these conditions:
· the payment is more than the amount the employer would have paid to the employee, if the employee voluntarily resigned or retired in other circumstances
· the termination of employment is before the employee turns 65 and earlier than the date the employee would have left their employment anyway
· the employer does not have any agreement with another person to re-employ the employee
· if the employer is related to the employee in some way, the payment is not more than it would have been if the employer and the employee were not related (known in tax law as dealing with each other at ‘arm’s length’)
· if the payment is an early retirement scheme payment, the Commissioner of Taxation has approved the early retirement scheme, and
· if the payment is a redundancy payment, the redundancy is genuine.
For more information on ETPs and how they may benefit you, visit the ATO.
Going green with your energy doesn’t need to cost the earth you’re trying to save.
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.
For those living elsewhere in Australia, it’s still worthwhile contacting your energy supplier and checking that you are on the best plan for the amount of power you use.
Getting ready for tax return time will help take some of the stress out of completing your tax return and will make sure you get any tax refund quicker!
The records you should have ready are:
· tax file number
· spouse’s tax file number
· spouse’s date of birth
· bank account details
· financial statements showing the total amount of interest earned
· share dividend remittance advices
· details of any assets you have sold during the financial year
· business income records
· income from rental property details
· foreign investment income details
· Centrelink payment summaries
· receipts for taxable deductions
· vehicle log book if using your vehicle for business purposes
· spouse’s taxable income
· previous year’s tax return
Once the tax year has ended at the 30 June, you should receive a group certificate from your employer and an end of year statement from your health fund. This will tell you if you need to claim the 30% rebate.
When you have collected all the information, you’re ready to submit your tax return. Why not try the ATO’s Personal Tax record keeper to get all your information in order?
Getting behind with your tax returns can be stressful, as About Seniors subscriber, John has discovered. Fear not, help may be available.
Q. John
I am on a disability pension and am desperately seeking help. I need to lodge multiple tax returns dating back to 2003. This has not only become very stressful for me, but could be financially difficult due to not only the cost of a consultant’s fees, but also possible fines from the Taxation Department. I am desperate to finalise this matter. Are you able to advise of anyone who could help me with these tax returns?
A. The first thing to do is not panic. If you are willing to work through your tax returns, there are people who can help.
The Australian Tax Office (ATO) has a program called Tax Help. Through a network of volunteers, who are not ATO staff but are trained and supported by the ATO, low income earners can get help filling in and lodging their tax returns. Tax Help is available in all cities and many country centres throughout Australia.
For more information, call the ATO on 13 28 61 or visit the ATO website.
What would you do with a share of $564 million? That’s how much is currently unclaimed by individuals and business from banks, insurance companies, deceased estates, etc and some of it could be yours.
The Australian Securities and Investment Commission (ASIC) is calling for people to claim money which may belong to them, with amounts ranging from $1.00 to $990,000. The largest amount claimed last financial year was more than $3.1 million – wouldn’t that be nice!
There is no cost involved in searching for your lost money, you just have to be able to prove that it’s yours. Simply visit ASIC’s free online database and type in your name.
Senior Rights Victoria (SRV) is a statewide legal service established to prevent elder abuse and safeguard the rights of seniors Victorians. Their upcoming sessions will advise you how to Safeguard your savings.
Designed for Law Week 2009, SRV are running a series of session throughout Victoria that will present ways to protect your savings, assets and property and prevent difficulties from arising in the future.
Open to all seniors Victorians, their family members and friends, the sessions will be held:
Monday 11 May 10.30am – 12pm, West Geelong Town Hall
Tuesday 12 May 10.30am – 12pm, Boyland Room, Box Hill Town Hill
Wednesday 13 May 1.30pm – 3.00pm, Campbell Theatrette, Bendigo Library
Thursday 14 May 10.30am – 12pm, Council on the Ageing, Block Arcade
For further information or to book your place contact SRV on 1300 368 821
Rumours abound about the content of the second Rudd Government budget, due to be delivered by Treasurer Wayne Swann on May 12. Much debate is focused on whether the highly anticipated $30 pension increase will finally come through.
The case for such an increase is believed to have been confirmed by the (still confidential) Harmer Pension Review which was delivered to the government in March this year.
Senator Bob Brown also put such an increase forward as one of his key negotiating points when the $42 Billion stimulus package was debated in the Senate in February.
Liberal Party leader, Malcolm Turnbull, has consistently called for the single pension rate to be increased to 2/3 of the rate for couples, which would effectively increase the single pension by $58 a fortnight, or $29 a week.
And speaking yesterday from a meeting of the G20 in America, Mr Swann confirmed his commitment to a pension rise, telling a Channel Ten reporter,
“…there is a problem with the base rate of pension. We have said that we will deal with it in this budget and deal with it we will.”
So there is good reason to believe a pay increase will come through, but when the Treasurer added the comment,
“And we’ll do it in a financially responsible way.”
it seems he was cutting himself some slack to NOT pay the expected $30 per week, but to hold something back to deliver to other people who are doing it tough – perhaps the unemployed on Newstart payments, which for singles is just $453.30 a fortnight.
About Seniors website believes there is room for increases for both pensioners and Newstart recipients – with the top 15% of the population holding most of the wealth and receiving most of the superannuation tax benefits, why not start there?
Read more in Kaye’s Budget Blog.
With long-term investments taking a dive, more Australians are turning to term deposits to grow their wealth
The opening of term deposits grew by 39% from June 2007 to September 2008 and the total value of term deposits s now estimated at over $500 billion. But how many people actually understand what a term deposit is and how to get the best from your invested money.
Prompted by the growth of this type of investment, the Australian Securities and Investment Commision (ASIC) have prepared a guide to alert investors to issues of which they should be aware. This is also being accompanied by a program of health checks on funds to ensure marketing and disclosure on term deposits is proper and fair.
If you are considering a term deposit, or are uncertain of the suitability of your current fund, you can download the ASIC guide, Getting the most out of term deposits, by visiting Fido.gov.au or calling the ASIC Infoline on 1300 300 630.
While some things are best done on the spur of the moment, planning for your wishes in later years should be done while you’re still able to convey your wishes.
Q. Helen
Would you please give me information about the advanced health directive and retirement accommodation?
A.
Many thanks for your email and interest in About Seniors.
We are unsure exactly what you wish to know and would welcome some clarification so we can correctly answer your question. Would you like to know how an advance health directive is enforced for someone living in retirement accommodation?
You can find out more information about Advance Health Directive by visiting the Department of Justice and Attorney General for Queensland by clicking here.
Understanding your spending patterns is vital to making the most of your money and the tools are out there to make it simple.
Create your own home budget using this handy About Seniors budget planner, complete with a sample budget form and a budget worksheet!
Tracking your monthly spending habits and accounting for every dollar spent is an important part of this process. For the next month or two, think closely about how you spend your money and record it. If you can, at the end of each day write down exactly what you bought, paid for and if it was essential or non-essential.
You can start now by estimating your current budget. Download our excel spreadsheet and fill in all the yellow areas, and the spreadsheet should automatically calculate the rest of the information for you! Make sure you account for EVERYTHING you spend, even if you don’t see a specific category on the budget template, add those expenses to “other” or create a new category that fits your needs.
Now that you know what you spend, identify where you spend most of your money on non-essential items and try and cut down on this area if you are spending more than you can afford.
The most important step in financial planning is to be realistic and stick to a budget. If your goal is to save $50 in the first month, but you don’t achieve it, don’t just give up, repeat the budget spreadsheet above and find out why you weren’t able to meet your goal, and set a new, realistic goal, even if its only $25!
Find our more information on managing your money.
Skimming of bank details has been very much in the news recently, with several arrests being made. But if you’re a victim of skimming, do you just grin and bear it?
Following the recent spate of skimming incidents, the Australian Bankers Association (ABA) has assured bank customers that they will not be liable for any losses from their accounts. This is indeed good news but how do criminals get your bank details?
The most common way is by attaching a device to an ATM which skims the detail from the magnetic strip on the back of a credit or debit card. Another way is by attaching a device with a hidden camera to ATMs, this captures details from your card and records your PIN.
Banks are aware of the devices being used on their ATM machines and machines are regularly checked. If you suspect any fraudulent use of your card, you should contact your financial institution immediately. In addition, the following steps will make it more difficult for criminals to obtain your details:
· shield the key pad with your free hand when keying your PIN at an ATM or EFTPOS machine.
· treat your card like cash and never let it out of your sight, this means not letting a shop assistant or waiter walk away with your card
· check your statements carefully and report any suspicions transactions
· make sure you get you card back as soon as your transaction is complete
· lower the limit or your card to minimise any loses would your card be skimmed
For more information on skimming incidents and what you can do to minimise the risk, visit the ABA.
Assuming your credit history is in order can be a costly mistake. Details of your credit transactions are taken into consideration by lenders before they will approve your credit application and if there is a discrepancy, you could end up paying a higher rate of interest or being refused altogether.
Getting a copy of your credit report is free, simply contact a credit reporting agency in writing, giving them your relevant details and in about ten days time, you should receive a copy of your history. Never respond to an email or click through on a website offering you a copy of history, they may make a charge, or worse, be a scam. Any agency offering a free credit report will not need your credit cards details so don’t give them unless you are sure they are offering a legitimate service and understand exactly why they need them. There are three reputable agencies that are recommended by the Australian Securities and Investments Commission (ASIC):
Veda Agency
Dunn and Bradstreet
Tasmanian Collection Service
Once you receive your report, make sure all your details are correct; a simple spelling mistake in your name or address can cause all kinds of problems, such as mistaken identity. If there appears to be an application for credit that doesn’t look familiar, it may indicate that your identity has been stolen, you should contact the police immediately.
If you do have legitimate defaults, check their accuracy. Defaults must be at least 60 days old when listed and you must have received a letter advising of the default before it was listed. Defaults can only be listed for five years before they must be removed.
Any inaccuracies should be taken up with the credit provider and if you are unable to resolve the problem, there are independent bodies that can help, such as the Office of the Federal Policy Commission, which deals with all credit reporting complaints.
For more information on your credit report, visit ASIC.
Remember that any work undertaken while on the road may have implications for Centrelink benefits you receive and your general tax situation.
Any change of income must be reported to Centrelink as it may affect entitlements. To discuss your circumstances, make an appointment with a Centrelink Financial Information Service Officer. These officers maybe able to work out approximately what your payments will be, but do not have the authority to make decisions about your payments. Visit Centrelink’s website for numerous online services, forms and information.
All income must be reported to the Australian Tax Office (ATO). However, many expenses such as materials, uniforms, mileage and even accommodation can be tax deductible. Keep relevant receipts and a vehicle log book to accompany your tax return. Visit the ATO’s website for comprehensive information.
Every silver lining has a cloud with scammers targetting those due to receive payments in the Government’s recent stimulus package, the very people who can least afford it.
The Australian Competition and Consumer Commission (ACCC) is warning of an email scam, requesting personal details which can be used to intercept cash payments being made in March and April. The emails are disguised as official communications from the ATO or Centrelink, asking people to submit an application to receive payments. Both the ATO and Centrelink have details of those entitled to payments and will not request additional information by email.
Never give any personal information out by email, any organisation requiring your information will undertake security checks before requesting such information. If you have responded to such a request, don’t be embarrassed, these scams are often professionally mastered and can fool anyone. You should contact the ACCC immediately if you receive anything you consider suspect.
Find out more about identity theft and what you can do to prevent it. Link to your tech piece.
Trusting financial advisors is difficult to do as recent court cases have shown.
FIDO, the website of the Australian Securities & Investment Commission (ASIC) is the first place to visit if you’re thinking of making any significant financial decisions. As always, AboutSeniors recommends seeking the advice of an independent financial advisor before committing any money but doing some research of your own can only help.
There’s a lot to consider when planning your retirement, will you have enough money, when can you afford to retire, will you be able to spot a dangerous investment, the list goes on and on. FIDO offers you the tools to get a clear picture of what your super find currently offers, choosing a retirement income product, facts and figures on reverse mortgages and warnings of what to be aware.
For more information on retirement planning and income, visit FIDO.
With interest rates coming down, you may be considering changing your mortgage provider. Your mortgage is one of the biggest financial commitments you will ever make and many of us tend to stick with what we have. New products come on to the market continually and with the fluctuation in interest rates, you could save thousands of dollars, and have a more suitable product by shopping around. FIDO has four handy steps to switching home loans.
Whether events of the last few weeks have shown us that you never know what’s around the corner. Making sure you have proper insurance, without paying more than you need is easier said than done. FIDO has tips for getting the right insurance cover and how to make claims for flood and storm damage.
Liked this article? Read similar articles here
One of the reasons why you may have chosen your bank is because they offered you the ability to use any ATM, at no cost. This changed on 3 March, 2009 so now a withdrawal of your money from another bank’s ATM may be a costly exercise.
From now onwards when you use an ATM which is not operated by your own bank or in a network arrangement, you will be advised of the amount charged to use that particular ATM (average fee is $2) before proceeding with the transaction. You may also be charged a disloyalty fee by your own financial institution, somewhere in the region of 25-50 cents. This can all add up to a hefty sum and thinking ahead will help you avoid these high charges:
· Always uses your own bank’s ATM or find out which ATMs are part of a network arrangement with your bank
· Find out where your nearest bank ATMs are by calling into the branch for a list, or calling their customer service line or visiting their website
· Walk a little bit further down the street to see if there is an ATM belonging to your bank, rather than using the first one you see
· Take advantage of cash out when using EFTPOS in places such as supermarkets and petrol stations.
· If you need to frequently use an ATM that does not belong to your bank, think about making larger withdrawals if you can afford it. You’ll only be charged one fee, regardless of how much you withdraw
· If there are a limited number of ATMs belonging to your bank in your area, call the bank to discuss the cheapest way to access your money.
Further information on these industry-wide changes can be viewed at Australian Payments Clearing Association or the Reserve Bank of Australia.
You may consider yourself to be financially savvy, not one to be caught out in financial matters but how much do you really know?
FIDO is the website of the Australian Securities & Investment Commission (ASIC) and offers handy financial tips and safety checks to make sure your money is safe. They also have useful, easy-to-complete, online quizzes covering basic money matters, women money matters, dangerous investments and superannuation. Taking only a few minutes to complete, you not only get the correct answers but links to useful tips covering the question topics.
Test your financial knowledge, visit FIDO.
Shopping around can save you money on credit cards, mortgages, personal loans and savings accounts. Doing your research online is quick, easy and can help you find the best deal.
You’ve worked hard to earn your money and its better in your pocket than the coffers of financial institutions. AboutSeniors always advises that you seek independent financial advice before making any money decisions but the four sites below are a good place to start finding out what’s available for those seeking a credit card, savings account, mortgage or personal loan.
Credit Cards - www.creditcard4u.com.au
Saving accounts – www.infochoice.com.au
Mortgages – www.yourmoney.com.au
Personal loans – www.canstar.com.au
It’s not often you get something for nothing but if you know what you want and are prepared to shop around, you need never pay another cent in bank charges.
Basic banking is just what the name suggests, an account which includes basic features functions such as the ability to deposit regular benefits or wages, make withdrawals or deposits, and access electronic payments networks. Most banks offer at least one basic bank account which has no account keeping fees and includes some fee-free transactions. These accounts are usually available to children, concession card holders and certain other adults who meet the criteria determined by the individual bank.
For more information on basic banking and which banks offer what, visit the Australian Bankers’ Association Inc.
Just like Jim, an AboutSeniors subscriber, many self-funded retirees want to know if they will get anything from the Government’s Tax Package.
Q. Jim
We are both retired. My wife has a Term Deposit earning approx $6000 a year in interest . I have an allocated pension (no tax payable) but have a few bank shares earning about $2,500 per annum
We both filed tax returns last year and were liable for tax on our income but with the rebates etc we did not have to actually pay any tax.
Will we qualify for the $950 payment?
Many thanks
Jim
A. From what you’ve told us, you should be eligible for the $900 (reduced from $950) from the Government’s most recent stimulus package. This will be paid by the Australian Tax Office (ATO). On their website they have useful instructions on how to read your tax notice for 2007-08, which will confirm your eligibility.
They also outline payment dates and advise you to make sure your details are up-to-date to ensure you get your payment quickly.
For more information on the Government’s Tax Package, visit the ATO.
For clarification on who is getting what, visit our Federal Government page.
For those facing escalating costs with no obvious solutions in sight, it might be useful to review the terms and conditions of the Pension Loans Scheme which allows those of pension age (or partners) to use real estate as collateral for a loan from Centrelink.
This scheme is a voluntary arrangement which allows for a loan for a prescribed or indefinite period. To be eligible you need to be of pension age (,males 65 or over, females depends upon date of birth), receive or be able to receive some level of pension under either the income or assets test and have assets which can be used to secure the loan. You can suggest an amount you would like to receive up to the amount of the current Age Pension. If your current pension entitlement is less than the full Age Pension, you may choose to top up to full amount of the Age Pension. The total amount you will receive will depend upon the value of your real estate used as security, the amount you wish to retain in this property and how old you are when the loan is approved.
To find out more you can visit the Centrelink website and download a PDF or telephone a Financial Information Service officer ( 13 23 00 ) who is authorised to discuss the terms and conditions and other information you may need to decide if such a loan is appropriate to your circumstances.
Can you believe that the average mortgage repayment on the Gold Coast accounts for 93% of a person’s income, making it the most unaffordable place to live in Australia.
Research undertaken by the Residential Developer’s Council used data on media house prices, income levels and mortgages to determine what percentage of income was used to service home loans. It is considered that paying above 30% of your income on a mortgage results in mortgage stress, making the findings of the research scary reading.
Following the Gold Coast as the least affordable place to live are Sydney with 82% and Sunshine Coast with 81% of income used to service mortgage repayments. And if you’re looking for somewhere more affordable to live, then why not try Latrobe Valley, where residents spend 29% of their income on their house repayment.
To view the top ten most and least affordable places to live, visit The Property Council.
As AboutSeniors’ subscriber Allan considers his options for retirement, he’s keen to know where he stand on the subject of un-demanded rent from his ex-wife.
Q. Allan
Next year I will claim the age pension (born 30/6/1944). For my five pre-pension years my former wife (divorced 1996) has occupied our fully-paid jointly-owned house (joint tenancy) and I have not demanded or received rent from her. During that time she shared the house with our adult son (only child, born 1984) until 2006. Until 2006 our son was a full-time undergraduate university student. He has now left home and lives independently. With her consent, I plan to buy out my former wife’s share of the house in July 2009, after I turn 65 (June 30). This timing is preferred because I am still working and can access my superannuation tax free after age 65. I have two questions: firstly, as a joint tenant do I have the right to demand rent from another joint tenant (my former wife) at presumably half the market rate and, secondly, does my lack of demand for the rent constitute a gift to my former wife that will affect my age pension claim?
A. Provided by Dixon Advisory Service
If Allan and his wife divorced in 1996 one question that should be asked is why is the house still “joint tenancy”? Possibly the house is now owned “tenants in common” which would make more sense.
However, as joint tenants, Allan would not be able to claim rent off his ex wife, as it would be his personal decision not to live in the house. He would have the right to do this.
If “tenants in common”, Allan would have the right to rent your half of the house out to another tenant, as he would own an equal half share or live in it if he chose to.
So if Allan has chosen not to do either, he can not claim it from his ex wife, as she owns half and has chosen to live in the house.
Accordingly, this would not be considered a gift for Centrelink purposes.
Investment properties are not deemed, the net rental income is calculated so Allan’s ex wife living there rent free will not impact for the income test.
It will still be an asset for the assets test though - it depends on how you are means tested i.e. income or assets.
Also, if you hold a house as tenants in common, both parties need to agree on whether or not to lease the property etc, also both tenants would have a right to live in the house provided they do not interfere with the other tenants reasonable enjoyment of the property.
Is your bank giving you the service you deserve? Do you know what your entitlements are as a bank customer? The Code of Banking Practice has recently undergone review but how will these recommendations affect you?
Recommendations made by independent reviewer, Jan McClellan, will be put by the Australian Bankers’ Association (ABA) to its members. The purpose of the review is to determine how well the Code has been working since the last review in May 2004, taking into consideration the changes to banking practices.
The Code is the basis for the relationship between banks and their customers, and the standards required are not met by all financial institutions. In her review, Jan McClellan calls for a more responsible approach to lending and full disclosure of exception fees, so people understand what the will be charged if they go overdrawn. To view the full report, visit the Review of Code of Banking Practice website
You can view the Code of Banking Practice by visiting the ABA website
With the beginning of a new year many people are assessing their priorities and considering whether to continue working or not, and if they can indeed afford to retire.
Martin Murden of Partners Superannuation Services has the following useful advice to consider before starting a pension.
Once you finish work, you may rely on your superannuation to provide for you financially but starting a pension correctly is vital to ensure you make the money you have go as far as possible. There are tax breaks of which you can take advantage.
Here is what you need to consider before starting your pension.
· Review the fund’s trust deed or review your current fund’s pension options
For self managed superannuants, trust deeds need to be reviewed to ensure they allow for payment of all income streams under current legislation as well as death benefits such as lump sum or revisionary pensions (when you die your pension can revert to your spouse/dependents). Superannuants in public offer funds should review their current provider to ensure their fund suits their pension requirements. Be mindful of restrictions.
o Ensure all your superannuation contributions are in the fund prior to starting your pension.
If you’re self employed or running your own business, make the necessary payments or if you’re an employee, get your employer’s confirmation that the final payment has been made.
o If you make a last-minute personal contribution and want a tax deduction, you will need to complete a ‘deduction for personal super contributions’ from (available for download form ATO website.
Given the 1 July 2007 superannuation changes, potential retirees are now required to complete this form. “Anyone not completing this form could miss out on a substantial tax deduction. For example, if you put $50,000 in your fund and you are in the 40% tax bracket, this could cost you 20,000 in tax.
· If you are a member of more than one fund, consider amalgamating your super fund accounts
This should occur after the final contributions have gone into the fund. The fund will then be closed and the personal contribution declaration made. You will then need to ask the SMSF trustee or fund administrator to transfer your entitlements from the one fund into the other.
This amalgamated fund must also be alerted of last minute personal contributions.
· Establish pension documentation for SMSF or request forms from provider
Superannuants in SMSFs will need be ensure pension documentation includes an application to the trustees requesting a pension, trustee minutes, pension conditions and member information. Those in public offer funds will need to contact their provider and initiate the pension process. Generally providers will send out the relevant forms.
· Determine how much you need from your pension and prepare a budget
To prepare a budget, you need to factor in your daily living expenses and what plans you have for retirement (travel, new hobbies and interests as well as purchases to support these hobbies such as a new car and caravan.)
· Ensure minimum or targeted pension is drawn by 30 June or the end of the relevant financial year and review payment procedures
Those in pension income streams with minimum or targeted pension amounts should ensure that these amounts are drawn by end of the financial year. You can either make periodic, ad hoc of annual withdrawals to satisfy this requirement.
· Review what investments will be required to provide the pension
Remember that instead of making contributions, you are now withdrawing money. This may require changes to investment arrangements within the fund. This may mean altering the fund’s investments to include a greater amount in cash and perhaps altering reinvestment procedures such as taking dividends and distributions in cash rather than having them reinvested.
· If I have a TRIS and an accumulation account, consider recasting
For those who have a transition to retirement income stream (TRIS) but continue to make contributions to their super fund, merging or “recasting” these two accounts will increase what is in the pension account - meaning more money will be tax exempt.
It is particularly beneficial to those whose initial pension does NOT have a tax exempt component but for those whose initial pension HAS a tax exempt component it could reduce the amount that is tax exempt on death, leaving beneficiaries with a increased tax bill.
For more information, visit Partners Superannuation Services.
This information is provided by Martin Murden of Partners Superannuation Services Pty Ltd, an Australian Financial Services Licensee, Licence No. 234665. AboutSeniors does not offer financial planning advice and would urge individuals to seek the advice of an independent financial advisor.
With summer holidays just around the corner, many of us will be making use of our credit cards when travelling. But just how do we keep our hard earned money safe?
VISA have issued a guide to using your credit card when travelling overseas. Common sense should prevail but with the excitement of being in an exotic land, it’s easy to forget the basics
For money safe travelling, view VISA’s top tips or for more information on using VISA when travelling overseas, visit www.visa.com.au
Getting financially fit for summer may mean transferring your credit card balance to a card with a lower interest rate. But after the introductory period, you could find yourself worse off than before.
The Australian Securities and Investments Commission (ASIC) has issued some guidelines on what you should be asking card issuers before transferring your balance. You should find out what the standard interest rate is after the introductory period, and if the introductory rate includes all transfers and purchases.
Also, you should ask yourself if transferring your credit card balance will really benefit you and if you can find a cheaper way of borrowing money.
Finally, take your time and read through the fine print. As tedious as this may be, it could save you from any nasty surprises in the future.
For more details of what to look out for when thinking of transferring your credit card balance, visit FIDO.
Many Australians are facing the toughest Christmas financially for decades however, every cloud has a silver lining; with companies battling to get your business, there’s a deal to be done.
When money is tight, luxuries are the first to go and according to a survey carried out by ServiceSeeking, the $500-$1000 usually spent on Christmas by 41% of Australians, will be greatly reduced. But if you do have a little money to spend on home improvements, then you may be able to get a good deal via ServiceSeeking.
ServiceSeeking allows consumer to post a job they need doing and business will go head-to-head to bid on your work, allowing you to secure the best deal. It’s quick to register and the service is free to use, with business paying a small fee when they bid on your job.
For more information, visit ServiceSeeking.
One of the biggest money mistakes people can make is paying more interest on their credit and store cards than they need to. This is the most expensive way to borrow money and, if you must do it, do it wisely.
There may be a credit crunch on but that shouldn’t stop you shopping around for the best deal on your credit card. Remember, the less you have to pay in interest, the quicker you can reduce the balance. Take advantage of special interest free rates, and when that rate ends, look around for another.
CreditMart.com.au allows you to compare credit cards by the qualities you need most. Whether it’s an interest free period, continual low rate, interest free days, or free fuel offers, you may be able to find a card that suits your needs.
For more information, visit CreditMart.
Divorce usually means a change in financial circumstances, and very rarely is this for the better. So how do you keep your head and your home?
Separating from a partner is the start of an emotional rollercoaster and the very time you shouldn’t be making big financial decision, although you may be forced to do so. Look on your new start as something positive and don’t make the following costly money mistakes:
· Emotional spending – blowing your budget won’t heal the pain
· Financial surrender – anything for an easy life is not the way to secure your new life
· Revenge – pettiness with just end up costing you in the long run, both mentally and financially
· Choosing advisors – make sure you have a separate accountant as we as legal advice.
· Major change – it’s tempting to just leave the old behind and forge a new life but let the dust settle before making any major decisions.
For more details on divorce money matters, visit i-don’t
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.
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.
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.
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.
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
Frozen funds – the facts, some useful Q&A and some Centrelink Q&A…
Government guarantees bank accounts
(With thanks to centrelink, IFSA and ASIC)
On 12 October the Federal Government guaranteed 15 million deposit accounts, covering $800 billion, and fund raising facilities of $1.2 trillion used by financial institutions to finance small business investments and home loans.
The Federal Government has also stated:
The non-prudentially regulated investment sector typically includes mortgage trusts, non-listed property trusts and debentures. It provides investment capital to a range of projects (e.g. property development) and offers investment returns to retail investors. These vehicles are an important form of capital for the real economy.
The Government has requested ASIC provide urgent advice in relation to retail investor hardship cases where redemptions may have been frozen, including using its modification powers under the Corporations Act to provide additional flexibility to fund managers and trustees.
No guarantee for mortgage trusts
The Federal Government has not guaranteed mortgage trusts. Some funds have frozen these investments so investors cannot withdraw their capital, although nearly all appear to be still paying.
Useful Q&A
Q. What does it mean when companies such as AXA, Perpetual and Colonial First State “freeze” funds?
A. They have stopped withdrawal of lump sums but in most cases are paying out interest and dividends on funds invested. Trustees must make sure there are no winners and losers if there is a run on funds, this triggers a clause in legislation forcing trustees to act on behalf of all unit holders, making sure that the remaining unit holders adversely affected. Sometimes the freeze is just until the organisation can communicate all with all holders as well as allow advisers to get in touch with them. The mortgage trust industry has been around for more than 40 years and weathered times of low liquidity before.
Q. Are these companies legally entitled to freeze these funds?
A. Yes – in fact they have a fiduciary duty to do this as they have to act in best interests of all unit holders.
Q. What sort of people are likely to be affected?
A. The average age of an investor is late 60s
Q. How do I know if I am personally affected? (Who should I contact?)
A. In the first instance checks out the website of the company, then with your investment number in hand, email or telephone for further advice. If you invested using a financial adviser, contact this adviser in the first instance. Keep a record (written) of all correspondence.
Q. Are all the companies who have frozen funds still paying income from these funds or have some frozen both?
A. We believe this to be the case – but you will need to check with your investment house to confirm.
Q. What can I do if I need emergency relief?
A. Contact the trustees of your fund – there may be provision for special case release for genuine hardship. If you already qualify for a pension, you can contact Centrelink as well. If you feel you may now qualify for a pension because of reduced assets, also contact Centrelink.
Q. Where can I find out more about market volatility?
A. The IFSA website
And some Centrelink specific Q&A
The Government is closely monitoring the global financial crisis and its impact on pensioners and has asked Centrelink make a special one-off update of our system with the current value of any shares and managed investments that pensioners might hold. This will be done in the next few weeks to ensure pension payments are based on the most up-to-date asset values available.
Q. How often asset evaluations are carried out for full or part Age pensioners?
A. Generally, updates on shares and investments are only made twice a year in March and September, however people can ask for a revaluation of their personal financial situation at any time.
Q. Is this review a one off? Has it been brought forward? If so, when was it originally scheduled?
A. Centrelink will automatically reassess the share values it has on customer files and adjust people’s payment rates where necessary. If customers who have investments and who are on a part rate were expecting a change in their payment and this doesn’t happen after several few weeks, they should call Centrelink on 13 2300 to discuss the situation. If possible, people should have their investment certificates handy to help speed up the process.
Q. What of those NOT on an age pension who may now be eligible because of lower assets – how do these people go about applying?
A. If affected investors are not currently Centrelink customers then they can test their eligibility for a Centrelink payment or ask to talk to a Financial Information Service Officer by calling 13 2300. Claims for Age Pension can be lodged online at http://www.centrelink.gov.au, over the phone or at Centrelink offices.
Q. For those whose assets are NOT FROZEN but need money urgently, an Advance payment may be available – can you share a brief synopsis of what an advance payment is and when/how it needs to be paid back?
A. Advance payments are an advance on a person’s regular pension payment, up to $500. The advance always has to be paid back through a reduction in a person’s fortnightly pension. People can only get an Advance Payment if they are on certain Centrelink payments (including the Age Pension) and can only have one advance in a 12 month period. More information is on the Centrelink website here: Advance Payment
Centrelink also have a Hardship information factsheet.
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.
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.
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
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
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.
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.
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.
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
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”.
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
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.
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.
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.
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.
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
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
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.
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
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.
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
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
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
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
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
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
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
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!
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
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
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
"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.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
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:
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 thereDo 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
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.
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:
Copies of Getting Advice can be downloaded from ASIC’s consumer website, FIDO or by calling ASIC’s Infoline on 1300 300 630.
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.
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
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:
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.
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
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:
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.
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
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!
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 "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:
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
"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
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
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
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
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!
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
Advertisement