valo-wealth

Superannuation Early-Year Planning: small moves now that help by EOFY

Fri, 06 Feb 2026 07:22:07 GMT

Superannuation early‑year planning: small moves now that help by EOFY

Big idea

You don’t need a complicated strategy to make the ‘end-of-financial-year’ (EOFY) easier. A few small steps early in the financial year can help you stay organised, avoid last‑minute admin, and feel more confident about your super.

General information only: This article is educational and doesn’t consider your personal circumstances. For the best results, it’s worth checking in with your financial adviser before making extra contributions or changes — they can help you choose the right approach for your goals.

Why planning early helps (in real life)

A lot of EOFY stress comes down to timing. Providers often see people make contributions until the last minute, which can create a rush because bank cut‑offs and processing times may affect whether contributions are allocated smoothly.

A helpful point from the Australian Taxation Office (ATO): for contribution caps, what often matters is when your super fund receives the contribution (not just when you send it).

The good news: when you plan early, you give yourself breathing room — and EOFY becomes a quick check‑in, not a scramble.

The 5 small moves that make EOFY smoother

1) Do a quick super check‑in now (10 minutes)

Ask yourself just one question: “Do I want to add anything extra to super this year?”

There are many common ways money can be contributed to super (employer contributions, personal contributions, spouse contributions, government co‑contributions, and more).

If you’re unsure which option fits your situation, your adviser can help you choose one that aligns with your goals.

2) If you’re contributing extra, “little and often” can feel easiest

Many people find it simpler to build contributions steadily through the year than to try to do everything near EOFY. It’s also easier to keep track.

3) If your income changes year to year, ask about “catch‑up” contributions

Some people may be able to make extra “catch‑up” contributions using unused amounts from prior years (there are rules and time limits).

You don’t need to learn the fine print — just know this can be worth exploring early, so it’s not rushed later.

4) Couples: consider spouse contributions (a simple option)

If one partner earns less (or has had time out of work), contributing to their super can help build their balance. Spouse contribution is a common strategy clients use.

5) A friendly note about “misallocation” (and how to avoid it)

This is one of those things that sounds scary but usually isn’t.

Misallocation typically doesn’t mean money is lost. It usually means the contribution arrives, but it’s labelled or sorted differently than you intended, so it may take extra time to match it correctly.

Here are the most common reasons:

a) A missing or incorrect payment reference

· A payment reference is the short note/number attached to a bank transfer that helps the receiving provider match the payment to your account.

· Easy win: double‑check the reference before sending.

b) Using the wrong bank details or transfer pathway

· Some providers use different bank details depending on the type of account or contribution. If funds are sent with incorrect details, they may still arrive, but may take longer to be allocated correctly.

· Easy win: use the bank details supplied specifically for your account/contribution.

c) Leaving it too late

· Late June is busy. Planning earlier gives more time to resolve minor mismatches quickly.

· Encouraging takeaway: when the details are correct, allocations can be faster, and funds may be available sooner.

A super‑simple early‑year checklist (for clients)

This month

· Decide whether you want to add extra to super this year.

· If you’re a couple, consider whether spouse contributions may be relevant.

· If you’re thinking about larger contributions later, flag it with your adviser early.

Before EOFY

· If making a bank transfer, double‑check the bank details and payment reference to help ensure it is allocated correctly.

· Give yourself a time buffer so you’re not trying to do everything in the final week.

Acronyms & meanings (quick glossary)

· End of Financial Year (EOFY) — the end of Australia’s financial year (30 June).

· Australian Taxation Office (ATO) — the government body that administers tax and many super rules.

· Total Superannuation Balance (TSB) — your total super balance across funds (used for some eligibility rules).

· Australian Business Number (ABN) — a business identifier used in Australia.

· Tax File Number (TFN) — your tax identifier.

· Superannuation Guarantee (SG) — employer super contributions required by law.

· Self‑Managed Superannuation Fund (SMSF) — a super fund you manage yourself (with trustee responsibilities).

· Multi‑Factor Authentication (MFA) — an extra login security step (for example, a code).

· Two‑Factor Authentication (2FA) — another common name for MFA.

The Psychology of Spending: Why We Buy What We Buy-and How to Stop Overspending

Mon, 15 Dec 2025 06:50:04 GMT

The Psychology of Spending: Why We Buy What We Buy-and How to Stop Overspending

Harmonising Life: Ten Tips for Mindful Balance at Every Life Stage

Tue, 09 Sep 2025 06:17:53 GMT

Harmonising Life: Ten Tips for Mindful Balance at Every Life Stage

Finding balance in life isn’t about fixing what’s broken - it’s about nurturing what’s already working and building habits that help us stay well. You don’t need to struggle to benefit from a more harmonious approach to daily living. In fact, making time for reflection, healthy routines, and meaningful connections is one of the best ways to prevent problems before they arise. The World Health Organisation (WHO) encourages everyone to take small, proactive steps to support their own health and well-being, no matter their age, work status, or personal circumstances.

Whether you’re working, retired, caring for others, or navigating a unique path, these ten principles can help you harmonise your life and support those around you. Sometimes, it’s less about perfect balance and more about knowing which “plate” needs a little extra attention - and when to let others spin quietly in the background.

1. Define What Harmony Looks Like Now

Balance is personal and ever-changing. Take a moment to reflect: What does a good day look like for you at this stage? Is it about energy, connection, purpose, or simply peace of mind? Your answer will guide your choices and help you focus on what matters most, like a plate spinner deciding which plate to tend to next.

2. Choose What Matters Today

Prioritise a few key things... responsibilities, joys, or restorative moments that will make today feel meaningful. This isn’t about doing more, but about doing what counts, whether that’s a walk, a chat with a friend, or time spent on a favourite hobby.

3. Create Daily Rhythms (Not Just Work Hours)

If you’re working, set clear boundaries for your workday. If you’re retired, caregiving, or managing a household, establish gentle routines such as morning movement, afternoon rest, or evening reflection. Consistent rhythms help anchor your day and support your well-being.

4. Unplug with Intention

Technology is a helpful tool, but constant connectivity can drain our energy. Set aside regular times to disconnect during meals, walks, or before bed, so your mind and body can recharge.

5. Move Your Body—at Any Age

Physical activity is a cornerstone of well-being at every stage of life. Whether it’s gardening, stretching, dancing, or a stroll around the block, regular movement supports your heart, mind, and mood.

6. Nourish Mind and Body

Eat a variety of nourishing foods, stay hydrated, and make time for mental rest. Enjoy nature, connect with others, and prioritise sleep. These simple habits are powerful preventive tools that help maintain health and resilience.

7. Make Use of Helpful Tools and Resources

Modern life offers a range of supports, from home health monitoring to digital resources and community programs that can help you manage your health and stay independent. These tools are designed to complement professional advice and empower you to take an active role in your own well-being.

8. Nurture Connection

Strong relationships are protective. Be present with loved ones, reach out to friends, and participate in community activities. Social connection is a vital part of a balanced life and helps buffer life’s stresses.

9. Share the Load—at Home and Beyond

Balance isn’t a solo project. Share responsibilities fairly, accept help when offered, and delegate where possible. This prevents burnout and fosters a sense of teamwork and mutual support.

10. Review and Reset Regularly

Life changes, and so should your approach to balance. Take time each month to reflect: What’s working? What feels heavy? Adjust your routines and priorities as needed to stay aligned with your current needs and goals. Sometimes, you may need to give a little extra spin to one plate, and let another slow down for a while.

Each year, the World Health Organization marks Self-Care Month from 24 June to 24 July, culminating in International Self-Care Day. The campaign highlights that looking after ourselves is not a one-off event, but a continuous, everyday commitment. By making small, positive choices part of our routine, we build resilience, prevent problems, and create a foundation for long-term well-being.

If this article has prompted you to reflect on your own routines, relationships, or well-being, consider reaching out to your advice professional. A supportive conversation can help you turn good intentions into sustainable habits.

Discover 9 Must-Visit Destinations — From Aussie Wilds to Global Wonders

Fri, 08 Aug 2025 11:54:36 GMT

Discover 9 Must-Visit Destinations — From Aussie Wilds to Global Wonders

Hello Traveller,

Ready for your next unforgettable adventure? Whether you’re craving untouched nature, spiritual calm, or thrilling experiences, these 8 destinations—some just a short hop from Australia, others across the globe—offer something truly extraordinary. Each location has its own rhythm, with specific places and activities that make it worth exploring. Let’s dive in.

Life Insurance: Myths That Could Cost You

Mon, 07 Jul 2025 07:05:50 GMT

Life Insurance: Myths That Could Cost You

Whether you're retired, still working, or somewhere in between, understanding the truth about life insurance is crucial—for you, your partner, or your adult children. And let's face it, if something happens to your adult children and they don't have enough insurance, guess who might be required to help out? And if you’re in that younger working stage of life, this is most definitely for you. Too often, cover is overlooked until it’s too late.

Here we clear up 9 common life insurance myths, so you can make informed decisions for yourself and help protect those you love.

1. “Insurance companies don’t pay anyway.”

ü This is a common belief—but the facts say otherwise.

ü 92% of life insurance claims in Australia are paid.

As long as the application is truthful and the condition is covered, you can feel confident that the claim will be honoured.

2. “I’m young and/or healthy—I don’t need it yet.”

Many people think insurance is only for those with kids or mortgages. But what happens if you—or your adult child—gets sick or injured and can’t work Would they turn to you for help?

ü Income protection helps them stay financially independent—without putting stress on family.

ü Waiting until later in life, apart from running the risk of needing it, will likely result in loadings or exclusions being placed on your insurance that could have been avoided when you were younger and healthier.

Bonus: premiums are cheaper when you’re younger and healthier too!

3. “If my health changes, I’ll lose cover.”

Not true. Once cover is in place, it won’t change if your health does. This is why the application process involves detailed questions—so the insurer can properly assess the risk up front, knowing they’ll be on the hook for a large claim if needed.

That’s another good reason to get in early, before any unexpected health issues arise.

4. “Getting covered means tons of medical tests.”

Usually, it’s simple. Most policies only need a GP check-up and a basic blood test.

If there’s a medical history involved, more detail might be needed; however, the process is designed to obtain the right coverage, not to exclude them.

5. “Level premiums never go up.”

Level premiums reduce the impact of age-based increases, but that doesn’t mean premiums never change. Insurers can adjust premiums due to market trends and claims experience. It’s important to review policy terms regularly.

6. “I’ll be stuck paying for cover I don’t need.”

Life changes, and so should insurance.

ü You can increase coverage when you buy a house or have kids (subject to some updated health questions)

ü On the flip side, cover can be scaled back as debts are cleared or the kids move out.

A financial adviser can help adjust the policy to fit your life stage.

7. “My super fund cover is enough.”

Most people have some life insurance coverage in their super fund, but it’s usually not enough.

ü Studies show typical super policies only meet around 38% of the needs of families with children.

ü Default cover in super often has less-friendly terms than retail insurance

For full protection, many people require additional coverage beyond what is included in their super. And no, super itself should certainly not be relied on – that's meant to support you in retirement.

8. “Workers’ comp will protect me.”

Workers’ compensation only applies to workplace injuries—and nothing else. If you—or someone close to you—becomes ill or is injured outside of work, they won’t be covered. And if you’ve ever known someone who has had to go through a Workers' Compensation claim, ask them what it was like.

That’s where life, disability, and income protection insurance come in.

9. “Only the main earner needs insurance.”

If one partner in the family gets sick or injured—even if they earn less—it can deeply affect the whole family. Especially where young kids are involved, the surviving/healthy partner will likely need to cut back or quit their jobs to look after the family – Or Grandma and Grandpa become full-time carers again.

ü It’s smart for both partners to be insured, no matter their income level.

Final Thought: A Gift That Keeps on Giving

Life insurance might not be the most exciting topic—but understanding it, or helping your loved ones grasp its value, can be one of the most meaningful gifts you give. Whether it’s setting yourself up with the right cover or guiding your children as they take on greater responsibility, it’s about more than money—it’s about peace of mind, security, and long-term freedom.

Why not forward this article to them? Or offer to connect them with us?

Start the conversation today—so they’re protected tomorrow.

Adviser of the Year Award

Fri, 30 May 2025 09:44:45 GMT

Adviser of the Year Award

I wanted to take a moment to share some news with you — news that I truly feel belongs to both of us. Back in February, I attended our licensee's National Adviser Conference. I was honoured (and surprised) to receive the Templestone Financial Services Adviser of the Year award for 2024. I really struggle with self-promotion so it's taken me a few months to build up the courage to send this out. However, it doesn't change the fact that to say I’m humbled is an understatement.

The criteria for this recognition are compliance, supporting fellow advisers, business growth, and maintaining a positive outlook. They are things I’ve always tried to uphold, but the reality is, none of it would have been possible without you. Your trust, support, and willingness to come on this journey with me over the past few years have shaped my business in ways I never imagined. I can't express how deeply grateful I am, particularly those of you who, in the early days of this business, believed in me and what I could create, before I had actually done it. Well, I've now done it, and this award is as much yours as it is mine. I consider you my friends and would like you to share in this award with me.

Rather than sending out this month’s Insight, I wanted to take a moment to share this milestone with you. Here are a few thoughts from the CEO of Templestone Financial Services, my licensee.

“I’m really pleased to share that Todd Conklin from Valo Wealth has been named Templestone Financial Services Adviser of the Year. Todd has consistently shown strong compliance, supported his fellow advisers, and contributed to the success of Templestone in a big way. On top of that, Todd ranked in the top five for advice volume across the group this year, which is no small feat. He’s a key part of our community, and it’s always a pleasure working alongside him. To see how he has organically grown and cultivated his business from nothing to what it is today is very inspirational. And knowing Todd, he's only just getting started! Congrats, mate!”

I look forward to continuing to serve you and to growing together in the years ahead.

So you can see the moment and perhaps feel a little more like you were there, below is a link to watch my 'acceptance speech'. It's only 2-3 minutes long, but before you click the link, please keep in mind this was never intended for reproduction and was for an audience of financial advisers. At the time, I didn't even know a colleague was filming it on their phone. It's unscripted, unrehearsed, and if you're wondering why we're wearing skirts, it's because it's a traditional Thai sarong we wore for the award ceremony (which was in Thailand!). Enjoy.

Staying Safe Online

Sat, 19 Apr 2025 05:20:29 GMT

Staying Safe Online: How to Protect Yourself from Cyber Attacks

Recently, several major Australian superannuation funds, including AustralianSuper, Host Plus, Australian Retirement Trust, Rest and Insignia Financial were hit by a cyberattack. The attack used a technique called "credential stuffing," where criminals try old, stolen passwords on other websites — and it works more often than you'd think.

This incident is a powerful reminder that cyber threats aren’t going away — but there are simple and effective steps anyone can take to stay safer online.

1. Use a Password Manager

One of the best ways to protect yourself is by using a password manager . These handy tools create and store strong, unique passwords for every site you use. You only have to remember one master password — the manager does the rest.

Here are a few trusted password managers:

1Password – Easy to use and works across all your devices.
Keeper – Strong security with a clean, user-friendly design.
Bitwarden – A secure, affordable option that's open-source.

Once set up, a password manager can automatically fill in your logins, so you don't have to type anything (or remember anything) ever again. It’s not just about convenience — it's about keeping your information out of the wrong hands.

2. Turn On Two-Factor Authentication

Two-factor authentication (often called 2FA or MFA) adds an extra layer of protection. When you log into an account, it asks for your password and a second code - usually sent to your phone or generated by an app. Even if someone gets your password, they can’t get in without that second step.

Most banks, email services, and super funds offer this option, and it's worth turning on.

3. Watch Out for Scams and Fake Emails

Cybercriminals love to pretend to be banks, government departments, or even friends. They might send emails or texts asking you to “verify your account” or “click here for urgent information.” Always be skeptical of unexpected messages. Don’t click links or download attachments unless you’re absolutely sure they’re legitimate.

If something feels off, trust your instincts. It’s always better to double-check — ideally by contacting the company directly through their official website or phone number.

4. Keep an Eye on Your Accounts

Check your accounts regularly — especially your bank and super — for anything that doesn’t look right. Many scams start small, so catching something early can prevent problems down the line.

Cybersecurity might sound technical, but protecting yourself doesn’t have to be complicated. A few simple habits — like using a password manager, enabling two-factor authentication, and staying alert to scams — can make a world of difference. The tools are out there, and they’re designed to help make online life safer and easier for everyone.

Liberation Day: Impacts and Context

Mon, 07 Apr 2025 04:39:40 GMT

Liberation Day: Impacts and Context

What is Liberation Day?

Liberation Day, announced by Donald Trump, signifies the imposition of universal tariffs on nearly all imports to the United States. The goal is to stimulate domestic production in the United States by making imported goods more expensive, thereby giving local US businesses a competitive advantage. Although it may sound straightforward, the ripple effects of such a policy can be complex and far-reaching.

Market Reactions

It’s fair to say that the announcements are ‘worse’ than expected, and so has already caused falls in Global stock markets, reflecting investor uncertainty about the future. The tariffs are expected to slow global trade, potentially leading to higher prices (inflation) and slower economic growth.

Investment Implications

So, what should you do in this uncertain climate? For fear of sounding too repetitive, I’m doubling down on the last newsletter. The sky is not falling. Never not be afraid! (You’ll have to read the last newsletter for that to make sense.) It’s crucial to avoid the temptation to make hasty portfolio changes in response to short-term market fluctuations. Please don’t hit the panic button – these things happen. They must happen. Instead, maintaining a long-term perspective and sticking to diversified investments can provide stability.

Here are a few key points to consider:

Stick to Your Plan : Your investment strategy was designed with long-term goals in mind. Major changes based on short-term news can derail your progress.
Diversify : Ensure your portfolio includes a mix of asset classes (stocks, bonds, real estate) and is spread across different industries and geographies. This approach reduces risk. Check!
Avoid Market Timing: Predicting market movements is notoriously difficult. Instead of trying to time the market, focus on your overall financial goals and the factors you can control.

The Bigger Picture

The economic landscape is always evolving, and events like Liberation Day are just one piece of the puzzle. While the short-term effects might seem daunting, history has shown that markets tend to recover and grow over time. Remember, it's not about making quick gains but about building a robust financial foundation for the future. By keeping a level head and adhering to a well-thought-out investment strategy, you can navigate these turbulent waters and stay on course towards achieving your financial objectives. That’s what we're here for – at Valo Wealth, we are guides!

Never not be afraid!

Thu, 20 Mar 2025 00:06:04 GMT

Never not be afraid!

Henny Penny, also known as Chicken Little, was one of my favourite stories as a kid. I'm sure you're familiar with the rather anxious hen who thought the world was ending because an acorn landed on her head. The mantra from that story that the sky is falling, has now become a famous idiom, indicating a mistaken belief that disaster is upon us.

A more contemporary phrase with a similar meaning in our family is “Never not be afraid!”. We’ve borrowed that from the 2013 family movie “The Croods” by Dreamworks. Grug the father, voice-acted by Nicolas Cage, does a great job of playing the paranoid father, who, in trying to keep his family safe is convinced that everything is out to get them - It’s a beautiful movie worth watching! In our family, and particularly with one of my daughters who tends to get a bit anxious, Grug's family motto of "Never not be afraid" has become a private code phrase that, despite its negative surface meaning, to us, is a humorous way to defuse uncertainty. In our family, it can be translated as, “It’s going to be OK... this isn’t something to worry about”. Perhaps you need to watch the movie to understand.

I’ve read a couple of headlines lately that Grug would have have been proud of…

“Australian share prices plummet $45bn after Trump recession fears tank US market”...

and,

“Horror signal Donald Trump has ‘gone too far’ as markets crash”...

Go ahead and google them – you can read the articles if you’re looking for something entirely unproductive to do.

I’ve always been distrustful of the news, and that’s only getting worse because it’s hard to even tell which news is real, and those that are real are so heavily politicised that they seem redundant. But one thing is common among them all. They are not sharing news out of the goodness of their hearts. In the old language, they’re trying to sell newspapers. These days, they’re trying to make you anxious, so you click stuff and earn them advertising dollars.

So if we peel back the sensationalism, what has actually happened to the markets? Well, they haven’t plummeted. They’re back at the same level they were in August last year, where they dipped below the current price. But we only have to go back a few months earlier than that to where the current share prices that we have ‘plummeted’ to, were record highs we had never seen before. When you look at it that way, it's not really that exciting or sensational. The graph below probably does a better job, with the dotted line showing the current price of the ASX200.

In short, if you’ve been watching your investments and they’ve fallen a little, don’t worry – it’s meant to happen. By nature, things will go up and down. And, we have a plan – you’ll be OK. That’s not to say we won’t have a big fall at some stage – like COVID, or the Global Financial Crisis, but like them, we probably won’t see it coming. And even then, we still have a plan!

Still, if you’re feeling a little anxious and want to chat, I’m always just a phone call away. But I might just tell you, “Never not be afraid!”.

Fresh Start: Your Guide to Managing Your Finances

Thu, 13 Feb 2025 02:51:06 GMT

A Fresh Start: Your Guide to Managing Personal Finances in the New Year

The new year is the perfect time to hit the reset button on your financial life. Whether you're looking to gain control over your spending, plan for the future, or simply create a more secure foundation, now is the time to build a plan that sets you up for long-term success. Financial planning isn’t just for the wealthy—it’s for everyone. A solid financial strategy offers you the peace of mind to make confident decisions, create opportunities, and weather life's uncertainties.

Here’s a fresh approach to getting your finances in order, no matter your current situation.

1. Understand Your Income

The first step in mastering your finances is knowing exactly how much you earn after taxes and other deductions. This post-tax income is the true picture of your available funds. Once you have a clear understanding of this, you’ll be able to make informed decisions that align with your financial reality.

2. Build an Emergency Fund

Think of an emergency fund as your safety net. Life can throw unexpected challenges your way—whether it’s medical expenses, job loss, or home repairs. Financial advisors often recommend saving at least 20% of your income until you’ve built a fund that can cover three to six months of living expenses. But remember, it’s best to personalize this figure based on your circumstances.

3. Manage Debt Wisely

Managing debt isn’t just about avoiding it; it’s about making your debt work for you. Some types of debt, like mortgages or student loans, are necessary investments in your future. But being strategic with how you manage them—such as making extra payments to reduce high-interest debt—can help you free up resources for savings and investments down the line.

4. Navigate Student Loans

Student loans are a significant hurdle for many, but prioritizing repayment is key. Take advantage of income-driven repayment plans or graduated repayment schedules that fit your financial situation. Tackling student debt head-on ensures it doesn’t linger and hinder your financial progress.

5. Use Credit Responsibly

Credit cards can be powerful tools for building your credit score and earning rewards, but only if used wisely. Always aim to pay off your balances in full each month to avoid interest, and maintain a low credit utilization ratio. By doing so, you’ll stay on top of your finances while reaping the benefits of responsible credit use.

6. Plan for the Long-Term

Retirement may seem far off, but starting early can make all the difference. Contribute to your employer’s retirement plan, especially if they match your contributions, and familiarize yourself with other retirement savings options, such as IRAs or individual 401(k) plans. The earlier you start, the more time your money has to grow through compounding interest.

7. Prioritize Insurance

As your responsibilities grow, so does the need for proper insurance coverage. Health, life, and long-term care insurance become increasingly important as you age. These safeguards protect your assets and give your family financial security should the unexpected occur. Make sure you’re adequately covered for both today and the future.

8. Maximize Tax Benefits

Tax season doesn’t have to be a stressor. Take full advantage of potential deductions and credits to reduce your taxable income. Understanding the difference between tax credits and deductions—and how to claim them—can lead to significant savings. Working with a tax professional can help you optimize your strategy.

9. Self-Care and Delegation

Financial planning is about balance. While it's important to save and make smart decisions, it’s also okay to treat yourself every now and then. Additionally, consider enlisting the help of professionals, such as financial advisors or certified public accountants, to guide you through complex decisions and ensure your plan is on track.

In Conclusion: Financial Freedom Starts with a Fresh Perspective

The key to financial freedom lies in strategic planning, disciplined saving, and making smart decisions along the way. It’s not about depriving yourself but about working smarter with your money. By following these steps, you can pave the way to financial security and create the life you envision for yourself and your family.

If this article has inspired you to reflect on your financial future, now is the time to consult with a professional. Whether you’re just starting out or are looking to refine your strategy, personalized advice can make all the difference.

Note: This information is general in nature and does not take into account individual financial situations or goals. Please consult with a financial professional before making any decisions.

Insurance and Swimming Between the Flags

Tue, 17 Sep 2024 03:47:58 GMT

Valo Wealth exists to help you connect your wealth to what’s most important. We strive to be your guide through an uncertain journey. Perhaps another analogy would be lifeguards… I’ve never been a lifeguard, but I am a keen surfer and am very familiar with the wonder and beauty of the ocean but also the dangers that lurk there for the inexperienced. Lifeguards know where to put the flags to maximise your safety. Swimming between the flags doesn’t guarantee a risk-free experience, but it does manage risk and provide a layer of protection, with watchful eyes ready to help if you get into trouble.

When you go to the beach, swimming between the flags assures you that a trained lifeguard who is both willing and able to help will come to your rescue if you get in trouble. Outside the flags or on an unpatrolled beach, you have no such protection. In a financial sense, swimming between the flags involves many factors, but one important element is insurance. Insurance fulfils the same function. Without it, you have no protection if things go wrong. With it, you have the peace of mind of knowing there is a financial back-up. Whilst we may not put our insurance companies on the same pedestal as our lifeguards, at the end of the day, they will come to our rescue if required. Of course, you don’t go to the beach expecting to drown – you expect to have a lovely time. So, too, with insurance, the expectation is that you won’t have to claim – and what a great outcome. But if you do, you must be adequately protected.

Let me share a personal story that is, unfortunately, unfolding in my family as we speak. My wife and I are generally quite diligent in keeping up all forms of insurance. Many years ago, we took out top-shelf comprehensive car insurance on our vehicle – you know, the kind with the free windscreen repair, hire care included, agreed value, choice of repairer etc. I was satisfied we had the best we could get. That was about eight years ago, and then life got busy. We never really reviewed it, and we felt that everything was OK. Fast forward to today. Our daughter, who was 10 years old when we took out the policy, is now driving and just got her P’s. I dutifully ‘dusted off’ the policy and took a cursory look, noting we had an “inexperienced driver excess”, and was satisfied my house was in order. A week later (a month ago now), my daughter had an accident. It was only minor, and she was fine – she reversed into a parked car in a split-second poor decision. No big deal, but she managed to scrape down one side and rip off the rear bumper bar of the other vehicle, courtesy of the bull bar fitted to our Toyota Prado. So not a cheap repair, impacting at least three or four panels. “No problem”, I thought to myself; I’ll call the insurer and make a claim. Guess what I was told when I called up? “I’m sorry, you are not covered. Your daughter is under age 25, and when you took out the policy 8 years ago, you opted to exclude drivers under age 25”. The result, is we have no cover in this instance, and the “Bank of Dad” gets to pay in full for the repairs to this guy’s car. We haven’t received the bill yet, but I estimate somewhere between $5,000 and $15,000. It hurts, but it’s manageable.

However, you know what hurts most? It was completely avoidable. Had I checked the fine print, my exposure would have been limited to the extra $750 excess! So here I was, thinking I was safely swimming between the flags when I was completely exposed. I count myself lucky. Firstly, the only injury my daughter suffered was to her pride. But secondly, imagine it was a more serious accident. Putting aside personal safety, the cost of paying cash to replace both our vehicle and the others could quite possibly be over $100,000 – maybe even $200,000 if she hit the right (or wrong!) type of car.

I’m somewhat embarrassed by this experience and am certainly guilty of being the ‘plumber with the leaky taps’. But I felt it was important to share, in the hope it has been a timely reminder for you to review your insurance. As a financial adviser, our domain is life insurance – the stuff that protects you, which arguably is the most critical coverage. Compared to cars, people, along with their future earning capacity, are very expensive to replace. Over the coming months, we’ll be diving deeper into the topic of life insurance. For those that are a little older, don’t switch off! Whilst you may be past the age of requiring life insurance, your kids probably are not, and there are compelling arguments for you to take an interest, but more on that in the next article!

What happened last Quarter?

Thu, 11 Jul 2024 06:03:05 GMT

You may have noticed that your investments have not fared as well over the last few months as they have in the preceding months. So what happened?

As always, lots happened. There were continued wars, elections, and the onslaught of Artificial Intelligence almost everywhere we turned. Is anyone sick of “chatbots” yet? On a financial front, global markets grappled with the same issues. Locally, Australia struggled with slow economic growth and high inflation. Some sectors performed well, but resources and property were weak due to low demand and high housing prices.

In summary, the last few months were rather flat, and this has been borne out in your investment returns. However, keep in perspective the huge gains from last year, particularly the last half of last year. If you look at the last 12 months on a rolling basis, returns still look very good.

A better question might not be what happened but what it means. And this may seem disappointing, but the answer is not much. The ups and downs and sideways movements are not only completely expected but necessary. If these things didn’t happen, they wouldn’t be investments.

Perhaps the best question might be, what do I do? At least for my clients, what you shouldn’t do is fret about your portfolio, because it’s not what matters. Remember the discussion about buckets? It’s not just theory. These ups and downs have been fully anticipated in the construction of your portfolios.

What you should do, is stay focused on what’s most important to you. Your lifestyle, your family, your goals and plans. Enjoy life – I’m certain it is meant to be that way.

Some changes to super coming – and they’re good ones!

Mon, 01 Apr 2024 21:43:14 GMT

It's fair to say that the rules around Superannuation seem to continually change. It's a challenge for me to keep up, yet alone someone who doesn't do this stuff for a living. However, it's not all bad. In fact, there have been many changes that have been quite positive, and make superannuation easier to build or access.

One such change is happening in the new financial year. For the first time in three years, people will be able to put more money into their super, thanks to some positive stats from the Australian Bureau of Statistics on wage growth. So, starting July 1, you can contribute a bit more to your super than you can right now. The limit for concessional (before-tax) contributions is rising from $27,500 to $30,000, and for non-concessional (after-tax) contributions, it's rising from $110,000 to $120,000.

I probably get more excited about this stuff than you do, but I think it's great news, especially for those with some spare cash they can sacrifice to lower their tax, and the older folks among us who can build their super just a little more before retirement

As a reminder, Concessional contributions, like the super your employer pays or the money you put in before tax, get taxed at only 15%, which is usually way less than your regular tax rate. And non-concessional contributions don't get taxed at all. These can be made from the money you have built up in the bank account. Once the money is in super, regardless of which contribution type, will only be taxed at 15% on any money that is earned, which is often much lower than if you made that same return outside of super.

If you're still with me, there’s also the “bring forward” rule that lets you put in up to three years’ worth of non-concessional contributions in one go (which means from 1 July, you can contribute $360,000 instead of $330,000). Likewise, for concessional contributions, there are "catch-up" contributions that can be made for people with super balances under $500,000, which allows them to contribute their unused pre-tax caps from the last 5 years.

Note that the Concessional contribution cap includes the compulsory super your employer contributes. As of 1 July, this is also increasing to 11.5%, which is generally good news.

If you're thinking of adding extra money to your super, please check with me first! Several rules might impact how, when, and how much you can contribute to your super, such as age, super balance, history, etc. The rules are still complex! But the take-home is that these changes are good, not bad.

Supporting Your Child's Journey to Their First Home Purchase

Tue, 30 Jan 2024 07:49:18 GMT

In the current economic environment, many parents find themselves in a position where they can offer their children a helping hand with purchasing their first home. At the same time, house prices have increased to ridiculous levels. These two factors combined have resulted in the “Bank of Mum and Dad” becoming extremely popular! Helping out the kids can make a significant difference in their journey towards homeownership. In this article, we'll explore three possible strategies you might consider to support your child in this important milestone.

A couple considerations:

Before jumping in to help out, consider whether you’re inadvertently encouraging a large financial commitment they just aren’t ready for. Will your gift be a blessing or a curse in years to come? Being responsible for a mortgage, learning to budget and understanding commitment (or the perils of over-commitment!) are crucial elements of adulting that come with home ownership. You may unwittingly deprive them of learning these lessons by being to generous.
What about the other kids? If you have more than one child, the family dynamics could make this very complicated. Are you able to offer the same assistance to all kids? Would that assistance look different for different kids? Is it still equitable? Are you going to cause contention down the track – perhaps even after you’re gone.

However, if the Bank of Mum and Dad is still willing to do business, here’s a few options.

Gifting them money

Pulling out money from super or other savings to donate as a cash gift can be a great way to contribute to your child's home deposit. However, it's important to bear in mind a few key points. Banks often require such gifts to be in your child’s account for a certain period, typically three to six months, so planning is essential.

Lenders will want to ensure your child is financially stable enough to manage the mortgage payments. This typically means they need a stable job or a reliable income if they're self-employed.

Remember, when you hand over the money, it’s not coming back. You might need to formally acknowledge that you don't expect repayment.

Another consideration is the impact on Centrelink. Gifts over $10,000 will still be counted as your asset for five years, so if you’re thinking that increasing your Centrelink entitlements may be a handy bonus for helping out the kids, you may have to wait a while to see the benefits.

Consider the implications if your child is purchasing a home with a partner. In the event of a relationship breakdown, the partner might retain a portion of the property your funds helped to secure.

Loaning them money

This option is quite similar, but it's important to establish a formal legal agreement between you and your child. This agreement should outline all the mutually agreed-upon terms of the loan, including:

• Repayment Amount: You have the flexibility to decide whether you want to receive repayments, and if not, this should still be documented in the agreement.

• Interest Rate: You have the option to charge interest if you wish, but it's not mandatory.

• Repayment Schedule: You can specify when the loan should be repaid in full or in installments. This private agreement allows you to set the rules, with the added advantage of being able to recall the money if needed, which can be a safeguard in case your child's marriage ends in divorce.

• Forgiveness on Death: Another available option for parents is to forgive the loan upon their death.

The primary drawback of this approach is the requirement for a formal legal agreement, which may incur some costs. However, not having such an agreement could potentially lead to unfavorable outcomes when trying to assist your children.

Joint Purchase

Some parents are happy purchasing a home with their children as co-owners, either in their own names or through a family trust arrangement. The concept behind this is that the child will gradually acquire full ownership of the property, either over time or through a single lump-sum payment, eventually assuming complete ownership of the property. You might share ownership in different proportions or include clauses regarding the future passage of your share.

This option calls for detailed legal guidance to ensure both your and your child’s interests are safeguarded. It's a good idea to set clear, mutually agreed-upon guidelines before proceeding. Further, Centrelink might consider that property as one of your assets, since your name will be on the title, which could be detrimental to your entitlements.

A few things to be aware of are:

• Your child won’t qualify for the First Home Owners Grant

• When the time comes to transfer your share to the child, there will likely be some Capital Gains tax issues. Who is going to fund that?

“Going guarantor”

Offering your property as equity through a guarantor loan is an alternative to providing cash. This option eliminates the need for your child to accumulate a deposit, as your home's equity secures the loan.

You might choose to limit your liability to a percentage of your child's property value. This can help in ensuring your release from the guarantee once certain conditions are met, like an increase in property value or partial loan repayment.

Keep in mind, if you're retired or still paying off your mortgage, this option might not be feasible. Additionally, your child needs to demonstrate their ability to maintain their mortgage payments.

The bottom line

Assisting your child in buying their first home is an incredibly supportive act, one that could set them on a path to a more stable and secure future. And if you have the means to do so, it might be a wonderful way for you to enjoy the impact in their lives instead of making them wait for the inheritance – at which time they may not need assistance any more, and you won’t be around to see the benefit. Thoughtfully consider which method aligns best with your family's needs and circumstances, and you'll be giving your child an invaluable head start in their adult life. However, no method is without its drawbacks and these need to be considered carefully. Seeking proper advice is crucial, as these decisions can have huge consequences, good and bad.

Investor Returns vs Investment Returns

Thu, 04 Jan 2024 02:20:40 GMT

To kick off the New Year, I thought it would be an opportune time to talk about investor behaviour and how it impacts investment decisions, especially those people who don’t have an adviser (which, of course, is none of you!).

Did you know there is a big difference between Investor returns and Investment returns? And unfortunately, the first one is seldom bigger than the second one. Let me explain.

Over the last ten years, ending 31 ^st August 2023, $100,000 invested in the Australian Share Market would have made $121,651*. That’s a cumulative return of 122%!

Now, as you may know, when markets move, they tend to move quickly. Timing the market is virtually impossible (that’s a whole other subject). Let’s say someone was trying to time the market. They noticed on a given day that shares had jumped significantly. They were swift off the mark and invested the very next day. Let’s say they were equally quick each time the market had a significant jump, and as a result, they only missed ten of the best days in that whole ten-year period.

The result? They would have only made $42,093. Not being invested for those ten days cost them three times that amount! That’s a huge difference.

It gets worse. What if, as is quite possible, they missed the best forty days? They would have actually lost $29,597! In other words, their return would have been $151,248 less than what it would have been if they had just remained in the market.

Scary right? I don’t think so – it’s only scary if you’re one of ‘those’’ people. But you’re not. It’s actually very comforting. Because if you keep doing what you are already doing – what I have been telling you to do, and stay in the market, invested sensibly, you can get great returns.

Regardless of what happens this year in the markets, please be confident. There will be ups and downs, but over time, the ups will defeat the downs, and the good times will outnumber the bad.

*Source: Morningstar. Returns based on the S&P/ASX 300 Index, for a 10-year period ending 31 August 2023.

Craving Certainty

Wed, 08 Nov 2023 02:07:02 GMT

Nestled in the opening paragraph of our annual agreements is the following sentence:

“ As humans, we crave certainty, but we can’t have it. Our value to you lies not in a static plan or projections but in being your co-pilot in your journey, knowing how and when to make course corrections to get you to your destination ”

I want to tell you where that statement came from. I’ve had countless conversations with people, who, despite ticking all the boxes for a secure future, still feel a nagging worry that it might not be enough. If this rings a bell, take heart—you're definitely not the only one.

In my chats with clients over the years, 'anxious' is the word that pops up most. If you're in the same boat, working hard and still feeling on edge, here's a couple of friendly points to ponder:

First up, remember that all the spreadsheets in the world can't promise you a worry-free future. They're handy for planning, sure, but they're more like weather forecasts for your finances—they give you a sense of direction, not a pinpoint location.

Second, having a fat bank account doesn't necessarily mean you'll feel secure. I've seen it firsthand: People with more dough than they could ever bake into pies can still be scared of losing it all tomorrow. There's a big difference between feeling secure and being secure.

I’m not saying that planning doesn’t help (or that bigger bank balances don’t help either for that matter). But, what I am saying is that embracing life's ups and downs is part of the journey, just as my clients come to realise. Sure, a curveball can come at any time, but that doesn't mean we live in fear.

The trick is to make peace with uncertainty. There's no ‘secret sauce’ for certainty, and hunting for it is like waiting for a bus at a train station—it's not coming.

A very wise man* recently said “The joy we feel has little to do with the circumstances of our lives and everything to do with the focus of our lives.”

And here's a little routine I've found handy:

List the things within your power to control — saving for retirement, smart investing, cutting back on expenses, maybe a casual job extra cash.
Give yourself a gold star for all you've tackled.
For the things left, roll up your sleeves and make a plan.
When worry tries to butt in again, revisit your list, take a deep breath, and remind yourself of all you've accomplished.

If you can repeat this process over and over, you’ll have a solid anchor to hold onto when the seas of uncertainty get choppy.

*Russell M. Nelson, Religious Leader