Your relevant Budget summary: The short, the long or the video version – your choice

Last year I branded the federal budget as boring, I won’t be doing the same this year! It’s a tough budget with all Australians told to bear the burden.

Tony Abbot has dubbed it “pain with a purpose” and according to Federal Treasurer Joe Hockey, “the economy is growing at less than normal speed and the time to fix the budget is now.”

For families, there is a focus on healthcare and education; for high income earners, a new tax just for them; for pensioners – new eligibility rules; and for the rest of us – a little bit of extra super.

For anyone who just wants an absolute bare bones budget breakdown, I’ve prepared a summary of the main points below. At the very least you can pretend to care if one of your friends or family members raises the matter.

And for anyone who would like a more comprehensive look at what this year’s Federal Budget involved, I’ve catered for your taste too by including some links to a much longer report and even a video.

First, the summary.

Personal Taxation

• A levy of 2% will apply for three years to incomes over $180,000 pa, starting in 2014/15. It will increase the top marginal tax rate to 49%.
• The levy will increase the Fringe Benefits Tax rate to 49% for three years, starting on 1 April 2015.
• Tax offsets available for dependent spouses and mature age workers will be abolished on 1 July 2014.
• Income thresholds determining the Private Health Insurance Rebate and Medicare Levy Surcharge will not increase for three years, starting in 2015/16.
• Interest on HELP debts will increase, with a maximum rate of 6% pa from 1 June 2016.

Superannuation

• People who make after-tax (non-concessional) super contributions from 1 July 2013 that exceed the cap will have the option to withdraw the excess amount plus earnings on the excess. Currently these excess contributions are taxed at 46.5%.
• The timeframe for increasing the Superannuation Guarantee contribution rate to 12% will be amended. The next increase, to 9.5%, will occur on 1 July 2014 where it will remain for four years. From 1 July 2018, the rate will increase by 0.5% pa before reaching 12% on 1 July 2022.

Social Security

• The age at which people will be eligible to receive the Age Pension will increase to 70 from 1 July 2035.
• From 1 July 2015, Family Tax Benefit – Part B will only be available to families who earn up to $100,000 pa, down from $150,000 pa. This payment will also be limited to families whose youngest child is under 6.
• The amount of income earned to be eligible for the Commonwealth Seniors Health Care Card will increase each year in line with inflation from 20 September 2014. However, tax-free payments from superannuation pensions will be included in the income assessment from 1 January 2015 for new applicants.
• From 20 September 2014, the Seniors Supplement will no longer be payable to holders of the Commonwealth Seniors Health Care Card. However, cardholders will still receive the Clean Energy Supplement.
• People receiving the Disability Support Pension under age 35 may need to undertake a compulsory workforce participation plan.

It’s important to note that at this stage, the measures announced are proposals only and may or may not be made law. So don’t go acting on them just yet…

If you’d like to hear more of what I have to say on the matter, click here for a recording of my most recent “You & Your Money” radio segment on 98.1FM Radio Eastern and click here for your more detailed Budget report.

And if you’d prefer to watch a 6 minute youtube budget update, click here.

Talk soon,
Caren

Hard not to be bitter…

It’s pretty easy to blame the US for the Global Financial Crisis (GFC). Even if they weren’t completely to blame, their housing slump and sub-prime debacle were a mighty big contribution.
You remember right? All those sub-prime mortgages where banks would loan money to just about anyone, and not only that but some were non-recourse (ie. if the bank forecloses and doesn’t get the full value of the property, there’s no further requirement for the homeowner to pay the balance of their loan). I’m no Julia Childs, but I see a really good recipe there – for disaster! Maybe something like this:

Mix way too many sub-prime mortgages with an over-supply of housing in some areas, and make a well in the middle. Gently fold in rising unemployment and a generous splash of foreclosures due to interest rate hikes. Pour into a tin lined with a collapse in residential housing. Bake at 180 degrees Celsius and test with a skewer and if gross domestic product (GDP) is falling it’s ready. Cool for (let’s face it, about 4 years) and what you have is a perfect GFC yeah?

So it’s a little hard not to be bitter watching their sharemarket screaming towards its highest point in history. In October 2007 the Dow Jones index reached it’s all time high of 14,164 and as I write, it’s at 13,125.

Of course that’s good, I’m not really whinging about their success BUT, in the words of Moving Pictures (or Shannon Noll if you didn’t get to experience the 80s), “What about me?”

In good old Oz, our ASX All Ordinaries index reached 6,854 points in November 2007, and where are we now? 4,348 as of yesterday. Still a long way off our all time high! Seems a tad unfair?

So what should we expect from sharemarkets going forward?

Prior to 2007, business cycles were reasonably long in duration, but it would seem now that they have shortened (eg. 3-5 years) in response to world monetary difficulties (probably euphemistic for some of the European countries). And of course there’s political and religious unrest, not to mention government instability in various geographic regions. So this relatively shorter business cycle began in mid-2009, and economists are forecasting that it possibly has another 12-18 months to run.

Anyone who listens to my radio program will have heard me say that “volatility is the new black”. It’s here to stay for at least this cycle. I did some research a couple of months ago and at that particular time our sharemarket had experienced movement of more than 1% in a single day 97 times in the 12 month period. WOW!! (By the way that’s an expression of amazement, not the Woolworths ASX code). Fortunately most of those times were “upward.”

Sooooooo, market volatility will continue for some time and we’re concerned that government stimulation packages haven’t been enough to sufficiently boost flailing economies. Depending upon a number of factors (eg. presidential and congress elections in the US next year, a programmed change to the political leadership in China, a continued thrust to hold the European Union together) there’s the possibility of a world recession in late 2012 – 2013. So my recommendation is to make sure you protect on the downside by taking a more tactical approach to portfolio management. For example, the current circumstances would seem to call for some strategic defensive positioning. In particular, holding enough equity exposure to take advantage of any market rallies over the next 6-12 months, but also putting measures in place to help protect against “downside” risk.

Alright, well that’s as technical as I’m prepared to get, it must be time for some cheese and bikkies (yes that’s my excuse for a glass of wine).

Talk soon.
C

There’s Wills, and then there’s Wills….

Last year we hosted a free information session and it was the most captivated we've ever seen an audience. The topic was Wills & Estate Planning, and the presenter was a solicitor!!

Soooooooo, I figured there must be something in it and decided to run another session this month. I just went and had a look at the register to discover that this session has now booked out in less than a week.

What the?! Seriously guys, the speaker is a solicitor.

Of course I’m joking, because I was just as enthralled as everyone else last year when Mal gave us real life examples of how easily estate planning can go really wrong, and the dangers of Will Kits and executor trustee companies.

Clearly people are interested in getting their estate planning right, but it can be hard to know where to start. In my opinion, there are 4 main groups of people that need to take particular care when preparing their Wills and Powers of Attorney:

Blended families - Not surprisingly, this can be a veritable minefield and one where I have personal experience. Much care needs to be taken to protect the surviving spouse and children, children from previous relationships, and the estate itself. This is also an area where a challenge to the Will is more likely.

Mal has told me a few times now about a woman he knew whose stepchildren legally evicted her from her home because of her husband's poorly worded Will. Obviously a worst case scenario, but it did happen and neither she nor her husband would ever have meant for that to happen.

Parents with young children - Most people don’t realise that appointing a guardian to their minor children in a Will is not legally binding. It still needs to go through the Supreme Court.

And you need to consider what happens with the proceeds of your estate if have young children? Are Testamentary trusts in place to deal with this? Do you have a plan for the guardians to be able to afford to raise your children?

Elderly - One of the messier situations I see time and again is where elderly parents don’t appoint Powers of Attorney while they can. Most people know about Financial and Medical attorneys, but a lot of people aren’t aware of the importance of appointing an enduring Guardian for lifestyle decisions – particularly relevant for aged care accommodation.

Couples - Regardless of the age of your children if you die without a Will, your estate does not automatically go to the surviving spouse. Under Victorian law, if you have children and an estate worth more than $100,000 (which is most people with a house and a chunk paid off their mortgage) then the surviving spouse receives chattels + $100,000 + 1/3 of the estate balance. The remaining 2/3 of the balance is split between any children – regardless of how much it is!

Singles Having a Will in place may not seem important, but you leave your family to deal with unnecessary red tape without one. Oh and Powers of Attorney are an absolute must!!

Hmmmmmmmm, my four categories pretty much cover everyone, which suggests that careful estate planning is particularly relevant for everyone. A few years back John wrote a great paper called “What happens when you die…?” It’s the story of a couple who made a number of simple mistakes and made a dog’s breakfast of their children’s inheritance. Click here for a light look at a pretty serious topic.

Talk soon,
C

Keeping fit financially...

So with the lovely weather last weekend, I started thinking about Summer. And that got me thinking about the beach and bathers, which lead to my annual resolve to get fit. It’s probably something that crosses all our minds at some point, but I wonder how often we think about our “financial fitness”.
And just like physical fitness, age plays a significant part in financial fitness. One of the reasons that all Australians need a financial plan, and have it regularly checked and updated, is that our needs change throughout life.

Financial plans should recognise a number of aspects, including current income; income prospects; lifestyle; expectations; and very importantly, age.

At the risk of stereotyping in the extreme (I don’t care, I’m allowed), I’ve put together some thoughts and tips for different stages in life.

20s
You’re young, you’re independent and you’re about to set spending habits that are likely to stick with you for the rest of your life. At this stage in life, retirement planning is probably the furthest thing from your mind. It’s all about having what you want and having it now.

If you’re single, have little or no debts and wish to one day own your own home, this is one of the most important periods in your life because it’s about the only time when savings are discretionary. Many 20-somethings may think saving is a dirty word, but this is the time you need to set a budget and stick to it. If you get into good financial habits at this stage they will last the rest of your life.

Top Tips for the 20s
• Set a budget and stick to it
• Start saving a small amount each month for a home deposit
• Take out income protection insurance
• Direct a percentage of all salary increases into savings
• Make minimum superannuation contributions
• Set your superannuation approach for the long term by investing in quality growth assets

30s
This is the time you’re supposed to get serious about your life and your finances. It’s a high commitment decade with many paying off a mortgage, starting a family and working hard. It’s also the time when you start to realise you must begin to seriously plan for the future if you haven’t already.

It’s the time when finances may start to get tight as commitments increase. It’s very important at this time in your life to avoid a high consumption lifestyle in an attempt to “keep up with the Joneses.”

Important considerations include life and income insurance, investing for growth, possibly saving for children’s education and buying or upgrading the home. Earning capacity often increases considerably from that of your 20s. For people without children this can mean you are well equipped to invest for the long term as well as to meet short term needs. But it can be the time to set a solid foundation for their future financial security.

Top Tips for the 30s
• Don’t get into the habit of spending all your income
• Set up an “emergency fund” to see you through if times are tough in the business
• Focus on mortgage reduction – don’t let debt stay at the same level or grow
• Make sure you have adequate insurance and a will
• Diversify investments
• Set a savings plan in place for children’s education
• If you don’t already have a Financial Planner, it’s time to get one
• Stick to a budget and avoid taking on debt to pay for luxuries, even though it’s easy to access loans.

40s
Many people in their 40s have paid off, or are close to paying off, their mortgage. This, coupled with the fact that for some it’s the time children start to leave the nest, can mean that the 40s are a period of greater financial freedom. The 40s is also often a peak earning period but it’s important not to counter these benefits by also making it your peak “spending period”.

Often, for the first time in their life, as people turn 40 they start to become aware that retirement is not so far away after all and the need to plan for it becomes more pressing. It’s the time to start really focusing on retirement savings if you are to have a comfortable retirement lifestyle. The minimum superannuation contribution will not be enough.

Top Tips for the 40s
• Increase life, disability and income insurance
• Increase super contributions
• Continue to build a diversified share portfolio
• Continue mortgage reduction strategies
• Reduce lifestyle debt, such as the mortgage, so that you can consider using equity in your home to diversify into other investments

50s
For many this is a period of major lifestyle change. Possible career uncertainty and impending retirement can have major financial and emotional effects. Many people’s dream becomes early retirement. However most people can expect another 10-15 years work and then another 15-20 years in retirement and, after working hard for years, you should be able to enjoy the fruits of your labour. The question is, at your present rate of savings, can you afford to fund the style of retirement living you would like? If not, there is still time to do something about it.

Generally, this is a decade of low financial commitments, high earning capacity and a time when you should be able to commit the maximum available income to your investments.

Top Tips for the 50s
• Add to your investment portfolio and continue to top up your super
• Maintain income insurance but focus less on life insurance
• Consider risk in relationship to your investment portfolio
• Make sure your will and power of attorney is up to date

60s
It’s time to sit back and enjoy the pay-off from years of hard work and financial diligence. More than ever this is a time when financial decisions are heavily influenced by lifestyle aspirations – perhaps you want to start travelling the world or spend your days soaking up the sun. However you may still need to fund 20 years or more of living. At this time of life many people also consider moving to a smaller home. It’s important to start re-positioning investments and assets for income rather than financial growth (but not to the exclusion of growth!). You’ve worked hard for your money long enough, so now you can enjoy the fact that it’s working hard for you.

Ideally, debt should be eliminated at this point and all large purchases, such as a new car, should be financed debt-free.


Top Tips for the 60s
• Continue boosting super entitlements until you retire
• Look at the variety of income streams available and consider what suits you
• Ensure you have investigated all entitlements such as pension options
• Review investments, still maintaining some growth assets to help fund a long retirement
• Consider eliminating or reducing life and income insurance but maintain health insurance
• Enjoy life to its fullest!

Obviously, I’ve made lots of generalisations as part of this post, but I hope it’s been a bit of fun and that there’s been a few good tips you can use or pass on.

Talk soon,
C

FEEL THE NOISE?

Oh man, it has been a noisy few weeks in sharemarket land. And most of that noise has been coming from the media – bless their often misguided, sometimes completely irresponsible, cotton socks.

This will be a fairly lengthy blog, but I think (hope) well worthwhile for anyone that’s wondering what on earth is going on. More importantly, it will provide some perspective.

But most importantly, there’s a prize offer at the end!!!!!

At my business, The Hendrie Group, our approach to managing finances has always been to identify long term goals and then to develop strategic plans to help meet those objectives.

As with all plans, nothing is set in stone, and there may well be variations along the way, to respond to changes both in your goals and to investment markets.

But we try to keep those changes to a minimum, by having a long term strategy, and filtering out the market “noise” which fills the media on an almost daily basis.

Those of you who regularly read my blog or listen to my radio program (98.1FM Radio Eastern Thursdays after the 9am news), will be accustomed to my periodic harangues about the need to be wary of sensationalism in media headlines and reporting. Not to mention, inaccurate reporting, media focus on “short termism” particularly in relation to investment returns, over-emphasis on the issue of fees, etc, etc ….. and to remain focused on the long term.

So, given the market gyrations of recent weeks, and the associated reports, I was pleased to read two articles which – in differing ways - reflected my philosophy.

In a topical article titled Why the fear industry has moved on from the Greek ‘crisis’ well-known and respected Australian finance journalist Michael Pascoe wrote:

“Is anyone feeling a little sheepish after all the hype about the potential Greek Armageddon last week? Probably not. The fear and worry industry immediately moved on to beating up the importance of China’s manufacturing industry numbers on Friday.

For all the theatre of protesters and police, the whiff of tear-gas in reporters’ constant pieces to camera, the repeated lines about the danger of Greece causing another global financial crisis….nothing much really happened.

…….Meanwhile, back at the headline factory, China’s indicator of manufacturing activity, the purchasing managers index (PMI) came in lower than expected for June. The Australian stock market allegedly saw that as a bad thing, indicating that China is slowing, albeit to a growth of about 9%. The Shanghai market saw it as a good thing, indicating that China is slowing and therefore Beijing won’t have to increase interest rates again. So it goes.”

(Market Perspective, The Sunday Age, July 3 2011, p22)

Jim Stackpool, a leading management consultant to financial planning businesses, says:

“Good financial professionals deliver certainty in a constantly uncertain world. Mining booms will come and go, international markets will fluctuate, countries - and companies the size of continents - will not perform predictably, natural and unnatural disasters will occur, and unforeseen threats will raise their ugly heads. The ramifications of each of these events will affect the assurance people seek, and good financial professionals anticipate this.

… (they) also understand our ‘natural financial wiring’… adversely affects most peoples’ decision making (that is most of us mere mortals tend to buy high and sell low), and they know how this thinking will most significantly affect the attainment of greater financial certainty in our lives.

Even more importantly, they understand their clients well enough to deliver the wealth management services required to reinforce and lead their clients on the financial journey most appropriate to deliver the assurance each and every client seeks.”

(Asset Financial Review, July 2011, p40-41)

(Note: All the bolding is mine for emphasis).
And finally, eminent Australian economist Shane Oliver (so not the media) wrote in his latest issue of Oliver’s Insights:

“A massive increase in economic and financial information flow is adding to investor jitters and driving a shift further away from long term-investing. This is likely to work against investors over time.

Investors should consider turning down the ‘news volume’ and refocus on investing for the long term, remembering the best time to invest is when everyone is gloomy. Averaging into weakness is a good way to go.”

(Oliver’s Insights, Edition 18, 29 June 2011)

So my message remains the same - stick with your long term strategy. Unless you really can’t stand the strain, in which case talk through your issues with your adviser.

Ok, now to the prize offer. If you have a Facebook account all you need to do to enter our draw is “like” our new Hendrie Group page before 31 July. The prize is a 26" Full HD LED Kogan TV with built-in DVD player and PVR. How good is that?

Talk soon,

C

A lesson in finance from Tulips

If you’ve read all the guff about me in my profile, you’ll know I have a background in literature and history (yeah, small career swerve!). One of my favourite novels is Thomas Hardy’s Far From the Madding Crowd. Great title eh? It was borrowed from a Thomas Gray poem (Elegy in a Country Churchyard).

Given my background, you can imagine how excited I was upon first entering the finance industry, to attend a lecture “Tulip Mania and the Madness of Crowds.” And I wasn’t disappointed. The protagonist of the story was the humble tulip, and I’m still not sure whether the moral of the story was supposed to be the role of supply and demand in economics, or the stupidity of the human race.

In the early 17th century, the Dutch literally went mad for tulips and demand ultimately outstripped supply. If I remember rightly, someone brought (stole?) some back from Turkey and didn’t want to share. Of course we know what happens when someone tells you that you can’t have something – you want it even more right? So began the manic trade of tulips.

There are stories of farmer’s mortgaging their farms just to get hold of a couple of tulip bulbs. Tulip traders made a fortune, and there was even a future’s market for these much sought after flowers!!

Obviously they became waaaaaaaaaaaaaaaaaaaaaay over-priced, and what has to happen then? Yep, you guessed it, a market correction! It started with some astute businessmen deciding that they would sell out and take some profits. This proved to be a prudent move given that new tulip varieties were being introduced, and thereby increasing the supply. Then a few more sold out of their “tulip position”, then a few more, and suddenly people started to panic, and the tulip market went into freefall.

To put things in perspective, tulip prices fell more than 90% in a matter of weeks. It’s impossible to accurately convert this to current monetary value, however popular consensus puts the comparison at something like $80,000 per bulb to less than a dollar per bulb.

You have to wonder at what point it occurred to some people that they had spent their life savings on flowers! OUCH.

More than one historian has linked this tulip phenomenon to the onset of the Great Depression in the Netherlands, not to mention “the madness of crowds”…

If you’ve seen the Wall Street sequel, you’ll recall Gordon Gekko showing Jake a painting and comparing Tulip Mania to the GFC. Not a bad analogy. When it comes to the sharemarket, crowd behaviour is both fascinating and frustrating. And unfortunately sometimes it is just plain mad. Think back to Greece, Portugal, Spain, Ireland, and more recently, Egypt. The way the market reacted was not in proportion to the relative potential market impact. And don’t forget our friend “Fat Fingers” who shook the US market by accidentally entering a trade in billions instead of millions.

I often tell my clients that if we took emotion out of the market, it would be extremely rational. However, it’s risk that drives reward so if there was no emotion there’d be little opportunity to make money. I guess we can’t have our proverbial cake.

The best advice I can give is to make sure you take a leaf out of Hardy’s book (pun intended), and stay far from the madding crowd when it comes to investment decisions. Make your decisions based on fact and fundamentals, and with professional guidance from your Financial Planner.

Talk soon,
C

This Christmas will be different!

It’s unfortunate that Christmas is often called the ‘silly season’. It doesn’t have to be silly, there are things we can do to make sure it doesn’t get out of hand, and that it’s fun and festive. So continuing on with the resolutions theme, perhaps we can implement some Christmas savings ideas for 2011.

We tend to forget that money is just like other aspects of our life, it requires careful planning and commitment to achieve true success. You wouldn’t go on a camping trip without planning, so why should your Christmas spending be any different? You need a plan!

First off you need a Christmas budget (sorry FIDO doesn’t have an online version). Make a list of the people you need to buy Christmas presents for, and an amount you expect to spend beside each name. I also try and actually think of an appropriate gift at this point – it makes it sooooooo much easier when you actually hit the shops.

When buying gifts, try and do it in a planned, controlled manner without getting too emotional about the purchases. Not leaving it to the last minute, and making a list before you reach the shops, could help guard you against impulse buying. When you’re desperate, you can end up spending a lot more than you intended.

Make sure you also think about:
• Decorations;
• Christmas get-togethers;
• Christmas lunch/dinner;
• Cards;
• Kris Kringle;
• Shopping Centre wishing trees.

And don’t forget the Christmas break, whether it’s camping, a resort, or just staying at home and taking the kids to the movies – it all costs money.

So how do you ensure the money is there come December?

I was talking to a client recently that has a Christmas Club account. The best thing about Christmas Club accounts is that they enforce discipline. You only have a short window of opportunity when you can access the funds to ensure that the money is there for Christmas.

The drawback to these types of facilities is that they don’t pay a very high rate of interest, so if you have confidence in your own discipline then you could choose a higher interest bearing account instead.

Alternatively you may even want to implement a longer term strategy that you can draw-down from each year.

These days there are also food hamper plans. These allow you to stagger the cost of food and gifts for Christmas over the year rather than in one big hit at the end of the year. I’d certainly advocate doing your homework to make sure you’re not paying a large premium for the convenience and payment plan.

I’d be very interested in hearing from anyone that has used these services, to find out whether they found them to be worthwhile. Just add a comment below or email me at askCaren@hendrie.com.au.

Don’t wait until the end of the year to start spending. You can start preparing for next Christmas at the January sales! Christmas wrapping paper, decorations, toys, games and much more are often up to 50% off. Or at least take advantage of sales throughout the year – if you see something on special that you know would make a great gift for someone, grab it or put it on lay by.

I always do this. In fact one year I bought all the presents for my nieces and nephews in July (12 in total) and put them on a “Christmas lay by”. By doing this I didn’t have to pick them up until as late as Christmas Eve, so it even solved the problem of where to store them.

With hindsight this was a great idea, because not only was I able to buy presents that were on sale, but I was also able to stagger my Christmas spending. My only caution is to keep a list detailing the present and the person you’re buying it for, otherwise it can be very confusing when you eventually collect that lay-by.

Have you thought about introducing a family Kris Kringle? In my family, the brothers, sisters, brother’s-in-law, and sister’s-in-law all put their names in a hat and rather than buying for everyone, we buy a really nice gift for one person each. Of course this didn’t work out so well for my sister this year when my brother in Byron Bay decided he wasn’t coming down until February…

A quick warning about credit cards….. ‘Plastic money’ makes spending very easy. So much so, that many people are left with a ‘spending hangover’ (thanks to my friend Vivienne James, author of The Woman’s Money Book”, for that term). Use your credit card wisely (remember it’s the most expensive loan you’re likely to ever have). Then get rid of the credit card debt as quickly as possible because it’s high interest and not tax deductible.

So if you found the Christmas finances tough this year, don’t ignore the situation – put a plan in place for this year. After all, if you don’t do something different, you’ll find yourself in the same position every Christmas. Try even one idea, and let me know how you go.

Talk soon,

Caren

Happy 2011!

So what were your New Year’s resolutions? Get fit? Give up smoking? Lose weight? Spend more time with the family? Work harder?

Did you make any financial resolutions?

The new year is a great time to take stock and make some decisions about your finances. Let me start you off with a few examples:

Create a Budget (or update the one you have).

This is the most basic step to getting your finances in order. It’s pretty tough to save money if you don’t have an accurate picture of what you’re spending. Creating a budget allows you to prioritise your spending and determine the patterns. Furthermore, you can work out where you don’t actually need to spend money.

It’s important to make your budget realistic so that you can stick to it. I suggest http://www.infochoice.com.au/distributions/asic/calculators/budgetplanner/index.asp This is a very comprehensive online budget tool. If you don’t already have a budget, it’s a great place to start.

If you do have a budget, then make sure you re-visit it each year in order to ensure it remains up-to-date and appropriate.

Get your credit card under control.

Eliminating debt is one of the most important aspects of any financial plan. Credit cards are probably the most expensive loan you’ll ever have (unless you’re planning a visit to a loan shark a la Sopranos style, in which case nothing I can say will help you).

Credit cards are very convenient, but you shouldn’t be spending more than you earn where you can help it.

Try to pay out your balance once a month – or at least make a decent payment.

Once you have that credit card under control – keep it that way!

Commit to investing:

There are many good reasons for investing, some include:

• provide for retirement;

• retire early;
• children’s education costs;
• sheer pleasure of knowing your money is working for you.

Make this year the year that you stop saying “I need to get around to seeing a financial planner” – do it, we don’t bite.

Perhaps you could make a commitment to save at least $100 per month into a regular investment plan.

Or if you have a lump sum of cash sitting in the bank that you know you don’t need for a few years, explore your longer term options

Invest your tax refund before you spend it! Instead of banking your refund along with the grocery and bills money this year, consider an investment that you can allow to grow over the next few years.

Protect what you have.

If you earn more than $40,000 and don’t have income protection insurance then you need to have enough income producing assets behind you to replace that income in the event you are unable to work due to illness or injury.

If you’re not in such a fortunate position, then you need income protection insurance. Simple as that. If you don’t have it, this could be your most important and valuable resolution.

Review Current investment strategy and portfolio.

The Australian Securities and Investment Committee (ASIC) recommends that all investors review their portfolio at least once a year. In fact, they have made it a legal requirement for all Financial Planners to offer an annual review service to their clients.

Investment is not a “set and forget” exercise. The reason reviews are so important, is because you can factor in changes to the market, economy, and your lifestyle.

Set financial goals and time frame:

It’s always easiest to save money when you have a specific goal – retirement, house deposit, paying off the mortgage, a holiday etc etc. It's important to work out what you want to achieve, and how long you have to achieve it.

A short-term strategy is just as important as a long-term strategy – but they are different. Don’t assume that what you’re doing is the most suitable just because it’s the way you’ve always done it.

Write down your short-term and long-term goals, as well as what needs to happen so that you can achieve those goals.

Learn more about the sharemarket.

Accepting that the value of your investment may go up or down over the short-term could greatly improve the potential for your money to grow over the long-term. Don’t be scared off by the last few years – learn from them.

Get good advice.

Engage professional advice to steer you through the investment maze. Like any professional service, check the financial adviser’s experience, qualifications, fees and services. Knowing your goals is one thing, but finding the best investment strategy to help you reach them can be difficult without guidance.

And yes, I would love it if you chose me and my terrific team to be the ones to help you!


Ok, I hope that gives you some ideas for this year’s financial resolutions. If you have any others, I would love to hear them! Just add a comment below or email me at askCaren@hendrie.com.au

Talk soon,

Caren