News

One of the oldest adages in the financial planning industry is “pay yourself first” by depositing a percentage of your income in a savings account. However, many of us are already so “maxed out” that we don’t have any money to put aside. The mere thought “I should save money” is more an affirmation of one’s inability to do so.

However, there are plenty of ways we can save money if we really motivate ourselves. The way to do this is to take small steps with great discipline and clarity of purpose. Too often, people trying to save money deposit large amounts into savings accounts, leaving them so strapped that they eventually withdraw it again.

Here is how to save money: take a small amount every week off of the top of your pay. This can be difficult at first and there are always temptations to spend your savings, but “slow and steady wins the race” applies here. Many people try to save by giving up something they really like and are actually surprised when they give in and stop saving money.

Ultimately, the most important question is this:

In an environment where business, finance and real estate are becoming increasingly competitive, it is crucial to find a great financial adviser. With an investment market that is becoming even more complicated, we think that it will be even more important to have a great financial adviser who can steer you through a maze of investment possibilities and help you choose the path that leads to treasure at the end.

Before You Meet Your Adviser

Before you walk into a financial planning firm’s office, you absolutely must do your homework. The first thing you need to do is ask yourself some questions. Why do you want a financial adviser? What do you aim to accomplish? How much risk is acceptable and how much is unacceptable? What time frame are you looking at for growth? What vehicles would you like to use for investment?

When You Meet Your Adviser

After you have answered your own questions, there are plenty of questions you should ask your adviser, too. How long have they been associated with the finance industry? What is their specialty? How much money do they charge? What is their philosophy on investing? Is there a free consult? If you aren’t satisfied and want to change advisers, will it cost you anything?

While the current super guarantee of 9.25% and its eventual 12% sound like a lot of money, most people who want a better retirement lifestyle will want to make extra contributions and use other techniques to ensure that they live the lives they want after they retire. Here are some tips for maximising your super.

Consolidate to One Account

If you have more than one super account, you may be paying unnecessary fees. Each fund charges fees and these fees can turn into a lot of money over a period of 30 years. When you pay extra fees, you are losing money twice: the fee itself and the money it could have made for you as an investment.

It is a good idea to move it all into one account. This means less paperwork, less fees and more money for your super. In addition, it is much easier to monitor the performance of one fund than multiple funds.

It’s never too early to think about your future, and Approved Financial Planners helps you do just that. One of the most important factors in your future is your superannuation fund, or “super.” Learning how to maximise it now will have a profound effect on your future lifestyle.

What Is Your Super Fund?

Your super fund is your own personal retirement fund. Your employer makes contributions to it and you are allowed to make contributions to it as well. In addition, the Government sometimes contributes to your super in special cases. Your employer is currently required by law to pay the “Super Guarantee” of 9.25% into your super. By 2019, this will have increased to 12%.

Your super will grow from year to year from accumulation. In addition, it will also grow from being invested. The laws have changed and allow individual Australians to manage and invest their own super funds. One important benefit is that super income is taxed at a lower rate than other investment income. In addition, those who contribute extra to their supers can receive co-contribution funds from the Government.

Another benefit is that you can purchase income protection or disability insurance at a lower rate through your super.

When it comes to life insurance, many Australians are misinformed due to a number of myths that pass for “wisdom” in some circles. Unfortunately, many Australians buy into these myths and leave themselves and their families woefully underinsured or not insured at all. Here are seven myths about life insurance.

“I am Too Young and Healthy to Get Life Insurance.”

Many young people overestimate themselves but no one can really predict when illnesses and accidents happen. By getting life insurance early, you can be sure that your loved ones are protected.

“The Government Provides All of the Protection I Need.”

The current maximum disability pension (for 2013-2014) is only $569.80 every fortnight for a single person and only $475.90 each for married couples. Can you sustain your current lifestyle on that payment?

“I’m Covered by Workers Compensation.”

Unfortunately, Workers Compensation only covers you if you are hurt at work. Most illnesses and accidents don’t happen at work, meaning that most Australians who rely on Workers Compensation are out of luck.

Have you ever stopped to think of what would happen if you suddenly had no income for three months? Six months? If the answer to this question disturbs you, it’s time to learn about income protection insurance. Income protection insurance pays you if you are unable to work for an extended period of time. This can help you with expenses that are crucial to keeping your home and providing for your family.

Who Needs Income Protection Cover and How Does It Work?

We recommend income protection cover for everyone whose ability to support their lifestyle is dependent upon them working to earn income. This can be someone with a small business that depends on their presence to function correctly. It is great for the self-employed and for those whose ability to work depends upon their physical health.

Income protection cover works exactly as one might think. If you are unable to work due to illness or injury, it pays you up to 75% of your current income. Income protection cover is 100% deductible. However, you must pay taxes on your income if you ever need to collect benefits.

Most policies have limits. For example, they will pay you until the age of 60 or for a set number of years. Your premiums may be stepped or level. A stepped premium means that your premium starts out lower and increases as you age. A level premium means that you pay the same amount of money each year. This ends up being more expensive in the beginning and cheaper towards the end.

Recently, a reputable financial firm surveyed over 2,000 Australian adults about their attitudes concerning investment, debt and savings. The online poll was taken toward the end of 2013 and involved household decision-makers between the ages of 18 and 65. Age, gender and location were all taken into consideration when compiling the results.

The report is called the RaboDirect National Savings and Debt Barometer (NSDB). This is the third annual report; as usual, it aimed to seek opinions about the financial issues that Australians find most important.

This year’s model related a lot of the issues to health and happiness. Across all major issues, age groups, occupations and both genders, those who were in the best shape financially said they were both healthier and happier.

So, who came out on top of the health and happiness scale? The Self-Managed Super Fund (SMSF).

Self-Managed Super Funds

Those with SMSFs felt that they were happier and healthier than those with other super funds by a large margin. In addition, approximately one out of three respondents who had SMSFs said that they expect to have at least $1 million in their funds when they retire. Of those who had different superannuation funds, only 10% expected to have $1 million when they retire.

Disability Insurance, usually sold as “Total and Permanent Disability Insurance,” is designed to relieve financial pressure in case you become permanently disabled as the result of illness or injury. It usually comes in the form of a lump sum and is used to pay for such things as living expenses, debts and medical expenses. It can also be the source of funding for a permanent lifestyle change if one is necessary.

How Does Disability Insurance Work?

Disability insurance covers you if you can’t work again due to disability. There are two different ways that most companies will insure you. The first is in case you are injured and can’t practice your own profession again, such as a musician with a debilitating hand injury. The other is if you are disabled and can’t work in any profession again, such as someone who becomes paralysed.

It is important to read the language of any policy carefully and thoroughly to make sure that you know what your coverage is.

How Much Cover Should You Have?

We know that the amount of cover you select will be largely dependent upon your ability to pay the premium, but we suggest that you make a list of all your projected expenses and get coverage for that number. Be sure to include enough benefits to pay off: your mortgage, miscellaneous household debts, cost of remodeling your home to compensate for your condition, ongoing household expenses, medical care and your children’s education.

Everyone knows about life insurance. Many people know about total and permanent disability cover. Some even know all about income protection cover. But one kind of insurance that often slips between the cracks is trauma insurance. In the insurance industry, trauma insurance is a relative newcomer, having been in existence for around thirty years.

But make no mistake; trauma insurance is a great policy to have and may be the one on which most Australians are the most likely to collect. So, what is trauma insurance and why do so few Australians know about it?

Trauma Insurance: How It Works

Trauma insurance provides you with a lump sum payment in the event that you suffer a traumatic illness. Each insurer has a different list of what conditions they deem payable, so you should choose your provider carefully.

By the Numbers

We mentioned that trauma insurance is the insurance that Australians are the most likely to collect. So, what conditions generate the most claims? According to the AMP website, in 2011 their trauma insurance claims were paid in this ratio: