Insurance: Get insurance while you’re still bulletproof

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According to research by TAL insurance provider the cost of personal insurance soars after the age of 35. This is also the time in our lives that you may be going through significant change such as marriage, children, a bigger mortgage and more responsibilities.

In the previous 5 years to 2017, TAL paid out insurance claims to the sum of $66m to people aged up to 35, but this figure soared for those aged 35 – 46 to a total payout sum of $152m.

From our experience working with clients and insurance providers, it’s wise to get a personal insurance cover in place before you turn 35. If you are approaching your 35thbirthday now is the ideal time to think about this, but it is important to stress that an appropriate insurance plan is wise at any age.

It’s time to get some professional advice – from an adviser with the technical expertise and experience required to make sure you’re properly covered.

Successful Investor Secrets

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The investment world can change dramatically from one month to the next. But these secrets of successful investors never go out of style.

Successful investing can be one of your biggest allies in the quest for long-term financial security. Unfortunately, unsuccessful investing can leave you wishing you’d kept your money in the bank.

So what are the secrets to making your investments achieve what you want them to achieve?  Here are some of the tactics used by successful investors around the world.

1. Start with a plan

Smart investors don’t just look for ‘good’ investments. They look for investments that will help them achieve specific goals.

You may be seeking a return above that available on cash or term deposits. In this case there are other investments such as shares and fixed income, which may be expected to generate higher returns than cash over the long term, however, they are also more volatile, so investors need to consider both the risk and return components of their portfolio.

2. Diversify widely

One of the main goals of investing may be to ensure you have a mix of assets that are likely to perform well at different times – helping you survive any downturn in a specific market or industry sector.

While many Australian investors are heavily exposed to Australian shares, a well-diversified portfolio will generally hold assets in each of the major asset classes (e.g. Australian and international shares, property, fixed income and cash).

3. Watch your costs

It’s easy to get fixated on the returns your investments can generate. But successful investors always keep track of, and seek to minimise, the fees and taxes associated with owning them.

A ‘buy and hold’ strategy can help you avoid transaction costs like brokerage, or buy and sell spreads from managed funds. It can also help you reduce capital gains tax, which generally decreases by 50% when you’ve held an asset for over 12 months.

4. Market Timing Risks

Despite periods of significant volatility on a daily basis, over the long term, investments in assets such as Australian Shares have generated strong returns.

5. Don’t panic

When share markets retreat (which they inevitably do), smart investors don’t hit the panic button and sell long-term investments based on short term volatility – this is made easier by following Step 1 “Start with a Plan”.

Instead, if you continue to invest during a market downturn, you may be able to buy high-quality investments at a lower price than you could if you waited for markets to recover.

Following the GFC, when the stock market bottomed in early 2009, many investors sold out of equities and held large proportions of cash in their portfolios. The opportunity cost of this decision has meant that some investors have missed a significant rally over the past decade.

6. Protect your assets

Even a carefully constructed investment strategy can come unstuck if you need access to your money in an emergency.

A smart strategy is to ensure you maintain a sizeable cash reserve, and put in place appropriate insurance such as income, TPD and life insurance. Having appropriate insurances in place can help prevent the need for a ‘fire sale’ of your investments if you suffer a serious illness or accident.

Tip: Income protection typically replaces up to 75% of your income if you can’t work due to an illness or accident. 

Five financial moves to make in your 40s

In your 40s? Here’s what you need to consider to financially get ahead.

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Being in your 40s often involves balancing many responsibilities that it becomes easy to neglect your own financial wellbeing. But it’s not too late to secure your future. Here are some tips that may help you financially make the most of your 40s.

1.       Create a plan

If you don’t have a financial plan, it’s time to get one. Ensure that it’s based on your needs and priorities. By working with a professional adviser, you may be able to tailor a plan that helps you optimise your ability to save and invest.

2.       Grow your savings

Your 40s could be your peak earning years, so it may be a good idea to ramp up your savings and funnel some of your income into your superannuation or investment accounts. But be sure to do your homework and consult with a professional financial adviser about your options.

3.       Give your super a health check

A quick super health check may help you optimise your retirement savings. For example, by choosing a different investment option or type of risk, you may be able to earn better returns on your super. If you have multiple funds, consolidating your accounts may help you save on fees. Again, seek advice from a professional adviser before acting.

4.       Avoid lifestyle creep

People generally have a tendency to inflate their standard of living as they earn more and can afford more things, such as a better car or house. While it’s only natural to want the finer things in life, you’ll likely end up with little to no financial gain if your spending rises as quickly as your income. Try stick to your long-term financial goals and remember the big picture.

5.       Consider investing more

Your 40s may be a good time to invest more – or diversify your investments – to help you grow your long-term savings. But keep in mind that it’s important to choose instruments that suit your risk appetite and time horizon. Developing a strategy with your financial adviser might make it easier achieve the return required to reach your financial goals.

Disclaimer: The views expressed in this publication are solely those of the author; they are not reflective or indicative of Millennium3 Financial Services position and are not to be attributed to Millennium3 Financial Services. They cannot be reproduced in any form without the express written consent of the author.

 

The information provided in this document, including any tax information, is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. Millennium3 Financial Services Pty Ltd ABN 61 094 529 987 AFSL 244252

 

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