What’s the price of advice?

What’s the price of advice?

Financial advice is less about increasing a client’s wealth now and more about helping the individual; or family achieve the things that really matter to them.

The coming 25 years will be a transition as the Baby Boomers move to retirement. CoreData estimates $3.9 trillion of wealth to be transferred into the hands of younger generations. This wealth transfer is unprecedented in history. With the progress of technology and current landscape of the financial services market, “advice is less about increasing a clients wealth now and more about helping the individual or family achieve the things that really matter to them”, as said by Simon Hoyle in Septembers Professional Planner.

In a number of recent studies undertaken by CoreData it has been revealed that individuals who seek competent and professional financial advice and who act on it are healthier and happier with benefits of advice beyond financial issues. These include;

  1. A Comfortable Lifestyle

In case studies, a core goal was to maintain a desired level of spending and allowing for inflation, to ensure living standards do not drop. This was exceeded as clients enjoyed additional expenditure including holidays.

  1. More Superannuation

Through the implementation of curated advisor strategies, additional contributions were made to enable a tax-efficient superannuation resulting in healthier balances and more funds when needed.

  1. Optimised Allocation

Financial advisors provide value in optimising the allocation of assets by placing assets into more productive investments. Case studies proved clients to have more funds to spend on themselves and their families.

  1. Peace of Mind

With the assistance of advisors households are assured of a more protected financial situation even with unexpected events occurring allowing for a greater sense of security and less to worry about in life.

  1. Confidence

Individuals equipped with expert financial advice generally have more confidence to spend on their lifestyle and are more confident in their decisions.

  1. Reduced Stress

Research by CoreData found a lack of financial wellness creates huge emotional and social costs from lack of sleep to damaging relationships.

Want to know how we can support you or your family in doing and achieving what matters to you? Give us a call on (02) 9415 1511 or email us for your no obligation conversation.

 

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Why people who set goals do better financially?

Why people who set goals do better financially?

As we move into the new financial year it is the perfect time to evaluate how you are tracking against the goals you set at the beginning of the year.

What were you saving for?

  • A holiday like 53% of Australians
  • Building your rainy day fund with 46% of Australians
  • Or with 40% of Australians saving to buy or renovate a home

How have you tracked with this goal? Are you any closer to having the financial structures and plans in place to achieve what you want in life? Or are you struggling?

You are not alone…

  • 41% of people incur unexpected expenses or change in financial circumstances
  • 27% experience a lack of willpower
  • 17% set an unachievable goal

So, what’s the trick?

It’s as simple as understanding the importance of goal setting. Without a goal, there’s nothing to work towards. Like a game of darts without a dartboard, where do you aim? The real question is where do you want to go, what’s your ‘why’?

By having a goal, research tells us you reap further benefits such as; increased performance, happiness, focus, energy, strength and success.

Long term goals allow you to understand your big picture, helps you to set small goals in order to reach that big goal. Short term goals set you up for success achieving regular wins and keeping you motivated giving you the ability to quickly know if you are on track or not.

So, set a goal, make your dartboard and let’s hit the bull’s eye!

If you don’t have any goals or are struggling to achieve the ones you previously set, let’s talk. At PrimeAdvisory our ‘why’ is to keep you on track!

References: ASIC MoneySmart

Source: https://www.moneysmart.gov.au/managing-your-money/saving/how-australians-save-money

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What you should be doing now to take advantage of record-low interest rates

What you should be doing now to take advantage of record-low interest rates

Home loan interest rates in Australia are currently at all-time lows and they may go even lower.

Rates are dropping because the Reserve Bank has cut the cash rate not once but twice, lowering costs for banks. In response, many lenders have announced cuts to their variable rate home loans.

These record low rates are great news for people who currently have mortgages or those intending to get a mortgage.  Unfortunately for those relying on bank interest from savings the news is not that good.

Here’s 4 ways you can make the most of the low mortgage rates.

  1. Don’t change anything

Doing nothing only makes sense if you have a variable rate mortgage and your lender is passing on the cash rate cut. You’re fortunate if this is the case because you’ll already be enjoying lower repayments without you having to do anything.

However, you still might want to consider the following options.

  1. Compare your rate and if you should refinance to a lower one

Even if your lender has passed on the rate cut it makes sense to compare your rate with what else is in the marketplace. With literally hundreds of lenders and thousands of mortgage products available you should at least be checking and keeping your bank honest.

Switching to a lower rate mortgage on the right terms could save you a considerable amount of money.  If you have a look at the marketplace now, some lenders are offering rates in the low 3.0% range.

To get a sense of just how low rates are right now you can check out our monthly lowest mortgage rates page.

  1. Make extra repayments with your lower rate savings

When your rate is reduced you benefit from lower minimum required monthly mortgage repayments. To maximise the benefit simply keep making the same monthly repayments as you were prior to your rate being reduced. The difference between what you need to pay vs what you pay if you maintain repayments will result in you paying back your loan faster and reducing your overall interest expense.

Let’s use an example to demonstrate how the extra repayments work. Say you borrowed $450,000 over 30 years @ 3.89% p.a.

  • Monthly repayments = $2,119

If your lender passed on the last two cash rate cut’s your rate would fall to 3.39% p.a.

  • Monthly repayments at 3.39% = $1,993

The interest you will save is $29,440 and you will be mortgage free two years and 11 months sooner.  How good is that.

  1. Accumulate savings to account for possible rate rises in the future

What goes down will inevitably go up.  Mortgages are usually repaid over a long time which would include different economic cycles. Despite current low rates, you should expect them to rise at some stage in the future. This means your repayments will rise too.

While rates are low you can use your savings from your lower repayments to build up a cash buffer to use if you need to cover higher repayments in the future. There are at two ways you can do this:

  1. Redraw

If your loan allows for extra repayments and has a redraw facility then you could follow the extra repayment strategy from tip 3 and then redraw the money if you need it later. Note that some lenders have restrictions on how much or how often you can redraw.

  1. Offset account

If your loan has an offset account you can simply add the savings to the offset and they’ll act like extra repayments, effectively helping you pay less interest. But if you need to cover higher repayments in the future you have access to the funds.

Contact your PrimeAdvisory Accountant or Financial Advisor to discuss how you can take advantage of the currently low interest rates to stay on-track.

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Tips for getting on track with your financial goals

Tips for getting on track with your financial goals

The end of the financial year is the cue for most of us to look at our financial position heading into tax time. Hopefully you’ve made progress towards your goals. But if you find that your expenses are trending higher than you’d like or—shock, horror!—higher than your income, this could be the perfect time for a fiscal makeover.

The starting point is gathering up as much information as possible, beginning with the household budget.

Take a budget snapshot

You can’t set realistic financial goals and savings targets without knowing how much money you have at your disposal. If you don’t already track your income and spending, then take an annual snapshot as you go through your records to prepare your annual tax return.

Deduct your total spending from total income and what’s left is what you have to work with. Any surplus could be used to kick start a regular savings plan. If you discover a budget black hole, identify areas where you are overspending and could cut back.

Pay yourself first

Did you manage to save anything this year or are you are constantly counting on this month’s income to pay last month’s bills? Do you spend first and hope to save what’s left?

Instead of making saving an afterthought, pay yourself first and allocate a percentage of your income to a regular savings plan. Setting up a weekly or monthly direct debit will remove temptation and encourage you to live within your means.

Review your mortgage

If you have a mortgage this is likely to be your biggest monthly expense so it’s a good idea to check your progress at least once a year. Why not use some of the savings you’ve identified and increase your repayments to save interest? If your mortgage has a redraw facility you could use this to create a cash buffer for emergencies. These are the type of strategies that PrimeWealth can help you with.

While you’re at it, go online and compare interest rates. If your rate is no longer competitive consider switching loans and enlist our help to negotiate a better deal.

Negotiate better deals

Your home loan is not the only expense worth haggling over. These days if you want to get the best deal on your electricity, phone, internet or insurance you need to ask. Before you do, ensure you understand what your current plan/policy covers and research what’s on offer elsewhere.

Make a practice of doing this once a year, when your plan or policy is due for renewal. The savings can be substantial and can be put to much better use reducing debt or growing your wealth.

Check your super

Do you know how much you have in super and how it’s invested? When you retire superannuation is likely to be your biggest asset outside the family home, yet almost one in four Australians don’t know which risk profile their super is invested in.* This can cost you thousands of dollars in retirement savings and takes only minutes to correct.

Instead, why not call your PrimeWealth Advisor and ask for your current balance and where it’s invested. As an example, a 25-year-old woman on $80,000 in a conservative option until she’s 70 could improve her retirement balance by $294,000 if she switched to a risk profile more in keeping with her age and circumstances. *

Protect your wealth

Reaching your life and financial goals is not just about growing your wealth but protecting it.

It’s important to review your insurance policies annually—or as your circumstances change—to make sure you and your family have adequate cover. Insurance can be a significant cost for families, but the income it provides when accidents or illness strike is worth every cent.

So why not go beyond the usual search for last-minute tax deductions this June to do a thorough review of your current position. Contact us if you would like us to help you make the most of the year ahead, give us a call.

*source: MLC Wealth Sentiment Survey, 5 April 2018

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How we helped manage a lump sum after the sale of a business

How we helped manage a lump sum after the sale of a business

Background:

Our client is 60+, a semi-retired professional living in Mosman, Sydney who is married and has adult children. Following the sale of a significant business asset our client had substantial investments in Super.  Having initially invested with a managed fund, he was looking for help from an advisor who could assist him in finding a better way to manage his lump sum.

Services:

PrimeAdvisory Assisted with:

  • Ensuring all concessional and non-concessional caps were utilised to maximise the dollar amount in super.
  • Strategic decisions around correct structures, including super, trust and personal names to ensure the best long term tax outcomes
  • Assistance with retirement plans and modelling

What the client says

“I started working with PrimeAdvisory as I was looking for someone to look after my super investment.  I was with a managed fund and I was unhappy that the fees were very high.  A colleague of mine suggested I speak to PrimeAdvisory to take over the management of my Super.

Because I was referred I was less sceptical than if I hadn’t known them.  I would have found it difficult to put my life savings into the hands of a stranger.  I felt more comfortable because he was trusted by someone else I knew and his personality was also a key factor.

When I met their advisor, he came across as a sincere person and when I walked into the PrimeAdvisory office it was obvious that they were very professional. In the office they display their values clearly, and they live those values, they’ve proven to me that they do that. For example, they say they will always get back to people with in the same day, and they do, even if it’s at 6pm at night.

I feel confident that investments are handled well and that they have a good understanding of the market conditions and my individual needs and situation.

I would recommend them to anyone looking for strategic financial advice and wealth management.”

 

 

 

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