BALANCING INVESTMENT OPTIONS TO SECURE YOUR FINANCIAL FUTURE

If you’re paying off your home loan but you also understand the importance of building up your super, you may find yourself trying to balance your present needs with those you’ll have in your future.

PROS OF INVESTING IN SUPER

Superannuation is one of the most tax-effective ways to save.  Depending on your age, it can be wise to channel as much money as possible into Superannuation.

If you plan to retire in the next 10 or more years, with more money in super you have the potential to benefit from compound interest and dollar-cost averaging: two of the most powerful ways to build long-term wealth.

Salary sacrifice works much the same way.  You can contribute money from your gross wage into super which means less tax is applied to your income.  There is a limit on how much you can deposit each year via this method.

PROS OF INVESTING IN PROPERTY

Buying can be an important investment too. However, because of property price rises, many people are finding property is becoming less accessible.  This is significantly changing the Australian way of life.

If you are already paying off a home then this can be a good thing, depending on how long you have before retirement. You can end up building enough capital growth to help you in retirement. By putting extra into your home loan, you’ll also pay less in interest charges as the principal amount owed on your home loan decreases.

We also generally expect the value of most homes to rise over time, therefore the more you repay, the more equity you may be able to build.

When it comes to property, you generally have to use after-tax dollars to repay your home loan. But in super you can deposit pre-tax dollars, often with minimal or no impact on your take-home pay packet.

What’s the answer?

There is no right or wrong answer. The way you prioritise will be unique for you depending on your own circumstances, your current super balance, income, needs and goals.

That’s where financial advice can make a big difference. We can show you the specific pros and cons for your individual circumstances.  You may not need to choose one option over the other. You may be able to have the best of both worlds.   https://amandamccall.com.au/contact-financial-services-brisbane

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IT’S 2017 – TIME TO START SAVING

Christmas has come and gone.  You have spent too much money on presents and the holiday season.  The New Year is the perfect time to implement some simple tips to get ahead and stay there!

SET A SAVINGS GOAL

Set a realistic goal that is achievable.  A goal that needs you to show some restraint but at the same time not having to sacrifice too much.  Visualise your goal.  Studies have shown that visualising your goal makes you more likely to achieve it.  It might be a $ value written down or a picture of a holiday destination for example.

SET UP A DIRECT DEBIT

Keep your savings in a different account to your everyday account.  You may be able to find one that earns a little extra interest.  Set up a direct debit from your everyday account to your savings account. 

BE MONEY SMART WHEN SHOPPING

A little bit of extra research can save dollars.  It might only seem like a few dollars for each item, but these soon add up.  A lot of items at the shops these days end up being discounted.  If you don’t need it right away, why not just keep an eye on it and make that purchase once it is discounted.

REFLECT AND REVIEW

Track how your savings are going on a regular basis and if you have got off track, alter course and get back on track. 

Constantly think about ways you can save money in your day to day living.

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TIPS TO STAY ON TRACK WITH YOUR CHRISTMAS SPENDING

There is no doubt Christmas is a time to be enjoyed.  However, it is an expensive time of year, with gift giving, more social outings etc. It can really stretch the budget.  Here are some tips to help you stay on track this Christmas:

1.       TRACK YOUR SPENDING

I know it sounds boring, but it will help.  Set a budget for things like presents, food for Christmas Day.  After each day’s shopping, record what you have spent and what you have left. 

 2.       ‘BAKE’ YOUR GIFTS

Are you a bit of a MasterChef in the kitchen?  Why not bake some gingerbread cookies, fruit mince pies or any festive treat.  Package them up in some cellophane or cardboard boxes and give these as gifts.  A lot cheaper than buying them already made, and I bet they will be a lot tastier as well.

 3.       RESEARCH AND BE PATIENT

Retail is so competitive these days.  Don’t just purchase an item the first time you see it.  Research online or wait until a discount is offered.  Most retailers are having Different offers each day so you really shouldn’t need to pay full price.

4.       SHARE THE COST

If you are hosting Christmas lunch, ask everyone to bring a plate of food.  Most people won’t mind and this will save a lot of money and time.

5.       DON’T SPEND MONEY YOU DON’T HAVE

Carefully consider putting purchases on your credit card or arranging some kind of quick finance with high interest.  You will regret it come January.

CREDIT CARDS AT CHRISTMAS

Credit cards are a convenient way to pay for the things you want, and ever so tempting at Christmas time, but this convenience can come at a cost. It can be very easy to rack up more debt on your card than you expect or are comfortable with, so it's important to stay in control.

Here are some things to consider whilst using your credit card at Christmas:

1.    OVERSEAS TRANSACTION FEES

If you do Christmas shopping online with an international retailer, you could end up paying an international transaction fee worth 2–4%.

2.    OFFERS TO INCREASE YOUR LIMIT

Banks sometimes offer you a higher credit limit on your card.  If you receive an offer to do this around this time of year if could be very tempting to take them up on this.  However, getting a higher credit limit can be bad for your Christmas budget, since the temptation to overspend will be magnified. You could easily end up spending more than you should and paying much more in interest charges too.

3.    CONSIDER REDUCING YOUR CREDIT LIMIT

If you want to avoid the temptation to overspend on your card, ask your credit provider to reduce your credit limit. You can do this by phone or by visiting a branch. In most cases, your account will be updated within 1-2 business days.

4.    PAY ON TIME

When you get your credit card statement, check the date the payment is due, and make sure you pay on time. This will help you avoid extra interest charges or hefty late payment fees.

To make it easier to pay on time, consider setting up a direct debit to pay a fixed amount off the balance owing each payday. Just make sure these payments cover at least the minimum monthly payment due on the card.

5.    MAXIMISE YOUR REPAYMENTS

If you only make the minimum repayments on your card each month, you will pay a lot of interest and it could take you a long time to pay off your balance.

Why not make a plan to get rid of your credit card debt and pay more than the minimum repayment each month.

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FINANCIAL TIPS FOR ALL GENERATIONS

We all see money differently and have grown up alongside different financial situations eg. The Depression where there was no money compared to today’s world where many of us are living with a huge debt over our heads.  Here are some tips that may help each generation with their finances.

GENERATION Z (teens to early 20s)

This generation tend to want it and want it now!  Gen Zs would do well to understand that financial success takes diligence and patience.  They would do well to live within their means, creating a budget and spending less than they earn.  They have time on their side, start saving, even a small amount each week and putting it away for the future.

GENERATION Y (20s and early 30s

Life is starting to get real for Gen Ys.  They may have a HECS Debt, just got married and started a young family and/or bought a first home.  Aim to have 3 to 6 months’ worth of salary put away for unexpected emergencies.  Consider insurance, especially if you have started a family, both life and income protection.  Gen Ys also have time on their side, participate in a retirement savings plan at work, if offered.

GENERATION X (30s and 40s)

Gen Xs may have home ownership, older children, a great career.  Time to review your insurances, take care of your health and create a Will.

BABY BOOMERS (50s and 60s)

Baby boomers need to shift their retirement savings into high gear.  Visit a financial professional if you haven’t already to ensure your assets are invested to ultimately provide a lifetime of income.

RETIREES

Time to enjoy!  First, review the basics – develop a realistic budget and don’t exceed your spending limits.   A financial planner can help you determine the best investment strategy to help ensure you don’t outlive your assets.

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