Attractive advertising, paired with an individual desperation, is what helps to fuel the seduction of Payday (short-term) loans, and they are quickly becoming a menace to our society; more often than not leading people into a worse financial situation than where they began.
Payday loans in Australia are part of the small loans market. Statistics show that many people who apply for such a loan are already in financial hardship. They may have even already tried to apply for a small personal loan through a banking institution and been denied a loan. The national consumer credit protection act mandates that all lenders ensure that the person applying for a loan can afford to repay the loan without substantial financial hardship. Payday companies are not required to make such assurances for their clients and have made access to small loans of under $2000 increasingly easier with their online presence.
It turns out it is not just a taboo amongst Australians. It has been revealed that people would rather speak about religion, politics and even sex, than they would about their finances, especially when talking to family and friends.
Talking finances is seen as something the majority of Australians are uneasy with, a staggering 50% will never discuss their finances with family or friends, while a further 14% still consider the topic taboo. Why do we find it so difficult to mention the ‘F’ word? Perhaps because money symbolizes different things to different people; power, control, security or ego.
Money is seen as an emotive topic, more so than religion or politics. Many people view their financial situation as a reflection of their personal success.
As from November 19, the first sizable industry fund, Australian super, will be making some significant changes to their fund, that may cause some concern for investors, especially if they were coming close to retirement. These changes come as amid fears of a potential property market plunge. Amongst the changes, property funds will be frozen for up to two years in the event of a crisis. Furthermore, the fund will prevent members from investing more than 70% of their savings in its property portfolio option.
According to Kofkin Bond and Co, one of the most challenging changes will be the rule that states that, for up to two years, the fund has the right to freeze any attempts at withdrawing savings from the property option, as well as prohibiting funds out of, as well as any new contributions into, the options.
Capital Gains Tax changes will mean that Australian expats will be denied the capital gains tax (CGT) main residence concession if they sell their former main residence while living abroad. To date, this stands to affect over 100,000 Australians who currently live and work overseas whilst owning property back home.
The GST tax advisers acknowledge that the Senate committee believes the CGT exemption may provide improved housing outcomes for Australians. However, they believe that there may actually be a counterintuitive reaction from expats as they decide not to sell properties until they return to Australia, creating a ‘lock-in’ effect rather than improving the quantity of housing inventory for sale. In other words; to avoid losing their ‘retirement plan’ to taxes, they will hold onto their property, potentially not selling it for decades, contributing to a lack of housing stock for sale.
In Hong Kong, expatriates have come together in an attempt to create a campaign that would influence the Senate Committee to overturn the proposal. They believe that such a policy will make it difficult for firms, both Australian and international, to employ Australians to work offshore if they have the potential to have life savings wiped as a result of selling their home while not residing in Australia.
Understanding your life insurance policy, and establishing from the beginning, that it is the right policy for you will save you time, money and potentially reduce the level of frustration when it comes to making a future claim. It has been reported that there is a 50% probability of a life event occurring, to any one person, that would result in the payment of a personal insurance claim whether it be life, total or disability insurance.
Consulting with a financial/insurance adviser will ensure that you haven’t wasted, or about to waste, money that could be put to better use, by contributing to a gifted policy by either employer or Superfund. Often there are circumstances where, in such policies, the claim may be reduced to almost nil payment.
Recently, we have been closely watching market valuations that have been indicating overpriced equity markets and it has us concerned. I liken the current state of the markets to that of the movie, The Big Short, which was based on the GFC (Global Financial Crisis) (If you haven’t seen the movie and would like to know what’s happening in our current markets I urge ask you to watch it this weekend.)
Although we still have exposure to some growth assets including certain shares in both Australia and various regions, Having watched people’s wealth being destroyed during the GFC, has made us overly conservative has made us highly conservative for two reasons:
There are moments in life where unnecessary risk is taken despite the warning signs. For example, swimming outside the flags at the beach when the surf looks exciting. The flags are there for a reason, they warn you about certain dangers like turbulent currents that could suck you out to sea. For the stock market, the warning flags are overvaluation and slowing growth and investors should take heed when they are waving.
The overvaluation flag has been waving in the wind for some time. For example, the Shiller Cyclically Adjusted Price Earnings index (S&P500 price-dividend by its trailing 10-year average EPS) has been flashing extreme valuation levels for the US stock market. Based on current US valuations, if you invested in the S&P 500 you could expect a ten-year return of -3.2%. The only time in history that the US market had higher valuations than today was just prior to the Tech Wreck.
With little doubt, Superannuation (AKA Super) is likely going to be a persons longest-term investment and, therefore, deserves to be considered with a greater depth than perhaps their other financial investments. There is no better time than now to engage in a conversation with a Kofkin Bond and Co financial adviser to ensure your Super is in order.
In the course of an average life, they may have many long and short-term savings and investment objectives. Saving for a holiday or a used car in your younger days may take a year or two, Whereas saving for a home deposit may take a little longer, and even then it may take thirty years, or more, to pay it off.
Growing up in Australia, we didn’t watch a lot of baseball; it was mostly cricket and rugby. But those sports share many commonalities with baseball.
In cricket, there isn’t an umpire calling balls and strikes. Instead the batsman protects the wicket—two “bails,” or small pieces of wood balanced between three posts (known as stumps) behind the batsman. If the ball hits the batsman and would have otherwise hit the wicket (I’ll spare you excruciating caveats to this rule), or hits the wicket directly, or if a hit ball is caught, he’s out. But aside from protecting a much narrower “strike zone,” the batsman is under no obligation to swing. The batsman can wait patiently for a ball to hit. (But “hitting it for six” is every bit as exciting, I assure you, as a home run).
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