The start of a new year generally brings with it a sense of optimism and fresh activity. Hope springs eternal for the sports fan with the prospect of a new season while for investors the start of a new year offers similar opportunities and concerns.

Will last year's performance be repeated? Where will next year's strong performers come from?

For the record last year was a pretty good one for a balanced investor - the Vanguard Balanced Index fund delivered returns of 13% - while the average growth super fund returned a respectable 8.6% after two years of double digit returns.

In their more rational, reflective moments sports fans know that no amount of zealous support or one-eyed optimism supersedes a genuine understanding of where your team really ranks. The scoreboard soon enough provides the hard reality check.

For investors that equates to understanding both where your portfolio is invested and where you need to get it in order to fund your retirement lifestyle.

In basic terms it comes down to the value of having a financial plan that takes into account your individual circumstances - in particular your income needs.

People who have their own self-managed super fund tend to be more engaged and aware of where their super is invested than typical super fund members where engagement level is understandably lower.

In many ways the SMSF sector will lead the way as the superannuation system matures because almost half of SMSFs are already in pension mode and increasingly members will be drawing money out of their fund to pay themselves a pension rather than contributing extra to the fund.

Yet the discussion around superannuation still tends to be centred around the level of account balance at the time of retirement.

Perhaps this is just a reflection of the super system not being fully mature but there is a growing sense of urgency that superannuation needs to be a retirement income system more than an accumulation vehicle.

In financial planning terms this translates to having a better understanding of what income your super portfolio can generate and whether that is enough to fund your retirement lifestyle.

Investing for yield is certainly nothing new for many SMSF trustees - it at least partly explains the heavy exposure to Australian dividend paying shares in SMSF portfolios - but that cannot not be the answer for all super fund members.

So when you are looking at your super fund statement showing the account balance for the period ending December 2014 take the time to look at it through the frame of how much income it can provide.

That is super's equivalent of a scoreboard reality check.


Source: www.vanguardinvestments.com.au

Losing weight, quitting smoking, saving money and getting out of debt are among the most popular New Year’s resolutions.

Unfortunately resolutions like these tend not to last long, particularly if there is no vision for how to make them work. Here’s how you can get serious enough about your financial goals to achieve long term change.

Make a plan

Good intentions won’t last long if they lack specifics. It’s easy to say “I want to get my debt under control”, but harder to sit down and work out a financial plan to achieve this. Whether it is one goal or a series, putting a plan in writing helps to track progress over time and gives you a foundation off which to make sound financial decisions.

Start small

Instead of going cold turkey, try making changes one step at a time. A small change a week can add up to big savings in the end whereas a sudden dramatic change is harder to stick to and more likely to backfire down the road.

Track spending

Over the course of a few weeks, track every cent you spend as this will give you a clearer idea of where your money is going. There are online budgeting programs that help simplify the process of tracking spending.

Set aside time

Schedule a time each week to work on your finances. Without a scheduled time slot, it’s easy to let all your hard work in compiling a financial plan slip and before you know it, paperwork has piled up, bills have gone unpaid and you are back where you started.

Work together

For a financial plan to work, everyone in the household must have a hand in making it a success. Ensure you and your partner can agree on and commit to your financial goals so there is no risk of one person secretly spending or overspending.

Anticipate obstacles

You never know what life can throw at you so be prepared for emergencies and unforeseen expenses. Set aside an emergency fund of at least 3 to 6 months basic living expenses to act as a stopgap if things go wrong.

Commit

Tell yourself that procrastination was last year’s bad habit, and this year you are making a commitment to move ahead with your financial goals. Remember it’s never too late to make a change for the better - today is the starting point for the rest of your life.

Source: www.citywidelending.com.au

For two months you have worked hard at paying off your debt. You stuck with your budget – each week putting the extra savings onto your debt repayment. Then one day you are at the shops and see something you really want – new shoes, the latest iPhone, a dress for your daughter – and your determination to pay off your debt goes out the window.

You decide to splurge just this once but over the coming months you find there are too many other things you can’t resist spending money on. It’s not long before you are even deeper in debt and once again looking for a way out.

After much soul-searching you realise that unless you change the way you think about money you will never get ahead of the debt cycle let alone start building your wealth.

Becoming wealthy is not just about how much money you start with, it is about the right mental attitude. Thinking long term, taking responsibility for your circumstances and having a positive outlook are just some of the mind strategies to master in order to achieve financial success.

Think long term
Be willing to put off gratification now in order to have more in the future – short term pain for long term gain. If you spend your money now, you can’t spend it later.

Take responsibility for your circumstance
Don’t try and justify your situation or worst still, blame others. Create your own circumstances by choosing actions that support your goals – when you choose the behavior you choose the circumstances.

Wear a positive attitude
Instead of thinking that you can’t, it’s too hard; tell yourself that if others can do it, so can you.

Make it happen
Have a plan for the future, make things happen rather than let things happen. Know where you are going and how you are going to get there.

Persist until you succeed
Don’t quit at the first sign of defeat, keep trying until you get it right. People more often make money through hard work and persistence than luck.

Source: www.citywidelending.com.au

Battling bulging credit card debt is going to prove a tough challenge for many Australians who blew their budgets over the Christmas and New Year Period. But implementing a simple five-step plan of attack now will help you tackle the piles of unwanted debt and wipe out those hefty balances in a matter of months.

Reserve Bank of Australia figures show Australians already owed a massive $49.6 billion on plastic, with more than $33.4 billion of that accruing interest – and that was before they started their Christmas shopping.

So here’s five steps to slashing that mounting plastic debt and returning to the black in 2015.

1. DESTROY THOSE CARDS

This is an easy way to put an immediate stop to the temptation of spending more using your card.  Mozo found the average credit card rate is 17.49 per cent, and on some cards the rate is as high as 23.5 per cent. This is an expensive way to buy things if you are not paying your card off in full each month. Whether you use scissors or a saw, rip up that card and say goodbye to plastic debt.

2. PLAN OF ATTACK
 
Check your latest card statements and work out how much debt you have. Then set up a realistic plan of attack on how to pay it back. “Get organised and make a monthly repayment plan for yourself,” comparison site Mozo’s spokeswoman Kirsty Lamont says. “Determine how much you can afford to pay off your card each month and set down a repayment amount.” She suggests the best way to do this is by setting up direct debits that automatically go onto your card debt.

3. PAY OFF MORE THAN THE MINIMUM AMOUNT

This is the key to culling credit card debt. Just paying off the minimum amount means it will take you years longer to kill your debt and you’ll fork out a fortune in interest charges. The MoneySmart.gov.au calculator shows that on the average card debt of $3,173 with an interest rate of 17.49 per cent, the minimum monthly repayment starts at $65. A cardholder would end up taking 24 years to pay off the debt, and would pay more than $6,400 in interest. However, if they more than doubled their minimum repayments, outlaying $155 per month, they would take just two years to pay off the card and fork out interest of only $550.

4. BALANCE-TRANSFER DEALS

Lamont says there are plenty of great balance transfers available on the market that allow customers to cut debt without paying interest. “With a balance-transfer card, you can avoid paying interest on your card for up to 18 months. This means more of your repayments will be going towards your debt rather than your interest charges,” she says. “They can help you pay off debts faster.” Balance-transfer deals allow customers to transfer plastic debts from one card to another and in many cases enjoy zero per cent interest rate periods to shave back the debt. Mozo’s database shows 18 months is the longest interest-free deal available on these types of cards. But if you do switch to a balance-transfer card, cut it up as soon as you get it so there’s no temptation to spend on it. If you make purchases on the card or fail to pay it off over the interest-free period, you will be hit with higher than average rates.

5. ONLY PAY USING DEBIT

Adopt a new approach to paying for goods in 2015. “Stop using the credit card and look at alternatives such as paying by debit card,” says MoneySmart’s senior executive leader, Miles Larbey. This will put the brakes on your card debt becoming bigger. It also means that you are only using money you already have and not money that you don’t have. Sometimes retailers will give you discounts for paying in cash and some banks offer cash back when you pay by debit card, so it’s a win, win.


Source: www.dailytelegraph.com.au

Attitudes towards investing are changing. There is a reduced focus on high returns and star managers. Investors are increasingly looking for confidence that they have the appropriate strategies to help them meet their personal objectives.

This is especially true for retirees who are largely reliant upon their financial assets to fund their lifestyle. As a result, advisers are fine-tuning their advice frameworks, and seeking investment strategies better matched to client goals and expectations. With the new year upon us, we explore the importance of goal-setting and retirement planning.


Boost your income in retirement


As the baby boomers begin to wind back their work commitments, an increasing number of Australians will need to draw on financial assets as a source of income to supplement any government support. In the context of constrained economic expansion and people now living longer, retirement planning becomes critical.

A few things to consider:

• Once you stop working, how will you meet your cash-flow needs to cover everyday expenses such as food and energy?
• What kind of lifestyle do you want to lead? How do you visualise your activities in the early stage of retirement - going to the cinema every month or perhaps an overseas holiday every year?
• Do you anticipate setting some money aside to support long-term aspirations such as providing financial assistance to grandchildren or making a large contribution to some other cause close to your heart?

There are a lot of moving parts when it comes to planning for retirement. You need to identify and prioritise your goals, estimate how much income you may need and assess your likely financial capacity in retirement. Then you are better positioned to work out what saving and investment decisions to take today that could help you boost your income in retirement. A financial adviser can help you through this process, considering your objectives, your personal circumstances and prevailing market conditions to design a strategy that is most suitable to you.

Keep your investments on track

Planning for retirement is an ongoing process that requires periodic review. Throughout your working years, your planning may progress through a series of stages in which you will clarify your investment objectives, evaluate your progress and make decisions to build confidence that you are on track to reach your investment targets. Even after retirement, with market conditions and your personal circumstances subject to change, you should periodically review your investment strategy to ensure you remain on track to realising your dreams.

Final thoughts

Entering the new year, we encourage investors to reassess what they want to achieve from their investments, and to take action by speaking to their financial adviser to bring about these changes. While thinking of investing for retirement can seem overwhelming, it should encourage you to map out a clear path to success.


Source: http://www.ampcapital.com.au/