Financial Planning QLD https://www.financialplanningqld.com.au/ Financial Planning QLD servicing all of Brisbane Thu, 07 Mar 2024 00:57:11 +0000 en-AU hourly 1 https://wordpress.org/?v=6.0.7 https://www.financialplanningqld.com.au/wp-content/uploads/2018/12/cropped-fav_icon_01-32x32.png Financial Planning QLD https://www.financialplanningqld.com.au/ 32 32 The Risk of Losing your Home https://www.financialplanningqld.com.au/the-risk-of-losing-your-home/ https://www.financialplanningqld.com.au/the-risk-of-losing-your-home/#respond Thu, 07 Mar 2024 00:52:58 +0000 https://www.financialplanningqld.com.au/?p=1972 Many Australians have suddenly found themselves struggling to meet their mortgage repayments from a home loan that started with low interest rates. And the number of Australians in this situation is growing. Research by the University of NSW suggests the proportion of households in financial stress has surged to 42% this year, up sharply on the start of 2020, when less than a third of households were in financial stress. In addition, calculations by the fintech company, Digital Finance Analytics,…

The post The Risk of Losing your Home appeared first on Financial Planning QLD.

]]>
Many Australians have suddenly found themselves struggling to meet their mortgage repayments from a home loan that started with low interest rates.

And the number of Australians in this situation is growing. Research by the University of NSW suggests the proportion of households in financial stress has surged to 42% this year, up sharply on the start of 2020, when less than a third of households were in financial stress.

In addition, calculations by the fintech company, Digital Finance Analytics, suggest just a 0.5 per cent rise in home loan interest rates could push another 220,000 Australian households into financial difficulties.

While these figures are daunting, there are some simple effective steps you can take if you are fearful your financial position is not as good as it should be. As always, start with drafting a budget and finding out where all your money goes.

If you’ve tried and failed to create a meaningful budget, speak with your accountant or tax agent as there are some very simple, cheap and clever software programs that can help you finally get one in place. Look for costs you can reduce, or better still, do without entirely.

Getting by with just one car in the family rather than two, for example, is estimated to save most families between $2,000 to $5,000 a year in related costs – savings that could be re-directed to help pay off your mortgage.

Then review your actual mortgage. Speak with a mortgage broker to determine whether there are better and cheaper home loans on the market that you can take advantage of. Remember every dollar of interest you save, means an extra dollar reducing the total size of your mortgage if you leave your payments unchanged.

If interest rates do increase and you can no longer meet your monthly mortgage repayments, be proactive and speak to your bank or home loan provider as soon as you become aware that there is a problem and ask for their help to find a way forward.

There may be some simple steps you can take such as consolidating any expensive credit card debts or personal loans into your low-cost home loan to reduce your overall repayments or consider selling that boat or caravan you no longer use and use those funds to reduce your debts.

If once you’ve reviewed the family budget closely, you realise you have simply borrowed more than you feel you can repay, don’t wait in the hope that things will somehow get better. The sooner you take steps to resolve the situation, the better.

It may be that you will need to sell the property that is ultimately causing your financial difficulties and while this can be disappointing, it is important to remember that it is not the end of the world. That it is possible to sell and move to a smaller home or a cheaper suburb.

If you are one of many Australians with a mortgage,then the most important thing to keep in mind is to not wait until you’ve fallen behind on your mortgage repayments. You will always be better off financially if you take control of the situation rather than wait until the bank steps in and sorts the situation for you. To see how I can help you in this situation, give me a call for an obligation-free chat.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

The post The Risk of Losing your Home appeared first on Financial Planning QLD.

]]>
https://www.financialplanningqld.com.au/the-risk-of-losing-your-home/feed/ 0
Should you invest your house deposit? https://www.financialplanningqld.com.au/should-you-invest-your-house-deposit/ https://www.financialplanningqld.com.au/should-you-invest-your-house-deposit/#respond Wed, 06 Mar 2024 23:38:29 +0000 https://www.financialplanningqld.com.au/?p=1931 It’s been fairly challenging to put a deposit together. With house prices very high, it’s forcing homebuyers to come up with bigger deposit amounts. When the traditional savings vehicles of homebuyers – savings accounts and term deposits – offer only token rates of interest, aspiring homebuyers start to ask themselves what can they do to build their deposit more quickly? This is the situation that Simon and Heather find themselves in. They’ve made a solid start on saving for a…

The post Should you invest your house deposit? appeared first on Financial Planning QLD.

]]>
It’s been fairly challenging to put a deposit together. With house prices very high, it’s forcing homebuyers to come up with bigger deposit amounts. When the traditional savings vehicles of homebuyers – savings accounts and term deposits – offer only token rates of interest, aspiring homebuyers start to ask themselves what can they do to build their deposit more quickly?

This is the situation that Simon and Heather find themselves in. They’ve made a solid start on saving for a house deposit, but calculate it will still be several years before they’ll be able to start bidding on a home.

They’ve explored the obvious options of course – spending less and saving more of their income, but there are only so many smashed avos on sourdough that can be foregone or extra jobs that can be worked. So what else can they do? Looking at the depressingly low rate they are earning on their existing savings, they wonder if those savings can be made to work harder by investing them in assets that have the potential to deliver higher returns. 

The first thing that Simon and Heather need to recognise is that any attempt to earn more than the cash rate comes with increased risk. Most people are aware, for example, that shares can fluctuate significantly in value, even from day to day. On the positive side, over the long term – five years and longer – a well-diversified share portfolio is likely to produce significantly better returns than cash. This doesn’t mean Heather and Simon should invest all of their current and ongoing savings into shares. Far from it. But these statistics make a good case for investing a portion of their savings in a broad mix of higher yielding assets. In addition to shares this may include property and various forms of fixed interest. However, with protecting their fortune a high priority. 

Heather and Simon should avoid speculative and many so-called ‘alternative’ investments. And they should avoid long-term illiquid investments, such as some unlisted property trusts. They may end up wanting to access their money at short notice.

They also need to be aware of how their investment income will be taxed both annually (share dividends, rental income) and on the ultimate sale of their investments (capital gains tax). Some tax treatments are positive, potentially including franking credits on share dividends, and a discount on capital gains tax.

Saving a home deposit requires great discipline, and exposing a portion of savings to even modest risk entails even greater discipline. Heather and Simon will need to avoid the temptation to invest larger sums when markets are up, or to want to bolt to cash at the first downturn in the market. 

If the idea of investing a portion of your house deposit appeals to you, then give me a quick bell. I will be able to help you understand the risks involved and how to manage them, recommend appropriate investment options that balance out those risks and potential returns, and help keep you concentrated on your main goal. There is absolutely no obligation, so give me a call for a free chat.

Sources:
Choose your investments: https://moneysmart.gov.au/how-to-invest/choose-your-investments

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

The post Should you invest your house deposit? appeared first on Financial Planning QLD.

]]>
https://www.financialplanningqld.com.au/should-you-invest-your-house-deposit/feed/ 0
Buying your children a home – good idea or bad? https://www.financialplanningqld.com.au/buying-your-children-a-home-good-idea-or-bad/ https://www.financialplanningqld.com.au/buying-your-children-a-home-good-idea-or-bad/#respond Thu, 22 Feb 2024 00:00:00 +0000 https://www.financialplanningqld.com.au/?p=430 Owning your home has long been considered the Australian dream, but the changing property market is helping to ensure that it remains just that for your children. Even with initiatives such as First Home Owner Grant schemes, home ownership remains unaffordable for many. Figures from the Australian Bureau of Statistics show that Australia’s property prices have rebounded since the dark days of 2008 by a staggering 69%. Furthermore, the International Monetary Fund reports that Australia rates as 6th in the…

The post Buying your children a home – good idea or bad? appeared first on Financial Planning QLD.

]]>
Owning your home has long been considered the Australian dream, but the changing property market is helping to ensure that it remains just that for your children.

Even with initiatives such as First Home Owner Grant schemes, home ownership remains unaffordable for many. Figures from the Australian Bureau of Statistics show that Australia’s property prices have rebounded since the dark days of 2008 by a staggering 69%.

Furthermore, the International Monetary Fund reports that Australia rates as 6th in the world for the highest house price-to-income ratios. It is due to this lack of affordability that many younger prospective home buyers are asking their parents for assistance in fulfilling their home ownership dreams.

So for parents, buying a home for your children requires financial insight.

The pitfalls

Whilst parents who buy a house for their children do so with the best of intentions, there are hazards that may befall the unwary. These include:

  • Tax consequences – how the property will be treated for tax purposes depends on whether rent is charged. If the child pays rent, expenses will be tax-deductible, but capital gains tax will be payable if the property is sold.
  • Opportunity cost – many parents may not be doing themselves any favours if their own financial well-being and security is compromised by their generosity. Relying on retirement savings to purchase a property later in life could be a decision later regretted.
  • Government benefits – if the property is owned by the parents, both the asset and any income will be included when calculating eligibility for Centrelink entitlements. Alternatively, should the property be placed in the name of the child, it will be considered a gift, meaning that the amount over the gifting limit will be deemed for up to five years. This can affect the level of benefits the parents might receive.

Alternative options

It’s not all doom and gloom though. There are ways for parents to assist their children in buying a home and enter the property market which in turn, can also help to deliver valuable life lessons. These include:

  • Gifting a deposit – instead of buying the whole property, gifting the deposit can often be sufficient to help offspring obtain finance, with the child taking responsibility for loan repayments. Furthermore, this option can address Centrelink concerns, and lessen the impact on the parents’ financial security.
  • Acting as guarantor on a loan – this involves using the parents’ assets as security for all or part of their child’s home loan.
  • Buying the property together – this arrangement generally involves parents providing a deposit, with the ongoing costs of the property being split between the parents and the child.

Put it in writing

There is a range of legal issues to be considered before entering into these arrangements. The rights and responsibilities of each party should be clearly and formally documented and address key decisions. These include, but are not limited to,

  • who is responsible for ongoing maintenance and costs on the property;
  • what to do if either party wishes to terminate the arrangement;
  • what happens if the child cannot meet repayments;
  • how the property will be held when/if the child marries/divorces; and
  • what happens to the property when the parents pass away.

Helping out your kids might seem like a good idea, but it is important that professional advice is sought first. Contact me and I can help you explore the available options to ensure that you find the solution that best suits your family’s circumstances.

You are probably thinking of a few things you would like to seek financial advice on, give me a call on 07 3162 1449 and I will be happy to answer them for you, obligation-free, it won’t cost you a thing.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

The post Buying your children a home – good idea or bad? appeared first on Financial Planning QLD.

]]>
https://www.financialplanningqld.com.au/buying-your-children-a-home-good-idea-or-bad/feed/ 0
When is a law not a law? https://www.financialplanningqld.com.au/when-is-a-law-not-a-law/ https://www.financialplanningqld.com.au/when-is-a-law-not-a-law/#respond Fri, 29 Dec 2023 23:00:03 +0000 http://localhost/fpqld_live_wp/?p=143 When governments propose changes to laws, many people mistakenly believe that law is already in place however, the path from proposal to law is not as straight-forward as you might think. When an unpopular or contentious bill is announced, perhaps because of the attention it receives from the media, everyday Australians are sometimes led to believe the declaration heralds a done deal, but this is usually far from the truth. Here’s a good example As part of the 2014 Federal…

The post When is a law not a law? appeared first on Financial Planning QLD.

]]>
When governments propose changes to laws, many people mistakenly believe that law is already in place however, the path from proposal to law is not as straight-forward as you might think.

When an unpopular or contentious bill is announced, perhaps because of the attention it receives from the media, everyday Australians are sometimes led to believe the declaration heralds a done deal, but this is usually far from the truth.

Here’s a good example

As part of the 2014 Federal Budget, the government proposed raising the age pension age to 70 by 2037.

The announcement prompted an immediate frenzy of media and political commentary and many Australians understandably believed that this was now the law and with immediate effect. Amid the controversy average Australians were left confused and worried.

As a result of intervention from the then minor parties, the relevant bill has not been passed in the Senate. Now, three years later, it remains that the age pension age will increase to only 67 by 2023.

A more recent example is the reporting of changes to superannuation announced in the May 2016 Budget. After much to-ing and fro-ing, most of these bills were finally passed (with amendments) in November 2016.

This is how it works

The process of taking a bill from proposal to L-A-W law can be lengthy and quite tedious.

In the House of Representatives, bills are usually introduced by government ministers, although other members of parliament can introduce bills known as private members’ or private senators’ bills.

Once introduced to the House of Representatives they must be read aloud by the Clerk three times. They are then presented in identical form to the Senate, where they are again read aloud three times. The tradition of reading bills three times harks back to the days before printers, when the Clerk was responsible for ensuring the members of parliament understood the bill before casting their vote.

Bills must be passed by a majority vote in both the House of Representatives and the Senate. Where a bill is complex and/or creates lengthy debate, the process can become very drawn out and take weeks or even months. Although in certain circumstances, a bill can be passed in only days if the law change is deemed urgent.

The path of a bill

The table below, shows the path a bill takes on its way to becoming law.

DiscussionProgress
First reading – bill is introducedHouse of Representatives
Second reading – members debate billHouse of Representatives
House committee – public inquiryHouse of Representatives
Consideration in detail – members discuss bill’s detailsHouse of Representatives
Third reading – members vote bill’s final formHouse of Representatives
Reported from Federation ChamberHouse of Representatives
Bill is passedHouse of Representatives
First reading – bill is introducedSenate
Second reading – members debate billSenate
Senate committee – public inquirySenate
Third reading – Senators voteSenate
Bill is passed in SenateSenate
Assent – Governor-General signs the billGovernor-General
Bill becomes an act of parliamentGovernor-General

In any given year, up to 200 bills are presented to Parliament and roughly 90 per cent of these become law. You can search for any bill before Parliament by going to www.aph.gov.au and searching under Parliamentary Business. It can be an interesting exercise.

As a local financial advisor here in Brisbane, I keep up to date with proposed changes that are likely to affect you, and will be able to explain the details and confirm the changes when a relevant law is passed. To get in touch, just give us me a call for obligation-free chat.

Sources:
www.aph.gov.au Parliament of Australia (Copyright Commonwealth of Australia)
www.peo.gov.au Making a Law (Copyright Commonwealth of Australia)

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

The post When is a law not a law? appeared first on Financial Planning QLD.

]]>
https://www.financialplanningqld.com.au/when-is-a-law-not-a-law/feed/ 0
The financial effects of divorce after 50 https://www.financialplanningqld.com.au/the-financial-effects-of-divorce-after-50/ https://www.financialplanningqld.com.au/the-financial-effects-of-divorce-after-50/#respond Thu, 28 Dec 2023 23:00:21 +0000 http://localhost/fpqld_live_wp/?p=141 With Australians marrying later in life and staying married for longer, the median age of divorce has risen over the last 20 years. It now stands at 45.3 years for males and 42.7 years for females. Couples who remain together into their 50s experience a lower divorce rate than younger age groups, but even so this age group still represents around 30% of all permanent splits. While divorce carries a heavy emotional burden at any age, the financial stakes for…

The post The financial effects of divorce after 50 appeared first on Financial Planning QLD.

]]>
With Australians marrying later in life and staying married for longer, the median age of divorce has risen over the last 20 years. It now stands at 45.3 years for males and 42.7 years for females. Couples who remain together into their 50s experience a lower divorce rate than younger age groups, but even so this age group still represents around 30% of all permanent splits.

While divorce carries a heavy emotional burden at any age, the financial stakes for older divorcees can be greater, and the prospect of starting over more daunting than for younger people. The over 50s have often accumulated significant wealth. They tend to be focused on that final sprint to retirement, maximising super contributions before putting their feet up and commencing a superannuation pension. Retirement may also entail downsizing a home or a move to the coast or the bush. At all points along this path through later life, the financial consequences of divorce are substantial.

Given the major upheaval created by this event it’s critical to obtain professional financial advice right from the start. This will help to ensure the smooth separation of finances and a reduction in any unnecessary emotional pain. This doesn’t just apply to the end of formal marriages; the issues are largely the same when de facto relationships come to an end.

The checklist

At the end of a marriage or long-term relationship some issues require immediate attention while others can be left until a bit later. Urgent items include:

  • Resolving living arrangements and ensuring access to funds for daily expenses.
  • Establishing individual bank accounts and giving new bank details to employers.
  • Securing an adequate income and working out a budget.
  • Changing life insurance and superannuation death benefit beneficiaries.
  • Revising wills and powers of attorney.
  • If dependent children are in the picture, their living arrangements and financial needs must be taken care of.
  • If property is held in a partner’s name, legal action may be required to prevent it from being sold prior to a property settlement.

Once these pressing issues are addressed attention can be given to:

  • Dealing with the family home – will it be retained, by whom and for how much?
  • How will superannuation balances be split?
  • How will the division of personal property be managed, taking into account both the financial and personal aspects of this difficult task?
  • In the case of a family business, will the business relationship continue?

Conflict or cooperation

Many couples manage their divorces cooperatively. For others it is a time of rejection, blame and conflict. But, even if a divorce can’t be amicable, it can often be handled in a mutually respectful way. Minimising the involvement of lawyers will help to avoid substantial legal costs, preferably to the benefit of both parties.

The next chapter

Many late-life divorcees will re-partner and establish happy new relationships. The financial aspects of re-partnering are many and complex, and even with the best of intentions, poor decisions, or even a failure to act, can have major financial consequences. For others, remaining single will prove more attractive. Either way, when life slips into a new and stable pattern, it’s time once again to seek out expert advice. If there is a question you have mind, give me a quick call and we can work out how to best tackle your next chapter in life.

Sources:
ASICs Moneysmart website: Life Events – Divorce or separation

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

The post The financial effects of divorce after 50 appeared first on Financial Planning QLD.

]]>
https://www.financialplanningqld.com.au/the-financial-effects-of-divorce-after-50/feed/ 0
Investing in property. What you need to know https://www.financialplanningqld.com.au/investing-in-property-what-you-need-to-know/ https://www.financialplanningqld.com.au/investing-in-property-what-you-need-to-know/#respond Wed, 27 Dec 2023 23:00:34 +0000 https://www.financialplanningqld.com.au/?p=2021 It is no secret that Australians love investing in property. And while property investing can be an exciting prospect, it is essential to consider the finer details before jumping in, especially any ongoing costs and expenses you’ll have to pay. Investment property tax deductions It is vital that you’re aware of what you can and cannot claim as a tax deduction as a landlord. For starters, did you know there is a difference between repairs and maintenance completed on the…

The post Investing in property. What you need to know appeared first on Financial Planning QLD.

]]>
It is no secret that Australians love investing in property. And while property investing can be an exciting prospect, it is essential to consider the finer details before jumping in, especially any ongoing costs and expenses you’ll have to pay.

Investment property tax deductions

It is vital that you’re aware of what you can and cannot claim as a tax deduction as a landlord.

For starters, did you know there is a difference between repairs and maintenance completed on the property versus improvements made?

The reason why this is so important to understand is that repairs and maintenance costs are claimable immediately as a tax deduction, while property improvements are claimable over several years (generally 2.5% every year for 40 years from the date that the improvements were completed). For example, lawn mowing, and land taxes can be claimed immediately, whereas renovating the kitchen needs to be claimed over several years.

The Australian Tax Office (ATO) allows the following expenses to be claimed immediately:

  • advertising for tenants
  • body corporate fees and charges
  • council rates
  • water charges
  • land tax
  • cleaning
  • gardening and lawn mowing
  • pest control
  • insurance – building, contents, public liability, loss of rent
  • interest expenses – related to borrowing
  • pre-paid expenses – such as insurance premiums
  • property agent’s fees and commission
  • repairs and maintenance
  • legal expenses

While these property improvements are claimable over several years:

  • Capital works – costs that increase the value of your property, such as significant structural alterations, e.g. renovating a kitchen.
  • Borrowing expenses – expenses such as loan establishment fees, lender’s mortgage insurance, valuation report fees, and title search fees are considered borrowing expenses.
  • Depreciating assets – assets costing more than $300, such as carpets, flooring, roofing, hot water systems, etc., can be depreciated over time.
  • Initial repairs – expenses incurred to fix existing damage after purchasing your property fall under initial repairs.

Take note these expenses CANNOT be claimed as a tax deduction:

  • Loan repayments – you cannot claim your principal loan repayments as a tax deduction.
  • Depreciating assets – from 9 May 2017, you cannot claim depreciation on assets if they have previously been used, such as second-hand furniture or existing carpet before you purchased the property. From 1 July 2017, if you rent out your own home, you cannot claim depreciation for assets that were in your home.
  • Other unclaimable expenses – expenses paid by the tenant, personal use of the property, travel expenses to visit the property, and certain other costs like conveyancing (however, this cost is added to the initial price of the property, which can reduce your capital gains tax).

Why should you make property improvements or repair work before the end of the financial year?

Have repair or maintenance work that you have been putting off or trying to save for? Completing these repairs before the end of the financial year may allow you to immediately claim these expenses as a tax deduction, resulting in instant tax savings. Costs related to fixing a leaking pipe or regular servicing of appliances fall into this category.

Even though capital improvement expenses can only be claimed over several years, if you incur those expenses shortly before the end of the financial year, you can start claiming them a lot sooner than if they were completed in the first half of the financial year, for example.

Seek professional advice

Buying your investment property is just the start of your landlord journey. Once you have acquired your property, engaging a property manager to rent it out and manage it on your behalf may take a lot of the stress out of maintaining your property. They can identify the best candidates for your property and manage any simple repair work or major improvements.

Along with a property manager, your accountant is an important ally in your property investment endeavour. They will be your best source for information on claimable expenses and tax deductions and will also ensure your tax obligations are correctly lodged with the ATO. If you would like to discuss property investment further, just give us a call.

And finally, above all else, enjoy your ride into property investing. We guarantee it will be an interesting one!

Sources:
Australian Tax Office https://www.ato.gov.au/Individuals/Investments-and-assets/Residential-rental-properties/rental-expenses-to-claim/ “Rental expenses to claim” (14 July 2021)

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

The post Investing in property. What you need to know appeared first on Financial Planning QLD.

]]>
https://www.financialplanningqld.com.au/investing-in-property-what-you-need-to-know/feed/ 0
When your home loan application is rejected https://www.financialplanningqld.com.au/home-loan-application-is-rejected/ https://www.financialplanningqld.com.au/home-loan-application-is-rejected/#respond Tue, 26 Dec 2023 23:00:22 +0000 http://localhost/fpqld_live_wp/?p=132 Tired of paying rent to a lazy landlord and watching your friends become homeowners, you crunch the numbers and figure out you can get a home loan at an interest rate of 3.7% per annum. After sifting through the auction results and doing your sums you calculate that you’ll need a home loan of $400,000 to buy a desirable property with an acceptable commuting distance to work. You plug the numbers into the MoneySmart mortgage calculator and it tells you…

The post When your home loan application is rejected appeared first on Financial Planning QLD.

]]>
Tired of paying rent to a lazy landlord and watching your friends become homeowners, you crunch the numbers and figure out you can get a home loan at an interest rate of 3.7% per annum.

After sifting through the auction results and doing your sums you calculate that you’ll need a home loan of $400,000 to buy a desirable property with an acceptable commuting distance to work. You plug the numbers into the MoneySmart mortgage calculator and it tells you that, including fees, your repayments will be $2,056 per month for the next 25 years.

Now you have your eye on a home within your price range. You apply to your bank to borrow $400,000, but when the answer comes back it’s “no”.

What?

Don’t blame the bank

Your bank would probably be quite happy to lend you the amount you asked for. However, in early 2017, banks and other lenders received a letter from the Australian Prudential Regulation Authority (APRA). APRA is the government body charged with making sure that banks behave responsibly, and though it may not feel like it, it does have your best interests at heart. As interest rates rise, a lot of Australian households are going to have real trouble meeting their home loan repayments.

The upshot is that APRA has instructed lenders to apply an interest rate buffer when assessing loan applications. Specifically, this means that your bank is required to check your ability to meet your loan repayments at “the higher of either at least 2 per cent above the loan product rate and a minimum assessment interest rate of at least 7 per cent.” In your case, that means testing your mortgage application at a rate of 7%. This would push your monthly repayments to $2,837, an extra $781 to find each and every month.

APRA has also warned lenders that it will be looking out for cases where they are making loans to borrowers with only a small monthly income surplus – another hurdle to overcome.

Are there options?

Of course you’ll be disappointed that some bureaucrat is leaning on your bank to reduce the amount they will lend to you, but mortgage stress is a real and growing problem. It really is better to be prudent about debt.

So what can you do?

Start with a realistic review of your finances. As your local Brisbane financial advisor we can help you with this but some initial actions include:

  • Get rid of unnecessary credit cards, as the entire limit, not just the card balance, is counted towards your total debt burden
  • Pay off any personal loans as quickly as possible
  • Go back to your budget and see what expenses you can cull without being too austere
  • Can you save a bigger deposit, reducing the amount you need to borrow?

Armed with advice and updated figures, take another look at the market and continue learning about home loans. Stress test your proposed mortgage to see if you can cope with significantly higher interest rates. If it fails, don’t give up on your dreams of home ownership, just be realistic. If necessary, set your sights on properties that are more affordable, making life a bit more enjoyable.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

The post When your home loan application is rejected appeared first on Financial Planning QLD.

]]>
https://www.financialplanningqld.com.au/home-loan-application-is-rejected/feed/ 0
Retirement plan financial advice https://www.financialplanningqld.com.au/retirement-plan-financial-advice/ https://www.financialplanningqld.com.au/retirement-plan-financial-advice/#respond Mon, 25 Dec 2023 23:00:34 +0000 http://localhost/fpqld_live_wp/?p=130 As we approach retirement some people start to panic a little wondering if they are truly looking forward to the time of their life when they no longer have to work. Is your retirement plan ready? All of a sudden something they have been pining for is becoming real! Instead of worrying, have a read of the following tips and if necessary, act now. After all, it’s your future – and it could be here sooner than you think. 1:…

The post Retirement plan financial advice appeared first on Financial Planning QLD.

]]>
As we approach retirement some people start to panic a little wondering if they are truly looking forward to the time of their life when they no longer have to work. Is your retirement plan ready? All of a sudden something they have been pining for is becoming real!

Instead of worrying, have a read of the following tips and if necessary, act now. After all, it’s your future – and it could be here sooner than you think.

1: What do you want and how will you get it?

What are your goals and objectives for your retirement? Use a retirement planner calculator and write out a plan that sees you enjoying the fruits of your labours. Then make sure your finances can achieve your goals. If not, do something about it now while you still have time. Be realistic and set achievable time-frames.

2: It’s not just about returns; remember the risks

Every investment has some degree of risk. Cash is considered the safest as there’s a good chance your money will still be in the bank when you need it. The downside is that it pays the lowest return; it isn’t tax effective; and doesn’t tend to keep pace with inflation. To achieve higher returns and make your money work harder, you need to take appropriate risk. Understand the differences between the various investment assets available and make your decisions wisely.

3: Share it around

To help reduce risk, share your investments across several asset classes – and within those asset classes as well. The right balance will depend on your financial objectives, the amount of time you have available to invest, and your risk tolerance.

4: Don’t forget super…

Superannuation will be your bank account when you are no longer working so you should be considering ways to boost your superannuation balance prior to retirement. But be aware the tax benefits are not always equal so make sure you have a balance of inside-super and outside-super investments.

5: …or tax

Tax is the trickiest area of all. Always make sure you get good advice on investing tax-effectively. A simple restructure of an underlying asset, investment vehicle or ownership structure can help you to minimise the amount of tax you pay and maximise your after-tax return.

6: Retirement can last another lifetime

With medical technology and improved lifestyles we are living much longer than previous generations. The older you get, the longer you’re likely to live. If you’ve managed to survive early risks, such as accidents or illnesses, your life expectancy actually increases. Being prepared for a longer retirement means that your money must last longer, so don’t be too conservative with your investments.

7: Stay cool

You are in this for the long term so when markets fluctuate and investments unexpectedly fall in value, don’t panic and sell. Sit down with myself and we review your portfolio so it stays focused on your long-term goals and objectives.

8: Keep learning

You are never too old to learn. Financial advisers have an important role in giving you tailored guidance, but you still need to make your own informed decisions about your financial plan. Make sure you understand your retirement plan and if not, ask us questions or do some research.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

The post Retirement plan financial advice appeared first on Financial Planning QLD.

]]>
https://www.financialplanningqld.com.au/retirement-plan-financial-advice/feed/ 0
Digital vs Physical Assets https://www.financialplanningqld.com.au/digital-vs-physical-assets/ https://www.financialplanningqld.com.au/digital-vs-physical-assets/#respond Sun, 24 Dec 2023 23:00:53 +0000 https://www.financialplanningqld.com.au/?p=1936 Not a day goes by where we don’t hear about bitcoin in the news or from a friend who has a hot tip on a new cryptocurrency. The past few years have seen an increase in the popularity of digital assets such as cryptocurrency and Non Fungible Tokens (NFTs). Direct shares and managed funds are also digital assets. What about physical assets? Well, this does not diminish the value of physical assets such as property, gold and cash. There are…

The post Digital vs Physical Assets appeared first on Financial Planning QLD.

]]>
Not a day goes by where we don’t hear about bitcoin in the news or from a friend who has a hot tip on a new cryptocurrency. The past few years have seen an increase in the popularity of digital assets such as cryptocurrency and Non Fungible Tokens (NFTs). Direct shares and managed funds are also digital assets. What about physical assets?

Well, this does not diminish the value of physical assets such as property, gold and cash. There are certain societies in the world that accumulate gold because it is a status symbol. On the other hand, people in countries like Australia love to invest in property. 

As taught in Finance 101 courses, diversification is a key aspect of investment and therefore, it is important to look beyond investment properties and consider other asset classes to spread your risk. With easy access to shares, managed funds and crypto, there is now a buffet of investment options to choose from, albeit with caution.

Let us understand the difference between digital vs physical assets.

Digital Assets

Similar to physical assets, they give you ownership in an asset but which is intangible, just like a JPEG image or PDF file. Shares, managed funds and cryptos are owned, stored and recorded in a digital format. 

Pros

Transaction costs – Usually, brokerage or commissions on buying and selling digital assets is much lower than on assets like property.

Liquidity – You can buy and sell them instantly on the internet with just a few clicks.

Fractional ownership – You can now buy a fraction of a share or a bitcoin on a trading platform. Common investors now have access to investment opportunities that were previously available only to large institutions.

Cons

Fear Of Missing Out (FOMO) – Given the increase in popularity of crypto and shares along with their easy availability, people are trading on them simply to be a part of the hype rather than conducting with their own research.

Security – Storing and securing digital assets is becoming increasingly important as your account can be hacked into and you can lose your valuable assets. Even though an asset like crypto which is backed by blockchain technology is not hack-proof.

Physical Assets

Owning a physical asset such as property, gold, cash or even collectibles is not a new concept. They are tangible assets that give us a sense of security because we can see, touch and feel them. 

Pros

Acceptability – Given the history behind these assets, they are easily accepted as a form of asset in all parts of the world. 

Usage – You can live in a property or wear gold jewellery as these assets can be used for enjoyment purposes too. 

Cons

High barrier to entry – There are high cost barriers to purchase physical assets such as building a 10%-20% deposit prior to applying for a loan to purchase a home. These assets are limited in nature making them expensive to acquire.

Liquidity – Apart from cash, other physical assets are not very liquid. It can take months to sell a property. Also, you cannot sell only a bathroom of your house if you needed urgent cash.

Next Steps – physical vs digital assets

When deciding where to invest your hard earned money, it is important to consider your life goals, age, current financial situation, risk appetite and the most important thing – something that will make you sleep peacefully at night. 

You should consult professionals to help navigate you through the different investment options that suit your situation. Want to speak with a financial adviser? Then give me call for an obligation-free chat to see how I can help you with the next step.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

The post Digital vs Physical Assets appeared first on Financial Planning QLD.

]]>
https://www.financialplanningqld.com.au/digital-vs-physical-assets/feed/ 0
New Year resolutions for small businesses https://www.financialplanningqld.com.au/new-year-resolution-for-small-business/ https://www.financialplanningqld.com.au/new-year-resolution-for-small-business/#respond Tue, 19 Dec 2023 23:00:55 +0000 https://www.financialplanningqld.com.au/?p=1388 As New Year resolution time rolls around spare a thought for your business, because every business can benefit from a few resolutions of its own. Here are a few ideas that any business can build some New Year resolutions around. Make sure you have an up to date business plan. Many business plans sit gathering dust on a shelf, or haven’t even been committed to paper. But a well thought out, written and effectively implemented business plan is an invaluable…

The post New Year resolutions for small businesses appeared first on Financial Planning QLD.

]]>
As New Year resolution time rolls around spare a thought for your business, because every business can benefit from a few resolutions of its own. Here are a few ideas that any business can build some New Year resolutions around.

Make sure you have an up to date business plan.

Many business plans sit gathering dust on a shelf, or haven’t even been committed to paper. But a well thought out, written and effectively implemented business plan is an invaluable tool for any business.

Creating a business plan is a major undertaking – definitely worth a New Year resolution – with some of the key sections being:

  • Business description.
  • Products and services.
  • Market analysis, including customers and competitors.
  • The all-important SWOT analysis (strengths, weaknesses, opportunities and threats).
  • Organisation and management.
  • The financial plan, including funding and financial projections.

Plenty of detailed information on creating a business plan can be found online, such as the Business Queensland website.

Implement a plan to promote your business.

An important section of any business plan is the marketing plan. How are you going to let potential customers know you exist? What story do you want to convey?

The Internet has lead to an explosion in the number of ways in which businesses, even very small ones, can promote themselves. Websites and blogs, email newsletters and social media posts, search engine marketing and online ads allow businesses to market themselves to highly targeted audiences, sometimes at low or zero cost. 

All this can take a considerable amount of time, however. So while it is possible for many small businesses to manage their own digital marketing, outsourcing this function to experts may be a more cost effective option. 

Conduct an internal audit.

Exactly what needs auditing will depend on the individual business, but common areas to take a look at include:

  • Stock levels and stock turnover rate.
  • Key accounting parameters such as accounts receivable, average payment times, cash flow and debt.
  • Business insurances: cyber insurance, key person insurance, public liability and professional indemnity insurance, and workers’ compensation.
  • Business systems and processes. Is the business running efficiently? What are the opportunities for improvement?
  • Staffing levels, turnover rate and employee satisfaction.

Improve internal communications.

When employees feel that their efforts are both recognised and appreciated, businesses are often rewarded by improved staff retention and productivity. That appreciation can be communicated in many ways; narrowly through wage reviews and promotions, and more broadly through support of a social club (good for improving communication between employees), the celebration of milestones, and other fun, seasonal events. 

Consult your experts.

Your accountant is ideally placed to help with your financial analysis. An insurance broker can help you get the best deal on the general insurances you need, and your financial planner can advise on personal insurances for purposes including key person and succession planning.

This list is intended to be inspiring rather than daunting, and maybe you want to tackle it one or two resolutions at a time. But imagine the day when all this is done, and the only New Year resolution you need to make for your business is ‘keep doing what we’re doing’.

As always here at Financial Planning Qld we have an open door policy, so pop-in or give me a call to see how I can help you with your business.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

The post New Year resolutions for small businesses appeared first on Financial Planning QLD.

]]>
https://www.financialplanningqld.com.au/new-year-resolution-for-small-business/feed/ 0