New Year, New Habits, New YOU!

With every New Year, comes renewed optimism. As we bounce back from recharging the batteries during the Christmas break, there is no better time to set new good habits in motion for the coming year.

In order to make room for new habits in 2022, be sure to wring out any bad practices. And, yes, procrastination is on the list, so reading this now instead of later is a great first step in the right direction! By focusing on habits, you will adopt simple, sustainable behaviours that will put you on the path to achieving bigger and better goals in 2022 and beyond.

Try these simple tips:

  1. Put off procrastination…now. 

    The hardest part of doing anything, particularly something new is actually getting started, so it’s understandable to feel overwhelmed. The thing that often holds you back is the mental dialogue that goes on in your mind. My advice – START doing and STOP thinking. The answer to procrastination is often not to think about things, just start some action.

    Having a Financial Planner may be a good starting point. It’s important to find one that you feel comfortable with to get the most out of the experience. By finding the right financial planner, there’s a greater chance of you heading on your way to new financial habits.

    You may get the most out of your Financial Planner by allowing them to get to know you better and understand your personal circumstances.

  2. Have a goal in mind.

    Having a specific goal to work towards can help maintain your new habits and give you a challenge to work towards. Make sure your habit-related goal is SMART: specific, measurable, achievable, realistic and time-based. For example, ‘start saving more’ is a goal, but it’s hard to know when you’ve achieved it and what ‘more’ looks like. Instead, setting a goal such as “Save $30,000 by 31 December 2022 for a house deposit” is a SMART goal and therefore easier to work towards. It’s specific, measurable, hopefully appealing and realistic, and it’s time-based.

    Have absolute clarity on your top 3 financial goals. We may also help you assess your goals and put a plan in place by booking an appointment with us.

  3. Find your motivation.

    To give yourself the best chance of creating a sustainable habit, ask yourself what motives you first before you even start working on this new activity. Let’s use the above example on saving money for a house deposit. Your motivation for doing this might be to give your growing family a bigger and better space to live in.

  4. Start small.

    Doing a little at a time is usually easier than tackling a whole project at once. Starting small and increasing the frequency of the habit will make it far easier to sustain in the long run. For example, you want to get into a new exercise habit i.e. running regularly, throwing yourself into a rigorous running regime before you’re ready could result in injury and set you back more than it helps you.

  5. Stick with it.

Sticking with new habits is not easy. However, if you’ve committed, stick with it. In time – the results will come! Setting smaller goals will keep you on track and make sure you measure your progress for extra motivation.

Whatever new habits you’d like to create, whether they are financial, health or relationship, there’s no better time to start than the New Year… New Year, new habits, new YOU!

Start 2022 with a plan for success

Include financial fitness to your New Year’s resolution this 2022. Challenge yourself and re-evaluate what’s important to you financially.

Make your appointment to speak with an RJS Wealth Management professional for the New Year today by calling 1300 27 28 29.

Book an appointment! Email:info@rjswm.com.au

This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

Busting the Super Myths

We often see people put Superannuation in the ‘too-hard basket’ and assume all will be fine when it comes time to retire. You can’t afford to be complacent these days. Your financial future depends on it. Take a look below where we bust the super myths and set the record straight.

 

Busting Super Myths - RJS

I have no control over my Super!

The Super landscape has changed considerably since compulsory superannuation was legislated in 1992. New laws introduced in 2005 saw Australian workers able to choose a super fund for their retirement savings, rather than a fund specified by their employer.  Since then we’ve also seen self-managed super funds (SMSF) grow in popularity. Today, there is also a greater choice of retail and industry super funds, varied investment options, and more control than ever.

Where there once used to be limited investment options, many funds now offer a varied range that goes beyond conservative, balanced, and growth. Some even often a pseudo-SMSF option where you have control over direct investment in shares, exchange traded funds, or term deposits.

For even greater control over your investment strategy, you may wish to consider a self-managed super fund (SMSF). These aren’t for everyone so it’s best to engage a professional advisor to discuss your options.

I don’t have to worry about Super yet, I’m years away from retirement.

No doubt you’ve heard the saying “Time in the market, not timing the market”. Now is the time to pay attention to your superannuation. Give your retirement savings a boost with the benefit of time.

It’s important to consider your current age, your expected retirement age, and your risk profile when making decisions regarding your super. Whether you’re 10 years from retirement or 30 years – investing time now to consider your super options, will pay off when you retire. A long-term approach enables your investment to ride out the natural cycles of the highs and lows rather than relying on hope and chance that makes markets and economies perform outstandingly well over a short period of time

We go into more detail here about why focusing on your Super now will mean huge benefits for your future.

Busting Super Myth RJS 1
Source: Photo by rawpixel.com on Unsplash

I’ll keep my super in a few funds for diversification.

Although diversification is widely talked about in the finance space, it isn’t generally used when discussing how many super fund accounts a person should have. By maintaining several accounts, you’re likely paying administration fees that are easily avoided.

Many funds now offer extensive diversification within their investment categories. And some even allow direct investment as we mentioned above.

Consolidating your super means you will enjoy fewer fees and less paperwork. Many super funds also offer various insurances as part of their accounts so it’s important to review your needs and eligibility before consolidating.

You should also consider any investment or tax implications when reviewing your super. Let us help you review your funds to get the best outcome for you

Source: Photo by William Iven on Unsplash
Source: Photo by William Iven on Unsplash

I’ll lose my money if the market crashes

Investing based on your risk profile is important for peace of mind. However, it is important to know that your risk profile may change depending on your age, your personal circumstances and how long you have until retirement.

There is a wide range of investment options in super funds that reflect the different risk profiles of members. You can view fund performance and market reports and choose how you would like your retirement savings invested.

Your skilled financial adviser can explain these to you and help you better understand what it means to you. With the help of your experienced financial adviser, you can view fund performance and market reports and be in a more confident position to choose how you would like your retirement savings invested.

By taking a proactive and more educated approach to your super,  your investment strategies can be better managed as your risk profile changes through your life. For example, this may mean mitigating your risk and reducing exposure to volatile markets as you get closer to retirement.

Over to you

You can’t afford for your Super to be ‘set and forget’ these days. And there’s no reason to. It’s important to make sure your super is working for you. Speak to one of our super experts and find the best ways to boost your retirement savings.

This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

Investing for income when interest rates are low

Looking for income producing assets while interest rates are low?

Investing for Income when interest rates are low

The official cash rate has been sitting at a historic low of 1.50% p.a since August 2016. With global growth barely moving and consumer debt at high levels, it’s conceivable that rates could remain low for a long time to come.

Lower rates over a number of years aren’t all bad. Offering benefits for those paying off a mortgage or funding a business, but it is the savers and income investors who get hurt the most.

With cash investments offering low returns, those nearing retirement are going to have to save more while working to meet their retirement goals. And that’s difficult enough as it is with an increased cost of living.

Fortunately, there are a few options available outside of cash, when investing for income when interest rates are low.

Risk versus reward when investing for income

It’s important to know upfront that while there is some promising income producing investment ideas in the current low-interest rate environment, they do come with a higher level of associated risk. That’s something you need to wrap your head around before you start thinking past a savings account or term deposit for better returns.

By diversifying your investments across a range of asset classes, you can prevent exposing yourself to an unacceptable level of risk by putting all of your eggs in one basket.

We’ve put together some of the income-producing investments available to you in this low-interest rate environment. Together with what you need to consider when deciding to invest. As everyone’s situation is different, professional advice from an experienced adviser is recommended.

High Yield Shares

When interest rates are low, shares are one of the first options that investors turn to. Interest payments are often a major cost for businesses so when rates are low it can mean that business profits increase and share prices rise.

Investing in the share market will expose you to increased volatility, so determining your level of portfolio risk is an important first step as share prices fluctuate all the time so are not ideal for short-term investments.

Even blue-chip shares can be riskier than other investment options, as high dividends can potentially mean the company has less to invest in future growth. So when investing for income, it’s important that stocks are not only healthy but have a strong history of paying dividends from a stable earnings base.

Dividend franking coupled with the potential for capital growth make high yield shares an attractive option. With share trading platforms making it easy to sell and buy quickly for low entry and transaction costs.

Bonds

Bonds offer a stable investment by providing a reliable income. Government bonds are often an attractive option as you can invest with a small budget and invest directly on the ASX, just like you would shares. Where other types of bonds are harder for individuals to access.

Corporate bonds offer a way for you to indirectly lend money to a company, with the company making interest payments to you as a return. This helps companies to raise funds.

While they tend to be safer than other investment alternatives, a result is lower yields and the risk that you may not always get your money back on corporate bonds.

Exchange Traded Funds (ETFs)

Rather than investing in individual shares, some investors prefer ETFs, which are managed funds directly traded on the ASX.

While traditional ETFs track the share market index, there is now a huge range of ETF options available with some specifically designed to generate income. In these cases, the funds offer exposure to high-yield shares with regular franked dividends, or even invest in high-interest deposits.

ETFs can be an effective way to diversify and help you get low-cost exposure to assets that might otherwise be out of reach.

While ETFs are seen as a low-cost option, you will need to consider having to pay a management fee and brokerage when you buy and sell.

High Yield Managed Funds

Managed funds are worth considering to get affordable exposure and diversification to a range of income generating assets.

They are great for being able to be tailored to a different balance of risk and return depending on your risk profile, as they allow you to diversify across asset types, industries and countries.

The fund you choose will charge a management fee as professional expertise comes at a cost. So be sure to look for a provider that offers value and take into account the impact the fee will have on your returns.

Peer-to-peer lending

A relative new-comer to the income-producing investments arena, peer-to-peer lending allows investors to lend money to a borrower through a third-party lending site. The borrower pays you back at an agreed rate of interest within a specified time frame.

The rate of return for peer-to-peer lending is higher than a savings account, however, does come with the added risk that the borrower may default on the loan and there is a chance you won’t get your money back.

Growing your income producing investment portfolio

With a range of options to choose from, you might determine that a diversified portfolio made up of a few of these investment options may allow you to enjoy higher yields while managing risks.

Unlike cash, none of these investments are government guaranteed, but you may reduce your risk through diversification.

Over to you

In the sustained low-interest rate environment, are you investing in income-producing assets? If you need help building your portfolio, talk to RJS Wealth Management. We’ll work with you to tailor an approach that is unique to your needs.

This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

Can I claim Fringe Benefits Tax (FBT)?

As a business owner, here’s what you need to know about Fringe Benefits Tax, its benefits and your taxation obligations

Fringe Benefits Tax is a tax payable by you on any benefits you have paid to employees in place of salary or wages. Fringe Benefits can be a useful way of attracting and retaining quality staff as they are perceived as a non-cash incentive or as a salary packaging option.

Fringe benefits include any rights, privileges or services provided to current, former or future employees or directors of a business. Common benefits include; utilisation of work vehicles for private purposes; low or no interest loans, school fees, health insurance, gym memberships and entertainment such as food, drink or recreation.

Fringe Benefits tax

FBT was created when the government realised that employers were being creative when paying benefits instead of salary. The most common fringe benefit is for http://www.rjsanderson.com.au/wp-admin/post.php?post=2243&action=edit#edit_timestampvehicles where the employer picks up the cost of the car and provides the car for their employees’ use.

Advantages for small businesses of paying Benefits

As a business owner – you will likely have your own expenses that can be paid for by the business rather than out of your salary or drawings. The amount of tax on a FB payment is the same as personal tax i.e. 47{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357}, rather than company tax of 27.5{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357}. However, as a business, you can claim the GST component and receive the tax deduction for the expense. There may or may not be tax advantages to you in offering fringe benefits to your employees. If you are offering them or considering offering them, talk to us to see whether it will be beneficial to you or not.

What is not classed as a Fringe Benefit?

Superannuation, salary, wages, termination payments and shares acquired under employee approved schemes are not subject to FBT.  Additionally, work-related items such as tools of the trade, mobile phones, computer software, some car parking, protective clothing and minor expenses under $300.

What do I need to do if I am providing Fringe benefits to employees?

Firstly, you need to check if you are registered for FBT. We can do that for you. Secondly, you need to keep all records related to the benefits and then report it. The FBT year runs from 1 April to 31 March and you will need to submit this information to your accountant for it to be lodged. Lastly, you will need to pay your FBT liability to the ATO.

The calculations for establishing the FBT amounts can be quite complicated, depending on the type of benefit and whether it includes GST or not. At RJ Sanderson Wealth Management we make the process simple and calculate this for you. To arrange a discussion to talk about your Fringe Benefits Tax options and obligations, call on 1300 27 28 29.
This article is published by R J Sanderson and Associates Pty Ltd ABN 71 060 299 783. This article contains general information only and is not intended to represent specific personal advice (Accounting, taxation, financial or credit). No individual personal circumstances have been taken into consideration for the preparation of this material. It is recommended that you obtain your own personal professional advice before making any financial or business decision.

Why it Pays to Understand the Six Stages of Financial Planning

Is one stage more important than the others?

Financial planning is for people at all ages and stages.
Financial planning is for people at all ages and stages.
Source: Adobe Stock

The six stages of financial planning set out exactly how a relationship between a financial planner and a client should develop. It’s an excellent framework for financial planners and a great tool for clients. Financial planners don’t always get the best rap and the guidelines below, as published on the web by the industry body, the Financial Planning Association of Australia (FPA), help solidify and formalise the boundaries in which planners work. Setting expectations and establishing a clear plan of action, gives potential and existing clients confidence and peace of mind.

For RJ Sanderson Wealth Management, as a high quality, long running, award-winning business, being open and honest about the processes we use is simply part of the job.

“The six steps of financial planning set out exactly how a relationship between a financial adviser and a client should develop.”

STEP 1 – Define the Scope of the Engagement

This first part is crucial. This is where you decide if you trust your financial planner and their knowledge enough to firstly tell them more about your financial situation and secondly, to allow them to help you. It’s the moment where you decide whether or not they are the right planner for you. Sometimes there is a simple personality clash. Not every client is suited to every planner. Other times, this lack of connection could indicate deeper issues.

A good financial planner will clearly explain their process, they won’t baffle you with jargon and terminology. They will listen to your needs, and your questions, and answer them honestly. They won’t make you feel stupid and they won’t talk down to you. You can ask them as many questions as you like, about their background, how they work and how they charge.

If you’re satisfied, you can move on to step two.

STEP 2- Identify Goals

Whatever dreams your dreaming about your financial future or retirement, now is the time to put them into words. Be honest with your planner about what you’re hoping for. Depending on your age, you might be working towards goals other than a retirement lifestyle. You might want to pay off your home, invest, or go on a family holiday every year. You might wish to set up nest eggs for your kids.  Whichever goals, you’re working towards, this stage is the basis for your future plan.

STEP 3 – Assess Your Financial Situation

At this stage, a good financial planner will ask a lot of questions. You need to be completely honest, and provide financial documents as needed, all this information will help your planner to establish where you are financially. Your planner will take a good look at your position – your assets, liabilities, insurance coverage and investment or tax strategies.

Financial Planner
Being a financial planner is ultimately a position of utmost trust. Source: Adobe Stock

 

STEP 4 – Prepare Your Financial Plan

Now, based on the information you gave in steps 2 and 3, your financial planner begins the hard work. The result of this step should be your individualised financial plan. It should be clear about the goals you wish to achieve. It should set out clear steps for you to take. It should be easy to follow and understand. There will be suggestions for products to invest in and strategies that suit your unique situation. There may be suggestions for cost cutting and it may not all be delightful reading. A good planner will not shy away from bad news and they’ll be tough if they need to. This is a good point for you to ask lots of questions about your plan, and satisfy yourself that it’s right for you.

STEP 5 – Implement Recommendations

Make sure you’re comfortable with the plan before you put it into action. As part of implementation your financial planner may work with specialist professionals, such as an accountant or legal specialist. They should advise you about the involvement of other parties and obtain your permission. The plan may include investment in a new product or asset you’re unfamiliar with, so ask as many questions as you need to. You can request changes until you’re happy with the final plan. It shouldn’t be a problem if you’ve chosen the right planner.

STEP 6 – Review the Plan

Over time, your circumstances, lifestyle and financial goals will change. Family circumstances change, so does your job, and of course, you’re always moving closer to retirement. Regular reviews of your financial plan are essential, and a good financial planner will schedule these in regularly, not only to make sure you’re on track, but to adjust the plan as your needs change.

Is one step more important than the rest?

These 6 stages, done well, help you identify, plan for, and reach your financial goals where possible. Is there one that stands out as more important than the others?
Yes, we believe so. The first step is the most important by far because it’s about relationships and trust. If you can’t trust your financial planner, if the relationship is not strong; there is no possibility of moving on to the next 5 steps. It’s important to make sure you are comfortable that your financial planner has taken the time to understand your needs, goals and preferences before they make any recommendations . It’s essentially the same as the FPA version, but the emphasis is on the relationship, rather than the work to be done.

Step 1 of the process is the key to your future prosperity

According to an investigation by Dr Rebecca Sheils of the Beddoes Institute, initiated by Zurich Financial Services, to build trust, financial planners must have a high emotional intelligence. They must be a good listener and communicator, always respectful and reliable, return calls, follow up and respond when they say they will. A high level of financial knowledge and technical expertise is expected as par for the course and nothing special, whereas emotional intelligence sets a good planner above the rest3.

The most important step in the Financial planning process is the first one, where you find a financial planner you can trust, who’s got your back and knows their stuff. That’s where RJ Sanderson Wealth Management comes in. We have a team of financial planners with buckets of financial knowledge and experience but also plenty of emotional intelligence. They’ll listen, answer all your questions (with no jargon) and always be there when you need them. Call us on 1300 27 28 29 today and arrange a coffee and a chat. It’s complimentary! 

Sources:

  1. Financial Planning Association of Australia: About Financial Planning – How it works
  2. Certified Financial Planners Board (USA) – Compliance : FAQ Financial Planning
  3. Education/Money Management – How advisers can build valuable relationships with clients

This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.