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Five ways to protect your estate

As sure as death and taxes

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

It’s a sad but unavoidable fact: one day we are all going to die. You will most likely have clear ideas as to how you would like your hard-earned wealth – your ‘estate’ – to be divided amongst your loved ones or other beneficiaries. However, estate planning is a complex area of law and basic mistakes can see Wills declared invalid, money end up with unintended recipients, or benefits reduced by avoidable tax bills. So how can you avoid making some of these mistakes?

1. Make a Will

Only around half of Australian adults have a valid Will. If you don’t have one, make one. Otherwise your estate will be distributed according to a government formula, and if no beneficiaries can be identified your life’s savings will end up in state government coffers. If you do have a Will make sure you review it regularly and update as required. Just a few of the key events for revising your Will include entering or leaving a marriage or de facto relationship, starting a family, establishing investment vehicles such as companies or trusts, changes to the financial or health status of adult beneficiaries or to add gifts to charities.

2. Appoint an appropriate executor

Administering an estate can be a major undertaking. Ideally you will want an executor who is competent, organised, honest and unbiased. Often this will be a spouse who is also the sole beneficiary, and administration of the estate may be relatively straightforward. But it’s common to also nominate an alternative executor should your spouse die before you. This may be an adult child or other close relative, and not necessarily a beneficiary. Whoever you nominate make sure you tell them that they are a (potential) executor and to provide them with important information such as the location of the original Will, and contact details for your lawyer, accountant and financial planner.

3. Identify assets that may not be dealt with by your Will

Any assets that you jointly own automatically pass to the surviving owner(s) on your death. They are not subject to your Will. If you have provided your super fund with a binding death benefit nomination your death benefit will be paid to the nominated beneficiary. This can be anyone, and not necessarily a beneficiary of your Will. If you nominate your ‘personal legal representative’ (i.e. your executor), the death benefit will be paid to the estate and dealt with according to your Will. If you don’t make a binding nomination the trustees of your super fund are obliged to pay the benefit to your dependents, as defined by superannuation law. This may not coincide with your wishes.

4. Be fair

If someone has reasonable grounds to believe they should receive something from your estate but you have not provided for them in your Will, then they may be able to legally challenge your Will. Legal fees may be paid by the estate, eroding its value, so you’ll want to minimise the chances of the Will being contested. Also be wary of ‘ruling from the grave’, for example by making any gifts dependent on a beneficiary either doing something (marrying a specific person, say), or not doing something.

5. Get expert advice

Estate planning throws up many other traps for the unwary, from paying too much tax on a superannuation death benefit to not making provision for beneficiaries who are unable to adequately manage their own affairs. With so much at stake, it pays to consult your financial planner who can assist you and also make recommendations to specialist estate planning lawyers.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.

Disclaimer

All statements made on this website are made in good faith and we believe they are accurate and reliable. Macarthur Wealth Management does not give any warranty as to the accuracy, reliability or completeness of information that is contained in this website, except in so far as any liability under statute cannot be excluded. Macarthur Wealth Management, its directors, employees and their representatives do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided on this website is owned by Macarthur Wealth Management. You may not alter or modify this information in any way, including the removal of this copyright notice.

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Markets hold their own in light of plenty of news flow

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

Local and global equity markets looked set to finish the week higher in what has been a topsy-turvy week for investor sentiment. 

In local stock news, Commonwealth Bank’s $6 billion share buy-back was more than $18 billion oversubscribed with an average scale back of almost 80%. Those holding a smaller number of shares were scaled back less whilst those left with less than 20 shares will see them compulsorily acquired.

Boral has completed the sale of its North American building products business for almost $3 billion to an American company. Boral has also completed the sale of its timber business for $64.5 million. Proceeds will be used to reduce debt.

Oil prices jumped to 7-year highs after OPEC+ agreed to stick to gradual production hikes, ignoring calls to increase production at a faster pace to bring down the oil price. The rapid ascent in the oil price has been due to a toxic combination of simultaneous re-opening across the globe (demand) along with significant under-investment in fossil fuels over the last few years (supply) given the focus on renewables. Russian President Putin said he was ready to stabilise energy prices by increasing gas shipments to Europe.
The Reserve Bank of Australia maintained the cash rate at the record low of 0.1% for the 10th consecutive month. It also confirmed its government bond yield targeting and its continued purchase of government securities at a rate of $4 billion per week at least until mid-February 2022. The central bank Governor reiterated that they expect the economy to be at pre-Delta variant levels by the 2nd half of 2022.

The Australian banking regulator APRA has raised the minimum interest rate buffer that lenders need to account for when assessing home loan applications in an attempt to slow booming home prices. The interest buffer has been increased to 3% from 2.5%. Time will tell if they need to do more to achieve their objective in what is a delicate balancing act.

Australian private sector credit grew by 0.6% in August, up 4.7% over the year, with housing and business credit rising, whilst personal credit contracted. Owner-occupied housing credit is now up 8.4% for the year whilst personal credit is down 5.6%.

Australian dwelling approvals unexpectedly rose by 6.8% in August, against expectations of a 5% decline, with both apartment and detached housing approvals increasing. Approvals for apartments drove the monthly gain. WA, SA, and VIC saw the strongest overall gains.

Job vacancies fell by 9.8% in the 3 months to end of August but remain 46% above their pre-pandemic levels. Private sector vacancies fell by 10.9% whilst public sector vacancies were up 2.3%. NSW, SA, and TAS saw the largest falls.

Australian dwelling prices rose by 1.5% across the 8 capital cities, with annual growth now sitting at 19.5%. Hobart, Canberra, and Sydney led the charge in September.

The value of new lending for housing, excluding refinancing, fell 4.3% in August, a larger fall than expected. Lending to both first home buyers and owner occupiers fell whilst lending to investors rose. Lending to first home buyers saw the biggest fall and is now down more than 21% since the peak in January 2021. Affordability hitting home.

Australia’s trade surplus came in at a record $15.1 billion in August, with exports up 4.1% whilst imports fell 1.5%, against expectations of a $10 billion rise. Non-rural exports were up a very strong 11.3% in the month to now be up more than 70% over the year. Recent iron ore price falls should see the trade surplus retreat somewhat in the period ahead but still a massive number for August.

Asia’s manufacturing activity rebounded in September after virus fears and restrictions eased. But European manufacturers reported increasing strains from supply chain squeezes. That, plus energy shortages, not helping.
China’s central government officials ordered the country’s top state-owned energy companies, with all forms of fuel on the table, to secure supplies for this winter at any cost as energy shortages threaten life and their economy.

Domenic Perrottet has been confirmed as NSW’s youngest ever premier, largely as expected, winning an internal party room vote very easily. He was most recently the Treasurer and has made some subtle changes to his front bench. Perrottet has also announced a faster easing of virus restrictions than his predecessor’s plan. Nationals’ leader and Deputy Premier John Barilaro also announced he is retiring from politics.

US politics remained messy enough to impact market sentiment as congress continues to debate their self-imposed debt ceiling of which any breach will see the government unable to pay their bills. Democrats are considering a smaller stimulus package to improve chances of it being passed, whilst the Biden administration is also set to unveil its China trade policy following a review of import tariffs. Interestingly, a recent report indicated that China is not complying with phase 1 of their trade deal with the US.

The Chinese government sent a record number of fighter jets into Taiwan’s defence zone over its national day weekend, with the numbers rising again early this week before Taiwan scrambled fighter jets and deployed missile systems to monitor Chinese planes. The show of force over 4 consecutive days is part of a growing and troubling long-term trend.  

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.

Disclaimer

All statements made on this website are made in good faith and we believe they are accurate and reliable. Macarthur Wealth Management does not give any warranty as to the accuracy, reliability or completeness of information that is contained in this website, except in so far as any liability under statute cannot be excluded. Macarthur Wealth Management, its directors, employees and their representatives do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided on this website is owned by Macarthur Wealth Management. You may not alter or modify this information in any way, including the removal of this copyright notice.

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Death, Taxes, and Inheritances, what you need to know.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. https://www.macarthurwealth.com.au/estate-planning/

More than $3.5 trillion dollars in inherited funds are expected to change hands within Australia during the next 20 years, with Australians enjoying one of the highest inheritance payout rates anywhere in the world. According to investment bank HSBC’s Future of Retirement report,

Australians pass on average $561,000 to their heirs, almost four times the global average of $148,000, with two in every three Australians planning to leave an inheritance.

This payout rate is significantly higher than has been the case for previous generations, with higher property prices and ever-increasing retirement savings creating larger and larger estates to be handed from one generation to the next.

Unlike most OECD countries, strictly speaking, there are no inheritance taxes in Australia, so this has also encouraged Australians to hold on to their estates until they pass, rather than distributing assets to the next generation while they’re alive.

The only exception is superannuation

If, for example, a person inherits funds from a loved one’s superannuation account and they are not a dependent, the transfer will trigger a 15 per cent death benefit tax, plus Medicare levy. This can be reduced if the person leaving the funds withdraws the money and places those savings outside superannuation as part of their general estate before they pass.

But given most people don’t know exactly when they will die, this is a rare event.

The only other way of avoiding this death benefit tax is to establish a family trust

However, establishing a family trust can be a complex and expensive option and requires sophisticated legal and tax advice before being implemented. But, as a strategy, it can successfully reduce your tax obligations.

Any asset can be inherited – from property to jewellery, from shares in listed companies to fine art. Even animals can be included in your Will. If you can own it, then it can be passed on to a beneficiary when you die. Receiving an inheritance, though, can be more complex, and professional advice should be obtained regarding how to best manage and invest any funds received.

Regarding any Centrelink entitlements, inherited funds are included for the purpose of the asset test. Therefore, they are subject to the normal deeming regulations and will impact pension entitlements accordingly

For most people, the biggest challenge is to find a way to squeeze these funds into superannuation, where they can be invested within a tax benign environment. And once they are used to support an account-based pension, they will effectively become tax-free in terms of any capital gains or income.

This is where you need to seek professional advice.

The rules governing just when and how much can be contributed to super will vary depending on your age, whether you are still working or not, and how much you already have in super. As estates become larger, it is increasingly important to get good advice to ensure your assets are distributed in line with your wishes.

The simpler and more straightforward your Will, the more likely it is to be successfully implemented. In addition, most advisers encourage clients to put in place a living Will, where, either in writing or via a conversation with your beneficiaries, you outline precisely what your wishes are and the reasons behind them.

By doing this, you are likely to discourage any challenges to your Will – challenges that can be extremely costly. Moreover, given that challenges can be financed by funds held within the estate, the prospect of challenges can in themselves sharply decrease the remaining assets to be distributed.

Effective estate planning can be complicated but the benefits of a well-constructed estate plan, can provide financial certainty and peace of mind for all parties, speak to your adviser about the options available to you.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without considering your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.

Disclaimer

All statements made on this website are made in good faith and we believe they are accurate and reliable. Macarthur Wealth Management does not give any warranty as to the accuracy, reliability or completeness of information that is contained in this website, except in so far as any liability under statute cannot be excluded. Macarthur Wealth Management, its directors, employees, and their representatives do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided on this website is owned by Macarthur Wealth Management. You may not alter or modify this information in any way, including the removal of this copyright notice.

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Estate planning for your business

It’s not uncommon for business owners to take short, irregular holidays because they don’t have the support to keep their business running without them for a longer break. Aside from taking time off for leisure, have you considered what would happen if you were forced to take six months off work due to a serious illness or injury?

Would the business survive and how would the bills be paid? Or if you were to die, can you be sure that your business partners would give your family a fair deal?

For these reasons, it’s important for all business owners to put in place a properly prepared succession plan. It’s just like a Will for the business, but there is often a wider range of scenarios and considerations involved.

As with a personal Will, what should be included in a good business succession plan can vary from one situation to the next. Here are some key areas that should always be considered:

  • Business structure – in the event of death or retirement, the ownership and control of the business may need to be transferred to the owner’s family or to the surviving business partners. How easily this would occur will often depend on how the business operates, such as through a trust, or a company, or without a separate entity at all.
  • Succession agreements – if something happened to one of the business partners, would that partner’s spouse or children be capable of taking over the control of that share of the business? If the answer is no, then a succession agreement can assist the remaining business partners to carry on operating the business whilst allowing for adequate compensation for the former partner’s family.
  • Managing risk – just like personal insurance, business insurance can provide a variety of types of protection such as temporarily meeting the normal costs of running the business (business expenses cover) or paying for a short-term replacement manager (e.g. trauma or disability cover). A life insurance policy linked to the succession agreement that provides the deceased partner’s family with suitable compensation for the transfer of business ownership to the surviving partners can also be a good idea.
  • Powers of Attorney – many small businesses can’t do much without the authority of the key decision-maker, so a Power of Attorney is integral to the succession planning process. It helps the business to physically operate if the owner is incapacitated through illness or injury.

There is a range of professionals who may need to be involved in setting up a succession plan, including your financial adviser, lawyer, and accountant. Even if you already have a plan in place, make sure you regularly review the agreements and your insurance policies to keep them up to date and reflecting the current value of the business.

Like a Will, don’t leave this to when it’s too late.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without considering your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.

Disclaimer

All statements made on this website are made in good faith and we believe they are accurate and reliable. Macarthur Wealth Management does not give any warranty as to the accuracy, reliability or completeness of information that is contained in this website, except in so far as any liability under statute cannot be excluded. Macarthur Wealth Management, its directors, employees, and their representatives do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided on this website is owned by Macarthur Wealth Management. You may not alter or modify this information in any way, including the removal of this copyright notice.

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Do you have the right protection for your loan?

Buying a property is one of the biggest investments many people will make in their lives. When it comes to securing a mortgage, many buyers may be so focused on the immediate steps ahead that they don’t consider having the right protections in place first.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

What are the different insurances that can protect a home loan?

Three key types of insurance will protect your mortgage:

  • Lenders mortgage insurance;
  • Mortgage protection insurance;
  • Income protection insurance.

Understanding the different insurances available for your mortgage for further protection is an important part of protecting yourself and your loan if you’re unable to meet repayments.

Lenders mortgage insurance (LMI) is a one-off premium payable if you want to buy a home, but your deposit is less than 20 per cent of the property’s value. LMI protects the lender in the event you’re unable to repay your loan. The premium is added to your total home loan amount, which means you’ll pay more interest over the loan term. While the extra interest is one of the main drawbacks of LMI, it helps people enter the property market sooner.

Mortgage protection insurance protects you if you’re unable to make loan repayments due to serious illness, injury, or death. Each policy is different depending on the insurance provider, but generally provide trauma, death and terminal illness and special injury benefits. These benefits are typically paid in a lump sum.

Income protection insurance can pay up to 85 per cent of your gross income if you’re unable to work due to partial or total disability. The definition of disability and the level of cover provided depends on the insurance policy.

What happens if you don’t get insurance for your mortgage?

If you don’t invest in protecting yourself and your home loan, you could end up in a costly financial situation. So, while the premiums for key insurances may seem like they add up, it far outweighs the risk of being unable to meet your financial obligations or support any dependents if you can’t repay your mortgage. Let’s look at an example.

Sam is 34 and a non-smoker. His home loan is $450,000. Unfortunately, Sam recently had a major fall at work, resulting in a head injury and several broken bones. He is unable to work for several months. With his mortgage protection insurance, he could access his specified injury benefit and receive a lump sum of $8,500. Sam’s income

protection insurance will pay 75 per cent of his salary for six months while he recovers. With these insurances in place, Sam could continue paying his mortgage and meet his living expenses while recovering from his injuries. Without these insurances, he may have had to sell his property and live off his savings.

How do you know which mortgage insurance to get?

Many mortgage holders have insurances attached to their superannuation or health insurance providers, so be sure to double-check the cover you already have before applying for any additional extra cover.

If you’d like to speak with someone independent of your mortgage application process, the Australian Government offers an assistance service. Contact the National Debt Helpline on 1800 007 007 to speak with a financial counsellor about protecting your mortgage. Additional services are available for small business owners, farmers, or people in regional areas.

Alternatively, speak to your financial adviser to be sure you protect your loan and your financial security.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without considering your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.

Disclaimer

All statements made on this website are made in good faith and we believe they are accurate and reliable. Macarthur Wealth Management does not give any warranty as to the accuracy, reliability or completeness of information that is contained in this website, except in so far as any liability under statute cannot be excluded. Macarthur Wealth Management, its directors, employees, and their representatives do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided on this website is owned by Macarthur Wealth Management. You may not alter or modify this information in any way, including the removal of this copyright notice.

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Simple money mistakes – and how to fix them!

The world is constantly dangling temptations before our eyes, and it’s never been easier to buy stuff, even if we don’t have the money. The upshot is that we are all susceptible to making some basic financial errors. Individually, these mistakes can be small. Added together, they can really hold us back from financial success.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

Adding up the little things

Take one simple example. It’s easy to spend $15 on lunch from a café. But make your own and you could easily save over $10 per day. Multiply that by your working days and you could be saving over $2,000 a year!

How about the great clothing trap? Every year Australian’s throw away huge amounts of clothing that has never been worn, or only worn a few times. Then there’s food. The average household throws away over $1,000 worth each year.

Add in other impulse purchases and it’s easy to fritter away many thousands of dollars on unnecessary or impulse purchases each year.

Big savings

Other common (and often bigger) money mistakes arise from our poor use of debt:

  • If you don’t pay off your credit card balance in full during the interest-free period, you could be digging yourself a debt hole that can be very hard to get out of.
  • If your impulse buys rely on the use of ‘buy now pay later’ services, it’s a sign that you probably can’t afford them.
  • Borrowing to buy things that immediately fall in value, such as a new car, is another quick way to blow some big dollars.
  • Even when buying an appreciating asset, such as a home, purchasing above your needs can leave you struggling to meet repayments, adversely impacting your financial position.

Finding a purpose

For many people, just being aware of these money mistakes is enough for them to avoid the traps. For others, the instant gratification of the purchase or the pleasure in zipping down the road in a flash new car can make it hard to adopt new habits. But what if there was a clear, long-term reward for suppressing the desire for instant gratification? This is a personal choice, but could be a big overseas trip, upgrading your home or simply achieving financial independence.

Setting some clear goals can make it much easier to forgo that focaccia and flat white in favour of a homemade (and just as delicious) sandwich. How many DIY lunches equal a week on a Greek island? Tick them off on a chart so you can visually track your progress.

Or each time you suppress the urge to buy something you desire but really don’t need, give yourself a mental pat on the back. You’ve just brought forward the day when you can buy that new house or work becomes optional. Again, charting your progress can help you see what you’re achieving and help you maintain your motivation.

So have a think about your financial habits and see how many fit into the basic categories of financial mistakes – spending too much, not saving enough, and making poor use of debt. Then work out the goals that are important enough for you to ditch the bad habits and develop good ones.

You might be surprised by just how much some simple changes can contribute to your financial success.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without considering your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.

Disclaimer

All statements made on this website are made in good faith and we believe they are accurate and reliable. Macarthur Wealth Management does not give any warranty as to the accuracy, reliability or completeness of information that is contained in this website, except in so far as any liability under statute cannot be excluded. Macarthur Wealth Management, its directors, employees, and their representatives do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided on this website is owned by Macarthur Wealth Management. You may not alter or modify this information in any way, including the removal of this copyright notice.

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An important conversation

None of us likes to consider our own mortality. For our older loved ones, it’s an even more confronting topic and difficult to discuss.

When Lindsay became ill, his family’s priority was to support him through his treatment and keep him positive and as comfortable as possible.

Typical of his generation, Lindsay had always been very private, never sharing personal information – not even with his nearest and dearest. After he passed away, it dawned on the family that nobody knew whether Lindsay would have preferred cremation or burial. At such an emotionally charged time, the question caused quite a dispute.

As parents, we aim to have open dialogue with our children over issues like drugs, sex, etc. But as our parents age, difficult discussions around medical arrangements, Wills, money, etc, are usually put off until something occurs to trigger the talk. Often, by then it’s too late, which is why it’s so important to communicate while you still can.

Once Lindsay’s funeral was over, the family faced more complex questions: did Lindsay have a Will? Was there any insurance? What investments and assets did he have?

Trying to locate Lindsay’s paperwork and make sense of his finances became a nightmare.

If only someone had asked him…

What should you talk to your parents about?

If you think about all those things you’d rather not discuss you’re off to a good start.

Before the conversation, consider:

•             Finances, assets, investments, accounts, insurance policies, etc

•             Will. Is it current and where is it kept? Who is the executor?

•             Medical. Medications and power of attorney

•             Funeral preferences

•             Aged care arrangements, family home, care facilities

•             Location of important documents

•             Usernames and passwords for online accounts

•             Contact details for doctor, financial adviser, trustees, power of attorney, solicitor, executor, etc.

During the conversation

• Extend an invitation: invite your loved one to express their feelings and articulate their wants. Present the discussion to making their life more manageable. Stress that you’re not taking over, but that you care and that they are in control.

• Present an example: use examples of challenges faced by others, explaining that you hope to avoid the same situation. Tell them you’d like to help them organise their paperwork to provide peace of mind and a plan for their future.

• Support independence: point out that you’re not reducing their independence but ensuring they maintain their independence as long as possible.

• Don’t judge: as your loved one opens up, listen respectfully and without judgement. Encourage discussion around their choices so you can understand and help implement them.

Carefully consider your approach. These are sensitive topics; introduce them gently and tactfully. It may be helpful to involve their executor, financial adviser or accountant.

Finally, just when you think your job is done, have the same discussion with your children, only in reverse. Be clear about what you want and why you’re talking to them.

Children don’t want to think about your mortality any more than you do. They’ll think you’re overreacting and probably won’t thank you for the information – not right now anyway. But that’s the nature of kids.

The main thing is that when your time comes, they’ll realise you’ve saved them a lot of heartache.

Need help? Contact us Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide. (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.

Disclaimer

All statements made on this website are made in good faith and we believe they are accurate and reliable. Macarthur Wealth Management does not give any warranty as to the accuracy, reliability or completeness of information that is contained in this website, except in so far as any liability under statute cannot be excluded. Macarthur Wealth Management, its directors, employees and their representatives do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided on this website is owned by Macarthur Wealth Management. You may not alter or modify this information in any way, including the removal of this copyright notice.

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Markets buoyed by US stimulus bills

Need help? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide. (02) 9683 2869. https://www.macarthurwealth.com.au

Local and global equity markets rose strongly this week buoyed by strong company earnings results, the passage of the US infrastructure bill, and progress on the bigger budgetary bill. 

Analysts now expect 2nd quarter profit growth of 93% for the 500 largest US companies. With their quarterly reporting season almost complete, 87% of companies have beat analyst expectations, which is the highest beat on record. 

In local stock news, general insurer Suncorp improved full-year cash earnings by 42% with shareholders to receive a special dividend, whilst the company will also undertake an on-market stock buyback. 

Toll road operator Transurban revealed that the costs of the West Gate tunnel project in Melbourne have blown out by about $3.3 billion. The company reported statutory profit of $3.27 billion. Lockdowns in Sydney, Brisbane, and Melbourne have reduced the number of cars on the road and have weighed on revenue. 

Commonwealth Bank of Australia released its 2021 financial year results reporting a $1.4 billion increase in cash profit to $8.7 billion over the last 12 months, an almost 20% increase. The bank also announced a $6 billion off-market stock buy-back. 

The gold price had fallen sharply over the last week and half before mounting somewhat of a recovery in the last few days. A stronger US dollar along with the continuing economic recovery and expectations of the US central bank paring back its stimulus program have all put downward pressure on the gold price of late. 

The iron price has continued to fall from its lofty heights following a report which said that China wants to limit steel makers’ impact on its environment, which made investors reassess their expectations for iron ore demand. 
The Reserve Bank of Australia has revised its economic growth forecast down to 4% for 2021 but has kept their forecast for unemployment at 5% for the same period. They did revise their unemployment forecast for 2022 down to 4.25% and left their inflation forecasts unchanged at 1.75% for 2022 and 2.25% for 2023. 

The negative impact of lockdowns have begun to rear their ugly head, putting aside the societal issues, as more than 15,000 home and business owners were unable to repay their loans in July. In addition, an additional 150,000 Australians became unemployed last month according to Roy Morgan. Their latest data showed the bulk of the job losses came from part-time work whilst 61,000 full-time workers also became unemployed. 619,000 workers are now looking for full-time work whilst 803,000 are looking for part-time work. 

July saw the National Australia Bank business confidence index and business conditions fall sharply, which isn’t surprising given the size and extent of lockdowns in a number of states. Australian consumer sentiment fell by more than 4% in August as consumers’ fears of unemployment rose sharply. 

US consumer prices for July rose at its slowest pace in the past 5 months as some price increases have subsided on the back of softening demand and increased supply. Even so, the July inflation number of 0.5% is still quite high, with the annual rate at 5.4%, as demand pressures and supply issues remain. 

US nonfarm payrolls increased by 943,000 jobs last month a Labor Department report showed. Economists had forecast payrolls would increase by 870,000. The report also showed strong wage gains as employers competed for scarce workers as many workers remain at home collecting overly generous unemployment benefits. The unemployment rate also dropped to a 16 month low. 

The US central bank had contrasting rhetoric from a couple of members this week with one suggesting that the US should be well past the pandemic crisis before the central bank raises rates. Another member said high inflation this year may have already met one of the bank’s benchmarks for raising rates. 

The Germans have again warned that inflation in the Euro area could pick up faster than expected and urged the European central bank not to drag out their emergency bond-buying program.   

A gauge of investor expectations for the German economy plunged to 40 from 63 points in July as fears about the impact of the delta variant gather pace. 

Chinese economic data showed exports rising by 19% in July on the same time last year, coming in just under expectations, whilst imports were up 28% on the same time last year, also coming in below expectations. 

China’s central bank has fanned expectations of further monetary policy easing, saying in its latest quarterly report that inflation pressures are controllable whilst highlighting risks to the economic growth outlook. 
The US Senate voted to progress the US$1 trillion infrastructure bill with 19 Republicans voting with Democrats to support the push. However, the Democrat leader of the House has said she will only bring the bill to a vote after the Senate passes a separate US$3.5 trillion bill which has all kinds of things in it, most of it Democrat election promises, which the Democrats will likely look to push through via a process called reconciliation (ie. without Republican support). The debt ceiling (currently at US$28.5 trillion….) with partisanship likely to make it a tough task. 

The Biden administration faced some hard truths this week as it pertains to foreign policy. A return to the Iran nuclear deal looks to be dead in the water as Iran races towards the capacity to build a nuclear bomb in light of perceived US weakness. The US will now be sending troops back into Afghanistan following an ill-advised move earlier in the year to remove US troops from the country. The country has again become a hotbed for terrorism with the Taliban carry out deadly attacks against US allies left behind. Lastly, US energy self-sufficiency is very much a thing of the past after US oil inventories got so low that President Biden had to ask OPEC+ to increase supply. US inventories are low due to increase in demand, but mainly due to government policy banning new investment in oil & gas and pipelines.  

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.

Disclaimer

All statements made on this website are made in good faith and we believe they are accurate and reliable. Macarthur Wealth Management does not give any warranty as to the accuracy, reliability or completeness of information that is contained in this website, except in so far as any liability under statute cannot be excluded. Macarthur Wealth Management, its directors, employees and their representatives do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided on this website is owned by Macarthur Wealth Management. You may not alter or modify this information in any way, including the removal of this copyright notice.

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A great way to help your kids – and you

Need help? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide. (02) 9683 2869. www.macarthurwealth.com.au

We are always hearing about how important it is to insure our own lives and income, but what about insuring our children’s.

How would your adult child and their family survive financially in the unfortunate event of an accident or an illness that prevented them earning an income for an extended period of time?

Income protection, TPD and trauma insurance are often not a consideration to a young family in today’s financial climate with many struggling with mortgage repayments, education spending and increased living costs.

But what would be your role if your child and their family were suddenly without an income? Without adequate insurance how would they cope?

What if you had helped your child to buy his or her first home and that child suffered a long term-illness or disability? How would that affect you if they couldn’t make the repayments?

Here’s a scenario…

Alan and Joanne’s married son Tim was involved in a car accident, sustaining a spinal injury that prevented him from working for two years. Unfortunately, Tim did not have income protection or accident insurance.

The bank foreclosed on his mortgage and Tim and his young family were forced to move in with Alan and Joanne. Eventually, Tim recovered and was able to return to work.

Aside from the emotional impact on Tim and his family, Alan and Joanne’s retirement plans were seriously compromised. Joanne’s health deteriorated due to the extra stress of the situation, and she was diagnosed with severe depression.

What could Alan and Joanne have done differently?

They could have asked Tim if his income was protected in the case of an unforeseen illness or injury, Learning that the young couple was allocating all spare cash to the mortgage, the parents might have offered to help pay for adequate insurance cover.

Even if you are not in a position to contribute to the cost of their insurance, raising the issue with your adult children and encouraging them to talk to a financial professional could be some of the best guidance you could ever give them.

Need help? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide. (02) 9683 2869. www.macarthurwealth.com.au

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.

Disclaimer

All statements made on this website are made in good faith and we believe they are accurate and reliable. Macarthur Wealth Management does not give any warranty as to the accuracy, reliability or completeness of information that is contained in this website, except in so far as any liability under statute cannot be excluded. Macarthur Wealth Management, its directors, employees and their representatives do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided on this website is owned by Macarthur Wealth Management. You may not alter or modify this information in any way, including the removal of this copyright notice.

Company reporting season buoys investor sentiment

Need help? Contact Macarthur Wealth Management for expert financial planning in Parramatta and Sydney wide. (02) 9683 2869. https://www.macarthurwealth.com.au.

Local and global equity markets largely trended higher over the week, buoyed by strong company earnings results and slightly more dovish central bank sentiment. 

Results for US corporate quarterly reporting season have been much stronger than expected at the half-way mark, with 92% managing to meet or beat earnings estimates while 86% have done so on the revenue side, making it the highest beat ratios since 1st quarter 2008. 

In local stock news, National Australia Bank announced it will buy-back $2.5 billion in shares. The buy-back will happen in August and follows ANZ declaring a similar move earlier this month. Banks are awash with capital following wealth management sales and provisioning for bad debts which never eventuated as the government and central bank saved everyone. 

Ryan Stocks has become the chairman of Boral after Seven Group gained almost 70% of the company through its takeover efforts. Seven has also installed its CFO as a director, whilst the previous Boral chair has retired and 2 other board members will retire after the AGM. 

US digital payments giant Square Inc has agreed to acquire Afterpay in a deal worth $39 billion, or $126.21 per share. The all-stock deal will see Afterpay integrated into the existing Square ecosystems worldwide. Afterpay’s board has unanimously recommended the deal to shareholders. Afterpay shareholders are expected to own 18.5% of Square once the deal is enacted. 

Oil Search’s board has endorsed Santos’ offer of $4.52 a share, which will make the combined company one of the 20 largest oil and gas providers in the world. 

The oil price trended lower this week as concerns arose regarding the pace of the global economic recovery in light of increasing virus restrictions in some countries.
The Reserve Bank of Australia has unsurprisingly kept the cash rate at 0.1% at their August meeting. Given current lockdowns across the eastern states, any rhetoric about the bank moving earlier than expected to remove stimulus has now gone. 

Concerns continue to mount regarding the economic recovery given the continued length of the Sydney lockdown (including army deployment), with Melbourne and parts of Brisbane also now under lockdown. 3rd quarter economic growth will be negative and 4th quarter isn’t looking too good at this stage, which might see the economy dip back into recession. 

Australian credit rose by a solid 0.9% in June, boosted by a 1.6% business credit, likely the result of businesses drawing down credit facilities to survive the lockdowns. Housing credit also posted a strong lift for the month with both owner occupier and investor credit rising. Personal credit fell, hardly surprising given concerns regarding the length of lockdown. 

Australian dwelling prices rose by a solid 1.6% across the 8 capital cities in July, with annual growth sitting at 15%. Price rises in July were particularly strong in Sydney, Brisbane, and Canberra. Regional prices increased by 1.7% in the month. The monthly rate of growth peaked in March this year at 2.8%, and has since trended lower, but the pace of growth remains strong. 

Residential building approvals in Australia fell by 6.7% in June, driven by a large drop in approvals for houses as growth settles at lower rate post the HomeBuilder scheme finishing. New lending for housing fell by 1.6% in June, with lending to first home buyers driving the fall whilst lending to investors rose. 

Plenty of rhetoric from US central bank members this week pointing to internal differences of opinion but not so far apart as to cause any major issues for chair Jerome Powell on the communication front. A couple of prominent members waxing lyrical about the economy being strong enough to see a reduction in money printing from 2022 and potential rate rises in 2023. 

US private payrolls data increased by a significantly less than expected 330,000 in July, versus expectations for more than 690,000

Price increases are starting to hit home in Europe with Germany’s inflation rate jumping to the highest level since 2008. Likely temporary given both the demand (government stimulus, restricted travel) and supply shocks (restricted work practices, border restrictions on labour, commodity price increases), but the data will fuel debate about whether policy makers need to start removing stimulus faster than anticipated. Highly unlikely at this stage, but worth monitoring. 

The Chinese government has pledged more effective fiscal support for their economy and tighter supervision of overseas share listings as policy makers highlighted economic risks in the 2nd half of this year. The US securities regulator has also increased disclosure requirements for IPOs of Chinese companies. 
US President Biden and his administration will likely ramp up already very high levels of government stimulus as the US economic recovery begins to stall, with $10 trillion of new spending/investment planned. 10 million Americans remained unemployed with new obstacles emerging as some states reconsider mask mandates and other restrictions, all whilst many of the emergency stimulus programs from 2020 come to an end. The political cycle is clearly front and centre as the Biden administration looks to buy its way to a stronger rebound in light of the all-important US mid-terms next year. 

A Hong Kong court sentenced the first person convicted under a national security law imposed by Beijing, to 9 years in prison. Doesn’t bode well for dozens of pro-democracy activists awaiting similar trials.  

China’s government has quietly issued new procurement guidelines in May that require up to 100% of local content on hundreds of items, erecting fresh barriers for foreign suppliers, according to a number of sources. The government has not responded to queries on the document. The edict flies in the face of their admission to the WTO and their phase 1 trade deal with the USA. Hardly surprising. 

YouTube suspended Sky News Australia from uploading content onto its website for a week under its “strikes” system. The Alphabet (Google) owned company said that the media company had breached its Covid-19 misinformation standards. Sky News Australia vehemently denies the allegations. In any case, a stain on censorship in Australia’s history. 

A growth number of Australian government MPs are pushing back against the use of vaccine certificates for domestic travel and attendance at venues and events. It came after news the government had agreed on a passport system for international travel, but was facing internal unrest when it comes to domestic use.  

Need help? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide. (02) 9683 2869. https://www.macarthurwealth.com.au

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.

Disclaimer

All statements made on this website are made in good faith and we believe they are accurate and reliable. Macarthur Wealth Management does not give any warranty as to the accuracy, reliability or completeness of information that is contained in this website, except in so far as any liability under statute cannot be excluded. Macarthur Wealth Management, its directors, employees and their representatives do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided on this website is owned by Macarthur Wealth Management. You may not alter or modify this information in any way, including the removal of this copyright notice.

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