Financial Tips and Treasures

SUPERANNUATION

Everyone can benefit from making small contributions into super, which — over a period of time — can make a big difference to your future. It’s never too late to start putting something extra aside for the years ahead.

 

Here’s how three different people — all in similar jobs — approach their super and the different type of retirement years they can each expect.

Take the case of Tom, Jill and Sue

All three started working at age 25, earning a gross annual salary of $45,000, to which their employers added the Superannuation Guarantee (SG) of 9.5%.

  • Fresh out of university and paying rent for the first time, Tom chose not to make any extra contributions to his super. Jill found herself in the same position, but decided she could afford to put aside an extra $20 a week.
  • Over the course of his working life, Tom will have saved around $368,000* in super, while Jill will end up with $483,000* — that’s $115,000 more!
  • Meanwhile, Sue waited until she was 45 to start saving more, but contributed $40 extra each week from her take-home pay to make up for lost time. She’ll retire with $454,000* — that’s still $86,000 more than Tom.

Three people, three different super strategies. You can clearly see the benefits of starting early. And even though Sue will retire with almost $30,000 less than Jill, she’ll be able to pursue more of her dreams in retirement than Tom, proving that it’s never too late to start saving.

super case study

Still unsure whether you’ll top up your super? Here are five things that might change your mind.

  1. You could enjoy a more comfortable retirement lifestyle

So what’s ‘comfortable’? The Association of Superannuation Funds of Australia (ASFA) Retirement Standard outlines how much money retirees need to fund either a comfortable or modest standard of living. A ‘modest’ lifestyle is considered better than one funded solely by the Age Pension, allowing for costs such as one or two short trips near home each year, plus the occasional restaurant meal and paid leisure activity. For a single person aged 65, the annual amount required at retirement for a modest lifestyle is $23,000 ($34,000 for couples).

A ‘comfortable’ lifestyle, on the other hand, provides much greater spending freedom: an annual holiday, for example. Making voluntary contributions to your super while you are working will go a long way towards helping fund such a lifestyle.

  1. Could you live on the Age Pension?

The current weekly rate for the full Age Pension for singles is around $435, which takes care of most of your day-to-day essentials. However, supplementing this with your super savings will help you pay for anything extra.

  1. You’ll be able to live well for longer

We’re living longer than ever before, with Australia ranked seventh worldwide in terms of life expectancy. With men living to age 80, on average, and women to 84, it’s important to have enough money to fund all of your retirement years.

  1. You could make a tax saving  

By making a contribution to your super from your before-tax pay (known as salary sacrifice), you’ll be taxed only 15%. It makes sense to make contributions this way, rather than from your take-home pay after you might have paid a higher income tax rate.

  1. The government could help your super, too

If you earn less than $51,000 a year and make an after-tax super contribution, you may be eligible for a bonus of up to $500 from the government, known as the government co-contribution. Contact the Australian Taxation Office (ATO) to find out more.

There are so many benefits to be had by setting something aside for your super from your weekly budget. Contact your super fund to find out how you can start topping up your super today — plus, industry super funds have financial advisers who can discuss your individual circumstances.

[Disclaimer]

* Assumptions: Investment earnings of 6.5% net per year and employment is constant until age 67. Inflation of 2.5% per year and figures are in today’s dollars (i.e. the final value is discounted for inflation). Figures include SG contributions of 9.5%. Calculated at 01/03/2016. This example is an illustration only and is not guaranteed. Actual outcomes may differ. Investments may go up or down.

Issued by H.E.S.T. Australia Ltd ABN 66 006 818 695 AFSL 235249, the Trustee of Health Employees Superannuation Trust Australia (HESTA) ABN 64 971 749 321. This information is of a general nature. It does not take into account your objectives, financial situation or specific needs so you should look at your own financial position and requirements before making a decision. You may wish to consult an adviser when doing this. Before making a decision about HESTA products you should read the relevant Product Disclosure Statement (call 1800 813 327 or visit hesta.com.au for a copy), and consider any relevant risks (hesta.com.au/understandingrisk).

 

women and finance

 

 

early home loan payments

Paying off your home loan over a period of 30 can seem like forever.  Whilst it is a long term commitment, here are 5 easy steps that can help you own your home sooner:

  1. Switch from monthly to fortnightly repayments. By doing this alone, a $500,000 mortgage can be paid off in 25 years and 6 months.  Taking 4 years and 6 months off your loan and $68,000 in interest savings

  2. Even the smallest extra repayment can help you reduce your loan term. By paying $25 / week extra (one bottle of wine!) you save yourself another 2 years and 3 months and another $33,000 in interest savings

  3. As interest rates are still reducing, keep your repayments at the higher rate. This has two benefits, you get in front and you have additional money sitting in your home loan and when rates start to increase you will not even notice the difference. For example if your interest rate has dropped 0.5% over the last 12 months, then this would be a saving of approximately $150 / month. If you did this, say, from year 3 of your home loan, this is then an additional 2 years and 8 months saved and another $36,838 savings in interest.

  4. Any bonuses / tax returns etc you receive, put them into your home loan too. If you receive an annual $4,000 tax return / bonus and from the first year you put this cash injection on to your home loan, this reduces your loan by another 5 years and another $87,000 in interest savings!
  5. Use an offset account. Money sitting in your offset account reduces the interest component of your repayment as the interest sitting in this account is calculated daily but charged monthly. So for every day those funds are sitting in the offset account you are reducing the interest you pay on your home loan. For example, your loan is $500,000 and you have $25,000 sitting in your offset account. You are only paying interest on $475,000 whilst your monthly repayment (assuming a rate at 4.24%) is still the same at $2,457 / month the interest charged reduces from $1766 down to $1678. Saving you $88. This, overtime, can have a big impact on reducing your loan. Bonus points if you have a credit card where all your expenses are paid from and you swipe your credit card balance in one transaction keeping your cash in your offset account– remember every dollar makes a difference!

I have seen people combine all five of these principals and this has seen clients reduce their loan term by half and from here they have then used equity to purchase an investment property and here begins the building of an empire!

Get in touch with 10thousandgirl Trusted Advisor, Nicole Cannon, of Pink Finance, here

women and finance

property investment

Wouldn’t you love an investment honey pot that produces enough income to let you retire early, or let you help out family and friends, or perhaps work part time?

There’s another name for that honey pot: it’s called an investment portfolio. However when it comes to building an investment portfolio, many of my clients only want to invest in property. They think that when all else fails that bricks and mortar is the safest investment. I have a slightly different view. Let me explain.

Property investment—as with any investment—carries a level of risk. For example, will you always have tenants? Will they pay the rent on time? How much rent will they pay? What’s your property worth? How much would a future buyer be prepared to pay for it? What if you have bad tenants? Then there are the ongoing maintenance costs, rates and taxes. What happens if for some unexplained reason your income stops, or is reduced, and you can’t afford to finance the loan on your investment property? What happens if your financial situation changes and you need to sell urgently under ‘fire sale’ conditions?

These are all legitimate questions that need to be carefully considered before jumping into the investment property market. Most people are aware that share prices move up and down because the share market performance is in the news every day. Imagine if property prices were reported daily! I wonder if bricks and mortar would still be perceived as ‘the safest investment’ if it was valued two or three times daily as the share market is?

That’s one of the things that concern me about property investment. It’s NOT valued daily. So at any point in time, you don’t really know what your property investment is worth. The popular belief is that property values always increase, but that’s simply not true. There are examples of oversupply or low demand that limit or even reduce property values. Equally there have been occasions when interest rates have soared and people have been forced to sell their homes below what they paid, leaving them with money still owing on the loan. That situation is known as having ‘negative equity’ and it means that you still owe money on something that you no longer own.

Just because you can see and touch property, it doesn’t mean it’s a safe investment.

Don’t get me wrong. I’m not saying property is a bad investment. We all know many people who have done very nicely from property investing. However I also know people who haven’t done so well. In the course of providing investment advice to clients, and hearing their stories, I’ve learnt that property investment is not a magic bullet.

The point I want to make is that a property investment may not perform to your expectations. Before you commit to taking a loan on a property talk to someone such as a financial adviser who has experience in advising on a wide choice of investment opportunities and who has seen both good AND bad outcomes of property investing.

If you’re convinced that property investment is right for you there are a number of the things you should think about: firstly understand WHY you’re investing. Do you have a specific timeframe? Will you need your capital at some fixed point in the future for other planned expenses? Do you have a risk management plan in case you can’t work for a period of time and you have gone into debt to buy the property? What sort of loan is the most appropriate and what ‘structure’ should hold the asset? Should it be in your own name, jointly with someone else, in super, a trust or a company?

Give some thought to diversifying your investments as well as your attitude to risk. How much risk are you prepared to take? If your superannuation funds are already invested in the diversified investment option, of an industry or retail super fund, then in all probability you will have some involvement in property already.

Where else can you get advice? Will property seminars help you make a decision? The purpose of many property seminars is often to entice you to become involved in one property or another, or to invest in a property fund. If f you go to a seminar and you like what you hear, make sure you do your research before committing yourself to borrowing, buying or becoming involved. While there are plenty of trustworthy property brokers who genuinely want to help people buy the right property, there are just as many who are more than happy to part you from your retirement savings on the basis of a few hollow promises about the safety of bricks and mortar.

So to start building or adding to your investment honey pot, do get some advice before leaping into the property market. An appointment with a qualified financial planner is a good place to start. I’m not just saying that because I’m a qualified financial planner. I’m saying that because a planner will consider any potential property investment in the context of all your other investments and financial goals and commitments.

If you would like to make an appointment with a First State Super financial planner, call our customer service team on 1300 650 873 or call me directly in Canberra on 02 6221 6200. You don’t have to be a First State Super member and your financial goals do not need to be just about property, super or retirement.

Written by

Gianna Salvestro AFP®, BFin UC., AdvDipSuper, AdvDipBus, DipFP

Financial Planner

This is general information only and does not take into account your specific objectives, financial situation or needs. It does not constitute product or investment advice.

FSS Trustee Corporation (FTC) ABN 11 118 202 672, AFSL 293340 is the trustee of the First State Superannuation Scheme (First State Super) ABN 53 226 460 365. Financial planning advice is provided by First State Super Financial Services Pty Ltd ABN 37 096 452 318, AFSL 240019.

women and finance

investing in shares

10thousandgirl’s Tina recently interviewed industry expert Greg Hoffman, who hosted our online workshop: Investing In Shares.  Greg is the Chairman of Forager Funds Management, which manages more than $200 million for its clients.

T:  What do you tell those who are intimidated by the sharemarket?

G  I tell them they’re probably already invested in shares through their super fund. So even if they don’t want to invest directly, a little bit of knowledge about their indirect share investments might go a long way.

T:  What about those who are keen to invest directly?

G:  It’s never been easier! There are a number of ways to start and we’ll explore the main ones in the online workshop (see below to watch and listen).

T:  Where is the best place to start with a few thousand dollars to invest?

G:  A good investment library! Self-education is key to financial success but I reckon those involved in 10 thousandgirl already know that. I recommend a few important books in the session (see below to watch and listen) for those keen to learn more.

T:  Any tips for first time investors?

G:  The sharemarket can be fun and rewarding. It can also be frustrating and expensive. Take it a step at a time while you build up your knowledge and experience. It’s a big advantage over property that you can start with just a couple of thousand dollars (or even potentially money you already have in your super fund). Once you know yourself better as an investor, you’ll find it easier to decide if you want to be a direct share investor (picking your own individual shares) or an indirect investor (through funds). After that, there are further aspects to consider in each of those paths.

 

Watch and listen to the full online workshop below, or go here for more resources around investing in shares!

 

 

ethical superannuation
As much as I shouldn’t admit it, I too am one of those that struggles to getting round to reading mail from my super fund.
In fact, many of us probably spend more time considering the origins of our coffee (Fairtrade anyone?) or the happiness of the chickens that laid our eggs (free range please!) than our super.
But when you consider  that super is likely to be the second biggest investment of our lives after purchasing a house maybe it’s worth a few minutes of our time?
Many of us have things we are passionate about, from reducing poverty, living with a lighter environmental footprint, and happy chooks. But although you may think about this in the supermarket aisles, are you thinking about this in the context of your super too?
Your super could be supporting activities that you are passionate about or investing in issues you are strongly against.
So why don’t you take 15 mins to ensure your super isn’t running against your values.
Here’s 5 steps to take a closer look:
1. THINK: Start by having a think about the issues that are important to you
2. READ: Have a read about your own superfund to see how they consider ethics and ‘responsible investing’ (most have a section on responsible investment on their website)
3. TALK: If you don’t find what you need, send them an email – how are you considering [insert your passion: climate change/refugees/animal welfare/weapons/child labour] in the way you invest?
4. RESEARCH: If you don’t get an adequate response, look at the options – there’s plenty of ethical investments out there that perform as well as other investments – see here as a start.
5. WALK: maybe it’s time to switch to an ethical or responsible super option? But let your old superfund know why you’re leaving, that way more will consider these important issues in future.
Simon, CEO of Responsible Investment Association Australasia, will be presenting a 10thousandgirl  Let’s Talk About Money workshop at the Queen Victoria Women’s Centre, Melbourne on July 14th on Ethical Investment.
Join us and find out more about ethical super investment – get your place, here.
About Simon 

Simon is the CEO of Responsible Investment Association Australasia, the peak industry body for responsible and ethical investors across Australia and New Zealand. RIAA represents 165 members who manage over $1 trillion of assets globally – ranging from large super funds and asset managers to financial advisers and research houses. RIAA works to see more capital flowing into sustainable assets and enterprises, working with members to both increase the uptake and deepen the impact of responsible investment.

Simon operates at the intersection of economics, finance and sustainability and has over 15 years of international experience as an economic adviser, investment analyst and environmental consultant, across finance, corporate and not for profit sectors.

Prior to joining RIAA as CEO in early 2013, he spent over five years at the Australian Conservation Foundation (ACF) as their Economic Adviser. In particular he led the debate on issues such as financing the transition to a low carbon economy working

get rid of bad debt

ICKY DEBT – I am talking about store cards and credit cards.  Let’s get rid of them and get you on track to a healthier financial you!

  1. Google “best credit card balance transfers” and choose the longest term for the lowest interest rate. The term is more important that the interest rate, or the fees. The longer the term the more time you are giving yourself to get rid of bad debt. Transfer the balance of your card and cut up both or all of your credit cards. You might find that banks will only transfer 75% of your credit card debt. Do the research and find the best deal. It’s the best shopping you will ever do for yourself.
  2. Cut up your new and old credit cards. You can’t reduce ugly debt and keep accumulating it at the same time! If you have ugly debt then you haven’t been living within your means. Get rid of all temptation to overspend.
  3. Get a direct debit card and go on a cash diet. That way you simply cannot spend more than you earn.
  4. Pay off whatever is left on your high interest credit cards first, the 25% that may not have been transferred across to the lower interest rate card.
  5. Divide the amount of money owing on the low balance credit cards by the months you have on the low rate and set up a direct debit to pay that amount off each month. If you can’t manage to pay off the debt within the time period, do the best you can and then repeat the process.
  6. Look at your spending patterns. Where your money is going is the first step to saving money. Cut costs wherever you can. Keep reducing your bills. There are always ways to save more money. ASIC Smart Money website has a great budget spreadsheet. 
  7. Never pay full price for anything, better still don’t buy clothes or go on expensive holidays until your ugly debt is paid off.
  8. Think before you buy everything.
  9. Don’t eat out, or if you have to, go out for breakfast, or have a picnic somewhere beautiful. It’s cheaper.
  10. Have long range vision and be patient. See yourself without having credit card debt. What is that going to feel like? Imagine it.

By Nicole Heales  – Dip F.A (Sec Inst) MComm Dist (F.P) Cert IV
Find out more about Nicole, one of our Trusted Advisors, here.

NicoleHeales Pic

 

superannuation tips

 

If you care about your health and wellbeing, then you probably have a plan in place to help you reach your goals.

In the same way, it makes sense to support your financial health with a range of ‘good habits’.

Your super is one of the most significant investments you’ll make in your lifetime.

Here are five simple steps you can take to ensure your super account is the healthiest it can be:

  1. Consolidate (or roll over) your super into one account to avoid multiple fees and their impact on your super balance. You’ll also help reduce your paperwork and carbon footprint by cutting down the amount of mail you get.
  1. Find lost super — this is vital if you’ve ever changed your job, name or address. Millions of Australians currently have unclaimed super. Useful websites are gov.au/superseeker and unclaimedsuper.com.au Best of all, it’s free to find your lost super!
  1. Put a little away now to benefit later in life by making voluntary before-tax contributions (also known as salary sacrifice) to your super. You may reduce your taxable income and contributions may be taxed at a lower rate than your income. Just remember, annual contribution caps apply.
  1. Take advantage of the government co-contribution scheme to receive 50 cents for every $1 you contribute (after tax) to your super — up to a maximum of $500. The maximum co-contribution reduces with every dollar you earn over $35,454, and cuts out after $50,454. Visit gov.au/super to find out if you’re eligible.
  1. Make an active choice about your investment options to reflect the level of risk you’re comfortable with and your retirement goals. Visit your super fund’s website to find out your options.

With thanks to one of our Supporting Partners, HESTA, for this post.

 

With more than 25 years of experience and $33 billion in assets, more people in health and community services choose HESTA for their super.

Issued by H.E.S.T. Australia Ltd ABN 66 006 818 695 AFSL 235249, the Trustee of Health Employees Superannuation Trust Australia (HESTA) ABN 64 971 749 321. This information is of a general nature. It does not take into account your objectives, financial situation or specific needs so you should look at your own financial position and requirements before making a decision. You may wish to consult an adviser when doing this. Before making a decision about HESTA products you should read the relevant Product Disclosure Statement (call 1800 813 327 or visit hesta.com.au for a copy), and consider all relevant risks (hesta.com.au/understandingrisk).

Financial literacy events for women

 

 

 

 

household cashflow

Worried about a big bill hitting you expectedly? Finding you’re looking at a scary low bank balance too often? This could be highlighting the importance of a household cash flow. Planning your cash flow will help you get ahead of the ins and outs in the bank account that lead to money worries.

What is a cash flow?

A cash flow or cash flow budget is a plan that sets out all of the planned sources and uses of cash. It’s usually set up by month, so you can see if there are any points during the year when you’ll be particularly short of cash.

What does a cash flow look like?

A typical cash flow has a column for each month, usually laid out in a simple spreadsheet tool. At the top, the template shows all of the expected incoming cash: income, tips, commissions, tax refunds or any other sources. Below that, cash outlays are detailed: outlays on food, transport and other incidentals. Bills that you expect to pay will also be shown in this section, based on when the payments are made. For example, an annual insurance bill is shown entirely within the month when the payment is due.

At the bottom, you’ll be able to calculate the net cash income/outflow for the month. By starting with a current bank account balance, it’s then very easy to project the balance over the rest of the year. In doing so, you’ll know if you’re ever too close to the line. And you’ll have something to check your balance against, for a very real-time measure of how well you’re sticking to your plan.

Financial literacy events for women

 

saving for the future

Lately I find myself pondering the idea I’ve started calling The Tomorrow Bucket.

The Tomorrow Bucket is a simple concept:

It’s the bucket of money (super, bank savings, property, business value) you will have “tomorrow” to meet your needs and wants (assuming that you won’t work forever). Obviously, if you never put anything in there, or constantly take stuff out, the bucket will never fill up.

When I say tomorrow, It’s not so much as in ‘tomorrow’ the day after today, but really it could be any day after that. Maybe it’s in thousands of Tomorrows time.

The thing is, Tomorrow comes about so very quickly. We all sit back and wonder where the time went, where did the years go?.

I’ve met a number of people lately who have arrived at, or are nearing their Tomorrow (retirement, redundancy, ill health etc) and found their bucket was empty – they spent it all yesterday when times were good. These people are stressed and regretful of missed opportunities. They are annoyed they didn’t think ahead.

In my experience, many people do add a little to the bucket over time (at the very least our employers pay into our superannuation), but then find out that what’s in there is not quite enough to fulfill their needs or expectations – so their Tomorrows are unenjoyable and they spend their time frustrated about what could’ve been.

Of course we all know those fortunate people who through good luck or good management have a bucket that seems overflowing and bottomless.

But for the most, we have to make a conscious effort and plan to fill the bucket over time, sometimes dipping in when needed, but still with a commitment to keeping it full enough for Tomorrow. Making long term investments and regular savings will get us there.

For example, saving just $20 each week with a 5% rate of return will give you over $132,000 after 40 years. That’s nearly $91,000 of interest!

Although life shouldn’t be about sacrificing every today for a possible tomorrow, we should all be able to make smart and often simple choices each day, month or year to give ourselves a shot at reaching Tomorrow with a bucket full enough to reach our dreams.

For me personally…. In my “Tomorrow”:

  • I want to give my kids a sound education and some extra-curricular and travel experiences to open and broaden their minds (and I’ll probably need to buy them a car to drive)
  • I’d love to see some of the worlds amazing places with my hubby,
  • I’d love to establish and nurture a beautiful garden and veggie patch,
  • I want to do more for charity.

How can I do all this without throwing some money into The Tomorrow Bucket today?

A drop of water every day might be a safer bet than hoping it pours just when you need it.

 

By Casey Kropman

Casey Kropman 2

Casey Kropman   BComm, Dip FP, CFP, SSA

Authorised Representative No. 417236

Total Financial Solutions Australia Pty Ltd AFSL 224954

Find out more about, or get in touch with, Casey, here.

balance transfer

If you’ve racked up a hefty credit card bill over the past few months and you’re wondering if you should take up a balance transfer credit card, there’s a few things to consider.

Firstly, what is a balance transfer?

A balance transfer lets you take the balance you owe on an existing credit card and transfer it over to a new credit card.

How does that help?

Balance transfer offers often come with a special interest rate that lasts for a specific period of time. For example, a credit card provider might offer you 0% p.a. for 12 months on balances transferred. Why pay 20% p.a. in interest when paying off your credit card debt, when you can pay zero? That means more of your monthly payments can go towards paying off your debt, instead of going towards interest.

What’s the downside? Is it really reducing my debt?

As with all credit products, you need to pay attention to the specific conditions of each balance transfer offer. Here are some things to look out for if you’re looking to reduce your debt:

  • Some credit card providers will charge an upfront balance transfer fee, usually 1-3% of the balance you’re transferring.
  • The special interest rate you receive from a balance transfer offer only lasts for a period of time, often ranging from 5 to 24 months. If you haven’t paid off your balance by the end of this honeymoon period, your interest rate will revert to a higher rate.
  • If you start spending with your new balance transfer card, you will start incurring interest on these purchases from day one as you will already have a balance outstanding and won’t be able to take advantage of any interest free days. This means you could end up worsening your debt situation if you’re not careful.
  • There are usually minimum and maximum amounts that a credit card provider will allow you to transfer to a new card and they usually require that your balance is transferred from a different credit provider.
  • Keep in mind that making too many applications for credit can hurt your credit score, regardless of whether your application is approved or declined. (If you don’t know your credit score, our partners Credit Savvy can help you check it for free here).

So before applying for a balance transfer card, make sure you’ve done the sums, read the policy and check that it meets your requirements before applying!

CreditSavvy is a valued 10thousandgirl partner –
check out their website for more information about all things credit.

risk stock market or beginners

There has been a lot of discussion in the media recently about volatility in global share markets, however the fact is that periods of market volatility are a fairly normal part of the investment cycle.

While it might seem a strange idea at first, risk is an essential part of investing; it’s simply the chance that what a particular investment actually earned (the return), could be less or more than expected.

A low-risk investment can provide the comfort of greater certainty of achieving its targeted return, while higher levels of uncertainty about how an investment will perform, generally means that an investment carries higher risk.

Risk and return

Generally, lower-risk investments are associated with lower returns, while higher-risk investments give the possibility of higher returns.

However, there are no guarantees when it comes to investing. While everyone would like higher returns, not everyone can handle the uncertainty that may come with a riskier investment.

How prepared you are to accept changes in your investment returns — including potential losses — will help you understand what’s known as your risk profile, or tolerance.

How much risk are you comfortable with?

Everyone’s risk tolerance is different depending on their own personal circumstances and mindset, so think about your risk tolerance before you make your investment choice. Are you the kind of person to lie awake at night worrying about a downturn in the market, or you can comfortably live with some market fluctuation?

So how can you work out your risk profile? Well many super funds provide an online risk profiler or calculator that make is super easy to work out.

These risk profilers can help you to clarify your:

  • investment goals and timeframe
  • experience level as an investor
  • tolerance of a potential short-term fall in the value of your investments

Based on your answers to these questions, the profilers typically will also indicate your investor type.

These investor types can include:

  • Cautious — typically invests over a shorter timeframe (three years or less), seeks lower-risk investments and, in exchange, is willing to accept lower returns
  • Assertive — generally invests over a five years + timeframe, is prepared to accept some short-term changes in returns, or moderate risk, as seeking slightly higher returns than a cautious investor
  • Aggressive — invests over longer-term (10 years or more), more comfortable with short-term fluctuations in investment performance, as aiming for higher long-term returns.

Super funds will typically match the investment options they offer to an investor type, so you can more easily see which option might better suit your personal circumstances.

Before changing your investment strategy, it’s worth considering getting advice. HESTA members can access advice — including about their investment strategy — at no extra cost.

It’s worth checking with your super fund about what advice they offer. Having a chat to a super expert at your fund can be a great way to get to know more about your investments and what type of investor you are.

Danielle Ludowyke of HESTA will be joining us for a free webinar on superannuation on November 26 2015 Register here to join us!

superannuation

Issued by H.E.S.T. Australia Ltd ABN 66 006 818 695 AFSL 235249, the Trustee of Health Employees Superannuation Trust Australia (HESTA) ABN 64 971 749 321. This information is of a general nature. It does not take into account your objectives, financial situation or specific needs so you should look at your own financial position and requirements before making a decision. You may wish to consult an adviser when doing this. For more information, call 1800 813 327 or visit hesta.com.au for a copy of a Product Disclosure Statement which should be considered when making a decision about HESTA products.

 

pay off your home loan

Did you know Australians are over $200 billion ahead in their home loan repayments? Over 70% of home loan payers are actually ahead in their repayments and are in fact more than two years ahead of schedule.

It is often not one reason as to why they are ahead but rather a number of little ways that people accelerate their repayments. Here’s some tips so that you too can get on the accelerated home loan wagon and pay off your home loan sooner …. after all, every little bit counts and better in your pocket than the banks!

  1. Shop Around. If you have an owner occupied property, now is the time to really negotiate a fabulous deal. There are plenty of lenders who are offering variable and fixed rates for under 4%. They key to this though, in order to pay your home loan quicker, when you do refinance is to keep repayments at the original level. As tempting as it may be to have more money in your wallet every month, by having the same repayment at a lower rate, there is more of your repayment actually paying of the principal and not just going towards interest.
  2. Pay Fortnightly. Paying fortnightly can save you 5-6 years off your home loan. That’s right, years. There are 12 months of the year but there are 26 fortnights. By paying fortnightly you are in effect paying 13 months off your home loan every year. The savings over the life of the loan is between $40,000 – $50,000!
  3. Pay an extra $10 / week extra off your home loan. On a $500,000 home loan and at a rate of 4.5% by paying just $10 / week extra, you can shave 12 months off your home loan and save you just over $15,000 in interest.
  4. Don’t reduce your home loan repayment when the RBA reduces the cash rate. If you maintain your repayment at the original level when your loan commenced it has two positive effects on your home loan. Firstly, you are paying off more principal on your home loan but secondly when rates actually rise again, you will not notice any repayment increase or pain. For example: If your $500,000 home loan 3 years ago was 5.5% with a repayment of $2,839 (interest component is $2,292) and if your rate is now 4.09% the interest component has reduced to $1,704. By maintaining the $2,839 repayment, you will then be paying off $1,135 / month off your home loan. If you paid an extra $1,135 / month off your home loan every month form year three for the life of the loan, you would save a whopping 12 years off your mortgage and $150,000 in interest alone!
  5. Use an offset account to reduce the interest you pay. Interest is calculated daily and charged monthly. For every single day that you have money sitting in your offset account you are reducing the interest you pay. This requires a little more discipline – no impulsive spending allowed here! If you have $10,000 in your offset account you could be saving yourself just over $30 / month in interest on a $500,000 home loan. $30 / month extra in repayments is a further 8 months off your home loan and $9,280 interest savings.

A combination of a few little things can certainly help you achieve greatness. See what you can do to get your home loan down!

Nicole Cannon is one of the fabulous advisers listed in our Lil Black Book; if you are thinking about a new mortgage or refinancing, drop her a line!

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