Do you have lost or unclaimed Super?

With recent legislative changes, if you have lost or unclaimed Superannuation the ATO can hold untouched super accounts with balances of up to $2,000. Superannuation fund providers have until May 31, 2013 to transfer untouched super accounts to the ATO. Once transferred to the ATO you will lose any insurance arrangements you have with your fund.

The process of claiming your lost super back from the ATO may be time consuming. Therefore if you have any lost Super act now before the transfer occurs.

 

You can locate your lost super by doing a search at the following web address (Note you will need your Tax File Number to do this):

 

http://www.ato.gov.au/individuals/content.aspx?doc=/content/33301.htm&alias=superseeker

If you find any lost super you can complete an application to transfer the funds into the Superannuation fund of your choice.

Term Deposit growth and low interest rates

As can be seen from the graph below the rapid growth of term deposits since the Global Financial Crisis in Australian bank term deposits has almost been threefold from just under 200 billion to around 550 billion. The irony being the term deposit rate, except for a very short period in 2008, has been very low indicating the investment has not been based on the return being offered but rather the safety of getting your money back. With these rates now below the 20 year average will this large supply of funds remain in this asset class or find another area offering a higher level of income such as shares or property. Only time will tell given the fears of America's debt and the Eurozone debt crisis however as these fears subside pressure will mount for retirees to look for more income.

Thanks to Clime Capital for sharing this chart. This definately puts things into perspective.

Better a little caution than a great regret

I really enjoy this story, again from the richest man in babylon. There is a lot to learn from the lessons within this book.


Mathon then asks Rodan whether a loan would be well made if the borrower could not repay. "Must not the lender be wise and judge carefully whether his gold can perform a useful purpose to the borrower and return to him once more, or whether it will be wasted by one unable to use it wisely and leave him without his treasures, and leave the borrower with a debt he cannot repay?" Mathon then relates that there are three classes of borrowers, those who promise more financial security than they borrow and who are thus always safe to loan to, those who borrow based on their capacity to earn and ability to repay the loan and thus are safe to loan to, and those who have neither property nor assured earning capacity, who will likely never pay a loan back. He pulls out his box of security tokens and relates some short stories including that of a woman who borrowed money to make her son a merchant. Mathon knew that her son was not ready to be entrusted with such money but to suggest otherwise to the woman was to infuriate her. Since she offered jewels as security, Mathom could not refuse her. Mathon shows that one of the tokens of security is a simple knot tied in a piece of rope, given by a person that Mathon has long lended money to, who always promptly pays his loans back, and uses the loans wisely to become richer. Mathon has had such a good experience with this borrower that Mathon no longer requires the man to give a "real" security to borrow money. Mathon states that he does not discourage borrowing gold, he encourages it, if it be for a wise purpose. Mathon ends by telling Rodan to read what is carved beneath the lid of the token box, which saying applies equally to the borrower and the lender. "Better a little caution than a great regret."

Seven cures to a lean purse

Akrad is back again today looking at seven ways to keep your money. These are very simple concepts that we all know and few live by.

1. Start thy purse to fattening

Arkad instructs the men to begin by continuing to work hard at their current occupations, but for every ten coins placed in their purse to take out for use but nine. "Deride not what I say because of its simplicity," Arkad says, "Truth is always simple."

2. Control thy expenditures

"How," some of the men ask, "Can a man keep one-tenth of all he earns in his purse when all the coins he earns are not enough for his necessary expenditures?" "How many of you have lean purses," Arkad asks. All of the men say that they have lean purses, that they have no money. "Yet," Arkad responds, "Thou do not all earn the same. Some earn much more than others. Some have much larger families to support. Yet, all purses are equally lean. Now I will tell thee an unusual truth about men and the sons of men. It is this: That what each of us calls our necessary expenses' will always grow to equal our incomes unless we protest to the contrary." Arkad tells the men not to confuse necessary expenses with their desires, that all men are burdened with more desires than they can gratify. "Budget thy expenses that thou mayest have coins to pay for thy necessities, to pay for thy enjoyments and to gratify thy worthwhile desires without spending more than nine-tenths of thy earnings."

3. Make thy gold multiply

Once you've started saving at least one-tenth of what you earn, you must put that money to work earning interest. "Put each coin to laboring that it may reproduce its kind even as the flocks of the field and help bring to thee income, a stream of wealth that shall flow constantly into thy purse."

4. Guard thy treasures from loss

"Everyone is tempted," Arkad relates, "By opportunities whereby it would seem that a man could make large sums by investing his money in most plausible projects. Often friends and relatives are eagerly entering such investment and urge him to follow." The first sound principle of investment is security—what is a person who wants a loan from you offering as collateral? Arkad relates again his decision to invest his money with a brickmaker who was going to buy jewels to trade. Some Phoenicians took advantage of the brickmaker's naivety concerning jewels and sold him bits of colored glass. "Guard thy treasure from loss by investing only where thy principle is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of gold. Let their wisdom protect thy treasure from unsafe investments."

5. Make of thy dwelling a profitable investment

If you pay rent to a landlord all your life, at the end of your life you'll have nothing to show for it. If you can instead pay a mortgage on a house, at the end of your life you'll have a house to show for it. "Own thy own home."

6. Insure a future income

Arkad instructs the class to prepare for retirement and to buy insurance so that their family will be provided for if they die. "No man can afford not to insure a treasure for his old age and the protection of his family, no matter how prosperous his business and his investments may be." Arkad then foretells the future creation of life insurance companies. "Provide in advance for the needs of thy growing age and the protection of thy family.

7. Increase thy ability to earn

A man must set concrete goals and work to achieve them. These goals should not only be to advance in one's career or one's position, but also to become wiser and more knowledgeable. Further, if a man respects himself, he must do the following:

• Pay his debts promptly and not stay in debt.
• Take care of his family.
• Make a will.
• Have compassion upon those who are injured and smitten by misfortune and aid them within reasonable limits; do deeds of thoughtfulness to those dear to him.

"Cultivate thy own powers, to study and become wiser, to become more skillful, to so act as to respect thyself. Thereby shalt thou acquire confidence in thyself to achieve thy carefully considered desires."


From the book The Richest Man in Babylon.

http://www.amazon.com/gp/product/0451205367?ie=UTF8&tag=lifevisions-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0451205367

This is general advice and does not take into consideration your personal circumstances.

Why do some people get wealthy?

I have spent a number of years trying to understand how some people get really rich while others don't. What I have found along my travels is that most of the reasons can be found in the book 'The Richest man in Babylon". As a tribute to what I think is an intriguingly simple presentation of financial planning concepts, I will share one concept each day.

Today's lesson deals with the principal of paying yourself first (Saving 10% of your income) and investing wisely.

A part of all you earn is yours to keep

Arkad relates that he did as advised, saving a tenth of his income for a year, then investing that money with a brickmaker who went on a journey to buy jewels to trade. He related this to Algamish, who castigated Arkad for this foolishness. "Every fool must learn," he said, "But why trust the knowledge of a brickmaker about jewels? Would you go to the breadmaker to inquire about the stars?" Algamish then said, "He who takes advice about his savings from one who is inexperienced in such matters, will pay with his savings for proving the falsity of their opinions." Arkad then saved his money for another year, and he invested it with Agger the shield maker who used it to buy materials; every fourth month Agger paid Arkad rent for the use of these funds. Arkad spent these dividends on fine clothing and regularly scheduled feasts. Algamish comments that Arkad is "eating the children of his savings" by not investing them. Arkad adjusts his behavior and when he finally meets with Algamesh two years later, Algamish is so pleased with how Arkad has taken his lessons to heart, he hires Arkad as a manager of his estate in Nippur. By continuing to save and invest wisely, Arkad relates that he became the wealthy man that he is now.



In summary do not take advice from those who are not qualified. Invest your savings along with any income that you earn in the future from these savings back into more investments.

If you are interested in buying the book click on the link below for more details.

http://www.amazon.com/gp/product/0451205367?ie=UTF8&tag=lifevisions-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0451205367




This is general advice and does not take into consideration your personal circumstances.

Should I fix my home loan?

This is a question that my client's often raise with me. The simple answer is that it depends on your personal financial situation.

The main thing that should influence your decision to fix you home loan is whether or not there is a chance you may need to break the loan before the end of the fixed period (such as selling your home). If the interest rates have gone down in the time before breaking the loan you will be required to pay a break out cost. However if the interest rates go up during that time it is unlikely your financial institution will pay you the difference which is in your favour.(Some banks actually do)

If your budget is tight and you enjoy the certainty of a fixed expense then a fixed loan will be a good option to set your budget. Also as can be seen from the graph below we are at 20 year lows in our interest rate cycle.

Nobody knows whether the rates will continue to fall but banks are predicting that they will, given that the 3 year fixed rate is lower than the current variable rate. That being said in 2008-2009 the banks had forecast a similar situation but the 3 year rate jumped considerably in a very short space of time. The cause being a rapid interest rate drop on the back of the Global Financial crisis followed by a dramatic rise in rates on the back of the governments stimulus package which improved the economy. There are too many factors to list that influence the RBA's decision to change the interest rate but generally the economic health of our economy dictates rate drops and rises. When the economy falters interest rates are typically cut and the reverse is true as our economy strengthens.

Each persons financial situation is different so no hard and fast rule applies. Typically though as interest rates continue to fall investment by companies and households grow giving rise to improvements in the economy which in turn can influence the RBA to lift rates. Some people that I see fix some of their loan while keeping the rest on variable to hedge their bets. If you are unsure about what to do with your loan speak with your financial adviser, banker or accountant to work out the best way to go.