Daydreaming about your next holiday?

Travel has evolved significantly over the past 20 years, with many travelers looking for something with more adventure such as walking treks in New Zealand, cooking experiences in Tuscany, cruising on the Mekong River, or travelling through Australia’s beautiful outback. With all this extra adventure, the need to prepare financially has become even more important. The last thing you want when you come home from a life-changing trip is have a large debt hanging over your head. And you certainly don’t want to be worried about money while you are away from home. Here are 5 ideas on how to make savings part of your journey. Start up a dream list or spreadsheet While you are daydreaming about your trip and imagining your travel experiences, jot each of them down and add your estimation of the cost next to each dream item. Keep adding to this list as your planning evolves, making sure you add in big ticket items such as flights, tours, petrol, eating out, accommodation and shopping. If you find your expenses are getting out of your reach, divide them into “needs” and “wants”. Set up a dedicated savings account Look for a savings account that is easy to use and has a competitive interest rate and conditions that suit you. Adding money to this account as often as you can will make you feel more positive about preparation for the trip and reduce financial anxieties. Consider a garage sale Garage sales are a great way to pare down possessions, create space in your home and add to your travel adventure fund. Selling unwanted items on eBay...

“Voluntourism”: how to make a difference in your retirement

When Dr Bryan Humphrey retired, he didn’t stop working. He simply shifted gears, concocting a plan to embark on his long-held dream of an international “voluntouring” adventure. After a career lecturing at Deakin University on education, criminology, and medicine, Dr Humphrey was ready to ply his many skills in an environment where he would make an immediate difference. “I had studied sociology and development in my first degree and had also been active with Community Aid Abroad (now Oxfam). And when I retired I was ready and wanting to use my skills to make a contribution overseas,” he says. An application to Australian Volunteers International landed him the role he’d been looking for. From November 2013 to November 2015, Dr Humphrey lived in Phnom Penh, Cambodia, where according to UNICEF,1 only 26% of children make it to secondary school and nearly 5 million people live on less than US$1 a day.  He was deployed as a learning and development mentor tackling poverty and issues surrounding the protection of women and children. “I worked with four NGOs. We ran a series of workshops and train-the-trainer sessions with a focus on developing sustainable and transferable skills,” he says. As the former Director of Workforce Capacity with the Queensland Public Service Commission, Dr Humphrey had plenty to offer. That said, the project was not without challenges. “When you arrive, you have your kit bag of knowledge but no idea what might be applicable in the new context. And it takes quite a long time to establish trust, get to know the cultural context and build relationships.” Also crucial to success, he says,...

Market update – Winter 2017

Australian economy still focused on global politics Riccardo Briganti – Investment Specialist, BT Advice Politics played a significant role in fuelling investor concerns in 2016 with the key events being the Brexit vote and the election of Trump. Investors were left approaching 2017 with a sense of trepidation given the upcoming European elections peppering the calendar in the first half of the year. This unease appeared to be justified when the initial rounds of the French elections saw the major established parties eliminated from the presidential race and the UK Prime Minister Theresa May made the surprise announcement that the UK would hold a general election in June. The focus has now shifted to the economic outlook and market fundamentals. The political landscape, while still uncertain, appears to be less destabilising than initially considered. The election of Macron in France and the likelihood Merkel will be re-elected has provided a measure of political certainty for the EU, while the potential economic impact of Brexit has been downgraded in the eyes of analysts. Potential disruption in the US with Trump has been mitigated by the government measures in place. However, the government deciding not to back all Trump’s promises has also obstructed the sought-after tax cuts, healthcare and infrastructure proposals. Global economic data continues to be encouraging, if not as robust as earlier in the year. Strong manufacturing results have eased, but economic growth is continuing. This is a double-edged sword: central banks are likely to delay rate increases if growth expectations are wound back which could be seen as a positive for financial markets but any hint of faltering...

Make my retirement funds last the distance

Australians are living longer and if you hang up your work boots at, say, age 65 and live to age 90, you need to plan for the possibility of a quarter of a century in retirement. That’s a wonderful thought! But will your money last the distance? Understanding your current financial position A good starting point is understanding your current financial position. That means adding up all your assets including your superannuation and then subtracting the total value of any debts you owe (your liabilities). The figure that’s left is your capital and this is what you could invest to support what will hopefully be a long and rewarding retirement. Cost your dream – budgeting for living expenses in retirement The next step to maintaining your retirement lifestyle is drafting a household budget. This will give you a firm idea of how much annual income you need to support your preferred lifestyle. Bear in mind, as a senior you may be eligible for concessions and discounts on a range of regular expenses if you hold a Seniors Card or if you receive a full or part age pension. Be mindful of your health While your health may influence when you retire and your life expectancy, it can also have a major impact on your finances in retirement. As you age, you may find medical bills comprise a growing part of your household expenses. This is definitely something to consider when planning your retirement living costs. Sources of income in retirement Returning to work for extra money One option to give your retirement income a boost, is returning to work...

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...