How to help your parents and still save for retirement

How to help your parents and still save for retirement

The financial impact of COVID may have cut into your parents’ retirement savings, or perhaps they just simply didn’t save enough to last the distance.

Whatever the reason, if you’ve now found yourself with parents you need to help, you may be wondering how this will affect your own retirement plans.

So, here’s a few things you can do to help both you and your parents improve your chances of retiring comfortably.

Analyse your parents’ assets and savings

It can be tough to start a conversation about money with your parents, but it’s one of the most important conversations you can have to understand their retirement savings.

Having access to their financial information will give you a better understanding about their situation. More importantly, you’ll know if you’re going to be required to help them financially.

Ideally you want a clear picture about their current assets, savings and debt status plus an understanding of their income and expenses. There are budget planners and phone apps you can use to help get control and visibility around spending habits. You may also want to use a retirement calculator to give an idea of how long their money will could last.

If you find they don’t have enough income to support their retirement, there may be things they can implement to change it. This could include cutting down expenses, moving to a more affordable home or renegotiating their debt. It’s very important to make sure they are maximising any social security entitlements they may have too.

Review their health insurance

Healthcare costs are becoming increasingly onerous so it may be advisable to review your parents’ health insurance. It’s important they have enough cover for medical expenses, long-term care and other retirement costs.

Seek professional help

Enlisting the help of an expert, such as a financial adviser, may alleviate some of your pressure.
Better yet, financial advisers can assist in developing appropriate strategies to ensure you’re meeting your own retirement goals as well as your parents. They can also investigate what tax concessions, or other government benefits, your parents may be entitled to.

Perhaps most importantly, a financial adviser can help you take a holistic view. They can look at your parents’ situation and your own and work out strategies that optimise both outcomes over the long-term.

For example, you may need to reduce your current spending to help your parents retire more comfortably. That’s a short-term cost to you – but if it means your parents can keep important assets like the family home, you may benefit from that in the long-term. A financial planner –trained, impartial and able to see the big picture – can be a big help.

Set clear boundaries

It’s an admirable thing to help your parents but be clear about what that help consists of – for example it’s one thing to help out with their bills occasionally, but it’s another to have your name placed on loan documents!

If that isn’t the type of help you had in mind, it’s important to communicate that – and stick to it.

Invest in your own retirement

There are retirement calculators you can use to see if you’ll have enough saved to maintain the standard of living you’d like in retirement.

If you find you need to make financial adjustments to increase your retirement savings, one option could be to contribute more to your super on a regular basis using your before-tax or after-tax income. There are tax benefits that come with this too.

For example, if you contribute some of your after-tax income or savings into super, you may be eligible to claim a tax deduction. This means you’ll reduce your taxable income for the financial year and potentially pay less tax, while adding to your super balance. It’s a win-win.

These types of contributions are capped at $25,000 per financial year however. If you choose to contribute over this amount, you may be required to pay more tax.

Bottom line: We all want to help our parents if they’re struggling financially, but it’s important to think of your own situation too. And don’t forget, money isn’t everything—one of the best things you can do for your parents is to spend quality time with them while you’ve got it!

If you would like competent advice in this area,  please email us at ds@bluerocke.com with your contacts, for an exploratory meeting, at our cost, not yours.

Article source: https://www.mlc.com.au/personal/blog/2021/03/how-to-help-your-parents-and-still-save-for-retirement


Bad Blood by John Carreyrou

Just read this superb book- one of those you can’t put down. Will be of interest to those into private equity funding for bio-medics.

 

This true story is about developing a device, to have a blood test without using a syringe.

 

What is astounding, is that a young 20 something, could get leading lights like Joe Biden (when he was VP), Shultz, Kissinger, Murdoch, Matthis and other senior figures to support her for years – until she was exposed.

 

Enjoy!


Coronavirus investment opportunities – what to look for in share markets

While share markets have experienced some of the sharpest falls in history, amid the Coronavirus pandemic, savvy investors have been looking out for opportunities created by recent events.

Travel, tourism, retail and universities are among some of the hardest hit sectors in Australia, due to Coronavirus.1 On the flip side, pharmaceuticals, video conferencing, entertainment streaming and e-commerce marketplaces have been coming out on top.2

So, if you’re looking for investment opportunities for long-term returns, here are five principles that may help you get started. But keep in mind, share markets are unpredictable, even when things seem to be improving they can turn very quickly.

1. Keep a long-term perspective

When making changes to your investment portfolio, it’s important to have a long-term view and plan to have your money invested for a while.

Just as we’ve seen a decline in share markets recently, historically it has recovered. From the 1987 Stock Market Crash to the bursting of the Tech Bubble in 2000, each trigger is different and the time it takes to recover varies too. It could take months or even years.

As such, if you do decide to make changes to your investments during the current volatile markets, it’s important to remember that the future is uncertain. Markets are constantly revaluing company prices with new information so this volatility is likely to remain until there’s certainty around the containment of Coronavirus.

2. Do your research

There’s a lot of ‘noise’ about the current state of the market, so keeping informed and getting an in-depth understanding about where you’re investing, is key.

Here are just a few of the things you could consider when looking at listed companies in the share market.

  • Does the company have a good track record?
  • Where does it get its earnings from, domestically or internationally?
  • How much debt does it have and when is it up for renewal?
  • How are the company’s earnings going to be affected by Coronavirus?
  • Does the business have a strong competitive advantage?
  • Does it have stable revenue and income?
  • What are its risks in different economic environments?
  • What price would you be prepared to pay for shares in the company?
  • What are the risks specific to this company, its industry, and share market more generally?

If you decide to purchase shares in a company, consider monitoring it and any share market announcements, including financial updates or results, issues affecting the industry and any competitors.

You may also want to keep an eye out for any news coverage and interviews about the business to get a feel for their current and long-term viability.

And that’s just the beginning. You need to consider how you’ll reduce your exposure to the risks of investing in that company. Most people manage that risk by investing in many companies and asset classes because their performance is influenced by different factors.

3. Look for the red flags

It’s important to distinguish between companies who have seen their share price fall as a result of market panic, caused by events like Coronavirus, and those that have fallen because they were already unstable and their weaknesses have been revealed by the economic downturn.

When identifying these undervalued shares, consider how much Coronavirus will impact the company now and in the future. It’s also important to look at the company’s balance sheet and business model to see if it can withstand this pandemic, or if it’s prospects are substantially compromised by a further drop in share markets.

Other red flags to look out for include companies with a significant amount of debt or those that may be highly affected by economic conditions.

You may also want to check the company’s position regarding ethical and sustainable investing and whether it aligns to your own values.

4. Consider contributing regularly

One of the ways to take advantage of a market downturn is to contribute a fixed amount to your investment portfolio on a regular basis.

The main benefit of this, as opposed to making a lump sum payment, is that it can help to reduce the impact of market volatility.

If you’re contributing the same amount of money as you were when markets were performing well, then when markets fall, you’re effectively purchasing at lower prices. For long-term investors, this is a great way of taking the guess work out of timing when to invest. Reality is, no one knows the best time to invest.

5. Seek support from professionals

Investment manager

You may not have the time or resources to do the analysis required to identify quality long-term investments so investing with a professional investment manager is an alternative option.

These companies have teams of experienced investment professionals doing the hard work for you and you pay them a fee for it. It’s important to consider if you’re comfortable with their investment approach and how they manage risk versus return.

Financial adviser

Obtaining independent advice from a financial adviser, before making any decisions, can help you design a plan to achieve your own financial goals. It may also provide you with a better understanding about the risks and rewards of investing and appropriate investments for you.

Bottom line: share markets are unpredictable so remember keep a long-term perspective. Given the complexities of investment decisions, it’s important to stay informed and seek support from professionals.

1https://www.businessinsider.com.au/coroanvirus-australian-industries-businesses-affected-impact-2020-3

2https://theconversation.com/coronavirus-your-guide-to-winners-and-losers-in-the-business-world-134205

 

Source: https://www.mlc.com.au/personal/blog/2020/05/coronavirus_investme


The purpose of good financial advice in a crisis

The purpose of good financial advice in a crisis

In this 3 minute video, MLC’s Brendan Johnson discusses the role of good financial advice during COVID-19 and how clients want to build confidence and a sense of control in this extraordinary time.

We are here to help, contact Dev Sarker at 1300 7171 136 today.

 

Source: https://www.mlc.com.au/personal/blog/2020/04/the_purpose_of_good


Small steps to great success

If you want to get ahead, financially, it’s necessary to take some steps to get there. It may seem daunting and overwhelming but like anything, if you have a professional guiding you along the way, small steps can lead to something great.

Step 1 | Seek advice

It’s hard to achieve great success without a team of experts behind you and your wealth is no different. Getting professional financial advice means your adviser can work through a myriad of options with you and implement a strategy aligned closely to your financial goals. Retirement planning, tax-effective super strategies, investments and estate planning? Your financial adviser can help.

Step 2 | Understand what role risk plays

One of the first things your financial adviser will do is work out your risk profile, which they will check at regular review meetings. Why? Because risk is related to return, and this will help drive the recommendations they make to you in terms of your financial plan. Generally, the higher the risk, the higher the return. While some people like higher risk investments because they have the potential to deliver higher returns, others prefer less risky investments. It’s important to remember that markets are cyclical and shares are a long-term investment so if the market wobbles, your financial adviser is best placed to keep an eye on your investments and determine if they remain aligned to your overall financial strategy.

Step 3 | Check your super

Your superannuation could be your largest asset, other than your own home. Given it’s such a large sum that you have been contributing to for years and years, and you are relying on it to sustain you in your retirement, isn’t it something you want to get right? Sure, it’s a long-term investment, but it’s important that it is invested in-line with your risk profile and financial goals. And you DO have options. As well as your employer contribution, you can kick in a bit extra through salary sacrificing. Contributing more to super will not only boost your account balance, it could reduce the amount of tax you pay.

Step 4 | Stick to a budget

Sounds boring, right? But a budget is not boring, it’s empowering!! Setting a realistic budget helps you understand where your money is going, what can be trimmed and where you can invest to save for your future. Understanding your overall financial health and having a budget aligned to your financial goals gives you a real understanding of the benefits of working with a financial adviser. You can start to see a real change in your circumstances. Having a budget doesn’t mean giving up things you want, it just means you plan for them and you make sure you can afford them BEFORE you spend the money. Setting and sticking to a budget is really the simplest way to help you get ahead.

Need advice? We’re happy to help. Call 1300 71 71 36 to speak to a financial adviser today!


Break free from being asset rich and cash poor

Here are four ways to try boost your income.

Are you asset rich but cash poor? You’re not alone. Data from the Australian Bureau of Statistics shows that almost one-third of older Australians in low-income households were asset rich but cash poor.[1] Most of their wealth was tied up in illiquid assets, in particular their home.

But you need not scrape by on so little. There are ways to try boost your income.

1. Take advantage of your property

Selling up and moving to a cheaper house may free up money to help fund your retirement. But keep in mind that it might affect your benefits if you’re receiving an age pension. Some of the proceeds from the sale might be counted as assessable under the age pension assets test, and this might lead to a drastic cut in your pension.

2. Supplement your income

Getting a part-time job could boost your cash flow if you are retired. But remember that working when you have become eligible for an age pension may reduce your pension amount. Discuss with your adviser how you might optimise your retirement benefits while working part time.

3. Rent out your property

If you have extra space in your home, you may consider to rent it out? Or if you have another property, like a holiday home, you may look into listing it as a short-term rental? This could impact the tax you pay when you sell your home so you should seek advice on these strategies.

4. Revisit your investments

Have you invested in securities? This may be a good time to meet with our financial adviser to review your portfolio. Your financial adviser may recommend strategies and ways to reduce your exposure to risk and volatility.

Understand the risks

You don’t have to be trapped in a situation where you are asset rich but cash poor. There are ways to boost your income, but keep in mind that some involve taking big risks. So seek financial advice to help you weigh your options and make decisions based on your situation.

We’re happy to help. Contact Dev Sarker today at 1300 71 71 36!

 

[1] Australian Bureau of Statistics, March 2016, ‘Many older Australian households asset rich, income poor’, accessible at: https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by Subject/6523.0%7E2013-14%7EMedia Release%7EMany older Australian households asset rich, income poor (Media Release)%7E40