Welcome to our November newsletter – the first issue since we’ve changed our name to Streamline Wealth. It’s been an exciting change and we thank you for the many kind messages we received from clients as we made this transition.
As well as the name change, we’ve got some further exciting announcements to make. Firstly, we’ve just launched our brand new website so please have a good look around. We hope you like the new look and welcome any feedback as we continue to fine tune the site.
You’ll notice a new feature linked into the website called WealthMap, which enables users to put in some basic details to get a quick snapshot of how their finances are shaping up. This is a really powerful tool for those who are looking to gain a better understanding of their finances and perhaps starting to think about seeking financial advice.
For our existing clients, we will shortly be adding a Client Portal to the website. This will provide each client with a personal login, enabling more secure and efficient communication including the sharing of documents and personal details. More details will be provided very soon.
On the economic front, the highlight of October was the Labor government’s first Budget (read our full review of the Federal Budget here). This was followed by another cash rate rise of 0.25% on Cup day, bringing the reserve bank cash rate to 2.85%, and a warning of further rate rises to come. However, there are signs that we are getting close to the top of the rate rise cycle. The RBA is now taking a more cautious approach, i.e. a 0.25% rise as opposed to the larger 0.50%, as there is a lag of around 2 to 3 months between raising rates and seeing the impact of those in the economic data. Markets responded favourably to the smaller rate rise on Tuesday, but there remains global uncertainty ahead. The expectation is that we may see another 0.25% rise in December to a total rate of 3.10%, after which the RBA may hold rates steady for a while as inflation is expected to peak around 8% in 2023. As always though, there’s more to play out so we just have to ride out the ongoing volatility.
We’ve got a bunch of new articles for you to enjoy this month, and if there’s anything you’d like to discuss further feel free to contact Martina or myself. Enjoy the weekend and the warmer weather forecast for the next few days. Fingers crossed the wet weather is behind us.
Skip to Articles
How to Spot and Stop Financial Abuse
Catching the Kindness Bug
Getting the Balance Right in Decision Making
Guide to Concession Cards for Seniors
Mortgage Vs Super
Wills and Powers of Attorney
How to spot and stop financial abuse
Until recently, financial abuse was often kept secret, especially where it occurred within the family. Thankfully that’s changing with public awareness campaigns and help becoming more readily available.
The emotional and economic damage caused by financial abuse can be far reaching and devastating. A recent Australian report calculates that in 2020 alone, financial abuse victims lost $5.7 billion while the cost to the broader economy was $5.2 billion.i
Nearly one in 30 women and one in 50 men suffer financial abuse each year, according to the Deloitte Access Economics report The Cost of Financial Abuse in Australia, 2022. These figures are almost certainly an underestimate, the report adds.
There are no typical victims of financial abuse: those affected are of all ages and means. Sadly, the abuser is often a friend, carer, partner or family member.
What is financial abuse?
Financial abuse is when someone uses your money without your permission, prevents you from getting access to money or takes charge of your financial decisions.
These days, financial abuse is considered a form of domestic and family violence, taking away your independence and leaving you feeling vulnerable and anxious. Victims may also suffer physical violence and emotional abuse.
The most common type of financial abuse is withholding income or controlling how it is spent, according to the Deloitte report. But there are other forms of abuse that can be equally harmful such as making a partner liable for a joint debt, preventing someone from working, refusing to contribute to household expenses and refusing to contribute to the costs of raising a child.
Many victims also suffer flow-on effects of the abuse such as financial hardship and stress, leading to mental health issues. Some may also lose their home.
In some cases of family violence, one partner takes control of the couple’s finances, preventing the victim from leaving the relationship. In others, where the victim does manage to leave, the abuser may continue their abuse using tactics such as expensive legal action or disrupting the victim’s work or business.
Recognising the signs
Victims of financial abuse may not be aware of the abuse for some time, allowing perpetrators to empty bank accounts, deplete investments and incur large debts in the victim’s name.
The federal government agency, Services Australia says the warning signs include:
- taking or using your money without your permission
- not being allowed to work
- having to account for how you spend your money
- withholding financial information from you
- spending any government payments you receive without your consent.ii
Incurring debts in your name is another form of financial abuse. Your partner may spend more than you agree on your credit card, pressure you into co-signing a loan with them, or take out a loan in your name, according to Australian Family Lawyers.iii They may also limit your educational opportunities by, for example, preventing you from enrolling in studies that could advance your career.
Older people and those living with disability can be particularly vulnerable to financial abuse if they rely on others for help and advice. Financial abusers may take money from their bank accounts or wallets, ask an older person to change their Will, take jewellery or other valuable items from their home, or take control of their decisions using a Power of Attorney when they are still capable of making their own decisions.
Where to go for help
If you or someone you know is suffering financial abuse, a number of free and confidential resources are available.
The MoneySmart website provides information about free legal advice at community legal centres or legal aid centres, and a number of suggestions if you need urgent help with money.
You can also find free and confidential counselling for family violence, abuse and sexual assault at: 1800RESPECT (24 hours a day, seven days a week)
1800 737 732
For crisis support, contact Lifeline (24 hours a day, seven days a week)
13 11 14
We understand that it can be difficult reaching out for support if you feel you or someone you love is being taken advantage of financially, especially if a family member is involved. Please call us if you would like a confidential discussion about safeguarding your finances.
Catching the kindness bug
Australians have seen more than their share of tough times over the past few years and there are many stories of how individuals and communities responded to natural disasters and the pandemic with empathy and valuable assistance.
Being kind and helping others does not have to be something that we only do in times of crisis however, every day can provide opportunities to look out for others and be more caring and compassionate in the way we conduct ourselves.
A kind nation
A recent study shows that we truly believe ourselves to be a kind nation and that we are living this out in our daily lives, with the average Australian performing 16 acts of kindness every week.i
The amazing thing about being kind is that it not only helps the recipient of your care and compassion – it also benefits you, the giver, in so many ways.
The benefits of a kind act
If you feel good after you’ve done something nice for someone else, you are not just basking in the psychological glow of a job well done and the thanks they gave you. Biologically, kindness releases chemicals like the “love hormone,” oxytocin, which helps us form social bonds based on trust and give us a sense of belonging and community, and serotonin which promotes a feeling of calmness and combats depression.
There are a host of other physical benefits that can come from doing something nice for others. Doing a good deed for others has been proven to lower blood pressure, improve the health of your heart, reduce anxiety, and stress, and even boost immunity.ii
Kindness – the gift that keeps on giving
Kindness tends to be contagious (but in a good way!). If you are the recipient of kindness, it can spur you on to think of others and in turn do a good deed for someone else.
Research also shows that the happiness people get from giving to others creates a ‘positive feedback loop.’ The more you give, the more positive you feel, which leads to feeling more inclined to help others.iii
Random, spontaneous acts of kindness
Being kind is all about the small things. You don’t need to be daunted by the effort or possible expense of a grand gesture. If you keep it small, it’s easy to include random acts of kindness as part of your daily routine. These could be as simple as offering a compliment to a co-worker or contacting a friend who is going through a tough time and just asking how they are doing and letting them know they are in your thoughts.
If it’s not something that comes naturally to you, it can help to just consciously aim to do one nice thing for someone every day. If kindness is on your radar, you can work some spontaneous gestures into your day. Pay forward that coffee in the café you always go to, open the door for the person struggling with their groceries or hold the lift for the guy in a hurry.
Once you’ve mastered spontaneity, you can take it one step further and plan how you’d like to help others on an ongoing basis. Here are a few ideas to get you thinking:
- Join a website to give things away you don’t use
- Share your skills by offering to mentor someone in your industry
- Help an elderly neighbour by offering to walk their dog or pick up some shopping when they need it
Being kind to yourself
Finally, fostering kindness is not only about being kind to others. As kids we may have been told to ‘treat others as you would treat yourself’ but we are often not as kind to ourselves. Many people maintain a negative internal dialogue that we would not tolerate from someone else, and we can be extremely hard on ourselves if we fall short of our own expectations. A little positive self-talk and self-care can go a long way when it comes to looking after yourself and it’s not selfish to do so.
Each act of kindness can change the way we see ourselves and others, as well as how others see us. so, when you are faced with the choice of how to react to a particular situation – take the opportunity to be kind.
Getting the balance right in decision making
We all approach decision making in our own way, making a multitude of decisions every day: ‘Should I hit snooze again on the alarm?,’ ‘Do I take the train to work, or do I drive,’ ‘What should we have for dinner?’
In fact, researchers estimate that the average adult makes 35,000 decisions every day.i While most of these are fairly insignificant, we also constantly make complex decisions that may support us in many areas of our lives – from navigating a change of career, handling a new project at work, or even managing the complexities of interpersonal relationships.
Having some knowledge of the decision-making process can help you to be more self-aware when faced with those larger, more complex decisions.
The biology of thought
The human brain is an intricate organ. It contains about 100 billion neurons and 100 trillion connections, and controls our emotions, thoughts, and actions. Our brains appear wired to work in complex ways to enable us to make the best decisions possible with the information we’re given. In very simple terms the process is a little like a court trial. Our brains register sensory information like sights and sounds and then act as a jury to weigh each piece of ‘evidence’ to make a judgement or decision.
Thinking fast and slow
Nobel laureate Daniel Kahneman in his hugely successful book Thinking, Fast and Slow – suggests that there are two distinct and different ways the brain forms thoughts.ii
‘Fast thinking’ is automatic, intuitive, and used for most common decisions. It is our brain conserving energy by making the bulk of its decisions on some degree of autopilot. This style of thinking uses cognitive shortcuts to let us respond quickly and instinctively to a wide range of fast and ever-changing inputs, like discerning emotions from facial expressions, ducking when something is thrown at us, reading words on a billboard, or driving a car on an empty road.
On the other hand, ‘slow thinking’ is more thorough and logical but also takes more time and is resource intensive. It kicks in when you focus on a task or problem, monitor and control your behaviour, formulate an argument or do anything that causes your brain to exert itself.
Different thinking for different situations
Of course, both styles of thinking have their place. It’s important to be able to make fast decisions when required – in fact, fast thinking comes from the most primal part of our brain to help us make the kind of snap decisions integral to survival. However, there are times when you need to analyse and think through all the implications of a complex decision like whether to accept that new job offer interstate or buy that new car.
Amongst the multitude of small decisions we face every day, it can be hard to find the time and energy for the big ones. Steve Jobs famously explained that he wore the same outfit every day to have one less easy decision to make so that he could focus his energy on the more complex decisions he was dealing with.
If you find you rely heavily on fast thinking in your life, making choices based on gut instinct with little research or consideration, it may be time to consciously slow it down.
While that may not mean wearing the same outfit day in, day out, you might be able to have a few things in your life on autopilot, like putting together a weekly meal plan so thinking about what’s for dinner is one less decision to make in your busy day.
Slow thinking takes discipline and effort. It’s important to approach critical decisions in a measured way and give yourself the time and head space to think things through, rather than being swayed by emotion or the cognitive biases associated with fast thinking.
Good decision-making, either financial or otherwise also benefits from having a sounding board to talk things through with, and of course we are here to assist with any important financial decisions you may be faced with.
Guide to concession cards for seniors
The excitement of heading towards retirement and a new stage of life can be tinged with concern over how to manage finances. For many people, seniors’ concession cards are a good way to help make ends meet.
While discounts on goods and services are always welcome, they’re even more valued right now as living costs continue to climb.
Concession cards for seniors provide significant discounts on medicines, public transport, rates and power bills. Many private businesses – from cinemas to hairdressers – also offer reduced prices to concession card holders.
There are different types of concession cards offered by federal, state and territory governments. While some are for those receiving government benefits, others are available to almost anyone aged over 60.
The cards are free and should not be confused with commercial discount cards that require an upfront fee or ongoing subscription.
The Seniors Card is offered by all state and territory governments when you turn 60 (64 years in Western Australia) and are no longer working full time. This card is offered to everyone, regardless of your assets or income.
The Card will allow you to claim discounts on things like public transport fares, council rates and power bills. Thousands of businesses across Australia also offer reduced prices to Seniors Card holders. In some states, a separate card is offered to access discounts provided by private businesses and another card is provided for public transport.
For eligibility requirements and the range of services offered in your state or territory, click on a link below:
New South Wales
Australian Capital Territory
Federal Government concession cards
If you’re receiving a government pension or allowance, you’re a self-funded retiree or you’re a veteran, you may be eligible for one of several cards issued by the Federal Government.
The Pensioner Concession Card is automatically issued to people receiving pensions or certain allowances.
The card provides discounts on most medicines, out-of-hospital medical expenses, hearing assessments, hearing aids and batteries, and some Australia Post services.
In most states and territories, card holders receive at least one free rail journey within their state or territory each year.
Commonwealth Seniors Health Card
If you’ve reached the qualifying age for an Age Pension (currently 66 years and 6 months) but you’re not eligible to receive a pension, you may be entitled to the Commonwealth Seniors Health Card.
You can receive the card if you:
- Are not receiving a government pension or allowance
- Provide a Tax File Number or are exempt
While there is an income test, no assets test applies. You will receive similar benefits to the Pensioner Concession Card.
Low Income Health Card
For those on a low income but not yet at Age Pension age, the Low Income Health Care Card can be a big help. If you meet the income test, you’ll get cheaper health care and medicines and other discounts.
Your gross income, before tax, earned in the eight weeks before you submit your claim is assessed and must be below certain limits.
The types of income included in the test includes wages and any benefits you receive from an employer, self employment income, rental income, super contributions as well as pensions and government allowances.
Other types of income are also counted including:
- Deemed income from investments
- Income and deemed income from income stream products such as super pensions
- Distributions from private trusts and companies
- Lump sums such as redundancy, leave or termination payments.
The Department of Veterans’ Affairs has a concession card for anyone who has served in the armed forces and their dependents.
Like other government concession cards, the Veteran Card provides access to cheaper medicines and medical care as well as discounts from various businesses. The Veteran Card is a new offering, combining the former white, gold and orange cards. There is no change to entitlements or services with the new card.
As you can see, the potential savings from seniors concession cards can be significant so be sure to check your eligibility. If you would like help working out your income and other eligibility requirements, give us a call.
Mortgage vs super
With interest rates on the rise and investment returns increasingly volatile, Australians with cash to spare may be wondering how to make the most of it. If you have a mortgage, should you make extra repayments or would you be better off in the long run boosting your super?
The answer is, it depends. Your personal circumstances, interest rates, tax and the investment outlook all need to be taken into consideration.
What to consider
Some of the things you need to weigh up before committing your hard-earned cash include:
Your age and years to retirement
The closer you are to retirement and the smaller your mortgage, the more sense it makes to prioritise super. Younger people with a big mortgage, dependent children, and decades until they can access their super have more incentive to pay down housing debt, perhaps building up investments outside super they can access if necessary.
Your mortgage interest rate
This will depend on whether you have a fixed or variable rate, but both are on the rise. As a guide, the average variable mortgage interest rate is currently around 4.5 per cent so any money directed to your mortgage earns an effective return of 4.5 per cent.i
When interest rates were at historic lows, you could earn better returns from super and other investments; but with interest rates rising, the pendulum is swinging back towards repaying the mortgage. The earlier in the term of your loan you make extra repayments, the bigger the savings over the life of the loan. The question then is the amount you can save on your mortgage compared to your potential earnings if you invest in super.
Super fund returns
In the 10 years to 30 June 2022, super funds returned 8.1 per cent a year on average but fell 3.3 per cent in the final 12 months.ii In the short-term, financial markets can be volatile but the longer your investment horizon, the more time there is to ride out market fluctuations. As your money is locked away until you retire, the combination of time, compound interest and concessional tax rates make super an attractive investment for retirement savings.
Super is a concessionally taxed retirement savings vehicle, with tax on investment earnings of 15 per cent compared with tax at your marginal rate on investments outside super.
Contributions are taxed at 15 per cent going in, but this is likely to be less than your marginal tax rate if you salary sacrifice into super from your pre-tax income. You may even be able to claim a tax deduction for personal contributions you make up to your annual cap. Once you turn 60 and retire, income from super is generally tax free. By comparison, mortgage interest payments are not tax-deductible.
Personal sense of security
For many people there is an enormous sense of relief and security that comes with having a home fully paid for and being debt-free heading into retirement. As mortgage interest payments are not tax deductible for the family home (as opposed to investment properties), younger borrowers are often encouraged to pay off their mortgage as quickly as possible. But for those close to retirement, it may make sense to put extra savings into super and use their super to repay any outstanding mortgage debt after they retire.
These days, more people are entering retirement with mortgage debt. So whatever your age, your decision will also depend on the size of your outstanding home loan and your super balance. If your mortgage is a major burden, or you have other outstanding debts, then debt repayment is likely a priority.
All things considered
As you can see, working out how to get the most out of your savings is rarely simple and the calculations will be different for everyone. The best course of action will ultimately depend on your personal and financial goals.
Buying a home and saving for retirement are both long-term financial commitments that require regular review. If you would like to discuss your overall investment strategy, give us a call.
Wills and powers of attorney
A good estate plan will help make sure your wishes are carried out when you die. It can also help if you become unable to make your own decisions.
An estate plan records what you want done with your assets after your death. It can include documents such as:
It also covers how you want to be cared for — medically and financially — if you can no longer make your own decisions. This part of your estate plan may be in documents such as:
any powers of attorney
a power of guardianship (giving someone the right to choose where you live and to make decisions about your medical care)
an advance healthcare directive (your needs, values and preferences for your future care)
The documents you choose will depend on your situation and what you’re comfortable to trust others with. Get legal advice if you’re not sure.
You must be over 18 and mentally competent when you draw up your estate plan.
A will is a legal document stating what you want to happen to your assets when you die. It is part (but not all) of your estate plan.
Your will can cover things like:
how you want your assets shared
who will look after your children if they’re still young
any trusts you want to set up
how much money you’d like to give to charities
plans for your funeral
Smart Tip: It’s important to have an up to date will. If you die without one, the law decides who will get your assets — and this may not be who you wanted.
Making your will
You can get your will written by a solicitor (for a fee) or by a Public Trustee. A Public Trustee may not charge if you:
are a pensioner or aged over 60, or
nominate them to carry out the instructions in your will (that is, to be your executor)
The rules vary, so visit the Public Trustee office website for your state.
If you use an online will kit, get it checked by a solicitor or Public Trustee. They can make sure it’s been done properly. If your will isn’t done properly, it will be invalid.
Make sure you put your will in a safe place and tell someone close to you where it is.
Updating your will
It’s important to update your will as your situation changes — for example, if you:
divorce or separate
have children or grandchildren
have a significant financial change
lose your spouse (or someone else who is named in your will) through death
Super and your will
A binding nomination directs who your super fund trustee gives your super benefit to when you die. If you don’t nominate someone, the super fund trustee will decide who your money goes to.
Family trusts and your will
If you have a family trust, it continues after your death. The trust determines who gets your assets, even if your will says something different.
A testamentary trust is a trust that is written in your will. It takes effect when you die, and it’s administered by a trustee, who you usually name in your will.
The trustee looks after your assets until your beneficiaries can get them. This is set out in your will, and is either when:
a child reaches a certain age, or
a beneficiary achieves a specific goal (for example, they get married or earn a particular qualification)
You may want to consider setting up a trust if your beneficiaries:
are minors (under 18), or
have diminished mental capacity, or
may not use their inheritance well
Another reason to consider a trust is to avoid family assets being:
Powers of attorney
A power of attorney is a document where you give someone else the legal right to look after your affairs for you. It’s important to nominate someone that is trustworthy, financially responsible, and likely to be around when you need them.
Find more information from each state or territory to appoint a power of attorney.
There are different types of powers of attorney:
General power of attorney
This allows someone to make financial and legal decisions for you. It’s usually for a specified time — for example, if you’re overseas and can’t manage your affairs at home.
If you become unable to make decisions yourself, a general power of attorney becomes invalid.
Enduring power of attorney
An enduring power of attorney (or EPA) allows someone to make financial and legal decisions for you. If you become unable to make decisions yourself, an enduring power of attorney will still be valid.
Medical power of attorney
This allows someone to make medical decisions for you if you ever become unable to do so yourself. It doesn’t allow them to make other kinds of decisions.
Legal and financial housekeeping
It will help your family and your executor if you list all the documents you have and where they’re kept.
As well as the documents talked about above, other key documents to keep handy are:
pensioner concession card
home and contents insurance
deeds and insurance policies for any other real estate you own
bank account details
investment documents (securities, share certificates, bonds)
prepaid funeral plans
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
Streamline Wealth Pty Ltd (AR 1299307), Neil Sonneveld (AR 1251279), and Martina Sonneveld (AR 297377) are authorised representatives of Nextplan Financial Pty Ltd (AFSL 452996). This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information. Investment Performance: Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.