26
Mar

Government Super Co-Contribution Scheme

Grow your Super Faster !

For those out there on incomes less than $49,488 per year, if you make a personal contribution (from personal funds) to superannuation prior to June 30 this financial year, the government will match your contribution up to $500 per annum with the benefit being directly linked to your level of income.

For example – if you earn $34,488 or less (FY 2014/15), the Federal Government will pay $0.50 (50 cents) for every dollar you contribute to your super fund in after-tax dollars, up to a maximum of $500 a year. In other words a contribution of $1,000 in this example would make you eligible for $500 to be paid into your superannuation account by the government after your taxation return is complete.

If you earn more than $34,488, your co-contribution entitlement reduces by 3.33 cents for every dollar you earn over $34,488, until it cuts out at $49,488. For example, if you earn $40,000 and you make an after-tax contribution of $1,000, the Government’s maximum contribution of $500 is reduced by $184, which potentially gives you a co-contribution of $316.

There is no need to apply for this bonus – all you have to do is make the contribution and lodge an income tax return and the rest is done automatically.

To be eligible for this incentive, your income should be below $49,488 in the tax year, be derived from employment or business activities and be below the age of 71.

Should you wish to discuss your eligibility for a government co-contribution further or if you require assistance with any other financial planning matter, please don’t hesitate to contact our office on (07) 3891 7666

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Alexander(Xan) Kitchin CPA, BBus(Acc), BEcon

Senior Financial Planner & Princpal at Wealth Connexion Pty Ltd

Important Information:  The information in this document is of a general nature only. Before you make an investment decision you should assess for yourself or obtain professional advice on whether the information is appropriate for your particular investment objectives, financial situation and particular needs.

5
Mar

Investing – What should I do ?

1 – Knowledge is Key

It really is vital that investors educate themselves when it comes to investing their funds, particularly as these funds are generally critical to future financial security and often security in retirement. Whether you engage a financial planner or not it is important to build your knowledge and to educate yourself before making an investment decision. For example, where you are interested in investing in shares, it makes sense to research the companies you are interested in, to understand market price, fair value, industry characteristics, as well as the risks and potential return of these shares. In order for an investor to make these sorts of decisions, we believe that part of the process should involve a Financial Adviser who can assist in structuring a diversified, extensively researched and appropriately weighted portfolio of investments.

2 – Past Performance does not guarantee Future Performance

Yesterday’s hero will not necessarily be this year’s star performer.   Just because a particular investment has done well in the past, this doesn’t necessarily mean that its’ future investment potential will be as good. Past performance is certainly worth reviewing and we do consider this, however it should not be the only factor to review when making a decision to invest. Before making recommendations, we consider independent research, time frames for investment, as well as the particular needs of an investor and what attributes they are seeking from the invested funds, including whether the funds are required to provide income or growth or a combination of these.

3 – The importance of Diversification

Emotional attachment can often play a part in an investor’s decision of where to invest. Let’s face it Australians generally have a soft spot for property. There is nothing wrong with property as an asset class, however it is critical not to have “all your eggs in the one basket” and to ensure that your invested funds are spread across all asset classes – this is called diversification. By concentrating your funds into one asset class, you depend solely on that asset class for return. Investment portfolios that comprises only one asset class or are overweight one asset class, may increase the potential for risk within a portfolio, particularly where that asset class performs poorly or suffers a sector specific set back or downturn.

4 – Liquidity

Liquidity can be more critical to investors at different times of their investing life, depending on a range of factors including whether an investor is working or retired. Generally speaking liquidity will always be an important factor to allow for. Some assets are not particularly liquid by their very nature so investors need to be mindful of this when choosing investments and how much of their funds to allocate to any given asset class. In the case of an emergency it is always important to be able to source liquid funds.

5 – Investing for the Long Term

I speak to many clients and often enough the question arises as to “when is the right time to buy” and “when is the right time to sell”. Unfortunately this is almost impossible to predict. Where investors attempt to predict entry and exit points, in many cases the opportunity has passed. In our experience making decisions based on a Long Term investment strategy is the most effective, this has the effect of ironing out the volatility that can occur over shorter periods of time. Time in the market, rather than timing the market as well as investing with an awareness of risk and risk tolerance, underpinned by a diversified portfolio generally provides better outcomes.

signature_xan

 

 

 

Alexander(Xan) Kitchin CPA, BBus(Acc), BEcon

Senior Financial Planner & Princpal at Wealth Connexion Pty Ltd

Important Information:  The information in this document is of a general nature only. Before you make an investment decision you should assess for yourself or obtain professional advice on whether the information is appropriate for your particular investment objectives, financial situation and particular needs.

5
Mar

Australians are Overpaid !

US Economist Says Australians are Overpaid – What do you think ?

I agree with this statement to some degree. With globalisation Australia’s economic influence is in danger of reducing further… read below to understand why !

The economy is struggling to grow because Australians get too much pay, too much annual leave and are too hard to fire, an American economist says. Does this mean however that Australians are Overpaid ?

Dr Bob Baur, chief global economist at Principal Global Investors, says the local labor market is in need of reform if the economy is going to shift from its dependence on mining for growth. Mining investment is dwindling and iron ore isn’t fetching the prices that it used to, but other sectors have yet to step up to fill the breach. The Australian dollar still too high and the labor market too restrictive, it’s hard to do business here, he says.

‘The best thing for Australia would be some significant economic reform in terms of maybe loosening up the labor market and making it easier for businesses to take on workers or let workers go in difficult times,’ Dr Baur told AAP.  ‘You’ve got tonnes of wonderful natural resources here but don’t export the resources – export them as a car, or a computer or a television set, or furniture. ‘You need to put some labor into it and make something of it here, rather than let somebody make something of it across the world.’

Dr Baur said Australia needed to follow the footsteps of the US, where manufacturing was thriving again after having lost six million jobs through the 90s and noughties to the cheaper labor markets of China and India.

While rising wages in developing countries and increased transportation costs had made the US much more competitive, manufacturing continues to deteriorate in Australia. ‘Wages are too high,’ Dr Baur said. ‘Either it’s the actual level of wages or it’s the fact that it’s very difficult for businesses to let somebody go for whatever reason – some combination of that. ‘In the US, we get two weeks’ vacation, so three or four weeks at one time (as in Australia) is not something that’s natural, at least in the US – it is in Europe, but then, Europe is not growing terribly fast either.’

Important Information:  The information in this document is of a general nature only. Before you make an investment decision you should assess for yourself or obtain professional advice on whether the information is appropriate for your particular investment objectives, financial situation and particular needs.