The Road Ahead : June July 2014
QUEENSLAND'S LARGEST CLUB 25 JUN/JUL 2014 THE ROAD AHEAD DOLLARS & $ENSE | LIFESTYLE plan now for fy 14-15 IT'S THE STEPS WE TAKE TODAY THAT WILL MAKE THE DIFFERENCE IN THE LONG TERM. WITH NOEL WHITTAKER ANOTHER FINANCIAL YEAR is behind us, and what a challenging one it has been. Returns from most asset classes were good, but the May budget took money from nearly everybody's pocket. This means good money management is more important than ever. The big job now is to look at your own personal balance sheet, and then put strategies in place to ensure that you finish the new financial year in a better position than you started it. Interest rates are at very low points, but don't delude yourself by thinking these rates will continue forever. Eventually all that money that is being printed around the world is going to work its way into the system and rising inflation is a strong possibility. When this happens, interest rates will start going up. Obviously it is far better to prepare for a rate rise in advance than to find yourself in a financial bind when it happens. So try to maintain home loan repayments of at least $8 per thousand a month -- that's $2400 a month on a $300,000 loan. Repayments at this rate will have the loan paid off in 16 years if rates are six percent. If they don't reach this level your loan will be paid off much faster and you will have given yourself a valuable safety buffer. Don't overlook the power of paying fortnightly. Repayments of $2000 a month will pay a loan of $300,000 back in 23 years at six percent, but if they were changed to $1000 a fortnight the term would drop to 19 years. There are 26 fortnights, but only 12 calendar months. Moving to fortnightly means you make the equivalent of an extra monthly payment without feeling it. If you are over 55, pour as much money as you can into superannuation. There is no point in leaving money lying in bank accounts where the interest is fully taxable, when you can move it to superannuation where the income will be taxed at just 15 percent. There is no entry tax on non- concessional contributions and, once you reach 60, you can make withdrawals tax-free as needed or leave the balance for as long as you wish. This is also a good time to track down any unclaimed superannuation that is lying idle; just go to unclaimedsuper.com.au and follow the prompts. If you are nearing 60, contributing spare funds to super is a no brainer, because you've got fewer worries about lack of access. A major benefit of holding money in super is that Centrelink does not count it until you reach pensionable age. For example, if the male partner was 65 and the female partner was 58, moving a large amount of superannuation from his name into her name could maximise his age pension benefits. Recently, my articles have been built around one common theme -- helping yourself so that you can have a more secure financial future. Remember, it is the steps we take today that will make the difference in the long term. Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: firstname.lastname@example.org.