Retirement Income

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10 habits of cheapskates you can follow to save money

<p>Secrets of the frugal and wealthy<br />Frugal people tend to be wealthy people, but that doesn’t mean they live extravagantly. In fact, their cheapskate mentality is exactly what helps them get rich and stay that way.</p> <p>Drive inexpensive cars<br />People who are smart about money understand that a car begins to lose its value as soon as it’s driven off the lot, and they refuse to invest a substantial amount of money in a depreciating asset. Instead of plunking down chunks of his massive fortune on sports cars, Facebook founder Mark Zuckerberg drives a Volkswagen hatchback with a manual transmission. And IKEA founder Ingvar Kamprad doesn’t buy cars at all – he uses public transport instead. Some cheapskates have done the math and realised using car services like Uber is even more cost-effective than buying a car.</p> <p>Invest in quality over quantity<br />Contrary to common belief, cost-conscious people aren’t cheap in the traditional sense of the word. In other words, they don’t buy junk just to save money. They would rather invest in a high-performing, top-notch gadget that will give them their money’s worth, than have to make repairs to or replace a cheaper version. In the long run, this saves the money it would take to constantly replace something cheaper.</p> <p>Prepare meals from scratch<br />Cheapskates don’t overpay for convenience. In the supermarket, they bypass the washed and chopped veggies and go straight for the whole heads of broccoli. They bypass the frozen food section and go straight for the fresh stuff – even if it means buying more than they need. That’s because they have a no-waste mentality – if they make too much, they save every scrap and label it before putting it in the freezer so they know what needs to be eaten first. This way, they stretch their grocery budget as far as possible.</p> <p>Don’t feel the need to constantly upgrade<br />Whether it’s a smartphone or a smart home, cheapskates don’t cave into pressure to keep up with the Joneses. Amazon CEO Jeff Bezos has dubbed the hamster-wheel pursuit of the latest and greatest gadgets “the upgrade treadmill.” And some extremely wealthy people have been known to live in the same home for a long time, even as their wealth grows. Billionaire Mark Cuban has famously lived in his house for almost two decades.</p> <p>Avoid the Diderot Effect<br />The Diderot Effect is a social phenomenon whereby someone acquires something of high quality and feels the need to make “reactive” purchases to complement the original one. For instance, a person buys a new rug. They’re enamoured of the rug, but it matches nothing in the room – so they make a slew of additional purchases in order to furnish a room that complements the rug. Frugal people are aware of this cycle, so they avoid temptation and don’t fall prey to it.</p> <p>Sidestep fees<br />Frugal people avoid fees – both hidden and otherwise – like the plague. Instead of automating all their payments, they’re constantly monitoring all of their bills and subscriptions to make sure new fees haven’t been introduced (and to make sure they’re not paying for goods and services they don’t need). If shipping fees for online purchases are too steep, they buy in-store. And ATM fees? Forget it. Cheapskates understand that dribs and drabs add up.</p> <p>Don’t shop for fun<br />Just like physically fit people don’t eat when they’re bored, financially healthy people don’t shop for entertainment. Their spending is far too intentional for that. When they’re stressed, upset or defeated, they don’t resort to retail therapy, because they know the high from mindless shopping is short-lived and will hurt them in the long run. Instead, they’ll turn to self-care – like exercising, laughing with loved ones or listening to music – to blow off steam and reap “rewards.”</p> <p>Try repairing before replacing<br />When something breaks, the easiest thing to do is replace it. But cheapskates would sooner expend energy than spend money – and some repairs don’t cost a whole lot, anyway. Things like dishwashers, shoes and furniture often need only easy, low-cost repairs – even when you hire someone to do the fix for you. Cheapskates will always pursue the repair route before thinking of buying something new.</p> <p>Opt for community-sponsored activities that are low-cost or free<br />The money-conscious are practically allergic to high-cost entertainment like live concerts or going to the movies (and buying popcorn!). But that doesn’t mean they lock themselves up inside and have no fun. In most communities, activities that cost little to nothing abound. Renting movies at the library, attending local productions and sports competitions, and taking advantage of free museum days top a cheapskate’s weekend itinerary.</p> <p>Save every cent – literally!<br />One of the everyday tricks of cheapskates is to save their spare change in a money jar instead of keeping it in their wallets, where they’ll be tempted to spend it. They literally empty out the change compartment each day and forget about. It’s one of the most practical ways possible to save money without even feeling it – and it adds up faster than you’d think. Remember: you can be frugal, but don’t be cheap!</p> <p class="p1">Written by <span>Kristine Solomon</span>. This article first appeared on <a href="https://www.readersdigest.com.au/food-home-garden/money/10-habits-of-cheapskates-you-can-follow-to-save-money?pages=1"><span class="s1">Reader’s Digest</span></a>. For more of what you love from the world’s best-loved magazine, <a href="http://readersdigest.com.au/subscribe"><span class="s1">here’s our best subscription offer</span></a>.</p>

Retirement Income

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Can you rid yourself of 2020’s financial stress as we head into 2021?

<p>2020 has been a tough year for nearly everyone, and that may be especially true for retirees and those nearing retirement who suddenly are worried about whether their careful planning and years of saving could be upended by events beyond their control.</p> <p>After all, retirement is supposed to be a pleasurable and satisfying time when you kick back and enjoy the fruits of all those decades of labor. That’s difficult to do if you’re jittery about a volatile stock market, or you fret over every expenditure because you aren’t sure whether your savings can go the distance in a lengthy retirement.</p> <p>As this year draws to a close, and we look toward 2021, plenty of people still have worries. For them – and maybe for you – the future is uncertain. But frankly, the future is always uncertain, and worrying about your finances without taking charge of your situation does no one any good.</p> <p>So, if you’re already in retirement or plan to be there soon, how can you reduce some of that financial stress that’s weighing you down in these tumultuous times? Let me offer a few ideas:</p> <ul> <li><strong>Take control.</strong> Just stewing and letting the emotional strain rule your days and nights does no good. Instead, focus on actions you can take to help reduce some of that stress. Often, just doing something – anything – can help you feel better. Review your financial assets so you truly know where you stand. Those assets might include savings accounts, investment accounts, retirement accounts, life insurance, real property or other items. You can’t create a plan unless you know exactly where you stand, so taking stock of things should be the first step. That way you aren’t operating in the dark. And what about the “T” word? Taxes! Have you imparted tax-efficiency as a part of your retirement plan? Do you know your options when it comes to this certainty?</li> <li><strong>Reconsider the timing of your retirement.</strong> Whenever the economy is shaky, it’s best to consider your options ahead of time so you can be prepared before problems arise. If you’re still working, for example, and you suddenly lose your job, one option may be to retire earlier than you originally planned and take Social Security. That can come with downsides, though. If you begin drawing Social Security before your full retirement age (between 66 and 67 for most people) you receive a reduced monthly check. That could cost you tens of thousands of dollars over a long retirement. Conversely, if your job situation is stable but you're worried your nest egg is inadequate, consider postponing retirement. That will allow you to save more, potentially increase your Social Security benefits, and can potentially give your investments time to recover from temporary market declines.</li> <li><strong>Review your budget and clean up bad habits.</strong> Many of us have less-than-stellar financial habits that we developed over the years. Those patterns of behavior don’t magically disappear as you approach retirement. You need to be intentional about changing bad habits so you aren’t spending more money than you need to – or should. To help you determine the difference between necessary and discretionary spending, review the past six months to a year of expenditures. As you review your spending, think beyond all those momentary, one-time splurges. Include your regular household bills, such as utilities, cable and cell phone service. You might be able to save money through a family plan, by bundling services, or by cutting the cord altogether.</li> <li><strong>Evaluate the risk in your portfolio.</strong> Perhaps you have had an aggressive investment strategy, and that’s how you accumulated a big nest egg that (you hope) was designed to carry you through decades of retirement. But, in an uncertain market and with retirement already here or close at hand, it may be wise to re-evaluate how much risk you’re holding in your portfolio. Now would be a good time to diversify and consider other investment options so you can help protect what you already have.</li> </ul> <p>Remember, though, that if your unsteady financial situation is getting the better of you, you don’t have to go it alone. Find an experienced financial professional who can help you develop a plan that can potentially ease at least some of your worries.</p> <p>It’s possible to get back on track financially – and, hopefully, set aside those concerns that could mar your enjoyment of life in retirement.</p> <p class="p1"><em>Written by Alan Becker, president and CEO of <a href="http://www.rsgusa.net">Retirement Solutions Group</a> and author of Return on Investment or Reliability of Income? The True Meaning of ROI in Retirement.</em> </p>

Retirement Income

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Treasurer Josh Frydenberg releases long-awaited Retirement Income Review

<p>Recently, <a href="https://nationalseniors.com.au/">National Seniors Australia</a> welcomed Treasurer Josh Frydenberg's Retirement Income Review.</p> <p>However, the document has been critiqued for lack of clear recommendation and understanding for the problems at hand. An overly complicated system is much to blame.</p> <p>The report predicts the cost to the taxpayer for funding the Age Pension will decrease. The Age Pension is expected to “fall from 2.5 per cent of GDP to 2.3 per cent by 2060.”</p> <p><a href="https://nationalseniors.com.au/">National Seniors</a> Chief Advocate Ian Henschke notes that while a equity in the home is a key factor in more successful retirements, a key barrier was not acknowledged.</p> <p>“<a href="https://nationalseniors.com.au/">National Seniors</a> has long been calling on the government to cut the interest rate for the existing Pension Loans Scheme (PLS). It’s a clear barrier.”</p> <p>Mr Henschke also noted that the report didn't adequately understand why Australians may not be making better use of their savings as they age.</p> <p>“Seniors tell us time and again they are petrified of running out of money. They fear the pension, health and aged care systems, which are essential components of the retirement income system won’t meet their needs. Acknowledging these fears is an important first step in reforming the retirement income system."</p> <p>“If you look at aged care, for example, we are currently in the middle of the Royal Commission because, to use the Prime Minister’s own words, people have lost ‘faith’ in the aged care system.”</p> <p>Mr Henschke said that the scheme "is especially important for those receiving aged care, who could be using it to live more comfortably staying in their own home and out of residential aged care.</p> <p>“The PLS has seen a three-fold increase in demand but only 2,288 people used the scheme as of March 2020.</p> <p>“Lowering the 4.5% interest rate should be a priority and certainly must be cut in the next Federal Budget." said Mr Henschke.</p> <p>“We urge the Treasurer to recognise the vital role older Australians could play in the economy and the COVID recovery by helping them release the equity in their homes.”</p>

Retirement Income

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Downsizing no more: Australian over 50s want more living space and independence due to COVID-19

<p><a rel="noopener noreferrer" href="http://oversixty.com.au/" target="_blank" class="c-link" data-stringify-link="http://OverSixty.com.au" data-sk="tooltip_parent">OverSixty.com.au</a><span> and </span><a rel="noopener noreferrer" href="http://downsizing.com.au/" target="_blank" class="c-link" data-stringify-link="http://Downsizing.com.au" data-sk="tooltip_parent">Downsizing.com.au</a><span>, Australia’s leading over 50s property portal, recently published a research paper which finds that downsizing has a bright future in the post-COVID-19 era.</span></p> <p>Informed by consumer surveys and other consumer search data, the paper finds that:</p> <ul> <li>COVID-19 has educated consumers about the disadvantages of being isolated in their existing neighbourhood and conversely the benefits of living with friends and community managers in a dedicated downsizing development.</li> <li>Downsizers are likely to be increasingly looking for developments with more personal space, either within or around the home, along with their own parking spot so they do not need to rely on public transport </li> <li>Downsizers have become more footloose and are increasingly attracted to areas which have been less impacted by COVID-19, such as regional areas, or want to move closer to family and friends.</li> <li>Irrespective of the COVID-19 economic dip, over 50s remain in a strong position to fund a retirement living purchase as they have enjoyed years or decades of capital growth in their family home value.</li> <li>Downsizers have also been motivated to move due to the fact they’ve been increasingly exposed to the maintenance and other chores of their existing family home while being forced indoors due to the COVID-19.</li> <li>COVID-19 has educated potential downsizers about the benefits of looking for, and inspecting, homes online</li> </ul> <p><a rel="noopener" href="https://www.downsizing.com.au/downloadable-reports/2/why-downsizing-has-a-bright-post-covid-future" target="_blank"><strong>DOWNLOAD THE REPORT HERE</strong></a></p> <p>According to the survey of Australian over 50s:</p> <ul> <li>Around one in three people are more likely to downsize because of COVID-19, with key motivations including being able to move to a like-minded community and reducing maintenance chores</li> <li>54% say two or more bedrooms are essential, up from 48% in a survey undertaken before COVID-19</li> <li>56% regard garages and 54% regard parking spots as essential - both of these ranked below 50% in a pre-COVID-19 survey</li> <li>On the flipside, only 38% want to be close to public transport, down from around 45% in the pre-COVID-19 survey.</li> <li>Only 16% said it was essential they stayed in the same area, down from 18% in our pre-COVID-19 survey</li> <li>Of the people who are more likely to move due to COVID-19, around 20 per cent are doing this to move out of a crowded environment.</li> <li>More than one in three survey respondents were interested in downsizing in Queensland, despite the fact that only one in four were actually based in the State, in line with increased search activity for this State on our website</li> </ul> <p>Downsizing.com.au co-CEO Amanda Graham said the survey showed that downsizing and retirement living was emerging from the COVID-19 with a strengthened value proposition.</p> <p>“We can see in this survey how COVID-19 has accelerated many over 50s housing trends already underway, including a desire for independent living and greater space and transport autonomy,” Ms Graham said.</p> <p>“In addition, COVID-19 has encouraged people to move to new areas, which they perceive as being safe but also where they can find new friends and enjoy a great lifestyle.</p> <p>“During COVID-19, we have also really seen a very strong structural shift to consumer search activity on digital channels.”</p> <p>Ms Graham said downsizers are proving to be a resilient residential property market segment during COVID-19, given they have accumulated significant home equity throughout their working lives and are now keen to achieve a better lifestyle and boost their retirement income.</p> <p><em>The report was written by Mark Skelsey on <a href="https://www.downsizing.com.au/news/787/Downsizing-no-more-Australian-over-50s-want-more-living-space-and-independence-due-to-COVID-19">Downsizing.com.au</a> and includes a foreword from the Retirement Living Council’s Executive Director Ben Myers (the report was produced independently of the Retirement Living Council).</em></p>

Retirement Income

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The do’s and don’ts of the share economy

<p>Selling in the sharing economy seems efficient. You have a spare room you aren’t using, rent it on Airbnb. You have spare time and a car, drive for Uber. You have mad Ikea skills, sell them on Airtasker. Work in the sharing economy can be a major income earner or a cash booster. Whether it's your primary income or you're testing the waters, there are a few dos and don’ts to maintain financial security in the sharing economy.</p> <p><strong>The dos</strong></p> <p>1. Contribute to superannuation</p> <p>Everyone earning income needs to be paying into superannuation. This is the most tax effective investment you can make in your future. Missing a few years of super payments because you were travelling and covering costs with small gigs will set you back. Even putting a little bit away helps.</p> <p>2. Get insurance</p> <p>Maintain your income protection insurance to protect against sickness or injury, trauma and TPD insurances. This is more important with the latest legislation change. You might also need professional indemnity and public liability insurance. Professional indemnity protects you if clients claim your service has caused them a loss. Public liability protects you if you injure a customer or damage their property. Check you are covered for general insurances – home, contents, car if you are using them for a side hustle.</p> <p>3. Research tax requirements, benefits and government regulations</p> <p>Governments are constantly catching-up to the sharing economy. Regulations and tax laws update frequently. Surprise tax bills are nobody’s friend, so keep on top of this. If you’re using your home, car or other assets you have opened up a new world of tax deductions. It’s worth your time to look into this. If this is an undeclared income you can’t claim deductions, but declaring a second-job might mean more tax deductions for things you previously couldn’t claim. Weigh up the options.</p> <p><strong>The don'ts</strong></p> <p>1. Don't underestimate the lifestyle costs of this work.</p> <p>Consider how this will impact your life. Is it going to be profitable enough to justify the distraction? Could it impact your primary income? What are the actual costs, like cleaning and wear and tear? Would the time and energy spent on this be better spent on a second job or seeking a promotion? Often, we think we can do it all, but everything has a cost. Be honest with yourself about how you want to live.</p> <p>2. Don't sacrifice your personal finances</p> <p>Know your limits and how much you want to invest to make it work. You’re effectively starting a new business. In the initial set up you will invest your own money. After that draw a clear line between business and personal finances. Think about whether you run the business in your own name, as a trust or as a company. This decision could determine whether you are personally liable for any debts. Understand your finances: what’s coming in, what’s going out, what you owe and what others owe you. This will help you avoid costly mistakes.</p> <p>3. Don't go in without an exit plan.</p> <p>Regulations change or you might hate it. You need an exit strategy that minimises financial losses. Think about this at the start, before you’ve invested. It may change how you do the initial set up. And if you’re relying on this income, then you’ll also need a back-up plan if you’re not earning it anymore.</p> <p>I have clients who have been earning income for years through the share economy. If planned and structured well it can make a real change to your financial situation. But flying in without considering costs, or personal security, could be dangerous. Take the time to think about your options. Time researching and planning is always a good investment.</p> <p><em>Helen Baker is a licenced Australian financial adviser and author of two books: On Your Own Two Feet – Steady Steps to Women’s Financial Independence and On Your Own Two Feet Divorce – Your Survive and Thrive Financial Guide. Proceeds from the books’ sales are donated to charities supporting disadvantaged women. Helen is among the 1% of financial planners who holds a master’s degree in the field. Find out more at <a href="http://www.onyourowntwofeet.com.au">www.onyourowntwofeet.com.au</a></em></p> <p><em>Note this is general advice only and you should seek advice specific to your circumstances.</em></p>

Retirement Income

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12 easy ways to save $20 a day

<p><strong>Define your budget</strong><br />Saving $20 a day can be as basic as sitting down and crafting a realistic budget. “Our society has done a poor job at teaching people how to save as well as construct a real budget and stick to it,” says Tom Graneau, author of Pennies to Power. He asserts that our money problems can be traced to a lack of discipline rather than a lack of funds. Graneau recommends putting away 15 to 20 per cent of your pay every time you’re paid, making it unlikely you’ll have that extra $20 lying around to spend on something frivolous.</p> <p><strong>Consign your clothes</strong><br />When you’ve grown bored with a once-beloved item of clothing, consider its condition. If you feel it’s too good to be put in a charity bin, a local consignment shop or online consignment space could be the perfect place to score some extra cash. “Selling clothes through consignment is a great way to earn money,” says consignment website co-founder Brielle Buchberg.</p> <p><strong>Make your own coffee</strong><br />This sounds way too simple but your daily café runs seriously add up, especially if you like the fancy stuff. Once you factor in a café latte, perhaps an overpriced pastry, and a second coffee run later in the day, by the end of the week you have seriously blown your budget. Become a DIY barista and make your own concoctions.</p> <p><strong>Say bye to gym memberships</strong><br />Many of us belong to a fitness studio, and those memberships don’t come cheap. If you use them regularly, fine, but it not you could try exercising with the help of a Fitness app instead. Look for one that offers live classes so, even though you are exercising in the privacy of your own home, you can still get that group camaraderie. It will cost you a fraction of the price of a gym membership.</p> <p><strong>Get paid for your opinion</strong><br />As a consumer, your thoughts are incredibly valuable to marketing companies. So much so that you can often find paid survey opportunities when you reveal your purchasing habits and how you decide to buy items.</p> <p><strong>Mark two no-spend weeks on the calendar</strong><br />Depending on your consumer habits, this could be a real exercise in frugality. “Other than petrol in your car and groceries in your fridge, try at least two no-spend weeks each month where you don’t pay for any extras (like that new tech gadget you don’t need),” advises Jill Caponera, a Consumer Savings Expert. “You’d be surprised how much extra money you’ll save when you’re not constantly spending it.</p> <p><strong>Experience your city… for free</strong><br />Boredom can lead to unnecessary spending, yet finding inexpensive entertainment can feel impossible. However, there are likely dozens of fun and free events either in your city or a nearby destination that can save you money while offering up a unique experience you might never have otherwise considered. Type keywords like ‘free events’ in your search engine along with the name of your city or town to discover what’s happening nearby.</p> <p><strong>Don’t be afraid to borrow</strong><br />If you’re a good neighbour, you likely have trustworthy relationships with the folks who live nearby. Before you go out and purchase, say, a power tool or a leaf blower that you may only use once a year, chat to your neighbours to see if they have the item available to borrow. The savings add up and you’re reducing waste at the same time. It’s a win-win.</p> <p><strong>Keep your budgeting style old school</strong><br />Money-saving apps are great, but they aren’t for everyone. Caponera suggests using the good old ‘envelope system’ if you prefer to keep your cash in plain sight. “Set aside a specific amount of money in individual envelopes to cover different categories of your budget,” she says. “If you’ve budgeted $400 a month for groceries, take that amount out of your bank account at the beginning of the month and put the cash in a labelled envelope. This will help you to keep your spending in check and not dip into extra money that could be saved for the future.”</p> <p><strong>When you treat yourself, create a savings ‘match’</strong><br />This idea is truly genius. According to a campaign run by a non-profit organisation, you should match the cost of what they describe as ‘non-essential indulgence’ in savings. This means that if you really want that giant cookie from the coffee shop, you should match its cost in your savings account (or a labelled envelope in cash). Think of it this way, if you can’t afford to save the matching amount, you can’t afford the treat either.</p> <p><strong>Sell some stuff</strong><br />Whether you bought into the Beanie Baby craze of the ’90s or have some other collection that simply isn’t bringing you joy anymore, it’s time to let it go. Find an app to help you list and sell items that you no longer need, or get some neighbours together for a joint garage sale. When multiple families join forces for a sale, it tends to attract more buyers looking for a great deal.</p> <p><strong>Skip takeaways</strong><br />This always feels easier said than done, but if you plan your lunches and dinners for the week, your bank account will come out ahead. Take a look at grocery ads for weekly sales and what could make for a cost-effective but healthy dinner. Bringing your own lunch to work every day also saves you a packet, so if you make more dinner than you can eat, you can have leftovers for lunch.</p> <p><em>Written by Kelly Bryant. This article first appeared on <a href="https://www.readersdigest.com.au/food-home-garden/money/12-easy-ways-to-save-20-a-day?pages=1">Reader’s Digest</a>. For more of what you love from the world’s best-loved magazine, <a href="http://readersdigest.com.au/subscribe"><span class="s1">here’s our best subscription offer</span></a>.</em><span></span></p>

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9 things financial advisors wish you knew

<p><strong>Check out the financial planner's credentials</strong><br />When shopping around for a financial advisor, look for accreditations, such as a Certified Financial Planner (CFP) or Registered Financial Planner (RFP). If they will be handling your investments, choose a reputable Chartered Financial Analyst (CFA).</p> <p><strong>Don’t delay</strong><br />If you’re trying to get out of debt or are sandwiched between dependent children and ageing parents, take a seat. “We recognise that financial advisors can take a back burner,” says money coach and CFP Sheila Walkington. “But it’s like insurance – get it before you need it.”</p> <p><strong>Go beyond the usual suspects</strong><br />Using your bank’s in-house financial advisors may be convenient. But while their products might suit your needs, they’re limited. It’s best to ask for a referral from family and friends. Look for a financial advisor whose clients are roughly in the same financial situation and life stage as you. And don’t be afraid to interview more than one candidate.</p> <p><strong>Everyone gets a little intimidated</strong><br />Many people don’t seek out financial planning advice because they don’t know what questions to ask. Good financial planners expect they’ll need to talk you through complex matters. “There’s a lot of shame associated with money,” says CFP Robyn Thompson. “But we don’t expect you to be an expert.”</p> <p>The initial discomfort is worth it. A survey by Canada’s Financial Planning Standards Council found people who have worked with a comprehensive financial plan felt twice as confident that they will have enough money to retire. As a general rule, you’ll need about 70 per cent of your pre-retirement annual income available each year.</p> <p><strong>Come ready to chat</strong><br />Good financial advisors will spend at least a couple of hours getting to know you before recommending products or strategies. “We’ll look at your taxes, income, investments, retirement savings, estate planning, insurance, debt and any other issues,” says Thompson. Your planner should check in with you at least once annually.</p> <p><strong>Keep things simple</strong><br />It’s your financial advisor’s responsibility to make sure they clearly communicate concepts to you. If they talk down to you or bewilder you with jargon, bid them adieu.</p> <p>Also, beware of the exaggerator. Head for the door if your advisor promises to “beat the market” – no one can safely guarantee that.</p> <p><strong>Be honest</strong><br />Lay out your income and spending, warts and all. “We can bring clarity to your financial habits and give you tools to help,” says Walkington.</p> <p><strong>Know how your financial advisor gets paid</strong><br />It’s fair to ask whether they receive fees for recommending some products over others, and be sure what you’re buying meets your needs.</p> <p>If you’re looking for an unbiased approach, fee-for-service financial advisors will charge by the hour or project, and isn’t motivated by commissions to sell you certain products.</p> <p><strong>Don’t D.I.Y.</strong><br />Just because you think you can handle your own securities trades, it doesn’t mean you should. Reading headlines about the latest market meltdown can make even the most level-headed investor act rashly. An experienced financial planner can keep you on an even keel through the market’s ups and downs.</p> <p class="p1"><em>Written by Anna-Kaisa Walker. This article first appeared on <a href="https://www.readersdigest.com.au/food-home-garden/money/9-things-financial-advisors-wish-you-knew"><span class="s1">Reader’s Digest</span></a>. For more of what you love from the world’s best-loved magazine, <a href="http://readersdigest.com.au/subscribe"><span class="s1">here’s our best subscription offer</span></a>.</em></p>

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Despite more than 30 major inquiries, governments still haven’t fixed aged care. Why are they getting away with it?

<p>It is fair to say the findings have been highly critical of the way aged care is run in this country. Many of these concerns have been brought to light again — along with new issues raised — in the ongoing Royal Commission into Aged Care Quality and Safety.</p> <p>Yet, as the royal commission has noted, successive Australian governments have shown a “lack of willingness to commit to change”.</p> <p>Responses often come years after the review and recount what has been done in an almost tangential way.</p> <p>Even the establishment of the royal commission was not based on previous inquiries or recommendations, but in response to media exposés of the appalling conditions in some aged care facilities.</p> <p>From these dysfunctional circumstances, three questions arise.</p> <p>First, what are the ongoing issues with aged care in Australia?</p> <p>Second, why have successive governments been comfortable making do with piecemeal solutions rather than truly “fixing” aged care, once and for all?</p> <p>Finally, and most perplexingly, why have Australian voters let them get away with it?</p> <p><strong>What’s the problem?</strong><br />It is important to emphasise that aged care is predominantly a federal government responsibility. The 1997 Aged Care Act is the main law covering government-funded aged care. This includes rules for funding, regulation, approval of providers, quality of care and the rights of those in care.</p> <p>Since 2019, the federal Aged Care Quality and Safety Commission Act regulates complaints, sanctions and enforcement, but has been criticised for lacking teeth.</p> <p>The 1997 act diluted many preexisting regulatory protections, such as strict financial accreditation and staffing requirements, and opened the sector up to privatisation. At the time, concerns were raised the new regime could compromise standards of care in aged care facilities and disadvantage older people on lower incomes.</p> <p>The concerns were raised again and amplified in subsequent years. For example, in 2011, a Productivity Commission report noted Australia’s aged care system needed a “fundamental redesign”.</p> <p>Here is a brief summary of the recurring issues raised in multiple reports:</p> <ul> <li>the huge difficulty people have navigating the aged care system, including finding accurate information about facilities</li> <li>failure to meet the needs of vulnerable older people</li> <li>poor quality care, especially for those with dementia and other disabilities</li> <li>the use of chemical or physical restraints</li> <li>inappropriate staff ratios and poor training</li> <li>the rising cost of care, especially in light of an ageing population</li> <li>adherence to accreditation standards</li> <li>ineffective complaints mechanisms.</li> </ul> <p><strong>Why haven’t these problems been fixed?</strong><br />One of the major hurdles to real reform is the relationship between the aged care industry and the federal government.</p> <p>The government funds the sector and provides a relatively “light-touch” oversight, while the providers attend to the day-to-day running of the facilities.</p> <p>However, there is concern this alignment has meant successive governments are not as involved as they should be and proposals for change are diluted by the influence of industry lobbyists.</p> <p>Another reason for governments’ reluctance to intervene is many of the providers are “too big to fail”. A facility’s licence and government funding can be withdrawn if standards are not met. Yet this rarely happens.</p> <p>Why? Because if a licence is revoked, residents need somewhere to go. The issues here can be seen in the closure of the Earle Haven nursing home in July 2019. Here, 68 elderly people were left homeless and had to be moved to hospitals and other aged care facilities.</p> <p>As a further example, Bupa, one of Australia’s largest providers, continues to operate, despite sanctions or failing fundamental assessments.</p> <p><strong>Why isn’t aged care a vote winner?</strong><br />After so many inquiries and so many horror headlines, the problems in aged care are well and truly common knowledge. But do Australians care enough about aged care for it to influence their vote — and so, influence the way governments respond?</p> <p>If we cast our minds back to the 2019 federal election campaign, the hot button issue concerning older people was the potential demise of franking credits and negative gearing.</p> <p>In-home and residential aged care barely rated a mention in the campaigns of the major parties.</p> <p>Even now, despite the publicity surrounding the royal commission, if an election was held today, would this issue actually influence voting intentions? Sadly, it seems unlikely.</p> <p>During the July 2020 Eden-Monaro byelection, a survey of nearly 700 voters showed while 84% believed the aged care system was “in crisis”, this influenced the vote of less than 4% of respondents. It also ranked last in a list of seven issues of importance.</p> <p>When heartfelt concern does not translate to winning votes, there is little incentive for the federal government to provide meaningful solutions to well-documented problems.</p> <p>We only need to look to the record spending in the 2020 Budget, which provided only 23,000 extra home care packages and deferred consideration of funding for residential aged care until the royal commission’s final report next year.</p> <p><strong>It comes back to voters</strong><br />Why does concern for the plight of people in aged care fail to generate public action?</p> <p>We suggest it is because many Australians consciously or unconsciously have ageist attitudes — that older people are inherently not important. On this front, look no further than arguments made by prominent commentators about the fate of older people during COVID-19.</p> <p>Yes, most fair-thinking Australians care about our older citizens, yet until either we or our family members are directly impacted, we do not prioritise it.</p> <p>If we don’t care enough or care about other things more, nothing will change. And, while this remains the case, the government will have no reason to do more than just tinker with an unsatisfactory status quo.</p> <p class="p1"><em>Written by Eileen Webb, Christie M. Gardiner and Teresa Somes. This article first appeared on <a href="https://theconversation.com/despite-more-than-30-major-inquiries-governments-still-havent-fixed-aged-care-why-are-they-getting-away-with-it-147736">The Conversation</a>.</em></p>

Retirement Income

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$1 solutions you’ll wish you knew sooner

<p><strong>Pull nails out gently</strong><br />If you’re planning to pull a nail out of wood but worry that the hammerhead will hurt the grain, protect the wood before using the hammer. How? Slip a plastic spatula under the head of the hammer before you start the job.</p> <p><strong>Replace the oil in baking</strong><br />Fat makes baked goods moist and tender. It’s also incredibly kilojoule-dense, and if you’re cutting kilojoules, it’s an easy place to start. But say you don’t like your cakes and muffins dry and tough? Then applesauce is the answer. Replace up to 2/3 of the oil called for in a cake or muffin recipe with applesauce, and you’ll add moisture and flavour while ditching the fat.</p> <p><strong>Sweeten the house</strong><br />People who are allergic to air fresheners and sprays can still enjoy the benefits of a sweet-smelling house. Wet a cotton ball with vanilla and dab it very lightly on the outside of a regular light bulb (not a halogen bulb) in your lamps. When you turn on the lamp, the bulb heats up and a faint but alluring scent of vanilla drifts out.</p> <p><strong>Soften beans</strong><br />Afraid those dry beans have been on the shelf too long? Help soften them by adding a pinch of baking soda to the soaking water. Add a fresh pinch to the cooking water, too, and you can significantly reduce the aftereffects of bean consumption.</p> <p><strong>Neutralise mouth ulcers</strong><br />Place an antacid tablet directly on the ulcer, giving it time to dissolve, or simply chew one. The medicine will stop the acids and enzymes in your mouth from attacking the tissue in the sore, and more importantly, it will stop the pain. (Be sure to check the product’s label for correct dosage instructions.)</p> <p><strong>Rip it off the right way</strong><br />Pulling an adhesive bandage off your child’s skin can be tough on both of you. Make it easier by rubbing the bandage with a cotton ball soaked in baby oil. Rub until you can easily pull the bandage off. This trick works well for adults with sensitive skin, too.</p> <p><strong>Clean your carpet overnight</strong><br />Whether your carpet smells dank and musty because of a pet, a smoker, or a season of rain, take the odour out with baby powder. Using a flour sifter, spread the powder generously over the carpet. Let it sit overnight – a few hours will suffice, but overnight is better – and vacuum up the powder and the smells in the morning.</p> <p><strong>Hold a nail</strong><br />Stop hitting your fingers every time you hammer a nail in place. Use the teeth of an ordinary comb to hold the nail while you hammer.</p> <p><br /><strong>Get rid of fishy odours</strong><br />Been chopping something pungent? The smell of garlic or fish can linger on your fingers long after the food is gone. Avoid that by scrubbing your wet hands with baking soda, just as if it were soap, then rinse in warm water. Your hands will smell sweet – and feel softer, too.</p> <p><strong>Remove splinters</strong><br />Make a paste of Epsom salt and water and apply it to the area harbouring a splinter. The paste will pull the splinter to the surface of the skin in about 10 minutes. It will pull insect stingers out of your skin, too.</p> <p><br /><strong>Skip the shaving cream</strong><br />Use hair conditioner for a smooth, clean shave – on your legs, under your arms, and (for men) even on your face. The conditioner will pamper your skin as well as your hair! You can also use hair conditioner as a soothing agent for legs irritated by shaving.</p> <p><strong>Preserve your bouquet</strong><br />Spray the undersides of your cut flowers – leaves and petals – with hair spray to prolong their life. Be sure to stand about 30 cm away when you spray them for best results.</p> <p>Numb your eyebrows<br />Make plucking your eyebrows much less painful by putting an ice pack on them until they’re uncomfortably cold. At that point your skin will be numb enough to begin plucking. You won’t even feel the tug!</p> <p><strong>Train a dog</strong><br />Most dogs hate the sound of dried beans rattling in a can. Use that to your advantage when training a dog by putting a handful of beans in the bottom of an empty aluminium soda can. Seal the top with a strip of tape. When your dog misbehaves, shake the can a couple of times.</p> <p><br /><strong>Refresh tired feet</strong><br />Take this tip from marathon runners, who know that a ten-minute soak in a sugarless mouthwash will take your tootsies from tired to terrific. Alcohol invigorates and mint will make them smell sweet again.</p> <p><strong>Remove crayon from walls</strong><br />If you find crayon markings on your wall, don’t get mad – get shaving cream. Spray the shaving cream directly onto the offending artwork, and scrub it off with a toothbrush or scrub brush.</p> <p><strong>Make a close-fitting hot pad</strong><br />Soothe aching muscles with a custom-made hot pad. Fill a long sock, such as a tube or athletic sock, with dried beans, and tie the top tightly closed with ribbon or string. Heat in a microwave on high for 30 seconds. Place it right on your painful spot. You can drape it around a stiff neck or wrap it around a sore wrist, and it will mould to you, providing faster relief.</p> <p><strong>Keep cookies fresh</strong><br />Homemade chocolate chip cookies can go from tasting deliciously soft and cakey to feeling hard and crunchy in a matter of days. To keep your freshly baked cookies tasting freshly baked, put a couple of slices of bread into the tin or jar where you store the cookies, laying the bread right on top of the cookies. The bread will keep that just-out-of-the-oven flavour and texture intact for up to a week.</p> <p><strong>Wax your windows</strong><br />Do your double-hung windows have a bumpy ride every time you open or close them? If your windows don’t slide up and down with ease, let a candle help them. Clean the insides of the window frame where the sashes travel, then rub the same area with a candle. The windows will have a much smoother journey.</p> <p><strong>Make your garage floor sparkle</strong><br />If you find a puddle of oil on your concrete garage floor, pour paint thinner over it, and then cover the area with kitty litter. (Make sure that the garage is well ventilated by keeping the garage door open, and don’t let anyone smoke or strike matches anywhere near the affected area – and keep the cats away.) The kitty litter will absorb the oil. Just sweep up the mess and you’re done.</p> <p><strong>Clean smudges off suede</strong><br />Suede jackets, shoes and handbags look great, but they’re prone to picking up dirty marks. Clean fresh smudges off quickly and easily before they set into stains by rubbing the suede gently with a piece of fresh white bread. Use a small, circular motion. You may need a second piece of bread to get the spot clean.</p> <p><strong>Keep down items from clumping</strong><br />Throw one or two tennis balls into the dryer the next time you dry down-filled items like pillows, comforters and jackets. They’ll ditch the flat look they get from the washing machine and puff up again with pride.</p> <p><strong>Repel mosquitoes</strong><br />You may love the mild apple-like flavour of chamomile tea but mosquitoes absolutely hate it. Brew a very strong batch of chamomile tea and keep it in a spray bottle in the fridge. Before you relax in the back yard or run through the tall grass, spray exposed skin liberally. It’s fragrant, potent and totally safe for children.</p> <p><strong>Fill a stripped screw-hole</strong><br />If the screw keeps turning and turning in a piece of wood, push a bit of foil loosely in the hole and try again. It will grab tight.</p> <p><strong>Freshen a fridge</strong><br />If something soured in your fridge or the freezer failed, clean it out, then fill a wide, shallow bowl with fresh coffee grounds and leave it in the fridge or freezer overnight. The strong scent of coffee will permeate the space, eradicating any hint of what went wrong.<br /><br /><strong>Banish burned-on food</strong><br />Liquid fabric softener is your best friend when it comes time to scrub pots and pans soiled by your worst enemy, baked-on grime. Soak the offending vessel in water and a squirt of fabric softener. Let it sit for an hour. Wash and rinse it all away.</p> <p><strong>Feed your plants</strong><br />Used coffee grounds are full of nitrogen, so it’s a shame to throw them away each day. Coffee is especially good for acid-loving plants, like camellias, evergreens, rhododendrons, azaleas and rose bushes, so be sure they don’t miss out on the occasional cup of coffee – grounds, that is.</p> <p><strong>Oil squeaky hinges</strong><br />Spray a little oil-based furniture polish on a squeaky door hinge, then open and shut the door several times to work the lubricant into the hinge. The furniture polish is a lot cleaner than the oil you’d usually use for a noisy hinge, and it works just as well to silence the squeak.</p> <p><strong>Untangle a shoelace</strong><br />Junior got a knot in his sneaker and pulled and pulled until it became an impenetrable mass. Sprinkle the knot generously with cornflour, and then work the knot again. The laces will start to slip and slide, and you’ll be able to get the kinks out.</p> <p><strong>Breathe better with a paper bag</strong><br />Got a case of the hiccups? Stop them before you start to hurt. Breathe in and out of a paper bag for a few minutes. You’ll create a build-up of carbon dioxide in your lungs, which helps relax your diaphragm – whose involuntary tightening causes the hiccups in the first place. This trick works if you’re hyperventilating, too.</p> <p><strong>Give the jar a hand</strong><br />No more banging a jar on the floor to loosen a tight lid. No more running it under hot water. And no more fancy tools designed to do the trick – that somehow don’t work. Just put on a pair of rubber gloves, and open the jar with ease. (Psst – sandpaper also works wonders!)</p> <p class="p1"><em>This article first appeared on <a href="https://www.readersdigest.com.au/food-home-garden/home-tips/1-solutions-youll-wish-you-knew-sooner?pages=1"><span class="s1">Reader’s Digest</span></a>. For more of what you love from the world’s best-loved magazine, <a href="http://readersdigest.com.au/subscribe"><span class="s1">here’s our best subscription offer</span></a>.</em></p>

Retirement Income

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Ways to make up $ as you get closer to retirement

<p>There is often a balance in this age bracket between pausing on what you have already built, in terms of superannuation and investments, until you have excess income again versus those who now have an empty nest and the opportunity to focus on doing more while they can.</p> <p>Review all five financial foundations for relevance and appropriateness now. What life events impact you now? Do you have more disposable income now, or less than say, ten years ago?</p> <p>Depending on your family situation, some of the strategies for twenties and thirties may still be relevant for you. Yet you may also feel you’re running out of time to work and invest! Technically, you’re still of an age to build your superannuation and probably have good reason to want to build it up, given gender pay gap implications and time out of the workforce in family caring roles. It’s always a joy to help women in this phase of life make a difference. It can be done.</p> <p>Don’t put your head in the sand. The sooner you move to get personal advice and implement what is right for you, the bigger impact you can have on your long-term outcome.</p> <p>Maybe you want to start some conversations around:</p> <ul> <li>Any residual mortgage on your home – what is the best strategy regarding that?</li> <li>Are your personal insurance policies still appropriate for you? Insurance costs can creep up significantly during your forties and fifties. If you have less mortgage debt and independent kids, you may not need the same level of life insurance or TPD.</li> <li>Does your emergency fund still reflect your comfort level?</li> <li>What’s your debt on investment property? Is it time to consider paying down or stick to ‘interest only’?</li> <li>Superannuation. Look at fees, how the money is invested and what insurance is inside the super. Are these working for you now? How risky are these investments? If you can’t touch your super for some time, can you be a little more aggressive with superannuation than you are with investments in your own name?</li> <li>If you are over 5532, is it worth exploring the transition to retirement (TTR) strategy which can be used to boost your superannuation balance before you retire or to top up your income as you ease back on the hours you work?</li> <li>Can you – should you – invest more? If everything you earn is “all yours” (no KIPPERS: Kids in Parents’ Pockets Eroding Retirement Savings!), this is time to put your skates on and maximise the income you have left. Are investments you have, outside of superannuation, right for you? How risky are your investments? Have you overstretched yourself? Do you need to sell them? Does it make sense to sell them? Or can they keep working for you providing you with income and capital growth over time? Do you need to change how you are invested?</li> </ul> <p>This is likely to be a time in your life when investments are working fairly hard for you, with more exposure to growth than defensive investments to benefit from the compounding effect of growth, but outside of superannuation, that may not be the right mix for you because you may want to access some of it.</p> <p>If you are feeling that it’s too late, you’d be surprised what can be achieved with great advice, direction, focus and more importantly action.</p> <p><em>Edited extract from <a href="http://www.onyourowntwofeet.com.au">On Your Own Two Feet</a> by financial advisor Helen Baker.</em></p>

Retirement Income

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The one quality Steve Jobs always looked for in employees

<p>Do you have what it takes to land a career that can make you a millionaire before you retire? Sure, you can perfect your resume, dress to impress, and nail the trickiest interview questions. But odds are, you’re probably forgetting one rather underrated quality – and for the late Steve Jobs, it mattered much, much more than a polished CV.</p> <p>In a rarely seen interview, a then-young Jobs revealed that when he was first hiring professional managers for Apple, he quickly learned that “most of them were bozos.” “They knew how to manage, but they didn’t know how to do anything,” he added.</p> <p>So, from there on out, Jobs began to value a different trait in job candidates. “We wanted people who were insanely great at what they did, but were not necessarily those seasoned professionals,” he said. “But who had at the tips of their fingers and in their passion the latest understanding of where technology was and what they could do with that technology.”</p> <p>In other words, forget job experience; Jobs wanted passionate people on his team, instead. Why, you ask? Not only can enthusiastic employees manage themselves, but they also understand the company’s mission – and strive for that common goal with earnest.</p> <p>To find employees with this type of passion, the Apple team interviewed each job candidate by presenting a Macintosh prototype and noting his or her reaction. “We wanted their eyes to light up and to get really excited,” Andy Hertzfeld, one of Apple’s first software engineers, said. “Then we knew they were one of us.”</p> <p><em>Written by Brooke Nelson. This article first appeared on </em><a href="https://www.readersdigest.com.au/culture/what-steve-jobs-looked-for-in-an-employee"><em>Reader’s Digest</em></a><em>. For more of what you love from the world’s best-loved magazine, </em><a href="http://readersdigest.com.au/subscribe"><em>here’s our best subscription offer</em></a><em>.</em></p>

Retirement Income

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Will COVID-19 change your retirement plans?

<p>Retirement should be a time we look forward to – when we can take a foot off the pedal and enjoy spending time with family and friends. But many Australians who had planned to retire in the coming months or even years are rethinking their options as COVID-19 has changed the landscape for retirees. </p> <p>Here are some things to consider if you are thinking about whether COVID-19 will affect your retirement plans.</p> <p><strong>Do you know how much you need to retire? </strong></p> <p>Many Australians are worried that they won’t have enough to fund their retirement, and, for some, COVID-19 has exacerbated these concerns. If this is you, it’s important you don’t put your head in the sand, because when it comes to retirement, inactivity is your enemy. </p> <p>If you are unsure whether you will have enough to retire, a great first step is understanding how much you will need in detail, because retirement looks different for everyone. It’s important to do this at a microlevel – understanding what you will need for everything from phone bills to medication and entertainment. This way you can put a more realistic, detailed plan in place, looking at how you can build your retirement funds and/or make small lifestyle changes to meet any shortfall.</p> <p><strong>Have you structured your super to weather financial storms?</strong></p> <p>Many of us intend to rely on our superannuation during retirement, yet, according to the Australian Bureau of Statistics, 49% of retired men and 45% of retired women in Australia rely on the Age Pension as their main source of income. </p> <p>COVID-19 has impacted global financial markets and, therefore, superannuation balances for many Australians. While these types of events are often referred to as being ‘once-in-a-lifetime’, the reality is that financial downturns can and do happen many times throughout our lives. </p> <p>The good news is that you can structure your super to weather financial storms – and it’s not too late to take a look at how yours is structured. There are many strategies to do this, and the right strategy for you will depend on your life stage and goals but maintaining a separate cash component can be an effective protection. </p> <p>Many people don’t consider doing this because it doesn’t present as much in the way of short-term growth, particularly with today’s historically low interest rates. But what it does do is allow you to continue generating an income stream while the rest of your super remains invested in growth assets, as well as providing the opportunity to make moves at the right time. Speaking to a trusted financial planner can be a great way to develop a super strategy that’s right for you and helps you protect and grow this all-important asset.</p> <p><strong>Have you prepared for the emotional transition?</strong></p> <p>Helping so many Australians with their retirement, we see the importance of planning for the emotional transition every day. And, in our experience, it’s almost, if not as, important as the financial one.</p> <p>Essentially, it’s about planning how you will spend your time, as you will find yourself with more free time on your hands than ever before. It might sound wonderful, and to most it does, but the reality is that the time can be hard to fill. Without planning for it, it can quickly become a negative and can even lead to mental health issues, such as loneliness or depression.</p> <p>In the current climate, particularly for those in Victoria, restrictions on travel, social activities and contact with others can make this transition even more difficult. Many retirees plan to spend more time with family, see the world or pick up new hobbies, much of which simply isn’t possible right now.</p> <p>It might be worth considering whether you continue to work until the situation improves, bringing in an income and topping up your super. This way, you will have a little more money in your pocket and can start living the retirement you want when restrictions lift.</p> <p><strong>Have you considered a transition-to-retirement strategy?</strong></p> <p>If you can’t or don’t want to retire in the current climate, it can be disappointing, particularly if you had already set a date. One way you can start the process without cutting off your income entirely is by looking at a transition to retirement strategy (TTR). A TTR allows you to continue working, reducing your hours, while starting to draw on some of your super.</p> <p>This way, you can take a proactive step toward retirement while still keeping an income coming in to cover your living expenses, topping up your super and potentially reducing your tax liability.</p> <p><strong>Are you ready to stop thinking and start planning? </strong></p> <p>If you are ready to get serious about your retirement, our eight-step roadmap can help you understand every aspect of retirement – from the financial to the emotional – so you can start planning for your dream retirement.</p> <p><a rel="noopener" href="https://aptwealth.com.au/how-much-will-i-need-to-retire/" target="_blank">Download it free here</a>.</p> <p>If you aren’t receiving financial advice, it’s a good time to start a discussion. The right financial adviser can help you decide on your next steps, ensuring you can live for today and plan for tomorrow.</p> <p>If you are thinking about retiring but are unsure of your next step, <a rel="noopener" href="https://www.eventbrite.com.au/e/retirement-your-questions-answered-registration-121995041453" target="_blank">register for our free retirement planning webinar</a> to find out how you can put yourself in the best possible position to live the retirement you deserve.</p> <p><strong><em>General Advice Warning </em></strong></p> <p><em>The information provided in this article does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.</em></p> <p><strong><em>Written by Andrew Dunbar, Director and Senior Financial Adviser, Apt Wealth Partners, this is a sponsored article produced in partnership with <a rel="noopener" href="https://aptwealth.com.au/financial-planning" target="_blank">Apt Wealth Partners</a>.</em></strong></p>

Retirement Income

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5 ways to downsize your debt

<p>It’s said that only death and taxes are certainties in life, but in the modern world, some form of debt is almost guaranteed too. Here are five ways to downsize your debt and get more control over your finances.</p> <p><strong><br />1. Look at your money holistically</strong></p> <p>It’s all too easy to look at our money in different silos: this is what we owe, this is what we have, and this is what we expect to come in.</p> <p>But you have to consider all your money as a single pool to work out what represents the best <em>overall</em> value for you financially.</p> <p>For example, tax deductions for extra superannuation contributions may be bigger than the low home loan interest rate you’re currently paying, meaning you could be better off by beefing up your retirement earnings than paying down the mortgage a bit faster.</p> <p><strong><br />2. Tackle the most expensive debts first</strong></p> <p>We often think of debt as the mortgage, but it may also be personal loans, car loans, credit cards and store cards/repayment plans. And each will have different interest rates.</p> <p>You’ll downsize your debt much faster by tackling the most expensive – that is, the ones with the highest interest rates – first. That’s because debts with high interest rates will grow much quicker, and can even spiral out of control.</p> <p>Depending on your circumstances, it may even be worthwhile consolidating some or all of your debts into one larger debt, particularly one with a much lower interest rate.</p> <p><strong><br />3. Make your mortgage work harder for you</strong></p> <p>Speaking of mortgages, these can actually be used in your favour, if you know what to do and do it wisely.</p> <p>Over time, you’ll build more and more equity in your home, as property prices increase over time and as you pay down the loan. And that equity can be used to make more money than the interest it would attract by being withdrawn.</p> <p>As such, look at whether your mortgage has an offset account or redraw facility that you could tap into. If not, it may be time to refinance to one that does.</p> <p>Consider too whether to go for a fixed, variable rate or a combination of both on your mortgage, and which makes more sense for your current circumstances. Fixed will give you budget certainty, but variable offers more flexibility.</p> <p><strong><br />4. Boost your income through investments</strong></p> <p>We often focus on paying down debt without building other investments. Chances are you’ve thought to yourself at some point “When I’ve paid off my home, then I will then invest”.</p> <p>But you lose precious time doing this, and time is our friend when it comes to investing – the longer your investment timeframes, the more you’re likely to earn through compound interest and higher asset values.</p> <p>So, consider whether you could be doing both simultaneously – investing for the future AND paying down existing debt. You may even find the proceeds of one will help you pay down the other much faster too.</p> <p><strong><br />5. Get your kids to pay their way</strong></p> <p>By the time you’re in your 40s and 50s, your kids – if you have any – are likely in their late teens or 20s. And a variety of factors, including full-time study, high house prices and more recently the COVID-19 crisis, mean that many young adults are still living at home.</p> <p>You may or may not be happy to still have them in your nest, but they can be a substantial drag on your finances if you let them.</p> <p>When they’re earning money of their own, get them to contribute to household bills, insurances and grocery costs. They would pay more if they were out on their own anyway. If they’re not working, then they can still contribute in other ways – cleaning the house and mowing the lawns won’t cost them a cent, but will save you from having to hire a cleaner and gardener.</p> <p>Either way, you’re freeing up extra cash to help pay down your debts!<br /><br /></p> <p>Helen Baker is a licensed Australian financial adviser and author of two books: <em style="font-weight: bold;">On Your Own Two Feet – Steady Steps to Women’s Financial Independence</em> and <em style="font-weight: bold;">On Your Own Two Feet Divorce – Your Survive and Thrive Financial Guide</em>. <em style="font-weight: bold;">Proceeds from the books’ sales are donated to charities supporting disadvantaged women. </em>Helen is among the 1% of financial planners who hold a master’s degree in the field. Find out more at <a href="http://www.onyourowntwofeet.com.au"><strong>www.onyourowntwofeet.com.au</strong></a></p> <p><strong><em>Note this is general advice only and you should seek advice specific to your circumstances.</em></strong></p> <p> </p> <p> </p>

Retirement Income

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The shocking truth about gender inequality in retirement - and how to fix it

<p>On average, women retire with half the super of men.<br /><br />According to the Australian Securities and Investments Commission, women finish their careers with a meagre average of $230,907, compared to the $454, 211 of their male counterparts. When a woman’s ability to service debt and pay expenses is impaired, the outcomes are worse. Between 2011 and 2017 there was a 52 per cent increase in older women contacting homeless agencies, according to the Australian Institute of Health and Welfare.<br /><br />The reasons for this are no surprise. On average women earn less so contribute less to super. Women also take on less demanding careers to be more available to the family.<br /><br />And then there’s the career breaks. Women take time from work, often years, to care for children and the home and now parents and parents-in-law (the sandwich generation). Many return to work part-time. The impact of career breaks ripple throughout a woman’s life.<br /><br />Low financial literacy also contributes to gender inequality in retirement. An ASIC survey found 85 per cent of female respondents didn’t understand fundamental investment concepts. In my experience, when educated about financial concepts women make wise investment decisions. Sadly women don’t always seek out that knowledge. I’ve sat in many consultations where women started out disengaged, tuning out but after some drawings and discussion, become focused and confident. <br /><br />According to the NAB Financial Anxiety Index, women are much more anxious about finances than men. Given the circumstances it’s not surprising. But there are strategies to use, at various stages of life, to maximise financial security. Many of these involve being tactical with superannuation.<br /><br />Here some strategies worth looking into:<br /><br /></p> <ol> <li><strong> Maintain your extra super payments when the markets are low.</strong> Fear about turmoil in the financial markets leads many to withhold investments. But maintaining - or increasing - your voluntary super payments will earn you more in the long term. When the market comes out the other side of the crisis, you’ll hold more super at the higher value.<br /><br /></li> <li><strong> Co-contribute to super.</strong> Regardless of the financial markets, co-contributing to super is a tax efficient investment. It is especially relevant if you are a single woman and can’t take advantage of having two incomes for one household. You just need to meet the criteria.<br /><br /></li> <li><strong> Investigate superannuation splitting or spouse contributions.</strong> If a husband has a lot of super and the wife doesn’t it is possible to move some of his super to hers. I had clients in this situation and moving his super over made him eligible for the aged pension. With a spouse contribution he can reduce tax and build her super at the same time.<br /><br /></li> <li><strong> Make carry-forward contributions into super.</strong> This is when you pay above the regular super contribution cap to make up for periods where you missed the cap. For example, say I stopped working to care for children for two years and didn’t pay anything into my super. Then I came into some money by working again, selling an asset or receiving an inheritance. I can pay my “extra” money into my super to make up for those lost years.<br /><br />I had a client who divorced and had to sell a property post-settlement. During the marriage she worked part-time and cared for children. We were able to pay $50,000 from the sale of the property into her super as a carry-forward payment. This way she avoided a significant capital gains tax bill.<br /><br /></li> <li><strong> Diversify investments.</strong> As a general rule I always encourage investment diversity. Women are naturally more risk averse than men. Spreading money across hundreds, or thousands, of investments decreases risk. Knowing about investing in shares versus managed funds is key to this strategy.</li> </ol> <p> </p> <p>There are concrete, seemingly insurmountable, reasons for gender inequality in retirement. The way to tackle these is with solid strategies. The earlier these start the better. Unfortunately, many women find out the reality of their situation too late. Whether single or not, becoming educated and involved in your financial plan is a step towards security.<br /><br /></p> <p><strong>Helen Baker is a licenced Australian financial adviser and author of two books:  <em>One Your Own Two Feet – Steady Steps to Women’s Financial Independence</em> and On<em> Your Own Two Feet Divorce – Your Survive and Thrive Financial Guide</em>.  <em>Proceeds from the books’ sales are donated to charities supporting disadvantaged women.  </em>Helen is among the 1% of financial planners who holds a master’s degree in the field. Find out more at </strong><a href="http://www.onyourowntwofeet.com.au"><strong>www.onyourowntwofeet.com.au</strong></a><strong> <br /><br /></strong></p> <p><strong><em>Note this is general advice only and you should seek advice specific to your circumstances.</em></strong></p> <p> </p>

Retirement Income

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Women in their 60s are the new homeless

<p>Having worked hard your whole life, you’re a few years away from retiring and pondering winding down, then – bam! You suddenly find yourself homeless. Sound impossible? Sadly, it’s becoming the reality for an increasing number of Aussie women in their late 50s and 60s.</p> <p>We tend to think of homelessness being associated with youth living on the streets. But homelessness comes in many forms, from couching-surfing to staying in shelters, bunking in with your children, or living out of a car. And it is rapidly affecting women in their later years.</p> <p>Putting the spotlight on the problem is the first step in trying to resolve it.</p> <p><strong>Scope of the problem</strong></p> <p>Some <a href="https://www.abs.gov.au/ausstats/abs@.nsf/mf/2049.0">116,427 Australians were homeless in the last Census</a> in 2016. And while men dominate homelessness figures overall, the ABS noted that “the number of older homeless females increased by 31% to 6,866 in 2016, up from 5,234 persons in 2011.”</p> <p>That’s a one-third increase in just five years.</p> <p>Meanwhile <a href="https://www.aihw.gov.au/reports/australias-welfare/homelessness-and-homelessness-services">Specialist Homelessness Services (SHS) agencies supported over 1.2 million Aussies</a> between the 2012 and 2019 financial years, including 290,300 in 2018-19 alone. Of these, 60 per cent were female, and over 55s are one of the demographics “known to be at particular risk”.</p> <p>As our population ages, this problem is only likely to get worse – particularly in the post-COVID world. It’s a trend I’m already seeing more frequently among women seeking financial advice in an attempt to turnaround their finances and their lives.</p> <p><strong>Why is this happening?</strong></p> <p>Like most social problems, this one has many contributing factors. The ones I see all too often are:</p> <ul> <li><strong>Single parenting:</strong> Raising kids on a single income isn’t easy. What money does come in, it is put towards short-term living costs, leaving nothing to put away for retirement.</li> <li><strong>Divorce:</strong> Relationship breakdowns often leave women with little in the way of savings. Either walking away without what they are entitled to, or getting the family home in settlement with a mortgage only to find out they can’t afford to keep it and are forced to sell.</li> <li><strong>Family and domestic violence:</strong> <a href="https://www.aihw.gov.au/reports-data/behaviours-risk-factors/domestic-violence/overview">One in six Australian women are victims of violence at home</a> (compared with one in 16 men). Many are literally fleeing for their lives, with a woman killed by her partner on average every nine days.</li> <li><strong>Gender pay gap / gender retirement gap:</strong> In 2020, <a href="https://www.wgea.gov.au/data/fact-sheets/australias-gender-pay-gap-statistics">Aussie women still earn 13.9 per – or $242.90 – less per week</a> in full-time earnings than men. That in turn means lower contributions going into their superannuation.</li> <li><strong>Primary caregiving:</strong> Many women are forced to abandon full-time work for caregiving responsibilities. And not just for kids – they are juggling caring for children and elderly parents/in-laws simultaneously.</li> <li><strong>Simple biology:</strong> <a href="https://www.abs.gov.au/ausstats/abs@.nsf/mf/3302.0.55.001">Aussie women statistically live four years longer than men</a>. Logically, a longer lifespan requires more money to maintain our standard of living. And inheritance from their partner is not always forthcoming, as it may have been spent on healthcare or used up to fund travel or other lifestyle things.</li> <li><strong>Not seeing advice</strong>: Many women fear seeking financial advice early enough and have no financial plan or a too conservative plan.</li> </ul> <p><strong>What can women do?</strong></p> <p>Thankfully, there are steps women can take to minimise the risk of becoming homeless in their pre-retirement years.</p> <p>As a start, I generally recommend:</p> <ul> <li><strong>Having an emergency fund:</strong> This is non-negotiable. Even a small amount put aside each week offers some relief should disaster strike.</li> <li><strong>Spending and investment plans:</strong> Have an eye over all your expenses, reviewing bills like loans and insurances regularly to get the best deal and having spare cash to invest.</li> <li><strong>Insurances:</strong> Have appropriate personal insurances for your or your partner so a life event doesn’t destroy your position.</li> <li><strong>Time management:</strong> Finding a better routine can help free up more time for income-generating activities.</li> <li><strong>Upskilling:</strong> Make yourself more employable and able to command more money by gaining extra qualifications and training in your field.</li> <li><strong>Don’t</strong> <strong>fear advice:</strong> Lots of women admit to being scared of seeking advice on money matters. By doing so, they often miss out on expert tax, super, budgeting and investment strategies.</li> <li><strong>Being proactive:</strong> Many women leave household finances to their partner, meaning they come unstuck if their partner dies or they separate. It’s your money too, and you have an equal say in how it’s spent/invested for the future!</li> </ul> <p><em>Helen Baker is a licensed Australian financial adviser and author of two books: </em>On Your Own Two Feet – Steady Steps to Women’s Financial Independence<em> and </em>On Your Own Two Feet Divorce – Your Survive and Thrive Financial Guide<em>. Proceeds from the books’ sales are donated to charities supporting disadvantaged women. Find out more at <a href="http://www.onyourowntwofeet.com.au">www.onyourowntwofeet.com.au</a></em></p> <p><em>Note this is general advice only and you should seek advice specific to your circumstances.</em></p>

Retirement Income

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Marriage and money help but don’t lead to long-lasting happiness

<p>We live in a culture that values “experiences”. These are often promoted in the media, and by those selling them, as vital to enhancing our well-being.</p> <p>We all know big life events like marriage, parenthood, job loss and the death of loved one can affect our well-being. But by how much and for how long?</p> <p>We set out to measure the effect of major life events – 18 in total – on well-being. To do so we used a sample of about 14,000 Australian adults tracked over 16 years. Some of our results were expected. Others were surprising.</p> <p>Overall, <a href="https://www.sciencedirect.com/science/article/pii/S2352827319302204">our results show</a> good events like marriage improved some aspects of well-being, but bad events like health shocks had larger negative effects. For good and bad events, changes in well-being were temporary, usually disappearing by 3-4 years.</p> <p>Here are some of our most interesting findings.</p> <p><strong>Happiness versus life satisfaction</strong></p> <p>Our study distinguished two different aspects of well-being: “happiness” and “life satisfaction”. Researchers often treat these as the same thing, but they are different.</p> <p>Happiness is the positive aspect of our emotions. People’s self-reported happiness tends to be fairly stable in adulthood. It follows what psychologists call “<a href="https://dictionary.apa.org/set-point">set point theory</a>” – people have a “normal” level of happiness to which they usually return over the long run.</p> <p> </p> <p>Life satisfaction is driven more by one’s sense of accomplishment in life. A person can be satisfied, for example, because they have a good job and healthy family but still be unhappy.</p> <p>Life events often affect happiness and life satisfaction in the same direction: things that make you happier tend to also improve your life satisfaction. But not always, and the size of the effects frequently differ.</p> <p><img src="https://images.theconversation.com/files/345708/original/file-20200706-33947-11dna88.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="" /> <span class="caption"></span></p> <p>In the case of having a child, the contrast is stark. Right after the birth, parents are more satisfied but less happy, possibly reflecting the demands of caring for a newborn (eg. sleep deprivation).</p> <p><strong>Changes are temporary</strong></p> <p>After almost all events (both good and bad), well-being tends to return to a personal set point. This process is known as the <a href="https://dictionary.apa.org/hedonic-treadmill">hedonic treadmill</a> – as people adapt to their new circumstances, well-being returns to baseline. This has been found in other studies as well.</p> <p>The good news is that even after very bad events, most people seem to eventually return to their set-point well-being level. Even after an extremely bad event such as the death of a spouse, people’s well-being generally recovers in two to three years. This doesn’t mean they don’t carry pain from the experience, but it does mean they can feel happy again.</p> <p><img src="https://images.theconversation.com/files/345709/original/file-20200706-21-ubgmd4.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="" /></p> <p><span class="caption"></span><strong>Bad events affect us more</strong></p> <p>The detrimental effects of bad events on well-being outweigh the positive effect of good events. Negative effects also last longer. This is partly because most people are happy and satisfied in general, so there is more “room” to feel worse than better. In fact, we can’t confidently say there is any positive cumulative effect of good events on happiness at all. However, marriage, retirement, childbirth and financial gains all temporarily improve overall life satisfaction.</p> <p>Our finding that “losses” hurt more than “gains” mirrors decades of behavioural economics research showing people are generally “loss averse” – going to more effort to avoid losses than to chase gains.</p> <p>The bad events that have the largest total effects are death of a spouse or child, financial loss, injury, illness and separation.</p> <p><img src="https://images.theconversation.com/files/345710/original/file-20200706-33943-10ysbb8.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="" /></p> <p><span class="caption"></span><strong>Small, fleeting effects</strong></p> <p>Starting a new job, getting promoted, being fired and moving house are events that people often fixate on as either stressful or to be celebrated. But, on average, these don’t seem to affect well-being that much. Their effects are comparatively very small and generally fleeting.</p> <p>This could be because of differences in the nature of these events for different people, or that they frequently occur. For example, being fired can be devastating. But for someone close to retirement who receives a large redundancy payment and moves to the coast, it might be a positive experience.</p> <p>An important caveat to our study is that it reflects the average experiences of people. There are likely to be some people who experience long-lasting improvements in well-being after good events. There will also be people who experience sustained decreased well-being after bad events. In future work we hope to identify these different people and isolate the characteristics that predict what responses to different events will look like.</p> <p><strong>The things that matter</strong></p> <p>Our results caution against chasing happiness through positive experiences alone. The impact, if any, seems small and fleeting, as the hedonic treadmill drags us back to our own well-being set point.</p> <p> </p> <p>Instead, we might do better by focusing on the things that protect us against feeling devastated by bad events. The most important factors are strong relationships, good health and managing exposure to financial losses.</p> <p>In 2020 we might also take consolation from the fact that, although it will take time, our well-being can recover from even the worst circumstances.</p> <p>We humans are a resilient bunch.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/140431/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><span><a href="https://theconversation.com/profiles/nathan-kettlewell-903866"><em>Nathan Kettlewell</em></a><em>, Chancellor's Postdoctoral Research Fellow, Economics Discipline Group, <a href="https://theconversation.com/institutions/university-of-technology-sydney-936">University of Technology Sydney</a>; <a href="https://theconversation.com/profiles/nick-glozier-94435">Nick Glozier</a>, Professor of Psychological Medicine, BMRI &amp; Disciplne of Psychiatry, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a>, and <a href="https://theconversation.com/profiles/richard-morris-1123613">Richard Morris</a>, Research scientist, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a></em></span></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/marriage-and-money-help-but-dont-lead-to-long-lasting-happiness-140431">original article</a>.</em></p>

Retirement Income

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Why Melbourne’s supermarket shortages will quickly pass

<p>You’re nervous, I get it.</p> <p>Panic buying is back, not as strong as in March and more localised in Melbourne. Once again shop shelves have been emptied of pasta, toilet paper and other household items.</p> <p>When will things get back to normal? Soon, more than likely in a matter of days, rather than weeks.</p> <p><strong>What is different now</strong></p> <p>Last time most of Australia was involved. Taken by surprise, supermarkets struggled with shoppers across the nation going into “hoard mode” simultaneously.</p> <p>Normally supermarket supply chains run like well-oiled machines with highly predictable demand. Products move slowly and continuously from factories to distribution centres to stores. Supply chains are “skinny”, with stores ensuring they have just enough stock to meet that demand, particularly for low-margin products like toilet paper that take up a lot of shelf space.</p> <p>A spike in demand can thus quickly empty shelves. It can prompt other shoppers to also start stockpiling, due to fear of missing out, making the problem worse.</p> <p>Responding to this situation in March took weeks, as supermarkets adjusted their orders and manufacturers ramped up production to supply more products. The supermarket chains used every trick in the book to balance supply and demand – including imposing limits on the quantity of products shoppers could buy at any one time.</p> <p><strong>What is happening</strong></p> <p>This time suppliers are more prepared. Their lean supply chains have built some fat. Inventory has not been at a minimum. Limits on the amount customers can buy have been quickly reintroduced.</p> <p>So why are shelves empty at all if this time businesses are more responsive?</p> <p>Well, one thing has not changed: there’s still a lag in supply chains responding to any sudden change in demand.</p> <p>With toilet paper, for example, orders are generally fulfilled in about ten days. Last time it took about three weeks for more paper to make to it shops.</p> <p>But, given the information of a spike in demand in Victoria made its way from shops and distributors to manufacturers almost instantly, things should happen faster this time.</p> <p>Retailers have already moved to answer the call by rerouting deliveries to increase supply where it is needed the most. The only thing stopping supply returning to normal is the speed of transportation and restocking.</p> <p>Also, the spike in demand is heavily localised in Melbourne. While there have been reports of panic buying and stockpiling in other states, it’s nowhere near the level of a few months ago.</p> <p>So shortages in Victoria will not be as prolonged as last time. Redirecting inventories will be a lot simpler.</p> <p>Think of it this way. Panic buying during March was like a big detour in the supply-chain highway given the whole country was involved. Now it is more like a car with a flat tyre reducing traffic speed locally. It’s not less dramatic for the people affected, but much simpler from a supply-chain perspective.</p> <p><strong>The new normal</strong></p> <p>So don’t panic. There’s less reason to join in the panic buying (or stockpiling, if you think of it as a rational response to lockdown) this time. We’re likely to experience these disruptions so long as COVID-19 outbreaks continue. The “new normal” is like a faulty switch. Regions will be on and off the spot until the pandemic is over.</p> <p>But as long as the entire nation does not move backwards all at the same time, supply chains from one state will quickly support the one experiencing difficulties.</p> <p>There’s really no reason for you to add to the problem.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/142288/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><em><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></em></p> <p><em><a href="https://theconversation.com/profiles/flavio-romero-macau-998456">Flavio Romero Macau</a>, Senior Lecturer in Supply Chain Management and Global Logistics, <a href="https://theconversation.com/institutions/edith-cowan-university-720">Edith Cowan University</a></em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/dont-panic-again-heres-why-melbournes-supermarket-shortages-will-quickly-pass-142288">original article</a>.</em></p>

Retirement Income

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How to build a share portfolio to suit yourself

<p>There is nothing like a global pandemic and the economic fallout to shake up one’s share portfolio. What worked in the past may now have to be put under the microscope. Unprecedented Central Bank interventions, record low interest rates and the highest unemployment rates since the great Depression, are a challenging backdrop to stock selection for the medium to long-term. It is reasonable to assume that share price volatility will remain as economies adjust to the post-Covid world.</p> <p>Whilst share prices have rallied, the same cannot be said of the dividends. The payout of total dividends from the ASX200 expected to fall by over 20 per cent this year. But you know that already, as a stream of companies have either cancelled, deferred or reduced their 2020 dividends. It shouldn’t come as a huge shock as the Australian dividend payout ratio has been consistently higher (circa 70-80 per cent) than the rest of the world (sub 60 per cent), post GFC. As cashflows contract companies have no choice but to reduce the dividend payout.</p> <p>So, what do you when the dividend favourites and the stalwarts of the last 20 years pose a real threat to your income? Firstly, don’t panic as it is not all doom and gloom; however, it may mean you need to restructure your share portfolio.</p> <p>As every share portfolio is different and everyone has been invested for varying periods and have different aims and goals, it is not possible to say categorically what you should do. But here are some tips to help you through the process, so that you can construct the optimal portfolio of shares for you!</p> <ol> <li><strong>How much do you need? </strong>Establish how much income you need and whether part of that income can be swapped for a capital gain. Assess your share market returns in a total sense (capital gain and income).</li> <li><strong>Assess the shareholdings you have</strong>; it took 10 years for the total Australian dividend payout to return to the pre-GFC levels. This does not necessarily mean this will the case going forward. But you do need to assess whether you can accept lower dividends from your incumbent shares and use capital instead, until the economy picks up and the flow on effects are felt in corporate profits and higher dividends.</li> <li><strong>Add some growth</strong>. Shares that are able to grow their dividend over time are the winners. As a rule of thumb these shares have a lower dividend yield, think healthcare shares versus the banks, but they have delivered a higher total return (capital gain and dividend income). It is probably prudent to add some growth to your portfolio, which can usually be found in shares that yield around 2-3 per cent but have the capacity to grow dividends over the next 10 years.</li> <li><strong>Add some defensive shares</strong>. In a post covid world, some defensive shares are probably prudent. I know the big rotation is on into the bombed-out cyclicals. However in the absence of a vaccine or improved cures, we are faced with a world that needs to accept the virus remains. Returning to a pre-covid economy and the way we work, rest and play is developing but business as usual remains a way off. The share market will be very sensitive to any covid outbreaks like we are witnessing in Beijing and parts of the USA (not to mention the continued growth in the emerging markets).</li> <li><strong>Lower for Longer.</strong> The head of the Federal Reserve, J. Powell made it very clear at the last Fed meeting, rates will stay low in the US until 2022. Whether this transpires, remains to be seen. But it is prudent to assume we will continue to a lower for longer interest rate environment, meaning a 2-4 per cent dividend yield on non-financial shares is a reasonable expectation.</li> <li><strong>High dividend yields may be a trap</strong>. Any shares that offer a high dividend yield, excluding the iron ore producers who are raking in the cash from $100 plus iron ore prices, should be treated with caution. This means there is the potential for dividend disappointment and possible capital erosion. The four large banks are a case in point.</li> </ol> <p>I like to mix up my share portfolio with some growth, some defensive shares and maybe even a quality bank, like Commonwealth. In these uncertain times, quality shares, with strong balance sheets, good corporate governance and identifiable earnings streams will offer older investors comfort. Of course, a vaccine would change everything overnight, so if you are feeling bullish about human ingenuity then you could add some deep cyclicals like an airline or travel company.</p> <p><em>Danielle Ecuyer has been involved in share investing in Australia and internationally for over three decades, both professionally and personally. Her experience and knowledge has been combined to help new or existing investors with long term wealth creation and income generation in her first book </em><a rel="noopener" href="http://www.shareplicity.com.au" target="_blank">Shareplicity: A simple approach to share investing</a> <em>(Major Street Publishing $29.95). </em></p>

Retirement Income

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Mortgage deferral, rent relief and bankruptcy: What you need to know if you have coronavirus money problems

<p>The coronavirus pandemic has wreaked havoc on the Australian economy, and the financial effects for many are deeply personal.</p> <p>Sadly, there’s no shortage of terrible advice online when it comes to personal finance. And as September 30 looms - the date by which JobKeeper, the increased JobSeeker and many negotiated rent and mortgage deferrals end - it’s important to be fully informed before you make potentially life-changing financial decisions.</p> <p>As a former financial counsellor and former consumer credit educator for the Australian Securities and Investments Commission (ASIC), here’s what I think you need to know if you’re considering mortgage deferral, rent relief or bankruptcy.</p> <p><strong>Mortgage deferral</strong></p> <p>Residential mortgages are covered by <a href="https://asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-209-credit-licensing-responsible-lending-conduct/">federal legislation</a>, under which lenders can assist when borrowers can’t afford their usual repayments due to changed circumstances — such as losing hours or employment.</p> <p>For example, you can ask your lender put on hold payments from June to September. It’s up to you and the creditor to establish clearly what happens to those payments. Are they pushed to the end of the contract, thereby extending the life of your loan? Or will you repay extra when you can afford repayments again?</p> <p>Make sure you understand how much more it will cost you in additional interest if you extend the life of your loan by deferring these payments to the end of the contract. Depending on the details of your loan, you could be adding thousands of dollars to the amount you need to repay.</p> <p>Most mortgage lenders don’t really want to repossess your house. It’s costly, time-consuming and stressful. But before asking for mortgage relief, you need to have a plan for the post-deferral period.</p> <p>What happens if you still can’t make your usual repayments? Any licensed financial professional should be able to help negotiate a deferral on your mortgage or other consumer debts such as credit cards, but you should first consider seeing a free financial counsellor who is independent of any lenders. They can be contacted on 1800 007 007 or through the <a href="https://ndh.org.au/">National Debt Helpline.</a></p> <p><strong>Rent relief</strong></p> <p>If you can’t pay your rent due to changed circumstances, you can ask your landlord to reduce or defer your rent. They can, of course, say no.</p> <p>Unlike mortgage deferral, the implementation and process is inconsistent across states and territories. It can be difficult to navigate.</p> <p>There are <a href="https://www.sbs.com.au/news/regulator-to-crack-down-on-real-estate-agents-pressuring-tenants-to-use-super">reports</a> of some landlords asking for comprehensive financial statements to support claims, or for their tenants to access the early release of up to <a href="https://www.ato.gov.au/individuals/super/withdrawing-and-using-your-super/Early-access-to-your-super/#Compassionategrounds">A$10,000 in superannuation</a> to pay the rent.</p> <p>Ausralia’s corporate watchdog, the Australian Securities and Investments Commission (ASIC), has <a href="https://download.asic.gov.au/media/5546344/asic-letter-response-to-early-release-of-super-state-rei-3-april-2020.pdf">warned real estate agents</a> that advising tenants to take money from their superannuation may constitute giving unlicensed financial advice and/or be against people’s best interests, attracting possible fines and jail time.</p> <p>If you’re talking with your landlord about rent relief, be clear on whether you’re talking about rent payments being reduced, deferred or permanently waived, and whether these payments would need to be made up by a certain date. Renters can seek help from <a href="https://ndh.org.au/">free financial counsellors</a> or a <a href="https://www.tenants.org.au/covid19/guide">tenants’ union</a>.</p> <p>State and territory governments have established various schemes to help renters work out agreements with their landlord (see this <a href="https://www.commerce.wa.gov.au/consumer-protection/covid-19-residential-tenancies-mandatory-conciliation-service">Western Australian</a> scheme as an example).</p> <p><strong>Bankruptcy</strong></p> <p>Bankruptcy should be a last resort. Many creditors have shown they’re willing to provide short-term delays (for about 90 days, for example) if people need more time to pay a debt.</p> <p>Consumer credit contracts are written on the basis that life has its ups and downs and if a debtor genuinely can’t pay, the creditor can help by reducing payments, stopping interest charges, deferring payments and/or restructuring loans.</p> <p>In almost all consumer bankruptcies, there is no return to creditors so they generally don’t want debtors to go bankrupt. It’s in their interest to help debtors through a difficult period so they can return to making payments.</p> <p>Of great concern to consumer advocates is that searching “bankruptcy” or “help with debts” on the internet will often generate results for companies with a vested interest in placing you in what’s called a “debt agreement”. These should be approached with caution. It basically means you pay for a company to help you declare bankruptcy - but this is unnecessary.</p> <p>A debt agreement is an act of bankruptcy that directs fees to those companies and quite often places consumers in unmanageable and unsustainable long-term repayment plans.</p> <p>Instead, try to find free financial counsellors, some of whom work for charities. They are professional, unbiased and expert at informing people of their options when in debt. They can be found via the government’s <a href="https://moneysmart.gov.au/managing-debt/financial-counselling">MoneySmart</a> site.</p> <p>If you can’t pay your debts, there are many <a href="https://www.afsa.gov.au/debtrelief">options available</a>. The key is contacting the right person or organisation - and knowing whatever comes up first in a Google search is not necessarily the best or most impartial place to get help in a financial crisis.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/141274/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><em><a href="https://theconversation.com/profiles/gregory-mowle-296811">Gregory Mowle</a>, Lecturer in Finance, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a></em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/mortgage-deferral-rent-relief-and-bankruptcy-what-you-need-to-know-if-you-have-coronavirus-money-problems-141274">original article</a>.</em></p>

Retirement Income