Tag Archives: Family

Looking after your mental health during the coronavirus outbreak

By Robert Wright /April 14,2020/

As the Coronavirus continues to spread, many people are naturally fearful for their health, their livelihoods and those they care for. During times of great uncertainty, it’s natural to be anxious however it’s also important to keep things in perspective.

In this time of crisis, it’s important to remember that medical professionals and infectious disease experts are working hard with public service officials to bring the pandemic under control, treat those affected and develop a vaccine as soon as possible.

In saying that, loss of income and job insecurity are very real problems and the Government has announced new measures for those affected. Should you find yourself in this situation please visit the Services Australia website (www.servicesaustralia.gov.au) for assistance.

The sheer volume of negative coverage in the mainstream media can be overwhelming leading to heightened anxiety, depression or feelings of panic. While it is important to remain informed, you may find it beneficial to limit your exposure to the mainstream media at this time if it is troubling you or those you care for.

It’s only natural to want to turn on the TV or search the web to get the latest coronavirus news. However, too much negative coverage can be overwhelming and simply cause more stress and anxiety.

Should you find yourself in a situation where you need to self-isolate for 14 days (or longer) there are a number of strategies you can adopt to support your mental wellbeing:

• Stay connected with friends, family members and colleagues via social media, email, video conferencing and phone.
• Remind yourself that this is a temporary period of isolation necessary to limit the spread of the virus. You are doing your bit for the community and those you care for.
• Try to get some exercise. Maintain a regular routine and choose healthy food options.
• If you are working from home, try to set up a dedicated workspace, take regular breaks and stick to your normal working hours.
• Avoid the mainstream media if you find it distressing.

If you are caring for young children, try to address their concerns about the virus in an open and honest way. Try to explain the situation calmly and in a manner that is appropriate to their age and temperament. It’s important to listen to their concerns, address any questions they may have, and to let them know they are safe and that it’s normal to feel worried in times like these.

If you are concerned about your own mental health, or if you are worried about the mental wellbeing of someone you care for, support is available from Beyond Blue on 1300 22 4636 or Lifeline on 13 11 14.

Source: Capstone

Retirees, COVID-19, and options on the table during a market crash

By Robert Wright /April 14,2020/

The spread of coronavirus has been followed by some of the biggest plunges in share markets since the Global Financial Crisis (GFC), both here in Australia and around the world.

There’s nothing new about a market correction, but for those close to retirement it can be a nerve-wracking experience. If you’ve checked your superannuation balance over the last week, you may need a stiff drink.

For investors, or anyone with super, the general advice is to hold your nerve. Selling out at a low will lock in losses. Market corrections are quite normal and share market pullbacks provide opportunities for investors to buy cheaper stocks that will rise in value over time.

Yet “hold tight” may be easily said to younger or middle-aged Australians accumulating wealth in the super system; but what about our ever-increasing pool of retirees? Do they have the luxury or the option to weather corrections such as this?

For younger Australians currently making regular contributions to super, the impact of large sell off is minimised for two key reasons. Firstly, there is plenty of time to wait until markets recover, and secondly, they also may benefit from buying cheaper assets at the bottom of the cycle.

Yet for retirees there are no such luxuries. While markets are down, every dollar of income drawn on from super is crystallising the loss at a market low point, this is commonly referred to as ‘sequencing risk’ and is the reason why retirees need to be more careful than those in accumulation phase.

We as a species have evolved with embedded natural instincts to flight or fight in times of crisis. The tendency for retirees to watch their investments closer and have a greater care-factor for their investment outcomes makes a lot of sense – they are less capable of replacing these savings. However, as a result, there can be a flight to safety at the worst possible time. Known as ‘behavioural risk’ this is the observation that investors tend to switch out of risky assets near the lows of the market cycle.

The spread of coronavirus and the resulting fall in markets highlights the importance of investors understanding how much risk they are holding in their super or pension account. Australians in or approaching retirement, who have sat up and taken notice of the recent market plunge, may now be wondering, what is the right amount of risk to hold in their investments?

Our view is that the decision to reduce risk needs to be traded off with the impact of potentially lower long-term returns.

With record low interest rates and bond yields, the future return expectations on traditional safe-haven assets is lower than ever, strengthening the concept that if risk equals return, no risk equals no return! And with our life expectancy ever increasing with advances in medicine, science and technology, our retirement savings need to support our lifestyle longer.

Investors looking to reduce downside risk, but concerned about the impact on long term returns, could consider some of the following options:

• Diversifying into non-traditional income generating assets, such as infrastructure assets
• Remaining in equities, but adding protection
• Checking investments are being optimised for retirement tax treatment
• Remaining in growth assets but increase diversification into growth-alternatives
• Consider a strategy that dynamically adjusts the asset mix based on the environment

But most of all, with any of the above, our view is that right now is most likely not the right time to make a reactionary switch. Let the dust settle and move gradually over time.
Retirement is about enjoying life without the obligation to work. For your investments retirement is also about considering your own personal appetite and capacity for risk, the cost of suffering large portfolio losses, and the impact of not earning sufficient return.
It’s a balancing act, but with the right help, entirely achievable.

Source: AMP Capital

Where to seek advice in uncertain times

By Robert Wright /April 14,2020/

With the ongoing escalation of the COVID-19 crisis many people are struggling. Huge changes are happening and we’re all being affected, socially, emotionally and financially.
If your ability to work and earn an income has already been affected, you’re likely to be worried about how you’re going to cover your bills and mortgage and pay for the essentials your family need.

Take care of the present first
Depending on your life stage, you may also have slightly longer term – but still important –financial concerns on your mind.

If you’re close to retirement, you may be anxiously watching how your superannuation balance has been affected by volatile financial markets. If you’ve saved a deposit and have been house hunting, perhaps you’re wondering if now is the right time to buy.

Your long-term goals and strategies can only be built on strong financial foundations. If you can maintain a strict budget and really rein in your cash flow for the duration of this extraordinary period of uncertainty, then you’ll be preserving that stability you need to make methodical progress towards your goals when we all come out the other side of this crisis.

Review your budget and strip out as many non-essentials as you possibly can. Look at deferring your mortgage repayments for three months or asking your landlord to take rent payments out of your bond. Talk to your credit card, mobile phone and utilities providers and see what you can negotiate.

These steps can help you hold onto any cash you have saved for longer. Not only does this give you a greater sense of security, it can turn those savings into enough to last you for months instead of weeks.

It’s now even more important to feel confident in the choices you’re making about money. Getting advice and taking action on your finances can help you experience less stress as things keep changing from day to day. When so many other things seem to be spiralling out of control, you can make a difference to your state of mind by being realistic about what you can change, and what you can’t.

There is no other time when professional advice is more valuable than it is now. So if you have a financial planner, talk to them. Ask them whether now is the right time to go ahead with that property you’re buying or how to manage your retirement plan if your investments have taken a hit. And if you don’t have that professional support, make sure you’re doing lots of research and thinking things through.

Source: FPA Money & Life

5 ways to help your grown-up children manage their finances better

By Robert Wright /July 24,2019/

We all love our children. So it can be tough to admit they may not be great with money. But be honest, do any of these ring a bell?

• They keep running out of money before their pay cheque comes in.
• They keep ‘borrowing’ money from you and others, and failing to pay it back.
• They have maxed out a bunch of credit cards.
• They have a bad credit history as a result of not paying back loans.
• They keep getting involved with ‘get rich quick’ schemes that end up losing them money.

If any of these seem familiar, is there anything you can do to help your children develop healthier financial habits?

How to turn off the money tap

It’s only natural to want to help your kids with big ticket items to give them a good start in life—particularly in an era when tuition fees and house prices make higher education and owning a home less affordable than in previous generations.

But it can be difficult to know when to start turning off the tap. If you have an adult child who isn’t very good with money, then giving them funds with no strings attached might not be the best approach. You might end up enabling their behaviour rather than encouraging better money habits.

Regardless of whether your adult kids still live at home, have moved out or are boomeranging back and forth, it’s never too late to start encouraging positive money habits that will help them save, spend and invest more wisely.

Here are some things you could consider to change the money dynamic in your family.

1. Start with the difficult conversation

If you’re determined to change the dynamic, it’s important to make this clear from the get-go. Sit down in a neutral venue and have an honest discussion. Explain what you’re going to do differently and why. It might not be an easy conversation. But in the long run it could help to clear the air and encourage a fresh approach. If your children are still living at home you’ve got the opportunity to set new ground rules like agreeing on a set amount out of their pay cheque every week for bed and board.

2. Ditch the gifts

If you’ve found in the past that gifting money doesn’t solve their problems long term, then you could try another approach. One option could be loaning them money in instalments, with future amounts dependent on achieving specific goals like saving for their first home, perhaps through the First Home Super Saver Scheme. Another approach could be matching their savings when they reach a pre-determined amount.

3. Focus on goals (short and long-term)

Talk to your children about their life goals. What do they want to do…travel the world? Buy a new car? Save up for a new home? Be open about money and talk about ways to save and invest. Short-term, an everyday bank account can help them set aside money to help them reach their goals.

You can also get your kids thinking long term about how their savings could be working better for them. These days if you want to invest, you don’t necessarily need a hefty starting figure or to fill in tedious reams of paperwork. From exchange traded funds to micro-investing platforms, there are plenty of online, digital ways to start small but think big.

4. Focus on the basics like debt

Like many of us in Australia, your kids may not have received a great education about finance. So when they think about borrowing money, they may not have much of a grasp of the difference between ‘good debt’ and ‘bad debt’. It could be worth explaining the difference between borrowing money for a car and for a house—once you’ve paid it back, what are you left with? A car that may have shed 75% of its value or a house that’s probably improved its value and most importantly provided a home to retire in?

5. Walk the walk

Your approach to your own finances can make a difference. If your kids see you splurging money without a real budget then they may feel it’s OK to do the same.

Source: AMP, 07 May 2019