Finance

Keeping your financial partnership on track

by DFS Ipswich on October 23, 2018 No comments

“While money can’t buy happiness, it certainly lets you choose your own form of misery.”

Groucho Marx might have been joking when he said this, but there’s no getting around it: money is a prime source of tension in marriages and domestic partnerships right around Australia. A survey by Relationships Australia found that 70% of couples are affected by disagreements about money. 84% of respondents said money troubles would be more likely to push people apart than bring them together. Cooperating on financial matters is well worth it for most couples. It’s not just your bank balance which will benefit from working together. Working through money issues with your partner can help develop communication skills, improve bonding through a sense of teamwork, and set up shared values to pass on to children.

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DFS IpswichKeeping your financial partnership on track

What determines the cost of an insurance policy?

by DFS Ipswich on September 18, 2018 No comments

There are a number of factors that determine the cost of an insurance policy. A cheap life insurance or income protection insurance policy doesn’t necessarily mean it’s an inferior one, and by the same token, the most expensive policy may not be the best to suit your needs.

The price of an insurance policy is generally a reflection of how the underwriter views the risk of you claiming on that policy. As each insurer will attribute their own measure of risk to each element of your lifestyle, personal habits and work situation, your overall risk profile can fluctuate between one insurer and another.

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DFS IpswichWhat determines the cost of an insurance policy?

Spring cleaning your finances

by DFS Ipswich on September 4, 2018 No comments

The sun is shining, the days are getting longer, flowers are blooming, the department stores are bringing in their Christmas stuff… yes, spring is finally here. Everyone knows that spring is the season of fresh starts. Most people will take the opportunity to do a bit of spring cleaning, getting to all those pesky once-or-twice-a-year jobs around the house. But right now is also a great time of year to review your finances. 

Why now? Well, with the end of the last financial year and your tax return well behind you, you’ve got some great data to help you reset your goals and measure your progress by. You’ve also got a little breathing room before the end of the calendar year so hopefully you’ll be a little less pressed for time when you’re making some important decisions. It’ll also give you enough time to sustainably budget for bigger expenses in the new calendar year, from home improvements to holidays. Here’s how to get started.

Clear out the cobwebs

Take a minute to sit down and review your budget. Make sure you have all the relevant information from your bank statements, tax notice of assessment, budgeting app, etc. In the last twelve months, have you stuck to your spending and saving guidelines? If not, what patterns can you see that you’ll want to ‘clear out’ of your spending habits for the coming year? This is your chance to develop a plan for avoiding wasteful spending. For example, if you notice that you’ve spent a lot on takeaway meal delivery, perhaps you could try planning a week of meals or signing up for that cooking class you’ve always wanted to take.

Fix that safety net

Just like you fix all those broken hinges, cracked tiles and split frames around the house come spring, now’s a great time to fix your financial safety net – your insurance. The fact is, the various risks and liabilities in your life change all the time. Sometimes it’s a little more obvious, like welcoming a new baby, or moving house. But some of the risks you can insure against shift a little more subtly. For example, you may have made a few purchases that you should have included in your contents insurance, but didn’t add them individually at the time.

Plant seeds for the future

Herbs, fruits, veggies, flowers – all the best stuff is planted in spring for harvesting weeks or months down the track! While you’re in the ‘planning ahead’ mindset, have a think about your retirement income too. Chances are that by now, you’ll have received a statement from your super fund with the details of your contributions, returns, fees paid and more. Take this opportunity to review whether your super is on track according to your long term goals. Use the budget info you gathered earlier to see whether there’s room for you to make some extra contributions on a regular basis. If you do find that you’re on track, think about other ways to put your money to work for your financial future. For example, you may consider a type of investment that’s now right for your changed circumstances.

Reset and revamp

Working out whether you’re on track with your budget and goals is a great start. But when was the last time you thought about what those goals should look like? Everyone’s circumstances, desires and priorities change. It’s normal to not have the exact same financial goals from one year to the next. That’s why it’s a good idea to review your previous benchmarks, even if you don’t end up changing what you’re aiming for. Carve some time out of your schedule, sit down with your partner/family, and have a chat about your ideas of financial success or independence. Better still, make an appointment to come in and see us. We’ll help you get the fresh perspective you need for the coming year and beyond.

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DFS IpswichSpring cleaning your finances

Decluttering your lifestyle

by DFS Ipswich on August 6, 2018 No comments

At what point does the amount of ‘stuff’ we have in our lives start becoming problematic?

Spending the entire day organising his garage instead of playing in the backyard with his son was the catalyst for Joshua Becker to declutter. Now the founder of the Becoming Minimalist website and author of several books on decluttering, Becker realised he wanted to spend more time with his kids instead of maintaining his many possessions.

You don’t need to be a parent to relate to this scenario. Many of us are time poor and are looking for ways to fit more into our days. If some of your day is being spent searching for your keys in a cluttered house or working around the clock to pay for those big purchases, decluttering can give you back both time and money. Clearing out your life can result in a cleared out headspace as well, giving you more mental energy for your career and relationships.

Decluttering, the act of paring back and reducing unnecessary things from your life, has become increasingly popular. The drawbacks of owning and pushing for more are becoming apparent. Even IKEA’s Head of Sustainability, Steve Howard, was quoted as saying, “In the west, we have probably hit peak stuff.”i Reducing your consumption and streamlining your life can create space and time for the things that really matter to you. Your hard-earned money can be spent on what you value, rather than what’s being marketed to you as a ‘must-have’ item.

Review your posessions

While having a decluttered home and life will give you back time, it does take time to achieve it in the first place. Set aside a weekend to begin to tackle the clutter in your home. Even if your home isn’t packed to the rafters with possessions, it’s likely you’ve been holding onto things you no longer need. If this task feels overwhelming, the best way to approach the job is one room at a time or even start with tackling a particular space like a cupboard or a specific type of item.

Ask yourself the following questions when you review your possessions, “When did I last use this?”, “When will I use it again?”, “Is this item useful?” “Does it make me happy?” Categorise items into piles, a pile for items to be thrown out or recycled, one for those that can be donated or sold and you can even have a pile for the items that you don’t quite know what to do with (not too many of these though!).

These items didn’t arrive in your home by accident, so take a look at your spending habits. Do you buy the latest gadgets? Are you a big clothes shopper? Do you purchase a lot of gifts for your loved ones? Being conscious of what you’ve been purchasing and what your triggers are will help you hone in on potential areas to cut back on. And now that your home has been organised, you’ll have a much better awareness of what you already have and what you don’t need more of.

Consider your commitments

Once the clutter in your home has been addressed, take a look through your calendar. Is it packed with appointments, social engagements, driving the kids around? Consider what commitments you can let go of and delegate. Once your schedule has been freed up, it can be tempting to utilise the spare time you’ve just created to fit other things in. Be mindful that you don’t fill it up again out of habit. We all need some downtime to recalibrate and relax. This might mean saying no to more things, which can be difficult if you’re a people pleaser, but it’s important to protect your time.

Decluttering does involve an initial commitment in time and effort, however it’s a worthwhile activity that will pay off in the long-run. The popularity of decluttering is due to the positive impact it can have on your life. It can provide a greater sense of contentment and calm amid our increasingly chaotic and busy lives, as well as saving money and time.

https://www.theguardian.com/business/2016/jan/18/weve-hit-peak-home-furnishings-says-ikea-boss-consumerism

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DFS IpswichDecluttering your lifestyle

Life Insurance for every life stage

by DFS Ipswich on July 31, 2018 No comments

One of the biggest misconceptions around life insurance is that it’s solely designed to provide a payout if you die. But life insurance is relevant at all stages of life.

From your fancy-free 20s through your working life and into retirement, you will have different goals and priorities worth protecting.

Here we look at the types of cover you should consider at each age and stage.

20-30 years

Partying, travelling, studying, working – for many, the first decade of adulthood means plenty of fun and not a whole lot of responsibility. As a result, you’re more likely to test your limits on the sports field, on the slopes, or in the sea.

At this age it may not seem like you’ve got a lot to lose, but what about the loans you’ve taken out? That credit card bill you’ve racked up? The career you’ve been building? The mortgage you’ve just taken out with your fiancé?

Life Insurance protects the future you’re building, your partner and your family, who could face liabilities if something happened to you.

To protect what matters to you in your 20s, consider taking out Income Protection, Total Permanent Disability and Recovery Insurance with cover for Sports, Adventure Sports, Critical Injury and Accident. With age on your side, your premiums will start low if you opt for stepped premiums.

30-40 years

In your 30s you’re likely to be knuckling down: maybe you’re paying down a mortgage, building your investments or welcoming children to the family.

It’s not only a busy and exciting phase, it’s one that can come with increased expenses and potentially debt.

While it can be tempting to focus on paying down these debts or accumulating more assets, it’s equally important to make sure you’re protected.

We can’t always predict what’s going to happen in life, and while we don’t like to think about the cost of being injured or getting sick, there are ways to support yourself and your family should you need an extended period off work.

In your 30s you should consider Life Insurance, Income Protection Insurance, Recovery Insurance and Total Permanent Disability Insurance. Within each of those insurances you should look at building in additional protection against Illness, Accident, Injury and Cancer.

40-50 years

In your 40s you’re probably still plugging away at your mortgage(s), getting to the more expensive end of your children’s education, climbing the earnings ladder and adjusting your lifestyle accordingly.

At this stage it’s important to protect everything you and your family have achieved, and the things you’re still working towards.

Life Insurance, Income Protection Insurance, Recovery Insurance and Total Permanent Disability Insurance with appropriate additional cover for Accident, Illness or Cancer are all worth considering at this stage of your life.

It’s also a good idea to review your level of cover regularly to make sure it protects your current assets and liabilities.

If you haven’t done so already, think about whether your children need life insurance.

It’s a horrible thought, but the unexpected death, terminal or critical illness of a child can be devastating financially, as well as emotionally.

Child Life Cover can cover out-of-pocket expenses that are not recoverable via private health insurance or welfare schemes, and ease financial strain if a parent has to reduce their work to care for a sick child.

50-60 years

At this stage you are likely consolidating your wealth, getting to the point where your mortgage is nearly paid off and preparing for retirement.

You may also be enjoying having an empty nest and doing a bit more adventuring.

While you may feel you have fewer responsibilities now, the facts are: these are often your prime earning – and saving – years, but they’re also the years when chronic diseases often emerge.

If something were to happen to you or your partner now, your retirement plans and the lifestyle you’ve become accustomed to may be disrupted. Not only that, your children could be left with your debts.

Life Insurance is particularly important now – providing your beneficiaries with a lump sum if you die – and Income Protection, Recovery and TPD Insurance can play a vital role in ensuring you get to embrace that retirement you’ve been working towards all these years.

No matter what stage of life you’re at, life insurance is worth considering. If you’re unsure about which option is best for you, we can help.

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DFS IpswichLife Insurance for every life stage

Getting ready for retirement

by DFS Ipswich on July 24, 2018 No comments

If retirement is something you are starting to think about, now is the time to put a plan together to ensure that you achieve the satisfying and meaningful retirement that you aspire to.

While the most enticing aspect of entering into retirement is the prospect of being free to do as you wish, it can be challenging to adjust to all that free time and to navigate the changes associated with leaving the workforce. It’s important you continue to fill your days with activities that give your life meaning and make you feel valued.

Maybe you have always wanted to pursue a certain hobby and never had the time. Whether it’s learning a language, picking up an instrument or unleashing your creative side, retirement can be the time to pursue your passions.

The other thing to remember is that you have a wealth of knowledge in your field, and it can be very satisfying to pay that forward. Why not consider volunteering a few days a week at an organization that might be in desperate need of your skillset or mentoring someone who is just starting out.

Staying active

As you enter into retirement it’s important to keep in mind that old adage ‘move it or lose it’. In fact, by some estimates, lack of physical activity may be the cause of about half of the physical decline associated with ageing.i Aim to choose exercises that maintain muscle mass and flexibility as well as finding time a few times a week to get your heart rate up. Consider riding, swimming, strength training, yoga or even working on your golf game as good options.

Practical Considerations

Retirement often entails some big changes. Some people like to downsize, others seek a move away from the city’s hustle and bustle. In planning your next move, make sure that the area is adequately facilitated for your needs. Consider, for example, the proximity to medical services and importantly the rest of your family.

Funding your lifestyle

Everyone will have different aspirations when they retire. For some it will mean being able to travel and see the world. For others it will be enjoying time with the grandkids or pursuing projects they have always wanted to tackle. Whatever your goals, you want to be sure you have the money to fund the lifestyle you aspire to.

It might be worth considering a gradual approach to ease into retirement. Rather than leaving the workforce altogether, you may be able to reduce the hours you work. That way you still have some income coming in, and a staged approach to retirement can also help with the mental adjustment to leaving the daily grind behind.

Transition to retirement as a strategy

A ‘transition to retirement’ (TTR) income stream is a type of pension that allows you to access your super while you are still working. The idea is that as you wind back your hours, you subsidize your decreased earnings with a portion of your super.

To do this, you must have reached preservation age, between 55-60 depending on when you were born, and have started a super account-based pension.

The table below will assist you in working out your preservation age.

Date of birth Preservation age
Before 1 July 1960 55
1 July 1960 – 30 June 1961 56
1 July 1961 – 30 June 1962 57
1 July 1962 – 30 June 1963 58
1 July 1963 – 30 June 1964 59
1 July 1964 and onwards 60

 

If you are younger than 65, you can draw down a pension income between 4% to 10% from your TTR account balance each year. You cannot withdraw a lump sum. When you are ready to stop work all together you can roll your TTR pension back into your super account.ii

While TTR pensions can help increase your flexibility and may have tax benefits while you’re still working, they do involve drawing on your retirement savings, therefore leaving less for when you retire. Further, they may not be beneficial in all circumstances, are subject to restrictions and can be complex, so it is best to speak with an adviser before making a decision.

Having a plan for how you ease into retirement is more important than ever. If you need help creating one, come have a chat with us to discuss your options.

i https://www.betterhealth.vic.gov.au/health/healthyliving/physical-activity-for-seniors

ii https://www.moneysmart.gov.au/superannuation-and-retirement/income-sources-in-retirement/income-from-super/transition-to-retirement

Liberum Financial Pty Limited and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54139889535 AFSL 357306 trading as Fortnum Financial Advisers This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information. Investment Performance: Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.
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DFS IpswichGetting ready for retirement

Market Update JUNE

by DFS Ipswich on July 2, 2018 No comments
Summary
  • Last week’s US dollar strength subsided somewhat this week, but the USD has been quite strong over the last quarter. This has translated to poor performance across the board in Emerging markets over the same period – but in particular the non-Asian based emerging markets of the Americas and Europe. This is because much of Emerging Asia’s debt is no longer denominated in USD, so USD strength doesn’t really hurt them as much (in fact it makes their exports cheaper to Americans) – but regions such as Turkey and Egypt have large USD denominated debt burdens – so a strengthening dollar is disastrous for them
  • In the last week most equity markets performed poorly, with Australia being a notable exception. In fact, over the last quarter both Europe and Australia have done very well compared to the rest of the world
  • Friday of last week, was the official meeting of OPEC, prior to which both Saudi Arabia and Russia had indicated production increases were ‘inevitable’. The results of the meeting were that production increases will indeed occur. This is somewhat surprising since Iran is a member of OPEC, and any change in policy requires unanimous decisions – and Iran don’t want production increases. Increased production leads to lower prices, and due to sanctions enforced on them by the US they have limited partners to whom they can sell their oil, so they have less to sell at a potentially lower price
 Portfolio Construction 101 – correlation

Anyone who has spent time learning the fundamentals of portfolio construction would be familiar with the concept of correlation, and the idea that less than perfectly correlated assets provide diversification and either a better return for the same risk, or less risk for the same return. For those lucky enough to have not spent much time thinking about it, correlation is simply a measure of how one or more assets move compared to each other. If you can find assets that both provide a positive return over time, but have a negative correlation when one performs particularly badly and a largely zero correlation at other times – that’s an ideal asset combination.

The foundation of multi-asset investing over the past few decades has been the idea that bonds act as negatively correlated assets to equities when equities sell off – in other words they go up in price when equities go down in price. If we look at the rolling 3 year correlation of the S&P 500 with the US 10 year Treasury index we can see this negative correlation:

Source: Bloomberg

This is the asset-allocation basis behind the majority of large Superannuation funds in Australia, endowments overseas and has worked really well for the last 20 years.

However, are bonds always negatively correlated with equities? Students of history would know that this isn’t the case. Unfortunately Bonds and equities can be positively correlated, and worse still, when they’re both going DOWN. We tested the correlation of Australian Bonds and equities back to 1885 (with the help of Milliman) to see how sound the theory was, with more than just 20 years’ worth of data – you can see the results below:

Future Potential Inflation

We are mentioning this now because global Central Banks have begun the process of either raising rates (the US and Canada) or easing/ceasing their Bond purchasing programs (ECB). This is because wage price inflation appears to be finally feeding through to the real economy and could feed through to prices. Central Bankers don’t want a repeat of the late 60’s leading to the inflation of the 70’s and the reaction required in the early 80’s. We are confident they have learned their lessons, but believe it is worth noting that in a rising rate environment, the building blocks of portfolio construction which have been broadly assumed by market participants for the last 20 years are unlikely to be best ones for the next 20. This is why DFS take a contrarian and evidence based approach to investing. We don’t just take assumed dependencies and rely on them ‘simply because’. We are constantly testing our thesis and looking for new ways to increase the robustness in our portfolio construction.

General Advice Warning
Past performance is not an indicator of future performance. The information provided in this article is general in nature and does not take into account your particular investment objectives, financial situation or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.  Dobbrick Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. Dobbrick Financial Services are a Corporate Authorised Representative of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357 306.

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DFS IpswichMarket Update JUNE

A note about the Royal Commission

by DFS Ipswich on May 11, 2018 No comments

In recent weeks we have seen plenty of media surrounding the Royal Commission into Banking and Financial Services. We felt it would be helpful to you for us to provide you with our preliminary thoughts.

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DFS IpswichA note about the Royal Commission

Refinancing?

by Paul Dobbrick on January 30, 2018 No comments

Home owners are enjoying a welcome combination of record low rates and a highly competitive lending market. Could that make now the time to consider refinancing your home loan? We look at the why you should, when you should and the ‘how to’ of switching to a new home loan.

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Paul DobbrickRefinancing?

$50,000 for $50

by Paul Dobbrick on January 30, 2018 No comments

TIPPING an extra $50 per month into your superannuation fund can leave you with nearly $50,000 extra at retirement, new figures show.

Australians are being encouraged to skip sipping on daily takeaway coffees and buying their lunch as just a few ways to creating extra cashflow they can stash into their super savings and help fatten their balance.

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Paul Dobbrick$50,000 for $50