Tag Archives: Women in Finance
Demand for financial advice doubles in five years
By Robert Wright /November 23,2021/
If your car engine sounds dodgy, you see a mechanic. If you’re unwell, you see a doctor. If you’ve got a tooth ache, you see a dentist. But what about when you’re looking to better manage your finances?
According to 2020 figures from research group Investment Trends, 2.6 million Aussies said they intended to seek help from a financial adviser over the next two years, up from 2.1 million in 2019 and double the levels seen in 2015.
Findings also revealed that COVID-19 had prompted greater engagement between Aussies and financial advisers where a relationship already existed.
Demand for advice is on the rise
Talking about the report findings, Investment Trends Senior Analyst King Loong Choi said, against a backdrop of economic uncertainty and volatile markets, a record number of non-advised Australians realise they need assistance from a professional.
“Among these potential advised clients, the pandemic has been a major catalyst, with 44% saying the COVID-19 situation had increased their likelihood of seeking advice,” he said.
Greater engagement between advisers and clients
The research also showed three in four financial advice clients had been in contact with their adviser to discuss the impact of the COVID-19 pandemic.
“Most financial planners have proactively engaged with their clients during this period of volatile markets, and clients themselves acknowledge these efforts,” Choi said.
The topics Aussies want advice on
There might be particular goals, events or circumstances that prompt financial advice, including unexpected situations like redundancy, death or divorce.
According to a survey by ASIC, the most common topics that participants had received advice on, or were interested in receiving advice on, were:
- investments (eg shares and managed funds) – 45%
- retirement income planning – 37%
- growing superannuation – 31%
- budgeting or cash flow management – 22%
- aged care planning – 18%
Other topics also included risk protection, self managed super funds, debt management, switching or consolidating super, and estate planning.
What’s involved when you see an adviser
You may opt to receive simple advice on a particular issue, broader financial advice, or ongoing financial advice.
After you’ve discussed your goals, objectives and attitude to risk, your adviser can then provide you with recommendations and a product disclosure statement for any product they’ve recommended.
As part of this process, it’s important to understand how you will be charged and you’ll also need to assess whether the advice provided is right for you. After all, it is your money.
Source: AMP
Women and superannuation – how the pay gap can impact your super
By Robert Wright /September 08,2021/
According to the Australian Bureau of Statistics, women are retiring with 37% less than men in their super accounts, which is a frightening thought considering women, on average, live up to five years longer.
So, what’s behind the super gap?
The super gap is partly due to the lower average earnings of women. Data from the Workplace Gender Equality Agency, reports that the full-time remuneration gender pay gap in Australia is 13.4% compared to males.
While many have blamed the “wage gap” on gender, Harvard Business Review research suggests women ‘ask’ for pay rises as much as men do, however, they are far less likely to actually get them.
The study also suggests that while men are successful in negotiating a pay rise 20% of the time, women were only successful 15% of the time.
This in turn impacts retirement savings, as the less money you earn, the less superannuation you will receive because your Superannuation Guarantee contributions are based on your level of income.
The second reason for the super gap, is that women typically take time out of the workforce to raise children. The absence of ongoing superannuation contributions can have a significant impact on the final amount women can end up with in super.
What can be done to address the super gap?
One of the simplest ways to catch up on lost super contributions, is to make additional contributions to super along the way. Small amounts over longer periods of time may be easier to commit to, for example, making additional contributions may be enough to narrow the gap caused by taking time out for the workforce.
If you are getting closer to retirement, you may consider maximising the amount you are contributing each year in concessional contributions up to the $27,500 limit (or higher if you have previous unused concessional cap amounts).
Keep in mind, however that any contribution you do make to super will be preserved, and unable to be accessed until you meet a condition of release from super. Most commonly this would be reaching your preservation age and then retiring.
In addition, it’s worth considering if you are in an appropriate super fund, which meets your needs, including the level of insurance cover you have and whether you may reduce this if you no longer need it.
Consider the fee structure of the super fund and also pay attention to how your super is being invested, for example – if you have a long time until retirement, you may benefit from increasing your exposure to growth assets.
For women in relationships, a problem shared could help close the retirement gap. This is because your spouse can split up to 85% of their concessional contributions each year with you.
Furthermore, if you earn less than $40,000 per annum, your spouse may be eligible for a tax offset of up to $540 for a $3,000 contribution (made with after-tax money).
Take control of your super as soon as possible; little changes early can potentially make a big difference in the long-term.
Source: BT
Change your spending habits and boost your happiness
By Robert Wright /March 10,2021/
After living through a year when our collective mental health took a beating, 2021 has brought with it a fresh sense of optimism and relief about what the future may hold. Like many people, you may be planning to do things differently this year.
But before you work on a wish list of things to buy and changes to make, you might like to take a look at the growing body of research into what we should spend our hard-earned cash on to bring us happiness.
Experiences, not consumption
Dr Thomas Gilovich, a professor of psychology at Cornell University in the US, has been exploring the relationship between spending and happiness for more than 20 years. After publishing a number of studies and reports, he offers important insights about how much happiness we can expect from buying stuff compared with spending on experiences.
“There’s a lot of work in the area of well-being and happiness showing that we adapt to most things,” Dr Gilovich says. “Therefore, things like a new material purchase make us happy initially, but very quickly we adapt to it, and it doesn’t bring us all that much joy. You could argue that adaptation is sort of an enemy of happiness. Other kinds of expenditures, such as experiential purchases, don’t seem as subject to adaptation.”
Not only do experiences leave us with lasting happy memories, anticipation of an experience can substantially increase your happiness, often more than the experience itself.
What kind of experiences?
If experiences define who we are, how can we determine what sort of experiences we should be having to make us happiest?
Much of the recent research on happiness has revealed that it’s “inextricably linked to having strong social ties and contributing to something bigger than yourself – the greater good.”
So it makes sense that experiences you share with others bring you more happiness than solitary ones.
Author and leading expert in positive psychology Martin Seligman has another theory. He divides experiences that bring us happiness into two categories: pleasures and gratifications. Pleasures bring us immediate contentment and enjoyment – things like a delicious meal or glass of wine, a massage or relaxing in a warm bath. There’s no doubt we’ll enjoy these experiences in the moment and remember them with appreciation, but they won’t bring us an enduring sense of satisfaction the way gratifications can. By challenging and engaging us, things like rock-climbing, dancing or restoring an old armchair can have a much longer lasting impact on our happiness.
Getting the best from experiences on a budget
The good news is that many gratifications don’t cost much, especially when compared with pleasures like expensive restaurant meals and holidays.
In his more happiness bang for your buck blog, Chairman of the Australian Government Financial Literacy Board, Paul Clitheroe offers a couple of useful tips for discovering new ways to experience happiness without spending big:
The $50 test
Take time to plan three activities costing less than $50 each during the next month. Ideas include going to the movies, buying art supplies, doing a cooking class or planting a small vegetable garden. For each activity rate how happy you think it will make you, how happy it makes you immediately after and how happy it makes you a month later. You’ll soon start to learn which experiences are contributing more to your overall happiness.
Keep a happiness diary
During the next month write down everything you buy and do in a notebook. Include how much it costs and how happy it makes you both immediately after and a month later. Now look at what you’re spending most of your money on. Does it match up with what makes you most happy?
When you take stock of what you’re spending money on and how happy you end up being as a result, you’ll have the insights you need to make changes to your budget and invest more wisely in your happiness.
Source: Money & Life
How much do I need to start investing?
By Robert Wright /March 10,2021/
While investing into traditional property might require a significant deposit, and a commitment to a long investment horizon, investing in shares, ETFs, managed accounts or managed funds can be accessed with a much smaller outlay along with the benefit of shorter term access to the value of your investment should the need arise.
It’s all about knowing where to start, which is quite often the hardest step. But we all have the potential to be successful investors – all it takes to get started is being armed with the right knowledge.
Taking the first steps
While some prefer to take the first few steps alone, others seek professional advice before investing. Either way, it’s important to select an investment type after you have done your research, determined your personal goals, and weighed up how you feel about risk.
Considerations such as your investment timeframe, current market conditions, expectations of future market conditions, and your tolerance to capital loss, and volatility (both positive and negative movement in returns) all need to be taken into account when choosing the right type of investment. This step alone is critical in assessing your propensity to take certain levels of risk to achieve an expected return over a given time-frame.
As mentioned above, it doesn’t take a lot to get started. You can begin investing directly in shares, or a managed investment (offering a diversified range of investment assets including shares), with a lump sum of as little as $1000, or less when setting up a regular investment plan. You can also contribute regularly to steadily grow your investments and build a diversified portfolio – while taking advantage of the benefits of compounding returns.
Paying yourself first
If your budget isn’t quite working and you’re struggling to set aside funds to grow initial capital, there is an alternate strategy.
Called ‘pay yourself first’, instead of aiming to save whatever is left over after regular bills and expenses, consider setting aside a fixed percentage of your regular wage or salary as soon as you get paid. Better still, set up an online funds transfer with your bank timed with each pay day, so that this amount goes directly into your savings account – you may be surprised how quickly you can accumulate funds to start investing.
Doing the groundwork
Be sure to do plenty of research so you understand the market and assets in which you’ll be investing. You should also research the products you’ll use to invest in that market, such as a managed fund (you should always read the Product Disclosure Statement for the fund itself). For shares in a listed company, it might mean looking at companies’ annual reports, analyst research reports or on a stock exchange’s website.
The key point is, there’s a wealth of information you can, and should use, to help decide which investments to consider. This information should also provide insights into the risks and to some extent the tax implications of the investment you are considering.
Another critical piece of research and decision making driver when choosing the types of investments to use is looking at the costs of investing. Things such as brokerage when purchasing shares, management fees and buy/sell costs when purchasing managed funds are key when investing as when investing small amounts, fees can play a major part in impacting your initial outlay.
Getting started
Having done your research, and formulated an investment strategy, getting started can require filling out a form, or applying digitally to purchase the investments you have selected (and paying some initial capital). From here, you might decide to set up a direct debit to steadily add to your investment portfolio.
Source: BT