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Things to ask a car dealer

Before you find a car and sign on the dotted line, there are a few things you should know. Here are a few questions you might want to ask the car dealer before you drive away with your new wheels.

Is there a balloon payment?

With a balloon payment, your weekly repayments are less than they'd otherwise be, but you pay a large lump sum payment at the end of the loan term (up to a quarter of the loan value).

Also known as Residual Value, these loans are common in leasing agreements but are also used in car finance.

If you have other short-term financial commitments (that you'll clear before your car loan ends), this option might be worth considering.

Are the repayments all-inclusive?

It’s not uncommon for finance offers to include costs like stamp duty, servicing and insurance. This means your repayments will include these costs, plus the purchase price of your car.

While this might seem like a great idea, remember you’ll be paying fees and interest on the total amount you borrow.

Also, be mindful that you may not get to choose who insures or services your car. These costs are generally cheaper if you shop around and choose your own insurer or mechanic.

Does the dealer get commission?

Car dealerships get commission when you purchase a car—and a higher commission when they use their own finance company.

Though this type of finance can be quicker and easier, keep in mind they’re making money from your purchase.

This means the car price may be inflated—the higher the price of the car, the higher the loan, the higher their commission.

Do I need an extended warranty?

Car dealers also earn a commission from 'add-ons', such as extended warranties and alarm systems.

Be sure you understand exactly what your finance agreement covers and do not sign anything until you understand what’s included.

Extended warranties tend to be expensive and there are laws to protect consumers from being pressured into purchasing them.

Remember you have protection under the Australian Consumer Law (ACL), even after your warranty period has ended.

Can I see the invoice price?

This shows you the exact itemised price of the car. For instance, you may pay $20,000 for a car that's actually worth just $18,000.

That extra $2,000 might be made up of car mats, mud flaps, bull bars and so on. These items can often be bought outside of the dealership for much less.

Important questions to ask the car dealer

If you’re buying a car through a car dealership, print off these questions and take them with you.

Interest rates

• Is the loan fixed or variable interest—and can I choose either?

• What's the annual interest rate?

• Is the rate influenced by my credit rating?

• What is the comparison rate—are there added fees in this rate?

• Is it an introductory rate, and if so what is the rate once it expires?

Fees

• Is there an application fee?

• Are there administrative or monthly servicing fees?

• Is there a fee to pay off my loan early?

• Can any fees be waived?

Repayments and loan terms

• What is the minimum and maximum loan term?

• Can I make extra repayments without penalty?

• Can I redraw from the loan if I’m ahead of my repayments?

• Is there a balloon payment at the end of the loan?

• If so, how much will this be?

Commission

• Are you being paid commission by the finance company?

• How does your commission get calculated and paid?

• How much more do you add to the interest rate to cover the commission?

Don’t be afraid to ask…

• Is that the best deal?

• Can you throw in car mats, paint protector, rims, alarm, sunroof, spoiler, tinted windows etc for free?

• What’s the invoice price of the car?

• What’s the best trade-in price?

Source : NAB February 2019 

The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article. 

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Source: MLC General article newsletter

Estate planning: Making it easier on family

It’s understandable to not have the answers if you’re asked about what will happen if you pass away. But if you make important decisions now, you could save your loved ones a lot of heartache when you’re gone.

Get professional legal and financial advice

The right professional advice can take the guesswork out of deciding how to distribute your assets, and help you make crucial decisions about who will have your medical and financial power of attorney.

You may consider finding a legal professional who specialises in wills and estates. You also have the option of consulting someone who can give you financial advice as well, such as a financial planner. If you’d like advice on accounting or tax-related matters, an accountant can help.

Make a Will

According to ASIC, around half of all Australians die without a will. If this happens to you, your family may have to apply to the Courts for the authority to administer your estate, sometimes called Letters of Administration.

You've worked hard to build assets, so you'll want them distributed to those who matter most. Sorting out your estate and making a will now helps to ensure that your wishes are followed when you’re gone. It also reduces the risk of family conflict.

While you can write your will yourself, we recommend you get legal advice, as it can get complicated.

Choose your executor

Think carefully about who you choose to be the executor of your will. When making your decision, it helps if:

• you’re close to the person and can trust them

• you've chosen two people to cover yourself if one person isn’t available.

You can find more information on the role of an executor from the Public Trustee relevant to your state.

Make sure family and friends are cared for

If you have people who depend on you financially and will continue needing your support, you may want to get both legal and financial advice about whether a trust would be helpful. Whether a trust is a practical option may depend in part on the size of your estate.

There are different types of trusts. If you support someone who is living with a disability, you may want to consider (and get advice about) special disability trusts. You can get some initial information about special disability trusts from the Department of Human Services.

Trusts are complex, so it’s important to seek advice on the pros and cons.

Take out life insurance

Consider taking out life insurance to help your loved ones financially. This could include things such as using the insurance funds to reduce or pay out a home loan.

GLOSSARY

Executor

Person(s) chosen in the will to make sure all things noted in the will are distributed as per your family member or friend's request.

Letters of administration

It's a document from the Supreme Court to make sure someone looks after the estate of your family member or friend if they don't leave a valid will.

Please contact us on |PHONE| if you seek further discussion on this topic .

Source : NAB February 2019 

The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Source: MLC General article newsletter

Money saving tips for travel

Travelling cheaply needn’t mean you miss out. Find out the best ways to save big on your overseas holiday plans, and make the most of every dollar.

Why you should budget for your overseas holidays 

Most of us love to travel, but not all of us can afford to travel as often as we’d like. A trip to Europe or the US might seem like it’s out of reach, but there are ways to rein in your travelling expenses and get to the places you love, more often.

Travelling on a budget doesn't have to mean that you miss out. If you plan ahead, work out a budget (and stick to it), you can have a better, longer – and cheaper – holiday.

Here are ten tips on how you can save money on your travels – and have a cheaper, better, longer holiday.

1. Fly for less

One of the few downsides to living in Australia is that you're miles from anywhere. Getting much beyond Bali will cost you, but there are ways to reduce flight costs.

2. Avoid peak holiday times

Travelling at the height of the European summer, for example, not only costs more, it’ll mean half your holiday is spent in a queue.

3. Compare flights as well as airlines

Remember, the cost of a flight can vary a lot, depending on when and how you purchase it.

Check out flight comparison websites to get a good deal. If you do book through one of these sites, be sure to read the small print. Their change/cancellation policies might not be as flexible as you need and could cost you more than you save.

4. Find an inexpensive bed

Halve your accommodation costs and you might be able to travel for twice as long.

5. Consider homestays

Go into this with the right attitude—be generous and ready to share—and you could end up with a free roof over your head, a tour guide, and a lifelong friend all wrapped up in one.

6. Check out a house swap website

You’ll be surprised to know how many people from Tuscany are eager for a holiday in Tasmania.

If you’re a bit more adventurous or love the outdoors, try backpacking, (no longer just for the young) or camping.

7. Go somewhere, not so obvious

Paris. New York. London.

Of course, the great world cities will always be magnetic places, but there’s a whole world out there. How about Marseille? Portland? Manchester? Belo Horizonte? Naples?

8. Get off the beaten track

It’s quieter, cheaper, and often more ‘authentic’. So long as you don’t tell too many people.

9. Eat like a local

Your greatest cost after accommodation will be food. Take the opportunity to sample the local cuisine – and cook when you can.

If you have a smartphone, get a good, cheap mobile data plan. Check out the public transport, perhaps download the transport apps for the cities you’re travelling to. Oh, and a free wi-fi finder app also might be worth getting.

 Source : NAB February 2019 

The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Source: MLC General article newsletter

5 reasons why small businesses fail

By Flying Solo contributor John Refalo

For many people starting a business is a dream but, at the same time, a significant risk when not done properly.

While we see a number of clients citing issues with the Tax Office as the catalyst for problems that upend them, there’s many reasons why a business can fail.

Let’s now explore what I believe are the five most common reasons why businesses fail.

1. You had poor planning

We may be sick of that saying “Businesses don’t plan to fail, they fail to plan” but this rings true. This is why we need a business plan—a good start is the template found on www.business.gov.au. To summarise quickly, a business plan is a document that goes through every aspect of your business, from establishing your vision and mission statement, to industry analysis and all the way to specifics like budgeting, employees, and expenses.

Spending adequate time creating a business plan will give you complete understanding of your business. You may be reading this now thinking “I am the owner … of course I know my business”. That may be true but a business plan forces you to:

• Consider your capital requirements;

• Define the direction that your business is going to take (vision, mission statement);

• Examine how your business is perceived in the market (quality, cost);

• Consider how you set yourself apart from your competitors (unique attributes);

• Deal with current and future threats to your business;

• Manage your income and expenses through budgeting;

• Consider finance arrangements to fund your part or all of your business;

• Consider opportunities in the industry/economy; and

• Define the employees’ roles and who is responsible for helping you achieve your direction.

This document is so important that even the banks require it when providing finance!

And while it’s up to you if you adopt one to this extent, or at all, spending some time looking at this (at least once a year) will hopefully change your focus on the ‘what’ you do in business to ‘why’ and ‘how’ you do business.

2. You failed to budget

Simply put, a budget will quickly tell you if you should be in business or not. It maps out your income and expenditure over a period of time which is especially crucial for those businesses that have cyclical or seasonal fluctuations (i.e. hospitality, agriculture, etc). By estimating the amount of revenue, or the peak periods when revenue is generated, businesses can see how much revenue is needed to keep the business alive during the slower months. On the flip side, focus on expenses is just as important (paying employees, meeting financial obligations, paying taxes) because it highlights what a business can afford.

3. You forgot to collect your cash!

Unless you are a ‘Not-for-Profit’, you are in business to make money. So when you complete a job, you expect to be paid for it … right?

These days, a lot of businesses operate on credit terms – sometimes necessary to secure customers. But when payment is due, a number of businesses are not doing enough, if anything, when collecting their debts!

I recently worked on the administration of a plumber that had a majority of ‘mum and dad’ customers on credit terms on its books accounting for $60,000 which was overdue. Had the owner followed up his customers and collected this amount, a lot of his short-term cash flow problems  could have reduced.

4.  You took (a big) wage

Business owners usually have a lot of sentimental attachment to their business, and for good reason. Some people pour their blood, sweat and tears into it. It’s for this reason that some business owners will use their business’ money as if it was their personal bank account.

This can have pretty serious consequences. For example I have seen businesses been used to pay for personal holidays, lavish lifestyles, mistresses, mortgage repayments and even a burial plot!

Diverting money from the business’ needs and focusing it on your own, limits the money available to grow your business, let alone to trade it! So next time, take a (reasonable) wage and once it hits your bank account, do whatever you want. We will revisit the seriousness of these personal transactions using a business’ funds in a future article.

5.  You didn’t set your price appropriately

A tricky question for business owners is: how can I price my product or service so I cover my costs but at the same time stay competitive? This is important because properly pricing your product or service determines how much profit you can make.

Specific budgets can help here on project-focused work where materials and labour are estimated, a percentage of meeting overheads (those costs not directly attributable to the job), provisions, and then applying a margin (a formal way of saying “the cream on top”).

If business owners take the time to price appropriately, they can see where their costs are being incurred and, more importantly, if they are undercutting themselves. There is no shame in walking away from a job because it is not profitable.

While there are many other issues that can be attributable to business failure, the above issues are what I believe are common for business owners, especially those starting out.

Source :Flying Solo  February 2019 

This article by John Refalo is reproduced with the permission of Flying Solo – Australia's micro business community. Find out more and join over 100k others.

Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Source: MLC General article newsletter

Not needed: A radically new investment strategy

Are you among the investors asking themselves: Is a radically new investment strategy warranted to deal with the challenging investment mix of continuing low interest rates, higher market volatility and subdued returns from diversified portfolios?

To the contrary, Vanguard’s economic and market outlook for 2019 and beyond emphasises that disciplined, diversified and patient investors who concentrate on factors within their control are likely to be rewarded over the long term.

In other words, the case for adhering to sound investment practices is compelling and a radical new approach is not needed.

Vanguard’s latest outlook warns that investors making short-term tilts to their portfolios’ asset allocations in an attempt to boost returns are unlikely to “escape the strong gravity of low-return forces in play as they ignore the benefits of diversification”.

In short, take a total-portfolio approach to investing rather than looking at different asset classes in isolation.

Further, the report suggests that a series of factors under investors’ long-term control are likely to “far outweigh” ad-hoc, short-term tilts to a portfolio.

Such under-your-control factors include:

• Save more: The straightforward strategy of saving more when possible can have one of the biggest impacts on the likelihood of our investment success. For many of us, this may begin with increasing our salary-sacrificed super contributions.

• Spend less: Our ability to reduce spending much depends, of course, on our personal circumstances. Yet many of us can keep a better control on our spending. And minimising investment costs should be a key focus of investors.

• Work longer before retiring: A longer working life, if feasible, provides a chance to save more for what will be a shorter and, therefore, less-costly retirement. And the continuing income from working past traditional retirement ages should help investors cope with a low-interest, subdued-return and more volatile investment outlook.

The adage that investors should concentrate on what they can control – not on what they can't – makes even more sense when investment conditions are more challenging. A shiny new approach to investing is not required.

Please contact us on |PHONE| if you require further discussion on this topic .

Source : Vanguard

By Robin Bowerman, Head of Corporate Affairs at Vanguard

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients' circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2019 Vanguard Investments Australia Ltd. All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page .

Source: MLC General article newsletter

When super isn't compulsory

As Australia’s $2.8-trillion super system attracts even more headlines than usual, more people may mistakenly assume that almost everyone in the workforce is covered by at least compulsory contributions.

In reality, the position is far different.

A research paper* from the Association of Superannuation Funds of Australia (ASFA) reminds us that a “substantial proportion” of Australia’s workforce is self-employed and therefore does not receive superannuation guarantee (SG) contributions.  

In other words, they are out in the super cold – unless they are among the small minority of the self-employed who make voluntary contributions or who have built-up some super savings from past employment.

Based on Australian Bureau of Statistics data, ASFA’s paper points out that 1.267 million people or about 10 per cent of our total workforce, as at August 2017, were owner-managers of unincorporated small businesses as their main occupation.

And the percentage of the workforce that is self-employed and uncovered by compulsory super contributions is expected to rise with the seemingly-relentless growth of the gig economy.

Here’s another key statistic. Some 20 per cent of the self-employed have no super whatsoever compared to 8 per cent of employees.

Critically, any super held by the self-employed is often extremely small, arising from whenever they have been classified as employees and eligible for compulsory contributions. Often, their modest super savings arise from the time they first joined the workforce and from occasional employment.

It seems paradoxical that the self-employed are among the most enthusiastic supporters of self-managed super when the majority of the self-employed have little or no super.

What can a self-employed person take to make that they don’t miss out on super? Here are a few tips:   

• Try to make regular contributions as if employed: Think about making contributions that are at least the equivalent of the compulsory contributions you would have received if employed. (The superannuation guarantee rate is currently 9.5 per cent of an employee’s ordinary earnings up to a maximum salary amount.)

• Claim a tax deduction for concessional contributions: The self-employed can claim tax deductions for their concessional (before-tax) contributions. The annual concessional cap for all eligible super fund members is $25,000. (Concessional contributions comprise compulsory contributions, salary-sacrificed contributions and personally-deductible contributions by eligible self-employed individuals and investors.)

• Contribute early, contribute often and contribute as much as you can afford:  By following this disciplined approach, you will reduce the chances of being left behind employees with your super savings.

• Look for opportunities to contribute more: If you receive, say, an inheritance or sell a non-super investment, consider contributing some of the money to super within the contribution caps. (The standard non-concessional, after-tax, contributions cap is $100,000 for 2018-19. Fund members under 65 have the option of contributing up to $300,000 in non-concessional contributions over three years, depending upon their total super balance.)  

• Think carefully before cutting your contributions if cash is tight: A temptation for the self-employed is to cut super contributions if business cash-flow becomes tight. Consider the long-term implications for your retirement savings of reducing your contributions; there may be other ways for your business to save money.

• Don’t overlook the insurance side of super: Most Australians with life and permanent disability insurance obtain at least default cover through their large super funds. And many of the self-employed also choose to hold income-protection insurance through their funds.

• Aim to obtain asset protection with super: Self-employed business owners sometimes seek advice about how their super savings may be protected in the unfortunate event of a future bankruptcy – subject to claw-back provisions in bankruptcy law.

• Watch for a gig-economy super trap: Understand that employers are not obliged to make super guarantee contributions for employees earning less than $450 a month before tax. This means, for instance, that employees making up their incomes doing a number of part-time jobs for different employers may fall below the threshold for each.

• Guide young family members towards super: If you have young family members working in the gig economy, perhaps in a series of part-time jobs, consider talking to them about the benefits of making voluntary super contributions.

Most of us have probably heard a self-employed business owner say “my business is my super” or similar words. Their expectation is often to eventually sell their businesses to raise enough capital to finance their retirement. But how realistic are those expectations?

As a past ASFA research paper points out that while some of these businesses may have a value of “a million dollars or more”, others may be worth may worth “little more than the market value of a second-hand utility or truck and some tools of trade”.

*Superannuation balances of the self-employed by Andrew Craston, Association of Superannuation Funds of Australia, 2018.

 Source : Vanguard February 2019 

By Robin Bowerman, Head of Corporate Affairs at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients' circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2019 Vanguard Investments Australia Ltd. All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Source: MLC General article newsletter