daniel-admin – Page 4 – The Hopkins Group

Emerging Markets Fund feat. Fidelity | Talks Investment with Mark Wenzel

Posted on 11/03/2022 by daniel-admin

Talk Investment with Mark Wenzel meets with our partner Fidelity to discuss the Emerging Markets fund in The Hopkins Group Managed Discretionary Account service.

Emerging Markets are an increasingly important component of global equity investing and having a partner the size and scale of Fidelity is important to drive returns.

Anthony and I discuss the definition of emerging markets, in which countries these investment opportunities are spread, how the research is conducted on the investment universe through Fidelity and some recent purchases Fidelity expect to drive returns for many years to come.

Financial Market Update February 2022

Posted on 08/03/2022 by daniel-admin

Welcome to the latest market update from The Hopkins Group.

In February the Australian stock market rose 2.1%, outperforming the US market by 5.1% which was down 3%. The reason for this was the high exposure to Gold stocks (up 18.4%) and Energy (up 8.6%) in the Australian market compared to the heavy weight to Technology (down 6.6% in Australia) in the US market.

With the Australian market, over the last 12 months mid-sized companies have been the best performing up 13.2% for the year. Small-sized companies have been the worst performing up 5%. The top 200 stocks are up 10.2%. Higher dividend paying companies are up 7.2%. Interestingly, in the US high yield stocks are up 16.5% outperforming Large stocks 15.2% up, mid-sized up 9.5% and small up 5.2%. These figures do not indicate any particular trend but are highlighted to indicate the variance seen across the market.

The retreat from fast growing technology stock in Australia and the US has been on the back of expected interest rate rises and lofty valuations. Inflation continues to worry the market with higher-than-expected inflation in the US seen during February. Housing is a significant component of the US inflation measure, but not in Australia, with rents and housing related expenses driving inflation higher in the US.

The other major event at the back of February is the invasion of Ukraine by Russia. This was the primary driver of higher energy prices but not the only one. The world realised during the first couple of months of the year that the transition to ‘Green’ energy will take longer than anticipated and the existing infrastructure for energy may not meet demand, which will see higher energy prices in the future. This leads to further inflation which is why the volatility in markets will remain elevated throughout the year as the market grapples with these issues.

Europe was the worst performing region for the month, down 4.3% with China down 3.9% and the NASDAQ down 3.3%. Over the last 12 months the NASDAQ is up 4.9%, although interestingly nearly half of all companies listed on the NASDAQ are down more than 20%. This indicates that the largest companies listed on the NASDAQ such as Apple, Alphabet (Google), Microsoft and Netflix have been driving the index higher. The broader S&P500 reflects this too with it being up 16.4% for the year, with the large companies not being dragged down by the laggards.

Government bond rate expectations continued to rise during the month, with inflation expectations. The interesting thing in the bond market is that the long-term rates do not reflect the 7 interest rate increases currently forecast by the market. This indicates that the bond market sees the economic strength as being temporary with economic growth and inflation reverting to low growth, low inflation after the COVID stimulus flushes through the system.

The rising commodity prices saw the Australian dollar rise 3% for the month. Commodity prices for most energy, industrial & precious metals, grains and soft commodities all rose during the month. The largest price increases were from commodities Russia supplies the world including Wheat, Thermal Coal and Lumber. Australia is a beneficiary of these price rises.

Why is your superannuation important?

Posted on 10/11/202125/10/2023 by daniel-admin

Superannuation has undoubtedly been an area that many Australian’s either don’t fully understand or outright ignore. This lack of interest and or awareness has led many individuals to receive suboptimal outcomes with their retirement savings.

Compulsory superannuation was first introduced in 1992 in a bid to ensure that the aging population of Australia was going to be able to support themselves in retirement without the need to rely on Social Security.

The government at the time implemented a carrot and stick policy in order to convince Australian’s to save for their own retirement.

The stick: Whilst the amounts have changed over the years currently 10% of your salary must be paid to your nominated fund. In the event you don’t nominate a fund your employer will nominate one for you. So statistically for every fortnight you work one day is spent working for your retirement savings.

The Carrot: In order to encourage people to save for their own retirement superannuation has a concessional tax rate. Currently the tax rates are 15% for those in an accumulation fund and 0% for those in a pension fund. The outcome of this is if a 26-year-old earning $50,000 per annum invested $5,000 per annum inside superannuation versus invested $5,000 in their own name. After 40 years the value of the investment inside would be $355,472 inside superannuation and $199,360; i.e. you end up with 78% more funds just due to the favorable tax structure. The benefit of this increases further with higher income earners. See figure 1.

Figure 1.

In summary, for the average Australian worker once a fortnight they are working for their retirement fund. It pays to take some time to work out where these funds go and where they are invested. If savings are for the purpose of funding retirement superannuation should be at the top of your considerations due to the favorable tax structure.

What can I do today to help me maximise my superannuation balance at retirement?

Following mandatory superannuation in Australia the superannuation industry has become a $3.3 trillion dollar industry (Association of Superannuation Funds Australia, 2021). There are many products out there to choose from, and just like any other product, some are better than others.

The two key factors that will contribute to an individual’s ability to grow their superannuation balance over time: Fees & charges and the correct asset allocation mix.

Fees:

Each superannuation fund charges a mix of flat member fees, tiered administration fees and investment management costs. There can also be other costs imbedded into your investment management fees such as transactional costs, property costs, borrowing costs and performance fees. These can be difficult to find and may require a thorough read of your relevant product disclosure statement.

However, just like adding an extra 0.5% to your investment returns will compound over time and produce a greater balance, so will reducing the amount of fees charged to your account.

Asset allocation mix:

The correct asset allocation mix is the most important determinant of your investment returns. The mix of growth and defensive assets that the funds are invested in is therefore incredibly important to maximising the superannuation balance at retirement.

There is strong link between portfolio asset allocation and investment timeframes. A longer time period allows for a full market cycle to ride out any volatility, and experience the investment returns of a full cycle whereas a shorter investment timeframe can result in volatility forcing an investor to exit their position in a down market.

The important thing about superannuation savings is that they cannot be accessed until you reach preservation age and retire or reach age 65. This means that for most Australians (under age 55) their investment timeframe is over 10 years which allows time for a full market cycle.

Alternatively, older Australians may find that as they approach retirement their investment window is getting shorter. In both scenarios it is important to consider what mix of growth and defensive assets is appropriate and going to produce the best outcome.

Investing In Brisbane Property – Market Update

Posted on 08/11/202125/10/2023 by daniel-admin

The question on everyone’s mind though, will this strong performance continue over the next 12 months and beyond?

Certainly the challenges surrounding COVID-19 haven’t really impacted property transactions, with more buyers moving to Brisbane for the lockdown-free lifestyle.

Brisbane property:

increased 0.6% over the last week;
increased 1.8% over the month of September, and
19.87% over the last year

And even though restrictions are beginning to ease in NSW and VIC, we believe there is still plenty of growth left, due to Brisbane property being considerably more affordable when compared to the other east coast capital cities.

With international travel set to resume soon, jobs on the rise and substantial infrastructure spending in place as the city looks ahead to the Olympic games in 2032, the future looks bright indeed.

Economic Benefit Olympic Games 3032

A recent report prepared by Urbis highlighted the key pipeline of opportunities that will provide economic and social benefits for Brisbane, Queensland and Australia.

The resurgence of buyer interest in the Brisbane property market has meant that auction clearance rates have consistently been in the 70% range, which is unusual as the city is not typically known for its auction culture.

This is certainly an indication that there are more buyers than there are sellers and this always leads to higher property prices.

Finding value in a surging market is the real challenge for buyers right now, particularly when we talk with clients about houses and townhouses across the city.

We believe good quality owner occupier driven apartments in lifestyle rich locations near Olympic facilities and new infrastructure will perform well in the long term.

There is no doubt the Brisbane market will also face strong medium- term rental pressures over the next 3-5 years as demand continues and little new rental supply is added.

Would you like to schedule a chat with a Property Investment Adviser at The Hopkins Group to understand if Brisbane is where you should be investing in your next property?

If the answer is yes, please complete the form via the link below and we will be in touch. Alternatively, you can call our office on 1300 726 082 and ask for Stephen Phillips.

A Beginner’s Guide To Personal Insurance

Posted on 07/09/2021 by daniel-admin

The world of personal insurance can be daunting. It sounds costly, time-consuming and let’s be honest, you don’t want to think about what will happen if you were to get hit by a car or if you suddenly receive a dreaded cancer diagnosis.

Unfortunately, personal insurance is extremely important – just as if not more so than health insurance, car insurance and home insurance – in helping to safeguard you and your family.

But where do you even begin? Let’s start with looking at some of the different types of personal insurance and why you might need them.

Life Insurance

Life insurance is important for someone who has loved ones that would be financially impacted if you were to pass away. It is a lump sum payment, payable upon death or terminal illness with less than 12 months to live. Life Insurance payments can be used for mortgage repayments, funeral expenses or even just to provide your family with financial security in the unfortunate event of your death.

Total & Permanent Disability Cover (TPD)

As the name suggests, Total & Permanent Disability Cover provides cover in the event you are totally and permanently disabled. No one wants to think about what their life would be like if that were to happen, but there is some comfort in knowing if you were in a tragic accident or suffer a stroke where you physically cannot return to work, you would receive a lump sum payment that could help with home modifications, care, and other expenses to help you live a comfortable life.

Income Protection

You insure your car and your home, but why not your income? Income protection pays you a regular income for the period you are unable to work due to sickness or disability. Depending on your policy, payments can last up till retirement age.

Trauma

Trauma Cover is a lump sum payment if you suffer a traumatic event or are critically ill. This can include cancers, strokes depending on the insurer. Trauma payments are often used as an emergency fund to help cover out-of-pocket medical expenses and other living costs.

The cost

This really depends on your age, your medical history, your occupation, your level of cover and your structure of cover. Don’t worry if you’re strapped for cash – there are different ways you can structure your policy to make it more affordable and even protect your personal cash flow. As example of this would be paying for your policy with your super or linking certain policies together. Also, some types of insurances are tax deductible, like income protection when it is owned personally.

There generally isn’t a cost to sitting down with an adviser and setting up your insurances – they are paid in commission directly from the insurer at no cost to you.

The process

Making decisions about your insurance cover can be overwhelming, but when you sit down with a financial adviser, they will help you with deciding which types of insurance and how much of it you will need.

Once you have decided on the type and level of cover that you want with your adviser, they will research different insurers to find one best suited to you – taking into consideration any medical conditions you may have. Generally, you will then go through an underwriting process online or over the phone where you will need to answer medical and lifestyle questions before your policy is issued to you.

Organising your personal insurances can be a tedious task but one that should be important to you and your family. In an ideal scenario, you will never have to claim on it, and it will just be a money loss. But unfortunately for many people this is not the case and having those policies in place can be the difference between keeping or losing your family home whilst going through a tragic or traumatic event. It is worth paying those premiums for peace of mind so that if something happens to you, you and your loved ones will be looked after.

Top 7 Tips For Finding A Professional Property Manager

Posted on 13/08/2021 by daniel-admin

If you own an investment property and are on the lookout for a professional property manager, there are some key factors you should consider before signing on the dotted line.

After all, property managers take care of absolutely everything relating to your rental, from the initial marketing and open inspections, through to managing the ongoing tenancy, answering queries, receiving rental payments, monitoring maintenance and more.

Choosing a great property manager will help you attract the very best renters, maximize your rental income and enhance the overall value of your investment, whilst also minimizing your exposure to risk.

So, without further ado, here are my top 7 tips for finding a professional property manager:

Compare Responsiveness

Prompt responses and excellent communication skills are key to a positive property management experience.

If you are waiting over a week for a reply to an email or your property manager isn’t picking up the phone this can be extremely frustrating. A great property manager should be proactive and always have their mobile phone on hand, even while on the go.

When you initially reach out to a property management company, try and keep a record of how long they take to get back to you. If they are not meeting your expectations throughout the signup process, this usually is not a good sign.

Ensure Legal & Compliance Expertise

A reputable property manager needs to have an in-depth understanding of legal and compliance relating to your investment.

In Victoria complying with the Residential Tenancies Act is vital to ensuring property owners meet their obligations and avoid severe penalties. Grounds for terminating a tenant’s lease and information on a properties minimum safety standards are just some examples of what is covered by the Act.

Look For Local Market Knowledge

Market knowledge is an area that is often overlooked. Does this real estate agent lease other properties in the area?

Are they utilizing property data reports to determine the optimal rental amount for your investment? Choosing a property manager with the right tools and local knowledge will minimize vacancy and ensure you are achieving the maximum return.

Read Client Feedback

Online customer reviews are a quick and straightforward way to identify a professional property manager. Reading experiences from both property owners and tenants will give you a strong indication of what to expect once you hand your property over.

Discuss Marketing

Property marketing determines how many tenants your property reaches and ultimately whether you receive optimal rental returns.

Make sure to check the property managers photography, if they include floorplans, appear on all the top listing websites and whether they invest in email or social media marketing.

Another form of marketing that has accelerated throughout the COVID-19 pandemic is online virtual property tours. During periods of lockdown renters could inspect the property from the comfort of their own home.

When open inspections resumed, virtual tours continued to help qualify renters before they opted to see the property in person. Request a marketing pack and make a note of the marketing costs so you can compare level of exposure vs expenses.

Check Fees

Fees are an important consideration and should be assessed along with the expertise and service standards.
The average fee for property management services in Melbourne is currently between 6% and 8% of all rental income, plus GST.

As fees are a regular expense it is a good idea to compare the local market and check any additional costs when the property needs to be advertised.

Be wary of agents pitching extremely low fees as they may not invest time ensuring your property is adequately taken care of and in some circumstances outsource work to third parties overseas.

Ask Questions

Are you reaching out to new property managers right now?

Here are some questions you might like to ask when making your initial inquiry:

How many years of experience do you have as a property manager?
What training and development programs do team members participate in to ensure they are up to date with laws and regulations?
What is the occupancy/vacancy rates for properties under your management?
How many inspections will your team conduct each year?
Can you provide any references from previous clients?
What is the average time on market for your rental properties in the current market?

So those were my top 7 tips for choosing a professional property management service provider.

By engaging a qualified property manager, like our team at The Hopkins Group, you can rest easy knowing your property is in safe hands.

Impact of latest changes to Victoria’s rental laws on landlords

Posted on 05/08/2021 by daniel-admin

After much discussion and many submissions from the Victorian community, the Residential Tenancies Act has seen the largest rental changes in more than two decades.

As of 29 March 2021, 132 reforms and law changes have come into effect clarifying the rights and responsibilities of the renters (previously tenants) and rental providers (previously landlords). These changes have an impact through every stage of the rental process – from before a rental agreement is even signed right through to after the agreement ends. In this blog, I’ll touch on the key reforms impacting residential rental providers today, but a full list of changes are available on the Consumer Affairs website, if you’re interested. Let’s jump right in…

Terminology changes

The new residential tenancy laws in Victoria refer to landlords as rental providers, tenants as renters, tenancy agreements as rental agreements and rooming house owners as rooming house operators.

Making modifications

Renters now have the flexibility to make prescribed modifications to the rental property, without the rental providers consent and rental providers cannot unreasonably refuse consent to some modifications. Of course, damages as a result of modifications (that are not considered fair wear and tear) will need to be remedied by renters, however things like painting walls and affixing picture hooks are fair game.

Renting with pets

This change took the lead, coming in earlier than expected in March 2020 – our furry friends are hear to stay with renters given the green light to bring pets into the rental with consent. However, note while consent must be applied for, a rental provider cannot unreasonably refuse a request to keep a pet. If there’s reasonable grounds to refuse permission a rental provider can apply to VCAT for an order.

Disclosure statements

Rental providers must now disclose important information to the renters before they sign a rental
agreement. This disclosure statement needs to be filled out each time a new rental agreement is signed and/or renewed.

Consumer Affairs disclosure requirements are extremely detailed series of questions that the rental provider must submit with each leased signed. This important document will be sent directly to the rental provider to ensure they comply with legislation and all relevant items are disclosed to the renter.

Rental Properties – Minimum standards

Rental providers must also make sure the rental property meets a set list of minimum standards on or before the day a renter moves in.

If the property does not meet minimum standards renters can end their rental agreement before moving in or they can request an urgent repair.

The minimum standards apply to rental agreements that started after 29 March 2021 and roll over into periodic agreement on or after 29th of March.

The minimum standards are divided below into 14 categories. All rental properties must meet the standards of each category. Each of the 14 categories and definition of minimum standards are again all available in detail on the Consumer Affairs website, however these items include:

Locks
Vermin proof bins
Toilets
Bathroom
Kitchen
Laundry
Structural soundness
Mould and damp
Electrical safety
Window coverings
Windows
Lighting
Ventilation
Heating

Penalties apply if a property fails to meet these requirements, so it’s in your best interest to undertake necessary checks before entering a new agreement. There are also consequences for not carrying out requested repairs to bring the property up to minimum standards.

Gas and electrical safety checks

Under the Residential Tenancies Regulations 2021, all residential rental properties are required to undergo an annual Smoke Alarm Safety Service, a two-yearly Gas and Carbon Monoxide Service, and Electrical Safety Service.

As a rental provider you are required to ensure a certificate of compliance is completed under all three sections. These services have been made mandatory to ensure the safety of residential rental properties and their renters.

Changes, changes and a few more changes

From an updated rental agreement, maximum bond and no more than one month’s rent to be paid in advance, fixed price advertising, a ban on inviting rental bids, misleading or deceptive advertising, through to changes on applications with changes to inappropriate rental application questions and unlawful discrimination information, on top of all those changes mentioned above – there’s a lot to keep up to date on.

With so many changes in the air, it’s never been as important to have your property managed by an expert. By engaging a qualified property manager, like our team at The Hopkins Group, you can rest easy knowing your property is in safe hands. To learn more about how The Hopkins Group property management services can help ease the burden on rental providers shoulders keeping up to date on the latest changes, contact us today.

6 topics to discuss with a financial adviser after a relationship breakdown

Posted on 26/07/2021 by daniel-admin

If you’re in a long-term relationship, chances are you’re probably not thinking about what happens when things go sour; but sadly, not all couples last forever.

When a married or de facto couple separates, often the first thought is to seek legal advice – which is always important – but what about financial advice?

There are often significant financial considerations both parties need to make, so seeking financial advice, including reviewing your financial position, revising your objectives and establishing a financial strategy are important for both your short and long-term future.

This article provides financial information to consider during a separation, including;

Independent financial advice
Identifying key financial positions across assets and liabilities, income and expenses
Superannuation
Rebuilding financial freedom, check your financial savings
Insurance and risk mitigation
Estate planning

1. Seek independent financial advice

It is unlikely to be appropriate for both parties to retain the same financial adviser.

Having separate advisers is generally preferable to maintain privacy and minimise conflict.  

If both parties in the relationship have been using the same financial adviser historically, one member of the couple may need to seek an alternative financial adviser for their needs during the separation process.

Upon appointing independent financial advisers, the advantage to both parties is it forces both to become involved in their financial health and understanding.

Often in relationships, there is one member of the couple who has a greater understanding and interest in managing the finances. However, upon separation, both parties need to appreciate and understand their financial position and asset ownership structures.

2. Review financial positions across Assets, Liabilities, Income & Expenses

What is mine is yours and what is yours is mine. This is generally the preferred position for all parties when relationships are operating effectively.

However, in situations when a breakdown occurs how do we agree on what is mine and what is yours?

To separate this out, we need to take stock of your financial position as a couple and put together a combined list of:

Assets (Home, savings, investments, etc);
Income (Salary, rent, dividends, etc);
Expenses (Food and groceries, bills, education, internet, etc); and
Liabilities (Home loan, credit card, personal loan, car loan, etc).

This information is important for the lawyers when finalising the property settlement.

A financial adviser can assist you with ensuring the valuations are correct and support in understanding which assets may be suitable to retain in meeting your revised financial and lifestyle objectives.

Following the separation, it may be timely to conduct another review of your assets and underlying investment mix.

Your appetite for risk and investment timeframe may have changed considering your post separation position and adjustments may be required.

Professional advisers can guide, and support you in making informed decisions about your financial future.

3. Consider your super

Generally, couples in a relationship breakdown can extract information about their superannuation using information from their super fund or obtaining support from their financial adviser.

Extracting relevant content about your superannuation is important as it will be considered on how to separate assets, think in a situation where a prime bread winner in the family has been building up superannuation over many years whilst the other member of the family has been taking care of the household and care of young children and not working.

The latter person here may be in a position where they have no superannuation savings at all. On this basis it is possible part of the separation of assets agreement will include splitting a super payment.

Splitting super to a former spouse or partner does not mean it can be withdrawn and paid out as cash.

The super remains subject to preservation laws and the benefits split to the former spouse or partner cannot be accessed until that individual meets a condition of release (for example, permanent retirement after reaching preservation age of 56 or turning age 65).

Options for splitting super

A couple can make a superannuation agreement or obtain a court order to split a super payment or a super interest.

The superannuation agreement or court order must outline how the super is to be split.

Splitting a super payment to the former spouse or partner could be done by specifying a fixed dollar amount, a method for calculating an amount, or a percentage of a payment.

This is also another reason why it is critical for members in a relationship breakdown to seek their own financial adviser. Having the same adviser will impose many conflicts of interest and will not benefit either individual party.

A super split may be subject to tax implications as well as administrative fees for the transfer.

Upon finding relevant agreements upon splitting super, how do you invest these proceeds? This is a crucial question to answer – receiving financial advice to determine preferred asset allocation, your risk appetite and future investment goals is critical.

It is important that the client seek independent legal and financial advice before entering into any agreement to split super.

4. Meeting future income needs

When it comes to considering your income and expenses, you may encounter several obstacles that you may need to overcome as a result of your separation.

For example, if you and your former partner no longer live in the same household, it changes your expenditure patterns and obligations with the same level of resources which may now be constrained.

The same income from before the separation or divorce is now paying for two households and two sets of bills and expenses.

It is critical to know all your expenses and determine how these are going to be funded.

Thus, lifestyle or spending adjustments may be necessary.

There may be some tough decisions to make:

If you have been a stay-at-home parent, you might have to re-enter the workforce; or
One working part time may need to consider an increase in hours to provide additional cash-flow to meet future ongoing expenditure.

A financial adviser may be able to help you find a strategy to ensure your income needs are met in your post settlement financial position.

These may include:

Budgeting and debt repayment strategies can be re-addressed, and priorities reassessed.
A client over age 55 could consider commencing a Transition to Retirement (TTR) pension from their super if they need more income.
Centrelink benefits can be explored. If there are dependent children involved, benefits such as Family Tax Benefits may be available. Older clients who are not working may consider eligibility for NewStart Allowance or Age Pension.
When there are children involved, one member of a separated couple may need to pay the other Child Support. The level of child support depends on several factors, including the adjusted taxable income of each party, how much time the children spend with each parent, and the age and number of children. It can be dealt with in a BFA.
Spousal maintenance may be payable and application for this can be made via the Family or Federal court. Under the Family Law Act 1975, a person has a responsibility to financially assist their former spouse or partner, if that person cannot meet their own reasonable expenses from their personal income or assets. This obligation can continue after separation and divorce and the level of support depends on what is agreed with the other party.

Rebuilding and checking your financial savings

Separation can have significant implications on a client’s cash-flow and financial position.

Initially, the client may need to defer their previous long-term savings objectives for more immediate short-term strategies which address their current situation.

However, it is important to also review the client’s longer-term financial goals and retirement plan.

Retirement timeframes, saving and super contribution strategies and retirement income objectives may need to be adjusted.

Seeking support via a financial adviser can assist the client in establishing and working towards these new goals.

5. Insurance and Risk Mitigation

Following separation, insurance needs are likely to change.

Your insurance needs analysis is likely to have changed due to the relationship breakdown, it is therefore critical to work with a financial adviser to determine what type of risk mitigation strategies are relevant going forward, these may include:

Expunge current or future debt obligations;
Ability to meet ongoing expenditure associated with school, education, rent, mortgage repayments; and
The level of cover for insurance may need to be adjusted based on the revised assets, debts and incomes.

These situations are particularly amplified in a previously dual income family. In the event of not being able to work due to illness or accident, you will no longer be able to rely on your spouse or partner’s income, making Income Protection a more critical cover.

6. Review your estate plan

Separation alone will not cause a will to be invalid even if you have bequeathed all assets to your now former spouse or partner.

The effect of divorce on a will varies depending on the state you live in.

Therefore, separation should be a key trigger for you to review your estate plan to ensure that it continues to reflect your needs and intentions.

A will and power of attorney both need to be addressed, as well as non-estate assets such as superannuation, a family trust and any joint assets. 

You may wish to update your affairs to remove their former spouse or partner as a life insurance and superannuation beneficiary, revoke any gifts to them in your will and appoint another person as attorney and/or executor of your estate.

A financial adviser can work with you to update your estate plan in conjunction with a lawyer or estate planning specialist.

Conclusion

Relationship breakdowns take a toll – both emotionally, but often mentally and financially. However, seeking appropriate advice can help you get back up on your feet.

Every situation is different, so it’s important to make informed decisions based on your own set of circumstances.

Estate planning within your superannuation fund – its not as simple as it looks

Posted on 22/07/2021 by daniel-admin

A recent determination of superannuation death benefits is a perfect example of the need for appropriate planning in relation to how your superannuation death benefits will be dealt with after death.

In a high-profile case, Magistrate Rodney Higgins was successful in his pursuit of his late fiancée’s death benefits, despite the fact that Ms Petrie had nominated her mother as her desired beneficiary. Unfortunately, superannuation laws can be quite complex and Ms Petrie’s mother was not eligible to receive the payment under the legislation. Mr Higgins and Ms Petrie made headlines in 2019 when it was revealed that the magistrate was in a romantic relationship with the court clerk, 45 years his junior.

There are a number of lessons that can be learned from situations like this one to make sure your death benefits are dealt with exactly as you would wish.

Why couldn’t Ms Petrie’s mother inherit her daughter’s superannuation balance?

Nominating a beneficiary inside super isn’t as simple as just picking anyone you like. Superannuation law governs who is eligible to receive a death benefit payment from a superannuation fund.

The list includes:

A spouse or de facto
Children
Any person with whom the person has an interdependency relationship (live together, financial support, domestic support etc.)
Legal personal representative (Estate)

Applying these rules to the case of 23-year-old Ms Petrie, it appears that Ms Petrie must have reached a position in her life where she was not interdependent with her mother.

Could this situation have been avoided?

Absolutely. If Ms Petrie had directed the trustee to pay her superannuation benefits to her estate in a binding nomination, then Rest Super would have been bound to follow her direction.

In this instance, Ms Petrie could then have directed her wishes for her estate through her will. While this may not have prevented a legal dispute, Mr Higgins would be required to challenge Ms Petrie’s will to claim any of the funds.

What happens if my nomination is invalid?

If you have nominated someone who is not a superannuation dependant as your death beneficiary with your superfund, the trustee of the fund (the superfund) has to make a choice on their own about where your benefits should go.

In the case of Ms Petrie, Rest super elected to pay her death benefit to her partner, Mr Higgins. Ms Petrie’s mother has appealed the decision and the pair have been disputing the sum for 15 months.

How can I make sure this doesn’t happen to me?

The simple answer to this question is seek advice. Your financial adviser can help you determine the easiest and most secure way to make sure that your death benefits are distributed in the way that you want them to be.

The key method to achieve this within the superannuation environment is through binding and non-binding death benefit nominations.

Binding nomination: this nomination will bind the trustee to follow your wishes
Non-binding nomination: This is more like an indication of your wishes that the trustee will consider when making the payment.

Key takeaway points:

Even 23-year old’s need to take time to consider their estate planning.
In our experience young adults in a demographic where they don’t have their own dependants yet are particularly prone to nominating parents and siblings – which may not be successful.
Discussing your estate planning with a financial adviser can save your loved ones a lot of heartache.

12 things to consider before you retire

Posted on 09/07/2021 by daniel-admin

So, you’re thinking about retirement. Congratulations! Looking ahead to a time after work can be as exciting as it is daunting. How can you make sure that you’re able to enjoy the lifestyle you want in retirement? What are the financial milestones you need to have achieved before you can retire?

The closer you get to retirement the more important it is for you to review your finances.

Three key questions you should be asking yourself include:

How much I need to retire on? (Short answer – you normally want to have 70% of your current income)
What will be my retirement income?
What tax changes should I be aware of post retirement?

The answer to these questions can vary from person to person, so it’s usually a good idea to seek advice from a financial adviser who can review your situation and goals and put your retirement figures in focus. You can also use tools like retirement income calculators available online, however it’s worth noting that these often make generalised assumptions and may not provide the personalisation you need to make confident retirement decisions.

Beyond these three key questions, here are 12 other things worth keeping in mind when mapping out your retirement strategy.

Determine a retirement budget before you retire

Create a spreadsheet with all your expected retirement living costs including groceries and housing to healthcare and taxes. Working out all your fixed costs will help. It’s also worth including working out any travel plans you may want to do in the future, but also add a bit of a buffer for the rising cost of living (as a guide, CPI has traditionally grown at a rate of 1.4-2.8% each year in Victoria)

Determine your retirement withdrawal amount

When working how much you need to retire, you need to make sure you have enough to last the desired timeframe (i.e. the length of your planned retirement) and consider if there will be any tax implications if you plan to retire before you reach age 65.

According to The Association of Superannuation Funds (ASFA), it’s estimated those who want a comfortable retirement need $640,000 for a couple and $545,000 for a single person. This assumes receiving a partial age pension.

ASFA says for a modest lifestyle income of around $28,254 p.a. for a single and $40,829 p.a. for a couple.

Have an emergency fund

As an adviser, I usually suggest having 6 months’ worth of income tucked away as a rainy-day fund that can cover all costs in case of an emergency.

Keep contributing to super after retirement

Consider different types of contributions such as Salary Sacrifice, member contribution, spouse contribution, depending on your circumstances such as age, income tax level and cash reserves. Speaking to an adviser about the right strategy for you is a good call when making superannuation considerations.

Consider looking for part-time work

Retirement doesn’t necessarily have to mean you’ve given up work for good. It might be a time to consider focusing on your passions with a part time job that will top up your income and living expenses. It also gets you out of the house, keeps you busy and social.

Consider what you are going to do in retirement

Going from a full-time work routine to weekends without end can be a big adjustment for some. While you’re making your retirement plans, don’t forget to think beyond just the numbers and think about some the hobbies you might want to pick up and all the things you might not have had time to do before (within reason).

Staying active will help keep you healthy – both physically and mentally.

Personally, I will be joining social groups including travel clubs and cooking classes.

Talk to a financial adviser

An adviser can help select the right retirement account, advise on investments, help with your budget and help you understand how you are placed. They can also help guide discussions around tax effective strategies including things like salary sacrificing, and assets you might currently hold outside of super like direct shares and discuss whether turning them into superannuation assets via in-specie transfer pre or post retirement is a path you should consider.

Taking a holistic view of your situation is a great way to minimise your tax liability, especially if you have a significant build-up of unrealised gain within your existing assets. Speaking to an adviser is always a valuable exercise – The Hopkins Group has a team of financial advisers available to answer all your retirement planning questions.

Review your estate plan

Look over your estate plan, your assets and liabilities upon possible incapacitation or death.

A living will (advanced healthcare directive) detailing your preferences with medical and power of attorney is a good thing to have in place, as well as a will to detail your wishes on how you want to divide your assets when you’re gone.

Review personal insurance policies

Life insurance is a good way to cover expenses and debt after your death but in saying that ask yourself, do you still need this insurance?

Is this insurance still appropriate? And do you have beneficiaries nominated?

It’s a good idea to review your policies with your financial planner when discussing your retirement strategy to make sure they continue to be the best fit.

Consider your health before you retire

Is there an employee healthcare plan? Are you getting regular check-ups? Are you looking at your fitness and nutrition?

Review your health insurance provider to see it is still appropriate, including reviewing your level of cover.

Consider your housing needs

Will your home still be suitable as you get older and what do you need to consider if it isn’t? Do you have to move? Should you move closer to family? Will you still be able to move around in your golden years? Will your home loan be paid off?

Discuss with your partner your retirement plans

Consider any government assistance such as age pension that may not be eligible due to your partner working

What’s left?

These considerations only really scratch the surface of things you need to consider before you retire – but you don’t have to consider these things alone! Speaking to a qualified financial adviser from The Hopkins Group is a great way to break your considerations down into manageable actions, but also to uncover what your unique retirement strategy might look like.