Innholdsfortegnelse for July 2019 i Money Magazine

Before the turn of the 18th century, humans lived, on average, to the ripe old age of 40. Three centuries later, many of us are just starting our careers, our families and our lives at that age. For some, life begins two decades later at 60. Here at Money, writing about retirement is a natural obsession. We publish numerous articles on superannuation, long-term investing and, in this edition, how to live life in retirement. Turn to page 34 where we invited three experts to provide a financial roadmap based on what you want your retirement to look like. This bumper edition features two milestones – the 15th year of the Consumer Finance Awards and the 20th anniversary of Money magazine. I’d like to name-check our managing editor, Darren Snyder, who…

It is a well-worn comment, but where did the past 20 years go? I have strong memories of starting Money magazine back in 1999. Channel 9’s Money show was one of Australia’s top rating television shows. My first book, Making Money, was also popular so it made a lot of sense to launch a magazine. Pam Walkley, a prominent, award-winning journalist and finance expert took up the role of editor. Effie Zahos had been a key part of the Money show team and I was delighted when she agreed to be deputy editor. You never quite know how a magazine launch will go and given I hadn’t been involved in one before, I had absolutely no idea. But the magazine proved to be really popular: the first issue sold like…

No one in their right mind would invest purely in a single asset class. Most people are invested in a “balanced” portfolio that has 60%-70% in equities. “Balanced” is one of those words that create a feeling of comfort. But the truth is that equities are much, much heavier than the other side of the “balanced” portfolio. The game is fun while equities are obeying the rules, but as soon as they do anything unexpected it all ends in tears. There is one asset class that is genuinely defensive – it just happens to be the asset class currently with the lowest yield. It’s government bonds. If you look back at the past 20 years of returns you will see that the average three-year correlation between Australian equities and the…

COST: Free (in-app purchases are available) OS: iOS 8.0 or later, Android 4.1 and up If you’re one of the 2 million Australians who run a small business, chances are you’re owed money. Research by the Invoice Market, which provides funding solutions for businesses, shows the nation’s small and medium enterprises are drowning in unpaid customer bills – each is owed an average of $38,000. Instead of putting up with excuses like “it’s lost in the system”, check out the Collect-MORE app. Tell it how much you are owed, plus a few other details, and it will analyse the data and provide an action plan designed to get your money. The app comes with a range of templates for drafting emails to chain-dragging customers, or if you’re worried they aren’t…

Earlier this year the share price of market stalwart Perpetual spiked more than 12% in four days. What was the fundamental reason? There wasn’t one. The ASX asked Perpetual what was behind the surge. It came up with a few historical matters but nothing that explained the significant price gain on a large volume. The Australian Financial Review, however, came up with a possibility: an index fund concentrated on investing for yield was forced to buy the stock. As Perpetual had been newly included in an index that measures the performance of high-dividend stocks, an exchange traded fund (ETF) that invests to match that same index bought in. From a zero base, Perpetual then became the sixth largest holding in the ETF as at March 31, with $130 million invested.…

Aidan Williams, Audinate’s co-founder and chief technology officer, has been one of the many things we’ve liked about the company since we upgraded it last year, and we’re delighted to hear that he’s now been appointed chief executive. He will replace Lee Ellison, who will leave on September 30 after 11 years. The company has been working on the transition for a year, which gives confidence that it will proceed smoothly. For one thing, it’s an internal appointment. An insider already knows everyone and his appointment should provide continuity. It’s also great to see the chief techie getting the top job. Other companies might need more of a sales type as CEO, but not Audinate. Its customers are manufacturers of audio equipment and the sales process is as much about…

Among the most stressful events in life are relationship breakdowns, loss of a loved one and purchasing a home. At just 26, Rebecca has experienced all three and is now considering going through the home ownership process again. Rebecca’s dedication in having cared for her late mum while working long hours to provide for her daughters is also quite remarkable. In deciding her next steps, we recommend Rebecca be guided by what’s most important to her: a stable home life, having more time for her daughters and studying. There is a common belief that buying is better than renting. However, this is regularly and rightfully challenged. A study by Ernst & Young highlighted how renters can be significantly better off as long as they invest what they had for a…

When we finally start to see retirement on the horizon a lot goes through our minds. We start to think about all the things we want to do but haven’t had the time for – the adventures to experience and places to explore. We ask ourselves big questions like: “What do I want to do for the next 30 to 40 years?” Then we start to think about money. Do I have enough to tick off all those things on my bucket list? I’m over work, but what happens when I no longer receive my fortnightly pay cheque? Will I/we manage? It’s never too early to prepare. The sooner you ask yourself these questions the better. There’s a lot of preparation to ensure you have the financial nest egg you…

Ten years ago Money magazine celebrated its decade-long presence in Australian print media. The 10th anniversary edition, published in July 2009, featured a few people who’ve become household names. In his former career as managing director of CommSec, Matt Comyn’s stock tip in the July 2009 edition was to buy the food and beverage firm formerly known as PrimeAg Australia. Four years later the company’s assets were broken up and sold, and Comyn’s now chief executive at the Commonwealth Bank. Money also interviewed Charlie Pickering, a panellist on Talkin’ ‘Bout Your Generation (formerly Network Ten) at the time and now host of The Weekly (ABC). Pickering spoke of not listening to his dad’s advice about money in his mid-20s, working with accountants to sort out his financial affairs, his introduction…

BANK OF THE YEAR The winner had the highest aggregate score of the institutions competing in seven of the individual categories. Customer satisfaction also played a part and data from Roy Morgan Research was used for a rolling 12-month period to March 2019. The weightings are: • Home lender 20% • Credit card issuer 20% • Customer satisfaction 10% • Money minder 10% • Investment lender 10% • Personal lender 10% • Business bank 10% • Mobile banking 10% WINNER: SUNCORP CUSTOMER-OWNED INSTITUTION OF THE YEAR The winner had the highest aggregate score of the institutions competing in six of the individual categories. Customer satisfaction also played a part and data from Roy Morgan Research was used for a rolling 12-month period to March 2019. The weightings are: • Home…

Five years ago, Sydney-based Janet Smith*, 55, travelled to the French Riviera on a cruise with her ‘second’ mom. She explains how different the experience was to her backpacking days: Travelling to the French Riviera was something that I thought only happens to rich people or celebrities. But then I received an email from my favourite aunt who lived in Hawaii. She was planning to go with a group of her closest friends to the French Riviera as a ‘bonding’ trip and if I came, she could get a group discount. She gave me a year’s notice and an itinerary of what the trip would look like. All the information I needed was in one nifty package: the weather, the cruise stops, the food and drinks on board and the…

There is an old saying in the music business: “You can make a killing, you just can’t make a living.” This could be said of many perceived “glamour” industries, but exploring the psychological drivers behind why so many people in these industries get trapped in poor economic situations sheds a light on an irrational decision-making bias that we are all susceptible to. It exists because of a gap between the self we present to others and the real self we are fearful of other knowing about – I call it the “rock star trap”. Working as a gigging muso in the grunge and electronica movements of the ’90s, I constantly saw a gap between how successful fans, friends and family perceived a local rock star to be and how successful…

Once every 10 years or so, banking takes a technology leap that propels the industry into a different direction. In the 1990s, it was telephone banking. In 2001, it was internet banking and some time after 2010 it was mobile and apps. If history is anything to go by, we are in for another technology jump. While there’s so much hype about artificial intelligence (AI), there are signs that it will be the cornerstone of the next wave of banking products and services. The 2019 Accenture Global Financial Services Consumer Study: Discover the Patterns in Personality, published in May, gives an idea of how the world of banking will evolve based on changing consumer behaviour. The study highlight is that banking customers can be categorised into four distinct segments based…

Australia has about 100,000 heritage-listed properties, and they can be easy to fall in love with. But when it comes to buying a heritage home, be sure to act with your head, not your heart. While the idea of owning a slice of local history can be very appealing, there is a catch. As Angus Raine, executive chairman of the Raine & Horne property group, points out, “the rub with heritage homes is that while the whole community loves them, it is the individual owner who wears the cost of restoring or maintaining them”. The bottom line is that these homes can cost more to restore, renovate and maintain and you need to go into the purchase with your eyes wide open. What heritage means Just because a property is…

YES One of the golden rules for successful property investment is diversification. So as long as where you invest meets your strategy, investing overseas should definitely be on your radar. As a professional investor, I look for opportunity everywhere, domestic and abroad. And lately I cannot find anywhere in Australia worth putting my money into. Otherwise I would be. Even with APRA reducing the servicing cap and interest rates recently dropping, I only see this slowing the decline in house values in Australia. But I will monitor it – and when the time is right, I will invest here again. The key to successful investing is striking when opportunity presents itself. In the middle of the GFC, in 2011, I decided to invest in the US. There were several reasons.…

I have been writing the Marcus Today newsletter for more than 20 years and read something called “Bob Farrell’s rules of investment” over 30 years ago. Farrell was the chief stockmarket analyst at Merrill Lynch from the late 1960s until 1992. He was a pioneer of technical analysis and thanks to him Merrill Lynch was seen to adopt and promote technical analysis at a time when Benjamin Graham’s book, The Intelligent Investor, had demonised it, on page 2, as “fallacious”. I don’t need to repeat Farrell’s rules here – they are a little bit tired anyway – but the concept of having investment rules is worthy. Everybody has their system, conscious or unconscious. Given a stock code, we all tend to go through the same routine, through habit more than…

Living off a low super account balance in retirement can be a daunting prospect. It’s one that baby boomers dread, having entered the workforce long before compulsory super was introduced. Many are far short of the $640,000 a couple are estimated to need for a comfortable retirement. It is something the federal government is trying to address with the work test exemption for recent retirees. Announced in the 2018-19 budget, the measure comes into effect this month. Under the old rules once you turned 65 you had to meet the work test to make super contributions. You had to work at least 40 hours in 30 consecutive days during the financial year in which contributions are made. But new retirees won’t need to meet this test. From the start of…

There are two issues that have dominated so far in 2019: trade and interest rates. And as we move into the second half of the year, the situation doesn’t look like changing much. By “trade” effectively we are talking about US trade policy, and more specifically the use of tariffs as an economic weapon by President Donald Trump. Trump claims he is advancing his country’s interests. He wants more goods to be made in the US, more employment and, in his words, “fairer” trade. He is seeking better balance in trade with countries and regions such as China, the European Union, Canada and Mexico. Now the discussions on these trade issues are ongoing. There is always the potential for breakthroughs in the negotiations. But if trade deals are concluded, then…

The search for the highest returns in Australian equities has been concentrated in a small group of companies now known as WAAAX stocks - WiseTech, Appen, Afterpay, Altium and Xero. Collectively, these companies are expected to earn just $162 million in the 2019 financial year from $1.9 billion in revenue but Afterpay and Xero don’t make any money at all. Their combined market capitalisation, however, is about $30 billion, which means they’re trading on a collective price-earnings ratio of almost 170 times 2019 earnings. Xero is not expected to turn a profit until 2021, when it is currently expected to produce $23 million. With a market capitalisation of $8.4 billion, it’s trading on 370 times 2021 forecast earnings. These multiples would tell a humorous story if they weren’t real, so…

YOUR GUIDE TO SUPER DATA The table on this page contains data and information to help you compare superannuation funds. It showcases MySuper investment options offered by some of Australia’s biggest super funds. MySuper options are default superannuation products that employees choose or are allocated by their employers. The performance results displayed are the annualised investment returns each MySuper option has delivered after taking account of all taxes and fees. Past performance is no indicator of future performance. The table also lists each fund’s SelectingSuper Fund Quality Rating. Funds that achieve these quality standards are designated AAA. Research was prepared by Rainmaker Information, which publishes Money magazine. For more info, see www.selectingsuper.com.au. YOUR GUIDE TO MANAGED FUNDS DATA The tables on these pages contain data and information to…

Performance after investment fees. Investment returns after investment fees annualised to describe each fund’s returns per annum. But if your managed fund achieves a high return and charges you an extra “performance fee”, Rainmaker has not taken this into account. Past performance is not an indicator of future performance. Rank. Funds are ranked against all managed funds in each segment, not just those included in each table. Indices and averages. Arithmetic average investment returns or average fees for all fund investment options within each category, that is, not fund size weighted.…

What was your first job? I worked in a cafe at an adventure park in the Barossa Valley, serving up hot dogs, making fairy floss and cooking hot chips. It was a great job that came with the added bonus of getting free ice-cream and fairy floss when the boss was out. What’s the best money advice you’ve received? The best money advice came from Paul Clitheroe when I was working on the Money TV show. I was looking for a new car and he said to me: “Kellie, buy the cheapest car that your ego can afford.” It was memorable and great advice but also a good lesson in life for a lot of purchases. Don’t feel the need to make prestigious purchases or label purchases, go with what’s…

Letter of the month Practical investment advice is appreciated I’d like to applaud the excellent article by Jo McCreery in your May cover story (page 40). Not only did she show how to invest, but she also named fund managers and ETFs that might be used. Many authors seem wary of providing such practical advice and leave the reader little better informed on a practical follow-up for investing. The otherwise informative article on investment bonds by four experts in the same edition would have benefitted greatly from mentioning which insurance companies provide bonds covering the various market indices. Tom Brave comments on the state of the nation Thank you so much for the bravery shown by Paul Clitheroe in his June In Your Interest: going largely against his readership (and…

The aftermath of the banking royal commission continues to be felt at the highest level of Australia’s financial services and insurance companies. Board chairs and directors at these firms have taken an 11% pay cut this year, although they had 11% increases the previous year. Managing directors and chief executives also saw pay packets drop 10% and 21% respectively, after large increases in 2017-18. The numbers come from the Governance Institute of Australia’s seventh annual board remuneration survey, which is conducted in partnership with McGuirk Consultants. Megan Motto, the chief executive of the Governance Institute, says beyond the royal commission exposing poor corporate culture, poor ethics and poor risk management – which led to several board and executive resignations – there has been “serious brand damage, hefty fines for poor…

The financial regulator APRA has imposed further licence conditions on AMP’s super trustees over compliance concerns. AMP Super must renew its board; improve conflicts of interest management, governance and risk management practices; improve breach remediation processes; address poor risk culture; and strengthen accountability mechanisms. Intrust Super has launched Super-Cents, an online tool to help members save extra money or spare change for retirement by connecting their super and bank accounts. Members can set automated micro-contributions based on their spending, make top-up contributions and monitor the difference it makes over time. They don’t need to open a new account or product as the technology is integrated across administrative and banking platforms. The BetaShares Legg Mason Emerging Markets Fund (ASX: EMMG) is now trading on the ASX. The active ETF provides investors…

Have you bought or sold cryptocurrencies such as Bitcoin during the year? If so, the tax office could be taking a close interest. The ATO estimates there are between 500,000 to 1 million Australians who have invested in crypto assets and many of them have failed, or will fail, to properly report the profits they have made for tax purposes. As a result, the ATO is collecting bulk records from Australian cryptocurrency designated service providers (DSPs) as part of a data-matching program to ensure people trading in cryptocurrency pay the right amount of tax. Data will include purchase and sale information. Following the exercise people may be contacted by the ATO and given the opportunity to verify the information collected, before any compliance action is undertaken. People will be given…

There are Australians who maintain relationships with more than five wealth managers and in the wake of the banking royal commission they’re prepared to switch if these managers can’t deliver value. The EY 2019 Global Wealth Management Research Report shows 40% of existing wealth management clients plan to switch providers in the next three years. It says switching is being driven by new digital solutions, changing digital habits and evolving definitions of value. It also points to the royal commission and increasing consumer and regulatory scrutiny of the sector. EY says the primary drivers for switching are having a child, leaving a job and getting married. Switching is not only driven by price but reputation and services. Antoinette Elias, EY Oceania’s wealth and asset management leader, says wealth managers “who…

Side hustles have been around for about as long as the working week. For many people a second job is often the only way to pay the mortgage, afford a holiday or escape from the daily grind. The digital age opens an enormous choice to moonlighters, and they are grabbing the opportunity big time. The internet makes it easier to rent out a spare room, drive people around town or sell widgets. About one in four now work outside their regular jobs, according to a recent NBN report, which also found the aspiration to do so is big among those aged 20-38. Consulting firm Deloitte said in its latest Millennial Survey that half of respondents wanted to quit full-time employment and join the gig economy in the next two years.…

To answer all of your questions, we must list your priorities, and then look at what you can do. The most important aspect for you right now is your job. Can you get the same job elsewhere or would you have to keep that particular one? If you need to keep that job, how do you feel about commuting to it if you were to buy a house on the Central Coast? How would your children cope? The answer determines what you can do – as in whether you can move to the Central Coast or not. That then leads to the next priority – your budget. If you are not happy to (or can’t) commute, then what are your local options? A two-bedroom apartment in Dee Why will cost…

My husband and I (32 and 30) bought a two-bedroom unit for $610,000 two years ago. We took out a mortgage for $550,000, which we are happily paying off. We also have a one-year-old daughter. We want to extend our family in the next five years so we’ll need to buy something bigger. The issue is that our place is now worth $570,000 in the current housing market in Sydney. We put about $1250 into an offset account every fortnight and have $20,000 sitting in it. Our combined salaries are $160,000 before tax and we both work full time. I’m wondering how we are going to achieve our goal and what is reasonable. Three-bedroom houses sell for just over $1 million in Sydney. How can we get to a place…

When I meet new clients for the first time I run through a short slidepresentation that poses the question, “What is your dream?” I want them to think about what they hope to achieve, not just with their finances but in their future life. A client once questioned this slide and suggested it should say, “What is your nightmare?” In my experience, many people contemplating retirement have fears about what this phase of life is going to look like and are not always focused on what there is to look forward to, such as taking up a new hobby, travelling and spending more time with family. Will I have enough? Apart from the emotional upheaval that goes with retiring, such as not having a routine and feeling less important because…

We are proud to bring you the 15th edition of the Consumer Finance Awards. A lot has changed in 15 years, not least the rate environment, what banks are capable of delivering through digital platforms, and what customers want. We reflected on all these areas as we reviewed the results of this year’s awards. First, there’s plenty of good news. This year we showcase the products and services of 11 finance providers (there are 13 but Suncorp and Freedom Lend each won two awards) and the winner of Insurer of the Year. A pattern quickly emerged from these 11 brands: a laser focus on the markets they serve and a competitive streak on pricing and customer service. The 2019 batch of awardees prove to us that you can combine profit…

If you live close to a train station or in the middle of the city and have space to park an extra car, you could generate thousands of dollars annually, according to the peer-to-peer platform Parkhound. Users also benefit: they can secure affordable, accessible long-term parking, often in high-demand areas. Parkhound has over 40,000 spots nationally from a variety of peer-to-peer spaces and car park operators. Since 2015 members, also called hosts, have earned more than $20 million collectively. Where to start Parkhound, a subsidiary of Spacer, is an online marketplace for storage and parking. It connects drivers who want convenient parking with local property owners who have an extra space, such as a garage, carport, driveway or allocated space. Pricing, costs and requirements It’s free to list with Parkhound…

• Talk openly and honestly about your finances to your partner or a trusted mentor. Being secretive of financial realities you’re ashamed of never leads to positive outcomes. You don’t need to broadcast it to the world but being financially transparent with someone you love and respect breaks a host of psychological traps. Don’t tie your self-worth to your financial worth. • Celebrate value. When you buy something that represents great value for money, celebrate it with your friends and social circles. Make the pursuit of value the game rather than simply buying something because you can. • Ask yourself, “What is the worst thing that could happen?” This helps negate the fear of loss associated with the rock star trap. Visualising the worst possible outcomes helps you realise that…

TIME TO REFINANCE? When ANZ and Westpac failed to pass on June’s full rate cut, the treasurer, Josh Frydenberg, was quick to encourage borrowers to take their business elsewhere if they weren’t happy. But as most borrowers know, refinancing can be time-consuming and sometimes costly. It’s not something we want to do every time interest rates change. Who knows? Next time around other lenders may turn out to be the skinflints. The comparison website Finder crunched some interesting numbers just before the rate cut. At that stage, the average standard variable interest rate was 4.91% and the average loan $384,700. If a borrower received the full 0.25% cut, they would save around $700 a year. On a $500,000 loan, the saving would be around $900. Westpac (and its subsidiary St.George)…

Knowing if a heritage-listed property is right for you means setting romantic notions aside. Many find it a rewarding experience, but a survey of heritage property owners on Melbourne’s Mornington Peninsula found 38% saw their home’s heritage listing as a burden. Among those who had applied for a planning permit, 40% said the restrictions were onerous or unreasonable. For those who are up for the challenge, owning a slice of Australiana can bring personal and financial benefits. By definition, there is a limited number of these properties and, as Raine notes, “most have achieved heritage status because they are unique, and in the supply/demand equation, scarcity helps to underpin a property’s long-term value”. Just be sure you know what you’re signing up for.…

Out of the blue you get some shock news that forces you out of the workforce. A company restructuring could mean you are facing a redundancy; or you receive unexpected news about your health; or a loved one needs you to care for them; or your adult kids require your grandparenting skills so they can participate in the workforce. It means you are suddenly retired, years before you had planned to. It can be traumatic and few people are prepared – emotionally and financially – for a sudden end to their career. For many people the peak earning years are the 40s and 50s, not the 60s, says David Knox, senior actuary at Mercer. He points out the average retirement age is 63 – four years short of the age…

Matilda, 65, has been working part-time so she can help care for her elderly mother, who has a terminal illness. During the 2018-19 financial year she worked over 40 hours a month and therefore was able to make personal contributions to her super. Last month she decided to retire, finishing work on June 28. Like many other workers in her age group, she hasn’t had the benefit of compulsory super all her working life and consequently her balance is modest. She has two super funds: one with a balance of $110,000 and another with $50,000 – $160,000 in total at June 30 this year. Taking breaks out of the workforce to have children and care for her mother have made it difficult to accumulate more. Women aged 65-69 have a…

Is there anything hotter than Australian tech stocks at the moment? No, I don’t mean just on the ASX. I mean anywhere. Our tech acronym WAAAX is not just showing the US FANG stocks a clean pair of heels, and it’s not only in a different postcode. If it was a race, WAAAX would be getting a rubdown and leaving the stadium while the FANGs had barely left the starting blocks. To illustrate, the worst performing of our tech darlings is beating the best of the US version over both one and three years. And many other Australian tech companies have gone along for the ride. For the optimists (and the shareholders!) it’s the market recognising the value inherent in these businesses. For the pessimists, triple-digit price-earnings ratios are bordering…

Performance after fees: When calculating fees, Rainmaker assumes a member has $50,000 in their account. Strategy: Some MySuper products invest your superannuation based on age and are known as lifecycle funds (marked LC). The table includes the LC option for 40-year-old members. Non lifecycle funds are known as single strategy (S). Rank: Funds are ranked against all MySuper investment options available in Australia. Indices and averages: To produce these indices, Rainmaker analyses the results of more than 3300 investment options.…

JAMES WHEATLEY James is a financial adviser at Mercer. He says: “I am most proud of our first home. It was a very emotional purchase, but we stuck to our guns, were patient and purchased a property we loved which was close to family, transport and a fixer-upper we could add our own touch to.” ANN LOVEDAY Ann is art director of Money. She says: “I’ve become addicted to Facebook’s Marketplace where modern, vintage and antique treasures are up for sale. I was thrilled to purchase a splendid marquetry inlaid, cedar parlour cabinet, C1890s, for just a few hundred dollars. The detailed craftmanship is stunning.” RACHAEL ARNOLD Rachel is a financial planner at Profile Financial Services. She says: “After saving for several years, I purchased my Sydney home on a…

Exactly what drives a new fund launch? You would hope managed funds are created to meet client needs, but the reality is this is rarely the main driver. To ensure a fund’s success, at least in a time frame palatable to fund managers, it must be commercially viable in terms of fund flows from investors. But it also needs to “fit in”, or be categorised into peer groups of funds with similar investment strategies or asset allocations. The advantage is funds can be measured and compared, allowing them to be rated by research houses. Advice companies and dealer groups can then use these measurements to develop their recommended lists and, over time, benchmark the funds and rate their performance. As a result, fund managers will launch funds that fit into…

STARTING OUT STARTING OVER A single woman’s guide to money in Australia Susan Edmunds New Holland Publishers, $29.99 From ditching debt to building savings, from investing to insurance, this book is a “how-to” for women finding or re-finding their financial path. A senior business journalist who specialises in personal finance, Susan Edmunds writes in an easy-to-understand language. Ample case studies and self-help checklists feature throughout the book, guiding women to a more secure financial future. She says there’s no special secret and no specific type of person who’s good with money, meaning finance doesn’t have to be hard or intimidating. Ten readers can win a copy. In 25 words or less, tell us how you would restart your financial future. Enter online at moneymag.com.au/win or send entries to Money, Level…

Following the Hayne royal commission into financial services, it would be reasonable to think that customer distrust would be the biggest battle we, as a new life insurance company, and the financial advisers we work with, face when communicating the importance of life insurance. So we asked advisers what their customers are saying – and the results are surprising. We found understanding of life insurance is low and confusion is high. Participants thought they might have life cover through their superannuation, as this rings a bell about something they signed, somewhere, some time ago. Worryingly, others think health insurance will be their saviour should they need total and permanaent disability (TPD) cover. This lack of understanding leads many to think life insurance is not necessary. We heard from advisers that…

Fair Trading NSW has conducted seven real estate operations within the first five months of 2019, and the monitoring program serves as a timely reminder to consumers about how they can sidestep bad agents. In its latest operation, Fair Trading inspectors issued $12,650 in fines to real estate agents who failed to comply with laws related to sales and property management. Unlicensed work and a lack of proper supervision of business dealings were among the breaches. As well, seven warning letters were issued for breaches relating to rules of conduct, signage and note-taking in sales files. The Australian Competition and Consumer and Commission’s (ACCC) website says when you’re dealing with real estate agents, check they have a licence. It also recommends that you do your research to understand the going…

Benjamin has built a solid financial base so is looking for the ... Next step in building assets Q I’vebeenreading Money forabouttwo years now. I’ve adopted much of the advice your articles provide and now wonder what else I can do in my situation. I am 35, married, with a salary of $100,000. I own my apartment and also an investment property (total value about $900,000). Both properties are 100% offset with balances in the cash account, and the investment property generates about $30,000pa to supplement my salary. My wife and I have some cash and are looking to diversify into growth assets within the year. Each year I contribute $25,000 to my super account to maximise the concessional contribution allowance. Currently there’s about $60,000 in the super account, invested…

Clients often say they’ll top up their super with the “extra money” from downsizing their home. Sadly, the new, smaller home in the dream location often comes with a similar or higher price tag. But if you’re lucky enough to have money left over after you downsize you could use the federal government’s downsizing contribution scheme to add the extra money to your superannuation. It is open to those who are aged 65 or over and sell their principal residence – they must have owned it for at least 10 years. If you tick that box you are eligible to make a non-concessional contribution to super of up to $300,000 from the proceeds. Couples can contribute $300,000 each. Downsizing your home may have an impact on the amount of social…

One million Australian households, with someone aged 65 or older, hold mortgage debt, according to a recent ABC report. About 80,000 of them have a debt that is three to four times their annual income, which means it might take 20 years to clear. Curtin University professor Rachel Ong, whose research focuses on intergenerational housing issues, says it is common for homeowners to walk into retirement holding debt. The number of Australians aged 55 to 64 with mortgage debt increased threefold to 47% in 2015, compared with 25 years earlier. Many turn to their superannuation to reduce debt, but Ong warns that this may reduce their ability to self-fund their retirement and force them to rely on the age pension. Avoid this situation by setting yourself a goal. Many homeowners…

• Anyone with spare space for car parking can earn an average of $200-$300 a month with Parkhound. • The platform currently has 40,000 spaces for long-term parking. • At the beginning of June, 24,284 members had made just over $20 million from renting out their spare spaces. • Parkhound claims motorists waste an average of 125 days in their lives searching for parking. • The site is free to join. Parkhound takes a 10% cut of a member’s (or host’s) parking income. • Unique features, such as augmented reality, make it easy for people with empty spaces to measure the area and gauge the appropriate price to charge. They can scan their empty car parking space through the app to get a price estimate for daily, weekly and monthly…

When it comes to passing on wisdom to your children, there is one area that doesn’t get a lot of attention: money. They really need help with finances, particularly in understanding the debt risks that suddenly surround them. While I didn’t get into debt until I was older and took out a mortgage, our kids are in debt already. Not only do they start their working life with a HELP debt from their tertiary study, they are bombarded with ways to buy now and pay later. They can get a debit card with the approval of a parent or guardian from as young as nine and in their own name at 12, and for a credit card in their own name at 18 if they meet certain conditions. Financial institutions…

Flight delays and cancellations are an unfortunate by-product of air travel, but this doesn’t mean consumers always have to be worse off financially when they’re stuck at the airport. The main thing to remember when purchasing airline tickets in Australia (both domestic and international) is that you’re entering a contract with the airline. Where this becomes tricky is that airlines do not guarantee flight times and any adherence to scheduled flight times does not form part of your contract of carriage. Airlines are responsible, however, for providing the service which gets you from A to B, and this service falls under the Australian Consumer Law (ACL). Under the ACL, there is an automatic guarantee that flight services must be supplied within a reasonable time. Now what constitutes a “reasonable time”…

It’s Christmas in July for property investors. The unexpected coalition win at the May federal election means current lucrative negative gearing and capital gains tax rules will continue, boosting investor confidence in real estate. “The results will bring a level of certainty and this means our housing markets are likely to pick up by the end of the year or early next year,” says Michael Yardney, director of Metropole Property Investment Strategies. In another confidence booster, at its June 4 meeting the Reserve Bank cut the cash rate to a record low of 1.25%. As well, the Australian Prudential Regulation Authority (APRA) has signalled it’s prepared to loosen strict controls on how banks assess lending risks for mortgages. It proposes removing its guidance, issued in December 2014, that lenders apply…

A traditional fixed-coupon bond is a fixed-income investment where an investor lends money to an entity (typically a government or company) for a defined period at a variable or fixed interest rate. Bonds can be traded. When equity prices go down, bond prices generally go up with the corresponding fall in bond yields. The annual interest paid on a bond is calculated this way: the amount invested multiplied by the days invested, divided by 365, multiplied by the interest rate. While investors can trade marketable bonds among themselves, trading is usually done through bond dealers or, more specifically, the bond trading desks of major investment dealers. These dealers are at the centre of a vast network of phone and computer links that connect interested parties.…

• Emergency fund. Your employment may seem secure, but you need to have a buffer. Three to six months of pay will tide you over and pay the bills until you work out your next move. • Draw up a budget. Review all your existing debts and insurances. Pay down debts. Get rid of any credit card debt with high interest rates. • Secure your home. How much do you owe? Have you paid extra into offset account? your • Review your life, TPD and health insurance. If you give up your insurance you may not qualify for cover next time as easily. The new rules will stop insurance if you don’t make super contributions for 18 months. • Put your spending under the microscope. Cut back before you lose…