What You Need to Consider Before Tying The Knot

Getting married is a milestone in anyone's life. It is a time filled with excitement as you research and plan your perfect day to celebrate your love and say I do and then dive into details of a romance-filled honeymoon! For many couples, the planning of the actual wedding and honeymoon take precedence over the boring and not as exciting planning of the future... However, just as important as the dress, the cake and the destination of that one big day, is the day-to-day realities of how you will plan, save and invest for your future.

Money can be one of the primary sources of disagreement in a relationship, and that is why before you say I do it is important that you and your partner take the time to discuss and agree on a "money plan." This includes understanding how tying the knot can impact your financial obligations and potentially affect how you structure your finances. Keep in mind, however, that finances and taxes can vary greatly depending on an individual's or a couple's specific situation. We recommend consulting a qualified professional to discuss your personal situation and get the best plan in place for you. 

Here are three things to consider when it comes to how marriage and money can work together:

1. Decide on a personal spending amount and keep it separate. One of our main cashflow strategies is to separate your weekly personal spending from your other money that's used for bills, investments and savings. Transfer your weekly spending amount to your spending account and use this money to cover gifts, dining out, transport and groceries – all the day to day spending. This works for couples because you each have your own allocation of personal spending deposited into your individual bank accounts, and you each have discretion over how you spend your weekly allocation. Just try and stick to the determined amount! Then with your remaining cashflow, you can set up automatic payment of bills and investing for your goals.

2. Set your goals together. If you're wanting financial success, you both need to know what you're saving and investing for in order to stay motivated, and also to ensure you don't dip into those savings. It's so important to set those investment goals together so that you're aligned and both planning for the bigger picture. Put a plan in place together and then you'll have a much better chance of reaching your goals.

3. Update your Wills. Getting married actually cancels any previous Will that you already had in place, so make sure you visit your solicitor soon after to get another one done. If you, unfortunately, pass away before having done this, you'll be deemed to have died "intestate" (without a Will), which makes estate planning a lot more complicated and time-consuming for the remaining spouse. Also, revisit your nominated beneficiaries on your super funds. Remember that a spouse can receive a super benefit tax-free.

If you would like support to put a plan in place or review your current strategy the Schuh Group Financial Planning team offer free consultations and are happy to support you in reaching your together goals. Contact Dominique Schuh direct at dominique@schuhgroup.com.au. or the Schuh Group office on 54804877.

Fading hope for "Trump reflation" was the main catalyst for the Australian share market falling the most in four months, but intensifying Chinese banking risks compounded the pressure on miners. The S&P/ASX 200 index tumbled 90.1 points, or 1.56 per cent, to 5684.5 as it followed the 1.2 per cent fall in the US S&P 500 last night, its biggest loss since November, after equity markets finally reacted to warnings President Donald Trump would struggle to implement his pro-market policies. The Australian dollar is trading at 76.78 US cents at the close Wednesday.

What this means for you:
When the mining shares in Australia drop, our whole market tends to come down for the day as well. This is because our hare market is highly concentrated with either mining-related or financial companies. Don't neglect holding some international shares to increase your exposure to other industries such as manufacturing and pharmaceuticals.

While it's still a little way off, from 1 July 2018, people with superannuation balances of less than $500,000 will be able to access their unused concessional contributions cap space to make additional concessional (before-tax) contributions. Individuals will be able to access their unused concessional contributions cap space on a rolling basis for a period of 5 years. Only unused amounts accrued from 1 July 2018 can be carried forward. This will be a handy way for people with smaller account balances to top them up where possible.

If you do not service your home loan regularly in the same way you service your car you could be missing out on thousands of dollars of savings every single year.

Taking the time at least once a year to review your structures and opportunities could provide you with remarkable savings that could boost your day to day living, provide investment equity or at the very least give you the peace of mind that your current loan is the best option and working well for you! The thing is that even small changes to interest rates and fees can make a huge difference over the lifetime term of your loan.
Refinancing your more expensive home loan is often a very simple process and the thousands of dollars of potential savings are well worth the effort. Furthermore, the opportunity to obtain a lower interest rate; the chance to shorten the term of their mortgage; the desire to convert from a fixed rate to variable rate or vice versa; the opportunity to tap into your equity in order to finance a large purchase; and the desire to consolidate debt provide strong motivation to at least review your current loan and lender.

Refinancing can be a great financial move if it reduces your mortgage payment, shortens the term of your loan or helps you build equity more quickly. When used carefully, it can also be a valuable tool in getting your debt under control.
If you haven't switched to a securely funded lower rate home loan then simply ask yourself - why not, as you consider some of the following key questions:

1. Am I paying an unreasonably high-interest rate?
2. Am I paying outrageous fees?
3. Am I frustrated by inadequate service?
4. Does my loan give me the features I need?
5. Am I paying for features I don't use?
6. Have my financial circumstances changed?

To make life easier for those wishing to check their home loan the Schuh Group Finance team are offering free consultations and reviews. With access to over 30 lenders, we will ensure that you have the information you need to choose the best option for you, we will also guarantee you the best rate available to you on any day. Plus, if you refinance with Schuh Group Finance this March or April, you will go in the draw to win a $2,500 Flight Centre voucher.


Should You Consider Salary Sacrificing?

The Australian share market reversed early losses to finish in the black following soothing words from Chinese Premier Li Keqiang. He said China would fasten its "seat belt" and rein in risks as it pursued a mid- to high-speed growth, while he also played down risks of a trade war with the US and said the country would continue to support global growth. The S&P/ASX 200 index bounced to close up 14.9 points, or 0.26 per cent, at 5774 as markets shrugged off US rate rise caution.

What this means for you:
We talk a lot about the benefits of salary sacrificing, but do you know when to consider it? The decision basically comes down to two things: 1.) whether your personal taxable income is greater than around $37,000, and 2.) whether you can do without the money as "take-home pay". If your taxable income is over $37,000, there will be a tax saving for you to do some salary sacrificing, particularly by contributing to super where the tax rate is lower at 15%. However, you need to find a balance between keeping enough money aside to be able to live on.

Do you have savings goals? Consider setting up separate fee-free online accounts to automatically save into from your income. This is a similar concept to the "jam jar" saving strategies of old, but it really works. If you've got a home loan, contact your bank to see if they'll allow you to set up separate offset accounts against your home loan. That way you can still do your saving for specific items such as holidays, and reduce your home loan at the same time.

The Australian share market finished flat on Wednesday, as investors remained focused on the release of jobs data in the United States later this week. In choppy trade - the S&P/ASX200 barely moved, down 2 points (less than 0.1 per cent) to 5759.7, while the broader All Ordinaries Index lost 2.5 index points to 5799.5. In the US the S&P 500 and the Dow Jones Industrial Average swung between losses and gains on Wednesday after a strong private hiring report raised the odds of an interest rate hike next week, lifting bank stocks while dragging rate-sensitive sectors.

What this means for you:
Have you ever wondered what you'd do if one of your children was seriously unwell? Would you have to stop work to take care of them? You may like to consider taking out a Child Trauma Policy, which provides a lump sum payout if your child is diagnosed with a critical illness. These policies are very low cost, but they do provide an injection of funds at a time when medical costs can skyrocket, and one parent usually has to take on a carer role. Policies are available for children aged between 2 and 18, and at 18 they can be transferred into an adult trauma policy.

We've had International Women's Day this week and it's a good time to remember that women make great investors. Statistically, women tend to be more patient with their investments and are less likely to make rash decisions. So what are you waiting for ladies, get out there and make a start!

Investors spent most of Wednesday anxiously awaiting an address by US President Donald Trump, with shares trading listlessly sideways before finishing the day marginally in the red. Buying in the banks and modest interest in utilities were not enough to keep the ASX supported, with Telstra weighing heavily on the bourse as it traded ex-dividend. Wall Street indexes rallied on Wednesday, with the Dow hitting a record above 21,000 points, while the dollar and U.S. Treasury yields jumped as investors bet that a U.S. interest rate hike would come soon.

What this means for you:
If you're thinking you'd like to make a large contribution to superannuation, this is the financial year to do it in. Until the 30th June, the after-tax (non-concessional) contribution limit is $180,000 per person, and you can even contribute 3 years worth of that amount into super in one go, making it $540,000 on offer if you're under the age of 65. As of 1 July 2017, the non-concessional contribution amount will drop to $100,000 per person, meaning the 3 years bring forward amount will also drop to $300,000 per person.

Many people trying to break into the housing market are making use of parental help in the form of a deposit. We suggest any large amount of financial help given to your children is treated as a "loan" rather than a "gift", with something in writing to support this. The reason being – your son or daughter gets into a relationship breakdown, any "gifted" amount can potentially be up for grabs in a property settlement, whereas a "loan" will need to be repaid to the parents, with only other assets left behind being included in a settlement.

Financial planning is not just for the wealthy. It's never too early to start out on the right path if you are a person ready to start building their wealth. The tools provided in the financial planning process can help individuals build long-term wealth and protect their family's future along the way, ensuring financial security later in life or in the case of disability (or worse). The truth is, we do not know what life might present us with, so preparation is key to long-term security.

Below is a list of the easiest ways to begin on the investment path and start to get your money to work for you and not against you!

1. Superannuation money - Top-up your own retirement savings above what your employer contributes by making salary sacrifice payments. You receive a tax deduction for any money deposited. While you're still accumulating, your deposits grow with only 15% tax being paid, then when you retire, a tax favourable income stream can be used to fund your lifestyle.

2. Share portfolio based on index funds – Give your savings an injection by adding a portion of them into the share market by making use of a low cost index fund, or better yet, a number of index funds. Then once you've established your investment, continue to save into it on a regular basis. The long term growth and dividend payments will far outpace the savings in a bank account.

3. Life and disability insurance – This is the backup plan for your family if it all goes unexpectedly wrong. Use your superannuation to fund the premiums where beneficial.

The Schuh Group Financial Planning Team are offering FREE "Get in the game" consultations for any client wanting to position themselves for continued growth and success. Contact Dominique Schuh direct at dominique@schuhgroup.com.au. to book your consultation today.

The ASX 200 index ignored the stronger overnight lead from Wall Street as it dropped 0.3% in early trade, due to weak wage and construction data. On the US market, investors are looking ahead to the Federal Reserve's minutes of its most recent meeting for clues on the timing of the next interest rate hike. The Australian dollar is up against the US, finishing at 76.79 US cents on Tuesday.

What this means for you:
Have you checked your nominated superannuation fund beneficiary recently? Your super fund assets don't automatically pass into your estate on death, as the beneficiary nomination will direct where those assets go. For industry funds, this nomination can sometimes lapse after 3 years, so it pays to revisit this. You also need to consider whether you'd like to leave the super fund assets to your children, as they may be forced to pay tax on the benefit amount. Nominating a spouse as your beneficiary will mean they receive the assets tax-free.

Overall the market has had a very strong 12 month period, which is great news for investors. For those who have been long-term investors, you're being rewarded for staying the course during both good and bad years.

The Week in Review

The Australian share market rallied on soaring Chinese debt extension and Commonwealth Bank's profit report and finished off high for the day. Last night the US S&P 500 index gained 0.4 per cent, but the S&P/ASX 200 index climbed to a 1.1 per cent gain, and finished up 53.9 points, or 0.94 per cent, at 5809.1 as bank stocks followed US financials higher. Wall Street's record-setting run entered its fifth day on Wednesday, as President Donald Trump repeated his promise of tax cuts and on upbeat economic data that increased the odds of a rate hike and lifted bank stocks.

What this means for you:
What a difference a year can make. This time last year investors suffered through one of the worst Januaries for markets on record, and now investors are enjoying a fantastic start to the current year. Some investors panicked 12 months ago and sold their shares, but for those who have stayed the course and not let their emotions get in the way, they've enjoyed double-digit returns over the 12 months. It just goes to show why it's so important not to make a short term decision on a long-term investment.

The heat wave power blackouts in parts of Australia have featured on the news recently, which reignites the issue of reliable energy. For individuals and businesses, there is a definite financial benefit to taking up solar for your power needs, provided you're going to stay in the same building for some years. Depending on the size of your solar installation, it will pay itself off in a number of years, meaning energy savings after that will fall straight to your bottom line. This may be worth considering for those who don't like their current utility bill.

You already know that you can rely on us to give you expert advice in all things home loans. And having the right product for your life can make all the difference when it comes to meeting your financial goals. If you are re-financing, down-sizing or buying your first home, we are here to help you find the most suitable loan for your needs and to help you achieve your financial goals.

But did you know we do so much more than home loans? We're experts in all kinds of credit and financial services and our aim is to make it easy. You can get everything you need under the one roof, including:

1. Car loans
2. Home Loan Refinance
3. Property Investment Loans
4. Personal Loans
5. Lifestyle loans – including boats and motorbikes
6. Honeymoon loans
7. Bridging loans
8. Property Development & Construction Loans
9. Insurance

And loads more! Whatever your goals, our job is to help you achieve them. We have access to a wide variety of different lenders and no matter what you want to buy, it is important that you find a solution that best suits your needs, budget and personal requirements. You can expect us to identify which products are most suitable for you and what you aim to achieve and to help you choose the correct solution. So why wait? Let us help you get a loan in place that's right for whatever you want to do next. To find out more, just call David Schuh today on 0400 224 615, or contact one of our finance team direct:
David Schuh david.schuh@schuhgroup.com.au
Jo Bennet jo.bennett@schuhgroup.com.au
Dannii Herron dannii.herron@schuhgroup.com.au.

The Australian sharemarket finished in the black as Reserve Bank growth optimism and rebounding iron ore prices buoyed sentiment. Wall Street finished flat last night, but after a choppy start the S&P/ASX 200 index rallied to close up 29.5 points, or 0.52 per cent, at 5651.4 as investors flipped back into the banks and miners climbed. U.S. stocks were little changed late Wednesday morning as investors assessed a flood of quarterly earnings reports. More than half of the S&P 500 companies have reported results so far, with their combined earnings estimated to have risen 8.2 percent - the most in nine quarters.

What this means for you:
What do you do once you've paid your house off? If you're in the fortunate position of having good income, you can use the equity you have in your home to borrow funds and invest in other assets. Preferably those assets will be income producing, which will then allow you to direct additional income streams to paying down the investment debt over time. We often forget about the borrowing power we have in our own homes, and how this can be utilised for wealth creation.

In the last 10 years, the average Australian home loan amount has nearly doubled. House prices continue to soar and affordability is quickly diminishing. Regardless of your stage in life, paying down the mortgage has never been more important. There are two key things you need to understand about your home loan. Firstly, the interest payable isn't tax deductible and so paying it down quickly should be your first priority. That is unless you have credit card debt or a personal loan with a higher interest rate, which should then become your first priority. Secondly, you'll be paying the most interest in the first few years of your loan as the principal amount is at its highest. So, the sooner you can get onto reducing that principal the better off you'll be because your interest will start reducing right away.

So short of finding a secondary income stream, here are some of the best ways to get that loan amount down asap. Refinancing to a lower rate may seem obvious but many people delay this simple move for a number of reasons. Some may be put off by the complexity of switching lenders, especially when they have all their financial products with a specific bank. For others, it may be finding the time to get around to it. But unless switching means paying another round of Lenders Mortgage Insurance or pricey exit fees, refinancing to a lower rate can save thousands in the long run.

Most home loan repayments are calculated on a monthly basis. But fortnightly repayments can serve you in two ways. Firstly, they allow you to squeeze in the equivalent of one extra monthly payment per year. For example, assuming your monthly repayments are $2,000, in a year that means you would have paid off $24,000 ($2,000 x 12). If you're paying fortnightly, you divide your monthly amount in half which makes it $1,000. As there are 26 fortnights in a year your total repayments become $26,000 ($1,000 x 26). This extra amount you've paid comes directly off your loan principal, which in turn reduces the amount of future interest calculated, meaning you pay off your loan sooner.

Income stream versus capital growth in retirement? We often here about people wanting an income stream from their investments in retirement, which makes sense if they are no longer earning an income from work activities. But don't forget, if your retirement assets are held in "pension" phase in your super funds, these will be considered "tax free" and no capital gains tax will be payable if you sell them. The most important factor in retirement is the overall return you receive, not necessarily whether it comes from income or capital gains.

A bounce in resource stocks helped the Australian share market rally from the red as Chinese economic data held steady. The S&P/ASX 200 index dropped into the red in early trade after Wall Street rallied from a 0.5 per cent loss to finish slightly lower last night after US President Donald Trump backed away from some of his controversial immigration curbs. But the domestic index climbed to finish up 32.3 points, or 0.57 per cent, at 5653.2 as a weaker US dollar supported commodity prices.

What this means for you:
Ever wondered why we have a "home bias" in our portfolio asset allocations? Australian shares make up only around 2% of the global share market, but in our portfolios we hold a significantly higher portion than 2% in Aussie stock. The main reason is the added benefit of franking credits on many Australian shares. This is a credit given to investors to prevent the double taxation of Australian dividends, after the share companies have already paid tax before the dividend gets to the investor. If you're in pension phase in your super, these franking credits can increase your returns on your Australian shares by as much as 2% per year, which is one of the few "free kicks" you can take advantage of.

Why don't we put all the money in Australian shares you might ask? It's because the overall rate of return is also important, not just dividend income. Apart from the last 12 months, the Australian share market has been underwhelming over the last 5 years, with the international shares and property leading the charge for growth. Building a disciplined and diversified long term investment plan will always be the best strategy for investors.

It has been a weary 12 months in politics across the world and as the USA begins to realise the full effect of a Trump leadership, we in Australia are now seeing the residual effects of our own 2016 federal election. Towards the end of 2016, a number of proposed changes to taxation, superannuation and social payments such as pension were set in place. In relation to Superannuation, a number of changes originally proposed in the 2016-2017 Federal Budget were legislated when the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 passed parliament on 23 November 2016.

The changes are positive overall, improving the equity, efficiency, and sustainability of super tax concessions and include:

1. Introduction of a transfer balance cap.
A $1.6 million cap has been introduced on the amount that can be transferred to super in retirement phase when earnings are tax-free. Additional savings can remain in an accumulation account (where earnings are taxed at 15 percent) or remain outside super. This comes into effect from 1 July 2017 and will be indexed in following years. Retired people with retirement phase balances below $1.7 million on 30 June 2017 will have 6 months from 1 July 2017 to bring their balances under $1.6 million.

2. Concessional superannuation contributions cap reduced.
The annual concessional contributions cap has been reduced to $25,000 (from $30,000 for those aged under 49 at the end of the previous financial year and $35,000 otherwise). This comes into effect from 1 July 2017.

3. Concessional superannuation contributions tax threshold reduced.
The threshold at which high-income earners pay Division 293 tax on their concessional taxed contributions to superannuation has been reduced from $300,000 to $250,000. This comes into effect from 1 July 2017.

4. Non-concessional contributions cap reduced and criteria introduced.
The annual non-concessional contributions cap has been reduced from $180,000 to $100,000. In addition, criteria for an individual to be eligible for the non-concessional contributions cap has been introduced and other minor amendments to the non-concessional contributions rules have been made. These changes come into effect from 1 July 2017.

5. Greater deductibility of personal contributions.
The requirement that an individual must earn less than 10 percent of their income from employment to be able to deduct a personal contribution to their super to make it a concessional contribution has been removed. This will apply from the 2017-18 income year.

6. Allowing 'catch-up' concessional contributions.
Individuals whose superannuation balance at the end of the previous financial year is less than $500,000 will be able to carry forward unused concessional cap amounts from the previous five years. This applies to working out an individual's concessional contributions cap from the 2019-20 financial year onwards.

7. More tax offsets for spouse contributions.
This increases the amount of income an individual's spouse can earn before the individual stops being eligible to a tax offset for contributions made on behalf of their spouse. This will apply from the 2017-18 income year.

8. Abolishing the anti-detriment rule.
The anti-detriment provision which allows superannuation funds to claim a tax deduction for a portion of the death benefits paid to eligible dependents will be removed from 1 July 2017.

Super Guarantee rate increase changes were previously legislated to increase according to the following timetable: 

The Super Guarantee contribution rate is set to reach 12% in 2025

With the above-mentioned changes taking effect primarily around the new tax year, 1 July 2017, now is the perfect opportunity and time to review your current Superannuation structures and see how you can take advantage of the upcoming opportunities.

The Schuh Group Financial Planning Team are offering free "Super Strategy Sessions" from February 1, 2017, for any client wanting to position themselves for continued growth and success. Contact Dominique Schuh direct at dominique@schuhgroup.com.au.

How is Your Asset Allocation Tracking?

The Australian share market has closed higher as positive news from steelmaker BlueScope Steel and medical device maker ResMed buoyed investors ahead of the main company earnings season in February. At the close, the benchmark S&P/ASX200 was up 21.4 points, or 0.4 per cent, at 5671.5 points while the broader All Ordinaries index was up 19.7 points, or 0.30 per cent, at 5726 points. Wall Street edged higher on Tuesday, led by technology and materials stocks, as the corporate earnings season kicked into high gear. Investors are also seeking more clarity on President Donald Trump's economic policies.

What does this mean for you?

Have you noticed a change in your Centrelink aged pension payments? The Asset and Income limits were reduced on the 1st January this year, and if your aged pension income has lessened, you may need to consider reducing your asset base. This can be achieved by spending some money on home improvements, gifting, investing in a funeral bond or simply spending some of your money. This may not be an ideal outcome for you, but these options may just help to increase your aged pension slightly.

How is your asset allocation tracking? If you've received some dividends or distributions from your investments recently, it's a good idea to check in on what you're doing with that cash. Are you just waiting for an opportunity to buy something, or are you blissfully unaware of what your investments have earned? To avoid this, talk to us about a regular investment plan that will allow you to keep investing small amounts on a continual basis, to ensure your cash is working for you. Investing on a consistent and regular basis avoids the associated risk of trying to "time" the market. Plus, it also ensures that your investing actually happens.

If you would like to review your current structures, contact us today on 5482 2855.

Falls by the big four banks have pulled the share market lower, as uncertainty about the policies of US president-elect Donald Trump influences trade. The benchmark S&P/ASX200 dropped 20.6 points, or 0.36 per cent, to 5678.8 points while the broader All Ordinaries index fell 21 points, or 0.36 per cent, to 5733.7points. Wall Street was little changed on Wednesday as gains in technology and financial stocks offset losses in shares of retailers.

What does this mean for you?
New year, new home! That's if you're a first home owner. The QLD government has increased the initiative to help first home owners into their own premises, and depending on the date of your contract, you'll get $15,000 or $20,000 towards buying or building your new house, unit or townhouse (valued at less than $750,000). This would certainly go a long way to covering the costs of stamp duty on house purchases, so keep this in mind if you're wanting to crack into the housing market.

There may be some estate planning considerations for those people with super balances over $1.6 million. Broadly, the new $1.6 million balance cap measure is a limit imposed on the total amount that a member can transfer into a tax-free pension phase account from 1 July 2017. If you're a beneficiary of that super balance, the tax-free status of an income stream may not be continued, which can result in more tax being paid on death by beneficiaries. If you fall into this category with having in excess of $1.6 million as your individual super balance, you need to get your planning up to speed to accommodate these changes.

If you would like to review your current structures, contact us today on 5482 2855

Is It Time For a Home Loan Health Check?

In 2016, we enjoyed the lowest interest rates on record. But have you been able to take advantage of the benefits? With home loan interest rates this low, if you are thinking about purchasing a new property now is a good time to talk to us about it. But more importantly, it is also a great time to look at your existing home loan to determine whether it is still the most suitable loan available for your needs. So why not call us for a chat? One of the services we offer is a complementary, annual home loan health check - and there's no time like the present! 

The aim of our home loan health check is to answer these questions:

1. Are you paying too much interest on your current mortgage?
2. Does your loan still meet your current needs?
3. Have your financial or personal circumstances changed? And if so, do you need different features and benefits from your loan?

When we update this information, we can look at your financial plans for the next 12 months and advise on how your loan could be set up to help you achieve your goals. For example, we could potentially help you unlock your equity to invest, renovate or make some lifestyle improvements.

Let us help you make the most of your finances.

We have access to a wide variety of lenders, so we're in a great position to help you compare loan products and choose one that suits your current financial circumstances. A saving of just a little on your home loan now, could add up to significant difference over the life of your loan. So why not give us a call today? To register for your free "Home Loan Health Check" please email one of the Schuh Finance team below or call David Schuh directly on 0400 224 615.

Email the team today, have a new rate option tomorrow:
David Schuh david.schuh@schuhgroup.com.au
Jo Bennet jo.bennett@schuhgroup.com.au
Dannii Herron dannii.herron@schuhgroup.com.au
Strong gains by resources companies including Rio Tinto and BHP Billiton have lifted the share market, despite falls by the banks. The benchmark S&P/ASX200 index gained 0.2 per cent, after earlier being close to 0.5 per cent higher. U.S. stocks slipped to session lows, before recovering ground, on Wednesday as drug stocks took a beating after Donald Trump's comments on drug pricing in his first formal news conference after his election victory. The Australian dollar has slipped a touch on the back of firming market bets on a US interest rate rise. The local currency was trading at 73.68 US cents at 0700 AEDT on Wednesday, down from 73.74 US cents on Tuesday.

What does this mean for you?

It's still early enough in the new year to do a business plan if you're in a small business. This can include a sole operator, a partnership or a business with a number of shareholders. Before the year gets away from you, think about what your long-term vision is, what your competitors are offering and how you're different, and then how you're going to market that difference. If you're a small business operator, that business is potentially your greatest cash cow, so take the time to plan for it being on track.

Have you checked your superannuation beneficiary nominations recently? Your superannuation balance doesn't automatically get paid into your estate, so make sure you've nominated where you'd like this to end up. There can be tax consequences for the people who receive it, so make sure you get some advice if you're unsure.
If you would like to review your current structures, contact us today on 5482 2855

  • Now that a new year has arrived, it's a great time to take stock of your finances and revisit your household and / or business budget. Budgeting is perhaps one of the most basic and the most effective tools for managing your money, yet most people neglect to do one. The task of sitting down and doing a budget may seem overwhelming at first, but the benefits make it worth the effort, including:

1. It enables you to see exactly which direction your money is going. If nothing else, this makes you more aware of what is coming in and how fast it's going out.
2. It helps you organise your spending and saving. We always recommend that people save first and then spend what is left over.
3. It enables you to save for expected and unexpected costs that come up.
4. It keeps you focused on your money goals.
5. It helps you determine whether you can take debt on and if so, how much.
6. It gives you control over your finances. 

So what makes a good budget? The key is to keep it simple, and a good way to get started is to:

1. Gather all your financial information, such as bank and investment account statements, recent utility bills and any information about the money you have coming in and what you spend it on.
2. Record all sources of income, such as your salary and outside income (e.g., interest on investments), etc. Write down your total income as a monthly amount.
3. List all of your expenses, such as rent or mortgage repayments, car repayments, mobile phones, insurance, groceries, petrol, utilities, entertainment and education expenses. Make sure you don't leave anything out.
4. Split expenses into fixed and variable. Fixed expenses broadly stay the same each month, while variable expenses change from month to month. So, you'll have to average these.
5. Once you have totalled everything you can see the bigger picture. If your income exceeds your expenses, you're off to a good start. If it's the other way round, you are living beyond your means and it's time to make some changes.

Make adjustments, so you can balance your income and expense columns. This means all income is budgeted to a specific expense, including some savings, whether that's in an investment fund, superannuation, or just a savings account. If your expenses exceed your income, look to see what can be cut – or consider how you might be able to increase your income, by taking a second job or working to get a promotion.

If you would like help with your budgeting, please contact Dominique Schuh in our office on 54804877 and she will assist you with some of our budgeting tools.

Investment Lessons to Learn From "The Donald"

NOVEMBER 4 2016, four days BD (Before Donald). The ASX had wormed its way down to 5263 and the Dow Jones was at 17,888. Market timers had driven both indices down, selling their own assets and their clients', so they could sit in cash and safely ride out any uncertainty. A day earlier in the Australian Financial Review, Tim Samway, managing director of Hyperion Asset Management, confirmed the uncertainty was causing investors to move to cash. Sounds like a good idea, right? A noted publication reported an important sounding person saying investors were moving to cash, why wouldn't you follow?

November 24 2016, sixteen days AD (After Donald). The ASX closed at 5545 and the Dow Jones was at 19,083. That's a 5.3% for the ASX and 6.6% for the Dow. Those would be acceptable returns for a full year. This is the way markets work. Gains often come in short spaces of time. You sit out a few weeks thinking an orange billionaire will make the world a scary place and suddenly you've forgone a freely available 5-6% increase in equities.

Once again, the market timers blew it. The cash sitters blew it. The currency speculators blew it. The stock pickers blew it and the gold mavens blew it. Plenty of people believed Trump would push the US dollar down (it went to its highest level in a decade) and send billions flowing into gold. As Trump would say "wrong!"

After a brief spike, in US Dollar terms gold has lost 11% since Trump was elected. The loss in Australian dollars was around half that due to the increase in the US dollar. If you want to know if anyone would have actually sold shares and jumped into gold, one investment newsletter advised readers of a "Trump Trade" where they sell their shares and pile into gold. For the past few weeks they've been making excuses as to why it didn't happen. "Finally, anyone who thinks they can forecast market movements is a fool"

Back to that noted publication, the Australian  Financial Review. On November 2, Trevor Sykes wrote a column titled "Safe Havens in an Unsafe World". After listing numerous financial and political boogeymen (including Trump) around the world, Sykes suggested investors find solace in gold:

"The classic refuge in any money panic is gold, which can be either held physically or by buying shares in gold mining companies ... if you're seeking insurance against a financial Gotterdammerung, putting a few per cent of your portfolio into yellow bars or gold equities should help you sleep better at nights."

Columnists like Mr Sykes have space to fill. Inevitably they'll cycle through a list of varying investments every few months to keep things interesting. Or on cue, when things are looking uncertain, they'll bring up gold and toss in terms like "safe haven". As an investor, you need to be aware that gold pays no interest or dividends and it's no less volatile than any other asset class.

Finally, (and we'll keep saying it) anyone who thinks they can forecast market movements is a fool. You'll see advisers and fund managers quoted in the media from time to time talking about how they're sitting on cash. Convinced of their own genius some of them sit out bull markets. The losers are their clients. Just because these strategies are printed in the media doesn't mean they have any authority. No one knows when the best or worst days will occur. Staying invested is the only approach that works.

For all Trump's faults, he's just reminded us of some big investment lessons and many investors learnt the hard way.

The Australian share market rallied for the third straight session to close at a 2016 high despite steep falls in iron ore prices. The S&P/ASX 200 again jumped 0.7 per cent at the open, before slipping to close up 22.4 points, or 0.4 per cent, at 5613.5 on volume 12 per cent below average as miners defied weakness in ore prices and banks continued to rally. The Australian dollar is moving within a narrow range and remains relatively steady against the US dollar. The local currency was trading at 72.66 US cents at 1200 AEDT, up from 72.52 US cents on Tuesday.

What this means for you:
The ATO has released data saying that the number of SMSF's has risen dramatically in the last five years (grown by 31 per cent) but the overall returns haven't been as positive. Our suggestion would be to hold off having an SMSF unless you've got a balance of at least $200,000 and you're contributing to it regularly. Otherwise, the costs of a tax return and audit can erode too much of the rate of return each year.

If you're looking for savings in the new year, you may want to get a second opinion on your insurance structure. Making use of your superannuation to hold some of your cover can be an effective way to reduce the overall cost of the premiums. But, you need to make sure you structure matches your situation and where you'd like any benefits to be paid. Drop in and see us in the new year for a free second opinion.


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