How to Find the Right Interim Manager for Your SME

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Businesses of all sizes have times when an injection of expertise from an interim manager (or even an interim team) with heavyweight business experience would be useful.  If you can’t afford, or don’t need a permanent employee one option worth considering seriously is hiring an interim manager.  The flexibility of bringing in a manager with depth of experience for a short period can generate invaluable results.  Pick wisely and you find someone with the skills to analyse your business needs and get up and running quickly.

Getting ready for an interim appointment

  1. Identify providers

Look for a number of interim providers, ask for recommendations and speak to interims you already admire – either in your sector or elsewhere.

  1. Establish relationships

Establish and build relationships with good quality interim providers and get a feel for what they can offer. The provider needs to understand your business. Once they do you will have the confidence they can find you the interim you need.

  1. Get an emergency staffing policy in place

Ensure you have a current company policy and procedure for emergency staffing. It is always good to have a contingency plan. You want to be able to minimise damage if you lose a key employee.

  1. Consider insurance

Does your company have sufficient insurance, for example key-man insurance? If a key person leaves or is ill such insurance can cover the costs of hiring an interim manager. So it might be worth your while to get this insurance in place.

Now you’ve identified a need get started

  1. Present a concise brief to your chosen interim management provider. Clear and direct face-to-face communication combined with email will get the best results. This will give the agency a fair chance of understanding the brief and mean they can identify appropriate, high quality candidates who genuinely can deliver what you need. (You don’t want someone just because the CV superficially ticks the boxes).
  1. Write a clear job description and include very specific skills and characteristics you need your Interim to have. You want the person to fit the company culture and the team.
  1. Discuss the milestones and deadlines for the hiring process with your provider so your expectations are realistic.
  1. Take care deciding the assignment length. For example, is it for two months or nine to 12 months?
  1. Budget carefully. If you drive the daily rate down, you’re unlikely to get the quality people or experience you need.
  1. Plan how you will integrate the interim into the team. Identify someone for the interim manager to report to who can establish regular times to liaise so there is supportive and constructive communication. You also need a system to ensure that your interim manager is achieving the quality and timeliness of deliverables need.

An interim manager with up-to-date expertise and good communication skills can help you navigate a stormy period, or introduce changes more smoothly and rapidly than your existing team could do alone.

Before your interim manager leaves, engage in a formal process for transfer of knowledge. Perhaps the person can run some training sessions before departing.  You want to make the most of your investment and benefit both short and long-term.

Get this right and hiring an interim manager could be the best business decision you make this year!

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TAGS > Insurance, Family, Life


Can Your Business Survive Losing One of Its Key People

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As much as you try to share skills, knowledge and information in your company, you probably have some people who are key to your business’ success.

key person insurance

It might be a Director or the CEO, whose vision made it a success in the first place. It might be your star salesperson, or someone in your IT area who knows the system backwards. It could even be someone who doesn’t create any revenue but does a fantastic job of boosting your company’s reputation or perhaps running your admin and back office systems.

 

Now, what would happen if you suddenly lost one of those key people?

 

And if you think it would never happen because they love your business so much, think again. Sure they may not resign. But they might decide to start a family and want to leave the workforce. Or what if they suffered a major illness or injury, or even passed away?

 

In addition to the obvious issue of lost productivity and their contribution to the business, you also have to spend time (and money) to recruit and train a replacement. And losing such a key person in your company could even affect your reputation and credit standing.

 

Could your business survive until you find someone who can fill their shoes?

 

Key Person Insurance can help you get back on your feet

 

Key Person Insurance can give you the financial support you need while you’re getting back on your feet. It can offset both your costs (e.g. hiring temporary help or recruiting and training a replacement) and your losses (e.g. not being able to do as much business until they finish their training).

 

It can also help with:

 

  • business succession planning
  • protecting your company’s equity value
  • agreed funding to purchase the equity
  • continuity of equity value for the surviving spouse
  • funding re-payments of any capital loans or personal guarantees
  • meeting requirements for bank business loans
  • salary packaging benefits (depending on the person’s taxation affairs).

And you can take out a policy (which is usually tax-deductible) on anyone you feel is a key person in your company.

 

How much should I insure them for?

 

The amount you specify will depend on the size of your company and the person you’re insuring.

The amount can be calculated in a few ways, including:

 

  • the ‘replacement cost method’, which is based on the cost is to replace the key person
  • the ‘contributions to earnings method’, which is based on the percentage of their earnings towards your company’s revenue
  • the ‘multiples of income method’, where their current salary is multiplied to determine their value.

 

 

Protecting your partners (and their partners) with a Buy/Sell agreement

 

What if the key person happens to be your partner in the company? Yes, the Key Person Insurance may well cover the finances involved in buying your partner’s shares from their family. But do you really want to be negotiating a deal at such an emotionally trying time?

 

Having a Buy/Sell Agreement in place can save everyone from a lot of anguish. It’s a legally binding agreement that determines what will happen to each stakeholder’s shares if they suffer a major illness or injury, or pass away.

 

It has two parts:

 

  • The Disposal Mechanism (also known as a Business Will), which states what happens if a partner leaves the business due to death or disability. It usually contains a valuation method.
  • The Funding Mechanism, which funds the Buy/Sell Agreement. This is where you would find the details of the Key Person Insurance policy taken out for each partner.

 

How do I arrange Key Person Insurance?

 

Before you take out Key Person Insurance you should first speak with your business advisor about the overall approach and then get into the details with an insurance broker. You need to make sure you get the cover you need without paying for the cover you don’t need. We can guide you in this area.

 

After all, it may well be the key to your business’ survival.

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TAGS > Insurance, Family, Life


Understanding Risk Management for Small Business

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Operating a successful small business involves decisions in several areas , one such area is risk. Risk, is the exposure to danger, harm, or loss. For businesses the term usually applies to the risk of financial loss.

Whether you have just starting your business, or you have been trading for a while, protecting the business you worked so hard to build is a priority. Unfortunately, it’s a step that many entrepreneurs neglect in the rush of launching a startup and operating day-to-day.

 

Here are several steps you can take now to protect your small business.

 

Choose the right form of business

Operating as a sole proprietorship — the default business structure for a one-person business — may be easy, but it’s not necessarily the best choice to protect your business. For one thing, the sole proprietorship structure doesn’t protect your personal assets. That means if a customer decides to sue you or a vendor demands payment that your business can’t afford, your savings, home and other assets could be fair game.

 

Hire a lawyer

You may not need to use a lawyer that often, but when you need one, you need one fast. Ask other entrepreneurs, business colleagues and friends for recommendations to lawyers who are familiar with small business issues. Take the time to compare lawyers by scheduling an interview with each before you hire them. Discuss payment options — most lawyers have different payment options for smallest businesses.

 

Find an accountant

Even if you plan on doing the bookkeeping yourself, a good accountant is worth the price. Who has time to keep up to date on tax law changes? You sure don’t — but accountants do. Not only can they save you money on your taxes, they can also provide valuable advice on how to structure your business, the best way to finance expansion, and how much to pay yourself.

 

For suppliers and contractors: Be smart about new customers

Before taking on a major new customer, conduct a credit check. This helps protect you against unpaid invoices. Never do business without a written contract — no matter how confident you are in the customer’s word. If something goes wrong, a contract may be the only thing that ensures you get paid for your hard work.

 

Buy business insurance

Most businesses need general liability insurance, and if you provide advice or professional services to customers, you may also need professional liability insurance, also known as E&O (errors and omissions) coverage. If you have employees you are required to have workers’ compensation insurance. Other insurance products to consider include key man insurance on your life and the life of other key employees, business interruption insurance (which protects your income if your business has to shut down due to a disaster), product liability, and cyber-insurance.

 

Protect your employees and customers

Disaster can strike any time, so it’s important to have a disaster plan for what you will do in case of emergency to protect your business. Create a plan and assign responsibilities for how to get employees and customers out of the building safely, what to do if a disaster keeps you and employees from getting to your business, and how you will keep running even if you can’t get to your physical location. Learn more about creating an emergency disaster plan.

 

Protect your business data

Back up your company data and documents with cloud storage so you can access files anywhere. When your information is stored in the cloud, you don’t have to worry about a crashed hard drive, or how a fire on your premises could wipe out precious data. To protect your business from cyber-crime and hackers, install appropriate firewalls and, more importantly, train your employees in cyber security measures, such as creating strong passwords.

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TAGS > Insurance, Family, Life


Four things Small to Medium Business Owners Should Consider About Insurance

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Australia’s more than two million small businesses make an enormous contribution to our communities and are the backbone of our economy.

Here are four steps that every small business owner should consider when thinking about their insurance. 

Key person insurance

Key Person Insurance Cover

 

1. Protect your most important assets

 

Your most important assets are your family, your employees and your ability to earn an income. Small business owners have a lot on their plate, juggling many roles within a company. With so much going on, it is understandable insurance won’t always be high on a long list of priorities.

However, ABS statistics show 5.3% of Australians experience at least one work-related injury or illness within a year. This is in addition to accidents taking place outside the workplace and non-work related illnesses. Any of these events could mean time out of the workforce and sudden loss of income, so it’s worth thinking about how your business would manage in this type of situation.

Additionally, offering life insurance to employees can act as a compelling tool for attracting and retaining top talent, and could be a highly competitive benefit!

 

2. Understanding different types of cover

 

It’s important to understand the different types of cover available for both you and your employees. For instance, income protection, trauma and TPD can protect your income by providing a regular lump sum if you become sick or injured.

Life insurance provides a lump sum benefit for your dependants should you pass away or become terminally ill. Key person insurance (also called key man insurance) covers against lost revenue and assets if you or a key person were to pass away, or became unable to work due to disability or illness.

Imagine if a business is owned by two business partners. One of those partners becomes sick and dies. What happens to the business? His/ her spouse will have a right to take over the share of the business. With Key person insurance, the surviving business partner can buy out the remaining share of the business and continue operations, allowing the business to still continue forward.

 

3. What’s important to you?

 

When considering your options think about what matters to you most and use that as a starting point. In our research business owners emphasised the importance of safeguarding their lifestyle, family and business.

 

4. Ask around

 

Seeking professional advice is always a good idea when reviewing your insurance. Our research shows small business owners consult a variety of sources for financial information. These include independent financial advisers, accountants or lawyers, brokers, internet forums, banks, friends and family. The research also showed that SMEs found using a broker saved time and gave them peace of mind.

 

 

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TAGS > Insurance, Family, Life


Debt Recycling

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Debt recycling enables you to simultaneously pay off non-deductible debts (such as your home loan) and build an investment portfolio for your long term future goals.

Benefits of debt recycling

  • You can use the equity in your home to take advantage of market opportunities now, rather than waiting for your mortgage to be repaid.
  • You will be diversifying your investments outside of the family home.
  • Building an investment portfolio now allows it to benefit from the power of compounding and long term investment growth.
  • Regular investing means you benefit from dollar cost averaging, because sometimes you pay more, sometimes less, for your investment, so your average purchase price essentially evens out over time.
  • Your taxable income may reduce as your deductible loan increases.
  • Your home loan may be repaid faster.
  • You will be able to access your investment portfolio if necessary.

How debt recycling works

 To use debt recycling, you need an existing home loan (or other non-deductible debt) and an investment loan. Your investment loan should be structured as an interest only loan and the funds invested in income-producing assets, such as managed funds or shares.

To implement the strategy, you arrange for all of your investment income to be directed to your home loan in addition to your regular repayments. The extra repayments increase your equity in your home, allowing you to increase your investment loan by the amount you’ve repaid on your home loan. This additional money is then used to increase your investment portfolio.

Over time, as your investment portfolio grows, so does your investment income and the amount you can use to repay your home loan.

Structuring your investment loan as interest only means your repayments are less than if the loan was principal and interest which allows you to direct more of your cash flow to your home loan. The cost of an investment loan is usually tax deductible if the investment is producing taxable income for you, so the interest repayments on this loan can reduce the amount of income tax you pay.

You can revisit this strategy periodically, each time increasing your investment loan by the amount that has been repaid on your home loan with the additional money being used to buy more investments. This process can be continued each year until your home loan is fully repaid. After that time, you can use your surplus income to buy more investments or repay your investment loan.

Other things you should know

  •  Debt recycling is a high risk strategy – if your portfolio performs poorly, or if interest rates increase, you could face significant financial stress or even put your family home at risk.
  • Debt recycling involves gearing (borrowing to invest). You need to understand the risks associated with gearing before undertaking a debt recycling strategy.
  • All borrowing requires discipline. It is important not to over-commit as this will increase the likelihood that ongoing interest and loan repayments can be met.
  • Before making any changes to your loan, you should confirm with your lending specialist what fees and charges may apply if your loan is restructured or if you make additional repayments.
  • You should review your life insurance cover regularly as your debt and asset levels change. It is important to have sufficient cover to help meet loan repayments in the event that your income ceases because of illness, disablement or death.
  • Tax advice should be sought prior to implementing or making changes to investment related borrowings.

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TAGS > Insurance, Family, Life


5 tips on holding Life Insurance through your SMSF

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Holding your Life Insurance through your Self-Managed Super Fund can be an effective method to secure the future of yourself and your loved ones. The following tips may help:

 

1. Considering Life Insurance within your SMSF is actually a requirement by the ATO
Findings from the government’s Cooper review revealed that only 13% of self-managed super funds actually held any form of Life insurance. In response to this underinsurance gap the ATO made it a requirement for all trustees to at least consider life insurance in their strategy document or meeting minutes. This does not mean that trustees are required by law to hold life insurance within their SMSF, it does however mean to be compliant with the ATO, it must be documented that consideration was given to life insurance within the fund.

 

How we can help: We can provide you with the right information to pass onto your SMSF accountant in order to ensure your SMSF remains compliant in this area.

 

2. Cash Flow Benefits
Since your SMSF owns the policy, it will fund the premiums. This can free up your cash flow, especially for times when money is tight or when you have more pressing financial priorities. It can be beneficial however to implement a contributions plan in order to avoid the eroding effect insurance premiums can have on your retirement savings.

 

How we can help: We can assist you in either transferring your current policy into your SMSF or advise on an alternative policy to undertake should this be appropriate for your situation.

 

3. Tax Efficiency
Tax savings can be achieved by funding your insurance premiums via pre-tax dollars through salary sacrifice and personal tax-deductible super contribution strategies. This effect is magnified for those in the higher tax brackets in reducing taxable income.

 

How we can help: We can provide you with specialist advice as to a contribution plan to avoid retirement savings erosion and to reduce taxable income.

 

4. Protect your assets within your SMSF
Life insurance within your SMSF can help avoid the sale of valuable assets such as property should something happen to a member. Not having the right insurance in place could have a major effect on the liquidity of the SMSF, as the death or TPD of a member is unpredictable and the consequences could be damaging to the other members.

 

How we can help: we can provide you with a review of your current cover and make recommendations based on your needs to cover any risk in this area.

 

5. Protecting Members
The underlying motive behind the requirement for members to consider Life Insurance in their SMSF’s is to prevent members from being underinsured. Putting in place the right amount of cover for your situation can help protect yourself and your loved ones from financial strain should something tragic happen.

 

How we can help: If you don’t know how much cover you need let us provide you with recommendations for appropriate levels of cover so that your financial future cannot be hindered by a devastating injury or illness.

 

 

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.

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TAGS > Insurance, Family, Life


Debt Management

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Reducing debt is considered a low risk strategy. You can save money in interest payments without the risk of market volatility.

 

Benefits

  • You can reduce the overall interest cost on your loan.
  • You may be able to reduce the term of your loan.
  • You have potential to increase your wealth by directing surplus cash flow towards savings instead of repaying non-deductible debt.

 

Options for managing debt

The following strategies may be able to help you reduce your debts faster, relieve your cash flow, reduce your overall interest cost and reduce the term of your loan.

 

Make additional repayments

A simple strategy to reduce your debt is to make additional repayments with your extra cash flow or savings. Not only will this reduce the level of your debt, but it will also reduce the overall interest you pay over the life of your loan.

 

A similar strategy is to make your repayments more frequently. Interest on your loan balance is calculated daily, so the more frequently you make repayments, the quicker your debt will fall. One idea is to halve the amount of your monthly repayments and repay this amount fortnightly instead. As there are 26 fortnights in a year compared to 12 months, this adds an extra couple of repayments to your loan each year.

 

Use an offset account or redraw facility

Offset accounts and redraw facilities both allow you to put money against your loan to reduce the amount of interest you pay, whilst also enabling you to withdraw the money if you need.

 

  • Offset account – allows you to put money into a bank account which is attached to your loan
  • Redraw facility – allows you to put extra money straight onto your loan.

 

To improve the effectiveness of these features, you could use a credit card with an interest free period to pay for your everyday expenses, thereby allowing your cash to sit longer in your offset account or redraw facility. However this strategy will only be effective if you ensure the full balance of your credit card is repaid in full every month.

 

Consolidate your debts

Debt consolidation is where several loans are combined into one loan account. An example would be to increase your home loan to repay your car loan and credit card debts.

 

Debt consolidation can help to:

  • ease cash flow – annual repayments on the one loan might be less than your total repayments on the separate loans
  • reduce fees – you will only pay account fees and transaction fees on one loan account
  • improve manageability – you will only have one monthly statement and one monthly repayment.

 

Potential disadvantages of debt consolidation include:

 

  • longer repayment period – a loan which might have been paid over a shorter period may be extended unless your total repayment levels are maintained
  • increased interest cost – if your loan term increases, the total interest cost over that term may also increase
  • fees – a loan restructure may incur additional fees and charges.

 

It is important to be disciplined when consolidating debt to ensure that debt is not re-accumulated from other sources. It is particularly important to take care with the use of credit cards – ensure the full balance is repaid every month and/or reduce the credit limit.

 

Repay high interest rate debt first

If you hold a number of different types of loans, such as a home mortgage, a personal loan and a credit card, the interest rate applying to each loan will usually be different, with some rates being considerably higher than others. Repaying the loans with the higher rate first will create savings compared with repaying all the loans at the same time.

 

For example, a credit card will usually charge the highest rate of interest, so by directing extra savings to repay this debt instead of the home mortgage (which usually has a lower rate of interest), you can save interest over the long term. If implementing this strategy, it is important to continue making the minimum required repayments on other loans at the same time.

 

Repay non-deductible debt first

A loan that is used to purchase an asset that does not generate income is called a non-deductible debt. These loans include your home loan, personal loans and credit cards. Your interest repayments on these loans are not generally tax deductible.

 

Loans to purchase assets that produce taxable income for you are called deductible debts. They include margin loans, investment property loans and investment loans to purchase shares and managed funds. Your interest repayments on these loans are generally tax deductible.

 

The tax deduction associated with deductible debt helps to reduce your cost of borrowing. The value of deduction is dependent on your marginal tax rate – the higher your marginal tax rate, the higher the value of your deduction.

 

Example (deductible debt): Tom borrows $100,000 to buy a share portfolio. His interest only loan has an interest rate of 7% per annum and Tom pays tax at the rate of 34.5% (including Medicare). The interest payable each year is $7,000 ($100,000 x 7%). Tom claims this amount as a tax deduction which reduces his income tax otherwise payable by $2,415 ($7,000 x 34.5%). This means Tom has indirectly reduced the interest cost of his loan to $4,585.

 

As non-deductible debts do not contain any tax benefit to help reduce the cost of your loan, these loans should be repaid as quickly as possible.

 

Other things you should know

  • All borrowing requires discipline. It is important not to over-commit as this will increase the likelihood that ongoing interest and loan repayments can be met.
  • Before making any changes to your loan, you should confirm with your lender what fees and charges may apply if your loan is restructured or if you make additional repayments.
  • You should review your life insurance cover regularly as your debt levels change. It is important you have sufficient cover to help meet loan repayments in the event that your income ceases because of illness, disablement or death.
  • Tax advice should be sought prior to making any changes to investment related borrowings.

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TAGS > Insurance, Family, Life


What is a buy sell agreement and how will it help my business?

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Buy/sell agreements help to ensure a smooth transition of business ownership to remaining owners in the event that one business owner dies or is unable to work due to illness or disablement. They help to ensure remaining owners retain control of the business and the departing owner receives fair value for the sale of his or her share of the business.

 

Buy/sell agreements are often funded with insurance policies. There are various options for owning insurance policies and these should be discussed with a financial adviser and/or tax adviser.

 

To implement a buy/sell agreement, business owners should enter into a legally binding agreement setting out the details of the arrangement. This agreement should cover issues such as who is to receive the departing owner’s share of the business, the trigger events that will result in the transfer (eg death, disablement), the formula for determining the value of the business and how the transfer will be funded (eg insurance or other monies).

 

The tax implications of paying premiums and claiming proceeds will depend on how the insurance policies are owned.

 

Other things you should know
• Business insurance should be reviewed regularly, to ensure it continues to meet the changing needs of a business.
• Insurance contracts vary. It is important to check the terms of any contract to ensure the cover meets the needs of the business and the owner.

 

 

General Advice Warning: 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 any relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser.

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TAGS > Insurance, Family, Life


Interest Rates 101

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There is much talk about what the Reserve Bank of Australia (RBA) will do at its next monthly board meeting. Although the Board has a full agenda, the one item most economists and mortgage-holders eagerly anticipate is the cash rate decision. Up, down or no movement?

 

The official cash rate is now 2.0% after the RBA reduced it even further in May in the hope of stimulating growth. Will this push more people into property investment or encourage more to fix the mortgage at a lower rate not knowing what the future will bring?

 

Before you start phoning up real estate agents or making changes to your current mortgage, it’s good to understand what has driven the interest rate consistently down since 2011 so you can make an informed decision.

 

What is affecting our interest rates?

 

Australia emerged from the Global Financial Crisis (GFC) a relatively strong economy, especially compared to the US, UK and much of Europe. To ensure our inflation didn’t get out of control, the RBA steadily increased interest rates until November 2010, holding them at 4.75% until November 2011.

 

However, the global economy continued to grow only moderately throughout 2012 and this, along with declining inflation in Australia, gave the RBA’s Board good reason to recommence reducing rates in early 2013.

 

A couple of months later, with very little change in growth across the major western economies combined with continued lower key commodity prices in Australia, the Board reduced the cash rate to a new low of 2.75% hoping it would stimulate sustainable growth.

 

By August 2013, little had changed forcing the RBA Board to apply yet another reduction, this time to a remarkably low 2.5%.
Although that move stirred the sleeping giant and attention to property started to return; it wasn’t fast enough. With inflation falling below 3%, the RBA further decreased rates to just 2.25% in February 2015, and, to the surprise of many, again three months later to a paltry 2.0%.

 

Is it time?

 

With the cash rate at such a low level, it might be a good time to shop around for a better deal. Exit fees were abolished in July 2011, so the power is in your hands. The only constants in life are taxes and change, so a long-term mortgage will never remain static.

 

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.

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TAGS > Insurance, Family, Life


Judging investment performance

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We all have different attitudes to investing. Some people are conservative and don’t like any variability in returns. Others accept the roller coaster of the share market as a short-term price to pay for better long-term performance. Some people will have both of these attitudes – conservative with their short-term savings and aggressive with their long-term investments.

 

It is probably unfortunate that the short-term performance of long-term investments is reported so often. The media often makes announcements such as “super funds balances boomed last month” or “share investors go backwards in one day”. Returns over short periods are probably irrelevant to a long-term investor.

 

But this reporting does shape the way people think about their investments particularly where shares are involved. You can expect shares to fluctuate in value over the short term but perform well over complete economic cycles.

 

There is a theory that when investors hear about these short-term returns they react in three different ways. Obviously, reactions depend on the most recent investment performance, but these are the most commonly made judgements (they might be familiar to you):

 

“I could have done better in the bank”

 

There will be times when growth assets under-perform term deposits. A lot of investors have thought this in recent years. As we are now witnessing with low interest rates, this is not true at the moment.

 

“I missed out”

 

There will be times when shares and property surge and someone you know will tell you they achieved 50% or 100% returns. The Australian residential property market was like this in 2002 and 2003 and the share market was similar between March and September 2009. Don’t worry, that time will come again so get in and stay in.

 

“I’m going backwards”
There will be times when shares produce negative returns. However history has proven time and again that sound share investment sees you “going forwards” over the long term.

 

Trying to achieve above-average returns at all times throughout the investment cycle is a recipe for disaster. It is tempting for investors to try to “time the market” – moving between asset classes by trying to predict the “next winner”. A better approach is to choose your own benchmark that will enable you to meet your goals. Then focus on a long-term strategy to achieve this return. A prominent investment axiom states “time in the market is more important than timing the market”.

 

Your financial adviser can help design a portfolio to meet your specific needs for the short and long term, so you don’t have to carry any regrets.

 

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.

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TAGS > Insurance, Family, Life