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Archives for Stephen Coniglione

3 Tips For Reducing Christmas Costs

Christmas is a time to be savvy!

The November and December months are a time when our wallets are an endless money pit, credit cards are in high demand as we try to keep up with the Joneses. The next few months of unconscious spending can set us up with a significant financial burden well into the New Year.

What can you do to avoid the Christmas expense blues?

1. Create a list

Get organised and make a list of all the people you need to buy presents for. Creating a list allows you to jot down some ideas and start looking online where you can find a bargain. Purchasing multiple gifts from one retail site will reduce your cost of postage.

2. Create a budget

This could be for each gift or the total amount you want to spend on all the gifts you want to buy. A budget will prevent you from buying gifts you don’t need or spending more than you want to.

3. Gift an experience

The manufacturing of cheap, quickly disposable trends are cluttering our lives and sending us broke with a mirage of happiness. Experiencing nature or organising an adventure will create a memorable journey that will last a lifetime.

These simple tips and suggestions will help you avoid overspending, which you’ll reap rewards for well into the New Year.

Please note this article only provides general advice and has not taken your personal or financial circumstances into consideration. If you would like more tailored financial advice, please contact us today. One of our advisers would be delighted to speak to you.

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Benefits of an SMSF

Previously, I highlighted the findings of the Australian Securities and Investment Commission (ASIC) report after reviewing 250 self-managed super funds (SMSF). ASIC does not regulate SMSFs, the Australian Tax Office does and trustees are held directly accountable.

At The Investment Collective, we assess the appropriateness of an SMSF, provide tailored written advice in the form of a Statement of Advice and present the recommendation where you are encouraged to ask questions to better your understanding.

Why should you set up at SMSF?

A client of mine established an SMSF to take back control of their superannuation by removing any influence from large financial institutions and unions. They wanted more investment choices and to be involved when choosing the underlying investments that are appropriate for their risk profile. Both members are now benefiting from the additional income from franking credits.

Another client established their SMSF once we conducted a fee analysis of their previous super fund provider. We highlighted all the fees and additional transaction, operational, borrowing and property costs they were paying. With their new SMSF the client has a very transparent fee structure and is now saving thousands each year. This client had a share portfolio in their name that we were able to directly transfer to their SMSF, increasing their superannuation benefit. We managed their capital gains over a few financial years and transaction costs were cheaper than going through a share broker.

In many instances, our clients’ are surprised how stress-free maintaining their SMSF is. We assist clients to look after and oversee almost all of the administrative tasks. We also connect our clients’ to professional SMSF administrators to complete the annual compliance obligations.

As you can see, there might be benefits to establishing an SMSF depending on your circumstances. The Investment Collective can assist you in an analysis of your current superannuation provider. Please contact us to arrange a review.

 

Please note this article provides general advice, it has not taken into consideration your personal or financial circumstances. If you would like more tailored advice, please contact us today.

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Is A Self-Managed Super Fund Right For You?

Australian Securities and Investments Commission (ASIC) recently released a report after reviewing 250 self-managed super funds (SMSF) files. These SMSFs were randomly selected based on Australian Taxation Office (ATO) data.

The report highlighted a poor standard of advice provided on SMSFs. They found 91% of the files reviewed were non-compliant. Non-compliant advice included process failures, poor record keeping and increased risk of financial loss for lack of investment diversification mainly due to a single investment property.

An SMSF allows a member to purchase property within the superannuation environment and I am often asked about how to facilitate this. However, what most clients do not realise is that property is capital intensive, costly to maintain and tends to offer a very low income. An SMSFs sole purpose is to provide retirement benefits for the members or their dependents. Therefore I have to ask my clients, is property appropriate for your retirement when you need to draw an income?

At The Investment Collective, we assess the appropriateness of an SMSF for every client.  We look at many factors and alternatives and then provide a detailed analysis for our clients’ to make an informed decision. If you have thought about establishing an SMSF you should consider the following:

  • The balance of your superannuation
  • Costs involved to set up and running an SMSF
    • According to ASIC a starting balance below $200,000 the setup and operating cost are unlikely to be competitive with other options
  • Willingness and ability to manage the SMSF and meet trustee obligations
  • An investment strategy that suits the needs of members
  • Members Insurance needs
  • Lack of government compensation available for SMSFs

Please note this article only provides general advice, it has not taken your personal or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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Investing For Your Children & Grandchildren

I’m often asked how best to invest for children and grandchildren. My clients are looking for the best long-term strategy to provide a gift to their children or grandchildren on their 18th birthday.

The best gift we can give children is educating them about the value of money and the benefits of saving and investing.

Prior to choosing an investment, we need to consider a few aspects including tax, fees and the complexity of the structure.

A major consideration for parents and grandparents is the tax rate children have to pay. To prevent Australians investing money in their children’s name to save tax, special rules apply to income earned by children under 18. Income derived from investments and savings account is taxed at 66 percent once it exceeds $416 a year until it reaches $1,445, after which 47 percent tax applies.

We can safely say that investing in the child’s name will incur the highest marginal tax rate.

The simplest approach is to invest in your own name, preferably the lowest earning parent or grandparent.

  • You pay the tax at your marginal rate
  • The first $18,200 earned is tax-free
    • You may be eligible for the low-income tax offset
    • If you meet the age requirements for Age pension, you may be eligible for the seniors and pensioners tax offset
  • Income derived from the investment may have franking credits

Another structure that can be used is a family trust, however, they are costly to establish and maintain, and time-consuming to administer.

As you can observe, the decision on the most appropriate investment vehicle for your children or grandchildren can vary depending on your circumstances. It is best to speak to your financial adviser at The Investment Collective.

Please note that this article is provided as general advice, it has not taken your personal or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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It Takes Time: Superannuation Contributions

The superannuation system has a long history with both sides of government shaping the compulsory superannuation system we have today. The establishment of this system in Australia was a response to the financial challenges posed by an aging population. The aim was to have individuals saving for retirement over a working life to relieve the pressure on Australia’s government paid age pension.

Throughout your working life, your employers will make compulsory contributions to your superannuation fund (currently 9.5%). You also have the option to make personal contributions to help build your savings at an accelerated rate.

The government has made superannuation savings attractive as it offers a flat tax rate of 15% on employer contributions and investment earnings (10% on longer-term capital gains if held for more than 12 months).

Reaching your retirement savings goal should not be complicated. You should endeavour to start early and make short-term sacrifices for the longer-term gains. Let time and compound interest do the majority of the heavy lifting for you!

An initiative from the federal government to help boost your superannuation is the co-contribution scheme. If you make a personal after-tax contribution to your superannuation, you may qualify for an additional contribution directly from the government (free money!).

The government will match $0.50 (50 cents) for every dollar you contribute to superannuation up to a maximum co-contribution amount of $500.  The maximum super co-contribution is available if your total income is less than $36,813. The maximum co-contribution reduces by 3.33 cents for every dollar earned over $36,813, reducing to zero when your total income is $51,813 (for 2017/2018 financial year).

There are a few basic eligibility criteria to be met in order to qualify:

You must lodge a tax return

At least 10% of your total income comes from employment or carrying on a business

The balance of your super is equal to or less than $1.6 million and

you are less than 71 years of age at the end of the financial year.

Provided you qualify for the co-contributions, and your fund has your tax file number, the government will automatically forward the co-contribution amount to your super fund.

To find out more go to the super co-contribution information page on the ATO website.

This article has not taken into account your objectives, financial situation or needs. You should consider if the advice contained within the articles is suitable for you and your personal circumstances before acting on it. If you would like to discuss the suitability of the advice to your personal situation, please contact us to make an appointment with one of our friendly advisers.

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Another New Year With Another Unrealistic Resolution?

Happy New Year from all the team at The Investment Collective.

What is your New Year’s resolution? Is 2018 the year you achieve it? I’d like to say that the odds are on your side, however, statistics from 2016 show that only about 8% of people achieve their New Year’s resolutions.

Setting goals is always tricky. Many New Year resolutions are either financial or fitness related. Financial and fitness goals are challenging at the best of times, especially if sacrifices or a change in regular behaviour need to be made. Is there another approach?

Setting only one goal will allow you to focus all your energy on achieving a positive outcome. Your financial New Year’s resolution may, for example, involve paying off a credit card. Setting up a regular cash transfer from your spending account after each payday will gradually reduce the amount you owe. These small steps will help in the long run to pay off the credit card by the end of 2018.

Paying off your mortgage is a big hairy audacious goal (BHAG) and an unlikely achievement in one year. However, you can make some simple steps to reduce years of repayments and thousands in interest. Firstly, get your mortgage reviewed from one of our mortgage specialists. Our team will compare a range of lenders to find you the best offer. Secondly, set a monthly repayment amount that is above the minimum required mortgage payment.

Have you set a fitness goal? The same way you consult a financial adviser to help you reach your financial goals, I suggest talking to an expert who can assist you step by step to help you achieve your fitness goals.

Personally, I have only set one goal that is not a BHAG – I’m getting married next year! My goal is to save an additional $10,000 before the wedding. I have also stepped out how I’m going to achieve this goal. The wedding is in one year, so I have a definitive timeframe. My goal is $10,000 and I intend on saving an additional $200 per week. To help me reach this goal, I have taken on an additional job that is flexible and manageable.

As you can see, each step is measurable, time-based and realistic. 2018 is the year I will achieve my goal. Will you achieve your goals, whatever they may be?

Please note this article is prepared as general advice only. It has not taken into account your personal circumstances or financial goals. If you would like financial advice tailored to help you achieve your goals, please contact us and talk to one of our friendly advisers today.

 

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3 Tools To Ensure Your Business Succeeds

Small business forms a significant part of the Australian economy. You may recall that one of the focuses of the 2016-17 Federal Budget included a raft of initiatives to simplify tax and compliance, encourage investment and increase the level of economic activity in our economy.

Australian small businesses employ over 3 million workers and added over $340 billion in 2013-14 to the Australian economy[1] it is therefore crucial for all levels of government to support small businesses, however, ultimately the buck stops with you.

So what can you do to make your business more successful?

1. Review your business.

Taking the time to stop and analyse your current business and areas of improvement, could lead to new ideas, new revenue streams and a reduction in costs.

Reviewing market trends and other factors affecting your business will help you to innovate and be a step ahead of your competitors.

2. Overstocked?

Business owners are enticed to buy in bulk and save, failing to recognise that excess stock will have additional costs, including the requirement for additional storage space, the increased likelihood of perishables, and in many cases, increases in the funding costs required to pay suppliers.

Implementing a policy of buying stock when needed will keep stock refreshed, reduce the need for storage space and improve cash flow.

3. Keep a close eye on your debtors.

It’s great making sales or providing a service on credit, but not chasing up money owed will lead to greater losses. Have a look at your outstanding debtors right now, did you realise that there was so much money outstanding? You should be looking at this weekly; if your customers think they can get away with not paying you, they will!

 

The information provided is general advice only. It has not taken into account your objectives, financial situation or need. If you would like to learn more or receive more tailored advice, uur business consulting team are experts in the small to medium enterprises (SMEs). If you would like to have a free consultation regarding your business needs, contact The Investment Collective today.

 

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Understanding Your Super Statement

The financial year has finished. September is commonly the month super fund statements will start arriving in your letterbox, and like many working Australians, you might be getting more than one.

Generally, superannuation is the second largest asset outside of the family home.

Your superannuation, no matter how big or small, is an investment and designed to fund your golden years. Do you spend the time reading through and understanding your annual superannuation statement?

The complexity of superannuation makes reading your statement confusing and stressful. Thus, ignoring and discarding the statement always seems easier.

Understanding your statement should be easy and here is what to look for:

Performance

Firstly, look at your account balance and the historical movement. The investment return is expressed as a percentage and gives the return on each of your investment options over a stated period, generally 1, 3 and 5 years.

Fees

The statement will list administrative and investment fees. The government also taxes employers’ a compulsory 9.5% (before tax) super contributions and earnings by 15%. Reviewing the total amount of fees you have paid will allow you to compare between different superannuation funds.

Contributions

Your superannuation statement will include a transaction history over the past 12 months, detailing contributions from your employers’ compulsory super guarantee. Make sure you are receiving what you are entitled to receive. If you are salary sacrificing or making co-contributions in addition of the super guarantee, check the accuracy of the deposits to your salary sacrifice agreement.

Insurance

Superannuation includes insurance cover, typically life insurance, total and permanent disability and income protection. The standard level of cover might not be adequate for your needs. Please talk to our insurance specialists to review the level of cover that is more suitable.

Beneficiary

Did you know that your superannuation falls outside of your will? For peace of mind, include in your super fund clear instructions as to whom you wish to inherit your superannuation. This can easily be achieved by completing a valid binding nomination, which lasts three years.

Familiarising yourselves with superannuation now, and creating a plan, could help you live a more comfortable and joyful retirement.

This advice is intended as general advice only, and is not meant to be interpreted as personal advice. It was prepared without taking into account your personal circumstances, objectives or personal situation. Please consider the appropriateness of the advice in light of your own circumstances. Should you wish to discuss further, to see if any of it might apply to you, contact us to speak to one of our friendly advisers today.

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Straw Hats in Winter

It’s winter, the mornings are cold and day looks grim. Dark clouds are brewing and now it’s raining. Everyone around you has an umbrella and scarf and you are wearing a straw hat that makes everyone look as they walk past.

Is standing out from the crowd such a bad thing?

To be a successful investor, you cannot constantly be swayed by changing the opinions of outsiders. Our Investment Committee is not distracted by short-term trends in the financial markets or the constant headlines and negative press we are exposed to in mainstream media commentary. Being able to maintain a long-term focus and not overreact to optimism or pessimism is critical for investing success.

Warren Buffett once said,

“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”

At The Investment Collective, we choose Australian companies that exhibit some form of “economic moat” to help protect the business against competitors.  This may include:

  • Strong branding
  • Efficiencies of scale
  • High barriers to entry
  • Switching costs

Our Investment Committee seeks out opportunistic investments where we view market pricing as not being representative of future predicted returns.

Markets will continue to rise and fall. Working alongside you to manage your investments, we help you make more informed decisions and seek to minimise your emotional burden.

If you would like to know more about how The Investment Collective can help you with your investment strategy, contact us to make an appointment today.

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