Financial Strategies

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Why Use A Financial Planner? >>

Debt Management >>

Retirement Planning Strategies >>

Personal Insurance >>

Wealth Creation >>

My Superannuation >>

Why Use A Financial Planner?

The question should really be why not. Unless you have the necessary credentials would you consider embarking on complex projects like building a house or major repairs on your expensive car or electronic equipment? Securing a safe financial future requires just as high a level of multi-faceted expertise and experience so it is vital to seek skilled, empathic advice which can best be provided by a financial planner.

Financial advice means different things to different people. Some are seeking investment advice or a smarter tax strategy while others are looking for help with budgeting or their insurance needs. The reality is that financial advice is all of these things – and much more. It is a comprehensive map, a financial plan that charts the way to one primary goal – helping you to take control of your finances and make sound financial decisions towards a safe future. Importantly, it can eliminate the often uncertain financial gap between today and your future. Like to know more?

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Debt Management

Do you have a credit card, a mortgage on your home, an investment loan or a personal loan?
If you answered yes to any of these questions you can count yourself in an elite group which owe your lenders approximately $48.8 billion in credit card debt.
Other prominent trends:
Borrowing to buy shares has more than doubled to AU$36.2 billion in the past two years.
Figures from census June 2008, show that mortgage repayments nationally consume 31.6 per cent of average household income, up from 27.7 per cent in 2001
Debt is totally fine if it is managed well. When you find yourself in the position of having more month than money – instead of more money than month, it’s a clear sign that the debt is managing you.

Any good financial strategy has to take into account your current financial situation; which includes assets and liabilities (what others expect you to pay them, and by when) Like to know more?

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Retirement Planning musts

We all at some time or another thought about:
Getting out of the rat race, getting of the treadmill, getting out of the daily commute, not having to punch in at whatever time your contract states, and just not have to worry about how you are going to pay those bills.

Sound like a dream? Well it probably will be if you don’t think about doing some planning for the future.

Recent statistics collected in the last census confirms that 1 in 10 people will be able to enjoy spending an accumulated income of more than $500 per week by the time they reach age 65.

We have a guaranteed minimum standard of living in the great country and a social security system that will assist you receive some form of entitlement assuming you meet the various tests set out by Centrelink.
The key points here are minimum standard of living & some form of entitlement.
If it was affordable and sustainable and was going to be there for ever, would the government of the day be encouraging you to SELF FUND your retirement? Like to know more?

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Wealth Creation

How do I make more money? How can accelerate my plan? If I don’t have the money now, can I borrow to do this?
What is this thing called gearing?
Gearing simply means borrowing money to invest. Gearing may be used with existing savings to accelerate the process of wealth creation by allowing an investor to make a larger investment than would otherwise be possible. The borrowed money can be invested in a number of ways, including direct shares, property and managed investments.

Negative gearing occurs when the interest payable on borrowed funds exceeds the net income received from the investment. The investor must have surplus income over and above their day-to-day living expenses to meet the shortfall. Gearing can be an effective strategy if the after tax capital gain return of the geared investment exceeds the after tax costs of funding the investment.

Does gearing suit everyone? Certainly not, however it is an effective strategy to create wealth.
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Personal Insurance

Life is full of surprises and often the unexpected can occur.
Accidents happen, people get seriously ill and the risk increases as we get older.
The death of a loved one can place enormous financial pressure on a family often when the survivors least equipped to deal with this issue. Having experienced this first hand I appreciate the emotional and financial strain that can occur. Have you considered how your family would cope financially, if you were no longer around?

Not a pleasant thought, but real enough not to be ignored. If you have a family who is financially dependent on you and / or you have debts that are serviced from your income alone, you need to consider the peace of mind personal insurance may bring your family if this were to occur.
Highland Financial can assess your personal insurance needs and if appropriate recommend the right level of cover for Life Insurance, Total & Permanent Disability cover, Trauma cover or Income Protection.
It’s part of our duty of care to recommend the appropriate cover. Like to know more?

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My Superannuation

(Your Superannuation is your money)

Superannuation is a place where you can accumulate money for your retirement in an environment that offers various tax concessions. Who’s super fund you choose is not the most important decision. Its not about fees, the best returns last month or even how many investment options are available; although valid considerations; we believe the most important thing to get right is the strategy. Highland Financial will help you develop the right strategy that suits your retirement needs.
We believe your goal ultimately is to Self Fund your income needs when you decide to cease working.
The topics below are designed to stimulate interest but are no means exhaustive on this ever changing area.

Additional Contributions
Making additional contributions to your super fund will accelerate the rate in which it grows.
Some key ways to achieve this result:

Concessional (Pre Tax) Contributions to Superannuation:
What are concessional contributions?
•   Concessional contributions include employer contributions (including contributions made under a salary sacrifice arrangement) and personal contributions claimed as a tax deduction by a self-employed person.
•   Concessional contributions are usually included in your fund’s assessable income. Concessional contributions and the earnings on them are assessable to the fund. The fund generally pays tax on its taxable income at 15%.

I’m over 50, what is my limit for concessional contributions?
•   The limit on concessional contributions is $50,000 a year until 30 June 2012 for those aged 50 or more.
You will be taxed on concessional contributions over the $50,000 cap at a rate of 31.5%. You can ask your super fund to release money to pay this excess contributions tax.
About concessional contributions

Will there be a limit on the amount of concessional contributions that can be made to my super funds?
From 1 July 2009 the limit on concessional contributions is $25,000 a year for those less than 50 years of age. This limit is called the concessional contributions cap.
You will be taxed on concessional contributions over the $25,000 cap at a rate of 31.5%. You can ask your super fund to release money to pay this excess contributions tax.

Superannuation Guarantee (SG)
Employers are required to contribute a minimum of 9% of an eligible employee's earnings base to a complying superannuation fund or retirement savings account

Salary Sacrifice Contributions
Salary sacrifice is an arrangement between you and your employer where you consent to reduce your salary by a nominated amount, and your employer uses this amount to increase its super contributions (before income tax is paid).
Generally speaking, if you salary sacrifice some of your gross (before tax) earnings into your super account this will usually reduce your taxable income and adds to your super savings at a concessional tax rate.

http://www.ato.gov.au/super/content.asp?doc=/content/38172.htm

Non-Concessional (After Tax) Contributions to Superannuation:

There is now a new annual cap on non-concessional contributions made to super. The non-concessional contributions cap for the 2010-2011 financial year is $150,000. People under 65 can use the ‘bring-forward’ option to make non-concessional contributions of up to $450,000 over a three-year period, if they contribute more than the cap in the first year.
If non-concessional contributions exceed the cap, fund members will be taxed at the rate of 46.5% on the excess amount. This is called the excess non-concessional contributions tax.

Spouse Contributions

What is the superannuation spouse contribution tax offset?
Taxpayers can claim an 18% tax offset on superannuation contributions of up to $3,000 made on behalf of their low income or non-working spouse. The maximum rebate allowed is $540.

Who is eligible?
To be eligible to claim the maximum tax offset, your spouse must be receiving in total $10,800 or less in a financial year. A reduced tax offset is payable for spouses earning up to a total of $13,800 in a financial year.
A 'spouse' includes another person who, although not legally married to you, lives with you on a bona fide domestic basis as your husband or wife, but does not include a person who lives separately and apart from you on a permanent basis.

Government Co Contribution (extracts from ATO website www.ato.gov.au )
Am I eligible for the super co-contribution?
You will be eligible for the co-contribution in a year of income if:
•   you make an eligible personal super contribution by 30 June each year into a complying super fund or RSA and don't claim a deduction for all of it
•   your total income (minus any allowable business deductions) is less than the higher income threshold
•   10% or more of your total income is attributable to eligible employment-related activities, carrying on a business or a combination of both
•   you are less than 71 years old at the end of the year of income
•   you are not the holder of a temporary visa at any time during the income year, unless you are a New Zealand citizen or holder of a prescribed visa
•   you lodge your income tax return for the relevant income year.

Super co-contribution calculator?

To calculate your co-contribution we suggest you visit the ATO website on:

http://www.ato.gov.au/individuals/content.asp?doc=/content/44186.htm

The co-contribution:
•   must be preserved in a super fund or RSA – it can only be accessed when other preserved amounts can be accessed
•   will not be subject to tax when paid to the fund or RSA provider
•   will not be taxed when received as a benefit
•   is not included as income in your tax return.

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