Personal transformation can be challenging. We all have habits we’d like to break and behaviours we’d like to do more of. But when we do some self-examination and think about what is involved in navigating change, it can seem overwhelming to get to where we need to be, whether that is personally or professionally.

That’s where small incremental change can be a powerful tool.

The power of one per cent

Just a tiny shift of something like one per cent, does add up. A compelling example of the power of one per cent incremental change is the story about Sir David Brailsford and the British Cycling Team. The team hadn’t produced a rider able to win the Tour De France in its entire history. Brailsford felt that by improving in achievable one per cent increments in a lot of areas, the team could produce a cyclist who could win the Tour de France in five years.

They made one per cent improvements in obvious areas such as nutrition, bike aerodynamics, weight, and seat comfort as well as in areas others didn’t think about. They located a pillow that provided slightly better sleep and travelled with it and another gain was made through adjustments to sleeping posture. Then, someone found a massage gel that worked marginally more effectively, and so on. These minuscule one per cent gains added up to a win in two and a half years instead of the predicted five years, and the team went on to win six races since 2012.

Why incremental change works

While you may not be gearing up to win the Tour De France, you can apply this powerful method of incremental improvement to your own life, to improve your health, relationships, finances, career, or business.

Too often we convince ourselves that impressive results demand massive action and fail miserably as we have bitten off a lot more than we can chew. However, making tiny adjustments to your life are much easier to manage and much more likely to be sustained than a huge shift.

It’s also common to think of a big win or achievement as a single event but the reality is that it’s generally the result of a series of tiny moments that each propel us one step further toward our goal.

The one per cent rule is so effective, as it can be scaled. The method works because you are making many small tweaks and building on those tweaks as they become habits.

Applying incremental change to transform your life

The starting point is to think of an area of your life you want to improve. Then think of small ways you can tweak your life to achieve that objective. The tweaks obviously don’t have to literally be as tiny as one per cent, but the objective is a series of minor changes, which built upon on a regular basis, really add up.

For example, if you are wanting to improve your health you don’t have to overhaul your lifestyle to reach your health goals, go for small, achievable changes. Try drinking an additional glass of water when you wake up, take some fruit to work to snack on, take the stairs instead of the lift at work, or get off the train one stop early to walk a little further home.

Or if you are wanting to further your career, try spending 10 minutes per day on expanding your network, incorporate some small productivity tweaks into your daily routine like not checking your emails constantly, and commit to self-growth by asking a single question every day to improve your knowledge. Building upon little, easy tasks like these can help you on your path to success.

Reaping the benefits

It is important to build though. One small tweak alone will not make an enormous difference. The challenge is to continue to make one per cent changes, without dropping the changes you’ve already made.

The key to this method, is to be consistent; it takes around 60 days to establish a habit so make sure you hang in there. You might have to even put a pause on adding any more changes to your routine as you adjust at various points along the way but just make sure you persevere to establish the changes you’ve already made.

There is no better time than the present to get started, so make the first micro change to your life today and watch each one per cent improvement add up to success.

Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Australia’s economy stubbornly defied predictions during 2023, dashing any hopes that we might begin to return to some kind of normal.

Some had expected an end to the Reserve Bank’s continued cash rate rises during the year. Instead, inflation has been a stubborn foe and we saw five rate rises, adding another 1.25%. But there was good news for property investors with an increase in prices in some cities.

On another positive note, superannuation funds bounced back after losses in 2022.ⁱ SuperRatings reported that the median balanced option is expected to return 9.6% in 2023, after most funds produced negative returns the previous year.

*Year to September, ^September quarter # November
Sources: RBA, ABS, Westpac Melbourne Institute, Trading Economics

The big picture

Global economic forecasts for 2023 were also beset by a number of wild cards during the year. While many economists were predicting recession in the United States and Europe and a rebound in China, the year ended differently with no recession in the US, Europe struggling but doing better than expected and China still battling some headwinds.

October brought concerns of a wider Middle East conflict, the International Monetary Fund revising its outlooks for the region, saying that an escalation of the conflict could be far-reaching, affecting tourism, trade, and investment.ⁱⁱ

Inflation and interest rates

In Australia, economic growth slowed a little on 2022’s result but still delivered a better return than forecast. The economy grew by 2.1% although a larger-than-expected increase in the population is putting extra pressure on housing and prices, keeping inflation higher.ⁱⁱⁱ It was the eighth quarter in a row of economic growth.  

Inflation remains high but many believe we have seen the end of interest rate rises for 2024. The latest figures show the rate of inflation dropped from 4.9% in October to 4.3% in November. 

New dwelling prices rose 5.5% in the 12 months to November while rents rose 7.1%. Electricity prices were up by 10.7% for the year and food and non-alcoholic beverages increased by 4.6%. 

The Reserve Bank raised the cash rate five times to finish the year at 4.35%.

Sharemarkets

Global sharemarkets ended 2023 on a more positive note. In the US, welcome news from the Federal Reserve of an end to rate hikes saw stocks and bonds soar in the final weeks of the year. During the year, the Dow Jones index increased by 13.7% and the Nasdaq by 43.4%. There was mixed news in Asian markets with a jump of 28.2% on the Nikkei 225 and 18.7% on India’s BSE Sensex but China’s Shanghai Compositive fell 3.7% and the Straits Times index of Singapore was down 0.3%.^iv

Australia’s sharemarket may not have experienced the heady double-digit returns of some global markets but it ended the year with a gain of almost 8%, marking its best performance since 2021.^v

Commodities

Despite big falls from the peaks of 2022, commodity prices remain high across the board.

Iron ore, Australia’s biggest export, rose more than 21% as the Chinese government continues to create strong demand by stimulating property and infrastructure development.

Oil prices saw some spikes during the year but steadied by December. However, the World Bank notes that conflict in the Middle East, on top of the disruptions caused by the war in Ukraine, could cause a major oil price shock, pushing global commodity markets into uncharted waters.^vi

As the US dollar gathers strength and Australia’s high inflation figures persist, the Australian dollar is under pressure. It ended the year where it began after recovering from a slide in the second half of the year.

Property market

While rising interest rates usually dampen property prices, by year’s end we saw a remarkable turnaround for some cities in another result that upended forecasts.

CoreLogic’s national Home Value Index rose 8.1% in 2023, up from the 4.9% drop in 2022 but not quite at the stellar 24.5% increase recorded in 2021.^vii

It was a patchy performance across the country. House prices rose at more than 1% every month on average in Perth, Adelaide, and Brisbane in the second half of the year. While Melbourne values dropped in November and December, Sydney and Canberra prices barely moved, and Hobart and Darwin prices fell slightly.

Looking ahead

As floods and storms ravage the eastern states and bushfires break out in the west, another tumultuous Australian summer might be mirrored by a chaotic year for the economy both in Australia and overseas.

The RBA expects economic growth to remain subdued but resilient in 2024, largely supported by construction and infrastructure work. Meanwhile the rebound in international students and tourism is expected to contribute to robust growth in consumer spending.^viii The RBA is also confident that inflation will continue to fall slightly throughout the year, but many predict at least one more cash rate increase during the year.

Worldwide, China’s spluttering economy and the outcome of the US presidential election may cause ripple effects across the globe, meanwhile markets will be nervously watching the conflicts in the Middle East and Ukraine as well as China’s threat to blockade Taiwan, for the potential to create broader economic challenges. 

Whatever the year ahead brings, we are here for you. If you would like to discuss your financial goals and circumstances in light of prevailing economic conditions, don’t hesitate to get in touch. 

Note: all share market figures are live prices as at 31 December 2023 sourced from: https://tradingeconomics.com/stocks

i https://www.afr.com/policy/tax-and-super/super-balances-grow-almost-10pc-thanks-to-tech-rally-20240103-p5euwb
ii https://www.imf.org/en/Blogs/Articles/2023/12/01/middle-east-conflict-risks-reshaping-the-regions-economies
iii https://www.abs.gov.au/media-centre/media-releases/australian-economy-grew-02-cent-september-quarter
iv https://www.businesstoday.in/markets/story/global-market-performance-heres-how-global-equity-markets-major-currencies-performed-in-2023-411391-2023-12-31
v https://www.abc.net.au/news/2023-12-29/asx-markets-business-live-news-dec29-2023/103271578
vi October 2023 Commodity Markets Outlook: Under the Shadow of Geopolitical Risks [EN/AR/RU/ZH] – World | ReliefWeb
vii https://www.corelogic.com.au/news-research/news/2023/australian-home-values-surge-in-2023
viii https://www.rba.gov.au/speeches/2023/sp-ag-2023-11-13.html

Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Employers are desperate for workers and cost of living pressures are making it tough to live on a pension. That’s a perfect mix of conditions to send some retirees back to work. But it’s smart to get good advice before you take the leap.

With unemployment rates at historic lows and employers facing a shortage of skilled workers, an increasing number of retirees are choosing to re-enter the workforce. According to recent data from the Australian Bureau of Statistics (ABS), approximately 45,000 more individuals aged over 65 are actively working compared with a year ago.ⁱ

Some retirees may have been forced to return to work to financially support themselves. National Seniors research found 16 per cent of age pensioners re-entered the workforce after initially retiring, while another 20 per cent said they would consider returning to work.ⁱⁱ

Declining superannuation returns combined with rising inflation and cost of living pressures may be some of the reasons why retirees could soon be returning to work.

Things to consider

Returning to work after retirement raises several important financial and logistical considerations for retirees including the effect on the Aged Pension and superannuation.

If you receive an Aged Pension and are planning to return to work, you will need to let Centrelink know you are receiving additional income within 14 days. The extra income may mean that your pension is reduced if it exceeds Centrelink’s income threshold. It’s essential for retirees to be aware of these thresholds and how their earnings may affect their pension to plan their finances effectively.

Eligible age pensioners should also consider the Work Bonus incentive. This incentive encourages age pensioners to return to work with no or less impact on their age pension. Under the Work Bonus, the first $300 of fortnightly income from work is not assessed as income under the pension income test. Any unused amount of the Work Bonus will accumulate in a Work Bonus income bank, up to a maximum amount. The amount accumulated in the income bank can be used to offset future income from work that would otherwise be assessable under the pension income test.

Effect on superannuation

Returning to work after retirement can have implications for your superannuation, particularly if you’re receiving a pension from your super fund. You can continue taking your pension from super, but you will still have to meet the minimum pension requirements.

So, even though you may not need that pension income, you have to withdraw at least the minimum, which depends on your age and your super balance. This minimum pension rate is set by the government. Failing to meet these requirements can have tax implications and may affect your pension’s tax-free status.

You can convert your super pension phase back into the accumulation phase if you wish to stop taking the minimum pension. However, be aware of the tax differences. In the accumulation phase, any income and gains are taxed at 15 per cent whereas they are tax-free in the pension phase.

Don’t forget that if you retain your pension account, then you will have to open a new super accumulation account to receive employer contributions because you cannot make contributions into a super pension account.

Other investments

If you have personal investments outside super and have been receiving a pension, your lower income may mean that you are not paying tax on any gains from them. But extra income from a job may mean you move up a tax bracket and any investment income and capital gains will then be assessed at the higher rate.

Returning to work after retirement can have far-reaching implications on your finances, particularly with regard to your Aged Pension and superannuation. It’s vital to carefully seek appropriate advice to ensure a smooth transition back into the workforce, allowing you to make informed decisions that align with your financial goals and overall well-being.

If you would like to discuss your options, give us a call.

i Retirees in demand as employers continue to face tight labour market – ABC News
ii A working retirement – choosing to return to work – National Seniors Australia

It’s easy to be inspired by the super-profitable renovations and dream rebuilds we see on TV.

In real life, the picture can be a little different. The key to achieving your particular dream home is to arm yourself with the comparative costs for both selling and buying, and renovating, with a clear understanding of what’s possible on the funds you can raise – and afford to pay off. So, let’s take a look at some things you need to consider.

Know your budget limits

Calculating how much you can afford to spend involves getting a current valuation of your property. Once you know your existing equity, you’ll have a clear picture of what you can afford to borrow and spend on a renovation or a new home. Both options often involve re-mortgaging, with the renovation needing an offset facility that allows you to draw on those funds.

When deciding on how much of your equity to use, you need to keep in mind the loan to value ratio (LVR) of your new loan amount. If your LVR is higher than 80% for your new loan, you may be required to pay lenders mortgage insurance on top of your already larger loan.

Comparing the costs of renovating and moving home

To get an accurate picture of whether renovating or moving would be the most economical solution for you, you will need to compare a few figures. These include the comparative costs of selling and buying something similar to your renovated property in your desired area.

Buying a new property means paying for conveyancing, stamp duty, marketing and agent and solicitor’s fees. While these costs haven’t risen a lot, the timeframe, costs of building materials and the labour needed for a renovation have. This makes it especially important to budget a renovation accurately, so you are able to compare these costs against buying a move in ready property, where everything has already been done.

The alternative scenarios you’ll need to consider include whether the home you want to create is realistically within your budget to buy or renovate, and if you could potentially end up overcapitalising.

Overcapitalisation is a consideration many would be renovators overlook but need to be aware of. This is when the cost of the renovation is more than the value added to the property. You may be happy with this if your aim is to create your forever home, but it may present financial challenges when the time comes to sell.

Again, research and accurate financial forecasts are important. You’ll need to consider the current value of your home, what it would potentially be worth when the renovation is complete and the price point of equivalent homes in your area.

Matching your renovation to your budget and timeframe

Homeowners choose the renovation route for lots of good reasons. Some may want to get a property ready to sell or to transform a loved but too small or dated home. While others may not be able to afford to buy another home that is suitable, or want to increase the rental value of an investment.

Whatever your reason for renovating, you need to remember that it probably won’t happen quickly or cheaply. This means proper planning and adding in some financial wiggle room, is vital for a realistic budget. This includes deciding on extras such as the quality of your fixtures, alternative accommodation, and employing a site manager or architect to organise trades, manage council approvals and manage the project budget.

There is a lot to weigh up before deciding between a renovation and property move. We’re happy to help you get the facts you need to make a fully informed decision and reduce any unexpected costs, so please get in touch to organise a chat.

Setting your renovation up for success

• Set a budget

• Consider what you can do yourself i.e., painting

• Understand the feasibility and costs of your ideas

• Employ trusted trades

• Start any council approvals or apply for permits early

• Speak to us about financing your renovation

Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

If someone offers to withdraw your super or move it to a self-managed super fund (SMSF) so you can get the money, it could be a scam. Learn how to spot the signs of a super scam and what you can do to protect yourself.

Scammers may target your super because most Australians have a super account that can hold a large amount of money. 

If you’ve been affected by a data breach, contact your super fund to let them know. A scammer may have access to your accounts, including your super. 

Spot the signs of a super scam

Scammers can target you online, by phone or email. They may use flashy advertising through social media or on websites.

Here are some ways a scammer could try to get your super.

Phishing scams for your personal details

A scammer contacts you pretending to be from a financial firm, such as a bank or super fund. They may use copied AFS licence details from a legitimate organisation to give you the impression they are genuine.

They ask for your personal or account details and may send an email with a link. When you click on the link, they will gain access to your computer, including your log-in details for other accounts.

With these details, a scammer can:

• create a super account in your name with another fund, or a fake SMSF, then transfer funds to this account and withdraw it

• use stolen myGov sign in details to gain access to your personal details and superannuation accounts

Encourage you to open a self-managed super fund

A scammer offers to help you ‘control’ your super by establishing a SMSF and transferring your super into it. They may:

• offer to help grow your super by investing with them in fake high return investments

• provide a fake investment performance app or computer program, showing false returns on your investments

• offer to ‘do everything for you’, advising there is no need to engage with anyone else as they will take care of it

• offer to invest your super in unusual investments such as cryptocurrencies or foreign currency bonds

Scammers using this tactic may not be pushy and instead attempt to build trust with you over time. Eventually, they convince you to transfer your super into a SMSF or bank account that they control. They can then withdraw your super.

Offer to get access to your super early

Someone offers you a quick and easy way to access your super early, which may not satisfy a condition of release.

They may offer to help you fill out genuine documents needed to do this. This may include giving them your personal details to withdraw super from your fund or suggest transferring it into a SMSF, for a fee. They may tell you that after the paperwork is lodged, you can access the funds for personal use.

This process is illegal, and you will end up paying additional tax and penalties. 

Protect yourself from super scams

Here’s how to protect yourself from super scams.

Check your balance and contact details

Check your super balance regularly by logging into your account through your super fund’s website.

Look for any unusual transactions such as transfer requests or changes in personal details. If something doesn’t look right, contact your super fund and ask them to check.

Checking your balance and account details regularly helps to identify issues or potential scams quickly.

Update your account security 

Consider utilising multi-factor authentication if offered by your super fund or ask to ‘password protect’ your account.

Make sure your super fund has an up-to-date mobile number, email and postal address for you. This will help them contact you if there’s any suspicious activity on your account.

Contact your superannuation fund directly 

If someone contacts you claiming to be acting on behalf of your super fund, contact your fund to check.

Use a contact method you have sourced yourself, as the one you’ve been given may be fake. Your super fund will be able to verify if the contact was authorised by them.

Know the rules about your super

Scammers may try to convince you that they can help access your super early. Knowing when you can legally access your super protects you from these kinds of scams.

There are very limited circumstances where you can get your super early.

Speak to someone you trust

If you’re not sure about something, talk to a person you trust before you go ahead. This could be a family member, your accountant or financial adviser, or your super fund.

Don’t deal with anyone who is not licensed

A scammer will not have a valid licence to set up or manage super funds. They may copy someone else’s or say they don’t need one.

Take steps to stop identity theft

There are simple steps you can take to help stop someone stealing your identity. For example, you can shred your personal documents, and be careful what you share on social media.

Report a super scam

If you think you’ve been targeted by someone who is trying to access your super, report it to:

• Your super fund

• Scamwatch

• ATO — 13 10 20

Case Study

A scammer takes Jasmine’s super

Have a savings goal and budget

It’s much easier to be a good saver if you have a goal in mind. It might be a holiday, a house deposit, or just a rainy day fund.

To work out the amount you’ll need, be realistic about what you can afford to save each week, fortnight or month.

A well-planned budget will get you started on your savings path. 

Earn your bonus interest

Good savings habits can reward you with bonus interest on some accounts. Be disciplined and it will pay off in the long run by helping you save a little faster.

How it works

With some savings accounts, you get bonus interest each month if you make no withdrawals and at least one deposit in a month.

Then, if you follow those simple rules, you’ll receive your regular interest plus bonus interest at the end of the month. 

An example

In your first month, let’s say you’ve saved $4,000 and your interest rate is 2.50% per annum. This means you’ll earn approximately $8 in interest for this month.

Your bonus interest varies from different accounts—some need a minimum monthly deposit, some no withdrawals, and some have no conditions (check the account details before you open the account).

For this example, we’ll assume there are no conditions and your bonus interest is 0.90% per annum. So, for month one your bonus interest will be $3.

Every month, you’ll see your interest and bonus interest (if you stick to the conditions) increase along with your savings.

Think of your interest as extra money you might not otherwise have had. Eleven dollars might not sound like much, but at the end of 12 months you may have earned an extra $130.

Set up a regular payment

If you get your phone or power bill direct debited from your account, why not apply the same concept to your savings account?

Simply set up a regular automatic payment to go into your savings account every day.

It’s best to make your payment early in the month, because transfers could take a few days to reach your account – and you don’t want to risk losing your bonus interest.

Compare our savings accounts

Just like with insurance and mobile phone plans, it’s best to compare which savings accounts are right for you. To get started, think about your needs.

Perhaps an account you can access at any time will work best. This means you can access your money any time without fees. Depending on the type of savings account you choose, you may lose bonus interest for any withdrawals you make.

Another option is a term deposit. A term deposit is a savings account where you lock the money into the account for a certain time and interest rate. The interest rate is usually based on the amount and length of time you put the money away for. This is fine if you don’t need access to the money during the fixed term. If you need to withdraw the money before the fixed term is up, you may be charged economic costs (not all the original interest you would have received will be paid to you).

Track your savings goal

Another secret? Keep track of your savings goal.

You can do this with our online savings tool. There are plenty of apps available. 

This handy tool enables you to add a savings goal to any of your savings or transaction accounts and can help you easily track your progress against your goal.

What to do if you have trouble saving

Sometimes having quick access to your savings can make it tempting to spend money. If you’re finding it too tempting, we can help.

Hide your savings account

You can hide your savings account by changing your settings in internet banking. This means you won’t see the balance when you log in.

Please note, you can’t hide an account if it has periodic or future-dated payments set up.

Lock your savings account

Having a locked savings account means you can’t withdraw money from that account. With this lock in place, you can still deposit money to your account and watch your balance grow, if your account isn’t hidden from internet banking.

For more savings tips, give us a call.

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/manage-money/budget-saving/money-saving-tips

National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.

© 2023 National Australia Bank Limited (“NAB”). All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Withdrawing part of your superannuation fund balance then paying it back into the account, known as a recontribution strategy, may sound a little strange but it could deliver a number of benefits including reducing tax and helping to manage super balances between you and your spouse.

Your super is made up of tax-free and taxable components. The tax-free part generally consists of contributions on which you have already paid tax, such as your non-concessional contributions.

When this component is withdrawn or paid to an eligible beneficiary, there is no tax payable.

The taxable component generally consists of your concessional contributions, such as any salary sacrifice contributions or the Super Guarantee contributions your employers have made on your behalf.

You may need to pay tax on your taxable contributions depending on your age when you withdraw it, or if you leave it to a beneficiary who the tax laws consider is a non-tax dependant.

How recontribution strategies work

The main reason for implementing a recontribution strategy is to reduce the taxable component of your super and increase the tax-free component.

To do this, you withdraw a lump sum from your super account and pay any required tax on the withdrawal.

You then recontribute the money back into your account as a non-concessional contribution. If you withdraw this money from your account at a later date, you don’t pay any tax on it as your contribution was made from after-tax money.

The recontribution doesn’t necessarily have to be into your own super account. It can be contributed into your spouse’s super account, provided they meet the contribution rules.

To use a recontribution strategy you must be eligible to both withdraw a lump sum and recontribute the money into your account. In most cases this means you must be aged 59 to 74 and retired or have met a condition of release under the super rules.

Any recontribution into your account is still subject to the current contribution rules, your Total Super Balance and the annual contribution caps.

Benefits for your non-tax dependants

Recontributing your money into your super account may have valuable benefits when your super death benefit is paid to your beneficiaries.

A recontribution strategy is particularly important if the beneficiaries you have nominated to receive your death benefit are considered non-dependants for tax purposes. (The definition of a dependant is different for super and tax purposes.)

Recontribution strategies can be very helpful for estate planning, particularly if you intend to leave part of your super death benefit to someone who the tax law considers a non-tax dependant, such as an adult child.

Otherwise, when the taxable component is paid to them, they will pay a significant amount of the death benefit in tax. (Your spouse or any dependants aged under 18 are not required to pay tax on the payment.)

Some non-tax dependants face a tax rate of 32 per cent (including the Medicare levy) on a super death benefit, so a strategy to reduce the amount liable for this tax rate can be worthwhile.

By implementing a recontribution strategy to reduce the taxable component of your super benefit, you may be able to decrease – or even eliminate – the tax your non-tax dependant beneficiaries are required to pay.

Watch the contribution and withdrawal rules

Our retirement system has lots of complex tax and super rules governing how much you can put into super and when and how much you can withdraw.

Before you start a recontribution strategy, you need to check you will meet the eligibility rules both to withdraw the money and contribute it back into your super account.

If you would like more information about how a recontribution strategy could help your non-dependants save tax, give our office a call today.

Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

It’s nice to enjoy a break over the summer months. In fact, it’s an Aussie tradition – that mass exodus after Boxing Day that sees us head off for some well-earned rest and relaxation. However, it can be hard to unwind when we have a device in our pocket buzzing away every couple of minutes.

Even those who manage to resist taking work away with them and checking work emails while on holiday, can spend a lot of time on a digital device! And while you are glued to that device, chances are you are not ‘in the moment’ enjoying your time with family and friends fully or the delights of wherever you are vacationing.

Digital addiction

It’s not an overstatement to say that during our everyday lives we are glued to our devices. The average person spends around five and a half hours a day on their phone – that’s over two months over the course of a year!ⁱ

We also tend to check our phones on average around 8 times an hour – almost once every 8 minutes. And just over half of Aussies (50.65%) consider themselves addicted to their phones.ⁱⁱ Throw in the amount of time we spend on tablets, laptops and other devices and it’s clear we generally spend a lot of time in front of a screen.

A vacationing trend

A new trend that may help to curb our online addictions is known as a ‘digital detox’ holiday.

Resorts and lifestyle destinations have got on board and many offer wellness packages offering a respite from the fast pace of online life with no phones, texts, emails, social media use or web browsing for the duration of your stay.

You don’t have to fly off to an internet black spot or sign up for a digital detox retreat to get the benefits though. Doing your own digital detox can be as simple as switching your phone to airplane mode or better still turning your devices off for a designated time every day or for a period of time.

Breaking free

The benefits of getting away from a screen, even if it’s just for a short break, are numerous but the main benefit of having a proper digital detox is reducing stress. If your phone or tablet isn’t buzzing, beeping or vibrating in your pocket or hand every few minutes, you start to breathe deeper and slow down.

Another plus of having a break from your device is the way it can affect the quality of your interactions with others. If you are not staring at a screen you open up opportunities to engage more fully with those around you. That means better quality time connecting with friends and family.

If you are a solo traveller, it can be challenging to not have the safety blanket of a phone in your hand, however there is something special about being more aware of your surroundings and taking in the little moments as they happen, without distractions.

Open to offline discovery

While tech can certainly make travel smoother in many ways, going phone free can open up opportunities for discovery. While it’s tempting to grab your phone to check the Google score of every restaurant you pass or using Maps to locate local attractions, it can be satisfying stumbling across a great little eating place tucked away down a laneway or finding a wonderful local market on your travels.

And when it comes to sharing your discoveries, you could also try keeping it offline. Instead of snapping moments to share immediately on social media, knowing you are going to be constantly distracted checking how your posts are being received, try to treasure those moments as they happen.

Whether you digitally detox for a few hours a day, a few days, or the duration of the holidays, your vacation will benefit from you unplugging for a bit. And who knows, you may even find some of your good digital detoxing habits follow you into the New Year.

i, ii https://www.reviews.org/au/mobile/2022-mobile-phone-usage-statistics/

Refinancing your home loan to take advantage of a lower interest rate might save you money. Before you switch, make sure the benefits outweigh the costs.

Before you decide to switch

If you’re thinking about switching home loans, you’re probably focused on getting a better interest rate. But there are other things to consider before switching.

Ask your current lender for a better deal

Tell your current lender you are planning to switch to a cheaper loan offered by a different lender. To keep your business, your lender may reduce the interest rate on your current loan.

If you have at least 20% equity in your home, you’ll have more to bargain with. Having a good credit score will also help with negotiations.

Compare any loan they offer you with the other loans you’re considering. 

Negotiate the length of the new loan

Some lenders will only refinance with a new 25 or 30 year loan term. You could end up with a longer loan term than the years left to pay off your current mortgage.

The longer you have a loan, the more you’ll pay in interest. If you do decide to switch, negotiate a loan with a similar length to your current one.

Weigh up the cost of lender’s mortgage insurance

If you have less than 20% equity in your home, you might have to pay lender’s mortgage insurance (LMI). This can increase the cost of switching and outweigh the savings you’ll get from a lower interest rate.

If you decide to switch, ask for a refund of some of the LMI from your current loan.

Compare the costs of switching your mortgage

Get at least two different quotes on home loans for your situation.

Check the average interest rate

Choose your loan and repayment types to see the average interest rate for new home loans. Interest rates are rising, so the average rate may now be higher.

Compare the fees and charges

We can help you find out what’s available.

Comparison websites can be useful, but they are businesses and may make money through promoted links. They may not cover all your options. 

Compare these fees and charges:

Smart tip: Ask the new lender to waive the application fee to get your business.

Check if you’ll save by switching

Once you have a short list of potential loans and the fees involved, use the mortgage switching calculator to work out if you’ll save money by changing home loans. It also shows how long it will take to recover the cost of switching.

Mortgage switching calculator

Check out how much you’ll save by changing home loans.

Case Study

Simon and Tiana consider refinancing

Simon and Tiana’s fixed rate home loan period ends in a few months and their interest rate will increase. They decide to see what other lenders are offering.

They find two loans with a lower interest rate and the features they want.

Loan A has an application fee of $600 and Loan B has an application fee of $300. Simon and Tiana decide to pick Loan A because it has the lowest interest rate, which offsets the higher establishment fee.

By switching loans they will save $84,040 ($280 a month) over the life of their 25-year loan. They will recover the switching costs in five months.

Contact us today for more information.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/home-loans/switching-home-loans

Important note: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

Important
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Look for a good currency exchange rate and check the fees when sending money overseas. A small difference can mean more money gets to your family or friend.

Types of overseas money transfers

Money transfer company

A money transfer company is usually the cheapest way to get money to someone overseas. The company can either move the money to the other person’s bank account, or arrange for the person to collect the money in cash at a local branch or agent.

You can transfer money:

• online, and pay using your credit card

• in person at a branch or agent, and pay using cash or EFTPOS

The transfer is usually faster if you do it in person than online, but you’ll pay higher fees.

You can transfer money online or in person with Western Union through Australia Post. See International money transfer with Western Union on the Australia Post website.

Bank transfers

You can transfer money by moving money from your bank account directly into an overseas bank account. This is called a money transfer, a telegraphic transfer (TT), or a wire or SWIFT transfer.

Banks can be a more expensive option. The ACCC found the big four banks are consistently more expensive than other suppliers for foreign cash and international money transfers. The exchange rate is generally less competitive. A bank transfer can also take up to five business days to go through.

International money order

An international money order is when the bank gives you an internationally guaranteed cheque. This also called an international bank draft.

You then post the cheque to the other person, and they cash or deposit it at their bank.

This is more secure than sending a personal cheque, but it’s slower and more expensive than an online transfer.

Compare exchange rates for money transfers

It’s worth shopping around for a good currency exchange rate. There are significant price differences amongst companies. You can save a lot of money, especially if you transfer a large amount or often.

Compare the rates and types of transfers on these independent sites:

• SendMoneyPacific – For money sent from Australia to the Pacific Islands.

• SaverAsia – For money sent from Australia to countries in Asia.

• Remittance Prices Worldwide – The World Bank’s website for other international transfers.

Compare these features:

If something goes wrong

You and the recipient should both contact the money transfer company if there’s a problem with the transfer.

If you’re not satisfied with their response, you can complain to the Australian Financial Complaints Authority (AFCA).

Scams

If you send money to someone and that person turns out to be a scammer, it’s almost impossible to get your money back. Be very careful who you send your money to. Visit the Scamwatch website for more information.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/banking/sending-money-overseas

Important note: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

Important
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.