A few interesting facts about retirement.

Given the financial demands of everyday life, planning your retirement may be a relatively low priority. You may also think that you have plenty of time to plan. But before you put off planning for your retirement any longer, here are some key facts you should consider.

Your retirement could last 30 years or more

A male currently aged 65 has a future life expectancy of 19 years and for females currently aged 65 it’s 22 years. But these are just the averages and they are increasing steadily. As these trends continue, your retirement could stretch to three decades, or maybe even longer.

You shouldn’t rely on the age pension

The full single rate age pension only provides around 25% of average weekly male earnings. What’s more, qualifying for the age pension may become more difficult in the future, given our population is ageing.

You shouldn’t rely on an inheritance

Your parents may end up spending all their savings and may even need to downsize their home to help make ends meet. So, if you’re relying on an inheritance to fund your retirement, you could be disappointed.

You might not have enough super either

With some of your money going into super through compulsory employer contributions, you’re off to a good start. But assume that those employer compulsory contributions will mean you have enough super to get you through your retirement and you could be in for a nasty surprise. Research conducted by Rice Warner Actuaries revealed that Australia has a shortfall in super of close to $1 trillion, which means many Australians may not have enough super to fund their retirement.

Start planning now

Thankfully, with a bit of preparation, it’s possible to plan for a long and comfortable retirement. Strategies like salary sacrificing into super, making lump sum contributions or using a transition to retirement strategy, are all smart strategies to consider to boost your super, and some of them generally have tax benefits too. It’s also possible to use your super to start a pension that pays you a regular income. Some pensions even guarantee to pay you an income for the rest of your life, negating the risk of outliving your savings.

Talk to a retirement planning expert

The best way to see how your retirement savings are currently tracking, and find out what you could do now to increase your super for retirement, is to speak to a financial adviser. They can help you set realistic goals and put a plan in place to achieve them.

To find out more, contact us today.

Is a Self Managed Super Fund right for you?

Self-managed super funds (SMSFs) are the largest and fastest growing super sector in Australia and for many good reasons. But before you start an SMSF, it’s important to weigh up both the advantages and disadvantages and consider seeking advice to determine whether an SMSF is right for you.

---

The Advantages

SMSFs can offer a number of features and benefits generally not available with other super options.

More investment control

You can establish your own investment strategy and directly control where and how your super is invested.

More investment choice

You can select from a wider range of investments including all listed shares, some unlisted shares, residential and business property, and collectables such as artwork, stamps and coins.

One fund for the family

You can set up a fund for yourself and up to five other people and consolidate your super balances. This could enable you to invest in assets of higher value than if you set up a fund with fewer members, achieve greater estate planning flexibility, and reduce fund costs.

Borrow to make larger investments

Your SMSF could make a larger investment in assets such as shares and property by using cash in your fund and borrow the rest.

Tax savings

With SMSFs you can take greater control over the timing of tax events such as starting a pension without triggering capital gains tax when your superannuation assets move into pension phase. You may also have the option of transferring certain assets that you own into your SMSF.

Greater estate planning certainty and flexibility

You can nominate who you would like to receive your super when you pass away without having to meet some of the constraints that apply to other super funds.

---

The Disadvantages

While an SMSF can offer greater opportunities to take control of your retirement savings, there are some potential disadvantages you should also consider.

Higher costs for lower balances

SMSFs generally only become cost-effective if the fund has $200,000 or more invested. This is particularly true where you outsource and pay for most or all of the fund administration.

Greater responsibility

When you set up an SMSF, you and any other fund members will generally need to be trustees (or directors of the corporate trustee) and will be responsible for meeting a range of legal and other obligations.

Harsh penalties for breaches

The Australian Tax Office has the authority to impose various treatments to deal with SMSF trustees who have breached super laws. These include:

•  requiring trustees to complete certain educational requirements within certain time frames

• disqualifying an individual from acting as a trustee or director of a corporate trustee

• imposing significant administrative penalties on individual trustees and directors of corporate trustees of up to $10,800 per breach

• applying through the courts to impose civil and criminal penalties, and

• giving notice to a trustee to freeze the SMSF’s assets where it appears that their conduct is likely to adversely affect the interests of beneficiaries.

Time consuming

You will need to have enough time, knowledge and skills to manage your own super and meet your legal and other obligations.

---

 Seeking advice

You should seek professional advice or guidance from a financial adviser when deciding on the best superannuation solution for you. It is recommended that you also seek advice from a registered tax agent to determine the tax implications for you before setting up an SMSF.

To find out more about the information in this article contact us today.

Our Investment Philosophy

Intuitive Wealth’s Investment Philosophy

Our Wealth Management Principles

Intuitive Wealth has a set of principles that guide how we advise clients and invest their savings.

1. Time in the market beats timing the market

   Even investing experts find timing the market hard to do on a consistent basis. A more important consideration is to simply be invested for a long-term time horizon and across a broad array of investment assets.

   We help clients achieve long term returns without needing to time the market and pick individual stocks.
   

2. The less you pay, the more you get

   Simply put, the less you pay for you investment services, the more money is left for you to keep.

   We use low cost index funds to reduce investment costs whilst maintaining a diverse market exposure.
   

3. Stick to a plan and be disciplined
   It is our job to help our clients manage their emotions and keep them on the right course.

   At Intuitive Wealth we ensure that our clients investment strategy is appropriate for their risk capacity and goals. We then continuously educate to ensure that they do not make poor investment decisions such as over-trading, chasing returns or panicking when the market falls.
   

4. Rebalancing reduces risk

   All asset and sectors of the market go through periods of strong performance followed by weak performance. These cycles are difficult to predict.

   Rather than guessing when markets are cheap or expensive, we periodically rebalance portfolios to reduce risk after periods of strong performance.
   

5. Avoid market hype

   There are three considerations to make when investing; return, risk and cost. Everything else is just marketing. The investment industry goes to great lengths to add extra complexity and choice in order to justify higher fees.

   We help clients distinguish between sensible investments and marketing hype.

6. Alignment of adviser and client

   Intuitive Wealth are holistic financial & investment advisers. We are licensed independently to any bank or financial institution meaning that we have no obligation to recommend internal funds. Our only objective is to recommend the most suitable product to our clients.

   Intuitive Wealth is paid only by the client and does not receive additional commissions for the investment products we recommend. As such, our clients can be confident that our only objective is to grow the wealth long term.

Our Investment Philosophy

• Asset allocation drives the majority of portfolio returns and risk, so it is of paramount importance.

• Low cost index funds provide superior after-fee returns to actively managed funds engaged in stock picking or market timing.

• Markets move in cycles so after a period of strong returns in one asset it is prudent to rebalance into others to lock in profits and reduce risk.

• When it comes to investing the only factors are return, cost and risk. Everything else is just marketing.

How Intuitive Wealth invest?

At Intuitive Wealth we strongly believe that the most important decision is choosing how much to invest in each asset class, rather than trying to pick winners within each asset. Diversification willows your portfolio to reduce the amount of risk you need to take to achieve higher returns, and ultimately reduces the volatility of your returns.

We use use Modern Portfolio Theory to construct our clients portfolios, a framework that has been recognised by a Nobel Prize in Economics in 1990.

Can active fund managers beat the market?

It is now difficult to be a ‘stock picker’ because there is an over saturation of smart investment managers trying to beat each other.

Today 90% of shock market trading is done by professionals. In most cases the buying and selling of shares are done between two investment managers. This is ultimately a ‘zero sum game’ whereby there is winner for every loser in a trade. On average, fund managers earn the benchmark market return less their fees.

Today their are more than 1 million professionals actively managing money. New information gets reflected almost instantaneously into stock prices. The market is efficient and has been the case since the 1990’s. This is why almost all professionals have had worse performance than the market index since then.

This doesn’t mean some professionals don’t have a good run with performance. However, history shows that good periods of performance are often followed by a period of poor relative performance. Fund managers struggle to stay consistently at the top for an extended period of time and investment styles come in and out of favor.

As such, we do not see the value in using fund managers as their performance (after fees) does not out-perform the market index - Their fees are not justified!

How is Intuitive Wealth different to other advisers?

Disciplined Investing

We are less risky than the average active fund manager or adviser because we do not try and outperform the market. Instead, our investment strategies track a broad range of diversified assets that generate long term returns.

Our clients have their investments periodically rebalanced to reduce the risk of having an over allocation of a particular asset class. We help clients understand their own investing behavioral biases and avoid the common pitfalls of over-trading, paying higher fees, chasing returns, or panicking when market falls.

Lower Costs

The funds management industry as a whole has achieved average performance, so paying them large fees destroys your long term earnings potential. Paying 2.5% in costs each year means that 75% of your potential returns are being eroded away over your lifetime.

The investment management industry lives off the the brokerage costs that are earned when you buy and sell out of stocks. Active fund managers and advisers want you to constantly be turning over your portfolio because it is how they can justify their large management fees.

But every cent you pay comes out of the returns you could have earned for yourself.

We believe that investing in low cost index funds is a more prudent strategy than stock picking. The reason why is that we believe our clients should keep their management costs as low as possible so that they have a higher likelihood of achieving long term investment success. The funds we recommend charge around 0.25% per year which is 0.75% less than most funds managers. This means that more money can be kept in our clients pockets.

No Conflicts of Interest

Intuitive Wealth has an independent relationship with any of the funds we recommend. We do not earn fees from these funds, so you can be sure that our recommendations are in your best interest. Most financial advisers charge a percentage based fee for managing your investments. However, we believe that it is more appropriate to charge a fixed fee based on the time and complexity of the work that we do. For those with larger investment balances, this will mean considerable savings in investment management fees each year.

If you are interested in starting your investment journey, speak to an Intuitive Wealth adviser today.

Insurance Fundamentals

Protecting What’s Important

“When it comes to insurance the old adage, ‘better safe than sorry’ rings true. 
We don’t like to think about getting sick or even worse, the death of a loved one, but when these things happen, insurance can help alleviate some of the financial stress. Insurance is about managing risks so you can protect yourself, your loved ones and your lifestyle if the unexpected happens. 
The tricky part can be figuring out your insurance needs and then how much you need to be insured for.”

— Matthew Kyroussis, Financial Adviser at Intuitive Wealth

Why you need life insurance

The day you’ve been waiting for has arrived; your brand new car is ready to take home. The first thing you do before driving it is get it insured. There’s no way you would risk anything happening to your new car!

This is a common scenario. Most of us don’t think twice about insuring our possessions, but what about protecting the most important asset – you? If you were in an accident and couldn’t work, how would you and your family afford your medical bills, on top of your mortgage and daily expenses?

While no-one expects to encounter misadventure, being prepared for adversity can help you protect against financial hardship. Insurance is an important part of any financial plan. In fact, wealth protection is often easier and cheaper than wealth creation. A comprehensive financial plan is as much about protecting wealth as it is growing it.

Life insurance is one of the best ways of protecting what’s most important to you. However understanding it all can be time consuming and complicated. Let’s simplify things and look at the basics.

The under-insurance epidemic

One of the biggest security threats facing Australians is the under-insurance epidemic. The majority of Australians simply don’t have sufficient cover. Even more alarming, many lack any cover at all. Consider the statistics:

• One in five families will be impacted by the death of a parent, a serious accident or illness that renders a parent unable to work;

• The typical Australian family will lose half or more of their income following a serious illness, injury or the loss of one of parent as a result of under-insurance;

• 95% of families do not have adequate levels of insurance; and

• Under-insurance is expected to cost the federal government $1.3 billion over the next 10 years.

These are sobering statistics, but the good news is that under-insurance can be overcome.Your financial adviser can help work out your insurance needs and how to structure premiums cost effectively.

The four main types of cover you need to know about

All of these insurances are commonly referred to as “life insurance” but each have their own place with respect to protecting your wealth and lifestyle.

• Death Cover

• Total & Permanent Disability Cover

• Trauma Cover

• Income Protection

---

DEATH COVER

• Pays a lump sum benefit on death or terminal illness.

• Can be used to eliminate debt and help with your family’s ongoing living expenses.

Suitable for:

• People with dependents.

• People who don’t earn an income but contribute to the running of the household e.g. non-working spouse.

How are my premiums paid:

• Premiums are paid from either your bank account or super fund.

Is it tax deductible:

• Yes, if paid via super you’re super fund will usually receive a 15% tax refund.

How much cover do I need:

• Usually enough to pay off the family home plus a few years (5-10) worth of income for your spouse and children.

---

TOTAL AND PERMANENT DISABILITY (TPD) COVER

• Pays a lump sum if you suffer a permanent disability (according to policy definitions) that prevents you from working.

Suitable for:

• People with dependents

• People with mortgages or other significant financial liabilities

How are my premiums paid:

• Premiums are paid from either your bank account or super fund.

Is it tax deductible:

• Yes, if paid via super you’re super fund will usually receive a 15% tax refund.

How much cover do I need:

• Enough to pay off your mortgage and an additional medical expenses. You should also consider any additional amounts to fund your retirement and living expenses (if you don’t have income protection insurance as well).

---

TRAUMA OR CRITICAL ILLNESS COVER

• Pays a lump sum upon diagnosis of a specified injury or illness

• Cover is specific to a range of injuries and ailments such as heart attach, stroke, cancer (according to policy definitions).

Suitable for:

• People with families or financial dependents, especially when only one spouse is working.

• People who do’t earn an income but contribute to the running of the household e.g. non-working spouse.

How are my premiums paid:

• You cannot pay these from super, therefore your bank account is the only way.

Is it tax deductible:

• No, your trauma insurance is not tax deductible.

How much cover do I need:

• A rule of thumb is to cover the average cost of a critical illness event which is $100,000.

---

INCOME PROTECTION

• Replaces up to 75% of your gross annual income as a monthly payment if you are unable to work due to illness or injury.

• You can nominate when payments commence and the period the benefit will be paid for.

• Premiums are generally tax-deductible for most people.

Suitable for:

• Families with dependents

• Working singles

• Self-employed individuals

How are my premiums paid:

• It is usually advisable to pay for this via your bank account, however you can also pay via your super fund with a small portion being paid personally.

Is it tax deductible:

• Yes, but your monthly income protection benefit is also taxed as income when you claim.

How much cover do I need:

• Typically 75% of gross income and super. Most advisable benefit is to Age 65 (retirement!) and a 30 day benefit period is usually most suitable unless you have a large amount of savings. In this case, a 90-day waiting period may be more suitable.

Separating fact from fiction

MYTH NO. 1: THE INSURANCE VIA MY SUPER IS ENOUGH

Like most Australians, you’ve discovered your only life insurance is through your super. You may be surprised at how little this amount of cover actually is.

Research shows that almost half of industry super fund members are under insured by $100,000 for life cover and by $1,000 per month for income protection cover. These are frightening statistics when you consider that many Australians only hold their insurance through their super.

Your adviser can help assess whether your insurance needs are being met with your insurance through super.

---

MYTH NO. 2: INSURANCE PREMIUMS ARE EXPENSIVE

Did you know you may be able to take out insurance for what you pay for your morning coffee? The average nonsmoking 31 year-old male, married with two children and earning $75,000 p.a. can obtain $750,000 life cover and $100,000 trauma cover for around $2.80 a day!

What’s more, when insurance is arranged through super, premiums for income protection, life and TPD cover are generally tax deductible.

One way of making insurance premiums more affordable is to consider the difference between stepped premiums and level premiums. You can select either of these premium types when you purchase insurance:

• Stepped premiums are recalculated every year based on your age and the policy fee. Stepped premiums start lower and gradually get higher.

• Level premiums only increase when the policy fee or premium rates change. They start higher and generally don’t dramatically change over time.

---

MYTH NO. 3: I DON’T ENGAGE IN PAID WORK, SO I DON’T NEED INSURANCE

Some may think – ‘I’m a stay-at-home parent, I don’t need life insurance’. What most families don’t realise is if the homemaker wasn’t around, their family would require a lot of assistance – both emotionally and financially.

If your household was to lose its homemaker, the effects on the primary breadwinner could be devastating. When a homemaker dies or becomes disabled, their partner is often left with limited options. They may have to reduce their working hours to look after the household, or employ outside help. Either option requires additional funds.

Families losing stay-at-home parents may require more than $75,000 per year for child care or home help expenses.

---

MYTH NO. 4: I’M YOUNG, HEALTHY AND DEBT FREE - I DON’T NEED INSURANCE

Many people believe that insurance is for people with dependents and debts. However, if you consider that a young person’s most valuable asset is their ability to earn an income, it makes sense that insurance plays an integral part in their lives. While it’s true that a young, debt-free person may not need comprehensive insurance across all products, what would happen if they became ill or disabled and couldn’t work? Can they depend on their parents to bear the financial burden? This is when income protection, trauma insurance and TPD insurance become options to consider.

---

MYTH NO. 5: INSURANCE COMPANIES DON’T PAY WHEN THE TIME COMES

This is one of the biggest myths, with research showing life insurance companies have paid a total of $7.5 billion in 2017 alone. ASIC data also shows that 9 out of every 10 claims are paid by the insurers we use.

EVERYONE’S CIRCUMSTANCES ARE DIFFERENT AND your PROTECTION PLAN SHOULD REFLECT THIS. SPEAK TO US TODAY TO GET YOUR TAILORED INSURANCE SOLUTION.

Property Purchase Checklist

Supporting Documents Checklist

Purchasing a property is an exciting life accomplishment for most. However, it is also a large large commitment that can create unwarranted stress and anxiety. Through education and guidance our Lending Specialists will make your property purchase a stress-free experience. You’ll always be sure that your best interests are looked after and that you are getting the right loan for your unique circumstances.

Below is a list of all the types of documents that our Lending Specialists will need to help you purchase a property.

General Supporting Documents

• Identification documents - Passport, driver’s licence & medicare card.

• Three months of banks statements for all your savings and transaction accounts.

• Three months of credit card statements.

• Most recent superannuation statement showing current balance.

• Most recent HEC’s statement showing current balance.

• Most recent statement for assets held, such as shares, term deposits & other investments.

• Last two payslips (for employees).

• If you are self employed - Last two years of personal and business tax returns and ATO assessments, including P&L statements.

---

If you are buying a new home

You’ll also need to provide:

• Copy of the contract of sale, if already signed.

---

If you are refinancing an EXISTING home loan

You’ll also need to provide:

• Six months of statements for all home loans you wish to refinance.

• Six months of any credit card or personal loans you wish to consolidate.

• Most recent council rates notice.

• Most recent strata notice (if applicable).

---

If you are building a new home

You’ll also need to provide:

• A copy of construction plan, specifications and builder’s fixed price tender documents (if available) - including builder’s licence number, insurance and council approved plan.

---

If you are purchasing an investment property

You’ll also need to bring:

• For existing investment property - Rental statements or lease agreement.

• For first time investors - Contract of sale (if signed) and any rent appraisal you may have.

By providing the following information to our Lending Specialists, you will be able to obtain detailed analysis about your borrowing capacity and all the costs associated with purchasing or refinancing a property.

For more information, book in your complementary Property Strategy session today.