Avoid Carrying Debt into Retirement

Increased housing costs and low wage growth are seeing more Australians carry higher levels of debt into retirement. Repaying this debt can place a major drag on retirement cash flows and prevent the achievement of retirement goals. Most of us would ideally like to, at the very least, maintain our current standard of living in retirement, but having debts to service in retirement means that there’s less money to spend on living essentials. And lets face it, the last thing you want to be worrying about in retirement is debt.

To avoid debt in retirement, these are some ways to go about it:

The ‘pay off one debt at a time’ approach

  • Tackle high interest debt first- Make a list of things you owe money on. Then, rank it from the highest to lowest interest. Then focus on paying off the loan with the highest interest. If you’re paying interest on credit card balances or personal loans and have the ability to redraw on a mortgage, pay them off using your mortgage account.

Look into Downsizing

  • Downsize your home. This may allow you to pay off debts and still have enough to purchase a smaller home. If this strategy frees up more money than you need to repay your debt, investigate the superannuation incentives available to ‘down-sizers’. Also, be aware any surplus cash you pocket may reduce age pension payments.

What if I already retired?

  • Already retired? Consider looking at using your superannuation to pay off outstanding debt.

As always, it is important to take your personal situation into account. Endorphin Wealth is able to create personalised strategies taking into your requirements and creating a happy, worry-free retirement plan. For example, if your mortgage interest rate is low, you do have significant investments earning a good return. This also means you have a long life expectancy and thus carrying some debt into retirement may be worth considering.

To manage your debt in retirement, Endorphin Wealth have many experienced financial advisors familiar with the process of managing debt in retirement.

For an obligation-free conversation about your financial future, please contact us on 03 9190 8964 or at advice@endorphinwealth.com.au.

The team at Endorphin Wealth are passionate about helping people achieve their life goals with great financial planning. We are not licensed or owned by big banks and financial institutions. So the advice and wealth management we provide is always in our client’s best interests. We have the advantage of being able to access a range of products from different providers. This means that our advice can be tailored to our client’s goals. We have offices located in Sydney and Melbourne, where you can find a financial advisor that is suitable for you. 

7 Common Mistakes in Wills and Estate Planning – Sarina Cowle

Sarina Lea Cowle is an accredited practitioner specialising in commercial law, wills and estates and workplace relations at Sarina L Cowle & Associates based in Melbourne. Previously, Sarina was a member of the business network international and was also a specialist at Premier Wills. Now owning her own business and coupled with over 30 years of experience, she looks into the 7 most common mistakes in wills and estate planning.

If you would like to contact Sarina Cowle, her details are:

Email: scowle@slclaw.com.au

Mobile Number: 0407 697 802

Website: SLC Law

 

 

7 Common Mistakes in Will and Estate Planning- Sarina Cowle

Having a goal, via a will, is important for the orderly passing of assets to the next generation. This includes charities and could protect the relevant family.  It is important to state formally and legally, a person’s final wishes.

Some people believe that going against wills are not worth making.  However, if someone does not record their own wishes then there is no evidence of what the will-maker thought was reasonable or wanted.

As such, the following points may help avoid some of the common errors.

  1. Consider Updating Regularly

A person regularly should consider updating their will. Particularly when major life events occur (eg. marriage, births, death of family members, divorce) and where financial affairs become more complicated (for example, the addition of trusts, companies, businesses and super funds).

Failure to consider the impact of any big changes could result in unintended gifts and inheritances. This could open up the estate to challenges and extra costs, possibly even thousands of dollars in legal costs!

A person may not need changes to a will that is well-drawn and can keep in mind some of these changes which is important to consider.

  1. Remember to Consider TAX!

Inheritances are generally not taxable in Australia.  However, there are “taxes” on the issuing of superannuation entitlements to non-dependants (eg. adult children). This includes important capital gains tax issues to think about.

Well-thought-out estate plans can decrease tax and increase the payouts to beneficiaries.

In the handling of estates, there are timelines to consider that greatly affect potential capital gains tax issues.  An experienced lawyer and accountant will be able to help.

  1. Remember to Appoint an Executor You Can Trust

An executor will be the party who handles your estate, therefore as a will-maker, you should choose wisely.

There are legal protections for beneficiaries against unskillful executors, however, a party who has the skills and one whom a will-maker can trust is always the best choice.

  1. Will Kits Are OK – If You Sign and Complete Them Correctly

Will kits that you pay for are generally well written. However, in fact, a lot remains in a drawer unsigned or incomplete.

Requirements for wills signatures are very fixed and are often wrong.  Following the law, there are ways to use a will that is not correctly signed, but again, a lot of extra costs is normally expected.  Some poorly signed wills may require a Court application to process.

  1. Include All of the Assets

Many people fail to issue all of their estate, whatever that might be at the correct time.  It is important to name specific gifts of property, for example, a car or house or painting AND to issue any remainder of the estate.  Normally the “residue” is the remainder of the estate. If these named gifts of major assets are sold during the will-makers lifetime, it would be problematic as it could leave a planned beneficiary with nothing!

  1. Consider Beneficiaries Needs With Care

Some beneficiaries can profit from special trust requirements or Special Disability Trusts under Services Australia Rules.  Others may have a legal disability and legal exposure like bankruptcy or because they are in risky occupations, for example, professionals and people who run their own businesses.

Some will-makers want to gift to beneficiaries who have a hard time with money or relationships or may be bankrupt.  A well-drafted will can protect family assets from wastage and give protection to the family inheritance.

  1. Superannuation and Assets Outside of the Will

Some will-makers forget that their companies and trusts may not form part of their grounds for issuing.  Superannuation is a great example. It is controlled by completely different rules and mainly the trust deed of the linked super funds.  Assets in a trust are passed down in the trust deed, and the amount is most likely besides the point.

It is important to guide the correct issuing of superannuation so there is no doubling up. This includes unfair and surprising treatment of beneficiaries or situations of excess tax.

Sarina Lea Cowle

The team at Endorphin Wealth are passionate about helping people achieve their life goals with great financial planning. We are not licensed or owned by big banks and financial institutions. The advice and wealth management we provide is always in our client’s best interests. We have the advantage of being able to access a range of products from different providers. This would be tailored to our client’s goals. We have offices located in Sydney and Melbourne, where you can find a financial advisor that is suitable for you.

For an obligation-free conversation about your financial future, please contact us on 03 9190 8964 or at advice@endorphinwealth.com.au

Make Christmas a Time of Joy for You!

It seems to arrive earlier and earlier every year. Just when you thought Christmas was only weeks ago, suddenly it’s only weeks away! While children count down the days, Christmas for many adults can be a difficult time financially. At Endorphin Wealth, will be able to help you plan out your Christmas budget and finances, with some savings to spare!

It can be a challenge to organise and prepare meals, buy gifts or to arrange a Christmas party. This can have the opposite effect to what most of us would like to achieve at this time of year. And let’s not forget that feeling when credit card bills arrive in January!

The good thing is that you get another chance each year to do things differently so you can have a different and much better Christmas this time around. Here are some ideas:

1. Create a Christmas Budget

Getting your spending in order isn’t all about sacrifice. A budget is just a plan. And working with a plan this Christmas can help ease any festive financial fears. You can carve out budget for things like gifts and holiday adventures plus still keep space for the usual joys, like weekly yoga or a meal out every Friday.

And you don’t need to do it alone. Endorphin Wealth has a team of experienced financial planners that can guide you every step of the way. We use personalised cash flow calculators and budget strategies to ensure you have a worry-free Christmas.

2. Small Savings = Big Gains in your Future

The countdown to Christmas is real. Why not pass the time by finding something small to save each day – look at it as a personal advent calendar! Maybe it’s making dinner at home, or adding spare change into an investment account.

We all have different small costs we could cut to have a little extra to spend – why not seek a financial planner to see where and you save and see what you could be using to fuel your festive spending power.

3. Start Shopping for Gifts Early.

Any benefits of “retail therapy” are soon lost as we push through overcrowded shopping centres looking for the perfect gifts for our loved ones. If you have left your Christmas shopping too late, make a list of the gifts you need in advance so you don’t waste precious time “browsing” or exceeding your budget. Or maybe do most of your Christmas shopping from the comfort of home – go online!

When you shop-smart, you could consider if there’s a local alternative to the most expensive brand name on your list? Compare prices, delivery costs, features and warranties and weigh up which product is going to give you the most bang for your buck. Buying earlier (like now!) can make a difference too. The closer it gets to Christmas Eve, the likelier it is that there will be a rush of demand that limits your choices and increases delivery costs.

4. Give Presents that Don’t cost an Arm and Leg.

When you think of the most precious things you’ve been given by your loved ones, there’s every chance it’s the experiences or the intention that counted much more than the gift itself. A present is really a way of saying “hey, I care about you, and this is a reminder”. So get creative.

If you can cook, paint or make things, why not craft a custom Christmas hamper or upcycle some vintage furniture? You could always gift someone a loyalty card that entails them to your driving skills, or music lessons. This way you can gift the perfect present without blowing your budget.

5. Savings Skills are the Gift that keeps on Giving

Sure, this isn’t a Christmas-only tip, but here at Endorphin Wealth, we want to help you have a healthy, happy attitude to saving all year round. Setting yourself up for a joyful New Year with some savings can help you focus on living – not losing sleep over your financial situation.

By setting aside a daily amount and an account for long-term saving, you’re investing in your own peace of mind. Micro-savings now, lead to mega savings later. Not sure where to start? At Endorphin Wealth , we have a team of expert financial planners that can help you create a cash flow strategy and budget for a happy, worry-free Christmas. Till then, Merry Christmas!

 

For an obligation-free conversation about your financial future, please contact us on 03 9190 8964 or at advice@endorphinwealth.com.au.

The team at Endorphin Wealth are passionate about helping people achieve their life goals with great financial planning. We are not licensed or owned by big banks and financial institutions. So the advice and wealth management we provide is always in our client’s best interests.

We have the advantage of being able to access a range of products from different providers. This means that our advice can be tailored to our client’s goals. We have offices located in Sydney and Melbourne, where you can find a financial advisor that is suitable for you. 

Guest Blog – How you can overcome your limiting beliefs regarding money and investing – Dr Ian Kaminskyj

Dr Ian Kaminskyj is a practitioner and trainer of Neuro-Linguistic Programming (NLP), which advocates the pursuit of excellence in all endeavours. It is the study of how to integrally & linguistically affect a person’s neurology in order to achieve a desired outcome. With a PhD in philosophy, Dr Kaminskyj also practices hypnosis and hypnotherapy to access the power of the unconscious mind. As director of AMFSC P/L and with 15 years of experience, Dr Kaminskyj has looked into the common limiting beliefs and internal drivers around money and investing.Profile photo of Ian Kaminskyj

If you would like to contact Dr Kaminskyj, his business links/contacts are:

LinkedIn: Ian Kaminskyj | LinkedIn

Website: Melbourne NLP Hypnosis Centre – experts in personal development & transformation — Melbourne NLP Hypnosis centre

Mail: ian@melbournenlphypnosiscentre.com.au

In case you missed Dr Kaminskyj’s first blog on establishing limiting beliefs on money and investing, and where they come from, the first blog post can be found her:

Limiting Beliefs on Money – Dr Ian Kaminskyj (endorphinwealth.com.au)

How you can overcome your limiting beliefs regarding money and investing – Dr Ian Kaminskyj

In our last post, we discussed many of the beliefs people have re money & investing, both positive & negative. We also discussed how these beliefs are formed and how often, they become outdated & no longer serve us.

In this post, we’ll describe one approach that you take to (a) become consciously more aware of the limiting beliefs you may have currently around money & investing, and (b) a simple approach that can help you start to change them into a version that will be more empowering and powerful moving forward.

So how do you determine your beliefs about money and investing? Quite simply, by answering some questions. Finish off the following statements, taking the very first thing that comes to mind.

People with money are ….

Money makes people ….

Investing is …..

My parents always thought that money would …..

I’m afraid that if had money, I would ….

If I were rich, I would …..

When I invest, I feel ……

I think money ……….

People who invest are ….

Some people’s responses to these questions might be:

Investing is RISKY!

Money makes people GREEDY!

The answers to these questions will start to alert you about your beliefs about money and investing, whether they be positive or negative.

Once you’ve started to get a better understanding of these, the big question is do these serve you moving forward?

Your current beliefs have got you to where you are today but will often NOT get you to where you may want to go financially moving forward. So if there are some limiting beliefs that you no longer want to maintain moving forward, how do you go about changing them?

There are a multitude of ways to do this using various different techniques, ranging from time line therapy, NLP, hypnosis, EFT to name just a few. As these beliefs are unconscious, the fastest way is to use tools that work directly with the unconscious mind, like NLP and Hypnosis.

In this Blog post, however, I’ll provide you with a simple strategy to become more consciously aware of your limiting beliefs around money & investing and then how to start to change these on a conscious level. With repetition, you can change your unconscious beliefs to ones that are more useful & empowering. This is generally slower than using NLP or Hypnosis, but still provides powerful results.

So here is the process that you can use. To illustrate how this work, I will use the limiting belief that Money causes grief & headaches

Step 1: Identify your limiting belief, which we have already done.

Step 2: What will be the consequences if you continue with this limiting belief for the next 5, 10, 15, 20+ years? How will they affect your family? Your retirement?  etc etc

For our example limiting belief, our response to these questions might be:

Given money gives me so much grief & headaches, I will naturally try and avoid it as much a possible. Consequently, I will generally never be wealthy & financially independent. I will thereby always be reliant on working and/or a pension in my retirement, assuming it still exists when I retire.

As a result, my family will just survive financially, never getting ahead, nor being able to enjoy the comforts that financial independence brings. My family will have limited choices as to which suburb we live it, which schools the kids can attend, what holidays we take as well as what house we live in.

Retirement will also be a challenge, as the pension will be low. Again choices will be severely limited when it comes to holidays, what retirement village we can stay in, etc.

To really drive home the consequences of this limiting belief, close your eyes and visualise and strongly feel how your future would be – feel all the pain & suffering it would provide, not only for yourself, but also your family!

Step 3: Ask – Is this something that you really want? For most people, the answer would surely be NO!

Step 4: What would be an empowering belief that you would be happy to take on to replace this outdated, limiting belief?

Money gives me the freedom & choices to live my life on my terms!

Step 5: By taking on this empowering belief, how will your life be different for the next 5, 10, 15, 20+ years? For our example limiting belief, our response to these questions might be:

By being able to live life on our terms, we will live the life of our dreams! We’ll be able to do what we want, when we want for how long we want!

We can live wherever we want in whatever size house we want. Our kids can go to the school of our choice and we can have as many holidays as we want.

Finally, we will have a comfortable retirement, enjoying ourselves with our friends and family. We will have choices available to us re where we stay, with whom we holiday and for how long.

I can’t wait to make this life a reality!

Step 6: Is this new future something that you want? If yes, what are you prepared to do about it?

For our example limiting belief, our answer would be YES and given the massive benefits, we’d be generally prepared to do whatever it took to achieve it!

Step 7: Make a commitment, right here & now, do to whatever it takes to achieve the future that you desire.

To reinforce this very strongly, do the following:

  1. Create a daily affirmation of your new empowering belief and repeat it daily 5 times in the morning & evening with passion, emotion & power! If you repeat this for 3-4 weeks, this is generally enough time to reprogram your unconscious mind with your new belief.
  2. Before going to bed, visualise your new future & again experience strongly all the wonderful emotions & feelings that will ensue, not only for you but your family.
  3. Create a plan of how you will start to make this new future a reality. Which experts will you engage?
  4. What new knowledge will you seek? What daily rituals will you create?
  5. Take massive action by taking the first step of your plan TODAY!!
  6. Celebrate, acknowledge and be grateful on a daily basis for whatever progress you make towards achieving your new future. Sure, there will be challenges and problems along the way – that’s guaranteed & part of the process. Learn from these, get the right support & advice and success will be yours!

I hope these suggestions have been helpful. I’d love to hear any questions you may have, any stories you’d like to share as well as your progress towards achieving your new future. Thanks again to Endorphin Wealth for this opportunity to share this information and these techniques to help their clients.

Till next time.

Dr Ian Kaminskyj

 

The team at Endorphin Wealth are passionate about helping people achieve their life goals with great financial planning. We are not licensed or owned by big banks and financial institutions. The advice and wealth management we provide is always in our client’s best interests. We have the advantage of being able to access a range of products from different providers that can be tailored to our client’s goals. We have offices located in Sydney and Melbourne, where you can find a financial advisor that is suitable for you.

For an obligation-free conversation about your financial future, please contact us on 03 9190 8964 or at advice@endorphinwealth.com.au

How do I recontribute to my Super?

Have you always wondered how you could pay less tax in your super? With help from Endorphin Wealth, you can now recontribute super to minimise the payable tax on either a super income stream or when your inheritors receive your super benefits.

By withdrawing and then recontributing your super, it will be classified as a non-concessional contribution. This means the tax-free proportion of your super will increase. With this strategy, you may save money in the long run.

This means more spending power and a more comfortable future.

How does recontribution work?

The recontribution strategy will first need you to be able to withdraw a lump sum from your superannuation. This means you must have either met a full condition of release, such as retirement or reaching 65. Another way is that you have unrestricted non-preserved money already in your account.

To continue making contributions, you need to be either under 67, or be under 75 and work for at least 40 hours over more than 30 days in a financial year. This is called the work test. It provides an exemption for one-year relief for recent retirees. It is available in the financial year following the year you last met the work test, where your total superannuation balance is less than $300,000 as of the prior 30 June and provided you have not previously used the exemption.

Step 1: Withdrawing your funds from super

After meeting all the requirements, you are able to withdraw money from your super account. Depending on the amount that is in your taxed and tax-free components, the withdrawal will proportionally draw from both accounts. This means that if your tax-free component makes up 20% of your account balance prior to withdrawal, then 20% of any withdrawal is the tax-free component and 80% is from the taxable component.

If you are above 60, you do not need to pay tax on either component if you’re a member of a taxed fund. You’re only liable for tax on a withdrawal if you are in an untaxed superannuation scheme.

If you are under 60, you’re entitled to the ‘low-rate cap’. This is a lifetime amount that you may withdraw from the taxable component of your superannuation, without paying tax.

Step 2: Recontributing the funds back into super

After making the withdrawal we then contribute the funds back as a non-concessional concession. If you are under age 67 on the 1st of July and your total superannuation balance is less than $1.4 million, you may be able to bring forward up to two years of non-concessional contributions. This is called the bring-forward rule and will let you pay a larger amount sooner.

However, this is a complex financial action. Hence, important to seek independent financial advice as your situation may differ.

How can this benefit me?

The strategy is effective also under the following circumstances:

Income tax perspective: A recontribution is still beneficial for those aged between preservation age (from age 58) and age 60 and who are expecting to receive a superannuation income stream as they do not need to pay tax on taxable components.

Estate planning perspective: This strategy can also be used where there is some likelihood that your superannuation benefits will be received by those not considered to be dependants under taxation law, such as adult children. This means it can decrease the potential tax payable from inheritors.

However as mentioned, it is a complex strategy and it is important to consider seeking professional advice. The team at Endorphin Wealth has both the experience and knowledge to implement these strategies and revamp your retirement plans.

For an obligation-free conversation about your financial future, please contact us on 03 9190 8964 or at advice@endorphinwealth.com.au.

The team at Endorphin Wealth are passionate about helping people achieve their life goals with great financial planning. We are not licensed or owned by big banks and financial institutions. So the advice and wealth management we provide is always in our client’s best interests. We have the advantage of being able to access a range of products from different providers. This means that our advice can be tailored to our client’s goals. We have offices located in Sydney and Melbourne, where you can find a financial advisor that is suitable for you. 

Guest Blog – What are your limiting beliefs around money and investing? Dr Ian Kaminskyj

Dr Ian Kaminskyj is a practitioner and trainer of Neuro-Linguistic Programming (NLP), which advocates the pursuit of excellence in all endeavours. It is the study of how to integrally & linguistically affect a person’s neurology in order to achieve a desired outcome. With a PhD in philosophy, Dr Kaminskyj also practices hypnosis and hypnotherapy to access the power of the unconscious mind. As director of AMFSC P/L and with 15 years of experience, Dr Kaminskyj has looked into the common limiting beliefs and internal drivers around money and investing.Profile photo of Ian Kaminskyj

If you would like to contact Dr Kaminskyj, his business links/contacts are:

LinkedIn: Ian Kaminskyj | LinkedIn

Website: Melbourne NLP Hypnosis Centre – experts in personal development & transformation — Melbourne NLP Hypnosis centre

Mail: ian@melbournenlphypnosiscentre.com.au

What are your limiting beliefs around money and investing? – Dr Ian Kaminskyj

So what are some of your beliefs about money & investing? Can you relate to any of the following?

  • Money doesn’t grow on trees!
  • Money allows me to live life on my terms!
  • I attract money with ease!
  • Money causes grief & headaches!
  • People with money are successful!
  • Money is the root of all evil!
  • Money is simply energy!
  • The rich get richer & the poor get poorer!
  • You have to work hard for your money!
  • Abundance is all around me!
  • People who are rich must be dishonest/shifty/dodgy/untrustworthy!
  • Having lots of money gives me options & freedom!
  • Investing is inherently risky, where you can lose everything!

It’s amazing how the subject of money/investing & wealth can raise such different emotions & beliefs in people. Some are positive & empowering while others can be very negative & disempowering. These emotions and beliefs that we have will also then heavily influence how we invest and our success in doing so.

The personal development expert Tony Robbins says that our beliefs are a feeling of certainty about what something means. Beliefs thereby control our lives in many ways. Limiting beliefs are beliefs we have in any area of our live that limit us in some way and produce unwanted or negative consequences for us.

You may be thinking then, where do these limiting beliefs come from and why do we take them on with such certainty?

This is fascinating question with at least 2 answers:

  1. People we looked up to when we were growing up, especially between the ages 0 to 7 years, but also into our teenage years, and
  2. Our past experiences.

In this article, I’d like to focus on the former, as it is something that many people are totally unaware of and can thereby, produce massive results when changed.

Our parents as influencers on our beliefs

You see, when we are children, especially in the age range 0 to 7, we are like sponges, learning from everyone around us. If we are with someone that we look up to, respect and admire, then we take on whatever they say as being totally true & correct – without question.  So if our parents have very limiting beliefs about money & investing, then we automatically these on board ourselves. The opposite is also true!

With enough repetition, these form deeply held beliefs that we take on that can subsequently rule the rest of our lives, as we believe them with such certainty!

Have you ever witnessed adults talking about their views on money & investing, only to see their kids take on the same beliefs?

I was talking with a colleague of mine recently who was describing how his Dad had very negative beliefs about money. He was always broke and complaining how much everything cost. When his Dad subsequently remarried and had children with his new partner, the children took on the same beliefs as his Dad when they grew up – always short of money & complaining about their finances!

So when you consider your beliefs around money and investing, can you identify where they came from? Can you see any beliefs are aligned with those of your parents?

Can you now also start to understand how they may be influencing you positively or negatively regarding your finances and investing?

Is it time for a change? If we use the analogy of running a software program in your mind re finances and investing, is it time for a software upgrade from a version that you may have been running since you were a child?

Next post

In our next post, we’ll describe one approach that you take to (a) become consciously even more aware of these limiting beliefs you may have currently around money & investing, and (b) a simple approach that can help you start to change them into a version that will be more empowering and powerful moving forward.

Till next time.

Dr Ian Kaminskyj

 

The team at Endorphin Wealth are passionate about helping people achieve their life goals with great financial planning. We are not licensed or owned by big banks and financial institutions. The advice and wealth management we provide is always in our client’s best interests. We have the advantage of being able to access a range of products from different providers that can be tailored to our client’s goals. We have offices located in Sydney and Melbourne, where you can find a financial advisor that is suitable for you.

For an obligation-free conversation about your financial future, please contact us on 03 9190 8964 or at advice@endorphinwealth.com.au

Sustainable Investments – The Future of Investing

Sustainable investing has gained a lot of popularity in recent years. People want to see their values and morals reflected in their investment portfolios.  

Typically, these values can be expressed under the headings of Environmental, Social and Governance (ESG). Also, there is growing evidence that ESG investing outperforms the market in the long term (RIAA Report).

The most recent Responsible Investment Association Australasia report states that $1.281b of assets are now managed under an ESG framework.  

What is ESG? 

The philosophy behind sustainable investing is to ensure that short term profits do not override long term considerations. This includes non-financial factors, such as environmental impact, stakeholder assessment and future generations.

It has been an increasing trend over the past decade by fund managers to create ESG assets. Also, demand for these assets has been increasing, with many of our clients requesting portfolios that take these factors into consideration.

For instance, sustainable investment would see tobacco, slave labour and businesses that pollute the environment prohibited from portfolios. This expectation from investors has led to a 42% increase in ESG investments from 2018 to 2020. This is expected to continue.  

COVID-19 impacts and looking forward 

There is increasing evidence that ESG assets are performing well over the long term. During 2020 and into 2021, sustainable investing faced some challenges due to COVID-19 though.

Despite that, many large ESG funds have outperformed the market and received record inflows during the pandemic. 96% of US investors expect their firm to prioritise ESG decision making in their portfolios. With investors more buoyant about economic recovery with COVID-19 over, ESG is definitely becoming part of the future.  

Having sustainably aligned morals and values should not prevent our clients from achieving quality returns. The performance of these ESG funds show that this is not a problem. The contention that ESG assets underperform the market should be considered a myth, as it is not supported by quantifiable market returns (see Bloomberg’s latest report here).

If you would like to consider if your asset portfolio can reflect your morals and values, please contact us on 03 9190 8964 or at advice@endorphinwealth.com.au 

The team at Endorphin Wealth are passionate about helping people achieve their life goals with great financial planning. We are not licensed or owned by big banks and financial institutions. So the advice and wealth management we provide is always in our client’s best interests. We have the advantage of being able to access a range of products from different providers that can be tailored to our client’s goals. We have offices located in Sydney and Melbourne, where you can find a financial advisor that is suitable for you. 

Property Rentvesting – By Phillip Richards

If not even COVID19 could slow down the juggernaut that is the Melbourne property market, then what can?

I speak to a lot of people who are looking for advice on how to break into the property market.

In fact, as a goals-based financial advisor, I spend a lot of time talking to people about property.

And whilst there is a wealth of investment opportunities outside of property that are worthy of consideration, there’s no denying that in Australia, the lust for bricks and mortar is very much a part of the national psyche.

We all want a place we can call our own.

Whether I’m helping someone attain their first or their 10th property, there is, in general, widespread disbelief at how strongly the Melbourne property market is performing after Victoria’s lockdown-riddled 2020.

Any hope first-home owners harboured of being able to access property on the cheap with all that money they saved by not travelling overseas or eating out with friends every second night have been dashed.

In the March quarter, house prices in metro Melbourne reached the $1 million mark for the first time, rising 8.8 percent from the previous quarter to $1,004,500.

That’s not to say that breaking into the property market is impossible for first-home buyers.

There are plenty of opportunities in the outer suburbs and regional areas.

The problem for many of these first-home buyers – who have perhaps grown up in Melbourne’s leafy inner-suburbs or who have been renting and living in some of Melbourne’s most in-demand pockets – is that they don’t want to live in these outer suburbs or regional areas.

And I should know because that just about sums me up.

I love living in the city.

It suits my lifestyle, my social network, and my work.

I need to be near the vibrancy of the city and so that is what I do.

I live in the city, where I rent a brilliant apartment that works within my budget and has all the amenities that I need, and I invest in property in the areas I can afford to buy property.

Would I live in Bendigo? As lovely a part of Victoria as Bendigo is, it’s not where I want to live personally.

But would I invest in a property in Bendigo, where the median house price rose by 9.9 per cent in the 12 months to December 2020?

You bet!

This is called ‘rentvesting’.

And I think it’s time we had a long, hard conversation about why more Australians should seriously consider doing it as well.

As Australians, we place an inordinate amount of pressure on ourselves to own the patch of dirt (or slice of sky if apartments are your thing) we live on.

It’s ingrained into us, as if it is the only measure of financial success.

But as part of a well-planned and executed financial strategy, reinvesting can be a fantastic way to enjoy all the benefits of property ownership, whilst living where you want to live.

By taking advantage of cheaper property prices in the outer suburbs or regional areas, you can attain an asset that is instantly cashflow positive, provides some great tax benefits and capital growth over the long term, whilst renting in the suburbs that you want to live in.

“Rent” is often seen as a bit of a dirty word.

People hate the idea of “paying someone else’s mortgage”.

However, there are also many positives that come with renting over the long-term, whilst investing in more affordable areas.

From my own experience, by committing to my lease for the long-term, I have negotiated a reduced rent with my landlord saving me significant money in the long-term.

I have also worked with clients to help implement strategies that incorporate rentvesting into a wider financial plan.

By using surplus savings and funds to invest in a stock portfolio that covers their rent, whilst their investment property (or properties) is providing a yield on top of the salary that they earn, we are helping clients kick significant financial goals.

If you or someone you know is interested in learning more about how rentvesting works, and how it might apply to you or your friend, please don’t hesitate to reach out and start a conversation.

– Phillip Richards (Managing Director & Financial Advisor)

The team at Endorphin Wealth and myself are passionate about helping people achieve their life goals with great financial planning. We are not licensed or owned by big banks and financial institutions, so the advice and wealth management we provide is always in our client’s best interests. We have the advantage of being able to access a range of products from different providers that can be tailored to our client’s goals and needs. We have offices located in Sydney and Melbourne, where you will be able to find a financial advisor that is suitable for you.

For an obligation-free conversation about your financial future, please contact us on 03 9190 8964 or at advice@endorphinwealth.com.au

5 Considerations in Choosing a Financial Advisor

1. Decide what you want/need from a financial advisor.

What you want and/or need from a financial advisor will depend on what stage in life you’re at, the amount of money you have (or don’t have!) and what it is that you wish to achieve.

The role of a financial advisor is to help you make financial decisions and plan your future. This could include advice about budgeting, investing, wealth strategies, superannuation, retirement planning, succession planning, estate planning, insurance and taxation.

2. Choose the type of financial advice that’s right for you.

It’s your choice on whether you get either general or personal financial advice from an advisor. This will depend on what you need.

General financial advice doesn’t account for your personal situation or goals, or how it might affect you personally.

Personal financial advice is tailored to your unique-to-you financial situation and goals and is designed to be in your best interests. Such personalised advice can include:

  • Scaled advice or “single-issue” advice— allows you to access cost-effective financial advice specific to what’s most important to you right now. For instance, you might just wish to get advice on how much you should contribute to super, or what to do with an inherited property.
  • Comprehensive financial advice— is tailored to your particular circumstances and objectives. Your advisor will help you to develop a plan to secure your financial future.
  • Ongoing advice— is essential as life doesn’t stand still for anyone. As personal or financial events change your world, the best way to stay up to date is to consult your financial advisor by way of regular monitoring and review of your financial plan and affairs.

3. Find a financial advisor.

It may seem to be an obvious consideration. However, this is a really important step in the process. There are a few options open to you for finding a licensed financial advisor, such as through:

  • A financial advice professional association, for instance – the FPA (Financial Planning Association of Australia)
  • Your lender or financial institution
  • A search on the ASIC (Australian Securities and Investment Commission) website’s Financial Advisors Register
  • Recommendations from people you know and whose opinions you respect and trust.

Researching your potential financial advisor is highly recommended. One of the first things to check is their FSG (Financial Services Guide). Their FSG will show:

  • The services they offer
  • How they charge
  • Who owns the practice
  • Any links to product providers
  • Their AFS (Australian Financial Services) licence number.

4. Meet your potential financial advisor.

Financial advisors don’t usually charge you for the first meeting. This presents a good opportunity for you to determine if they’re a “good fit” for you.

When you first meet with them, ask them about:

  • Their qualifications, main client type base and specialty areas
  • Their experience, e.g., the length of time that they have been practising as a financial advisor
  • Their fee structure
  • What information you’ll receive and how often
  • How they’ll consult you on decisions
  • How they’ll monitor and manage your investments
  • What commissions or incentives they receive from financial products and how they’ll choose products to recommend to you. Remember, this aspect of their fees should also be disclosed in their FSG.

A good advisor will get to know you, keep you informed, and help you achieve your goals. They’ll also discuss how much risk you’re comfortable with.

5. Assess your compatibility with them.

Your potential advisor might tick all the boxes regarding their experience, qualifications, fees and so on. Yet, if you can’t establish a rapport with them, the relationship is likely to fail. Ask yourself the following:

  • Do they give you immediate straight answers to questions that you put to them, or do they appear to avoid giving a direct answer when faced with a pointed question?
  • Do their values and principles appear to be aligned with your own?
  • Is their manner professional but friendly?
  • Do they listen to you attentively or is it that they appear to more concerned with telling you how good they are?
  • If you are meeting with them as a couple, do they give full attention to receiving feedback from both of you?
  • Finally, do you like them and feel comfortable in their presence?

Your final choice of financial advisor will be integral to achieving your financial/lifestyle goals. Choose carefully.

 

FOOTNOTE:

The Australian Securities and Investment Commission (ASIC) Rules and Regulations and in particular, REGULATORY GUIDE 175 (RG175) is one that all investors should be aware of.

RG175 is for persons who provide financial product advice to retail clients, and their professional advisors. It considers how certain conduct and disclosure obligations in Pt 7.7 and Div 2 of Pt 7.7A of the Corporations Act apply to the provision of financial product advice.

In summary, this Regulation states that an advisor must always consider the client’s relevant circumstances, that is, the objectives, financial situation and needs of a client that would reasonably be considered relevant to the subject matter of advice sought by the client.

 

Retirement Planning 1

Estate Planning for You, Your Family and Your Business

Estate Planning

It’s frightening to know that over 50% of the Australian adult population do not have estate planning in place. The most common reasons given by those who don’t are along the lines of “I just haven’t got around to it”. Often, it’s their view that they don’t have enough assets to warrant a Will.

The reality however is that everyone over the age of 18 should not only have a Will, but at the very least, two other estate planning documents as well. They are an Enduring Power of Attorney (EPOA) and an Advance Care Directive. So why? And what are these documents?

Wills

As part of the overall estate planning process, a Will is designed to ensure that your assets are properly distributed to the people that you care about.

Without a Will, your wishes have no way of being known, and the administration of a deceased estate without a Will can be a complicated and expensive process for your next of kin.

In simple terms, there are two types of Wills – “simple” and “complex”.

A simple Will needs to contain some basic information. You as the testator (the person writing the Will) need to name a personal representative, or the person who will make sure that the Will instructions are carried out as written (the Executor). Then you name the people (called beneficiaries) who will receive your stuff (money, property, land, etc.)

A complex Will is often required to address issues such as:

  • Changing family situations (e.g., blended family)
  • Business ownership
  • Testamentary trusts
  • Protective trusts for incapacitated beneficiaries
  • Guardianship clauses
  • Maintenance of minor children
  • Provision for the children of prior marriages or relationships.

Did you know that there are some things that you can’t give to beneficiaries via your Will?

Your Will can generally only deal with assets that you own in your sole name or that you hold as “tenants in common” with other owners (e.g., land or property).

If you own real estate with another person as ‘joint tenants’ and you die, the property will transfer to the other joint tenant, and not form part of your estate. The same applies for shares or bank accounts in joint names. In both instances, this is very often the case with property and assets jointly owned by marital partners and are not assets that you can gift by your Will.

A properly constructed estate plan not only addresses those assets that pass via your Will. Other assets such as those held within a Trust or company that is not fully owned by you, or held within say, an SMSF (Self-Managed Super Fund) can’t be gifted through your Will.

You may be able to nominate in your Will a person to take control of the Trust however, your Will cannot distribute trust assets.

Of special significance is any superannuation asset. Superannuation is an asset that may or may not form part of your estate after you die. There are factors that will determine the outcome. For example, the type of Death Benefit Nominations (if any) made to the fund Trustees.

Depending on the rules of the fund, benefits can be made in the form of a lump sum, a pension/income stream (also subject to regulations) or both. A member can execute a “Binding Death Benefit Nomination” (BDBN) which directs the fund Trustee as to where and how (depending on the terms of the Trust Deed) proceeds are to be paid on their death.

Some of the advantages of having a BDBN include:

  • Keeping proceeds out of the estate and reducing the risk of a claim on the estate being made by a disgruntled beneficiary
  • Certainty that proceeds will be paid to the intended beneficiary
  • Minimising payment delays

It is vital to get appropriate advice from your financial advisor regarding the type of superannuation fund you have, what rules govern the fund regarding the treatment of your superannuation death benefits along with any nominations. The taxation implications pertaining to your death benefits should also be considered.

Accounting for all these issues will then allow you to make informed decisions for your super death benefits as part of your overall estate planning strategy.

If you run your own business, a significant part of your wealth may be tied up in the business. Your business assets may be held in various structures such as trusts, companies or partnerships, or even an SMSF.

Careful consideration should be given to who will take control of the entities that hold the business assets after the death or incapacity of a key individual in the business. Successful continuation of the business can be put in jeopardy if appropriate succession planning has not been put in place.

Failure to consider the impact of your death or incapacity on your business can also create problems for your personal estate. In particular, if there are loans between you and the business or if you have provided personal guarantees for business loans.

In consulting with your financial advisor, here are some considerations to make regarding your superannuation and/or business assets. For instance:

  • Do you have an up-to-date Binding Death Benefit Nomination in place for your superannuation fund?
  • Who do you wish to control your business, investment entity and assets?
  • Have Trust Deeds been reviewed or updated recently?
  • Have you reviewed your Company Constitution?
  • Are your business insurances up to date?
  • Do you have a buy/sell or other business succession agreement in place setting out the process if a business partner is incapacitated or dies?
  • Have distributions been made to you from a discretionary trust that remain unpaid, or have you loaned or contributed substantial amounts to a trust?

Power Of Attorney

A Power of Attorney (POA) is a legal document, which permits an individual to act on your behalf, when you can’t make decisions for yourself. This can include when you are travelling overseas, are hospitalised or impaired. You can appoint one or more people to look after your legal and financial affairs. This can help to ensure that they are managed in your best interests.

You can limit the powers the person has. For example, their ability to sell your property or manage your business affairs.

An Enduring Power of Attorney (EPOA) is a Power of Attorney document designed to continue to operate if you lose your mental capacity.

Both POA’s and EPOA’s give a person the power to act for you in legal and financial matters.

Advanced Care Directive

If you become mentally incapacitated, an Advanced Care Directive is a document that allows you to appoint a person, known as a “Substitute Decision Maker,” permitting them to make certain lifestyle and welfare decisions for you.

The Advanced Care Directive will include decisions in relation to lifestyle and accommodation. It may also include directions in relation to the medical treatment you are to receive should you become terminally ill.

You must sign an Advanced Care Directive whilst you are of sound mind. It will come into force if you are no longer able to manage your affairs due to loss of mental capacity.

Your financial advisor can assist you in ensuring that all relevant aspects of estate planning are addressed. It is likely that your advisor will require the services of other specialists to ensure that your estate is distributed correctly.

The team at Endorphin Wealth are passionate about helping people achieve their life goals with great financial planning. We are not licensed or owned by big banks and financial institutions. The advice and wealth management we provide is always in our client’s best interests. We have the advantage of being able to access a range of products from different providers that can be tailored to our client’s goals. We have offices located in Sydney and Melbourne, where you can find a financial advisor that is suitable for you.

For an obligation-free conversation about your financial future, please contact us on 03 9190 8964 or at advice@endorphinwealth.com.au