A FINANCIAL UPDATE NEWSLETTERFOR THE CLIENTS OF WEALTH MANAGEMENT PARTNERS

Financial News

Adviser DetailsTroy Hartley, Steve Beattie, Janusz Mazurek, Adrian Whitaker, Roger Harris, Quincy Matambanadzo, Steve Perica, Richard Moore & Allan Culbertson

Wealth Management Partners Pty Ltd 129 Melville Pde, Como WA 6152

Authorised Representatives of GWM Adviser Services Limited. Australian Financial Services Licensee. www.wealthmp.com.au

November 2016

Financial advice boosts confidence in retirement

This concerning statistic was revealed in MLC’s Australia today report. Of the remainder, only 9% feel ‘prepared’ for retirement and only 14% consider themselves ‘somewhat prepared’ for retirement.

Retirement is then, this is now

For many Australians, retirement seems a long way off. We’re so busy worrying about paying off the mortgage and maintaining our standard of living that retirement planning isn’t on the radar. For some, it’s not even a consideration.

This lack of preparation for retirement is a symptom of a ‘living for today’ mindset that’s emerged in Australia today. More Australians are living pay-cheque to pay-cheque and they’re foregoing financial planning for travel, entertainment and other lifestyle factors that are now being confused with standards of living.

Ignore retirement and it will go away

Do we think if we ignore the concept of retirement planning, in favour of managing the demands of today’s lifestyle, the ‘problem’ will simply go away? Or is it that we feel retirement is too far away to plan for?

How big is your nest egg?

With couples needing $58,922 per annum for a comfortable retirement and $34,064 per annum for a modest retirement, and singles needing from $23,000-$43,000 per annum for a modest to comfortable retirement, those who aren’t prepared will face a significant shortfall, especially if you retire at 65 and live for 25 years.

Financial professionals offer a silver lining

The good news is that help from financial professionals has an encouraging impact on our financial confidence and security.

Australians engaging the help of financial professionals are more than twice as likely to feel ‘very or fairly well prepared’ for retirement than those without a financial professional. They’re also 21% less likely to feel slightly or not at all prepared.

Those surveyed with financial planners or advisers are also 22% less likely to expect to rely on government support to ensure their financial security (52% with financial advisers compared with 27% without) and are 10% less likely to be relying on an inheritance to ensure financial security (77% with financial advisers compared with 67% without).

What can you do?

If you acknowledge that one day you’d like to stop working while still having control over your lifestyle, think about how much money you’d like each year and what that means as a lump sum. Engaging the help of financial professionals may help you put a plan in place to enjoy the lifestyle you want in retirement.

Best regardsSteve Beattie

Managing Partner

Seventy-seven percent of Australian pre-retirees who haven’t enlisted the help of financial professionals don’t feel prepared for retirement.

Property is often the first port of call for Australians looking to build wealth. However it’s a long term commitment that isn’t for everybody. We’ll help you think about the benefits and risks of real estate, your appetite for risk and whether it’s the right investment strategy for you.

THE MAIN POINTS

• Property can be a sound investment option – often less volatile than shares, but it’s a long term venture

• It’s a solid visible asset that can earn rental income as well as realise capital gains in the future

• Shares and managed funds have historically delivered better returns than other assets but are considered one of the riskiest types of investment

• Cash investment is a safe option, providing stable regular income through interest payments

• Before you begin investing, it’s a good idea to think about your financial goals and how long you want to invest for

BENEFITS OF PROPERTY INVESTMENT

Property is a reasonably secure, long-term investment. Potentially, you could earn rental income that may cover your loan repayments. If you decide to sell it in the future, you could benefit

from capital gains. It can also provide additional financial benefits through taxation and gearing.

Building equity in your investment home loan gives you the opportunity to expand your portfolio with additional investments.

Investing in property may be a good way to diversify your portfolio and reduce your risk if you’ve other investments like cash, shares or managed funds.

UNDERSTANDING THE RISKS OF PROPERTY INVESTMENT

Like any investment, there can be risks involved with property. The income from rent may not meet your expectations. It may not cover your loan repayments.

The value of your property may decline and you may end up with less money than what you started with. You may not be able to access your money quickly and may earn lower returns than with other types of investment.

Remember, investment properties are long-term ventures, so prepare for the inevitable lows and highs.

Knowing your strengths and weaknesses

Real estate investing can require you to be a business manager, marketing specialist, accountant, tax adviser, product developer, handyperson, customer service rep, inspector and

people manager. Sound like you? If not then best pay someone else to do it for you or consider another investment strategy.

Investment property research

By doing some sound property research, you can help to minimise the risks of investing in property. Always buy in sought-after locations, close to transport with easy access to schools and amenities. This means you’re not likely to have problems finding tenants. You are also more likely to win with capital gains down the track.

Buying a house or a unit? It’s important to buy what suits your budget and cash flow, and the type of property that suits the location you buy in.

OTHER TYPES OF INVESTMENTS

Shares

Shares are considered growth investments because their value can rise. You may be able to make money by selling shares for a higher price than you initially paid for them.

If you own shares, you may also receive income from dividends, which are effectively a portion of a company’s profit paid out to its shareholders.

Of course, the value of shares may also fall below the price you pay for them. Prices can be volatile from day-to-day and shares are generally best suited to long term investors, who are comfortable withstanding these ups and downs.

Cash

Cash is a defensive investment. This means that it generates regular income (through interest payments), as opposed to growing in value over time.

Cash investments include high interest savings accounts and fixed interest investments like term deposits, government bonds and corporate bonds.

Talk to an expert

Before you make important decisions with your hard earned cash, consider talking to your WMP financial advisor to discuss appropriate investment strategies for you.

Is property investment for you?

Are you affected by the recent changes to Superannuation? You may have read some articles recently around the proposed superannuation changes that the Government announced in the May 2016 Federal Budget. Last Thursday, Treasurer Scott Morrison advised that some of these proposed measures have changed.

This article will go some way to providing you with the latest information. With superannuation being a moving ‘beast’ it can be hard to keep up and know how you are affected. Your WMP financial advisor can help you to understand these changes in relation to your personal circumstances and help you understand what opportunities this may present.

So what are the changes?

The lifetime contribution cap has been abolished

In the May 2016 Budget, the Government proposed the introduction of a $500,000 lifetime cap on non-concessional (after-tax) contributions to superannuation. What has changed? This lifetime cap of $500,000 has been replaced by these proposed changes, starting 1 July 2017:

• a non-concessional contributions cap of $100,000 per year

• Individuals under 65 as at 1 July each year can ‘bring forward’ three years of non-concessional contributions

• Individuals with over $1.6 million in super can no longer make non-concessional contributions.

These proposals won’t take effect until 1 July 2017, so the existing non-concessional contributions caps will continue to apply for the current 2016-17 financial year:

The work test will now continue from age 65

In the May 2016 Budget, the Government announced it was removing the work test for contributions made on or after an individual’s 65th birthday. This would have allowed individuals over age 65 to contribute to super without having to be gainfully employed for at least 40 hours over a consecutive 30-day period.

What has changed?

This change has been abandoned and so individuals looking to contribute to super from age 65 will still need to satisfy the work test, so the current rules will continue to apply.

The ‘catch-up’ of concessional contributions will be delayed

In the May 2016 Budget, the Government announced that from 1 July 2017, the Government proposed to reduce the cap on concessional contributions (such as employer

and salary sacrifice contributions) to $25,000, and then allow individuals to ‘catch-up’ on any unused concessional contributions within the next five years, if their superannuation balance was less than $500,000.

What has changed?

While the reduced concessional contributions cap is still proposed to apply from 1 July 2017, the ability to ‘catch-up’ on any unused concessional contributions has been delayed until 1 July 2018.

Do you have a question?

Despite this new round of changes, superannuation remains a very tax-effective way for you to build up your retirement savings. However, these proposals need to successfully pass through Parliament before becoming law and may be subject to further change during this process. For more information on how these changes could affect you, contact your WMP Financial Advisor.

Did you know?• 23% of Facebook users check

their account at least 5 times a day.

• Food is the top category on Pinterest making up 57% of discussions

• Instagram has already had more

than 16 billion photos uploaded since debuting in 2010. 5 million photos are uploaded daily.

• 50% of Linkedin users have their Bachelor’s or Graduate Degree

• Twitter has over 288 million monthly active users

This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.Troy Hartley, Steve Beattie, Janusz Mazurek, Adrian Whitaker, Roger Harris, Quincy Matambanadzo, Richard Moore, Steve Perica, Allan Culbertson and Wealth Management Partners Pty Ltd trading as Wealth Management Partners are Authorised Representatives of GWM Adviser Services Limited ABN 96 002 071 749, trading as Garvan

Financial Planning an Australian Financial Services Licensee, Registered Office at 105—153 Miller Street, North Sydney NSW 2060 and a member of the National Australia group of companies.

The products/services offered by WMP Business Development is not authorised by GWM Adviser Services Ltd trading as Garvan Financial Planning and GWM Adviser Services Ltd trading as Garvan Financial Planning is not responsible for the advice/services provided by WMP Business Development. Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.

In Australia, torn bank notes are worth the proportion of the note left. Half a $20 note is worth $10.

Perth Office129 Melville ParadeComo WA 6152

Postal AddressPO Box 1408South Perth WA 6951

P 08 9368 6030F 08 9368 5798E admin@wealthmp.com.au

www.wealthmp.com.au

Do you have someone in your family that is part of Generation Y? Also known as Millennials, Generation Y refers to the generation currently in their mid-20s to early-mid 30s, who were born between 1980 and the early 2000s. Celebrated and criticised equally, this generation is characterised by its access to information, technology and travel more than previous generations. Equally, Gen Y has been shown to have very different attitudes to work and money than the generations that came before them.

Gen Y has also experienced an environment of economic volatility early in their adulthood, in some cases effecting their employment and their propensity to earn. For these reasons, many in this generation are choosing to live in the family home for longer and waiting until later in life to enter home ownership.

Research suggests a range of trends in how Generation Y thinks about money. If you want to engage your Gen Y family-member in improving their financial management skills, you might consider some of the following:

1. Create rules around the Bank of Mum and Dad

Whether borrowing, paying rent or contributing to household expenses, ensuring that your Gen Y is accountable for their use of the ‘Bank of Mum and Dad’ is a useful place to start. Pulling their weight and paying their share of household expenses creates a broader awareness around the practicalities of running a household.

2. Involve them in a long-term savings goal

Studies show that Gen Y show consistent savings habits on a month-by-month basis, however this does not necessarily equate to implementing long-term savings habits. Whether it’s an apartment or a car, help them create a tangible long-term savings goal that incentivises saving today.

3. Engaging with super

A persistent issue for superannuation is a lack of engagement from those who are furthest away from retirement. Talk to your Gen Y about managing their superannuation by selecting an investment option most appropriate for their life stage or consolidating multiple superannuation accounts to minimise fees.

4. Discuss debt

Generation Y is recorded to have more debt and at an earlier age than any other generation before them. If your Gen Y has a loan or credit card, make sure they are aware of their total principal and interest payments and help them create a practical repayment schedule.

5. Help them put a plan in place

While Gen Y is more than capable of creating a budget, few actually do so. From writing up a basic budget, through to visiting a financial adviser, getting numbers down in black and white and tracking finances is a valuable exercise to start engaging your Gen Y family-member on money matters.

6. Encourage the entrepreneur

Statistics show that Gen Y has a strong tendency towards entrepreneurship. This could be attributable to the attractiveness of new digital business models or simply a desire for self-employment. Whatever the case, if your Gen Y has an idea for a small business, guide them in turning this idea into a tangible outcome by providing personal, financial and administrative insight from your own experiences.

Back to School: Teaching Gen Y

We can’t stress enough the importance of reviewing your financial situation.

Circumstances are constantly changing and we want to ensure you are optimising your financial position at all times.

As our valued clients you are entitled to that annual review with our advisers, so we encourage you to take that opportunity, it is our commitment to you. So be proactive and

contact us and let us make sure you’re on the right path to your financial freedom!

Call our office on (08) 9368 6030 to make your appointment