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LIFE Quarterly – September 2017

LIFE Quarterly – September 2017

In this month’s edition of Prepare for Life, we look at some of the key changes to Transition to Retirement (TTR), which apply from 1 July 2017. The general concessional (before-tax) contributions cap has been lowered from $35,000 to $25,000 and the fund earnings on assets financing a Transition to Retirement pension will no longer be exempt from earnings tax. The implication of these changes is very much dependent on your individual objectives, needs and financial goals.

The Great Australian Dream is a belief that, home-ownership can lead to a better life and is an expression of success and security. With Australian housing prices placing pressure on individuals due to affordability, it is important to assess your situation and discover what is an appropriate option as ‘bigger is not always better’.

What is your view of the use of facial analytics to determine ones biological ageing and individualised lifespan for the use by insurance underwriters?

Quarterly Newsletter – September 2017

Lonsec Market Commentary – September 2017

Lonsec Market Commentary – September 2017 

The Australian market had a fifth month of negative or flat growth in September, with the ASX 200 Accumulation Index returning -0.02% as commodity sectors pulled back.

At its October meeting the RBA left the cash rate on hold at 1.50%.

The unemployment rate remained steady at 5.6%. The participation rate remains high in historic terms, moving higher in trend terms throughout 2017 and sitting comfortably above 65%.

‘Globally, the MSCI World Index gained 0.68% in AUD terms, supported by US and European shares’.

Australian consumers still struggling to stay positive. ‘The Westpac Melbourne Institute Index of Consumer Sentiment rose 2.5% from 95.5 in August to 97.9, but pessimists still outnumber optimists’. There are concerns around interest rates, deteriorating housing affordability and rising energy prices these are impacting the level of confidence, offsetting the improved outlook for employment.

Lonsec Market Commentary – September 2017

(Lonsec September 2017, Issue Date: 11-10-2017)

We have had a number of enquiries about Loans v Gifts to Children

Loans v Gifts to Children

We have had a number of enquiries about Loans v Gifts to Children

In many families, there is a movement of money from parents to children. How do you want to record the transaction? Should it be a gift or should it be a loan?

Giving your children money. Loans vs Gifts

What is the best way to provide children with financial assistance. Many parents think they are being kind when they gift money to children. However, such is not always the best course of action. If the child divorces or goes bankrupt the money is lost.

But I love my children

There is nothing wrong with helping your children financially. However, it is important to protect the monies in case the following occurs:

  1. they divorce
  2. go bankrupt
  3. suffer from drugs
  4. suffer a mental condition
  5. stop loving you and there are family disputes
  6. you run out of money yourself, in your old age or retirement

Therefore, to protect your loan a law firm can prepare loan agreements that comply with the Family Court. Homemade loan agreements may not work as they carry less weight with the Family Court and Bankruptcy Court. Why take the risk, discuss with a lawyer your situation?

Documenting loans to children

Never ‘give’ your children money. Always ‘lend’ them money ‘payable on demand’. Get it back if something goes wrong.

A loan is not always for property and the grandchildren’s school fees. You can also fund the children’s Superannuation fund, discuss this with a lawyer.

At different times, it is common to benefit one child over another with money. If you benefit one child over another it can be  adjusted automatically at the time of your death. Say you lend one child $500,000 and the other child $300,000 that can be adjusted after your death. This will allow everything to remain fair.

When making loans to children:

  1. talk with all your children together about the loans
  2. never gift children money – only loan them money (this protects both you and them)
  3. don’t rely on home-made loans or IOUs – we can assist you in having a legally prepared Loan Agreement through a law firm.

Loan Accountants & Unpaid Present Entitlements

In a Family Trust the parents will often distribute income to the children to take advantage of lower rates of tax. The children never see the money. Instead, they loan it back to the Family Trust. This is called an Unpaid Present Entitement (UPE). Sadly, at any time the child can ask for the money. Deeds of Debt Forgiveness can be prepared.

It may be wise to speak to a lawyer about the following:

  1. Loans to children – get 100% of the money back if the child divorces, overrides the Family Court.
  2. Loans to high risk spouse – ‘safe harbour’ mum lends money to an ‘at risk’ husband who is a professional or business owner.
  3. Deed of Debt forgiveness – children forgive debt that the Family Trust owes them

(Legal Consolidated Barristers & Solicitors, 2017)

 

LIFE Quarterly – June 2017

LIFE Quarterly – June 2017

In this month’s edition of Prepare for Life, we recap on some of the key topics of this year’s Federal Budget, touching on bills that will see changes to the economy, housing affordability, tax, superannuation, education, aged care, social security and health.

It seems, in this day and age, with new technologies surrounding how we pay for things, we have lost accountability for our spending and sometimes living beyond our means.   We look back at the old days, before the plastic card and smart phone, to a time when we were better able to manage our monies.  If you would like to complete a new budget to help you better manage your funds, we will be happy to send this to you.

1 July is around the corner where we will see new legislation affecting contribution caps to superannuation, further limiting those of you who are building your retirement savings.  If you have any questions about how you can best utilise your time to contribute before June 30, do not hesitate to give me a call for a friendly chat.

As always, if there is anything in this issue that you’d like to discuss in further detail please do not hesitate to contact us

Life Financial Planners 2017 Q2

Federal Budget 2017

Federal Budget 2017 

The Australian Government is creating incentives to improve housing outcomes, including the proposed legislation of:

‘Helping first home buyers to save a deposit through voluntary contributions into superannuation’. This is still being considered

For further information about the budget visit http://budget.gov.au/2017-18/content/glossies/overview/download/Budget2017-18-Overview.pdf

In addition, if you would like to discuss any of the Federal Budget topics feel free to contact Marijana Ravlich on (08) 9322 1882.

IFA Excellence Awards 2016

IFA Excellence Awards 2016

The IFA Excellence Awards are the only industry awards dedicated exclusively to boutique and non-aligned financial advisers.

LIFE Financial Planners is proud to announce that we have been nominated as finalists for the third year in a row in the category of Best Client Servicing – Company. As an independently-owned financial advice company that pride ourselves on providing the best personal advice and customer service we are extremely honoured to be finalists in this category again.

 

IFA 2016  IFA Excellence Awards 2016 IFA 2016

Lonsec Market Commentary – August 2017

Lonsec Market Commentary – August 2017 

 Australia has had GDP growth and continued to have improvement within the labour market. The economy appears well positioned despite wage weakness as the economy grew by 0.8% in June quarter and 1.8% over the year to date. The unemployment rate down from 5.7% to 5.6%.

The Reserve Bank of Australia (RBA) is placing emphasis on employment, indicating that labour market growth should result in improvements in wages over time. The main concern is maintaining a balance between stimulatory monetary policy and the medium-term risk of high and rising household debt.

An appreciating dollar over recent months, is likely to contribute to subdued price pressures and it seems like interest rates are to stay on hold for some time yet to come. The Reserve Bank left the cash rate on hold at 1.50% at its September meeting, where it has remained since the downward move in rates one year ago. In addition, low petrol prices have contributed to lower inflation, with prices at the pump down 15c/litre nationally since early June 2017.

Australia’s consumer sentiment struggling to stay positive. The Westpac Melbourne Institute Index of Consumer Sentiment fell 1.2% in August from 96.6 in July to 95.5. Households are feeling the squeeze, with concerns regarding interest rates and housing affordability. Changes to sentiment in August may be due to recent mortgage rate increases, as the major banks raised rates on interest only mortgages in late June.

In the United States, the S&P 500 gained 0.96% in AUD terms as the global equity markets are challenged with geopolitical tension originating from the Korean peninsula.

The MSCI Word Index gained 0.85% in AUD terms, which was significantly influenced by Asian markets.

‘The S&P/ASX 300 A-REIT Accumulation Index returned 1.51% in August after coming under pressure in July. Overall, there was solid reporting in regards to A-REITs, as there was a strong demand for quality real estate boosting asset values, NTAs and continued strength in Sydney and Melbourne office markets.

Global REITS were slightly lower for month of August. REITs have generally been held back by growth sectors such as offices, malls and hotels. Low volatility remains, although a structural fall in volatility could boost valuations and risk-adjusted returns.

China recorded GDP growth of 6.9% in Q2 2017, which was enough to ward off fears of a slowdown and satisfied officials that efforts to tighten lending have not been detrimental to the economy.

‘Commodities had a bumper month in August, driven higher in the wake of North Korea’s missile tests’.

Lonsec Market Commentary – August 2017

(Ref: Lonsec August 2017, Issue Date: 08-09-2017)

Lonsec Market Commentary – July 2017

Lonsec Market Commentary – July 2017 

The Australian market experienced a flat month in July, down 0.01%, with gains from the Materials and Financials sectors propping up the index.

Overall the Australian economy appears well positioned with an improving employment situation, strong manufacturing growth, and a robust retail sector. However, the improved employment outlook contrasts with the lack of growth in wages, which remains at a record low, which is a universal phenomenon in developed markets.

The Australian Dollar (AUD) rose 3.8% against the United States Dollar (USD) in July, from 0.7689 to 0.7980, reaching its highest level since May 2015.

As its August meeting the Reserve Bank of Australia (RBA) left the cash rate on hold at 1.50%. The RBA noted that inflation continues to run below the 2% target, with higher prices for electricity and tobacco expected to boost CPI in coming months. However, working in the other direction is increased competition from new retail entrants – a reference no doubt to Amazon’s imminent arrival on Australian shores

Global equities – The S&P 500 TG Index gained 1.93% in USD terms and pushed to a new record high, but fell 1.94% in AUD terms as the USD weakened. The Dow Jones Industrial Average pushed above 22,000 points for the first time, with no small thanks to Apple, which jumped 3.27% in USD terms before hitting a new record high in early August.

Global shares, measured by the MSCI World Index, were down -1.59% in AUD terms, with the Japanese and German markets being the contributors. The DAX fell 3.90% as a crisis erupted in Germany’s automotive industry, with the big five (Audi, BMW, Daimler, Porsche and VW) pressured with multi-billion euro fines for cartel behaviour by the European and German competition authorities.

(Ref: Lonsec July 2017, Issue Date: 09-08-2017)

Lonsec Market Commentary – July 2017

LIFE Quarterly – December 2016

LIFE Quarterly – December 2016

In this issue we look at changes to the assets test issued in the 2015 Budget which is coming into effect 1 January, impacting the Aged Pension payments.

We discuss why it is so important to engage in your superannuation affairs coming in to 2017 as we prepare for the new legislation limiting how we contribute to super.

With Christmas around the corner  we witness an increase in cheer and a decrease in funds, click the link below to read more in this quarters LIFE Quarterly;

LIFE Quarterly – December 2016