Author: James Black

Advocacy to support the rights of older people

by James Black

Why more women need MONEY as a value and it's benefits

By Guest Author Kelly Magowan

Having been a career coach for well over a decade and worked with a diverse range of clients from various industries and professions  (men and women), more often than not it is the men who include money in their list of core values. Occasionally women will, however, only very occasionally.  Why is this?  Below I have offered some thoughts.

Values Defined

Values can be seen as blurry things. If you need a refresher then below is a great descriptor of what values are from MindTools.

“Your values are the things that you believe are important in the way you live and work. They (should) determine your priorities, and, deep down, they’re probably the measures you use to tell if your life is turning out the way you want it to.”

Values & Greed!

For women it seems that having money as one of your core values could possibly translate into the view that your greedy. Is this perception or reality?  I suspect a combination of the two.

When I coach  men in their 20s – 50’s about their values in detail and what this means to them, and how it is played out in their work and lives, more often than not money translates into them being able to provide for their current or future families. And no, it is not a luxury yacht, expensive cars or endless overseas travel. It mostly is around having food on the table, paying the bills, a comfortable lifestyle and being able to educate their children.  No doubt part of this also relates to status and a sense of self-worth.

So while certainly greed exists, I would suggest for the average person, they are looking to have a personally rewarding career and lifestyle. Is this greedy?  I don’t think so. However men are much more comfortable with acknowledging this personal value, and articulating it publicly. For many women this is not the case. In addition, men generally are better at putting a fair or inflated monetary value on their contribution in the workplace.

Is it that it is not socially acceptable for women to acknowledge (which I believe is a part of it), the other is that women are just as likely to want the same output in terms of what money as a value offers.  However, are less likely to acknowledge it – be it on a conscious or sub-conscious level. As a result this could potentially be contributing to pay inequality, with men four times as likely to initiate the negotiations as women.

My suspicion is that if you don’t talk about or acknowledge the importance of money in your life from a growth and opportunity perspective, you are less likely to find yourself in a positive money situation.

Choices

Money is one of my core values and the reasoning is not one of greed.  For me it is twofold, when I work I expect to be paid fairly for the work I do, as this is a part of me defining my self-worth. Secondly, I know that as a child of a migrant, that money provides you with choices.  My husband and I lead a far from lavish lifestyle.  There is no designer car or high end fashion. We travel rarely and when we do it is in our own state. However for me the value of money is there because like most parents we hope to be able to offer our children the best education we can. I would also like to know that when retirement comes we will lead a comfortable lifestyle where I can continue to do voluntary work within the community. Is this greedy? No, it is a case of money offering choices.

Women’s roles & money

In an age where we have more women working and more separations in families, women’s roles have extended greatly, be it the sole, equal or shared income contributor. Yet this is not translating into equal salaries.

There is an element of denial in how important money is to our lives particularly by many women. Not so much when it comes to shopping, saving or the household budget, more around how the money is earned! The spending part is easy for us all to speak about. The how and valuing how hard it is to earn is the challenge. Also, valuing our contributions and asking to be paid more when warranted!

Last week I met with a friend who is a contender for a senior role and has pitched herself in the middle range of what they are offering – even though she is brilliant and should be pitching herself at the top of the pay scale! Sadly it is a common scenario – a women undervaluing her expertise and the value she brings.

Like me, you have no doubt heard the saying ‘If you do what you enjoy and do it well the money will follow’. I am not so sure about that. Perhaps for some, however, for many others this does not translate into their reality.  I can tell you this from countless stories of women who spent their careers being loyal and working hard to deliver value to their employer/s and not being paid fairly for doing so.  So we can carry on with this mantra or we can acknowledge that the world of work and pay is not about what is fair and rewarding those who do a good job.  The onus is on us to value ourselves and to speak up.

I would love to see a mindset shift around how women define money as a value for their work and lives.  Once this occurs we may start to see some even greater traction around pay equality.

If you would like to discuss, please call us on |PHONE| or email |STAFFEMAIL|.

Source:

This article was originally published by Kelly Magowan from www.kellymagowan.com and is reproduced with the permission of Kelly Magowan.

Kelly Magowan is the author of e-book, A Busy Woman’s Guide to Salary Negotiations.

Important:

This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for their action or any service they provide.

by James Black

The Good, the Bad and the Ugly

I don’t think anyone would have predicted that 2016 would be quite as eventful as it turned out to be but while a lot happened not a lot actually changed.  To my mind, investing, particularly in emerging markets (EM), always requires a patient, judicious approach and 2016 was no different. The list of issues to worry about is a long one: Exchange rates, interest rates,  growth rates, political uncertainty – my developed market peers have a lot on their plate! If nothing else 2016 reminded markets that the issues above are not just the preserve of emerging markets. Globalisation has driven ever greater linkages across geographies and asset classes, any perceived interference therefore creates volatility which is immediately transmitted across the investment universe. With that in mind, there are a couple of things I did want to comment on.

References to specific securities should not be taken as recommendation.

Source:

by Alex Duffy, Portfolio Manager Fidelity Global Emerging Markets Fund 

This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”).  Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity International. 

This document is intended for use by advisers and wholesale investors. Retail investors should not rely on any information in this document without first seeking advice from their financial adviser.

This document has been prepared without taking into account your objectives, financial situation or needs.  You should consider these matters before acting on the information.  You also should consider the Product Disclosure Statements (“PDS”) for respective Fidelity Australia products before making a decision whether to acquire or hold the product.  The relevant PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading it from our website at www.fidelity.com.au . The issuer of Fidelity’s managed investment schemes is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. Details about Fidelity Australia’s provision of financial services to retail clients are set out in our Financial Services Guide, a copy of which can be downloaded from our website at www.fidelity.com.au. 

© 2017 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited.

Important:

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for their action or any service they provide.

by James Black

What is your aged care funding strategy?

by James Black

Your latest gig, your latest super savings

It wouldn’t be surprising if saving and investing are far from the minds of many younger people working in the burgeoning “gig economy”.

Participants in the gig economy work at a series of jobs or tasks – sometimes called a portfolio of work – rather than as part-time or full-time employees. It could be bigger and faster-growing than you may believe; largely because of the changing nature of work and the accelerating impact of e-commerce.

The Economist magazine published late last year an article, Apps and downsides, that looked at the ups and downs of the gig economy. And the magazine quoted a report by McKinsey Global Institute stating that 162 million people in America and Europe – more than 20 per cent of the working-age population – “work outside normal employment”. Almost half relied on this work for their main income.

It’s reached the point where hardly a day would go by when most of us come in touch with a member of the gig economy or “digital workforce” – that’s if they don’t work in it themselves.

A central point of The Economist article is that non-employed participants in this emerging economy or workforce do not receive all of the employment rights or benefits of those classified as full or part-time employees. From an Australian perspective, non-employees do not receive, for instance, superannuation guarantee (SG) contributions.

Employers are, of course, legally required to pay compulsory super contributions to those classified as their employees, again whether working full or part-time (with certain exceptions for very low-income earners). In turn, the self-employed in Australia are not compelled to put money aside for their own retirement.

Of course, some members of the gig economy are legally classified as employees (depending upon the arrangements and the nature of the relationships) and would receive compulsory super contributions.

Significantly, the new chief executive of the Association of Superannuation Funds of Australia (ASFA), Martin Fahy, emphasised the growth of the gig economy in his first address to his association’s annual conference late last year.

Research by ASFA, among others, has long highlighted that the self-employed overall have extremely low super savings, particularly when measured against their employed counterparts.

In an updated research paper, Super and the self-employed, published in May last year, ASFA reported that 22 per cent of the self-employed had no super in 2013-14 while most of those with some super had extremely inadequate amounts.

The fact that 78 per cent of the self-employed had some super in 2013-14 may an overly-positive impression. Their super is often attributable to small compulsory contributions picked up sometimes in the past when working for an employer – perhaps doing casual or part-time work.

Certainly, the gig economy is opening up exciting opportunities for many more individuals to gain more control over their lives and be their own bosses; whether at the beginning of their working lives, nearing retirement or somewhere in between.

A tremendous challenge for younger, self-employed members of the gig economy is to recognise the long-term rewards of voluntarily putting savings aside for a retirement that might be 40 years or so away. (These rewards include, of course, investment compounding as returns are earned on past returns, concessional tax treatment and a higher standard of living in retirement.)

Perhaps a little nudge from informed parents – to explain why regular saving makes sense even if it isn’t compulsory – may help get things rolling.

Source: 

Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2017 Vanguard Investments Australia Ltd. All rights reserved. 

Important: 

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for their action or any service they provide.

by James Black

Planning a holiday, building a house and creating a portfolio

Two quick questions. How long did you take to plan your last Christmas holidays? And how long did you take to plan your investment portfolio?

“It’s often said that many people spend more time planning a two-week vacation than they do on their investment plan,” say US-based Vanguard investment analysts Donald Bennyhoff and Colleen Jaconetti in an updated research paper.

“Experience suggests that this witticism is not far off the mark,” Bennyhoff and Jaconetti add.

“On their own, investors often ignore the important planning phase,” the analysts emphasise, “focusing instead on filling their portfolios with investments featuring attractive returns. This is akin to buying building materials for a house before the architect has drawn up the blueprints.”

Their research paper – Required or desired returns? That is the question – suggests the critical first step in creating an investment portfolio is for investors, perhaps with the help of a good adviser, is to understand their objectives and their constraints. And this should involve gaining an understanding of the often-overlooked and critical difference between required and real returns.

Their paper is written from the perspective of how advisers can help their clients develop investment portfolios based on realistic expectations for returns.

“The financial planning process should result in an estimate of the return needed to accomplish an investor’s objectives, taking into account that client’s unique goals, time horizon, current asset base, liquidity needs, saving behaviour, tax sensitivity, and risk tolerance among other factors”, they write. In other words, this is the required return.

Investors may set unrealistic desired returns based on a variety of influences including their own investment experiences (good and bad), historic returns over various periods, lists of the latest highest-performing managed funds, media reports and investment advertising.

Unsurprisingly, say Bennyhoff and Jaconetti, an investor’s desired return is often much higher than their required return. In turn, this can lead to investor taking excessive risks in the pursuit of achieving those higher, unrealistic returns.

Regular Smart Investing readers may be familiar with our discussions of the importance of distinguishing between required and desired returns. And it is well-worth revisiting this research paper in the light of Vanguard’s latest medium-to-long term economic and market outlook.

Our outlook emphasises that investors should ensure that their expectations for returns are reasonable or realistic in this low-interest, more subdued-return environment. It’s a straightforward message that goes to the fundamentals of sound investment practice of carefully setting your objectives and then working out the best way to get there with a disciplined and realistic approach.

As Bennyhoff and Jaconetti conclude: “Headlines and hyperbole can change daily. An investor’s long-term objectives, however, are far less variable.”

Source:

Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2017 Vanguard Investments Australia Ltd. All rights reserved. 

Important:

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for their action or any service they provide.

by James Black

The relationship between interest rates and housing affordability

A fall in interest rates is usually greeted with delight by homebuyers. The lower the interest rate the less the mortgage repayments on a particular house, right?

Well, maybe.

However, lower interest rates also mean borrowers can service a bigger loan. In a competitive housing market that can push up prices.

So what’s really going on? Have recent falls in interest rates been good or bad for homebuyers?

The numbers crunched

In mid-2011 the average interest rate on a standard variable home loan was 7.79% p.a. and the average price of homes across Australia’s eight capital cities was around $478,000. After paying a 10% deposit a buyer would have been facing a mortgage of about $430,000 with repayments of $3,259 per month over 25 years.

By mid-2016 average mortgage rates were down to 5.1% p.a. That’s great for anyone who took out a mortgage at higher rates, but what about new entrants into the housing market? In the intervening five years the average price of houses increased by 30.4%, so after paying a 10% deposit the mortgage needed to buy the average ‘residential dwelling’ had jumped to $560,644. Ouch!

But here’s the soother. At an interest rate of 5.1% the repayments on this much bigger loan work out at $3,310 per month – almost the same amount as for a 2011 buyer. And there’s something else to take into account. From 2011 to 2016 average weekly ordinary time earnings increased by 16.1%. With an extra $912 per month in income, the average wage earner has that fractionally higher mortgage repayment easily covered.

The upshot? On the base numbers, the average house was about as affordable in low-interest-rate 2016 as it was in high-interest-rate 2011, and more affordable when wage increases are taken into account. However, one thing this analysis doesn’t capture is the deposit. If house prices increase at a greater rate than average earnings, new homebuyers have a harder time saving the deposit they need just to get to the starting line.

The problem of averages

Average numbers hide a wealth of detail. House prices in Melbourne and Sydney have followed very different pathways to those in Hobart and Darwin. Over the past few years some cities have become more affordable as a result of lower interest rates and stable house prices. In other cities house prices have continued to boom, making it much more difficult to get a foot on the ladder of home ownership.

Really ‘affordable’?

The generally accepted rule of thumb is that a household should not spend more than 30% of pre-tax income on mortgage repayments. Any more is defined as ‘mortgage stress’.

In the example above, in 2016 someone on the average wage would have been spending 50% of his or her gross income on mortgage repayments. In other words, a single average wage earner couldn’t afford an average house.

Fortunately, for couples with both earning the average wage, the figure is a more comfortable 25%. But how much more comfortable? In the worst case, if their mortgage interest rate jumped to 6.94% p.a. immediately after taking out their mortgage they would reach the threshold of mortgage stress. Such a large and immediate jump is unlikely, but higher interest rates in the future are definitely on the cards.

Priceless advice

Dealing with the big numbers associated with buying a home can be a bit daunting. If you need help in working out a plan towards home ownership, or in managing a current mortgage and other household debt, talk to us today on |PHONE|.
 

by James Black

The toughest tasks for self-managed super

What are the hardest aspects of running your self-managed super fund (SMSF)? Is it the paperwork, all of the investment rules or the fundamental challenge of choosing where to invest your money? 

If you named choosing investments for your SMSF as the toughest task, you would be far from alone. 

A comprehensive survey for the Vanguard/Investment Trends 2016 Self-Managed Super Fund Reports, released during the past week, asked SMSF trustees to list the hardest aspects of running an SMSF. Their main responses included: 

• Investment selection (43 per cent). This percentage has risen over the past year as SMSF trustees, along with other investors, attempt to come to terms with the low-interest environment and widespread expectations for more challenging and volatile investment conditions over the medium-to-long term. (See Vanguard’s economic and investment outlook, Australian edition, from our Investment Strategy Group.) 

• Administration and regulation (40 per cent). This includes having trouble keeping track of changes in the rules. 

• A lack of time including to review and plan for their SMSFs (24 per cent). 

Interestingly, 22 per cent of respondents to the survey did not find any aspect of running their fund difficult. 

The finding that more SMSF trustees have difficulty choosing investments would also partly explain another finding from the survey that a large proportion of SMSFs recognise that they have unmet needs for advice. 

An estimated 255,000 SMSFs – out of 572,000 funds at the time of the survey – had unmet needs for advice. This is the largest number recorded by Investment Trends over the years. 

“Advice needs most often relate to retirement,” the report comments, “though more [SMSFs] are citing investment-related advice gaps.” 

For instance, an estimated 146,000 SMSFs have broad unmet needs for advice on retirement strategies while 139,000 have unmet needs for investment advice. And an estimated 100,000 funds have unmet needs for advice on tax optimisation. 

Drilling down on more specific unmet needs for advice, SMSFs recognise their need for advice on inheritance and estate planning (an estimated 61,000 funds), SMSF pension strategies (57,000), age pension and other social security entitlements (55,000 funds), investment strategy/portfolio review (52,000), identifying undervalued assets (51,000), Exchange Traded Funds (46,000), offshore investing (43,000), trying to ensure members don’t outlive their savings (42,000 funds) and protecting assets against market falls (39,000). 

The finding that 44 per cent of Australia’s SMSFs recognise that they have unmet needs for professional advice is extremely positive. This should lead to more fund trustees working with advisers to set appropriate asset allocations for their diversified portfolios, checking on the adequacy of their retirement savings and setting suitable retirement income strategies for retired members.

Source

Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2016 Vanguard Investments Australia Ltd. All rights reserved. 

Important

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for their action or any service they provide.

by James Black

A popular retirement career – but can you make money from it?

Ever wanted to be a writer? Retired and thinking of new ways to earn money? Published author, Karen Turner, shares her experiences, navigating the unpredictable but satisfying world of professional writing.

They say everyone has a story to tell – but can you make a living from writing? Truth is, it’s very difficult to live solely on royalties from book sales. Some people do, but for mere mortals whose names are not J.K. Rowling, here are some cold, hard figures:

My books, Torn and Inviolate, retail for $24.95. I receive roughly $8.00 per sale, after the publisher, retailer, distributer et-al take their respective shares.

From my $8.00, I pay income tax and superannuation.

There are online sales too. eBooks retail for less, meaning my royalty is lower.

Question: What’s the quickest way to upset a writer?

Answer: Tell her you loved her book so much you lent it to your friend. Arrrgh! If you love the book so much buy it for your friend!

As a fiction writer, I make a good living writing non-fiction. Here are a few ways to do this:

• Become a technical writer: large organisations regularly pay good writers to draft technical or business documents.

• Write a business book: perfect if you have an area of expertise.

• Blogging: writers post articles about any topic you can shake a pencil at: travel, food, sport, etc. Some writers even blog about writing – ahem. Bloggers earn money by selling advertising space or reviewing products and services.

Retired people or those not reliant on regular income often write their memoirs or family chronicle. Others undertake to record their town or suburb’s local history. These can be rewarding, but generally not profitable.

Just remember: if you’re earning money the tax office needs to know. I run this as a business so I have to manage its affairs, e.g. invoicing clients, lodging tax returns, completing BAS, etc. Even authors need to seek good financial advice. A book can take years from the initial draft to publication so planning ahead is imperative.

I am often asked about how to get published.

Traditional – pitching to publishers/agents can be incredibly demoralising. Rejection will become your middle name – accept it! Even J.K. Rowling was regularly rejected; persistence is key. If you are offered a contract, don’t rush into signing without fully understanding the implications. Bodies like the Australian Society of Authors provide contractual advice.

Independent – Self-publishing can be expensive – eBooks, less so – but Indie publishing allows you complete control. Do your readers a favour though: have your manuscript professionally edited. Even great writers make errors!

Ready to go? Even if you’re a good writer, you can’t go wrong by doing a course. Stick to better-known institutions like your local TAFE, or check out the Australian Writers’ Centre website, www.writerscentre.com.au.

The best advice I can offer is: start. Once you’re into it, stopping will be the hard part!

Writing may not the most lucrative career, but it’s one of the most satisfying – I love my job!

This article has been written by Australian author Karen Turner. Karen’s books, Torn and Inviolate are available from online bookshops and your favourite downloadable eBook site. She is currently writing the third (and final) book in the series.

See Karen’s website for further details of where to buy her books www.karenturner.com.au and receive a free chapter sample of Torn.

by James Black

Take five with Lucy Liu, Paraplanner at Advisersure

by James Black