Financial Newsletter Sunshine Coast

Welcome to Unique Financial Partnerships, keeping you up to date with all financial planning, self managed superannuation funds, tax minimisation, life insurance, on the Sunshine Coast and around Australia.

The information in this newsletter is current at the time of printing. Contact us for updates.

The true value of a financial adviser

What is the true value of a financial adviser?
This is a difficult question. How is something like this measured? It could be something as simple as having someone guide you to becoming a better investor or perhaps something more intangible.
There is value in having a savings plan or budget.
A recent Investment and Financial Services Association (IFSA) survey found that people with financial advisers saved around $2,650 p.a. more than those without one. Their total investment balances were around $8,000 higher as well. (These figures are after fees.)
There is value in structuring your tax and insurance affairs optimally.
Recently, a Futuro financial adviser had a client with terminal cancer pass away. The client was an active share trader and had a self-managed super fund, which, at any time, requires a lot of focus and attention. In the months before the client died, the adviser had a series of meetings with the client and his wife to ensure all trustee responsibilities were delegated correctly and moved the fund’s investments to a managed account. He also ensured the client received all insurance payments available to him. This took the pressure off the client and his wife during that difficult time. The adviser is now working with the wife and other relatives to ensure the fund is wound up correctly.
This same planner mentions the example of another client, a UK citizen who had retired in Australia and who suffered a stroke. The client was not physically affected, but his temperament and personality changed.  The adviser’s original advice meant the client could afford the medical assistance he needed. The planner has also made sure the client is receiving the full range of treatments available for him in Australia.
There is value in the peace of mind your adviser can give you.
Four out of five people seeing a financial planner agree that their adviser has given them greater:

• understanding of finance,
• knowledge and education about investment options,
• confidence that they’ll achieve their lifestyle and financial goals, and
• confidence that they are prepared for retirement.

So, if there’s something on your mind, pick up the phone and speak to your adviser.  What you get from that chat will probably be very valuable!

Life insurance premiums: stepped or level

Are you one of the millions of people who don’t look forward to receiving your life insurance premium each year? We all know that it will increase as we get older, but sometimes when you open that envelope and read the new premium amount, it can come as quite a shock. So what can you do?
When it comes to life insurance, you might not know that you can choose for your premiums to be ‘stepped’ or ‘level’. Stepped premiums are the most common, but level premiums are catching on and may be something worth considering.
What’s the difference?
A stepped premium increases each year. The amount it increases will depend on your age. As a very rough guide, you can expect your premium to rise by the amounts shown below:

Level premiums remain the same throughout the life of the policy. The premium is calculated on the average premium, meaning you will pay significantly more while you are younger, but on the upside you pay a lot less when you get older.
Most claims tend to occur between the ages of 40 and 55. This can also be the time that the cost of stepped premiums can be too expensive for many of us to keep. By using level premiums, your premium will stay the same.  And the younger you lock the premium in, the lower the premium will be.
Which is best for me?
There are a few things you should consider before deciding whether a stepped or level premium is best.

• How long will you hold your policy? If you keep your policy for less than seven years, you will usually be better off paying stepped premiums.
• What pattern of cashflow suits you best? You may prefer the lower stepped premium now because you expect to have a higher income in the future. If your cashflow is comfortable now, you may prefer the higher level premium now so future payments are not a burden.
• Will you need the same level of cover in the future? You may need less cover in the future as you pay off debts and build assets. If so, as stepped premiums increase, you might be able to gradually reduce your cover to keep the cost affordable. 

Your Futuro adviser can help you make sense of which option is right for you.

Business tax breaks end soon

The federal government’s Small Business and General Business Tax Break initiative finishes on 31 December this year. So, if you’re thinking of using it, it’s time to really get moving!

Under the scheme, businesses with turnover of under $2 million per annum are able to claim a 50% bonus tax deduction for eligible assets costing more than $1000, bought before 31 December 2009 and installed before 31 December 2010.

All other businesses have access to a 10% tax break for eligible assets costing more than $10,000 bought by 31 December 2009.

Don’t forget that the deduction allowed is a true ‘bonus deduction’. It has no impact on the depreciation deductions on the asset that the business can claim. This means that, over time, you could claim deductions of over 100% of the asset's price.

Recent evidence suggests that many businesses have already taken advantage of the scheme with new car sales, particularly in the light commercial sector, growing well, even during this tumultuous year.

Although the time allowed for the deduction is ending soon, you should not rush and buy something without consulting the experts. While the scheme is fairly straightforward, there are some technicalities that must be considered before you buy.  Talk to your professional adviser first.

Ho Ho Ho! Avoid a debt hangover this year

Christmas is a time of giving. We all enjoy the look on the faces of our families and friends when they open a gift that they love. But it is important not to get carried away and create a debt you will be paying off well after the gifts have been put away. 

Rather than be swept up in a Christmas spending binge, think about using some of the following tips to help you enjoy a debt-free Christmas:

• Plan ahead as much as possible (even a few weeks is better than a few days),
• Set a sensible budget and stick to it,
• Write a list of people you wish to give gifts to and match your list to your budget,
• If you can, use cash or lay-by rather than credit. If you must use credit, utilise interest-free periods and avoid the temptation of using multiple credit cards to ‘spread the debt around’,
• Shop around for the best prices,
• Think about things you might be able to make instead of buy. Giving a personal gift often means more than expensive store-bought items,
• Agree with family members to limit the amount spent on presents, and
• Reduce the food and drink bill for Christmas by buying in bulk if you can.

And most importantly, if you must use credit cards, pay them off as soon as possible after Christmas. The New Year will bring enough regular bills of its own!

Disclaimer
All representations and information contained in Futuro in Focus are made in good faith and are believed to be correct at the time of preparation. Articles are of a general nature and they do not purport to be specific investment advice. Individual needs or other considerations have not been taken into account, thus information contained herein should not be relied upon as a substitute for detailed advice. Futuro Financial Services will receive fees or brokerage from the provision of advice or placement of investments. You may, by contacting our Privacy Officer on 07 3018 0400 or by writing to Futuro Financial Services Privacy Officer GPO Box 942 Brisbane QLD 4001, request not to receive further editions of Futuro in Focus.