Yearly Archives: 2017

The Right Time to Start Saving is Right Now

Albert Einstein once said “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” Who are we to argue?


Compound interest is when interest is earning interest not just the original capital. I.e. you invest $100 at an interest rate of 5%. After year one you have $105. After year two however, not only does your original $100 earn another 5% interest, but the extra $5 is also earning 5% interest so that at the end of year 2, the money has grown to $110.25. Yay an extra 25 cents. Where compounding really gets interesting is when you extend it over long periods of time.


Let’s take two examples. Example 1 is a 25 year old who has a decent income and is able to put away $100 a week into an investment that generates 6% p.a.


In the second example, however, the person tends to spend all of their money on fun stuff, living life to the fullest until the age of 45 where they decide to start saving for retirement. They are on quite a bit more income than the first person who is only 25 and instead of being able to save $100 a week, they can save $400 a week.


Person 1 ends up with approximately $861,457 at age 65 after contributing $213,200 over the 40 years.


Person 2 ends up with slightly less at approximately $835,851 at age 65 however they have astoundingly put in $436,800. Over twice as much as person 1. Imagine what person 1 would have been able to do with the extra $224,600 that they didn’t need to contribute over the last 20 years? Me personally, I’m thinking holidays.


While returns are important when investing, the single most important thing that can grow your wealth the most is time. Compound interest makes this possible, and so when is the right time to start saving? No matter how old you are, the right time to start saving is right now.


PS. Compounding also works in reverse when you borrow money. Having to pay interest on interest deteriorates wealth just as quickly as earning interest on interest creates wealth.


– Liam Rutty –

Celebrating Achievements | Andy Lay

We all celebrate certain things in our lives. Whether it’s the arrival of a new baby, holiday, weddings, or our first home, the list goes on and on. However do we celebrate enough and do we use these achievements to our advantage? All these events are equally important to the person involved and we’ll be looking into how and why we need to celebrate these successes, once we’ve achieved them.


When we don’t meet our goals, we often put heavy emphasis on what didn’t work and all the negative effects that go with it. So why don’t we do the same thing when we achieve our goals? Once we’ve achieved our goal we would acknowledge it at first but then quickly move on. To give you an example, my wife and I had initially set ourselves a goal of saving enough for our own home several years ago. We initially made a commitment to ensure we had enough savings by the end of 3 years to buy our own home. To make things a bit more difficult, we didn’t want our son to be in child care, which meant my wife wasn’t working and I was the sole income earner. We didn’t let this get in our way and were able to reach our goal by the end of the 3 years. After we purchased our home, we both sat down and reflected on all the hurdles we had overcame and more importantly soaked in the fact that we achieved our goal even with hurdles along the way. This gave us a more positive outlook and motivation for future goals.


So why should we celebrate?
So it’s all great that we celebrate our achievements, but is there an actual reason why we do and will it help us in the future? Here are some important points relating to why we should celebrate success.


1.    To learn and replicate future achievements.
One reason we celebrate is to recognise what is working well and why. Furthermore you can learn and inspire yourself from your past achievements. So in turn means you can replicate your achievements in the future. In my case for example, we agreed that being able to save for a house whilst on 1 income was a huge achievement. However we’ve also reflected on what hurdles we had to overcome and how we can replicate this success in the future. We’ve since achieved smaller goals such as creating an education fund for our kids and next is to save for a new car.


2. Changing your mindset to focus on success
Whatever it is that you want to achieve, having the correct mind set can be difference between success and failure. Having a negative mindset and constantly focusing on hurdles and failures will affect your motivation and ultimately leads to a higher chance of failure.


A large part of success is about your state of mind – so it’s about having a successful mindset. No matter how minor, you need to celebrate all your successes. Put a large focus and emphasise on what you’ve achieved and less on past failures and what hurdles lie ahead. Telling yourself you’ve overcome hurdles before and that you’ve also achieved successes in the past will help build your self-confidence and create a positive outlook. Conversely not recognising your achievements or putting your success down to luck, will not have the same effects on your mindset and motivation.


3. Motivation and Feel Good About it
Motivation is another factor which determines the success and failure of our goals and is also connected to our mindset. In this case motivation comes in the form of us acknowledging all our successes. Not just the big ones but smaller millstones, actions and goals, will give us the extra push along. So always give yourself plenty of reasons to celebrate your successes. That way you continuously build motivation for future goals and accumulate momentum.


One of the best and most important reasons to celebrate your success is simply because it makes you feel good. Because feeling good is what it’s all about isn’t it? It’s the reason why we set off on our goal in the first place. Remember there’s nothing more important than for you to feel good about achieving your successes.


4. Sharing success
Celebrating your success doesn’t always have to be about yourself and your partner. You could also get your relatives and friends involved and join in with the celebrations. Informing your friends and family of a goal you have set can also assist your achieve it, as it will keep you accountable. Back to the example of us purchasing our first home, we initially brought up the topic with our parents and our friends. Although they weren’t going to keep us accountable, at the back of our minds however we really wanted to achieve our goal to prove to everyone that we were capable of reaching our goals despite encountering challenges along the way. At the same time, once we purchased our home, we got all our friends and family together and celebrated our success, which in our minds just spreads the positivity around to everyone.


A final point to remember is you have to recognise your own success if you want other people to as well and how you do it is up to you but just remember to have fun doing it.


– Andy Lay –

Success in Retirement

Regarding preparation for retirement, the terms ‘create,’ ‘protect’ and ‘enjoy’ encompass a variety of challenges; however, the acknowledgement of these challenges, and the subsequent methods of dealing with these problems can lead to success in the future.


The following two tables which show the lump sum requirements for both couples and singles when taking into account lifestyle upon requirement.


According to “The 2017 ASX Investors Survey,” the 2013/14 mean superannuation balances for households and individuals were $355,000 and $214,000 respectively; these figures, coupled with the data above, are indicative of some of the problems faced regarding ‘enjoy,’ as super balances somewhat dictate your quality of life.


Therefore, in order to ensure that enjoyment occurs upon retirement, creating wealth is imperative. The same ASX report states that 60% of Australian adults participate in at least one form of investment, however, the lack of activity by younger generations and engagement with their super contributes to lower super balances, across the board.


A global survey in “The Future of Retirement” report released in April 2017 by HSBC; indicates that only 34% of working aged people believe that they will be financially comfortable in retirement, whilst 58% thought that they will continue working to some extent in retirement because they have to.


In Australia the Superannuation system forces people to start saving for their retirement from an early age, however it still doesn’t ensure that these savings are working to their full potential.


These statistics further highlight the importance of seeking financial advice and putting a retirement plan in place from an early age because in our experience, clients who engage with an adviser will significantly improve their chances of being able to achieve your goals and enjoy their retirement.


At JBS, we run a Cash Coach and Retire Right program to specifically address these needs and help you to achieve the success you desire upon retirement.


– Richard Smart –

Achieving Success | Richard Smart

Realising your goals can often be a long and arduous process. There are many obstacles one must navigate in order to achieve the desired results, however, not every method of action is able to produce sustained success.


Being a second-year commerce student, the transition between first and second-year university has been almost seamless, since many of the habits I obtained throughout last year have made me more comfortable with factors such as workload and time management. In order to guarantee that I will be able to reach my potential, some of the habits I have developed include ensuring I attend all lectures; even though they are posted online, and actively seeking help from a range of people including friends and tutors. Although these may seem like obvious ways to maximise success, it is easy to decrease your workload given the relaxed nature of the university environment, and examples of people dropping marks and even failing subjects due to their own laziness and bad habits are not rare. As such, I believe that I am much more likely to achieve success now and in the future, as opposed to a year ago, due to the routines I have forced on myself.


Despite reinforcing a number of good habits, there were a multitude of negative behaviours I developed throughout 2016 that needed to be quelled; the process of eradicating these tendencies began with identifying their limitations and acknowledging that, in order to achieve my goals, I must do away with these bad habits.


One habit that I have since removed has been leaving assignments to the last minute. Previously, this was a common occurrence due to a combination of an insane amount of assessments at once and poor time management skills (most of the time it was due to the latter), and whilst I would achieve good results, it was obvious that this would not be sustainable in the long-term. I am proud to say that throughout the entire first semester of 2017, I was able to submit every assignment the day before they were due; this personal success is purely due to recognizing previous faults and eliminating my bad habits.


It is easy to become frustrated when attempting to achieve your objectives as poor habits and lifestyle choices can interfere with the process; acknowledging what has worked and what is holding you back can often be the factor that enables you to attain your goals.


– Richard Smart –

Budgeting Tips

How you manage your cash flow will be the biggest influence in achieving your lifestyle and financial goals.


Let me repeat that:  Without a budget you are unlikely to achieve the things you want from life.


You probably know you need to sit down and go over your monthly expenditure but you never get around to it.  Meanwhile, you’re not sure exactly where your money’s going each month.  If you take a hands-off approach when it comes to budgeting, your finances and lifestyle are likely to be negatively impacted.


If you’re a procrastinator or just plain lazy, here are a few easy tips for taking charge of your cash:


1. Track your Spending
Whether you’re trying to pay down debt, save for a dream holiday or house, or boost your savings, having a budget is a vital part of the plan.


Making your budget work is all about knowing exactly what you’ve got coming in and going out each month.  If you’re not living on a budget then you won’t have a clear idea of what’s going on.  Figuring out where your hard-earned dollars are going is the first thing you need to tackle before you attempt a budget.


If you don’t want the hassle of tracking your spending, JBS can do that for you.


2. Keep it Simple
Warren Buffet once said ‘Simplicity is the greatest form of sophistication’.  Whilst he was referring to investing, the same principal can apply to budgeting.


Making a budget isn’t rocket science.  You firstly need to know where your money is coming from and where it is going.  If you’ve got money left over at the end of the month then you’re already off to a good start.  If not, then you’ll need to do some additional fine tuning to look for things you can cut back on.


Once you’ve got a sense of what your budget should look like you’ll need to set up a system for allocating your money.


This is where JBS steps in.  We work with you to create a budget that is simplistic in nature, however aligned to your future goals and objectives.  We ensure you have enough money to spend on yourself today so you’re happy, but there is money left over each month to work towards your future goals.


3.  Put your Budget on Auto-Pilot
The majority of attempts to budget fail because meaningful and permanent change comes from a change in behaviour not simply reporting spending patterns.  We know this, and we believe effective cash flow management contains 2 key elements:


1. A redesigned banking structure that changes a person’s behaviour – This may include setting up multiple bank accounts and arranging automatic direct debits that puts you in a better position to achieve your short and longer terms goals.  Essentially you put your savings on autopilot.


2. Regular reporting to track your progress and to make adjustments along the way.  Each month JBS provides a report outlining your monthly spending, what went well, what needs improving, and how you are tracking towards your goal.


This report helps ensure you are accountable to the plan we set you now and in the future, maximising your probability of achieving your goals.  All you need to do is follow the plan we set you, the rest is on autopilot.


4.  Start Small
Learning to stick to a budget isn’t something that happens overnight.  Our JBS Cash Coach program however can help you set a budget which is aligned to your goals, and keep you accountable to your plan.


For you, all it takes is 5 – 10 minutes each week.


Sitting down with JBS to prepare a budget may seem like a hassle but it’s a smart investment that has long-term benefits.


Taking the first step is usually the hardest part but the sooner you stop dragging your feet, the bigger the payoff will be.


– Glenn Malkiewicz-

Real Story of Loss & Survival

Have you ever imaged the difference an insurance benefit could make in your life?  Below is a real life story of a JBS client who made the smart decision to protect themselves, and whose life has been transformed as a result.


At the time of his diagnoses, Steve*, aged 52 had just changed employment, taking on a lower paid role in a more challenging but better-suited environment.  With less than $20,000 in savings, the next few years had to be carefully managed from a financial point of view.


JBS received a phone call from Steve earlier this year who advise he was looking to cancel his Trauma and Income Protection policies due to cost.  We reviewed his financial position and income requirements, and determined his cash flow position justified retaining the insurance.  After reiterating the need for the insurance, Steve agreed to retain the cover.


Less than a month after, Steve was diagnosed with Cancer.  He stopped working immediately to begin the treatment and recovery process.  Steve had full private health insurance, however was left with out-of-pocket medical expenses totalling more than $20,000 after just 3 weeks of consultation and treatment.  This cost was expected to rise and with no employment income, financial stress began to set in.


JBS commenced the claim process, arranged all the required paperwork, corresponded with the insurer, and had the claim proceeds paid into Steve’s bank account within 8 days.  The Trauma claim payment of $150,000 allowed Steve to fund his medical bills and ongoing living expenses which removed all financial stress, and more importantly allowed him to focus on what really mattered which was his recovery.


Steve is recovering, however yet to return to work.  His Income Protection is providing him with around $10,000 per month which is sufficient to pay for his ongoing treatment, living expenses, mortgage repayments etc.


Around 4 years before his diagnosis, Steve initially met with JBS to discuss his goals & objectives, and financial planning needs.  Part of the advice JBS provided included Trauma and Income Protection and fortunately Steve listened and now, looking back, says it was one of the best decisions he had ever made.  Each year since that initial meeting, JBS engaged Steve to ensure he remains on track with the plan JBS set, as well as to regularly outline the important of his insurance levels.


Even this early on into his treatment and recovery Steve often thinks about what his life would have been like had he not had the financial support Trauma and Income Protection provided.


Steve’s diagnoses is not uncommon.  What is uncommon is the lack of insurance cover many people here in Australia have and the challenges that poses when illness / injury occurs.


During 2016, over 100,000 people here in Australia made an insurance claim on either a Life, Permanent Disablement, Trauma, and / or Income Protection policy.  Over $9 billion was paid to people like Steve.


Think about this:

– Not one of these claimants expected to claim on their insurance.

– If these claimants hadn’t received the $9 billion from their insurance policies, where else would they have got that kind of money?

– This is not a one-off statistic:  over the previous 5 calendar years the total claims paid out from the leading Australian insurers totals just under $35 billion.


That’s a lot of people who didn’t ever want to claim – but had to.  How glad do you think they and their dependents were, to have been wise enough to take the good advice of their adviser and plan for the unexpected?


Life isn’t always a smooth ride.  Should your health take a turn for the worse, you want to ensure you’re appropriately covered so you can meet the challenge head on.  Without the appropriate level of insurance, the financial stress could make your recovery a very tough hurdle to clear.


– Glenn Malkiewicz –

Financial Challenges

Many young Australians are continually facing more and more financial challenges and hurdles as they enter adulthood.  Many are trying to save to buy their first home, travel the world, buy their first car, paying off their HECS debt, or all of the above.


As parents there are few little things that you can do to help teach your children about finances, which will go a long way for them in the future.  One of the most important is to teach your children how to do a budget or how best to save their money.


It can even be a worthwhile exercise including your children when it comes time to doing the family budget, this way they’ll learn that nothing comes for free and the things that they enjoy (such as their flashy smart phone) costs money, even if it’s paid for by the bank of mum and dad.


When you give your children their pocket money a good exercise can be to sit down with them and see if there’s something they wish to buy or spend their money on.  Once this has been determined you can then help them set a goal and savings plan. Teaching this at a young age can help them become disciplined with their money and set them up for the future when they need to save for the bigger things (such as their first home).


When it comes time to buying their first car or home they’ll most likely need to borrow money to help them (especially in the case of the home), so it’s worthwhile teaching them about debt and how it works. It may sound silly but introducing them to how debt works will help them understand that when the time comes they’re not just going to be given free money, but they’ll have an obligation to pay that money back plus interest.  You’re older children may understand this but the younger ones may not quite grasp this.


At JBS we have wide range of services to help clients achieve financial freedom. For the younger clients we have a Cash Coach program to help with savings and budgeting and a Retire Right program which is tailored towards our older clients to help with the transition from working life. These services help our clients overcome their biggest financial challenges and achieve their goals.  We even offer services to our clients children to help them on their journey.


– Peter Folk –

2017 Budget Update

On Tuesday 9th May 2017 the Treasurer, Scott Morrison, released the Government’s 2017 Budget.

This video and newsletter outlines the proposals contained in last night’s budget.  We ask that you read through the proposed changes as they may directly impact your situation.









Budget Summary

The key take outs of the 2017 Budget were as follows:


–  An opportunity for first home buyers to save for a home deposit through superannuation.
–  The opportunity for retirees to make a non-concessional contribution to superannuation should they downsize their house.
–  Reinstatement of Pensioner Concessional Cards for those who lost their Age Pension entitlement earlier this year.
–  Increased Medicare Levy from 1st July 2019.
–  Rental property tax changes.

Click here to read the full breakdown on the above and other changes as announced.


These changes may be significant to your situation and may warrant further discussion.  Feel free to contact our office to discuss any of the proposals in further detail.


JBS View & Planning Opportunities

The one guarantee in our profession is change and once again this reiterates the importance of obtaining ongoing advice and continuing to review your situation to ensure that you are structured appropriately to ensure that you are positioned well for the future.  Here are some things to consider:


–  If you are looking to purchase your first home, the new proposals may be advantageous to you.

–  If you are over age 65 and considering downsizing, there may be a benefit in waiting until July 2018 before you sell your principal place of residence.

–  Consider making extra superannuation contributions before 1st July 2017 (this applied prior to the 2017 Budget and still applies now).

As always, prior to making any significant financial changes, please give Jenny, Warren or Glenn a call, or even if you just want to discuss how the budget might affect you personally.


Please Note: The measures outlined in the Federal Budget are proposals only and may or may not be made law and will depend on the outcome of the upcoming election.

Challenges in setting financial goals

The challenge in getting one’s financial goals structured is actually identifying the goals and hunting around for answers.  Often the first challenge is to get in the right mind set to sit down and talk to your spouse or family about your short term and long term financial needs. These needs then develop into a goal which you wish to achieve, but people are limited by financial planning knowledge and even time.


Financial goals generally involve the growth and protection of your savings and enjoying your retirement – yes I am mentioning retirement because eventually that is the long term goal and if not, then it’s time to start planning your financial goals around your retirement. At JBS, we have a Retire Right program that aims to help you plan your retirement better.


There are multiple ways in which a person can overcome the hurdle of limited financial planning knowledge. Let’s look at some of the hurdles that we face and try to understand ways to overcome them.


Limited or no time to research investment options
In the financial world, time is money. It doesn’t mean you make this your full time job, but it is crucial to devote some time towards gaining knowledge on the instruments that will help you grow and preserve your hard earned money. Generally speaking, your investment options depend on your risk profile. As you can see in the graph, the types of assets your money can be invested relies on the relative risk you are willing to take on given the expected relative return. To help with the research, today there are numerous tools accessible on the internet, for example Yahoo Finance or Morningstar.

Source: Australian Investors Association

Lack of working knowledge of investment instruments
Once you have removed time to identify your present financial status and researched which investment options are out there in the market, the next hurdle arises in understanding the workings of that instrument or options. Some are straight forward, like a fixed term deposit while some might look complicated, like Exchange Traded Funds or Equally Weighted funds. It may look daunting at the start but with the help of the right tools and resources, you will be on the track to implement your financial goals. ASIC’s Money Smart website provides basic insights into the financial aspects that are vital to be understood, especially on the risk side of things, before venturing on your own. One of the best options is to have a financial coach by your side who will help you attain your financial needs. Have a look at what we at JBS have to offer in our Cash Coach program.


Waiting for the right time to invest
If you have never invested or traded before then it is imperative to at least not start at the wrong stage of the stock market cycle. However don’t waste time over thinking and analysing the situation. The earlier you start hitting your financial goals, the better it is. Currently the market seems to be performing well with the ASX200 Accumulation racking up a 4.8% return in the March 2017 quarter. If you look at Warren Buffett’s  ‘Buffett Indicator’ (Total Market Capitalisation divided by the country’s GDP) for Australia, since post GFC, it has been treading around 96%, which indicates that the Australian stocks are valued more or less accurately and a big correction is not on the cards as per the market commentators.

Source: Eureka Report

Finding the right advice from the right people
In this fast paced changing world, it can be difficult to manage your work life, family, friends, travel and financial goals. MLC’s Q3 March 2017 Wealth Sentiment Survey found that after not having enough money to invest, self-doubt on how to invest and save money was the second reason why Australians did not reach their financial goals. Only one out of every four respondents on that survey had a financial plan. So find the right adviser whom you can trust and who understands your personal financial goals in order to avoid being that bracket of society.


Again, always seek advice from experts because you are dealing with your life savings.


– Aakash Mehta –

Savings & Momentum | Peter

I remember back in 2009 I ran the Melbourne Marathon, a whopping 42km run that took me over 5 hours, yep 5 long hours of continuous running (what was I thinking!?).  One day after completing the Marathon I went for a long run and asked myself, why am I doing this?  I’ve run the Marathon so why do I need to keep running, it just seemed pointless.


Fast forward to now and I constantly use this as a reminder that you need to keep setting yourself goals to allow you to keep up your momentum.  Over the past few years’ I set myself a budget (I know sounds boring) and goal to save up for a house, it did mean that I had to make some sacrifices, but I’m happy to say that in November 2016 my Fiancé and I bought our first house.



Now the key is to keep up my momentum on the savings to achieve further goals, I’m happy to announce I also got recently engaged, but with that comes the massive expense of a Wedding and Honeymoon (Yikes!).  To keep us motivated and the momentum going my fiancé and I keep thinking of the next big thing we need to save for.  Once the Wedding and Honeymoon is done and dusted, the focus will then be on getting that pesky loan down, having an enjoyable life (travel and new shiny things), and I guess at some point kids will pop into the picture (yep another big expense).


At the end of the day I find the best thing to do is continue to set yourself a goal, if you don’t I find you lose your momentum, and this is evidenced by me becoming lazy after the Marathon (yep the waistline has grown).  Now that I’ve continued to set myself new goals with my Fiancé, we are continually saving and working towards a common goal allowing us to keep up our momentum.  In the end this will hopefully allow us to enjoy our life and hit our goals, and hopefully I’ll get my nice new shiny Audi one day!