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Millennials & Money – your unique needs

Updated on Finance

If you entered the world between 1980 and 1996 you’re part of the “millennial generation”. You’ve grown up in an age of unprecedented abundance and incredible technical innovation, and as a group, enjoy a greater wealth of opportunity – professionally, socially and recreationally – than any previous generation. Many goods and services have never been cheaper in real terms, allowing you to live more for today than adopting your parents’ and grandparents’ single-minded focus on buying a home and saving for retirement.

Career or a combo?

That’s not to say you don’t face challenges. Increased employment casualisation, short-term contracting, and the threat of automation, can potentially threaten your job security. Or you might actually embrace a ‘come and go’ career, interweaving periods of work with stints of travel, child-raising or volunteering. Indeed, many millennials are discovering that the whole concept of work versus recreation is becoming blurred. With a computer the primary tool of trade in many professions, you may be able to work just as easily from a spare bedroom in Berlin or Barcelona as in Parramatta or Perth.

Medical advances promise a long and healthy life, meaning you may not even intend to ‘retire’, choosing to work for as long as health allows.

Is home ownership that important?

Some of your cohort find it liberating not to be tied down to one place by a mortgage and a heap of stuff, however the likelihood is that if you haven’t bought a house already, you still aspire to the great Australian dream of home ownership. This is a real challenge particularly for younger millennials and may involve unacceptable compromises such as living a long distance from work. But attitudes to long-term renting are changing. While Australia has yet to develop both the culture and cooperative ownership structures that make life-long home rental the norm in some countries, it’s a sure bet that enterprising millennials are working to change that. In any case, renting can be an economically viable alternative to buying.

There’s an app for that

Whether it’s finding a meaningful job, financing a new venture through crowd funding, borrowing through P2P platforms, finding a house or just a room, or even looking for love, you know where to find the apps. Still, with the mass of opportunities that have arisen from greater connection and changing social attitudes, life is in many ways more complicated than it was for your forebears.

Let’s talk about money

Managing money is no exception. For a start, there’s the challenge of working out what the right balance is between funding a desirable lifestyle now and saving for medium and long term goals. Once that’s decided there are the questions of how to save and where to invest. The Internet is awash with information and advice, with much of it of a high standard. Unfortunately this is balanced by a vast amount of misinformation and an abundance of shonky investment offers, making it difficult to distinguish the good from the bad.

Fortunately, help is at hand. We’ve made it our business to understand the wants and needs of all generations. There is more to life than saving for retirement and maximising entitlement to the age pension. If you have that millennial feeling and need some advice on how to manage your unique financial needs to get as much out of life as possible, explore our website a little more, find us on Adviser Ratings, then contact us for a chat.

 

This is general information only

 

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Are we jeopardising the bank of Mum & Dad?

Are we jeopardising the bank of Mum & Dad?

Updated on Education, Finance

The temptation is obvious. Soaring house prices have made buying a home tough for most home buyers and prompted many parents to think they should step in and make a financial contribution.  The typical argument is that Mum and Dad don’t really need the money and that their children will inherit it one day anyway so it might as well be now when it can do some real good.  As a result of this thinking, the Bank of Mum and Dad is now estimated to be one of the top 10 mortgage lenders in the country, as more and more people turn to their parents for financial help when buying a home.  According to Digital Finance Analytics, parents are now contributing $90,000 on average towards the first home deposit of each of their adult children, up 20 per cent in the past twelve months.  With the median house price in Australia’s combined capital cities now $896,000, parents contribute just over 10 per cent as a deposit, or if two sets of parents are involved, 20 per cent as a deposit.  For most parents, this is a large amount of money, which can be given to their children either as a straight-out gift or as a formal loan or so-called ‘soft’ loan.  Typically, this is done by drawing down against the value of their home as security and gifting the funds or providing a guarantee for their child to buy a home using their home as collateral.  The financial comparison site, Finder, estimates that 60 per cent of all first-home buyers access funds from their parents to buy their first home.  More, it found that 50 per cent of these children were facing some level of financial stress before deciding to buy a property with the help of their parents.  While gaining financial support from Mum and Dad might be essential for many Australians to take that first step onto the home ownership ladder, is it a good decision for Mum and Dad?  While some parents can afford this financial handout, it is only the case for some. Figures from the Association of Superannuation Funds of Australia show 1.68 million, or more than half of all Australians over 70, have no super.  Of those older Australians who do have super, the median value is between $100,000 and $149,000, suggesting few in this age bracket have funds they can afford to give away.  ASFA estimates only 185,000 Australians have $500,000 or more in super, and about 27,325 individuals have more than $2 million in super – a figure where giving funds to children might be affordable.  These figures change considerably for Australians in the 50–70 age bracket as these younger Australians have had access to super for longer.   However, it’s clear that the Bank of Mum and Dad is not as flush with funds as suspected, and many are sowing the seeds of their own financial destruction.  While it is simple in the first flush of retirement to think there is more than enough to support Mum and Dad for as long as they live, life events might undermine this.  No one knows how long they will live or what medical issues they may face through retirement, which could mean they themselves need every cent they have.  Throw in the prospect of one or both parents needing to move into a nursing home at some stage, which can be a significant cost of around $500,000 per parent; then their finances start looking very shaky.  The real fear is that in trying to help their children buy a home, all the Bank of Mum and Dad is really doing is pushing up house prices and sowing the seeds of their own financial problems.  The information provided in this article is general in nature only and does not constitute personal financial advice. 

What can you tell your employees about Super?

What can you tell your employees about Super?

Updated on Finance

It’s a common question asked by employees: “what should I do about my super?” If you are an employer or manager and feel confident of your knowledge of superannuation and investment, it can be tempting to give an answer. However, just about anything helpful you have to say will likely fall within the definition of giving financial product advice, and that could land you in very hot water. The boundaries Financial product advice is a recommendation or statement of opinion that: is intended to influence a person or persons in making a decision in relation to a financial product or class of products; or could reasonably be regarded as being intended to have such an influence. The Corporations Act casts a wide net. Financial product advice can include anything you say about: joining, or making contributions to, a superannuation fund; making additional contributions to a super fund, including by salary sacrifice; rolling accumulated superannuation into or out of a fund; and selecting particular investment or insurance options within a superannuation fund. The ability to provide advice is generally restricted to holders of an Australian Financial Services Licence or their representatives. Very few employers, or their staff, fall into this category, and giving financial product advice, even inadvertently, could lead to prosecution. What can you talk about? You can provide factual information that does not include a recommendation, an opinion, or an intention to influence a person’s decision regarding their super. This allows you to provide information about: employees’ rights and employer obligations; how your employees can tell you what superannuation fund or retirement savings account (RSA) they want their superannuation guarantee contributions paid into; or the employer fund into which you will pay superannuation guarantee contributions if the employee doesn’t nominate a superannuation fund or RSA. You can also give your employees the Product Disclosure Statement (PDS) of your default superannuation fund. Just don’t provide any explanation of the material it contains or attempt to recommend the default fund. How can you help? None of this precludes you from helping your employees. You just need to go about it the right way. For example, you can refer employees to a licensed or authorised adviser. Just be sure to disclose any benefit you may gain from making such a referral. Or you can ask a superannuation fund provider to make a presentation to your employees. Take care, though, that you don’t give the impression of either endorsing or disapproving of the fund in question. Being asked for advice is recognition that your employees respect your views and knowledge. It can be flattering and you may well know a great deal about superannuation and investment. However, without the necessary authorisation, you need to steer well clear of financial product advice. And it’s not just you who needs to be aware of these restrictions. You need to ensure that your HR staff and line managers are also aware.   What can you tell your employees about Super 14/11/2018 This is general information only

Financial Success: More Than Just Money

Financial Success: More Than Just Money

Updated on Finance

When discussing financial success, many people tend to use the terms “rich” and “wealthy” interchangeably. While being rich is often associated with having a lot of money or material possessions, being wealthy is about having financial abundance that is sustainable over the long term. Being Rich Being rich is often associated with having a high net worth, a large income, or significant assets. It’s a term used to describe people who have accumulated substantial money or wealth. However, being rich does not necessarily guarantee financial success. Someone who is rich may have a lot of money, but they may not have the financial stability or security that comes with being wealthy. Being Wealthy On the other hand, being wealthy is a more sustainable form of financial success. Wealth is often created through long-term investments, passive income streams, and wise financial planning. A wealthy person has accumulated enough assets and income-generating investments to provide a steady income stream, allowing them to live comfortably without relying on external factors. Financial success requires more than just having a lot of money… it is about having financial security AND freedom: Financial security means having enough money to cover your basic needs and some comforts. Financial freedom is the ability to make choices based on what you truly want rather than being constrained by financial limitations. The path to financial success requires a good understanding of financial literacy, clearly defined personal values, a long-term perspective, and the ability to establish, and stick to, a strategic plan. Financial Literacy Understanding how money works, including managing, investing, and saving it, is critical to achieving financial success. This knowledge will help you make informed decisions about your finances and enable you to take control of your financial future. Personal Values Successful people achieving financial freedom often clearly understand what is most important to them. They know their values and use them as a guide when making financial decisions. This approach helps them focus on their priorities and avoid impulsive purchases that jeopardise their long-term financial security. Long Term Perspective True financial success and wealth isn’t built on the back of “get rich quick” philosophies. There is no “magic pill” for financial success; it’s a lifestyle, not an overnight fix. Building wealth takes time. It requires focus, discipline, patience, and long-term commitment. Strategic Planning Achieving financial success requires strategies such as creating a budget, investing wisely, and building passive income streams. Again, these are all strategies that require patience and commitment. It is essential to stay focused on your goals and take the necessary steps to achieve them. While the above factors each play a critical role in your journey to financial success, the secret ingredient lies in defining what financial success and wealth mean to you personally, as someone else’s definition of financial success may look very different to yours. Some ways to achieve this are to: Assess your lifestyle – Consider what your ideal lifestyle looks like; where are you, who are you with, what are you doing? Define your values – Figure out what is important to you and define your values based on this. Your values can then provide a framework to make decisions based on what is important. Set Financial Goals – Be clear on what you want to achieve in life. You can then define your vision further by setting specific financial goals. If you are ready to start your journey towards achieving financial success, a financial adviser can help. They will assess your financial situation, identify your goals, and create a long-term financial plan tailored to your individual needs. With their guidance and support, you can take control of your financial future and achieve the financial security AND freedom you deserve. The information provided in this article is general in nature only and does not constitute personal financial advice.    

How much do I need to start investing?

How much do I need to start investing?

Updated on Finance

Far from being the realm of the rich, building an investment portfolio is something that most people can do. It can start as a simple savings plan – a few dollars in the bank – before expanding into a diversified portfolio containing a range of asset classes. Getting started may be easier than you think, so let’s look at some of the basics. How do my goals influence investment choice? Your goals have a big bearing on how you invest. If you are saving for a specific purpose such as an overseas trip, a car or a home deposit, you’ll most likely have a relatively short investment time frame and will want your savings to grow in a predictable way. In this case an interest-bearing bank account or term deposits will provide the greatest certainty of meeting your savings goal. With no upfront costs you really can get started with a few dollars. If you have a longer timeframe and the desire for your investments to deliver higher returns, you’ll be looking to include asset classes that can provide capital growth as well as income. These include shares and property. For small investors the most practical way to access property may be via a managed fund. Shares can also be purchased through managed funds, or directly via a share broker. Taking into account minimum brokerage costs on shares and minimum investment amounts set by fund managers, you’ll probably want to have $1,000 to $2,000 available to make the move from ‘saver’ to ‘investor’. What are the risks? Shares, property and even fixed interest investments can all rise and fall in value. In other words, they carry greater risk than cash investments. Spreading your money across a range of asset classes and specific investments, and sticking to a long-term strategy decreases investment risk. But fluctuating markets also create opportunities. If you regularly contribute new funds to your portfolio, you’ll get more for your money during down times than you will when markets are booming. What about costs? Fund managers may charge entry fees, management fees and exit fees, and it’s important to be aware of all of the specific fees that apply to you. All other things being equal, the higher the fees the lower your investment returns. Tax can also be considered a cost, and depending on the complexity of your investments, you may also incur fees for accounting and financial advice. Should I start with a lump sum or with a savings plan? This depends entirely on you circumstances and desires. Receiving a lump sum such as an inheritance or a tax refund is often the catalyst for someone to start investing. But without such a windfall, it’s still possible to build a great portfolio. Many managed funds offer the option of starting with a relatively small initial deposit followed by regular or irregular additional contributions. How do I start investing? Over long time frames, decisions made now can make a big difference to the performance of your portfolio. If you’re new to the field one of the best investments may be to consult a financial adviser. An adviser can help you clarify your goals, understand the jargon and determine your tolerance of risk. They can also recommend specific investments and point out the potential tax implications of different investment choices. Excited by the possibilities? Getting started is as easy as making a phone call. Contact us today to get started!   This is general information only  

Quarterly Economic Update: July-September 2024 

Quarterly Economic Update: July-September 2024 

Economy, Finance, Investing

The Australian economy is still growing, but things are moving slower than usual, and the Reserve Bank of Australia (RBA) is being cautious with any changes to interest rates. They’re waiting for inflation to settle before taking further action.  GDP Growth: Slowly But Surely  While the economy is growing, it’s not as fast as we might like. Over the June quarter, the economy expanded by just 0.2%, with a 1.5% growth over the financial year. While these numbers sound positive, when you factor in Australia’s growing population, the story changes. For the sixth quarter in a row, GDP per capita (which looks at economic growth per person) has actually fallen. This shows that while Australia as a whole is growing, individuals may not feel that impact, especially with rising costs of living.  Interest Rates: Holding Steady  In September, the RBA decided to keep interest rates on hold at 4.35%, with the next decision due in November. While the US recently cut rates, Australia hasn’t followed suit, and it’s unlikely we’ll see any rate cuts before Christmas. The RBA is holding off to ensure inflation is well under control, despite it being much lower than the peak in 2022.  Inflation: Better But Still Stubborn  Annual inflation hit 3.8% in the June quarter, slightly up from March. However, there’s good news: underlying inflation (which strips out the more volatile price changes) has been falling for six straight quarters, down from its peak of 6.8% in late 2022. That said, prices for everyday goods remain high, and the overall cost of living is still squeezing households.  Households Are Tightening Their Belts  With cost-of-living pressures building, many Australians are cutting back on things like travel and entertainment. Even grocery spending is down, with households trimming their food budgets by 1%. However, spending on household goods, like furniture and appliances, increased by 4%, which propped up discretionary spending overall.  Housing Market: Prices Still Going Up  The property market remains strong, with housing values continuing to rise across Australia, although at a slower pace than before. CoreLogic reports that the national Home Value Index rose by 0.5% in August and a further 0.4% in September. Despite the cost of living, demand for property remains high, which is keeping prices elevated.  Jobs Market: Still Tight, But Productivity Is Falling  Australia’s unemployment rate remains low, sitting at 4.1% as of June, which is historically strong. However, total hours worked rose only slightly, and productivity—measured by GDP per hour worked—fell by 0.8%. While jobs remain secure for many Australians, people are working more for less output, and this could become a concern for long-term economic stability.  Global Outlook: Uncertainty Ahead  Globally, central banks are starting to look at easing monetary policies, but it’s still unclear how much they’ll ease up. Ongoing conflicts in the Middle East, Ukraine, and northern Africa are causing further instability. Meanwhile, Asia’s economy, a key trading partner for Australia, is expected to slow in 2024, which could have a knock-on effect on our own economic growth.  What It All Means for You  For everyday Australians, the combination of high interest rates, sticky inflation, and rising living costs means it’s more important than ever to manage your finances carefully. Mortgage holders won’t see relief from rate cuts soon, and households should continue to be mindful of their budgets, especially with the cost of essentials like groceries and petrol still fluctuating.  If you’re feeling the pinch, now is a good time to seek professional advice and ensure you have a financial plan in place that helps you navigate these uncertain times.  The information provided in this article is general in nature only and does not constitute personal financial advice.  

Quarterly Economic Update: April – June 2024

Quarterly Economic Update: April – June 2024

Updated on Economy, Finance, Investing

The economy continues to slow, with inflation remaining sticky, the new federal budget making waves, and global events that may have a significant impact. Uncertainty at home and abroad The current outlook indicates uncertainty both domestically and internationally, making it unlikely that inflation will reach the target range of 2-3 per cent in the near future. May forecasts suggested that inflation would return to the target range by the second half of 2025 and reach the midpoint by 2026. However, recent indicators point to weak economic activity, such as slow GDP growth, an increase in the unemployment rate, sluggish wage growth, and uncertain consumption growth. Advanced economies are experiencing a slowdown in growth, although there are signs of improvement in the Chinese and US economies, along with increased commodity prices. Nevertheless, geopolitical uncertainties remain high, which could potentially disrupt supply chains. The Federal Budget focuses on social matters Treasurer Jim Chalmers presented the 2024-2025 Federal Budget on May 14, 2024. The government aimed to alleviate the cost of living without worsening inflation. Key announcements included: Interest rates remain steady, but the pain may not be over The Reserve Bank of Australia (RBA) kept interest rates on hold and the cash rate steady at 4.35 per cent throughout the quarter. At the June RBA board meeting, Governor Michele Bullock stated that the board has not dismissed the possibility of further rate hikes. Interest rates will stay at this level until the RBA’s next board meeting in early August. Inflation persists, despite slowing Inflation remains persistent, with the RBA predicting that it will take some time to consistently stay within the target range of 2-3 per cent. Although inflation has decreased significantly since its peak in 2022, the rate of decline has slowed. At the same time, economic growth has been limited as households cut back on non-essential spending due to income constraints. What are we spending on? Households are continuing to limit their spending on non-essential items. Spending on discretionary goods has shown a slow increase, rising by only 0.6 per cent over the year. On the other hand, spending on non-discretionary goods and services has risen by 5.8 per cent, mainly due to higher fuel and food costs. Household spending on health has significantly increased, showing a 15.7 per cent rise compared to this time last year. Health spending made the largest contribution to the overall 3.4 per cent rise in household spending in April. China lifts Aussie beef bans China has lifted bans on most beef and other exporters. The bans began in 2020 when China suspended beef exports from eight processors and imposed official and unofficial trade barriers on barley, coal, lobster, wood, and wine, costing exporters $20 billion Australian dollars ($13 billion) a year. These measures were viewed as politically motivated actions to penalise Australia, although China claimed they were related to trade issues. With the lifting of these bans, less than $1 billion worth of Australian exports are still being impeded. This marks a significant reduction from the previous $13 billion impact on Australian exporters. Trump down but not out Donald Trump’s conviction on 34 felony counts of falsifying business records has not stopped his campaign for President. As the November election looms closer, economists have expressed concerns about Trump’s campaign promise to impose a 10 per cent tariff on all US imports. If implemented, this and other trade policies could trigger another round of trade wars, disrupt international trade, and impact global growth. The information provided in this article is general in nature only and does not constitute personal financial advice.