Australia is an ageing population. In 2007, 13% of Aussies were aged 65 and over and by 2056 this figure will be close to 23% – nearly a quarter of the larger populace.

Add to this the reality that many of us are going to outlive our savings, and the age we qualify for the government pension is rising, then it’s no surprise that aged care and estate planning are hot topics for government, financial advisers, and families alike.

So what are the important things to consider when you are looking to plan your or a loved one’s life after retirement?

5 Core Issues

1. The costs
Establish entry fees and bonds and ongoing costs of nursing homes and hostels. For residential care make sure you know what the costs are for thing like daily care fees, and income-tested fees;

2. The family home
Consider if someone will continue to live there, or should it be sold or rented out? You might consider options such as a reverse mortgage;

3. Social Security
Find out how to maximise your aged pension entitlement by structuring your assets in the most effective way;

4. Tax
Look at what special tax offsets may be available when living in residential aged care;

5. Estate planning
Have you or your loved ones sorted out the Power of Attorney or Enduring Guardianship?

Government help

In July last year the Australian government launched the Let’s talk about changes to aged care Campaign (myagedcare.com.au). The changes included:

• Greater support to stay independent and in your own home and community with more Home Care Packages to meet your needs;
• Older people being asked to contribute to the costs of care, if they could afford to do so;
• Increased flexibility in ways to pay for accommodation in an aged care home;
• Centrelink providing income testing for people receiving home care, and both income and asset testing for people receiving residential care.

Estate planning

A huge part of aged care planning is estate planning. At its most basic, estate planning is about working through what you want to do with your assets when you die. It’s much more than a will. Effective estate planning is about your asset protection and empowering you with the information and knowledge to make informed conscious choices – so your family is not left stranded or your assets eroded or exposed to systems, processes and challenges you have not factored in or maybe are not fully aware of.

Financial planning

Whatever your preferred choices are for aged care there is a need for preparation and sound financial planning. Speak to one of our Planners at Southern Advisory to discuss your personal situation and to create a plan for your future.

Source: BT

Investment properties in Australia are being hit by falling rental yields. So is it possible to still make money from investment properties? Here we consider the challenges and opportunities of the current property market and how to navigate both.

Jumping on the investment property bandwagon
Currently, Australian investors are entering the market in large numbers, especially in Sydney and Melbourne; driven in part, by low borrowing costs and rising prices, which are both very attractive. Home loans to landlords now account for more than half of all mortgages, the highest share on record. And the record low cash rate of 2.5% is fueling continued demand, as is increased investment from overseas.

Increasing property prices
House prices in major Australian cities rose 8.9%in the year through October, according to CoreLogic Inc – the largest property data provider in the world. They have climbed 13 per cent in Sydney (the most of all Australian cities) and 8.9% in Melbourne. So in terms of capital gains – in the major cities at least – property is still performing well as an investment.

Falling yields
The downside is that these higher prices coincide with an increase in the supply of homes for lease, which is causing rental yields to fall.

A quick snapshot across eight state and territory capitals in October of this year show rental yields dropped to 3.7% for houses and 4.5% for apartments. That’s a drop from 4%and 4.7%t a year earlier, CoreLogic figures showed. The result is that investment properties are getting more expensive to buy and returning less cash flow through rent.

Warnings
There’s been a lot of debate about the Australian ‘housing bubble’: The argument being that the current property market is over-inflated and prices are due for a fall. In September, The Reserve Bank of Australia warned that the increase in investor lending might be, “a sign of speculative excess”. The implication is that investors may be paying too much and are at risk of a period of negative equity. This timed with falling rental yields, makes investing in property look increasingly high risk in the short term.

So if you are an investor or looking to invest in property, here are seven things you can do to mitigate some of this risk.

1. Get some up-to-date advice. Revisit or even rethink your investment strategy by speaking to one of our Planners at Southern Advisory. Your financial goals will determine whether property is good for you in the short and long term;
2. Take a long-term view. All types of investments go through cycles of growth and retraction – property is no different. It’s well known that over time, property has increased in value in Australia;
3. Do your research – look for hot spots. Areas that you can still get a bargain but look to increase in value in a short period. These areas might not be fashionable but they make good investment sense. Also consider regional and commercial property, which can perform better as an investment;
4. Don’t get in over your head by borrowing too much or overcapitalising. Do the math between what you need to spend on a property, the rental returns and the projected capital gains. Make sure you have a plan about how to cover the shortfall if interest rates go up;
5. If you believe you will get a greater rental yield, improve the property(s) you currently own;
6. Make sure you’re getting all the value you can through gearing and other tax strategies. Again speak to an adviser about how to maximise these;
7. Diversify your investments. A balanced investment portfolio should include a range of asset classes, not just property. In fact property, depending on your stage of life and financial goals, may not be the best choice for you. 

 
With any type of investment it's imperative to seek advice. Contact Us to arrange an obligation free consultation to discuss your financial plan and your investment goals.

Source: BT

Dreaming of making your millions through property investing in 2015? Here’s a guide on where to start looking, and what to avoid.

Regional towns with strong economies, Brisbane and several tourist hotspots in Queensland are among the property markets in Australia showing short-term promise in 2015, say experts.

With prices peaking in many parts of Sydney and Melbourne, Canberra facing an oversupply of housing and Perth running out of steam post-mining boom, Robert Mellor, managing director of research group BIS Shrapnel, is predicting big things for Brisbane.

“Sydney’s probably got a little bit of growth left in it, but there’s not another 20 per cent. It will maybe be eight per cent in the next 12 or 18 months and then it will start to slow. Over a five-year period, I’d say Brisbane’s going to outperform it.”

He suggests buying in established suburbs five to 10 kilometres out of Brisbane’s CBD, and avoiding large apartment towers being built in the heart of the city.

Likewise, Mr Mellor, along with other experts, also recommends steering clear of high-rise apartment complexes in Melbourne and Sydney’s CBD, warning of potential oversaturation of the market.

Time to look north

Back to Queensland, and Mr Mellor believes tourist areas which have been slow in recent years, such as Cairns, the Gold Coast and the Sunshine Coast, could also see price rises.

“Cairns is likely to see solid recovery, but not as significant as Brisbane or the Gold Coast or the Sunshine Coast,” he says.

John Lindeman, director of research firm Property Power Partners, believes areas such as Cairns – the closest Australian airport to many Chinese cities – will benefit from the predicted boom in Chinese tourists.

He says areas such as WA’s Margaret River region and South Australia’s Kangaroo Island could also see strong boosts in tourist numbers, along with the Gold Coast, which he says has “been languishing for a long time”.

Mr Lindeman says the boost in Chinese tourists, helped by the falling Aussie dollar, will bring more tourism workers to those areas, who will need somewhere to live.

Meanwhile, he believes that prices on the periphery of capital cities will see growth, as first-home buyers get pushed out of more established suburbs by sky-high prices.

In Melbourne, for example, he points to areas such as Melton, Bacchus Marsh, Berwick and Cranbourne as potential winners this year.

The baby boomer effect

At the other end of the market, many baby boomers looking to retire in the next few years will sell their ‘nest egg’ to fund their retirement, he says.

“One third of housing stock is owned by people who are 55 and over.”

Many are likely to move to cheaper areas two or three hours from capital cities, boosting prices in those areas, he predicts.

The south coast of New South Wales, or areas in Victoria such as the Mornington Peninsula, East Gippsland or the Yarra Ranges, may benefit.

Don’t dismiss regional Australia

Mark Kelman, who owns 15 investment properties and authored the book Become a Property Millionaire in your Spare Time, believes it’s going to be a big year for regional areas.

“I reckon all the regional areas that have a reasonable economy are actually going to start moving,” he says.

Mr Kelman believes investors will turn their attention from chasing capital growth in the cities, to cash flow positive properties in regional centres.

He recommends researching towns that have “good, multiple sources of employment” and populations of more than 10,000 people – preferably growing.

Anything with upside, such as new roads being built, new shopping centres, or companies moving there, might show promise.

Mr Mellor says markets that have lagged behind Sydney, such as Wollongong and Newcastle, will continue to see solid growth, and probably outperform Sydney in the next two to three years.

The south west coast of Western Australia may see a rise, while regional Victorian towns such as Bendigo and Ballarat may get a boost off the back of an improved regional rail system.

Do your own research

Meanwhile, Mr Kelman recommends doing your own research by inspecting a number of properties, talking to the local council about projects underway, and speaking to locals including real estate property managers to find out the types of properties people want to rent in the area.

“Whenever you buy property you’ve got to take into consideration who’s going to rent it and who’s going to buy it from you,” he says.


Source: thenewdaily.com.au

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 2.25 per cent, effective 4 February 2015.

Growth in the global economy continued at a moderate pace in 2014. China's growth was in line with policymakers' objectives. The US economy continued to strengthen, but the euro area and Japanese economies were both weaker than expected. Forecasts for global growth in 2015 envisage continued moderate growth.

Commodity prices have continued to decline, in some cases sharply. The price of oil in particular has fallen significantly over the past few months. These trends appear to reflect a combination of lower growth in demand and, more importantly, significant increases in supply. The much lower levels of energy prices will act to strengthen global output and temporarily to lower CPI inflation rates.

Financial conditions are very accommodative globally, with long-term borrowing rates for several major sovereigns reaching new all-time lows over recent months. Some risk spreads have widened a little but overall financing costs for creditworthy borrowers remain remarkably low.

In Australia the available information suggests that growth is continuing at a below-trend pace, with domestic demand growth overall quite weak. As a result, the unemployment rate has gradually moved higher over the past year. The fall in energy prices can be expected to offer significant support to consumer spending, but at the same time the decline in the terms of trade is reducing income growth. Overall, the Bank's assessment is that output growth will probably remain a little below trend for somewhat longer, and the rate of unemployment peak a little higher, than earlier expected. The economy is likely to be operating with a degree of spare capacity for some time yet.

The CPI recorded the lowest increase for several years in 2014. This was affected by the sharp decline in oil prices at the end of the year and the removal of the price on carbon. Measures of underlying inflation also declined a little, to around 2¼ per cent over the year. With growth in labour costs subdued, it appears likely that inflation will remain consistent with the target over the next one to two years, even with a lower exchange rate.

Credit growth picked up to moderate rates in 2014, with stronger growth in lending to investors in housing assets. Dwelling prices have continued to rise strongly in Sydney, though trends have been more varied in a number of other cities over recent months. The Bank is working with other regulators to assess and contain economic risks that may arise from the housing market.

The Australian dollar has declined noticeably against a rising US dollar over recent months, though less so against a basket of currencies. It remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices. A lower exchange rate is likely to be needed to achieve balanced growth in the economy.

For the past year and a half, the cash rate has been stable, as the Board has taken time to assess the effects of the substantial easing in policy that had already been put in place and monitored developments in Australia and abroad. At today's meeting, taking into account the flow of recent information and updated forecasts, the Board judged that, on balance, a further reduction in the cash rate was appropriate. This action is expected to add some further support to demand, so as to foster sustainable growth and inflation outcomes consistent with the target.


Source: www.rba.gov.au