Winter Addition Newsletter

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ASPIRATIONS • WINTER EDITION 2016

Contact us

WELCOME TO THE WINTER EDITION 2016

ASPIRATIONSYOUR PARTNER IN

MORTGAGE LENDING &

FINANCIAL PLANNING

Anthony Wright

Authorised Representative

Pty Limited AFSL No. 232706

Office Number: 07 55200 698

Email:[email protected] Website: www.pivotalplanning.com.au

News and Information in this dition

What happens if I let my insurance lapse?........................................................................................................Page 2

Getting more done with fewer interruptions……………………………………………………………………………………Pages 3 & 4

Ten steps to self-managed super………………………………………………………………………………………………..Page 5

Diversifying inside super …………………………………………………………………………………………………………Pages 6 & 7

Changes to the Age Pension assets test………………………………………………………………………………………..Pages 8,9 & 10

Is your growing family stretching your budget? ………………………………………………………………………………Pages 11 & 12

Procrastination: Just do it. Eventually…………………………………………………………………………………………..Pages 13 & 14

What is the seven-year property cycle? ………………………………………………………………………………………..Pages 15 & 16

mailto:[email protected]



http://www.pivotalplanning.com.au/



https://www.facebook.com/PivotalPlanning?ref=hl





•


What happens if I let my insurance lapse?

Like many Australians you may be wondering if your cover can adapt to

your needs.

If you let your insurance lapse, you risk being unable to make a claim when you may really

need to. Take a look at our claims statistics below and you’ll see that, more often than

not, it’s our older customers who understand first-hand the true value of their insurance.Life claims by age

Under 30 years 6%

30 to 39 years 12%

40 to 49 years 18%

50 to 59 years 30%

60 years+ 34%

Source: Claims Paid 2013, AMP Life Limited and The National Mutual Life Association of Australasia Limited Claims.

Based on the statistics above, if you’re over the age of 50 there is a higher chance you’ll need to make a claim on your policy at

some point in the future. So it’s worthwhile consider ing the value of your insurance before and your personal situation before you

let it go.

Health, age and changing legislation

If you let your insurance lapse, you need to think about whether you will be able to get the same cover back again, should you

ever want to. And it’s important to know it’s not just age and health-status that can affect a new insurance application.

As an example, new legislation means some policy options1 held in super are no longer available for new applicants at all. So for

some people, cover that was once in place and then lapsed is now gone for good.

Investing where it counts

As your dependants leave home and your debt levels reduce you should probably reconsider the level of cover you need and

have. While you need to understand your own circumstances and changing needs, often one of the main reasons customers let

their insurance lapse is to save money. An insurance policy can seem like an unnecessary expense and with any luck it may not be

necessary at all. But ironically, not being covered for an event that actually happens can be far more expensive than the cost of a

policy.

There are a few ways to manage the affordability of insurance

Insurance through super is an option where you don’t have to pay for your policy from your hous ehold budget; however, it does

come out of your super. Accordingly, you need to carefully consider your personal circumstances and decide whether this option

is right for you.

Insurance can give you peace of mind as you near retirement. If you need to claim, your regular super payments may be coveredtoo so you’d be boosting your retirement savings even if you’re out of action.

The key is to make sure your insurance always meets your current needs―that way, the cost of your policy can reduce if your

needs become less.

To explore your options, please contact us.

1. The own-occupation option is no longer available on new total and permanent disablement policies held in superannuation.

Important information

© AMP Life Limited. 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, AMP does 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, AMP does not accept any liability (whether under

contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

http://pivotalplanning.com.au/contact-us/







•


Getting more done with fewerinterruptions - Continued

Here are some more tips for reducing interruptions at work:

If you have instant messaging on your computer, change your status to ‘Do

not disturb’ or ‘Busy’ (but don’t forget to turn it back on to ‘Available’ when

you’re free again).

Listen to music on your headphones. This way you won’t be preoccupied by office conversations or other noises in your

workplace. But, remember to keep the volume down so you don’t distract yourself or other workers.

Work at different times. If you have an urgent task and you’re easily distracted by others, come into work a little earlier (if you’re

a morning person) or leave a bit later so you can get the job done when less people are around.

Go somewhere quiet. Book a meeting room or go to a quiet room. Dr Irwin recommends that her students who struggle with

procrastination go to a place such as a café where they can chat for 15 minutes then “just shut up and write” for an hour bef ore

taking a break.

Reducing interruptions should help you to be more productive at work, by allowing you to achieve more in less time, and with less

stress.

1American Psychological Association. (2006). Multitasking: Switching costs: http://apa.org/research/action/multitask.aspx

Reducing interruptions should help you to be more productive at work, by allowing you to achieve more in less time,

and with less stress.

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

http://apa.org/research/action/multitask.aspx

http://apa.org/research/action/multitask.aspx



•


Ten steps to self-managed super

If you’re thinking about managing your own super, consider these

tips.

It can be hard to know where to start or what’s ahead when you embark on

setting up your own self-managed super fund (SMSF). The good news is AMP can

help you every step of the way:

1. Start with financial advice

An SMSF isn’t for everyone so you’ll need to consider your own circumstances and goals before deciding whether an SMSF

is right for you. Get some financial advice. If you don’t have a financial adviser, AMP can help you find one.

2. etermine your fund’s structure

Will an individual or corporate trustee structure work best for you? If you’re unsure, speak with us or read more about

structuring an SMSF.

3. Establish a trust deed

It can be easier than it sounds—AMP’s online services can help you set up your fund’s trust deed in around 15 minutes.

4. Register your SMSFEvery SMSF must be registered with the tax office—you can do it yourself or AMP can do it for you.

5. Set up your fund’s bank account

You need to set up a bank account for your SMSF and roll your super into it—ask us how.

6. Create an investment strategy

Your fund’s investment strategy must be documented and will then determine how your fund invests money. SMSFs

investments generally include a mix of cash, term deposits, shares, managed funds and direct property. We can arrange

for someone to help establish the investment strategy for your fund.

7. Protect your members

As part of your investment strategy, you’ll need to consider the insurance needs of each member of your fund. AMP can

help with life insurance, total and permanent disablement and income protection options.

8. Manage your investments Your fund’s money will need to be managed as stipulated by your SMSF investment strategy— if you need help, we can

arrange for an adviser to help you manage your investments.

9. Run your fund

Your SMSF must remain compliant with a range of SMSF rules. AMP can help take care of the day-to-day running of your

fund including managing its compliance, reporting and administrative obligations.

10. Stay up-to-date

It’s easy to keep up with changing rules and regulations when you choose to receive updates from AMP.

Find out more about all that’s involved in running an SMSF, please contact us.

Important information

© AMP Life Limited. 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, AMP does 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, AMP does not accept any liability (whether under

contract, tort or otherwise) for any resulting loss or damage of the reader or any other person

https://www.amp.com.au/news/2014/november/How-should-I-structure-my-SMSF

http://c/Users/BMBMAJ/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.IE5/ON3PTAWE/Article%20about%20SMSF%20rules




https://www.amp.com.au/news/2014/november/How-should-I-structure-my-SMSF



•


Diversifying inside super

Find out what it is how it works and why it matters to

you

What is diversification?

Diversification is a risk strategy that lets you ride the

ups and downs of investing. It reduces your exposureto risk, so your investments won’t be as affected by

fluctuations in markets.

How do you diversify?

Investment diversification can be achieved by choosing a mix of:

asset classes (cash, fixed interest, bonds, property and shares)

industries (e.g. finance, mining, health care), and

markets (e.g. Australia, Asia, US).

You can also invest at different times to reduce your level of risk through investment strategies, such as dollar cost averaging.

Diversification when it comes to super

Super funds employ investment managers to decide on the best investment approach for members of the super fund.

They actively diversify investments within and across different asset classes.

The investment manager then buys and sells assets on behalf of super fund members with the aim of delivering the

best possible investment returns.

Most funds will allow you to choose from a range of superannuation investment options with varying levels of risk and

return (such as conservative, balanced or high growth, for example).

Consolidate to diversify

You may think having your super spread across multiple super funds means you’re diversifying. However, it also means you’repaying multiple fees and your super savings are harder to keep track of.

You might want to consider consolidating your super today so you can:

save money—one super fund means one set of fees, potentially saving you hundreds of dollars each year and thousands

over a lifetime

save time—having one fund is easier to keep track of with less paperwork and administration

find money you didn t know about—you can conduct a lost super search as part of your consolidation

simplify control of your investments—with one fund it's easier to manage an investment strategy to meet yourneeds.






•


Diversifying inside super - Continued

Before you consolidate, it's a good idea to check if you’ll

pay any exit or withdrawal fees from your existing super

fund and if you hold any insurance in your existing fund

and want to keep it whether you can transfer this over.

Working out what’s right for you

Everyone’s situation is different. So you need to think about your personal situation, your investment goals and the

level of risk you’re prepared to take, to ensure your investment option within your super is right for you.

Not sure what the right investment option is? Consider getting some professional advice. An adviser can help you work

out whether you need to change your investment option based on your life stage or risk tolerance for example.

Keeping track of your super

While your super fund investment managers are managing your super investments for you, it’s still a good idea to keep

track of how your investments are performing.

If you’re an AMP customer, remember to log into My AMP where you access your super statements, view up-to-date

unit prices in your investment portfolio summary, change the way your super is invested and much more.

If you’d like help with working out the right diversification mix for your super, please talk to us today.

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

https://www.amp.com.au/wps/portal/au/FindAnAdviser?iid=faa-featured-result



https://www.amp.com.au/data/amp-links/my-amp




https://www.amp.com.au/data/amp-links/my-amp




•


Changes to the Age Pension assets test

The government’s recent changes to the ge Pension could

affect your ability to plan for a comfortable retirement.

Recent reports2 suggest that more than 300,000 Age Pensioners will

have at least part of their pension cut, with just under 100,000 of

these people losing all Age Pension entitlements, taking effect from

January 2017.

The Age Pension and assets test explained

The Age Pension provides income support and access to a range of concessions for eligible older Australians3.

Retirees who are currently aged 65 or over, and who satisfy income and assets tests and other requirements, can

receive a full or part pension.

Recently, the government introduced changes to the Age Pension’s assets test thresholds which will take effect from 1

January 2017. The thresholds indicate the value of the assets you can own (excluding your home) before you lose your

eligibility for the Age Pension.

What will change?

From 1 January 2017, some people will benefit and others will be worse off.

Around 50,000 Aussies are expected to be better off under the government’s changes and receive the full pension.

Approximately 120,000part-pensioners

are likely to add around $30 per fortnight to their wallet.

Full pension, home owners

If you own a home, the new assets thresholds will allow you to hold assessable assets up to $250,000 (singles)

and $375,000 (couples) without impacting your full-pension entitlements.

Full pension, non-home owners

The new assets thresholds for those who don’t own a home will be $450,000 (singles) and $575,000 (couples).

The upside of losing

People who do lose their pensions in 2017 will automatically be entitled to receive a Commonwealth senior’s health

card or a low income health card. These cards will provide access to Medicare bulk billing and less expensive

pharmaceuticals.

2 http://www.superguide.com.au/how-super-works/300000-retired-australians-to-lose-some-or-all-age-pension-entitlements

3 http://www.humanservices.gov.au/customer/services/centrelink/age-pension

https://www.amp.com.au/personal/super-and-retirement/education/prepare-to-retire



http://www.superguide.com.au/how-super-works/300000-retired-australians-to-lose-some-or-all-age-pension-entitlements



http://www.humanservices.gov.au/customer/services/centrelink/age-pension








•


Changes to the Age Pension assets test –

Continued

If you’re on a part pension what will happen?

From 1 January 2017, around 91,000part-pensioners

will lose their

Age Pension and about 235,000 part-pensioners’ payments will be

reduced.

Part pension, home owners

Couples who are homeowners will not receive the pension when their assets reach $823,000 in value. Single

homeowners will stop receiving the pension when they have more than $547,000 in assets.

Part pension, non-home owners

Singles who don’t own a home won’t qualify for the pension if assets total $747,000. And couples will lose

pension entitlements after they’ve accumulated more than $1 million in assets.

How you can prepare for the changes

Depending on how these changes will impact you, there could be a number of things for you to consider, including:

If your entitlements are reduced, how will you replace lost income?

Do your assets need trimming down? Call us now and we can help you with asset reducing strategies.

Do you have any large planned expenses, such as a holiday or home repairs for example, that might reduce your

assets before the changes come in.

Generally, it’s a good prompt to review your finances. Experts say single people need an annual amount of $42 ,569—

and couples $58,444—for a comfortable retirement4. Use our What’s my number calculator to work out how far your

money will go in retirement.




https://portal.amp.com.au/AMPWhatsMyNumberCampaign/ui/index.html







•


Changes to the Age Pension assets test –

Continued

Want to know more?

Stay tuned for further updates closer to when these changes are due

to come in. If you would like more information now, please contact us.

Assumptions as at 1 January 2017:

4 https://www.superannuation.asn.au/resources/retirement-standard

For single homeowner

The existing lower asset test is projected to have risen from $202,000 to $210,500

The full aged pension is projected to be $891 per fortnight

Tapering rates are $1.50 per $1,000 for the current arrangements and $3.00 per $1,000 for the proposed

arrangements

For couple homeowners

The existing lower asset test is projected to have risen from $286,500 to $298,500

The full aged pension is projected to be $1,343.20 per fortnight

Tapering rates are $1.50 per $1,000 for the current arrangements and $3.00 per $1,000 for the proposed

arrangements

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

https://www.superannuation.asn.au/resources/retirement-standard






•


Is your growing family stretching yourbudget?

Here are seven tips to help you stay on top of your finances as

your family grows.

Growing your family can be one of life’s greatest joys, but if you already

have one or two children, you’ll understand that raising kids can be

costly. To cope financially with having more kids you’ll need to balance your income with the increasing expenses.

Take a long-term view

When you understand the costs additional children can bring, you can be better prepared to meet them.

Calculate the costs over your kids’ lifetimes—page 9 of NATSEM’s Cost of kids report outlines the typical costs for

additional children—stating that on average families spend $281 a week on one child, $232 on the second child and

$193 on the third child up to the age of 24 years.

This is not to say however that the costs of larger families are not substantial, just that additional children don’t tend to cost quite as much, due to economies of scale.

Tips for making your money go further

Once you have an understanding of the budgeting challenges a growing family can bring, it’s time to get creative. Every

little bit helps, so look for ways to cut expenses—you may even have some fun in the process! Here are a few ideas:

1. Buy things once

When it comes to clothes, toys and baby equipment, put aside items you can re-use. Renewing items with a

touch of paint or new fabric can create some personalisation for a new child without breaking the bank.

2. Cut your bills

Look for ways to cut your bills. You may be surprised at how much you save by turning off appliances at the

wall, using energy efficient light bulbs and only turning on the dishwasher when it’s full. Compare energy offers

at the government's Energy Made Easy website.

3. Grow your own

You can have fun with the kids and save money at the same time by growing your own veggies. Try planting aveggie garden from seed—you may even want to add some backyard chickens and collect breakfast eggs with

your little ones!

4. Compound your savings

Set up a savings account and regularly deposit some of the money you save from cutting down your living

expenses. It could help with education costs or a family holiday down the track.

http://www.natsem.canberra.edu.au/storage/AMP_NATSEM_33.pdf



http://www.energymadeeasy.gov.au/



https://www.amp.com.au/personal/banking/products/everyday-accounts/term-deposits












•


Procrastination: Just do it. Eventually.– Continued

4. Be kind to yourself

Be prepared to make mistakes and understand that it’s all

part of the process. Studies show that people who forgive

themselves for making mistakes along the way tend to have

more overall success7. So don’t be hard on yourself. Just regain your focus as soon as you can and stay with

your plan.

5. Stay informed and ask for help

We’re here to hep – we can help you manage your money and stay on track to reach your financial goals.

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



•


What is the seven-year property cyc le?

Some property analysts claim the property cycle changes

every 7 to 10 years 8. We ask MP Capital’s chief

economist Shane Oliver to explore this view and explain

what causes property cycles to change over time.

Q: Shane, what is meant by the seven-year property cycle? What

are the different phases?

A: The "seven-year property cycle" is often referred to by

property market commentators and refers to the swing in house

prices through the phases of boom, bust, bottoming and recovery. But it’s rarely seven years. In fact, average

Australian capital city prices have had multiple cycles over the last 15 years with booms around 2003, 2007, 2010 and

just recently.

The cycle is better seen in terms of the rate of property growth, as not all downturns or bust phases have price

declines, but rather just a slowing. The cycle can also vary from city to city, with only Sydney and Melbourne being in

boom phases recently, and also within cities.

Q: What factors influence this?

A: The main factor driving the property cycle is the cycle in interest rates, with periods of rate cuts eventually driving

upswings in the property cycle and vice versa for rate hikes. Around this, the supply of and demand for property also

has an impact, along with job security and unemployment.

Q: What is the rule of 72? Is this accurate in predicting how long it takes for a property or area to double in value?

A: It’s a short cut to understand how compounding works. It’s actually quite useful because it all depends on the

growth rate or interest rate (which in the case of compounding is the same thing). Because it depends on the growthrate, it allows for the impact of a shift from a higher growth world to a lower growth world.

For example, when inflation and growth in wages was higher in the 1980s, property prices averaged growth of around

11.5% pa, which meant they would double in value roughly every 6.3 years.

But now in a world of lower inflation and wages growth, property price growth over the last decade has slowed down

to an average of just 6% pa, which means they are doubling in value roughly every 12 years. So it’s a mental arithmetic

shortcut for investors to use: 6 X 12 = 72 (hence, the ‘72 rule’).

Q: o you believe that if people haven’t been through a full property cycle then they can’t really know real estate

markets?

A: No. People can understand how real estate markets work by doing their homework. They need to look at past

property cycles to gain an understanding of how the cycle works and how it interacts with interest rates and other

variables. Unfortunately, as with other investment markets, people tend to get lured by property at the worst point in

the cycle, after it has already had a strong gain and is more expensive.

What is the seven-year property cyc le? - Continued

8 http://www.npapropertygroup.com.au/news.php?newsid=120

http://www.ampcapital.com.au/article-detail?alias=/olivers-insights/july-2014/the-power-of-compound-interest-an-investors-bes



http://www.npapropertygroup.com.au/news.php?newsid=120







•


Q: Where are we currently sitting in the cycle in Australia and how

much does this vary by state, city or suburb?

A: Perth and Darwin are going through a bust after the mining

boom. Canberra, Hobart and Adelaide are in a soft patch, which

could turn into a gradual recovery. Brisbane is in a recovery

phase. Sydney has been in the midst of a boom and Melbourne

too, but both have started to slow lately. The range by state, city

and suburb is immense with price gains averaging around 18%

year-on-year in Sydney to price falls of around -4.5% year-on-

year in Darwin.

Q: And finally, what’s the general outlook in your opinion for the Australian property market over the next 3-5

years, and longer?

A: It will vary from city to city, but I’d expect modest average gains over the year ahead, followed by modest average

price falls around 2017. This will occur because the RBA will eventually raise interest rates and increased supply will

start to really hit the market.

Overall, price gains are likely to be constrained and over the medium term, given that house price-to-income ratios and

debt levels are very high and given we have just seen a period of very strong gains in our two biggest cities, Sydney and

Melbourne.

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

This document, unless otherwise specified, is current at Friday 16 October and will not be updated or otherwise revised to reflectinformation that subsequently becomes available, or circumstances existing or changes occurring after that date. Pastperformance is not a reliable indicator of future performance.

http://www.abc.net.au/news/2014-06-12/australia-has-third-highest-house-price-to-income-ratio/5517452

http://www.abc.net.au/news/2014-06-12/australia-has-third-highest-house-price-to-income-ratio/5517452




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