In the late 80s interest rates peaked at 17% which made home ownership out of reach for most people and hard to cover for those that had them. We move forward to today and the Reserve Bank Cash Rate is at a very low 2.25% with the last rate rise occurring in November 2010.

While this isn’t great news if you’re thinking of investing into bank deposits or fixed interest investments as returns are low, it does open up opportunity for people to review their mortgage, other debts and financial planning affairs in general.

Some of the main considerations could be:

–   Obtaining a low rate mortgage that still provides the benefits that you need or utilise. If you refinance to the lowest rate loan you could end up paying a higher interest rate on your credit card and may not be an appropriate strategy or beneficial for you

 
–   There are lenders outside the major 4 banks. While many of us complain about the big 4 making massive profits, we also like their security. You can consider options outside the banks and look at credit unions, lending societies, and other lending institutions.

 
–   Reducing your mortgage interest rate and continuing to make the same level of repayments could see you reducing the length of your loan which means interest savings. But, are there restrictions on how much you can make in additional payments? Do you have a redraw facility in case you need to access the funds?

 
–   Credit card interest rates are high and can be up to 20% so consolidating debt may be a way to go, especially if you can reduce that down to say a mortgage rate of around 5%. But beware because if you don’t make additional payments to cover the consolidated funds, you are extending the term of this debt and could end up paying higher interest over the life of the debt.

 
–   Margin lending becomes more appealing with lower interest rates however any strategy that includes debt, should also have contingency plans. Can you still afford it if interest rates increased by as much as 3%? Do you have relevant insurances in place to ensure that can cover your obligations if you can’t work?

 
–   Returns on cash and fixed interest investments become lower and shares become more appealing however you need to consider the risks involved. Chasing returns rather than investing into a diversified portfolio could see a decline in your balance outside what you are comfortable with.

 
–   Be careful with your spending, with additional funds in our pocket due to lower interest rates, it is tempting to spend more. Maybe consider making additional repayments of debt, additional savings or additional super contributions to ensure that the additional money available in your cashflow isn’t blown.

While you may think that you’re personal situation hasn’t changed, the world around you is. Interest rate rise and fall, economic markets changes and legislation is amended, which is why you should be regularly reviewing your financial position. If you haven’t had a review of your financial plan lately, make sure you give the team at JBS a call to make an appointment.

For 33 years my Mum (Dianne) and Dad (Howard) have been at the farm in Cosgrove South, 17 km east of Shepparton. Although only a hobby farm by neighbour’s standards, the farm is over 100 acres and we have had many adventures and life experiences on the land.

Dad and Mum gave us a great start in life. They were always keen for my sister Megan and I to experience new things and try new ideas. Dad and Mum were really into conservation and the environment. I remember one time when Dad, a lecturer at Dookie Agriculture College, encouraged students to participate in a field trip to plant over 400 native trees in the 30 acres west of our house. Almost 20 years later and the paddocks has now become a landmark along the Midland Highway. The natural vegetation and the wildlife is now prevalent.

I remember another time Mum organised a Melbourne high school to come and camp in our paddocks to gain a country experience. They were studying astronomy and for my sister and I who were primary school kids at the time, it was a great experience to have older kids at our place using telescopes to study the solar system.

I also have great memories of shooting hares, marking lambs, raising potty calves and camping in the paddocks with mates, but without a doubt, the highlight of growing up on the farm was our mini Moke. I honestly don’t remember learning how to drive. My sister and I would spend many hours driving around the farm. My mates also loved coming out to the farm to have a drive of the Moke. There is no doubt that it was always a lot of fun, however Dad, from any early age, drilled into us the fact that driving can be dangerous. I remember being out in the middle of the paddock when it was raining and I was driving. Without warning Dad reached over and spun the steering wheel. We spun around a number of times in the mud and it really reinforced just how quickly and easily you can lose control. I still remember the feeling of being out of control in the Moke and this lesson has no doubt held me in good stead throughout my adult life, to the point where I’m yet to have a car accident (touch wood).

Dad was known throughout our extended family for his great ideas. Being out of town, we collected rain water for drinking, and bore water for the gardens and toilets. I remember complaining one summer’s day about the fact that I was hot and I wanted to go for a swim. Dad came up with the idea that we could swim in the bore water tank. The closed in tank was about 12 foot high, 6 feet wide, with about 8 feet deep water. The man hole to climb in is about 3 feet by 3 feet, meaning that it takes some time for your eyes to adjust to the dark. It is also black and attracted the sun, so the top foot or so of water was really quite warm yet the rest of it was freezing cold as it was pumped straight out of the ground. A 10 min swim chills you to the bone and is enough to survive an afternoon of 40 degree heat. Over a number of summers, my sister and I developed many games in the tank to pass our time. We would sit under the freezing cold water as it was pumped into the tank, dive for golf balls and have frog races. I even remember one Christmas we had over 16 of us in the tank at one time including both of my 80 plus year old grandparents, diving for golf balls on the bottom in the pitch black. The swimming tradition continued last Christmas, with my son Riley having his first swim in the tank. It wasn’t a very warm day and I got in, he only lasted a matter of seconds, but for a 3 year old it was pretty scary, and I’m very proud of him for giving it a go, and I’m definitely claiming it as a swim. To be honest however, I think he was actually more impressed with the 16 frogs that currently call the tank their home.

Other ideas that Dad has had over the years include Teflon tape on the dogs bowl to stop the ants being able to climb into the food. Raising yellow belly fish in the tank to stop them getting eaten by birds. Raising many animals including emus, a kangaroo, a magpie and many lambs who had been separated from their mothers.

There is no doubt however that Dad’s most successfully idea has definitely been our olive trees. In 2000 Mum and Dad planted over 50 trees in our front paddock. For the past 7 or so years the crop has been increasing to the point that a big SOS goes out each year around mother’s days for pickers to come back to Cosgrove South for a “farm experience”. This is become a great tradition, one that my children Riley & Lucy look forward to each year. Last year was our biggest crop, over 440kg’s of olives, which equated to 110 litres of oil. Dad takes it to an Italian man on the other side of Shepparton who uses a traditional olive press to make traditional olive oil. Although the quality is well and truly good enough, Mum and Dad don’t produce the oil for commercial purpose. They get more pleasure out of gifting it to their family and friends, and those who have been fortunate enough to taste it (including the JBS team) continue to ask when the next crop is due.

I could go on and on about my memories of the farm and I really feel fortunate to have had such great experiences growing up. Megan and I really learnt some important lessons and a lot about life. My goal now as a father is to continue passing on my parents attitude to life which is have a go, try new things as you never know what might happen.

The Commonwealth Seniors Health Card (CSHC) provides concessional benefits to self-funded retirees who aren’t entitled to the Government Age Pension.

Some of the benefits provided include:
•    Concession rates for medication (Pharmaceutical Benefits Scheme)
•    An additional Seniors Energy Supplement payment
•    Other concessions provided by State, territory and local governments as well as private businesses, in the areas of health, transport, education and recreation

To be eligible for CSHC a person must meet the following criteria:
•    Have reached the age of Pension entitlement
•    Not qualify for pension payments from the Department of Human Services or Department of Veterans Affairs
•    Meet residency requirements
•    Meet the income test which is based on your Adjustable Taxable Income

The income test is as follows:

Changes from January 1st 2015

Any person, who commenced a superannuation income stream from the 1st January 2015, will have their Account Based Pension deemed as income. This means your account based pension income is now subject to a rate of income (deeming rate) for calculation purposes rather than the previous calculation of reducing the gross annual pension payments by the relevant deductible amount which is actually a return of the original capital. This could make it more difficult to meet the income test.

The deeming rates are as follows:

Anyone who has commenced a super income stream prior to the 1st January 2015 will be exempt from the new rules as long as they became holders of the CSHC before 1st January 2015 and continue to be eligible in the future.

Example 1
John is 66 years old, married, and a holder of the CSHC before the 1st January 2015.  John and his wife have a combined annual income of $70,000 per year.  John also has $600,000 in a tax free account based pension, which he commenced before the 1st January 2015 and draws $45,000 per annum.  Because of the grandfathering rules, John’s Account Based Pension will not be subject to deeming rules as it was commenced before the 1st January 2015.  The pension is subject to the old rules, giving him a deductible amount of $33,784 on the $45,000 he’s withdrawing from his Account Based Pension.  This means that only $11,216 will be assessed as income.  This amount together with John and his partner’s income of $70,000 brings their total annual income to $81,216, meaning he will be eligible for the CSHC.

Example 2
Cath is 66 years old, married and a holder of the CSHC before the 1st January 2015.  Cath and her partner have a combined income of $70,000 per annum.  On the 2nd February 2015, Cath decides to move her account based pension, which is worth $600,000 to a new product.  As a result, Cath loses the grandfathering provisions and her new account based pension will be deemed to earn $19,806 worth of income.  Together with Cath and her partner’s taxable income of $70,000, brings their combined total income to $89,806.  In this scenario, Cath would fail the income test, as their combined income is over $82,400 meaning Cath will not be eligible for the CSHC.

This is why it is very important to seek advice before considering re-booting an existing pension. The benefits that you currently receive from holding the Commonwealth Seniors Health Card must be considered as part of the assessment in the strategy to re-commence any income stream to ensure that the strategy is right for you.

If you wish to discuss how these changes may affect you, please contact the JBS team.

Over the Christmas and New Year’s break, I had an amazing plan to get a few major things done in the 1 month I had off. First thing was to get my home loan ready in the anticipation of potentially purchasing my first home. Next, was to complete all outstanding errands and spend some quality time with my family (as I had my lovely nieces from interstate visit). In between all of this, there was Xmas parties, birthday parties and New Year’s celebrations. If I managed to get some spare time in between, I had plans for myself, to do absolutely nothing at all (the stuff dreams are made of).

How did I go? Let me tell you.

As a rule of thumb I always want to get the least enjoyable tasks out of the way first, so in the first week the goal was to get my finances ready which would leave me 3 weeks to search and find the perfect home for me and my family. Bearing in mind that the majority of the paperwork required for my home loan was submitted prior to my break, it still took until the last week of my holidays for the application to be completed. This was due to my slackness but we eventually got there. Anyway, 3 days to go and find for our perfect home. To make matters worse, I came down with a fever in the last week of my holiday. The end result was, even though I got the home loan sorted I am still currently looking for a home, not to worry because I got to spend some quality time with my family.

Each year, my God Daughters come down from Darwin and spend their summer holidays with us. I’ve always loved having them visit for several reasons. Firstly, I enjoy several activities only kids can enjoy, these being going to water parks, riding the rides all day, and eating ice cream when all the rides have been closed. Some may say I’m babysitting three 3 little girls, I’m secretly enjoying the water parks just as much as they are. The second reason is my son Leon, who is 1 and has endless amounts of energy and still wants to play even when we put him down to sleep. However after a full day of running around with his cousins, he sleeps like a dream. This leaves me a couple of hours to relax and watch a movie, hit the gym, or even head out with the boys (subject to permission from the wife).

In between sorting out my home loan, enjoying theme parks with the kids and getting sick, I managed to get all my errands completed including servicing both cars and painting my parent’s house.

So did I learn anything from my 1 month break? I learnt that my son sleeps a lot better after he spends all day playing with his cousins, I also learnt that maybe he needs a brother or sister so I can spend some more time with my wife (or the boys). Overall I managed to spend a lot of quality time with my friends and family, I completed all my errands and miraculously found time for myself. The question now is when’s my next holiday? Can’t wait!

As we go about our day to day lives we never think about what could happen to us, whether it’s becoming permanently or temporarily disabled, becoming quite ill or even getting into an accident.  For members of a self-managed super fund (SMSF) this could become an issue.  What as members and trustees of your fund can you do to prepare and handle these situations?

The first thing to do regardless of whether you have individual or corporate trustees is for each member to appoint a legal personal representative (LPR) under an enduring power of attorney.  By doing this, if you or another member become disabled and unable to conduct your normal duties as a member / trustee of your SMSF, then your legal representative steps in and takes over for you.  What you should make sure is that you choose the right person to appoint as your legal representative.  As you need to be certain that they understand what it takes to run an SMSF and the duties required of a member / trustee.

What you then need to ensure is that your Trust Deed allows for the legal representative to become a member / trustee of your SMSF.  Not all trust deeds allow for this and you need to make sure yours is flexible enough to allow the appointment of a replacement director or trustee depending on your structure.  If your trust deed doesn’t allow for this then in the event a member becomes disabled then the their super benefits may no longer be able to remain in the SMSF and must be paid out to another fund.

The final thing to do is to assess your trustee structure to ensure it allows for the seamless transition for the legal personal representative (LPR) to replace the disabled member.

The table below outlines the differences between an individual and corporate trustee structure.

Every situation differs and a member becoming disabled doesn’t always occur, thankfully! But by following the tips above you’ll be prepared for the worst case scenario. Our office will be able to assess whether or not you’re ready for this event, so feel free to pick up the phone and give us a call!

Table Source: SMSF Adviser

If you are a Gen X or Y retirement is an average of 33.6 years away, for some it will be up to 50 if the retirement age is increased.  Not only is the age at which we retire creeping up but the time in retirement and money required to fund it growing too.  Forced super contributions have not been increased in line with this growth and as a result there is now a broadening gap between what one has saved for retirement and their actual needs.

Recent studies have shown that for a male to have a truly comfortable retirement he needs to contribute 17.5% of his annual salary to super until retirement and for females the figure is 19.5%.

9.5% of that is currently taken care of by your employer and the rest is up to you!  Is it really feasible to contribute 8-10% more of your income into super?  Let’s put it into dollar figures to make it simpler.  For an individual earning $60,000 this equates to an average $103 per week of extra savings.

If you committed to that saving plan at age 30 by the time you reached 40, it would have made an average $79,262 increase to your super balance.  If we extend that out to retirement (age 70) we are looking at a $1,041,108 difference.

What would you give up for an extra million dollars in retirement?  Your morning coffee? Buying lunch at work? Using non-preferred bank ATM machines?  Combining these simple techniques could easily get you on your way to saving $100 per week.

Unfortunately what we find for the Gen X & Y demographic is that if they cannot see an immediate benefit for themselves, they will not give it much attention.  They are extremely quick to take on debt to satisfy a want for a new car, piece of clothing or electronics, yet extremely slow to put any money away as they cannot see any present day tangible benefit.

It all comes down to education, JBS can assist the Gen X & Y’s with their financial needs. It’s about taking control today and you will thank yourself when it comes to retirement.  Start with what you can afford, get yourself into a saving rhythm and mindset that is sustainable and doesn’t impinge too much on your lifestyle.  Keeping your savings plan manageable is key to its success.

For every 1 dollar saved before age 35 you will have 7 more in retirement.  Would you turn down a 600% return anywhere else?

At JBS it’s not all work and no play, we love to kick back and have FUN too. The team also loves a bit of healthy competition between one another, so it was decided that a game of soccer was a great way to de-stress after work.

As an ex soccer player myself, I find the sport exciting to watch for about two minutes, and those two minutes are usually when players score goals. That makes the other 88 minutes of the game about as fun as watching paint dry.

As you know the JBS team isn’t your average group of office professionals, so we decided to step it up and take on the challenge of Bubble Soccer.

Now you’re probably wondering what is Bubble Soccer?

Basically it’s indoor soccer (5 vs 5) with huge inflatable Zorb like balls around you that you wear like backpacks, and the ball isn’t light – weighing approx. 9kgs.

Your aim is still to score as many goals as you can, however the game is full contact. The FUN part about this game of soccer is you get to smash into each other – team mate or not, bouncing & rolling around in your inflatable ball, occasionally getting stuck upside down with your feet popping out the end.

Forget faking an injury for a penalty in this game, instead you’ll be laughing non stop while trying to take out one another. Click here to check out the footage we captured of the team doing just that.

Movember is an annual event  involving the growing of moustaches during the month of November to raise awareness of men’s health issues, specifically prostate cancer and other male cancers.  The fact this event attaches so much attention and is encouraged by the medical profession show the seriousness these health issues have on families.

The facts:

• Prostate cancer is the most commonly diagnosed cancer in Australian Men (20,000+ new cases per year)
• 1 in 8 Australian men (1.3 Million) experience depression at any given time.
• Every hour, more than 4 men die from potentially preventable conditions in Australia.

There are many complex reasons for the poor state of men’s health which include: 

• Men not openly discussing their health and how they’re feeling
• Reluctance to take action when men don’t feel physically or mentally well
• Men engaging in risky activities that threaten their health
• Stigmas surrounding mental health
• Men are less likely than women to seek help for health concerns, and also less likely to use health care services

It is important that families are adequately protected to combat the financial impact that Prostate cancer and other illnesses impose.  This financial stress can be removed through implementing appropriate levels of insurance, an area JBS Financial Strategists can assist with.

For more information regarding men’s health issues click here.

Never before have I had a better reason to bail work the second the clock hits 5.30pm than now, for what awaits me when I walk into the front door each night I arrive home.  On Tuesday, 14th October @ 6.22pm, the latest miracle to enter this world had arrived.  I became the father to little Ashton.

This is the first sighting we have on record of Ashton.  Just 15 mins after birth he was smiling as wide as the eyes could see.

It’s amazing how something so small with so much to learn can impact one’s life.  How one’s world changes upon the birth of their little one…

•    Within an instant your life is flipped upside down and your new role as a father for which there is no training manual is suddenly a priority.

•    My status as my fiancé’s number 1, has been downgraded to number 2.  Still love ya babe

•    Fatherhood and perfectionism don’t mix.  However, my fiancé has provided great support to baby Ashton and myself.

•    I am always waiting for the daily Ashton updates to come through whilst at work.

•    That one hour ‘daddy / Ashton time’ from the time you get home is the best part of the day.

It has been the most surreal experience to date for my partner and I, and how we have adapted to our new life which has now changed forever.  Whatever Ashton grows up to be, you just know he will make a real impact on this world in a positive manner.  So I say look out world, Ashton is coming!  Before that time however, he will continue getting drunk on mum’s milk and sleeping 17 hours per day.  Sounds like the perfect life…

Approximately $800 million+ was wagered on Melbourne Cup Day.  It is part human nature to trust in luck or a big windfall such as winning the ‘big one’ at the Melbourne Cup or the lottery, and for most people it’s just good fun.  But statistically we know this is highly unlikely to happen.  We also know that a high proportion of people will suffer a significant health event throughout their working life resulting in their income stopping.

There is a greater chance of suffering a heart attack than winning the Melbourne Cup trifecta.  In fact, the confronting news is if you buy a tattslotto ticket the day before the draw, studies show you have a greater chance of dying before the lottery is drawn than winning it.

The challenge is to make sure we take the ‘gamble’ out of things that really matter, like protecting our family in the event we become sick / injured and are unable to work to ensure we can continue to pay the mortgage and living expenses.

What are the Odds?

A lack of financial preparedness can have significant impacts down the track.  No one wants to find themselves in a situation where they can no longer support themselves financially.  It is about making your own luck rather than simply hoping for the best.

If you wish to discuss your risk protection options further, please contact one of the advisers at JBS.