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Investment for Beginners

Work Super 101 – Part 1

work super 101If you have a full time job or part time job, then you will have superannuation.

Regardless of your views on super, it is compulsory for employers to pay a certain level of super for their employees.  It is currently 9.5% of your ordinary time earnings.  Generally speaking, it is paid on the amount you earn for your ordinary hours of work.

As an employee starting a new job, your employer will provide you with a number of forms to complete.  Amongst them will be:

  • a TFN Declaration form to help the employer calculate how much income tax to deduct from your gross pay and remit to the ATO on your behalf (you have to fill in Part A); and
  • a Super Choice Form which is your instruction to your employer as to which superannuation fund you would like your super to be paid into

Because of the excitement of the new job, filling in forms becomes a bit of a chore.  For most people, nothing is more boring than superannuation (apart from watching paint dry) so when it comes to choosing a super fund, the easiest choice is to tick whatever default option the employer offers.  Super is super right?  Who cares?

You should care!  If you choose the default super option offered by your employer, your money will generally go to a default option or a MySuper option in one of the following types of super fund:

  • Industry fund
  • Government fund
  • Corporate fund
  • Employer-sponsored fund

I am not saying that these funds are poor choices. What I am saying is that your apathy in not making a more informed decision is the poor choice.  It’s leaving your retirement savings in someone else’s hands and hoping for the best that is the poor choice.  By doing so, you are giving up the opportunity to have active control over your money.  I’m sure you wouldn’t do that with any other money you have.

Also, the rod you are making for your own back is, by repeatedly selecting the default employer option every time you change jobs, you end up with a trail of superannuation accounts behind you.

While many employees in private enterprise can choose where their super goes, there are some employee groups who can’t.  It would come as no surprise that the most notable exceptions to the freedom of superannuation choice are the employees of union driven workplaces and the employees of the government itself.

If you work in any level of government in Australia, you will only be allowed to contribute to the relevant government super fund.  Similarly, if you work is a unionised workplace, you are likely to find there is an award or workplace agreement which forces your employer to direct all or part of your super to a relevant industry fund.  Industry funds are those funds which are run for the benefit of their members and of course, their associated unions.

 

 

estate planning is essential

SMSF Review – No Estate Plan?

estate planning is essentialMost clients I see for a SMSF review have not done much about Estate Planning.

Estate planning means making a plan for the distribution of everything you own and control when you die.

While most people I meet have been meaning to get around to it, they haven’t taken action.  I understand why because it is a complex area, and sometimes it is hard to know where to start.

Estate planning is more than just having a Will.  Your last will & testament only deals with money and assets that are owned in your personal name.  Whether you realize it or not, you probably have other assets within your control that can’t be dealt with directly by your Will.  There are separate strategies for these.  They include:

  • Money & investments held in superannuation, including your SMSF
  • Life insurance policies
  • Jointly owned property (e.g. your home)
  • Money and property controlled in a private company or trust

Whilst you can’t put your home in your SMSF, it is common to draw some of the other common elements of your wealth together into your SMSF such as money, investments, property, life insurance policies and business premises.

And there is a reason for this!

One of the lesser known advantages of a SMSF is the protection it offers as a vehicle which can carry and distribute family money and assets from one generation to the next.

I can’t emphasise enough how important estate planning is as part of a SMSF review.

This protection is not only effective against those you love the least, like creditors and those who want to sue you, it is also effective against potential risks arising from family members you love the most.

I know that sounds really strange, nut here’s an example.

The last thing you want is for hard earned money to be squandered by a child with a drug or gambling habit, or be taken by a child’s departing spouse as part of a divorce settlement.  That can happen if you don’t get it right.  And I can tell you now that a simple Will won’t cut it.

Also if you have a child who can’t fend for themselves, for example a child with a disability or a spendthrift child, you can set up the means to provide for that child for life, long after you’ve departed this world.

However, it is essential that all of these arrangements be put into place while you are alive and still have your full mental faculties to make such decisions.

This is the heart of estate planning!

Call me for a SMSF review and get your SMSF working for you as the inter-generational wealth vehicle it should be.

Gary

General Advice warning

The article above is general advice only designed to educate and heighten awareness of self-managed superannuation and estate planning issues. It should not be regarded as personal advice, because it does not take into account your personal circumstances, financial situation or specific goals. For personal advice that is tailored to your needs, please contact me or consult your licensed financial adviser.

two buildings in brisbane

Business consultancy Australia

Self-managed super – is it right for you?

Business consultancy AustraliaThe number of people establishing self-managed superannuation finds (SMSF) continues to increase.  People are enticed by the prospect of having control over their own superannuation affairs.  But in my experience, people don’t realize the full extent of what they are getting themselves into. Having control may be desirable, but being your own administrator, accountant and investment adviser is very challenging and can be a trap for many SMSF newcomers.   Although it is easy to outsource all of these knowledge gaps, the resulting cost structure can be very expensive. In many cases, people set up SMSFs without doing enough homework.  Often they fail to reach the objectives they set for themselves and could have been better off choosing an appropriate APRA-regulated fund. In my experience, people don’t understand the wide range of superannuation choice available.  Unless a member investor particularly wants to invest in direct property through superannuation, other forms of superannuation should also be considered before the decision is made to set up a SMSF. ASIC (The Australian Securities and Investments Commission) is also concerned about trustee knowledge gaps.  The corporate and financial services industry regulator has weighed in recently and, as part of its SMSF taskforce activities, has outlined a range of factors it believes are important for financial advisers to discuss with their clients. Conversely, anyone considering a SMSF should seek unbiased advice before acting.  In particular, more information should be sought and greater consideration given to:

  • the roles and responsibilities associated with being a trustee of an SMSF
  • the time, cost and resources required to run an SMSF
  • the risks associated with an SMSF structure (ie, not having access to a government compensation scheme)
  • whether the investor has the necessary skills and expertise to make investment decisions for the SMSF
  • the importance of asset diversification
  • whether the investor’s investment strategy will deliver the returns required to adequately fund their retirement; and
  • the advantages and disadvantages associated with a switch from an APRA-regulated fund

Check out the ASIC Moneysmart site to read a little more about how a SMSF works https://www.moneysmart.gov.au/superannuation-and-retirement/self-managed-super-fund-smsf Call me for a free 1-hour overview of a SMSF where I will give you a balanced explanation of both the opportunities and responsibilities that will be placed on you and your family as trustees.  Contact me at Gary Weigh & Associates Business consultancy Australia on 0408 756 531 or gary@garyweigh.com

Don’t pay an adviser you never see

Pay one fee and be commission-free

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Welcome to my business building Australia blog

Gary Weigh business coaching Brisbane5 Handy hints for your super

  1. It’s compulsory so why not make it work for you
  2. Gather it all in the same fund and save on admin fees
  3. Make your super commission free – why pay an adviser you never see
  4. If you don’t have insurance get some through your super fund
  5. Make sure you nominate a beneficiary to receive your benefit if you die (be careful, there is only a few people you can legally choose)

 We can arrange it for you. Call me direct on 0408 756 531 or email gary@garyweigh.com

So what about the government’s new MySuper initiative? 

My answer to that is if you don’t care about your super, then MySuper is for you.  It is there for people who don’t care.

For more helpful business building Australia information about superannuation check out our financial planning services

More Super confusion on the way

business coaching BrisbaneFor employers and employees there is yet another major change to superannuation just around the corner.  And it will probably impact you.

Chances are you aren’t aware of this.  This monumental change in Australia’s superannuation system is one of the country’s best kept secrets.

The federal government and the superannuation industry know about it because they have been talking amongst themselves about MySuper for a couple of years now.

But most people in Australia’s work force (i.e. the consumers it actually affects) are still largely in the dark.  This is unfortunate because many employers and employees will have to take action; and soon.

MySuper is the government’s initiative to replace employer default funds with a cheap; one-size-fits-all super fund offering; with no investment choice and basic insurance benefits.   Everyone gets the same and, to the extent that you do nothing, you will get what you are given.  They will look very much like union super funds (i.e. industry funds).

For employees

So what does MySuper mean to employees who chose to go with their employer’s default super?

  • You may have an additional super fund on New Year’s Day
  • If so, you will have two sets of fees
  • You may also have a duplication of default insurance which you will pay for
  • Your employer will only be permitted to contribute to your new MySuper fund
  • In mid-2017 your current super will be transferred to your MySuper fund
  • For older workers it removes the option of the ‘transition to retirement’ strategy because there are no immediate plans to have a pension version of MySuper
  • You may lose access to advice from an adviser associated with your employer’s fund
  • Fortunately, you can roll your money out of MySuper at any time to a fund of your choice

Will you be asked first if any of this is ok with you?  No!  This will happen without asking you.  So if you want another choice that puts you in control of your retirement savings, SEEK ADVICE NOW!

For employers

By 1 January 2014, you must have categorised all of your employees for superannuation purposes.  Categories include MySuper members, choice members and transitional members.  This probably means adjusting your payroll system to accommodate the payment of employer contributions to one or more MySuper funds.  Doing as you’ve always done is likely to result in penalties.

Conclusion

This is real money we are talking about.  Your money!  So take control of it.  Your superannuation plays an important role in your personal finances.  Ignoring it for decades is sheer madness.

This change is a great opportunity for both employers and employees to side-step ‘MySuper’ and take control.  Doing so will provide the opportunity for your own super and that of your employees to work hard for your retirement.

MySuper is the ‘do-nothing’ option for employees, but not for employers.   I am here to tell you that with superannuation, as with every other product and service – you get what you pay for!  There is so much more you can do with superannuation these days.   SEEK ADVICE NOW!

Call Gary for

  • financial planning Brisbane
  • business coaching Brisbane

Call direct on 0408 756 531

Business owners and superannuation

Business Planning Consultancy Brisbane

It is not uncommon for business owners to be imbued with self-belief and the need for control.  They generally need these attributes to succeed.  Unfortunately, many extend the self-belief mantra well beyond the point of common business sense.

Even when operating well inside your own field of expertise, it is wise to build a good team around you.  But whenever you move outside this zone, good advice from trusted advisers becomes a must.

It is not surprising then that many business owners having generated good returns by coordinating processes and influencing people around them; logically extend the notion to their superannuation.   However, self-belief and the desire for control are not enough.

Either you have the time, the desire, and the necessary expertise to generate your own superannuation returns and comply with the law, or you must pay someone else to do it on your behalf.  The law and the ATO (who administers the laws relating to self managed super funds) are fairly unforgiving.

Even managed (e.g. retail) superannuation is not easy, which is why many Australians are reluctant to engage with it.  Self-managed superannuation is even harder.  It encompasses all of the laws of superannuation, and then some.

Most business owners regard their business as a large part of their superannuation.  Rightly so, and the government recognises this.  For instance, the law does recognise the connection between a ‘real business property’ asset and a self-managed superannuation fund by allowing business owners to transfer business premises to their self-managed funds and lease back.  The rules are strict so advice is crucial.

The link between business and superannuation is further recognised in the small business CGT (capital gains tax) concessions, allowing eligible business owners to convert all or part of the ultimate sale proceeds of their business into superannuation with prescribed CGT concessions, after meeting certain gateway tests.  In this case, independant tax and accounting advice is crucial.

The value of appropriate advice from suitably qualified professionals cannot be emphasised enough.  As well as gaining access to the necessary expertise (e.g. financial, legal, tax), timely advice well in advance of any property transfer or sale allows for appropriate eligibility, structuring and compliance planning.

General advice only

This information is of a general nature only and does not take into account what you currently have, or what you want and need for your financial future. It is important for you to consider these matters, seek professional advice and to read the appropriate Product Disclosure State-ment (PDS) before you make a decision to buy, cancel or continue to hold any product. Call me for a copy of any relevant PDS.

Important

Gary Weigh is the Director of Gary Weigh & Associates Pty Ltd ABN 41 084 228 679, Authorised Representative (no. 256617) of The FinancialLink Group Pty Ltd ABN 12 055 622 967 AFSL No. 240938

Superannuation – will you retire on it?

Business consultancy Australia

business consultancy AustraliaMy cynical view is, “For the majority, probably not!”  Younger workers with time on their side perceive no immediate need and therefore, have little interest.  Older workers have the need and the regret of not acting sooner, but lack the time to accumulate sufficient retirement savings.

I believe that if it wasn’t for compulsory superannuation and union super funds, most workers wouldn’t have any superannuation savings at all.  Nor would they have any personal insurance protection.   To most people, superannuation is just another form to fill in when starting a new job; and to get life insurance is just another budget impost with a benefit that the life insured will never see.

It is only when it is too late that the benefits of needs-based superannuation savings and insurance protection are fully realized.   I regularly receive enquiries from people who are two years off retirement or who have been diagnosed with cancer.  As much as I feel their desperation and regret, we are planners, not magicians.

But then the phone rings and the person on the other end tells me that they have taken stock of their life and they have realised that they need to budget; address their debts; start saving for the future; and protect their family (while still healthy) in case life deals them an unfortunate blow.

These are the clients I live for – people who live for today and want to plan for tomorrow; people who look past their own mortality to the financial welfare of their spouse and children.

I again remember why I chose this profession – to help people who are willing to help themselves.

Are you pricing yourself out of business?

Gary WeighBusiness Coaching Brisbane – An Expert Fix

I visited a new client recently.  His business was building company websites.  He wondered why he wasn’t getting ahead even though he and his staff were reasonably busy.  There were a few problems but his pricing was such that at full capacity his gross margin couldn’t cover his fixed costs.  That means the more work he did, the more money he lost.  Who would have thought?

I know that all this ‘margins’ and ‘fixed costs’ stuff all sounds like accountant ‘gobbly-gook’ speak but this problem has been sending many enterprising business owners to the wall for thousands of years.

Mis-pricing is a common trap for many inexperienced business owners.  If you over-price, customers will buy from your competitors if you have nothing else to retain them.  Under-price and your profit (and your business) could be non-existent.

It is the one critically important variable you must get right to be competitive, make a profit and stay in business.  Common pricing mistakes include:

  • Following rules of thumb
  • Comparing with competitors and discounting by 10%
  • Not taking into account the unique cost structure of your business
  • Not taking into account your own time when considering cost price
  • Not pricing to a target volume at a target gross profit margin

Good financial management skills are never needed more than when you are determining the cost prices and selling prices of your products and services.   If you need help give me a call.  Coaching is an investment in the future profitability of your business.  CHECK OUT OUR SERVICES   SIGN UP NOW

Did you know that GARY WEIGH & ASSOCIATES  is not only a leading business coaching Brisbane company but also a leading financial planning firm (authorised representative of The FinancialLink Group Pty Ltd) specialising in retail & self managed superannuation advice and personal protection insurance advice?

A new age in financial advice

Business consultancy Australia

MyProsperityForum is a fast convenient way to access unbiased financial advice.  If you are busy and short of time, simply subscribe at www.myprosperityforum.com and log in at any time of the day or night.  Ask questions, see what others ask, check out the articles & FAQ.  The forum is ideal for anyone who can’t afford the time, or doesn’t want to make a business hours appointment for financial advice.

Your host is Gary Weigh, a friendly and very experienced financial planner.  He has grey hair and extensive knowledge, the result of 30 years of solving problems and giving good advice to Aussie individuals, families and businesses.

Gary will guide you through the twists and turns of superannuation, savings, investment, sensible building wealth, finance, retirement planning, estate matters and more.  If you are a business owner, he will give you advice on building your business so that you can ultimately exit on your own terms.

You can trust that MyProsperityForum provides unbiased advice and education only.  There are no products for sale in the forum, and no product push.  However, Gary will explain to you how various product types work.  He will also make complex government rules and difficult financial concepts easy for you.

If in the future you decide to purchase a financial product or need a referral to a specialist professional, then simply ask and Gary will make arrangements for you outside the forum.

In MyProsperityForum you have access to expert, unbiased advice 24/7.  Use it short term to gain financial know-how and do your own thing; or use it long term as your trustworthy financial planning companion.  So before you take the next step on your journey to prosperity, run it by Gary in the forum.

If you value good advice, subscribe now to MyProsperityForum only $49.97 per month


Could you finance 30 years retirement?

Whether we are employed or business building or both, we all face the same problem.  That is, how to finance that period of our lives from so-called ‘retirement age’ to the day we die.

For many, superannuation will only be part of the story.  For the majority of Australians approaching retirement age, work super will not be sufficient regardless of whether it is in an industry fund or a retail master trust.  Most who struggle with low super balances now would have still faced the same problem, albeit not so severe, even if the GFC hadn’t occurred.

Let’s face it!  The period of time in retirement these days could be 30 years or so.  Even a seemingly healthy $500,000 in superannuation is not likely to cut it over that time span.

We all need to accumulate enough income earning assets to see us through to the end of life.  That requires a pro-active approach to wealth building with sufficient lead time.  The alternative is to rely on work super and the age pension and hope for the best.

Those unable to be fully self funded retirees or who find the age pension inadequate, may have to keep working in some capacity, even on a part time basis to accommodate traditional retirement activities, such as travel and sightseeing.

Business owners might choose not to sell out so soon and stay longer in their businesses, perhaps decreasing their direct involvement.  Others might choose a sea-change, living and working in a different location, or a career change which could include running a home-based business, online or offline.

The point is that whatever the post-retirement strategy is, it has to be planned.  If a new career or business building are to be part of the retirement solution, common sense suggests that they should be planned and in place before existing income sources are terminated.