The Gillard Government is spreading the benefits of the mining boom by boosting the superannuation savings of Australians.

What is the increase to the superannuation guarantee rate and who will receive it?

The current superannuation guarantee (SG) rate of 9% will progressively increase to 12% from 1 July 2013 to 1 July 2019.  Approximately 8.4 million employees will receive the increase in SG made as contributions to their superannuation accounts.  Employees who currently receive employer contributions of more than 12% may not receive any increase in superannuation contributions.

What does the abolishing the superannuation guarantee (SG) age limit mean?

Employees currently do not receive the 9% SG contribution after the age of 70. From 1 July 2013, employees who continue to work after age 70 will continue to be entitled to SG contributions. An additional 51,000 Australians aged 70 and over are expected to benefit from this new measure.

Are these new measures now law?

Legislation to enact the three new measures has been passed by the House of Representatives and has been introduced into the Senate in early 2012. These measures are part of the Minerals Resource Rent Tax package.

To find out how much these important changes could increase your superannuation, enter some basic information into the Super Calculator on www.moresuper.gov.au

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but LBFP does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that LBFP has to its clients under the Financial Services Reform Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

Financial Planner Tony Rigby said first time investors need to think carefully about the charges involved in a property when looking at building an investment portfolio.

Mr Rigby said rates, maintenance fees, body corporate fees, agent letting rates and a steady flow of cash are all determining factors when assessing whether a buyer can afford to invest in property.

“Know your budget – it’s critical”, he said. He said while the rental yields and tax incentives may be attractive the first step when making the foray into property is to take a good look at your personal cash flow.

When structuring finance to buy into property with an existing mortgage, Mr Riby suggested having a large portion already paid off.

If an investor’s outgoing exceed their incomings, the property become negatively geared, and while there are tax incentives this can cause financial hardship, Mr Rigby said.

Samford mortgage broker Amanda Benham said the most important factor for potential investors was to do extensive research on the area before purchasing.

“Don’t over-extend yourself and be prepared for the worst case scenario, just in case”.

Source: North West News – Amy Hutchinson and Ben Johnson

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but LBFP does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that LBFP has to its clients under the Financial Services Reform Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

Estate planning simply refers to the arrangements you have in place to ensure your wishes are carried out in the event of death.

Estate planning can be a simplistic or highly complex process. The level of complexity will be determined by your individual situation and requirements.

In the event you divorce and re-marry, your estate planning position can become more complicated than before. Because of these complexities, the likelihood of disastrous consequences is also far greater than before.

If you re-marry and you have children from a previous relationship, a step family is created. Additionally, if you and your new partner decide to have your own children, a blended family is created. Both these scenarios are becoming more common today, and it is not unusual for there to be tense and strained relationships between new family members. Fragile relationships compound the already complex nature of estate planning for step and blended families.

So what are the estate planning issues for step and blended families?

A major problem can occur if you re-marry and do not update your Will. This is because marriage renders your Will invalid (i.e. you must draft a new Will after marriage).

If your Will is invalid and you pass away after re-marrying, you will die intestate. This simply means you have died without a valid Will. Under these circumstances, each state (and territory) have their own intestacy rules that determine who receives your assets.

While the rules do vary between states, in most cases your spouse will inherit most (if not all) of your assets. But what about your children from your previous marriage? The rules of intestacy generally favour your spouse, so it is entirely possible that your children, and your ex-spouse, will not receive any share of your assets.

The consequences of this situation could be tragic, but are avoidable. Simply remember, if you re-marry and you have children from a previous relationship, make sure you draft a new Will.

This is one of many issues for step and blended families in terms of estate planning. To make sure you have adequate arrangements in place you should seek advice from an expert.

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but LBFP does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that LBFP has to its clients under the Financial Services Reform Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

How much?    $200 billion.   And here’s a worry.

If you work in a bank’s money market operation; or if you are a politician; the millions turn into billions and it rolls off the tip of the tongue a bit too easily. but every dollar that is borrowed, some time, has to be repaid. By you, by me and by the rest of the country.

Just after 5 o’clock tonight I did a bit of math for Jason Morrison ( Sydney radio presenter). But it’s so staggering its worth repeating now.

First thought; Gillard, Swan, Wong, before that Rudd, all of the Labor Cabinet, call these temporary borrowings, a temporary deficit.

Remember Those Words :  Temporary Deficit.

The total Government debt will end up around $200 billion.

So here’s a very basic calculation  .. I used a home loan calculator to work it out….. it’s that simple…$200 billion is $2 hundred thousand million.

The current 10 year Government bond rate is 4.67 per cent. I worked the loan out over a period of 20 years. Now here’s where it gets scary …. really scary.

The repayments on $200 billion, come to more than one and a quarter billion dollars – every month – for 20 years. It works out we – as taxpayers – will be repaying $15.4 billion in interest and principal every year .. $733 for every man woman and child – every year.

The total interest bill over the 20 years is – get this – $108 billion.

Remember, this is a Government, that just 4 years ago, had NO debt. NO debt.

In fact it had enough money to create the Future Fund, to pay the future liabilities of public servants’ superannuation, and it had enough to stick $20 billion into the Building Australia Fund ……

A note was sent to me which explains that the six leading members of the Government, from Ms Gillard down, have a collective work experience of 181 years, but only 13 in the private sector.

If you take out of those 13 years the number that were spent as trade union lawyers, 11, only two years were spent in the private sector.

So out of those 181 years:

• no years spent running their own business
• no years spent starting their own business
• no years spent as a director of a family business or a company
• no years as a director of a public company
• no years in a senior position in a public company
• no years in a senior position in a private company
• no years working in corporate finance
• no years in corporate or business restructuring
• no years working in or with a bank
• no years of experience in the capital markets
• no years in a stock-broking firm
• no years in negotiating debt facilities with banks
• no years running a small business
• no years at the World Bank or IMF or OECD
• no years in Treasury or Finance.

But these people have plunged Australia into unprecedented debt.

Well, in a way you can’t blame them.

It’s clear the electorate did not do their homework, because the Government is there by right.

Ah, but they are Labor and people vote for them because Labor is good for the working family – right???

Quoted by: Ross Greenwood of Channel 9, Finance Editor

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but LBFP does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that LBFP has to its clients under the Financial Services Reform Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

Following this logic then, your home should be your biggest asset. Right? I don’t believe so.

Don’t get me wrong, your home is a valuable asset that warrants insurance, but I question whether it is your biggest asset.

Ask yourself this question. What has allowed me to purchase and maintain my home?

MY INCOME.

Without your income you wouldn’t have what most consider to be their biggest asset. And ironically, you wouldn’t be able to pay for the insurance policy to protect it!

Back to the statistics – less that 20% of us have our incomes protected.

Does this not make our logic flawed? Are our priorities out of whack?

We’re happy to protect the asset we need income to buy, but we overlook the bigger risk – loss of income! What if your income stopped yesterday? Would you be able to keep your house?

It seems not even a tax deduction for insuring income has provided enough incentive to take this risk seriously.

This is an accident waiting to happen, because in many cases it’s not until you do lose your income that you realise the importance of it. But by then it’s all too late.

Life Balance Financial Professionals can help you to protect your income. Contact us to find out how.

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but LBFP does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that LBFP has to its clients under the Financial Services Reform Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

It’s no secret there are plenty of insurance providers playing in this space at the moment and consumers are responding in droves to their clever marketing campaigns. I say clever because on the whole, consumers think they can now get insurance that is the same as that offered by insurance advisers and financial planners by simply picking up the phone. This, however, could not be further from the truth.

The reality is, buying life insurance (and income protection insurance for that matter) over the phone is fraught with danger unless you understand and accept the conditions of the policy you are buying.

Sure, there are no medicals and paperwork required, but there is a reason for this – the policy is underwritten at claim time. What this means is your eligibility for the insurance is actually determined at the time you claim, not at the time you start paying the premium. In effect, what the insurance company is doing, is asking you to formally apply for the cover you have already been paying them for.

To illustrate, if claiming under an income protection policy, you will firstly need to complete an application form, personal statement and medical and occupational questionnaires. Then, the insurance company may request to see your medical records and put you through a series of medical tests. If, after all of this, they determine you are an ‘insurable risk’ for the policy you have taken out, your claim will be paid. If not, your claim will be rejected. The bottom line? You have no guarantee of insurance upfront.

Furthermore, the claims process often takes time, a number of weeks or even longer. This is important because if, for instance, you have claimed under an income protection policy, it will have been because you can’t work due to an illness or injury, so you’ll be going through the underwriting process at a difficult time and unless you have other financial resources to fall back on, you’ll be without income as well.

With respect to a life insurance claim, the insurer will firstly obtain all of the deceased’s medical records and where necessary, seek medical opinions from specialists and other medical experts. Again, this can take some time which is an important consideration. For example, if the deceased was the sole income earner, and the policy proceeds were needed to pay out the mortgage on the home and provide an income for family, timing becomes very important indeed.

After all enquiries have been made, the insurer will then determine whether the deceased would have been eligible for the policy and decide whether to pay the benefit to the beneficiaries (usually the surviving spouse and children). Additionally, pre-existing medical conditions are often excluded, so if you pass away as a result of a pre-existing condition your claim will usually be denied.

Moving onto cost, many consumers perceive insurance purchased over the phone to be cheaper than engaging an insurance broker or financial planner. Certainly, because of the shortcomings outlined above, this should be the case, but it isn’t. Because you are not underwritten upfront, the insurer has no idea how much risk they are taking on. This means they also have no idea how much they should charge you.

So what do they do?

They assume some applicants will be low risk (healthy) and others will be high risk (overweight with health issues). Low risk applicants are less likely to claim and are therefore a cheaper risk, and high risk applicants are more likely to claim and are therefore a more expensive risk. The insurers then balance this risk by calculating an average premium for everyone. This effectively means that the low risk people are paying a higher premium than the level of risk they represent, and the high risk people are paying a lower premium than the level of risk they represent.

Given this, high risk people are getting a good deal, right? Possibly, but think about this – which people are more likely to have a claim rejected once they have been underwritten?

Advice is the final issue to consider. The consultants you’ll speak to are not trained, and the company itself not licensed, to provide you with advice around what insurance policies and levels of cover you actually need. Additionally, they can only recommend one product, their own!

So what can we conclude from this?

Buying Life and Income Protection insurance over the phone is quite simply, not worth the risk. Afterall, you take out insurance because you want certainty, right?

These insurances play a crucial part in securing your financial future. Life and Income Protection insurance exist purely to eliminate any number of risks that you and your family could face if the unexpected happened. Because of this, it is vital you arrange these insurances in a way that provides as much certainly as possible.

To do this, you must engage an insurance expert. An expert will assess what insurances you need, the levels of cover required, the most suitable policy and insurance company to deal with and ensure you are underwritten upfront to provide certainty. And you’ll be paying a premium that reflects your level of risk.

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but LBFP does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that LBFP has to its clients under the Financial Services Reform Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

Financial freedom is like a pot of gold at the end of the rainbow. Ask five wealth creation experts how to find it, and you’ll undoubtedly get five different answers.

In good times, there’s talk of property booms or investing in sure things on the sharemarket. In tough times, some say it’s prudent to spread your risk, or to buy into government bonds, while others reckon it’s better to focus your strategy on saving.

History tells us that the world of wealth creation is all about cycles. So what can we learn from history? Is it worth looking back so we can move forward with our personal finances?

Back to the future

References to financial strategies are peppered through historical texts, including the Bible, says Dr Ciorstan Smark, a senior lecturer in accounting and finance at the University of Wollongong.

“Biblical proverbs such as ‘The rich rules over the poor and the borrower is slave to the lender’ (Proverbs 22:7) and ‘It’s stupid to guarantee someone else’s loan’ (Proverbs 17:18) have been quoted by US commentator Dave Ramsey, radio presenter and the author of Total Money Makeover.

“And the late Larry Burkett, advocated getting out of debt and having a good solid savings account in case of difficult times.

“These commentators are very much about frugality and financial freedom and about not wasting resources or the planet.”

“They may be conservative theories, some may say old fashioned. (However) quite a few Old Testament (thus present in religious traditions of Judaism, Christianity and Islam) are looking pretty good right now!”

Consider the downturn

In good times, she says that people see their neighbours who’ve adopted more risky strategies doing better than they are, “but they don’t take into account the bad times, and the downturn in wealth cycles.”

Cut back to history for some belt-tightening lessons. For example, when Shakespeare had Lord Polonius say to his son Laertes, in Hamlet, “neither a borrower nor a lender be…” it was a classic financial cautionary tale of living within your means.

In books such as George S Clason’s The Richest Man in Babylon, which was first published in 1926, it was suggested that the richest ancient Babylonians lived by the concept of paying yourself first. They believed in putting aside 10 percent of your earnings, which you then invested in safe ways to make your money earn compound interest.

“The very conservative view of wealth creation will give less returns in good times but better than average results in difficult times,” admits Dr Smark.

“The thing about the historically conservative and low-debt strategies, and setting aside a certain portion of your earnings for those rainy days, is that they work in difficult times of high unemployment and uncertainty.

“I don’t think we’ve seen the worst of the global economic fallout yet so having 10 percent of your income set aside every year is a good look.

“People who do their financial planning often believing that everyone’s going to stay employed, no-one’s going to get sick and nothing’s going to go wrong. They are playing a dangerous game.”

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but LBFP does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that LBFP has to its clients under the Financial Services Reform Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

Gold has been with us since time began. For thousands of years it has motivated civilisations and their economies influencing the fate of kings, emperors and their empires.

As a society, our fascination with gold can be epitomised in the 100 year old tale of a man who boarded a ship carrying his entire wealth with him in a large bag of gold coins. Only days into the voyage, a terrible storm prevailed and the alarm was sounded to abandon ship.

Strapping the bag around his waist, the man went up onto the deck, jumped overboard into the ocean and promptly sank to the bottom of the sea. The question asked as he was sinking was: “did he have the gold? Or did the gold have him?”

Click on the link to read more here…

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but LBFP does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that LBFP has to its clients under the Financial Services Reform Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

THE Reserve Bank has kept interest rates on hold after two consecutive cuts adopting a wait-and-see approach.

Against the backdrop of signs the global economy is in better shape as European officials roll out more measures to tackle the debt crisis, the RBA today decided at its monthly board meeting to keep the cash rate at 4.25 per cent.

Fresh global optimism outweighed the Reserve Bank’s concerns about the strength of the Australian dollar, weak business confidence and struggling retail and construction sectors.

The move did not meet expectations with 13 of 14 economists had tipping the RBA would cut the cash rate as an insurance policy.

The official rate was trimmed at the central bank’s November and December board meetings on fears the eurozone debt crisis was set to drag down global growth.

ANZ was the only major financial institution to predict the RBA would stay on the sidelines but it expects a rate cut in March.

Source: www.news.com.au

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but LBFP does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that LBFP has to its clients under the Financial Services Reform Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.