Financial PlannersInvestment PlanningNews Creating Passive Income Streams

Tips for Creating Passive Income Streams

Investment planning can be confusing and scary. It is one of the services we offer in our Perth office. When investment planning is done right, your money can make money for you. We cannot offer specific information over a blog; you will have to contact our office in Perth for a consult if you would like specific advice. However, we can provide some general tips to get you pointed in the right direction.

Do You Have Goals Yet?

Our parent company, AMP Financial, has a lot of good information on their website, https://www.amp.com.au/. On their page entitled “Understanding Investments,” they recommend that you formulate short term, medium term and long term goals. Short term is defined as in the next six months to two years. Medium term is the next two to five years. Long term is anything further down the road than five years.

Choosing the Correct Investment Vehicle

On AMP’s webpage called “Choosing the right investment option,” they explain how to decide which forms of investments are right for you. The first factor to take into consideration is your risk tolerance. This is determined by combining your attitude towards risk with the amount of time you have to invest.

Generally, the higher the potential return, the higher the risk. However, that isn’t always the case and our financial planners are experts at finding investments that have above-average risk to reward ratios. Here are some risk-reward factors of popular investments.

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Financial PlannersInvestment PlanningNewsRetirement Planning Clear on Investment Goals

Why It’s Important to be Clear on Investment Goals

Whether you are in the investment planning stage, the retirement planning stage or both, our parent company AMP recently provided information reminding us all how important it is to be clear on investment goals. We provide individual consults in our Perth office. One of the first questions we usually ask is about investment goals. Believe it or not, some of those we are consulting don’t have any investment goals yet.

Why Now?

The cash interest rate is at record lows. While this is a boon for borrowers, it is causing many investors to rethink their strategies. One of the major decisions investors must make now is whether they prefer income sustainability or capital stability. *

Previously, term deposits and other cash investments have been regarded as “safe.” Under normal circumstances, cash investments deliver an adequate, if not large, level of income. In addition, their capital value is stable. *

So, what has changed? When the RBA cash interest rate is low, both loan rates and the income provided by long term cash deposits are also low. Since the RBA cash interest rate is the lowest it has ever been, many cash investments are no longer providing high enough returns to offset inflation. *

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Financial PlannersNews Optimistic About The Economy

7 Reasons Why the Chief Economist of AMP Capital is Optimistic about the Economy

As financial advisors in Perth, it is our job to know everything we can about the economy. At Approved Financial Planners, we spend a lot of time talking to clients and peers about minute details of events affecting the economy.

As you may have guessed, it hasn’t always been fun and games, starting with the end of the mining boom in WA. Even though the economy has been doing much better as of late, there is still no shortage of naysayers predicting doom and gloom for the Australian economy.

Recently, Dr Shane Oliver, the Chief Economist of AMP Capital, our parent company, published a piece on the “Oliver’s Insights” section of the company blog called, “The Australian economy – seven reasons not to be too gloomy.” The piece provided contextual background for why the naysayers are so persistent, then gave seven reasons why the economy is in better shape than the naysayers think. We would like to provide a summary for you.*

Frustrated with Slow Growth?

While the March quarter showed a 0.9% growth in the Gross Domestic Product (GDP), annual growth is stuck at 2.3% where economists would rather see it between 3% and 3.25%. If one takes into consideration that net exports were responsible for 0.4% and inventories were responsible for 0.3%, domestic final demand was nearly flat for the March quarter and only 1.1% year to year.*

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Financial PlannersNews Maximising Your Tax Return

Tips for Maximising Your Tax Return

It’s that time of year again. Financial advisors and accountants in Perth are busier than ever, helping advise clients what and what not to deduct on their tax returns. We would like to provide a few general tips here. Remember: this does not constitute any individual or direct financial advice. That can only be done by a meeting with a licensed financial planner in our Perth office.

Anyway, here are some tips that may help you out.

Home Study

If you are learning a new skill at home and it is directly related to your ability to earn an income, you may be able to claim a percentage of the expenses incurred during self-education.

Work Uniforms

If your job requires you to buy work uniforms, you may be able to claim both the purchase and cleaning of the uniforms.

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Business InsuranceFinancial PlannersNews Business Overhead Insurance in Perth

Does Your Business Have Business Overheads Insurance?

If you are an owner or a partner in a business, you may already know about business overheads insurance. We feel that business overheads insurance is an important piece in helping any business protect its assets if the owner becomes disabled and unable to work for up to a year due to sickness or injury. In a competitive business environment such as that in Perth, it can mean the difference between your business surviving or folding if you become temporarily unable to work.

Business overheads insurance is usually used to pay overheads such as payroll, rent, utility bills, office expenses and other fixed costs. The premiums are usually able to be deducted from your taxes and the policy covers up to 100% of business expenses that are deemed eligible.

AMP Business Overheads Insurance

We are associated with AMP and they offer a business overheads insurance policy. Here are some highlights.

Indexation: When the consumer price index (CPI) rises, AMP automatically increases your cover to reflect those rises.

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Financial PlannersInsurance ProtectionNews Up To Date Wealth Protection Plan

Is Your Wealth Protection Plan Up to Date?

Wealth protection, also known as insurance, helps you protect yourself and your family. It helps you ensure financial security for yourself and your family in case something bad happens to you. We have been providing wealth protection and financial planning in the Perth area since 2005. We can’t provide individual advice without a consult, but here is an overview of how a solid wealth protection plan may protect you and your family.

The Four Basic Types of Insurance

There are four basic types of insurance cover: income protection, trauma cover, total and permanent disablement (TPD) and life insurance.

Income protection pays you up to 75% of your income in monthly payments during any period of time that you are unable to work because of injury or illness. This provides for your monthly expenses and keeps you and your family afloat while you are unable to work.

Trauma cover pays you a lump sum if you are diagnosed with a specific illness or medical condition outlined in the plan. Many plans also cover medical procedures such as bypass surgery. This allows you to focus on getting well instead of worrying about finances.

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Financial PlannersInsurance ProtectionNews Financial Planner Discuss NDIS

Is the National Disability Insurance Scheme Enough to Protect You and Your Family?

Currently, the National Disability Insurance Scheme (NDIS) has two trial sites in the Perth area. The NDIS is under the umbrella of the National Disability Insurance Agency (NDIA). It is currently available for residents of two Perth suburban areas: the Lower South West and Cockburn/Kwinana.

What is the NDIS?

According to their Government website, the NDIS is a scheme in which the disabled are offered community assistance to help them live better lives. It is designed to assist not only people with disabilities, but their carers and their families. It is intended to provide those who suffer a significant and permanent disability. Assistance includes information, referrals, individualised supports and plans, early intervention and support to help access activities and community services.*

However, there is one thing that the NDIS isn’t: it is not Total and Permanent Disability Cover.

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Financial PlannersNews Financial Advisor's Duty Of Care

Does Your Financial Advisor Understand Duty of Care?

If you are looking for a financial advisor in Perth, you have probably noticed that there are a lot of choices out there. Financial advisors are bound by a concept called “duty of care.” The concept of having a “duty of care” is communicated in many different ways by statutes involving the provision of financial advice.

What is “Duty of Care”?

“Duty of care” basically means that your financial advisor is required to look out for your best interests and inform you of developments that may increase the risk of any investment they have recommended to you.*

Swan and Baker Pty Limited vs. Marando

It is best illustrated by a decision which was upheld by the NSW court of appeal last year: Swan and Baker Pty Limited vs. Marando. A financial advisor and the firm he worked for were accused of misleading and deceptive conduct by two investors. They were also accused of a breach of professional duty because they had provided negligent advice.*

In 2008, Mr and Mrs Marando invested $500,000 in the City Pacific Ltd Mortgage Fund on the advice of accounting firm Swan & Baker. The funds were to be invested for 90 days and available for reinvestment after the term had elapsed. Swan & Baker gave the Marandos a copy of a document called the Fund Product Disclosure Statement. Within the statement was a 14-day “cooling off” period that applied to new investments.*

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Financial PlannersNews Financial Advice For All Australians

Financial Planning Association of Australia Cites Intergenerational Report: Recommends Financial Advice for all Australians

The Financial Planning Association of Australia (FPA) cited a recent Government document as confirmation that all Australians need professional financial advice. As a firm that has provided financial planning help in the Perth area since 2005, we have always felt that a good financial planner can make a difference in anyone’s future.

2015 Intergenerational Report

The document in question is produced by the Treasury: the 2015 Intergenerational Report (IGR). According to the IGR, life expectancy will increase greatly in the next forty years. At birth, men are projected to have a life expectancy of 95.1 years, while women can expect to live 96.6 years. Today’s life expectancy at birth is 91.5 years for men and 93.6 years for women.*

The end result is that, by 2055, the ratio of working Australians to those who are over 65 will be 2.7 to 1. Today, that ratio is 4.5 to 1. In 1974/75, for comparison, it was 7.3 to 1.*

Mark Rantall, who is the FPA’s CEO, feels that it will be important for Australians to maximise their superannuation funds to rely less on age pensions. According to Mr Rantall, “The IGR makes it very clear that [those with higher superannuation savings are less reliant on age pension].”

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Financial PlannersNews Financial Planning Provides Psychological Benefits

Little-Known Research Paper Indicates that Financial Planning Provides Psychological Benefits

We have more than 40 years of combined experience in providing financial planning to the Perth area, but even we were surprised when we found a little-known research paper authored by Kym Irving from the Queensland Institute of Technology in 2012. The article was subsequently published by Australasian Accounting Business and Finance Journal in their special issue on Financial Planning.

According to Ms Irving, the traditional six-step process of financial planning not only impacts clients mechanically through results, but psychologically, too. One of the central themes of the article is that the physical reality of improved well-being also results in a better psychological sense of well-being.

The Six-Step Process

The very nature of financial planning is that it helps individuals create a series of positive, goal-oriented outcomes by helping them manage their funds and ensuring that they meet their financial goals. Ms Irving used a six-step model of financial planning that included:*

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