SUMMER 2017

SUMMER 2017 1

Inside:

LET’S MAKE YOUR NEW YEAR’S RESOLUTIONS A REALIT Y. 2

GUARANTEED FUTURE VALUE - WHAT’S THE CATCH? . . . 3

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. . . . 5

CONTRIBUTING TO SUPERANNUATION EARLY . . . . . . . . . .

MARKET UPDATE FROM ONE OF OUR PARTNERS . . .

FESTIVE SEASON BUDGETING TIPS . . . . . . . . . . . . . . . . . . .. . . 6

YOUR FINANCIAL WELLBEING

Welcome to the summer edition of our newsletter.

As the year winds down, now is a great time to review all aspects of your financial world.

In this edition we take a look at some new year’s financial resolutions we can help you with before the end of the 2017.

As the end of year car sales begin, we explore a marketing incentive used in the car industry – Guaranteed Future Value, and how it can affect you down the track.

We’ve got a feature on the power of compounding interest in your superannuation and the summer market update from our partners at Colonial First State.

And as we approach the festive season we give you a few tips on how to control spending during an often expensive time of year.

We hope you enjoy!

SUMMER 2017 2

LET’S MAKE YOUR NEW YEAR’S RESOLUTIONS A REALITY.

Most of us make New Year’s resolutions – and while we might not be able to be your gym buddy, we can help you get your finances into shape!

Of the two thirds of Australians who make New Year’s resolutions, more than half will focus on their finances1. And with 2018 just around the corner, now is the perfect time to start planning your financial strategy for the year ahead.

Here are some New Year’s financial resolutions that you can make right now.

Resolution 1: I will review my household spendingA detailed budget can be the most valuable tool you have for managing your finances. So if you find yourself regularly overspending, now is a great time to look at where your money keeps going.

Resolution 2: I will manage my debtsClearing your debts can seem like a daunting task – but whatever you do, don’t stop chipping away at them. Remember, the longer your debts stay with you, the more you’ll spend on interest.

Resolution 3: I will start savingSaving can become even easier if you open a high-interest savings account. And by setting up a direct debit, you can automatically deposit a fixed amount from your everyday account as soon as you get paid (in other words, before you even notice it’s gone).

Remember to budget for larger expenses that come around once a year, like your home insurance or car registration, so they don’t sneak up on you and empty your savings.

Luckily, we specialise in helping you put into action strategies to achieve your financial goals.Before the end of the year we could help you get a plan underway and:

• get your kids into their first home • pay off your mortgage faster or lock in your

interest rate• use your home equity for investment purposes• consolidate your debt• protect your family and lifestyle with personal

insurances, or• discuss and implement a retirement plan

tailored for you.

Regardless of what you would like to achieve, our network of experienced brokers and qualified Financial Advisers can help get your finances in shape for the New Year.

Call us to see how we could help!

1. ING DIRECT Global New Year Survey 2013.

SUMMER 2017 3

GUARANTEED FUTURE VALUE - WHAT’S THE CATCH?

A common incentive offered by car manufacturers is to guarantee the future value of their car. It seems like a good idea, so what does it all mean? What should you be aware of?

Simply put, this is a sales tactic that attempts to leverage your fear that your new car will fall drastically in value, especially when your finance contract has a balloon payment (i.e. a large final repayment at the end of the finance contract).

It also puts the dealership in a position to ‘control the second market’ by forcing you to come back to them for your next purchase, effectively giving you less choice and often under the guise of ‘supporting their brand’.

If you are considering this type of guarantee, take time to review all your options and consider the following important points when making your decision:

• You will have less choice next time you want to trade this car as you must return to the same dealer.

• If you elect to go to another dealership, and your balloon payment is above the ‘real market value’, you will have a minus equity position and may need to refinance the outstanding debt.

• Dealers will seek to recover any shortfall in the ‘real value’ of the car by charging full retail price on your next purchase, accessories, finance etc. This means you will have fewer

opportunities to negotiate on price as the money must come from somewhere!

• Generally all maintenance must be completed by the dealership’s workshop as a condition of the offer, often at a higher cost than competitors.

• There will be ‘return conditions’ on the contract capping kilometres travelled and allowing for only fair wear and tear on the vehicle. Failure to comply will void the offer or require you to pay a ‘make up payment’.

• There will be a ‘sunset clause’ - a date the guarantee offer must be taken up by or it will lapse. This may encourage you to consider upgrading your vehicle earlier than you would like to.

Independent resources such as Red Book (www.redbook.com.au) can be used to see how specific car models depreciate over time and help ensure balloon values on finance contracts are realistic without locking into arrangements that may not suit you in the future.

An experienced finance broker is well placed to assist you and will have access to a variety of finance options and structures that can be tailored to best suit your needs.

So if you are considering upgrading or purchasing a car, contact us today!

SUMMER 2017

Are you over the age of 20? Are you putting extra money into super?

While superannuation may not appear to be anything exciting to you at the moment, especially if you are lucky enough to still have 40+ years to retirement, consideration of your retirement now will only benefit you long term if you start your superannuation investing early.

Here are some interesting facts that explain why:

1. The 2016 Census reports the median grossweekly income for a family is $1,734 ($90,168pa). Currently employers are required to pay9.5% of your gross salary as superannuationguarantee contributions to super. The medianhousehold therefore contributes $8,566 tosuper each year.

2. The Association of Superannuation Funds ofAustralia says a ‘comfortable lifestyle’ for acouple would demand savings of $640,000. Asingle person would be $545,000.

3. The median household would need tocontribute to super for 75 years to achieve asuper balance of $640,000.

Thankfully, the power of compounding investment returns can help bridge the gap and make this achievable.

It doesn’t matter how small your extra contributions are, they still make a difference particularly if you start making them early in your working life. The graph below shows the impact of starting to save for retirement at 20 years old, compared to 40 years old. In this example, at age 40 you would need to contribute almost four times the amount each month to achieve the same outcome.

The value of adopting an approach that realises the value of your superannuation is undeniable. And partnering with a Financial Adviser with the qualifications and skill set to assist you in achieving your desired lifestyle goals could allow you the ability to truly enjoy your later years with financial security.

No matter how old you are, if you would like some help ensuring you are able to enjoy the standard of living you want in retirement, please call us and we will connect you with one of our qualified Financial Advisers.

Assumes a 7% annual returnSource: JP Morgan Asset Management / Business Insider (2014)

Source: Business Insider / Andy Kiersz (2014) - 6% return

These diagrams are for illustration purposes only and are not indicative of any particular investment – past or future.

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POWER OF ACTIVELY CONTRIBUTING TO SUPERANNUATION EARLY

$1.2M

$1M

$800k

$600k

$400k

$200k

025 30 35 40 45 50 55 60

Benefits Of Saving Early - growth of savings accounts

• Chris invests $5kannually between ages of 25 and 65.

• In total, he invests$200,000.

• Susan invests $5kannually between ages of 25 and 35.

• In total, she invests$50,000.

• Bill invests $5kannually between ages of 35 and 65.

• In total, he invests$150,000.

$1,142,811

$602,070

$540,741

65

$16k

$14k

$12k

$10k

$8k

$6k

$4k

$2k

$020 25 30 35 40 45 50 55 60

How much you need to save to get to $1M at retirement

$14,261

$6071

$3421

$2153$1435

Age when you begin saving

Mon

thly

savi

ngs t

o ge

t to

$1 m

illio

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$900$698$499$361

SUMMER 2017

As anticipated, the Reserve Bank of Australia left interest rates unchanged at 1.5%. The official rate has now been held steady at this level for more than a year.

The economy expanded 0.8% in the June quarter of 2017, taking the annual pace of growth to 1.8%. The expansion was supported by strength in net exports as well as domestic demand. The figure was broadly in line with expectations, but represented a substantial improvement from the March quarter.

In spite of more than 54,000 jobs being added in August, official statistics suggested that unemployment remained unchanged at 5.6%. The figure remains close to five-year lows. Lower unemployment appears to be having a favourable influence on consumer confidence,

which improved markedly in September following a weaker reading in August.

Business confidence is less positive, with the NAB Business Confidence Index falling to its lowest level this year. Companies appear to be concerned about demand, government policy, and input cost pressure from both energy and wage growth.

Keen to find out more about how the impact of the overall global markets could affect your future, and what you could do about it?

Call our friendly team today and speak with one of our Financial Advisers.

We look forward to hearing from you.

5

SUMMER MARKET UPDATE FROM ONE OF OUR PARTNERS - COLONIAL FIRST STATE

WARDS Financial Solutions

T 02 4555 7215 F 02 4655 2655M 0417 020 104 E liz@elizabethhomes.com.au W www.wardsaccounting.com.au

This newsletter has been sent to you by ELIZABETH HOLMES PTY LTD | ABN 82 098 235 762 an Authorised Credit Representative of Mortgage Wisdom Australia Ltd| ABN 60 101 118 398 | Australian Credit Licence No. 377272.

General Advice Warning: This newsletter contains general information only and in no way constitutes the provision of professional advice, nor should it be relied on as a substitute for financial, credit, accounting, legal or other professional advice. We have not taken into account your financial situation, investment objectives or particular needs. Before making an investment or financial decision, a person must seek appropriate independent professional advice and also consider whether this information is appropriate to their needs, objectives and circumstances.

Disclaimer: Information in this newsletter relating to matters concerning Credit Services are made on behalf of Astute Financial Management Pty Ltd (Australian Credit Licence No. 364253) and matters concerning investment, superannuation, insurance and Financial Services are made on behalf of AIW Dealer Services Pty Limited (AFSL 414 256) (collectively “the author”). The author as well as their representatives, agents and employees give no guarantees and make no representations, express or implied, as to the accuracy, currency, completeness or suitability of the information contained in this document. Nor do they accept any liability whatsoever as a result of any information herein being incorrect, incomplete or unsuitable or as a result of a person in any way using or relying on the information herein.

SUMMER 2017

The festive season is a joyous time but the lead-up to the festive season can be stressful and can really stretch your finances. Here are some easy ways to spread the cheer without blowing your budget.

WRITE IT DOWN

Draw up a budget for your spending – not just presents, but your spending on food, drink and socialising.

PLAN AHEAD WITH A PRESENT LIST

Write down everyone you plan to buy a gift for, no matter how small the gift may be. List what you want to buy, and where from.

BE A SCROOGE AND COMPARE ONLINE

Most stores run their sales and promotions on their online stores. Online you can compare prices easily and look for promotion codes to save even more money.

BIG FAMILY? SECRET SANTA

Not only do you save time by not worrying about an extended list of people to shop for, you can also save a ton of money.

AVOID CREDIT CARDS - USE LAYBY

If you feel you can't trust yourself with a credit card at Christmas, consider trying to pay for items with cash. If you pre-plan larger gifts, you can layby a few months early and pay them off over time.

FOCUS ON THE CELEBRATION

Talk to friends and extended family about spending time together instead of exchanging gifts. Sometimes the most remembered gifts are those that took thought, not money.

SHARE MEAL COSTS AND BRING A PLATE

Arrange for everyone to ‘bring a plate’ on Christmas Day so everyone pitches in and splits the cost and effort.

PLAN FOR NEXT CHRISTMAS

Look at the possibility of opening a high interest savings account and contribute a small amount each pay. You can also shop for presents throughout the year, especially during sales in January and at the end of the financial year.

Remember that Christmas is one day – don't ruin the whole of the next year for it.

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FESTIVE SEASON BUDGETING TIPS

SUMMER 2017