5 reasons to take your insurance more seriously

As we move through life, find a partner, raise a family, and maybe start a business, the importance of insurance in a long term plan increases. That’s because insurance is all about providing a financial safety net that helps you to take care of yourself and those you love when you need it most. Here are 5 reasons why insurance matters. Protection for you and your family Your family depend on your financial support to enjoy a decent standard of living, which is why insurance is especially important once you start a family. It means the people who matter most in your life may be protected from financial hardship if the unexpected happens. Reduce stress during difficult times None of us know what lies around the corner. Unforeseen tragedies such as illness, injury or permanent disability, even death – can leave you and your family facing tremendous emotional stress, and even grief. With insurance in place, you or your family’s financial stress will be reduced, and you can focus on recovery and rebuilding your lives. To enjoy financial security No matter what your financial position is today, an unexpected event can see it all unravel very quickly. Insurance offers a payout so that if there is an unforeseen event you and your family can hopefully continue to move forward. Peace of mind No amount of money can replace your health and wellbeing – or the role you play in your family. But you can at least have peace of mind knowing that if anything happened to you, your family’s financial security is assisted by insurance. A legacy to leave...

Why super is still simple

It may be hard to believe, particularly with all the discussions since the 2016 Budget announcements regarding changes to the system, but at its core, super still remains a relatively simple concept. Superannuation remains a very tax effective investment vehicle, with a maximum tax rate within the fund of 15% when the relevant rules are complied with. So what’s all the noise about the changes then?  There are some changes and it is important to be across them, but the above fundamentals still remain.  The changes themselves can largely be categorised into two main themes – changes around contributions, and changes in retirement. Contribution changes The changes to contributions don’t take effect until 1 July 2017.  From that time, there will be a reduction in the amount that can be contributed annually, and if you have (or are approaching) a total super balance of $1.6 million, an additional restriction on your non-concessional (or after tax) contributions apply. From 1 July 2017, the annual limit for concessional contributions falls to $25,000.  This limit applies for everyone eligible to make or receive these pre-tax contributions, which generally comprise Super Guarantee (SG) amounts from employers, amounts salary sacrificed to super and, if you are eligible, personal deductible contributions.  If all you receive is the minimum SG required from your employer, then the reduction in annual limits (from $30,000 or $35,000 this year depending on your age) won’t have an impact on you.  But if you also salary sacrifice, you may need to review your arrangements by 1 July 2017 to ensure you don’t inadvertently exceed the cap.  Of course, the flip side...

The Trump Presidency – what it means for you

When news of Donald Trump’s impending election victory starting filtering through in the afternoon of 9 November, markets were thrown into turmoil. The Australian sharemarket lost almost 5% in the space of a few hours, the US sharemarket pointed down 5%, oil plummeted and gold shot up. Within 12 hours, calm had been restored. Sharemarkets rebounded, oil recovered losses and gold retreated. And in the following days, share and commodity markets surged as hopes of Trump-led economic growth gained currency. Gold recorded its worst week in three years, falling 6.1%. Donald Trump’s victory may have been a surprise for some, but the ensuing rise in markets caught almost everyone off guard. Most market commentators had forecast short term panic; one predicting sharemarket falls of between 5 and 10 per cent, a plummeting Australian dollar and surge in the gold price. Like so many others before them, these predictions did not come to fruition. So what are the likely medium to long term implications of Trump’s victory for Australian investors? In short, the answer is uncertain. And in general, markets do not like uncertainty. Will Trump the President retain the more contentious policies of Trump the Election Campaigner? Will the Republican Congress allow these policies to become law? How will the world, particularly China, respond to Trump? It will be some time before we know the answers to these questions. But early signs are far from the doom and gloom predicted. There is a widespread perception that Trump’s policies are good for growth. His policies include lowering corporate and personal taxes and increasing spending on infrastructure. These types of policies...

Economic Outlook

What’s in store? Riccardo Briganti – Investment Specialist, BT Advice Economic data has taken a back seat in recent weeks as the US presidential race and the eventual election of Trump has dominated attention. Now that the election is out of the way, focus is likely to return to economic statistics to inform investment decisions including likely central bank decisions. The US Federal Reserve (the Fed) is due to meet on December 13-14 while the Reserve Bank of Australia (RBA) meets in early December. US economic data has recently presented an economy where positive developments in some areas have been offset by weakness in other areas. This has seen overall growth struggle to break higher, but the risk of recession has been held at bay. The labour market has been the most consistent area of strength but even it has suffered its share of setbacks. Nevertheless, most recently the news has been positive. Non-farm payrolls increased by 161,000 in October with the unemployment rate at 4.9%, slightly below the rate seen a year earlier. The closely watched ISM index – a measure of the strength of the US manufacturing sector – also pointed to further improvement, following a lull earlier in the year. The index increased to 51.9 in October from 51.5 a month earlier. A reading above 50 suggests the manufacturing sector is expanding. The related measure for the non-manufacturing sector fell to 54.8 from 57.1 a month earlier. In contrast, consumer confidence has faltered. The two main measures – the Michigan University survey of consumer confidence and the Conference Board Consumer Confidence index both tumbled in October...

Market Update – are we near the bottom?

What has driven the recent falls? The turmoil in global investment markets has continued into this week, although the last few days have seen a bit of stabilisation and improvement in several markets. In a way we have seen a range of issues combine to create a perfect storm for share markets over the last few weeks with: China’s currency devaluation and weaker economic data raising concerns about the Chinese economy. This came at a time when concerns about the emerging world have been building for several years as falling commodity prices have weighed on commodity producers particularly in South America and the Middle East, this has been made worse by a shift to populist/anti-reform economic policies and Russia has shot itself in the foot over Ukraine. China’s recent currency devaluation has triggered further falls in Asian and emerging market currencies, which have already been falling for four years now (and are down 37% from their 2011 high – just like the $A!). Tensions between North and South Korea. The bombing in Thailand. Worries about the US Federal Reserve raising interest rates at some point after investors have got used to near zero interest rates for more than six years. The concerns in the emerging world have seen US shares break down through the technical chart ranges that have provided support of late. Even Greece got a look-in with a new election on the way (although it’s unlikely to be a major threat as either the still popular Syriza will be returned in a coalition government (most likely) or the main opposition group New Democracy wins – but both...

Income protection matters at every age

Are you looking towards a comfortable retirement in the not too distant future? If you are, you need to ensure your income is protected, so that in the event you fall seriously ill or experience an accident in the lead up to finishing work for the last time, you don’t have to dip into your retirement savings to cover your income shortfall while you recuperate. It’s easy to assume that the older you get, the less important income protection is. You might have paid off the house in full; you might even be working part-time and looking towards a time in the not too distant future when you’ll be stepping out of the workforce altogether. But the runway to retirement is actually one of the most important times to ensure your income is adequately and fully covered. Because if you had to stop work for any extended period as a result of an accident of serious injury during this time, without income protection insurance you would probably need to rely on your retirement nest egg to keep the ship afloat. This could have serious and negative consequences for how you spend your retirement. Worryingly, research conducted by the Australian Institute of Superannuation Trustees and Industry Funds Forum has found a significant underinsurance problem when it comes to income protection. The research found 45 per cent of Australians are underinsured by $1,000 a month[1]. For people in this group, making ends meet becomes a real issue – something that is difficult to contemplate when you are also trying to recover from an accident or illness. faxless payday loan direct lenders...

Striving for balance with work and life

Work-life balance for four out of every ten working Australians is actually getting worse, according to a report by The Australian Institute Think Tank in November of last year. The study also found Australians are donating $110 billion in free labour each year by giving extra time to work without being paid. This means the average full-time worker is doing six hours of unpaid overtime each week – worth an estimated $9471 a year. Why? The reason for the increasing work/life balance imbalance, is work insecurity and pressure from bosses, says Director of Research David Baker. Fear about job security is described as widespread. “For many Australian workers rocking the boat appears to be a genuine concern,” Mr Baker says. “If seeking better balance is perceived to be a threat to career prospects people are unlikely to freely raise the issue with their boss.” On top of that, technology means we are constantly available, so it can be difficult to switch off. So is the elusive work-life balance possible? Work life balance – what is it actually? Firstly, it helps to actually define what work-life balance is. It’s an often talked-about concept but in reality how that looks is very personal. Jim Bird who works at WorkLifeBalance.com, a company that offers high performance, enterprise-wide work-life balance solutions and time management programs, says that what it’s not, is trying to schedule equal hours between your work and personal life. There’s no perfect, one-size fits all solution but rather, that the best individual life work balance will vary over time and often on a daily basis, Mr Bird says. Why it’s...

OIL – The Good, the Bad and the Ugly

The price of oil may only be something you think about when you’re filling up at a petrol station or when you book a flight and see fuel excises. But if you’ve been looking at oil prices recently, you would have noticed they’ve been going down. So what does this mean for investments? In this article, we explore the reasons for this fall in pricing and the outlook for oil markets. Declining oil prices Oil prices have changed rapidly in the past year. This has been a result of two factors – global oil supply and demand, and the Organisation of the Petroleum Exporting Countries (OPEC). Key points Lower prices may benefit consumers and countries that import oil, while posing challenges to economies that rely on oil exports. Oil prices have declined over the past year due to: Increased supply, while demand remained static OPEC allowing the market to self-regulate supply. Global oil supply and demand Growth in oil demand has been at a stable pace with growth and projected growth at approximately 1.2% pa for 2004-2019. In recent times, there has been a dramatic increase in supply with shale oil as the new source of oil. Much of the increase in production has come from the US. The increased supply has meant an excess of oil and in turn, prices have declined. OPEC OPEC has regulated oil over the past 30 years by matching supply to demand. This meant the level of prices encouraged development of new sources of oil. Shale oil is cheaper to produce than other sources of oil and as a result, was still profitable...

Peace of mind when the unthinkable happens to your family

When your child falls ill, the least of your worries is usually how you’re going to survive financially. Indeed, mostly children bounce back quickly after an illness. But when they experience a more serious condition, the adverse financial effects on the family can be significant. But there is a way to ensure you can keep your head above water and at the same time focus on your child’s health. As any parent knows, having a sick child is a terrible experience, even if they just have a fever. Having a seriously ill child is even more harrowing. This can put immense pressure on the family, in which both parents typically work from the time when children are very young. So when a child is critically ill, generally one parent will need to take substantial time off work. Moreover, this situation is terribly unsettling for every member of the family, especially any siblings of the sick child. Facts of sick kids How would you cope if, heaven forbid, one of your children had to spend a protracted period in hospital? Some people have the luxury of being able to rely on their extended family to step in when such a situation occurs. But research shows people in that situation are in the minority. According to the Australian Bureau of Statistics, grandparents usually care for around a fifth of children while mum and dad go to work. Which means around 80 per cent of families need to rely on outside support when it comes to childcare, of either sick or healthy kids[1]. So many of us would be left in the...

Protecting your most important asset

It’s easy to assume challenging times tend to affect other people. But the reality is any one of us can suffer an accident or illness that stops us from doing our job – even at a relatively young age. Which is why income protection insurance is such an important investment at every stage of our lives. As a young person, it’s easy to think few things have the potential to affect your income. But every day, people who are really just at the start of their lives experience events that mean they are temporarily unable to perform their role and earn the salary they need to support themselves and their family. As a result, income protection insurance is an essential cover for most of us. Accidents and illness can happen to anyone, whether it’s an injury from playing your favourite sport on the weekend, an accident whilst skiing on holidays or an unexpected illness striking you down unexpectedly. We are all at risk of suffering an accident or serious illness. In fact, when it comes to cancer alone, according to the Australian Institute of Health and Welfare’s 2012 report Cancer in Australia: An overview men have a one in three risk of being diagnosed with cancer by the age of 75, whereas for women this figure is one in four[1]. Income protection provides financial support for people suffering a range of illnesses including cancer, heart attack and stroke. This type of cover is one of the main ways to protect your finances should you suffer a serious accident or illness. Let’s take a look at how it works. Taking...