21 Money Tips for 2021

21 Money Tips for 2021

21 Money Tips For 2021

cyber-security-laptop

2020 has been a year to remember (or maybe forget). With 2020 coming to a close, our attention now turns to 2021.

With the New Year comes New Year resolutions with many of these revolving around money.

Here we have listed 21 money tips for you to help master your money in 2021.

1. Plan your spending

Budget is a bit of a dirty word and doesn’t generate much excitement. Much like a strict diet.

However, a spending plan is different. A spending plan is a plan on how you will spend your money. This means allocating parts of your income to different areas and this includes the fun stuff like eating out, clothes and gifts.

By having set allocations, you can spend guilt free knowing that you have the money allocated where it needs to be.

2. Surplus – The Key to Long Term Wealth

After creating your spending plan, you will see that you will either have enough income to cover all your expenses and have some left over (surplus) or you won’t and you will be losing money (deficit).

If you have a spending plan deficit, this means you are living above your means and are accumulating debt. Over the long term, this type of debt can be a huge drag on your finances.

Having a surplus in your spending plan gives you options. These options are the key to building wealth as it is this surplus that you can put towards things such as a home, investment property and/or share portfolio.

3. Put yourself first

This also works with your spending plan. Plan to pay yourself first and then allocate the rest of your income. Most people do this the other way around whereby they spend first and pay themselves whatever is left over (this can often be nothing).

If you pay yourself first, you will begin to adjust your other spending in line with the reduced amount available while knowing that you are putting away money for your future.

4. Be aware of trade offs

You only have a certain level of income which can be allocated around all of your expenses.

Unfortunately, this means that in order to buy one thing, you might have to give up another.

For example, say you want to buy a new pair of shoes but you also want to buy a new bike but only have enough spending money for one. You need to make the decision of which one will be better for you long term and bring you the most joy.

We make these trade off decisions all the time without being aware of them. By being aware of the trade-offs, you can make better decisions with your money.

5. Good Debt versus Bad Debt

Learning the difference between good and bad debt can play a massive role in building wealth.

Understanding that not all debt is bad is the first step.

Debt that helps you make money such as debt on an investment property is considered good debt as you are borrowing someone else’s money and using it to buy something which will hopefully grow in value and earn you an income.

Avoiding bad debt is just as important. Bad debt includes things such as credit cards and personal loans where you have used someone else’s money to buy something which doesn’t earn you an income or won’t grow in value. In effect, you are likely paying a considerable amount of interest on things that provide very little value.

6. Be SMART – Set Money Goals

It is proven that actually setting goals and writing them down increases your chances of achieving that goal.

When setting goals, make sure they are SMART! (Specific, Measurable, Achievable, Realistic and Timely).

These types of goals work great when trying to save up for something such as a home deposit, an overseas holiday or a wedding. They also work great for paying down credit card debt and car loans.

7. Invest in yourself

Your greatest asset is you.

By investing in your education and health, you will have the ability to earn a greater income as you will be more valuable to employers.

This increase in income can then allow you greater opportunities in the future.

8. Unsubscribe

Netflix, Stan, Spotify, Disney+, your gym membership and the home utilities are just some of the things which can now be set up to be paid automatically from your bank account.

While this makes paying your bills easy, it can also mean you are paying for things you no longer use. It can also lead you to being out of touch with how much everything is costing.

Make sure to check what is coming out of your account each month and if you are not using something, cancel the direct debit. The money is better in your pocket than someone else’s.

9. Compare, compare, compare

While you check your direct debits, why not also compare electricity and gas providers to make sure you are getting the best deal.

There is a heap of comparison sites now such as Compare the Market and iSelect, which can help you sort through all the different providers.

And while you are at it, why not also compare your mobile and internet plan.

More often than not, if you go to your current provider and tell them you have found a better deal, they will try and match it. This is because it is much easier to keep a current customer than find a new one.

10. Are you covered?

It is important that your insurances are regularly reviewed to ensure they are still relevant to your needs. You may be over or underinsured depending on your circumstances.

This goes for your home, contents, car, life, health, income protection and any other insurance cover you may have.

11. Your money, your super

Take the time to actually look at your superannuation statement and see what is happening. Have you made or lost money this year? What is considered good performance this year? How is your super invested? Do you have insurance in your fund?

Taking ownership of your superannuation is one of the smartest things you can do when it comes to your personal finances.

12. Invest!

If you have some surplus cash and are not sure what to do with it, it may be time to consider investing.

Bank deposits are earning next to nothing and when you take into account inflation, it is likely you are actually losing money on this cash.

If you are unsure how to do this, check out Tip 21.

13. Check your home loan rate

Home loan rates are at record lows and the Reserve Bank is not looking to raise rates anytime soon.

The banks do not always pass on these rate cuts to their customers. It is up to you to make sure you are getting the best possible deal.

Variable home loan rates are now sitting between 2-3 per cent so if your rate is greater than this, you may be paying too much.

While it can be painful to refinance, the effort could literally save you thousands.

If you need help with this, have a look at Tip 18.

14. Should you fix your rate?

While checking your home loan rate, you may want to consider fixing some of this and locking in a great rate.

Some fixed rates are now below 2%!

Fixed home loans do come with certain conditions however so ensure you understand all the terms around this before locking it in.

Tip 18 can also help with this.

15. Are you using an Offset Account?

An offset account works like a regular saving account but is linked to your home loan.

Any money in an offset account reduces the amount of interest paid on your loan. A no-brainer if you have a home loan and cash sitting in the bank.

16. Thinking of an Investment Property?

Research is key. And not just the property itself but everything else that goes with it.

  • How do you purchase it – in your own name? a company? trust?
  • How do you structure your debt?
  • How will it impact my cash flow?
  • Does an investment property actually suit your lifestyle?

Making sure you understand all this before committing to a property is crucial. Once the property is bought; it may be too late.

Avoid making a very expensive mistake and take the time before you make the decision.

17. What about a Buyer’s Agent?

A Buyer’s Agent is a professional who guides a buyer through the process of purchasing a home.

A Buyer’s Agent has a legal obligation to protect the interests of the buyer and work to ensure they’re getting the best deal possible.

Most importantly, Buyer’s Agents work with property and other agents every day. If you are going to spend hundreds of thousands of dollars, you need to make sure you have someone looking out for you and choosing the best property for your circumstances.

Buying a property is not as simple as looking at realestate.com.au and picking something that looks like a good investment.

18. Should you use a Mortgage Broker?

Anyone can check the websites of different banks, compare rates and apply for a loan. So, using a mortgage broker is not a necessity.

However, have you considered;

  • How best to structure your loan?
  • Which lender allows for new home construction?
  • What are the risks of going with a smaller lender?
  • Should you stick with your current bank for the ease of keeping all of your accounts in one place?

A good mortgage broker will help with all of these things and will ensure you get the best loan possible for your circumstances.

If you are going to spend hundreds of thousands on a property you should make sure your loans are set up in the best possible way.

19. Shares or Property?

Firstly, both are great vehicles for building wealth.

Neither one is better than the other. Each provide their own advantages and disadvantages.

Shares allow you to start off with a smaller initial investment and you can easily add money to your portfolio on a weekly, monthly or annual basis with minimal fuss. You can also create a very diverse portfolio very easily.

Property on the other hand requires a larger initial outlay and likely requires borrowed money which increases your risk. It is also much harder to create diversity as you are likely only able to buy the one property at a time and if the chosen property doesn’t perform well then, your whole portfolio doesn’t perform.

However, the fact that you can borrow money to buy property is one of its great benefits. This allows you to leverage and have more money working for you. By having more money working for you, you can accelerate your wealth building.

The choice often then comes down to what you want to achieve through investing.

Better yet, if you can do both, you can enjoy the benefits of both and have a nice diverse investment portfolio.

20. Educate yourself

The more you learn about money, the better you will be at managing it. It sounds simple, but lots of things about money are not taught at school and often we only learn about these things through our mistakes.

Educating yourself on all thing’s money can help you make less mistakes and help better manage your finances moving forward.

If you have made it this far in the article, you have already started the education process. Well done!

21. Speak to a Financial Planner

Money is too often put into the too hard basket and forgotten about or we say we will get to it later but never do.

Everyone now leads busy lives and this can lead to money never being a priority.

Why not outsource your money management to a Financial Planner?

While a Financial Planner costs money the value they provide is so much greater. They will ensure you get the best possible outcome from your circumstances and are likely to cost a whole lot less than the price of doing nothing.

Imagine how much better off you will be in 5-, 10-, 20- or 30-years’ time by having someone looking out for your money on your behalf.

Take the stress out of money and speak to a trusted financial planner.

Need more help or information?

Click the link below to contact us at Plus 1.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

plus-1-logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

Has Joe Biden Winning The Election Been Good Or Bad For Investment Markets?

Has Joe Biden Winning The Election Been Good Or Bad For Investment Markets?

Has Joe Biden Winning The Election Been Good Or Bad For Investment Markets?

cyber-security-laptop

The race for the US Presidency caused a raft of news headlines and was filled with a bunch of controversy.

On the night, the favouritism swung back and forth between Biden and Trump with the result not actually being known until some days later.

While Joe Biden was announced the winner, Donald Trump has yet to actually formally concede.

But what does all this mean for you and your investments?

It is a well known that in the lead up to a US election, the share market becomes extremely volatile.

There are a number of reasons for this with the major one being uncertainty.

Uncertainty causes investors to be more nervous than usual. When investors are nervous, there can be a lot of buying and selling happening in the market which causes the large fluctuations in market and company values.

Elections cause this uncertainty because generally speaking, both presidential candidates have opposing policies and ideas. Some of these ideas are favourable for businesses and investors while others are not. Therefore, investors are trying to figure out who will win and what businesses the result will impact the most.

So, how has the market performed since Biden’s election win?

Investment Market

November 7

(Election Day)

November 24

Gain/Loss (%)

Annualised Return (%)

Dow Jones

(US Market)

28323.40

30046.24

6.08%

87.77%

All Ordinaries (Australian Market)

6395

6855

7.19%

109.62%

As the above table shows, the market has responded extremely well in the couple of weeks post Biden’s win.

Both the US and Aussie markets have rose by more than 6% in a matter of two and a half weeks. In reality, you are more likely to see these types of returns over the course of 12 months, let alone a couple of weeks!

In fact, if you were to annualise these returns, your returns are 87.77% for the US market and 109.62% for the Aussie market. This means, at the current rate of growth in the Aussie market, you would more than double your investment within a year!

In no way am I suggesting that the growth over the last two and a half weeks will continue at the same rate. The above figures are purely to illustrate just how well the market has responded to the US election result.

Of course, there are likely to be other factors driving markets higher besides the election result, however, what this does show is how certain events can substantially influence markets, even in the short term.

The Dow Jones (US market) is at an all time high at the time of writing. This is despite COVID-19 still being rampant across the United States.

Where markets will go moving forward is anyone’s guess. However, what is clear is that those who sold out of the share market earlier this year when COVID-19 panic was at its highest have missed out on substantial gains in their portfolios.

If you would like to contact us to learn more or discuss your own investments, feel free to get in contact with us on (03) 5833 3000, or via email at wealthadvisors@plus1group.com.au

Need more help or information?

Click the link below to contact us at Plus 1.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

plus-1-logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

The US Election – What does it mean for your Investments?

The US Election – What does it mean for your Investments?

The US Election – What does it mean for your Investments?

cyber-security-laptop

The lead up to this week’s US Presidential Elections is certainly not like any lead in to an election we have seen before. Enough said on that.

The last 20 years in particular has provided many changes to the investing landscape and we can best describe the changes from more “Traditional” (for the sake of a word) investing to the “Changed World” of investing. History has provided the following.

“Traditional or Historic Investment Environment”

  • US led the world almost solely.
  • Bank stocks (big 4 in particular) were the main staple of Australian investors.
  • Shares exposure typically home bias and little international exposure except for some superannuation funds exposure.
  • Resource stocks like BHP and Rio Tinto seen as must haves in a lot of portfolios.
  • Term deposits 3% to 5% pa rates of return generally the normal.
  • Home loan rates hovered around 6% to 8% pa.
  • Inflation closer to average of 3% per annum.
  • Japan previously the second powerhouse.
  • Federal Government in the main mad on ensuring actions towards budget surpluses and budget deficits seen as a no/no at least in the longer term.
  • Own home ownership seen as family’s biggest assets.
  • World leaders in some ways stereotyped individuals (not too flamboyant) or more stable in their approach.

“Changed World Environment”

  • China emergence as a powerhouse
  • Technology incredibly entrenched in our World
  • Historically low interest rates for savers – the search for good/safe yield goes on and getting harder and harder
  • Historically low home loan and investment property loan rates
  • Home loan ownership seen as very difficult for many due to capital city prices despite low interest rates.
  • Superannuation fast emerging as largest asset for some families
  • America in some ways seen as lost the plot.
  • Non-traditional type stocks providing the best growth for investors.
  • Tech and health care stocks at the forefront
  • Individuals can have access to every share in the World with as little as $1,000 and push of a button.
  • Multi trillion-dollar government debts now the norm throughout the World with returns to surpluses (and no long-term government debt) seen as 30 to 50 years away. Acceptance of this as the new norm.
  • The vast methods and sheer magnitude thereof of the Media can almost “kill” or bring down anyone or action they want to
  • And of course, last but not least by any means this year’s pandemic

What Does It All Mean?

US Presidents will come and go and there will generally be some disruption to markets of some sort – positive or negative or just the usual volatility a little more exemplified until the dust settles – a few weeks or months later.

We might say that this time it is different but there is always an argument for that case. History and time will tell – any prediction is just an opinion – no one really knows.

When it comes to growth investments (essentially shares – of all sorts) we must stress that when the dust settles (even in this NEW CHANGED WORLD) it will always be that shares in good companies that have good products, sound management, are reasonably priced and provide good market exposure will continue to be the way forward in managing share portfolios. This applies with your own ordinary investments, superannuation monies or pension funds.

It is the same with investment properties – location, location, location – being the main catalyst as well as ensuring the property is well priced and well presented.

At Plus1 we are available at any time to discuss issues of this nature with due regard to your investments or financial planning generally.

Need more help or information?

Click the link below to contact us at Plus 1.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

plus-1-logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

Horticulture Covid 19 Guidelines

Horticulture Covid 19 Guidelines

Victorian Farmers Undertaking Horticultural Work Must Have A COVID-Safe Plan In Place

cyber-security-laptop

With the summer months on the horizon, the harvest season is about to commence for many Victorian farmers, however this year will be very different due to Covid 19.

Victorian farmers undertaking horticultural work with a seasonal workforce and labour hire providers, must have a Seasonal Horticulture Workers COVIDSafe Plan in place along with additional attachments that relate to seasonal employees.

The Seasonal Horticulture Workers COVIDSafe Plan template is available below along with the full guidelines and fact sheet to assist employers understand their additional obligations.

The guidelines aim to support the horticulture industry and outlines how harvest can be undertaken in a COVIDSafe way to protect seasonal workers, limit the potential for transmission of Covid19 between workers and protect agriculture businesses and our regional communities.

Please refer to the below documentation;

More information can be found at vic.gov.au

Need more help or information?

Click the link below to contact us at Plus 1.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

plus-1-logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

Info and Tips – 2020 Federal Budget

Info and Tips – 2020 Federal Budget

Info & Tips – 2020 Federal Budget

boardroom-meeting

Recently the Federal Government outlined the budget for the upcoming year. Below we’ve outlined the major changes and some tips on how to make the most of the announcements.

For Business & Staff

Instant tax deduction for asset purchases

If your business turnover is less than $5 billion per year, you will be able to write off the full value of any eligible asset you purchase after budget night and before June 2022. This is an expansion of the instant asset write-off, which was only available to small and medium businesses. This provision previously had a limit of $150,000 – the limit is now removed.

Tax Cuts

  • The Government is bringing forward the second round of tax cuts
  • These cuts are planned to be backdated to July this year
  • The Low- and Middle-Income Tax Offset of $1,080 will remain for another year

What does this mean if you employ staff?

  • Employers have until November 16, 2020 to implement updated tax table and begin withholding the reduced PAYG amounts from staff wages
  • Cloud based systems such as Xero, Quickbooks Online and MYOB Essentials should update their tax tables automatically
  • If you are using desktop software, you will need to check with your software provider to ensure you are up to date. You may need to upgrade and update your files and software

What does this mean for you personally?

  • If you’re earning between $45,000 and $90,000, you will end up with an extra $1,080
  • If you’re earning more than $90,000, you will take home up to an extra $2,565

PRO TIP: Put your tax cut to good use! Some ideas on how best to use your tax cut are included at the bottom of this article

JobMaker

The Government will give hiring credit of $200 a week to employers who hire anyone aged 16-30, and $100 a week for any worker aged 30-35. New employees must have been on JobSeeker and be given at least 20 hours of work a week

Financial Planning

Superannuation

  • Performance Testing – From July 2021, all MySuper products will be subjected to an annual performance test and if the fund underperforms, members must be notified by the fund.
  • YourSuper – The Government is releasing an online tool which will help you compare the fees and returns on super funds to help you make an informed choice
  • No more multiple accounts – When changing jobs, no longer will employers need to set up default accounts for new employees. Employers will now be able to access your existing super details directly from the ATO. This will reduce the amount of super funds set up and fees paid by employees.

PRO TIP: Don’t wait for the Government to tell you if you are in a poor performing super fund. Compare your super today and get in touch with our Financial Planning team to help you if needed.

Older Australians

  • Cash payments – Two more cash payments of $250 for a range of welfare recipients, including pensioners and disability carers; the first from December 2020 and the second from March 2021
  • Home Care – $1.6 billion spend over the next four years to introduce 23,000 additional home care packages, giving people the option to keep living at home.

PRO TIP: Make sure you regularly review and report your assets and income with Centrelink. A reduction in assets and income can make a significant difference to your payments.

First Home Buyers

The First Home Loan Deposit Scheme has been expanded to give another 10,000 first home buyers an opportunity to get into the property market with a deposit as small as 5%. Caps on prices have also been raised by as much as $250,000 depending on the area.

PRO TIP: Remember a small deposit of 5% means you will need to borrow 95% of the property value which will lead to you paying more interest over the life of the loan. Further, a 5% deposit does not leave much of a buffer if property prices fall. This can lead to you having negative equity (where you owe more than your home is actually worth).

Using your tax cut to maximise your savings goals

The below shows how you could use your personal tax cuts to maximise your savings goals

Mortgage

If you had a mortgage of $400,000 with an interest rate of 3.00% over a 30-year period

  • An extra $1,080 per year (paid monthly) results in your mortgage being paid more than two years earlier and $18,266 in interest savings
  • An extra $2,565 per year (paid monthly) results in your mortgage being paid nearly five years earlier and $38,545 in interest savings

Investment

You invest your tax cut of $1,080 per year into an investment account earning 8% interest over 10 years

boardroom-meeting
  • Total Amount Invested Over 10 Years – $10,800
  • Total Interest Earned Over 10 Years – $5,471
  • Total Savings – $16,271

If you invest your tax cut of $2,565 per year into an investment account earning 8% interest over 10 years

boardroom-meeting
  • Total Amount Invested Over 10 Years – $25,650
  • Total Interest Earned Over 10 Years – $12,994
  • Total Savings – $38,644

      Superannuation

      If the idea of a tax cut sounds good, you could take this further again and put this money into superannuation and claim a tax deduction.

      If you are earning between $45,000 to $90,000, and you contribute your tax cut of $1,080 to superannuation, you will pay 15% tax on the contribution ($162) rather than your marginal tax rate of 34.5% ($372.60) if you earnt this money outside of superannuation. A tax saving of over $200.

      Further, if you are earning more than $90,000, and contribute your tax cut of $2,565 into superannuation, you will pay $384.75 tax on the contribution. Compare this to earning the $2,565 outside superannuation where you will be taxed $1000.35. This is a tax saving of $615.60.

      It is important to remember however that this money will be locked away for retirement so this needs to be considered prior to making and contributions.

      Always speak to a financial professional before making any of these types of decisions.

      *Tax rates include the Medicare Levy of 2%

    Need more help or information?

    Click the link below to contact us at Plus 1.

    Open Hours

    Monday to Friday
    8:00am to 5:00pm

    Closed Public Holidays

    plus-1-logo

    If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

    Contact Us

    27 Welsford Street
    Shepparton, VIC 3630

    T: (03) 5833 3000
    F: (03) 5831 2988
    Email Us

    What Do You Want?

    What Do You Want?

    What Do You Want?

    cyber-security-laptop

    We have all heard the famous saying “Failing to plan is planning to fail” and this has never been truer in this current environment of uncertainty.

    Having a plan in place helps you to navigate through the uncertainty and keeps you focussed on the things you want and the steps on how to get there.

    Perhaps something that we don’t often consider however is actually clearly defining what we want.

    More often than not, we go through life by simply going through the motions and not actually considering where we want to go.

    Putting a plan in place is great, but ultimately, it needs to actually lead somewhere. 

    For those of you who have seen Alice in Wonderland, you may recall the scene where Alice comes to a fork in the road and she needs to decide which way she will go.

    “One day Alice came to a fork in the road and saw a Cheshire cat in a tree. ‘Which road do I take?’ she asked. ‘Where do you want to go?’ was his response. ‘I don’t know,’ Alice answered. ‘Then,’ said the cat, ‘it doesn’t matter.” – Lewis Carroll, Alice in Wonderland

    We all come across our own “forks in the road” during life and if we don’t know what we want or where we are going, it doesn’t really matter what we do because we don’t have a desired destination.

    This is why identifying goals and putting a plan in place is so crucial. A plan acts as a roadmap towards where you want to be and what you want to achieve.

    We help our clients find out what is truly important to them and then create a plan to help them get there.

    Of course, plans rarely go exactly as planned. This is why we continue to act as a guide for our clients along the way so that when forks in the road appear, we can help them decide which way is best.

    Need more help or information?

    Click the link below to contact us at Plus 1.

    Open Hours

    Monday to Friday
    8:00am to 5:00pm

    Closed Public Holidays

    plus-1-logo

    If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

    Contact Us

    27 Welsford Street
    Shepparton, VIC 3630

    T: (03) 5833 3000
    F: (03) 5831 2988
    Email Us