Andrew from Vista Financial

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About Andrew from Vista Financial

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  1. Sources of Income in Retirement

    Switching from earning an income through employment to generating an income in retirement can require some careful planning. Often income will come from many different sources and the combination that works for you will depend on your individual circumstances. It pays to seek financial advice to help determine which sources of income will best meet your needs and living costs and support you through your retirement.
  2. What is a Managed Fund?

  3. What is an investment (insurance) bond?

    When investment strategies are implemented to build and maintain wealth, they are centred on an understanding of your financial situation, goals and objectives. The utilisation of superannuation is often a major component of this due to reasons such as the variety of investment options available and the favourable tax treatment of income and capital gains in both the accumulation and pension phase. Depending on your personal circumstances, there may be situations where it’s also beneficial for you to grow and hold a portion of your wealth outside of superannuation. Reasons that can prompt this may include: Savings for future expenses that will be incurred in the medium to long-term, but prior to your ability to gain access to superannuation. These expenses may comprise such things as saving for a long-stay overseas holiday or your child’s education or wedding. Alternatively, you may find that you wish to continue building wealth, however you are unable to make further contributions to superannuation due to reasons such as your age and employment situation, or having exceeded your contributions cap limits. Due to the above considerations, you may find that an investment bond (also commonly referred to as an insurance bond) forms a component of your overall investment portfolio. What is an investment bond? An investment bond is a non-superannuation investment vehicle commonly offered by insurance companies and friendly societies. It has similar features to a managed fund (e.g. your money is pooled with other investors and is managed by fund managers) combined with an insurance policy (e.g. with a life insured and a nominated beneficiary). This type of investment has been around for some time now, and it’s one way to build wealth outside of superannuation in a tax effective manner if the relevant investment bond rules governing contributions and withdrawals are followed and the strategy is appropriate to your financial situation, goals and objectives. Below we have provided you with some of the key points surrounding investment bonds. Investment options As with any investment, your risk profile is an important consideration. Although investment options may vary between bond issuers, generally an investment bond gives you the ability to invest in a variety of different investments and construct a portfolio that has asset weightings appropriate to your risk profile. For example, you may have the choice to invest in conservative assets (such as cash and fixed interest), growth assets (such as shares and property), or a diversified mixture of both. Tax treatment Investment bonds are tax paid investments. This means that tax is paid by the bond issuer and not you as the investor. The maximum tax paid on earnings is 30% before being reinvested back into the investment bond; however, depending on the underlying investments in the investment bond, you may find that franking credits and other offsets may further reduce this effective tax rate. In addition, generally you do not need to declare earnings in your tax return. As such, investing in an investment bond may be of benefit to you if your marginal tax rate is higher than 30%. In terms of withdrawals, if you decide to redeem your investment after 10 years, subject to the 125% rule (discussed below), then there is no additional tax payable on earnings; however, if this is done within the first 10 years, then the following rules apply. Investment bond - Tax treatment of earnings upon withdrawal Withdrawal made Tax treatment Within the first 8 years 100% of earnings assessed at your marginal tax rate (MTR)* In year 9 Two-thirds of earnings assessed at your MTR* In year 10 One-third of earnings assessed at your MTR* After 10 years No additional tax payable on earnings *Less a 30 tax offset. Given the tax treatment on earnings when making a withdrawal, you will typically find that this type of investment is generally held for the long-term, namely, more than 10 years. Initial contribution and future contributions (the 125% rule) When it comes to investing in an investment bond, there is no cap on your initial contribution, however some bond issuers may require a minimum initial investment amount. Furthermore, you can usually make additional contributions in future years. Provided these additional contributions are no more than 125% of the previous year’s contributions, they are treated for tax purposes as if they were made in the first year. For example, if you make total investments of $2,000 in the first year, your future contributions could increase each year as shown below, without breaching the 125% rule: Investment bond - 125% rule Years Contributions 1 $2,000 2 $2,500 3 $3,125 4 $3,906 5 $4,883 5 $6,104 7 $7,629 8 $9,537 9 $11,921 10 $14,901 However, there are two important things to consider regarding contributions and the 125% rule: If you make contributions that exceed 125% of the previous year's investment, the start date of the 10 year period will reset to the start of the investment year in which the excess contributions were made. If you don’t make a contribution to the investment bond in one year, any contributions in following years will reset the start date of the 10 year period. Fees payable The fees applicable to the investment bond will depend on the relevant bond issuer and the investment options that you have chosen; however, common fees that you may pay can include establishment fees, contribution fees, withdrawal fees, management fees, switching fees and adviser service fees. Estate planning An investment bond may provide estate planning opportunities. For example: Death benefits from an investment bond can be directed to a nominated beneficiary tax-free regardless of who receives the benefit or how long it has been held. You can invest for the benefit of a child, with the option to have the ownership transferred automatically to them once they reach a nominated age. Furthermore, the 10 year period generally doesn’t reset upon the transfer of ownership. Moving forward As you can see, an investment bond may be an important consideration in situations where it’s also beneficial for you to grow and hold a portion of your wealth outside of superannuation in a tax effective manner; however, the use of an investment bond will be based on your financial situation, goals and objectives. Consequently, depending on your personal circumstances and the reason for growing and holding wealth outside of superannuation, alternatives to investment bonds that may also be considered are direct shares, managed funds, online savings accounts or mortgage reduction (and then withdrawing the required amount when needed via a redraw facility). If you have any questions about investment bonds then please contact us.
  4. The Pension Protection Fund

    The Pension Protection Fund (PPF) protects millions of people throughout the UK who belong to defined benefit, eg final salary, pension schemes. If their employers go bust, and their pension scheme can't afford to pay what they promised, the PPF will pay compensation for their lost pensions.
  5. Running the retirement planning race

    For those who have taken part in a marathon or other endurance sport, you’ll already know that to reach the finish line you need: 1. Preparation, 2. Flexibility, 3. And, perseverance. In many ways, retirement planning is quite similar. Below we take a look at some of the key considerations. Getting clear on why you’re doing it and making the commitment When it comes to taking that first step, one of the biggest obstacles to retirement planning is shifting one’s mindset. Understandably, it can be hard to engage with the topic of retirement, especially if it’s far off and you have competing priorities right now. One place to start is by considering what kind of lifestyle you’d like to lead in retirement and how you might fund it. The Age Pension is a safety net for those who don’t have enough superannuation or other financial resources behind them to generate a reasonable minimum retirement income. The maximum Age Pension alone allows for a very basic lifestyle – the current full payment rate (including the pension supplement and energy supplement) is $23,096 pa for singles and $17,410 pa each for couples. From 1 July 2017, those at least 65.5 years may qualify, however the age is set to increase by 6 months every 2 years and will be 67 years by 1 July 2023. If you are striving towards a better lifestyle in retirement and/or want to retire before the Age Pension kicks in you will need to build your own personal financial fitness, to either supplement the Age Pension or self-fund your retirement. This may involve ramping up your debt repayments and/or savings. For example, paying off your home and growing your superannuation (over and above your employer’s Superannuation Guarantee contributions) and/or other investments outside of superannuation to reach your goal. Taking a proactive approach to retirement planning earlier, means you can benefit from the power of compounding and give yourself flexibility if things change along the way. This may enable you to move towards your goal at a more comfortable pace. If you leave retirement planning for later, you may find yourself under more pressure to reach the same goal or your expectations for retirement may need to be revised. See our article “It’s Never Too Early or Too Late To Save For Retirement" for a good example of this. Here, we show how much money you need to set aside each month (assuming a 6% return pa) to reach $1 million by age 65 if you start at different ages during your lifetime. For example: Age 20 = $361.04 pm Age 30 = $698.41 pm Age 40 = $1,435.83 pm Age 50 = $3,421.46 pm Building your support team, assessing your existing situation and cross-training An important part of retirement planning is building a team of relevant people around you. For example, your financial adviser is here to help you map out an appropriate path and support you on your journey. This will initially be based on an assessment of your baseline financial fitness and the establishment of a plan that focuses on the steps that need to be taken to achieve your goal. Depending on your circumstances, the plan can encompass many areas of your personal finances. For example: Creating a budget and monitoring your cash inflows and outflows Managing your debt levels and making extra debt repayments Saving and investing for the long-term Reviewing the use of superannuation as a vehicle for wealth accumulation Establishing a contingency plan with personal insurances. Together these things can help you reach your goal. For example, budgeting can help you tap into surplus income, which can then be used to pay down debt faster. The extinguishment of debt, frees up further income, which you may choose to contribute into superannuation and/or build other investments outside of superannuation. Having appropriate personal insurances in place can help you stay on track to reach your goal when an unexpected event such as a sickness or injury occurs. Milestones, reassessing your progress and blasting through the wall Retirement planning is not a sprint. It’s a long-distance run. So, working towards smaller milestones, reassessing your progress and making adjustments where needed along the way can help you stay motivated and keep on track to achieving your goal. A milestone can be extinguishing debt by a certain date, reassessing your progress can include an annual review of your financial situation, whilst making adjustments can involve tweaking your plan to cater for changes in legislation over time. Nevertheless, at a certain stage in your race whether it be at the beginning, halfway through or nearing the finish line, you may find yourself hitting a “wall”. This may be due to one or a combination of factors, for example, competing priorities and/or unexpected events. To manage your way through this, it’s important to assess the situation with your support team, make adjustments where required, and then refocus your attention to the goal at hand. Digging deep, crossing the finish line and post-planning Nearing the finish line, may be the point in your life where you have paid off your debts, accumulated a reasonable superannuation account balance, have additional investments outside of super and are in the highest income earning years of your career. This is where you can start to think about building on what you have already achieved to date. For example, by doubling down to further boost your superannuation in the time remaining, which may involve maximising your concessional and non-concessional contributions whilst still considering the limits. Crossing the finish line is often accompanied by a feeling of relief and accomplishment. Your preparation, flexibility and perseverance has culminated into your goal becoming a reality. At this stage, it’s time to reassess your current situation and manage your recovery and relaxation. The next chapter of your life is upon you, although it may not be as physically and mentally demanding, it’s still important to stay on top of your new baseline financial fitness. We hope you have enjoyed our look at some of the parallels between retirement planning and running a marathon. If you need help with your retirement planning, remember we are here to help you map out an appropriate path and support you along the way. Access this and many more articles and videos like this here: Vista Financial Knowledge Centre
  6. What is a Managed Fund?

    When it comes to investing, there are various investment methods available to build and maintain wealth over the long-term. For example, depending on your circumstances, you may invest directly (e.g. share portfolio), indirectly (e.g. managed fund), or a combination of these. Managed funds are professionally managed investment vehicles that allow investors to pool their money together to invest. They may differ in the way they invest (e.g. asset allocation, investment philosophy, risk tolerance and investment time horizon) and the fees and charges attached to them can differ. Watch our animation for further insight into what a managed fund is, how it works, and the pros and cons of investing in one: Managed Fund Video
  7. The pitfalls of DIY Will kits

    According to recent research, approximately 45% of Australians* pass away without a will, or ‘intestate'. The word intestate is derived from the Latin word intestatus meaning a person who passes away without a will. Intestacy may result in inconvenience, delay, and expense during a difficult time in your life having just lost a loved one. Intestacy may occur not only where a person fails to make a will, but also for other reasons, such as: The will didn't properly dispose of all their assets; The will was invalid due to it not being signed and witnessed according to the law; The person didn't have the mental capacity to make the will in the first place; and, The will was drafted poorly, and the legal rules governing will construction weren't followed. When considering your estate planning, it may be easy to fall into the mindset that drafting a will is a simple Do-It-Yourself task, especially considering there are many cheap DIY options available online and through your local newsagency or post office. However, a recent analysis*^ completed by Choice, in consultation with several estate planning professionals, looked at numerous DIY will kits available and they settled on this summary comment: “Will kits can be an excellent research tool. Depending on your situation and skills, they can help you to write your will, but they can't adequately handle complex situations such as blended families or self-managed super funds. So we recommend you get some expert advice as well. Making sure your loved ones are provided for is far too important to leave to chance, and the consequences could be disastrous if you get it wrong.” The main points that lead to this summary by Choice regarding DIY wills are as follows: Will Kit 1 The will kit contained basic instructions, which may have resulted in confusion. 'Issues relating to children, taxation, superannuation and executors' weren’t appropriately covered off on. Will Kit 2 There was no mention of taxation issues. Will Kit 3 There was no space for witnesses (to the will) to sign each page, so the will may be considered invalid. 'Discussion about who could challenge the will was not entirely correct'. Superannuation issues weren't appropriately covered off on. Will Kit 4 The summary regarding the distribution of superannuation was unclear. There was 'no provision or explanation as to when it would be appropriate to seek tax advice'. Will Kit 5 The will didn't appropriately deal with superannuation and taxation issues. There were no clear instructions to seek professional advice if/when doubt arose from anything contained within the will kit. As you can see by the above points, there appear to be common trends when it comes to DIY will kits i.e. formatting issues and the lack of informative information in certain areas, such as taxation and superannuation. In addition, many DIY will kits do not offer the capacity for establishing testamentary trusts (to protect assets after your passing or for tax-related purposes), nor are they able to be amended with a codicil (an additional document that allows you to change details in your will such as an Executor or a beneficiary changing their name). By seeking professional advice from your estate planning professional, in conjunction with your financial adviser and accountant, you can limit the chance of leaving behind a partial or fully intestate estate, as well as make sure the will that is drafted reflects your full intentions and the individual complexities of your personal finances, such as personal insurances, investments, superannuation, and taxation considerations. It is a good habit to review your estate planning situation and needs at least every five years, or if a major event happens. Article from Vista Financial Knowledge Centre
  8. Multiple super accounts and you

    Regardless of your age, one of the ways to help you grow your wealth and prepare for retirement is to take an active interest in your superannuation sooner rather than later, especially when considering the impact that having multiple superannuation accounts may have on your end ‘retirement nest egg’. You’ll notice from your superannuation statement, that your super grows from contributions and returns less tax and costs (such as contributions tax, administration/member fees, investment fees, adviser fees and insurance premiums). With this in mind, consider what impact several sets of deducted costs may have on your overall superannuation balance if you have multiple superannuation accounts running simultaneously. Not to mention all the extra paperwork come super statement time. As at 30 June 2016, over 14.8 million Australians have a superannuation account* – great news for people looking to have a lifestyle above what is provided by Age Pension entitlements! But did you know that almost half currently hold their superannuation in more than one fund? What’s more alarming is that many of these people are nearing retirement in the 61 to 65 age bracket. That could mean they may have been paying duplicate sets of costs throughout their working life, potentially reducing their ‘retirement nest egg’! Fees aside, it is also important to be aware of how this impacts asset allocation. In many instances your additional superannuation accounts may have been established under what is called a ‘default investment option’, which in some instances coincides with a balanced investor, on average this equates to roughly 70% growth assets (such as shares and property) and 30% income assets (such as cash and fixed interest). You might find that this is exactly how you would like to be invested based on your financial goals and objectives and risk tolerance. But if the default investment option does not align with your needs it may mean that you’re not getting an optimal result from your superannuation. Before you go rolling one superannuation balance into another it is important to understand that in some instances it may make sense to retain multiple superannuation accounts. For example, you may be in a position where: one superannuation account needs to be retained with the minimal account balance because you have personal insurance cover within it that was established prior to a medical condition developing; whereas, the other superannuation account is receiving your personal and employer contributions due to its potentially better quality investments. If you are unsure about which path to take, then remember it is ok to seek professional advice from us before you consolidate your accounts because we can help you make an informed decision regarding fees, insurance offerings (and insurance cover established prior to medical conditions), defined benefit schemes, as well as diversification, risk tolerance and much, much more. Lastly, as at 30 June 2016, there were roughly six million lost and ATO-held superannuation accounts with a total value of roughly $16 billion*. Is some of it yours? Read our article on how to find your lost super because it could mean more money for you in retirement!
  9. Vista Financial Knowledge Centre

    We have recently launched a financial knowledge centre which can be found here: http://www.vista.financialknowledgecentre.com.au/kcarticles.php and it's FULL of informative and educational articles and videos on all things finance, here’s a video to explain it. I should also mention that it is free to sign up even if you are not a client of Vista and you will receive a 2 month trial period.
  10. When can I get a Mortgage

    Hello Phil An employee will secure a mortgage much sooner typically than someone that is self-employed as usually a self-employed person requires at least 2 years books. The other hurdle is that I believe the 489 is a temporary visa and this can mean that some lenders will not entertain the idea of a loan. However some will but typically the maximum loan will be an 80% LVR. Really you will need to be here and in employment/working before you can entertain the idea of looking at securing a mortgage I think but as I say unless you have a huge deposit and are willing to pay a premium for a mortgage it's likely that the employee route will provide a better chance. Regards Andy
  11. Tax on money transfer

    Hey KPG It seems that Snifter has answered your questions already however just to clarify the tax situation on monies that you bring with you to Australia when you emigrate....no it is not taxed. Regards Andy
  12. UK Pension

    Hello Pamela In that case it makes no difference from a tax perspective whether you have the payments paid directly to your Australian or UK Bank. Is that is what you are trying to ascertain?? Andy
  13. UK Pension

    Hello Pamela In relation to your private pensions........are these in payment already? Thanks Andy
  14. Work Bonus (Age Pension)

    Work Bonus The Work Bonus provides an incentive for pensioners over Age Pension age to participate in the workforce by allowing them to keep more of their pension when they have earnings from working. How does the Work Bonus affect pension rates? The Work Bonus increases the amount an eligible pensioner can earn from employment before it affects their pension rate. The first $250 of fortnightly employment income is not assessed and is not counted under the pension income test. The Work Bonus operates in addition to the pension income test free area. From 1 July 2015, for single pensioners, the pension income test free area is $164 a fortnight and for couples combined, it is $292 a fortnight. For example, this means a single pensioner over Age Pension age with no other private income could earn up to $414 a fortnight from employment and still receive the maximum rate of pension. Work Bonus Income Bank Pensioners over Age Pension age accrue any unused part of the $250 fortnightly Work Bonus exemption amount in a Work Bonus income bank, up to a maximum of $6,500. The income bank amount offsets future employment income from the pension income test. The income bank amount is not time limited; if unused, it carries forward, even across years. The Work Bonus income bank is useful for pensioners who wish to work, particularly those who undertake intermittent or occasional work. How does the new Work Bonus work for single pensioners? Example 1: Bob is an age pensioner working as a school crossing supervisor, earning $300 a fortnight. He has no income other than the Age Pension. Under the Work Bonus, the first $250 of Bob’s employment income is not assessed, and only $50 is counted under the pension income test. This is less than the pension income test free area of $164 a fortnight for a single pensioner, and Bob will still receive the maximum rate of Age Pension. Example 2: Maria is an age pensioner who works for three fortnights as an accountant. She has no other income. As Maria has not worked in the previous 12 months, she has accumulated the maximum income bank amount of $6,500 (26 fortnights x $250). During the three fortnights that she works, Maria earns $2,000 a fortnight, a total of $6,000. As Maria’s income bank amount is more than her employment income, none of the $6,000 is assessed under the income test and she will still receive the maximum rate of Age Pension. In addition, Maria will retain $1,250 in her income bank to offset any future employment earnings ($6,500 - $6,000 earnings + $250 Work Bonus concession for each of the three fortnights that Maria works). How does the Work Bonus affect the employment income of your partner? The Work Bonus applies to individual pensioners. It cannot be shared by a pensioner couple. Example: Mary and Jim are a couple who both receive the Age Pension. Mary has employment income of $550 a fortnight and Jim has employment income of $200 a fortnight. They have no other income. Under the Work Bonus, the first $250 of an individual’s employment income is not assessed. Only $300 a fortnight is assessed as income for Mary and nothing is assessed as income for Jim. Under the pension income test, pension is reduced by 50c for every $1 of income over the income test free area. Mary and Jim’s combined assessed income of $300 a fortnight is $8 higher than the income test free area ($292 a fortnight for a couple) and their combined pensions are reduced by $4 a fortnight ($2 a fortnight each). If Jim was under pension age, he would not be eligible for the Work Bonus and all of his earnings of $200 a fortnight would be assessed as income. Who is eligible for the Work Bonus? All pensioners over Age Pension age are eligible for the Work Bonus if they have employment income. This includes: Age Pension, Carer Payment, Bereavement Allowance, Disability Support Pension, Widow B Pension and Wife Pension recipients. Employment income Employment income is income from paid work undertaken by the person as an employee in an employer/employee relationship. This includes but is not limited to salary, wages, leave payments, commissions, employment-related fringe benefits, bonus payments, supported wages and casual loading. Employment income does not include income from self-employment or business income. Pensioners who are self-employed or running a business are not entitled to the Work Bonus, but are able to make business deductions from their income. Application for the Work Bonus Pensioners do not need to apply for the Work Bonus. If you are a pensioner with variable fortnightly employment income, you must keep Centrelink informed of your income. The Work Bonus can only be applied to employment income that has been reported. Pensioners can report over the phone (including Voice Recognition), in person at a Centrelink office or by using the internet. For more information For more information about the Work Bonus, contact the Department of Human Services (DHS) on 13 2300 or visit the DHS website.
  15. Driving Licence

    Hello I can't remember if you have to do something different the first time you get one (been here for almost 10 years now). I'm sure you have seen the website: https://www.sa.gov.au/topics/driving-and-transport/motoring-fees/driver-s-licence-and-permit-fees It looks like that's for the year and then there is the admin charge so probably better getting longer then 1 year. There is an enquiry button on the site, maybe send an email to them, I'm sure they will be happy to confirm. Regards Andy