Autumn 2015 STAFF Life Balance Financial Professionals: Kym Marriott B.MAN, CFP Director & Authorised Representative Tony Bell B.COM (ACC), CFP, CPA. Director & Authorised Representative Steve Inwood M Fin Plan, CFP Director & Authorised Representative Anu Bindal B.COM (ACC) and B.COM (Eco)Accountant Alison Inwood MBA, B.BUS, Dip FP Representative James Marriott Dip FP Associate Planner Life Balance Accounting Bruce Newberry BA (ACC) CPA Tax Partner Helen Bell Accounting & Tax Assistant Karen Newberry Accounting & Tax Assistant Contact Us: Street Address: Level 2 31 Merivale Street South Brisbane QLD 4101 Postal Address: PO Box 3875 South Brisbane QLD 4101 Ph: (07) 3846 1644 Fax: (07) 3846 1655 Email:mail@life-balance.net.au

Welcome to our Autumn 2015 newsletter.

Before you know it, the end of the financial year will roll around again. If one of your New Year’s resolutions was to stay on top of your finances, why not start getting ready for the end of the financial year. With a little preparation you can take the stress out of tax time and make the start of the new financial year a happy one. In this issue: 2015— The outlook Planning for 30 June Is the cost of living really rising? Where would you love to live out your retirement?

Kind Regards Kym Marriott & Tony Bell Directors & Representatives Life Balance Financial Professionals

Your Partner for Success

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Welcome to Life Balance

The new year has started with a different

landscape than had been expected. The falling

price of oil, generational lows in bond yields and

renewed political concerns in Europe have

sharpened the focus on what 2015 will hold for

the global economy and financial markets.

On 21 January 2015, the International Monetary Fund

(IMF) updated its global economic growth and inflation

forecasts given four key developments since the last

release in October 2014: lower oil prices, growing

economic divergences among advanced economies, US

dollar appreciation, and movements in interest rates and

credit spreads in emerging economies. As a result, the IMF

is forecasting global economic growth of 3.5% in 2015 (was

3.8%) and 3.7% in 2016 (was 4.0%).

The IMF has also adjusted its forecasts of inflation given

the dramatic fall in the price of oil over recent months, but it

seems likely that further adjustments will be necessary as

the full impact of lower oil prices are realised. This means

that the shape of the world economy could be very different

in 2015.

In Europe, where the main source of downside risk is held,

the IMF is forecasting growth of just 1.2%. The real concern

though is deflation (ie the general level of prices falling),

especially given the sharp fall in oil prices. As a result,

European Central Bank President Mario Draghi has taken

decisive action in late January to fight deflation and provide

an aggressive policy response by buying European

government bonds. Simply, Europe is now undertaking

what the US did from 2009 to 2014.

The performance of the Japanese economy was one of the

biggest disappointments of 2014. The weak growth outlook

in Japan is expected to see the Bank of Japan keep

interest rates near zero and continue with aggressive

quantitative easing programs in 2015. China’s growth rate

is likely to moderate to an average of 7% per year in 2015,

down from 7.3% per year in Q4 2014. Growth in China over

2015 is expected to be driven by an improvement in

exports and relatively steady growth in consumption. This

should offset a further slowdown in investment – especially

related to the property market.

Lower oil prices is good news for oil importing countries that

have a large consumer sector, which includes not only the

US, Europe and Japan, but also countries like Australia. The

lower oil price is bad news for energy exporting nations,

such as those in the Middle East and Russia.

In addition, one of the defining events for global markets in

2015 is expected to be the start of the monetary policy

normalisation process in the US, through the first interest

rate hike. This is anticipated to occur around mid-year.

Political risks are also high on the agenda for 2015. The

newly elected left-wing government in Greece, will be

looking to renegotiate its official bailout program with EU

officials in the coming months, once again reigniting

speculation of a possible Greek exit from the European

Union (a very unlikely outcome). There is a UK general

election in May and elections in Spain late this year. In the

US, the focus will turn to the 2016 Presidential elections and

who will run.

In Australia, the outlook is most likely for a year of growth a

bit below trend of just under 3%. The economy is slowly

trying to rebuild momentum post the years of mining-led

growth, but this is taking time. The Reserve Bank of

Australia cut interest rates to 2.25% from 2.5% in February

2015 to provide extra support to the economy as it

transitions from mining led growth to non-mining led growth,

led by export growth in liquefied natural gas, education and

tourism as well as the benefits from a lower Australian

dollar.

Despite solid global economic growth, low inflation and

central bank action is likely to keep global bond yields

relatively low, although some increase should be expected

from these ultra-low levels. Relatively low bond yields should

be supportive of some sharemarkets but there remains

headwinds in the economic outlook globally. The US dollar

is expected to be the strongest of the major currencies this

year, especially against the Euro and the Yen. It should also

be expected that volatility throughout financial markets

should rise.

© Colonial First State

2015 - The Outlook

Preparing early for end of

financial year

Preparing early can save you stress at tax time.

1. Top up your super Every little bit you add to your super will make a big difference down the track thanks to its concessional tax and the effect of compounding interest. So it could make sense to contribute more than the Super Guarantee amount that your employer pays into your super each year. There are two types of contributions you can make: Concessional contributions (before-tax contributions made to your super) include: your Super Guarantee employer contributions additional money that you add to your super, known as salary sacrifice tax-deductible personal contributions (if you’re self-employed). These have been capped at $30,000 for the 2015 financial year when you’re under 49, with additional tax applying if you exceed your cap. Non-concessional contributions (any money you contribute that you’ve already paid tax on) such as: money from your take-home pay money from the sale of an asset or an inheritance. In 2014-15, non-concessional contributions are capped at $180,000, but as you’re under 65 you may be able to use three years’ worth at once and contribute $540,000. Contributions in excess of this cap may be subject to additional tax of 49%. Before you make additional contributions to your super, speak to Life Balance to ensure this strategy is right for you.

2. Contribute to your spouse’s fund If your spouse is a low-income earner, why not contribute to their super before the end of the financial year and get a potential tax offset? If your spouse earns under $13,800

a

year, by contributing more than $3,000 in their super before June 30 you may be able to claim a tax offset of up to $540. 3. Set up a new budget Maybe you’re finding it hard to pay off the mortgage, or relying too heavily on credit cards. Or perhaps you’re just not sure where the money’s going. Whatever your financial situation, a budget can help you get in control, or get a clear picture of where you stand financially, so you can get into the best possible financial position for the next financial year.

We're here to help If tax time is a stressful time for you, we can help you get organised and structure your finances to improve your tax position before June 30.

Is the cost of living really rising? If inflation is so low, why does everything seem so expensive?

Official figures show that inflation in Australia is low and likely to stay that way for some time to come.

According to Stephen Halmarick, Head of Economic and Market Research at Colonial First State Global Asset Management, “The current inflation rate is well within the Reserve Bank’s 2% to 3% target range. That’s good news for consumers; both because it means prices are relatively stable and because it suggests official interest rates are likely to stay low for some time yet.”

What consumers say

But official figures are one thing — percep-tions are another. According to a recent poll by Essential Media

1, 48% of households

believe that prices are rising and their In-come simply isn’t keeping up. This is par-ticularly true for lower income earners, with almost 60% of households in this group say-ing the cost of living is getting higher. It seems people’s perceptions of cost of living are greater than the reality according to economic modellers.”

“Remember the trouble John Howard got into when he said 'Australian workers have never had it better'? The statistics backed him up — but that's not how people felt.”

Why the difference?

“One of the main reasons for the inconsistency between official data and what people are feeling is that some price rises are much more noticeable than oth-ers,” Halmarick says.

“When people are hit with higher costs for regular purchases, like electricity or petrol, a small rise can be much more noticeable than a large fall in the price of something they only buy occasionally — electronic goods, for example. And while overall in-flation is down, there have still been price rises in some areas, including motor vehi-cle services, rates and new housing costs.”

What’s in store?

The good news is that inflation is not only expected to stay low, but some of those nig-gling regular bills are also coming down.

Staying ahead of inflation

Inflation may be low right now, but it still has the potential to erode your savings over time and eat away at your spending power, especially in retirement. Fortunately, you can help protect yourself by choosing in-vestments with the potential to outpace price rises and generate positive returns, even if inflation picks up.

1 The Essential Report, 21 October 2014

Cheaper energy costs and

falling petrol prices should help

to make life easier for

consumers, while interest rates

are set to stay low.

10 reasons to eat apples Apples are full of a

fibre called pectin - a

medium-sized apple

contains about 4

grams of fibre.

Pectin is classed as a

soluble, fermentable

and viscous fibre, a

combination that gives

it a huge list of health

benefits.

more

The Life Balance office had a special

visitor earlier this week. It was lovely

to meet Anu and Wendy’s beautiful

baby girl Zara for the first time.

Anu is also being spoilt by his Mum

who is visiting from India.

Hot retirement

destinations - at home and

overseas

More and more baby boomers are choosing to downsize for their re-tirement, taking advantage of the booming property market. This year, tens of thousands of retiring Australians are planning to sell their houses. And now, more than 20% of Australians who opt for a 'sea change' or 'tree change' are over 50 — choosing a simpler lifestyle that will stretch their savings even further in retirement. Remember, a short holiday is no guide to whether you would like to live in a community full-time. Every place has its advantages and disadvantages, so make sure you’ve done your homework before you take the plunge. And don't underestimate the impact of being far away from family and friends -while you may feel fine about it now, you may feel differently if you find it hard to make friends or you want to spend more time with grandchildren later on.

Top retirement destinations

Sea Change Margaret River, WA Sunshine Coast Tree Change Hunter Valley, NSW Daylesford, VIC Overseas Bali New Zealand