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A new year is a chance for a fresh start

A new year is a chance for a fresh start

New year is a great time for making lifestyle changes, however, for goals and changes affecting your financial health, there’s often no better time than when starting a new job.

Well 2022, it has to be better than the last two years, right? With everything that has been going on the last two years, you may have not had the time or motivation to get your financial affairs in order because life has been all about survival every day. With a fresh new year comes a new opportunity to get your finances in order and feel comfortable with the knowledge that you are getting professional help to make the most of your hard-earned dollars.

Plan around your pay cycle

If your job pays fortnightly, there is a great opportunity to modify your mortgage repayments. Paying half your monthly mortgage as a fortnightly repayment lets you squeeze in one extra monthly repayment each year – potentially saving thousands in interest over the course of a loan.

Don’t waste a pay increase

If you received any sort of pay increase in 2021, or you are starting a new job in 2022 with a higher salary, there are opportunities to save more while maintaining the lifestyle you’ve become accustomed to. One of the most tax-effective investments is making additional concessional contributions into your super. Using your before-tax pay, it’s usually taxed at just 15 per cent instead of your marginal tax rate.

Individuals may contribute up to $27,500 during 2021/22 as concessional contributions to super.

Check your insurance

As you move through your career, priorities change and with a mortgage and children comes the need to protect your income. Thew new year is a good time to sit down and check your insurance – inside and outside of super – and make sure it matches your financial situation and your current lifestyle needs.

Check your budget

You may have been living on a more frugal budget the last two years if you have had a downturn in employment due to COVID, and your expenses may have decreased as we have not been able to travel, eat out, participate in sports and hobbies. Your income and expenses going forward are likely to change. A financial adviser can help you set a budget based on your 2022 salary and expected expenses. They can also discuss investment strategies to ensure any surplus finances gives you a boost today, and in the future.

Time to get your superannuation on track

With many people predicted to have more than 10 jobs in their lifetime, having a super fund that can move with you from job to job and into retirement has never been more important. After all, losing track of just one super fund can cost you thousands in retirement.

Not all super funds can do this though, and once you’ve done your homework to find the fund that best suits your investment profile and insurance needs with fees you are comfortable with – it’s often a good idea to stick with it. This gives you peace of mind throughout your working life that your retirement savings won’t get lost and you won’t be paying unnecessary tax and fees when the time finally comes to retire.

A Financial Adviser can talk you through some superannuation fund choices and how to go about consolidating your superannuation accounts to take advantage of the benefits of having one, rather than multiple accounts. They can also talk to you about the benefit of having multiple accounts – it doesn’t suit everyone, but there are a few that are better off with more than one super fund, under the right conditions.

For help with your 2022 financial plan including super, savings and more, contact your Financial Adviser today.

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Happy New Year for 2022

Happy New Year for 2022! We are now open and our normal office hours will resume. We hope you have had a great holiday season.

We are open for the new year and taking appointments. With so many external impacts on all our lives over the past two years as we have responded to the COVID-19 pandemic, many of you will have had a change in situation or had a chance to reflect on what is really important to you. For this reason we encourage all our clients to book a review meeting with us so we can discuss your current situation and any changes that may need to be made to your financial plan to accurately reflect your situation now.

For our clients who prefer face-to-face meetings, please rest assured we will follow the Government’s health advice around operating a COVID-safe business so we are able to accommodate face-to-face meetings in our office. We welcome the opportunity to see you in person.

We have found the online virtual meetings are a highly effective way of engaging clients and conducting meetings so for any clients who prefer to communicate via online channels, we are pleased to continue to offer virtual meetings in 2022. Please let us know if this is your preference when you book your review meeting and we will set it up as an online meeting.

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Thanks for an amazing 2021

Thanks for an amazing 2021!

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Financial advice helps you achieve more

Financial advice helps you achieve more

Whatever you want to do, you’re more likely to do it with the help of some sound financial advice.

We all have something we’d like to be doing more of. It could be spending more time on hobbies, less time at work and more time raising a family, more time travelling the world or reducing working hours as we get closer to retirement. One thing we all want to make sure of is that we have a steady income stream to make the most of what we really want to do – now and in retirement. That’s where the power of financial advice has been proven to help those with a goal achieve what they want.

Of those who set goals with a financial adviser, 86% said financial advice helped them achieve their goals.[1]

This key insight came to light in a groundbreaking survey of over 12,000 Australians in conjunction with CoreData. It found the benefits of financial advice helped no matter your age, wealth or gender. So, if you want to achieve your very own goal and have a comfortable life, it’s more likely to happen with some financial advice.

We can provide you with professional advice for your financial planning needs. Call us today to arrange a meeting.

 


[1] IOOF Survey 2020: The True Value of Advice – A study of 12,643 Australians is an Authorised Representative of Lonsdale Financial Group, ABN 76 006 637 225, AFSL No 246934. This is general advice only and does not take into account your objectives, financial situation and needs. Before acting on this advice, you should consult a financial adviser.
Disclaimer: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author.

 

The information provided in this document, including any tax information, is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429

 

 

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Intergenerational Wealth Monthly Market Wrap November 2021

Mixed investor sentiment abounds

  • Global shares rose 5.4% and 1.7% in hedged and unhedged terms, respectively. The market was led higher by US stocks with the Nasdaq (a tech-heavy index) up 7.3% while the benchmark S&P 500 index was up 6.9% (both in USD terms) as investors were positive on the September quarter earnings results with tech giant Microsoft up 17.9% as one example.
  • Australian shares underperformed global shares, falling 0.1% in October. The leading sectors were Technology (up 2.1%) and Health Care (up 1%). Industrials (down 3.3%) and consumer staples (down 2.3%) were the worst performers. Technology returns were supported by Computershare which benefitted from rising bond yields given its higher interest income on client cash balances.
  • Fixed income returns were poor particularly for the Australian market. An increase in bond yields predominantly of short to intermediate duration saw both Australian and international bond markets sell off. The pain was more severe domestically as it became clear the RBA had abandoned its yield curve control for the 3-year bond which ended the month at 1.22% (compared to the RBA 0.1% target).
  • The Australian dollar (AUD) rose 3.8% against major currencies and 4% against the US dollar. A key boost came from the reopening of the economy after lockdowns while the rise in bond yields also made our currency more attractive to speculators.

As global growth stabilises?

Globally

  • Global business surveys suggest economic growth momentum may have stabilised in October with improvement in services sector offsetting weakness amongst manufacturers. Supply chain disruptions remain an ongoing feature in business surveys impacting inflation.
  • Chinese developer Evergrande repaid an outstanding coupon on one of its foreign bonds. Investors appeared more confident on containment within China of any further issues.

Locally

  • Economic momentum is bouncing back domestically as NSW and Victoria eased lockdown restrictions.
  • The RBA withdrew guidance that interest rates would stay at 0.1% until 2024, suggesting a more optimistic view on the economy. The RBA also ended its policy of targeting 0.1% for the 3-year government bond yield.
  • Sep-21 quarter inflation showed an annual rise of 3% while underlying inflation rose 2.1% over the same period.

Major asset class performance

Currency markets

This report is prepared by Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837 (Bridges). Bridges is an ASX Market Participant and part of the IOOF group of companies. This report is prepared by the IOOF Research team for: Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837, Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323, Elders Financial Planning ABN 48 007 997 186 AFSL 224645, Financial Services Partners ABN 15 089 512 587 AFSL 237 590, Millennium3 Financial Services Pty Ltd ABN 61 094 529 987 AFSL 244252, RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429, Shadforth Financial Group Ltd ABN 27 127 508 472 AFSL 318613 (‘Advice Licensees’). The Advice Licensees are part of the IOOF group comprising IOOF Holdings ABN 49 100 103 722 and its related bodies corporate (IOOF group).The Advice Licensees and/or their associated entities, directors and/or employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this document or may provide services to the company referred to in this report. The document is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of the Advice Licensees. The Advice Licensees and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. The document is current as at the date of issue but may be superseded by future publications. You can confirm the currency of this document by checking the intranet site (links below).The information contained in this report is for the sole use of advisers and clients of AFSL entities authorised by the Advice Licensees. This report may be used on the express condition that you have obtained a copy of the Advice Licensees Financial Services Guide (FSG) from their respective website. Disclaimer: The information in this report is general advice only and does not take into account the financial circumstances, needs and objectives of any particular investor. Before acting on the advice contained in this document, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before making a decision to acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance. The contents of this report should not be disclosed, in whole or in part, to any other party without the prior consent of the IOOF Research Team and Advice Licensees. To the extent permitted by the law, the IOOF Research team and Advice Licensees and their associated entities are not liable for any loss or damage arising from, or in relation to, the contents of this report. For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process
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Four ways to teach children healthy money habits

Set a good example for your children with just a few simple changes.

As a parent, you try to ensure your children have the skills to make smart financial decisions. For example, you tell them about the importance of saving or the power of compound interest. But did you know that you could be sending them negative money messages without meaning to?

Here are four common ways you could teach your children healthy money habits.

1 | Revealing the magic behind digital money 

Your children have likely seen you pay for hundreds of transactions without glimpsing cash changing hands. For small children, it can seem like money problems are solved with magic – just wave or tap a plastic card. This makes it important to discuss the value of money with them. A good way to start is to explain how your earnings get deposited into your bank account and how you use this account to pay bills. For older children, consider showing them how taxes are deducted from your salary.

2 | Spending wisely

Frequently buying things on an impulse could send the message that it’s fine to spend without planning. Sticking to a budget is key to avoiding impulse-buying. To set an effective budget, consider working with a professional financial adviser. Your adviser can develop a budget that factors in your income, expenses and financial obligations.

3 | Teaching them independence 

It’s convenient to do everything for your children. But by giving them a chance to have their own money and decide how and where to spend it, they could learn powerful lessons about budgeting. For adult children, always offering them financial help can create a cycle of dependency. Letting them make their own money decisions could help them develop financial responsibility.

4 | Including them in budgeting

Many parents keep household financial planning and budgeting to themselves. While you don’t have to fully involve your children in managing your family’s finances, giving them a role to play, such as getting them to do grocery shopping using a set budget, can teach them lessons about money. If your children are old enough to earn some income, why not help them set their own long-term financial goal?

Using your influence positively

You can strongly influence your children in relation to money, so it’s important to pass on smart money management skills. If you don’t know where to start, consider reaching out to your financial adviser to help you stay on top of your finances through proper planning and budgeting.

 

Disclaimer: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. The information provided in this document, including any tax information, is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429
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Intergenerational Wealth Monthly Market Wrap October 2021

Monthly Market Wrap October 2021

Energy and Evergrande fear arise

  • Global shares fell 3.8% and 3% in hedged and unhedged terms, respectively. After a period of strong outperformance, growth stocks led by US tech names were the worst performers in September. Inflation fears amidst energy supply issues in China and Europe was one driver. The prospect of reduced central bank support with lower bond purchases was another.
  • Australian shares outperformed global shares, falling 1.9% in September. The leading sectors were Energy (up 16.4%), Utilities (up 2.1%) and Financials (up 1.5%). The mining sector underperformed (down 12.1%) as investors reacted to the sharp selloff in iron ore prices, driven by Chinese growth fears.
  • Fixed income returns were also poor. An increase in long-term bond yields saw both Australian and international bonds sell off.
  • The Australian dollar (AUD) fell 0.7% against major currencies and 1.2% against the US dollar. Concerns over China amidst the unravelling of developer Evergrande weighed on AUD support.

 

As global growth momentum slows

Globally

  • Global business surveys suggest economic growth momentum continued to soften in September. Supply chain disruptions remain an ongoing feature in business surveys impacting inflation.
  • In addition, several factors drove energy fears across both China and Europe. In China’s case, restrictions on Australian coal imports played a part as did issues crimping coal mining outside Australia.
  • The unravelling of Chinese property developer Evergrande also triggered fears about the Chinese property market and flow on impact outside China. It appears the government will not bail out the business but is looking to minimise the fallout of any collapse.

 

Locally

  • The lifting of coronavirus restrictions in Sydney and Melbourne is approaching. 11 October is the likely start for Sydney and late October for Melbourne.
  • As both business and consumer confidence has held up in thislockdown phase, we anticipate a strong bounce back in the economy for the December quarter.
  • The RBA maintained guidance that interest rates would stay at 0.1% until 2024.
  • The strength of the local property market is drawing regulatory attention with expectations of APRA using macroprudential policy tools. These could impact the total amount able to be borrowed due to tighter debt servicing requirements, slowing the market.

 

 Major asset class performance

Asset classes1 month
%
1 year
%
5 years (p.a.) %
Australian shares-1.930.610.4
Australian small companies-2.130.410.2
Global shares (hedged)-3.828.313.4
Global shares (unhedged)-3.027.815.2
Global small companies (unhedged)-1.839.413.8
Global emerging markets (unhedged)-2.817.310.5
Global listed property (hedged)-5.329.14.4
Cash0.00.01.2
Australian fixed income-1.5-1.53.1
International fixed income-1.0-0.82.7
 Source:  Bloomberg & IOOF, 30 September 2021

 Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Australian small companies: S&P/ASX Small Ordinaries Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD

Please note: Past performance is not indicative of future performance

 

    Currency markets

Exchange ratesAt close on 31/8

%

1 month
change
%
1 year
change
%
USD/AUD0.73-1.20.8
Euro/AUD0.620.72.1
Yen/AUD80.4-0.18.6
Trade weighted index60.8-0.70.2
Source:  Bloomberg & IOOF, 30 September 2021

All foreign exchange rates are rounded to two decimal places where appropriate.

Please note: Past performance is not indicative of future performance.

 

This report is prepared by Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837 (Bridges). Bridges is an ASX Market Participant and part of the IOOF group of companies. This report is prepared by the IOOF Research team for: Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837, Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323, Elders Financial Planning ABN 48 007 997 186 AFSL 224645, Financial Services Partners ABN 15 089 512 587 AFSL 237 590, Millennium3 Financial Services Pty Ltd ABN 61 094 529 987 AFSL 244252, RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429, Shadforth Financial Group Ltd ABN 27 127 508 472 AFSL 318613 (‘Advice Licensees’). The Advice Licensees are part of the IOOF group comprising IOOF Holdings ABN 49 100 103 722 and its related bodies corporate (IOOF group).The Advice Licensees and/or their associated entities, directors and/or employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this document or may provide services to the company referred to in this report. The document is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of the Advice Licensees. The Advice Licensees and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. The document is current as at the date of issue but may be superseded by future publications. You can confirm the currency of this document by checking the intranet site (links below).The information contained in this report is for the sole use of advisers and clients of AFSL entities authorised by the Advice Licensees. This report may be used on the express condition that you have obtained a copy of the Advice Licensees Financial Services Guide (FSG) from their respective website. Disclaimer: The information in this report is general advice only and does not take into account the financial circumstances, needs and objectives of any particular investor. Before acting on the advice contained in this document, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before making a decision to acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance.  The contents of this report should not be disclosed, in whole or in part, to any other party without the prior consent of the IOOF Research Team and Advice Licensees. To the extent permitted by the law, the IOOF Research team and Advice Licensees and their associated entities are not liable for any loss or damage arising from, or in relation to, the contents of this report. For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process

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Four Steps To Retirement Success

Four Steps To Retirement Success

There’s never been a better time to be approaching retirement. With better health and greater financial resources than any previous generation, baby boomers are changing what it means to be ‘retired’.
 
But what about your retirement? Do you have a clear picture of what your lifestyle is going to look like? Or how much money you will need to fund it?
 
Whatever your ideal retirement looks like, one thing is certain – you don’t want to be worrying about money. That’s why you need to plan ahead.
1. Take control of your super
2. Make the most of your government contributions
3. Plan your exit from the workforce
4. Plan for contingencies
 
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Intergenerational Wealth Monthly Market Wrap September 2021

Risk-on environment persist

  • Global shares rose 2.7% and 3.1% in hedged and unhedged terms, respectively. The market was led higher by US tech stocks as investors anticipated a slower economic growth environment in which more cyclical names will struggle.
  • Australian shares underperformed global shares, rising 2.5% in August. The leading sectors were technology (up 16.8%) buoyed by a takeover bid for Afterpay from US payments giant Square and healthcare (up 6.8%). Materials was the worst perform (down 7.9%) driven by lower iron ore prices and forced selling of BHP following news that it is ending its UK dual listing.
  • The Australian dollar (AUD) fell 0.6% against major currencies and 0.4% against the US dollar. Lockdowns in both NSW and Victoria dragged on the economy souring investor support.
  • Fixed income returns were mixed. The decline in bond yields supported Australian bond returns. Arguably we saw some resolution of the bond vs equity world views with global yields rising and equities continuing to perform well. Weighing against this however is the relative weakness of cyclical stocks.

As Australians vaccinate en masse

Globally

 Global business surveys suggest economic growth momentum has peaked with a slowdown exacerbated by the Delta strain and related supply chain disruption notably in the Asia-Pacific region.

  • The US followed Israel in approving booster doses bolstering confidence that future mutant strains will be contained.

Locally

  • Economic growth for the June quarter surprised on the upside with strong household and government spending offsetting export weakness (production issues and high commodity prices).
  • High commodity prices can cause exports to be a net drag if lower volumes are exported relative to previous periods. This is because we focus on real GDP, an underlying measure of economic growth.
  • The Sydney lockdown was extended until the end of September. Peak daily cases may be reached in September according to government modelling.
  • Pleasingly vaccine progress is tracking strongly, boosting confidence that re-opening will occur in the December quarter this year. This can be seen in both consumer and business surveys which are considerably more positive than they were during the pandemic’s first wave last year
  • The RBA left its cash rate unchanged and deferred a reduction in its bond purchases until early next year.

 

Major asset class performance

Asset classes1 month
%
1 year
%
5 years (p.a.) %
Australian shares2.528.110.9
Australian small companies5.029.511.0
Global shares (hedged)2.729.414.4
Global shares (unhedged)3.131.415.6
Global small companies (unhedged)2.943.114.2
Global emerging markets (unhedged)3.222.611.0
Global listed property (hedged)1.532.95.2
Cash0.00.01.2
Australian fixed income0.11.13.3
International fixed income-0.20.62.9
Source: Bloomberg & IOOF, 31 August 2021

Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Australian small companies: S&P/ASX Small Ordinaries Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD

Please note: Past performance is not indicative of future performance

 

 

 Currency markets

Exchange ratesAt close on 31/8

%

1 month
change
%
1 year
change
%
USD/AUD0.73-0.4-0.8
Euro/AUD0.620.10.3
Yen/AUD80.5-0.13.0
Trade weighted index61.2-0.6-2.2
Source: Bloomberg & IOOF, 31 August 2021

All foreign exchange rates are rounded to two decimal places where appropriate.

Please note: Past performance is not indicative of future performance.

 

This report is prepared by Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837 (Bridges). Bridges is an ASX Market Participant and part of the IOOF group of companies. This report is prepared by the IOOF Research team for: Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837, Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323, Elders Financial Planning ABN 48 007 997 186 AFSL 224645, Financial Services Partners ABN 15 089 512 587 AFSL 237 590, Millennium3 Financial Services Pty Ltd ABN 61 094 529 987 AFSL 244252, RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429, Shadforth Financial Group Ltd ABN 27 127 508 472 AFSL 318613 (‘Advice Licensees’). The Advice Licensees are part of the IOOF group comprising IOOF Holdings ABN 49 100 103 722 and its related bodies corporate (IOOF group). The Advice Licensees and/or their associated entities, directors and/or employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this document or may provide services to the company referred to in this report. The document is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of the Advice Licensees. The Advice Licensees and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision.The document is current as at the date of issue but may be superseded by future publications. You can confirm the currency of this document by checking the intranet site (links below).The information contained in this report is for the sole use of advisers and clients of AFSL entities authorised by the Advice Licensees. This report may be used on the express condition that you have obtained a copy of the Advice Licensees Financial Services Guide (FSG) from their respective website. Disclaimer: The information in this report is general advice only and does not take into account the financial circumstances, needs and objectives of any particular investor. Before acting on the advice contained in this document, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before making a decision to acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance. The contents of this report should not be disclosed, in whole or in part, to any other party without the prior consent of the IOOF Research Team and Advice Licensees. To the extent permitted by the law, the IOOF Research team and Advice Licensees and their associated entities are not liable for any loss or damage arising from, or in relation to, the contents of this report. For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process
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Is super worth the hype?

Is super worth the hype?

As Financial Advisers we talk about superannuation a lot. So much so that it probably becomes a fuzzy word people don’t even hear any more. And the younger you are, the less interested you probably are.

 

But superannuation is super important. It is likely to be the biggest investment you will have in your lifetime, unless you own a mortgage free home. It’s also what will keep you afloat when you retire – which for some of us is a choice, for others it’s a choice made for us due to illness, or the inability to continue to carry out our normal work duties or due to financial hardship.

 

Without a regular deposit of wages or salary into your bank account, how will you afford to pay your bills, buy food and clothes and keep your car running? Have you have been lucky and wise enough to establish a few back-up options during your working years?

 

The Association of Superannuation Funds of Australia’s (ASFA) estimate of how much money you’ll need in retirement, depending on your lifestyle is in the table below. This is how much it estimates you need to have every single year you are retired.

ASFA Retirement StandardAnnual living costs
Couple – modest$40,829
Couple – comfortable$62,828
Single – modest$28,254
Single – comfortable$44,412
Source: ASFA Retirement Standard, for those aged around 65 (March quarter 2021, national)

 

There are also guidelines for the lump sum couples and singles need sitting in their superannuation account upon retirement for a comfortable lifestyle. These guidelines assume that the retiree/s will draw down all their capital, and receive a part Age Pension – which not everyone is eligible for, so it’s recommended you speak to your Financial Adviser about your situation.

CategorySavings required at retirement
Couple – comfortable$640,000
Single – comfortable$545,000
Source: https://www.superannuation.asn.au/ArticleDocuments/269/ASFA-RetirementStandard-Summary-2018.pdf.aspx?Embed=Y All figures in today’s dollars using 2.75% AWE as a deflator and an assumed investment earning rate of 6 per cent

 

If you know what your superannuation balance is currently, how old you are and approximately how many working years are left, you can use the above tables to figure out how you are tracking in terms of reaching a comfortable super balance to live a comfortable retirement lifestyle. Keep in mind these are averages and estimates. You, as an individual, may have higher needs, greater expectations of your retirement lifestyle, a desire to retire early or be disadvantaged by not receiving super when you have taken time out of the workforce to have children – all of these factors will impact on the amount you will need tucked away in superannuation.

 

With all this information, what can you do about increasing your superannuation balance so you hit your target by retirement age? If you are currently employed you would be receiving the super guarantee from your employer which for many years was paid at 9.5% of your salary (unless you have an employer that pays above minimum, lucky you!) and rose to 10% on 1 July 2021. It is set to rise again to 10.5% on 1 July 2022.

 

In addition to the superannuation guarantee there are other options you can consider if you are eligible such as government co-contributions to super, spousal contributions, contribution splitting and the low income super tax offset. Your Financial Adviser can have a conversation with you about how these strategies may help you increase your super balance.

 

Hopefully this article has provided some useful information, and you’re hyped up to take greater notice of your super balance because when your working days are over, it’s going to really matter to you.

 

If you would like to discuss super strategies, or review your financial plan, we would love to hear from you.

 

Sources:
https://www.superannuation.asn.au/resources/retirement-standard
https://www.ato.gov.au/rates/key-superannuation-rates-and-thresholds/?anchor=Superguaranteepercentage
https://www.smh.com.au/money/super-and-retirement/how-much-super-do-you-really-need-to-retire-20201023-p5683z.html
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