There is never a better time than now to review your investments. By implementing the following tips you can start improving your financial situation straight away.

• Work out what you want to achieve in life – what are your goals and objectives, write them down and for motivation put them where you will see them every day.  

• Review and reduce your debts – Start by paying the debt with the highest interest rate first, prioritise non-deductible or ‘bad’ debt.

• Pay yourself first – I’m not referring to spending money first I’m talking about putting funds away for the long term before you spend money. Start an automated investment system.

• Spend less than you earn – This sound obvious and in reality it is. Unfortunately it’s often easier said than done and some of us are in denial because they think they are living within their means but just aren’t doing it. Have an objective look at your bank accounts, credit cards and other loans to ensure everything is heading in the right direction. If you have large debts consider consolidation.  

• Use the power of compound interest – the earlier you start the more your investments can work for you.

• Time in, not timing markets – the ‘sharemarket’ will always be volatile, by being invested for the long term you reduce investment risk.

• Reduce your taxes and take advantage of government initiatives – salary sacrifice into superannuation is essentially an automated investment system for your retirement that reduces your tax. If applicable take advantage of the Eligible Spouse contribution and the Government Co-contribution.

• Seek advice – a financial planner can help you by giving advice on your specific circumstances. 

I can’t stress it enough but the most important thing is to start something now. Email me [email protected] if you have any questions. 

Disclaimer
The information on these pages is provided in good faith and is to the best of our knowledge accurate. We provide it without any warranty as to its correctness of statement or opinion or its suitability for any particular purpose. Any advice on this blog/website is of necessity general in nature and not specifically tailored to suit differing individual circumstances. For that, you must seek and we advise that you do seek financial advice from a licensed professional. Sean Thomas can accept no liability for any decisions that you may make based on the information on this blog/website.

The reality is for most people your ability to earn an income is the biggest asset of your life. By insuring this income it can give you peace and mind that should you be unable to work you can still make those mortgage repayments and protect your family.

What is income protection?

Should you be unable to work due to illness or injury, income protection insurance can replace up to 75% of your employment related income until you are able to return to work. Income protection insurance is tax deductible and can be held inside or outside superannuation.

Why do I need Income Protection Insurance?

Are your house and contents insured? What about your car? If you go overseas do you take out travel insurance? Most of us recognise the importance of protecting the assets we have accumulated over the years and rightly so, as we’ve worked hard to get them.

But have you ever thought about protecting your ability to work?

After all, it’s your income that enables you to own a house, maintain a car and take holidays.

Ask yourself the implications of being unable to work, how much sick leave would you have? Do you have savings to tide you over? What about your mortgage, school fees or simply putting food on the table.

The reality for personal trainers is your career is more dependent upon physical activity and if you are physically unable to work income protection insurance can then pay up to 75% of your income to protect your financial obligations.

But I’m already covered

Are you sure about this??  

Sick leave – how much have you got saved up or are you self-employed?

Workers’ compensation – covers workers for injuries only associated within the workplace. However, most serious accidents occur outside the workplace, leaving those without

income protection cover vulnerable. You can have world-wide cover through income protection insurance.

Insurance in superannuation – Review your current policy because it is likely to be non-existent or inadequate.

Social security – the funds available from the Government should not be treated as a solution and most benefits are assets and means tested.

Some options to consider

Income protection insurance has a number of options which impact the cost the main options are as follows –

Waiting period

This is the period of time you must be unable to work before your benefits start the shorter the period the high the cost. For personal trainers the waiting period is generally 30 days.

Benefit amount

The maximum amount that you can cover is 75% of your pre-tax income. The higher the benefit the higher the cost.

Benefit period

This relates to the length of time that you can receive benefits whilst on claim. For personal trainers this varies dependent upon the provider but it’s generally 2 or 5 years however to age 65 is possible. The longer the benefit period the higher the cost.

Stepped or level premiums

The basic analogy is stepped premiums are initially cheaper however level premiums present significant long term cost savings as stepped premiums get more expensive with age due to increased risk. By taking out level premiums you can keep your costs down when you are at an age when more susceptible to making a claim.

Not all policies are the same

As an example a good feature for a personal trainer is day 1 accident benefit. This feature varies between companies for example two insurers may pay from day 1 however with the first you need to be off work for 30 consecutive days to the have your claim backdated to day one and for the other you have to be unable to work for 3 days only to have your benefit backdated.

As a personal trainer I believe that a shorter period for day 1 accident cover is important because as with the nature of the job and the associated lifestyle there is a higher chance of injury leading the a short period off work than with a lot of other occupations.

When getting your income protection insurance I recommend getting advice from a professional. You need to be aware that this represents just one piece in your financial puzzle. Please feel free to giving me a call on 0405 31 36 30 or flick me an email [email protected]

Disclaimer
The information on these pages is provided in good faith and is to the best of our knowledge accurate. We provide it without any warranty as to its correctness of statement or opinion or its suitability for any particular purpose. Any advice on this blog/website is of necessity general in nature and not specifically tailored to suit differing individual circumstances. For that, you must seek and we advise that you do seek financial advice from a licensed professional. Sean Thomas can accept no liability for any decisions that you may make based on the information on this blog/website. 

Debt is currently a dirty world. With events well documented such as the European debt crisis and the ‘GFC’ debt really isn’t looking too crash hot at the moment. The reality is the world is going through a process of
deleveraging where hopefully in the long term we have all learnt a lesson. (although I suspect we haven’t) 
 
So I hear you saying that all debts are bad however look at thing objectively and I think most people will agree that it is difficult to go through life debt free.
 
What is good  debt?
 
The generally consensus is that good debt is debt acquired to produce an appreciating asset and yes shares do appreciate in value in the longer term. Examples of appreciating assets commonly funded through debt are the family home, investment properties and shares. Sometimes debt incurred to purchase the family home is framed as bad debt as it isn’t tax deductible however my view is it’s technically a good debt but you need to take tax deductibility into consideration when electing which debt to pay down first.

What is bad debt?

Bad debt is used to purchase a depreciating asset such as a car or debt obtained to support lifestyle spending. Bad debt is those credit card purchases that you ‘had’ to make and that European vehicle that you had to have when a cheaper alternative would do the job. 
 
What does this mean to me?

When taking on any debt consider the long term implications. Here are some common scenarios.
 
When buying the family home will I be able to make my repayments if I don’t get that bonus or if interest rates rise 2%? What will happen when we have a family and go down to one wage?

When buying shares or investment properties are they really a good investment? What happens if share prices fall, am I prepared to invest long term (minimum 10 years), what if I don’t get a tenant?

When buying that shiny new motor vehicle, do I really need all these extras, can I afford the repayments and what are the long term ramifications?

With genuine bad debt such as furniture, jewellery, racing bikes and clothes consider how bad you need it, should I save the money first, can I justify not putting the funds into the mortgage, and what are the long term ramifications?

I hope this article has got you thinking and will at least assist in making an informed decision when you are making that next impulse purchase or investment.

Disclaimer
The information on these pages is provided in good faith and is to the best of our knowledge accurate. We provide it without any warranty as to its correctness of statement or opinion or its suitability for any particular purpose. Any advice on this blog/website is of necessity general in nature and not specifically tailored to suit differing individual circumstances. For that, you must seek and we advise that you do seek financial advice from a licensed professional. Sean Thomas can accept no liability for any decisions that you may make based on the information on this blog/website.