19/02/14: Age Pension Bonus: Last chance to register

Move quickly, deadline approaching!

If you're still working, male, and you were aged 65 or over (or 63.5 or over if you're a female) before September 2009, then you need to read this article.

If you fall into this age group and you expect to receive the Age Pension when you do finally retire, then you need to be aware that the Pension Bonus Scheme (PBS) closed to new members from 20 September 2009. Assuming you fall into this specific age group, the good news is that you can still register for the Age Pension Bonus, but you will have to hurry because applications close 28 February 2014.

Background: The PBS is a scheme to encourage older Australians to defer taking the Age Pension. The scheme pays a tax-free bonus to eligible individuals who work beyond Age Pension age, provided that they qualify for the Age Pension when they eventually retire. The maximum payment available is around $47,000 when you defer claiming the Age Pension for five years or more, and you're eligible for the full Age Pension when you do claim your entitlements. If you're eligible for a part-pension, you may be entitled to a part-Pension Bonus.

According to Centrelink, you will be eligible for the Age Pension bonus if you satisfy the following conditions:

> reached Age Pension age before 20 September 2009 (age 65 for men, 63.5 for women).

> continue to work since reaching Age Pension age.

> have not yet claimed the Age Pension.

> register before 1 March 2014.

If you have already applied for the PBS, then the scheme continues to apply for you, subject to meeting the scheme's 'work test' condition.

Note: Your eligibility for the PBS runs from the time you register, rather than the time you reached Age Pension age.

If you think that you may be entitled for the PBS, we recommend that you immediately make an appointment with Centrelink to formally determine your eligibility. Westmount clients can call our office if in doubt - we'll perform a quick calculation based on your current circumstances - beats waiting in a queue! Rick Maggi (Westmount. Financial Solutions.)

25/02/14: Spending your super lump sum?

Tread carefully...

The decision about whether to take super benefits as a lump sum, superannuation pension or both as a lump sum and a pension is a key financier issue. But be careful, funding your retirement requires serious resources… Read more here  Rick Maggi (Westmount. Financial Solutions.)

23/01/14: Expect more...

The risk of a share market correction...

Since 1950 the average cyclical bull market in Australian shares lasted 48 months with a 126% gain. The current bull market has gone for 28 months with only a 37% gain. So where are we now in the cycle? Are we heading into a bear market already or is there more growth to come? Read on…  Where are we now?   Rick Maggi (Westmount. Financial Solutions.)

17/01/14: The Year Ahead

Westmount Clients Only

19/12/13: The Fed finally tapers

...and what it means for investors

Overnight the US Federal Reserve announced that it will begin carefully and slowly scaling back its massive stimulus program next month. It is the central bank's first step towards winding back the stimulus that has helped the US recover from its worst recession since the 1930s and a sign that the US economy is recovering.

In response, the US share market surged by almost 2% and at the time of writing, local markets are up by about 1.5%. Our local currency immediately dropped to 88.18 US cents but then quickly recovered to 89.45 US cents as investors digested the news. Most importantly, this should be viewed as good news. AMP Capital's Dr Shane Oliver discusses the implications for investors here. Rick Maggi (Westmount. Financial Solutions.)

11/12/13: Review of 2013, outlook for 2014

Insights from AMP Capital's Shane Oliver...

It's that time of year again where we can take a look at the year that was, and then look forward to the next twelve months. Read more here  Rick Maggi (Westmount. Financial Solutions.)

30/11/13: Deflation or rising inflation?

What is the risk?

AMP Capital's Dr Shane Oliver looks discusses the potential consequences of a deflationary spiral versus rising inflation on your hip-pocket. Enjoy. Read more here  Rick Maggi (Westmount. Financial Solutions.)

19/11/13: Salary sacrifice your way to prosperity

Boost your superannuation through salary sacrifice

An effective 'salary sacrifice' strategy now could be the key to getting more from your super in the future. Read more here  Rick Maggi (Westmount. Financial Solutions.)

04/11/13: Avoiding excess risk in a low-interest environment

Don't upset the fine balance...

The strong growth in the prices of many Australian shares over the past year is attributable, in part, to the buying of yield-hunting investors. A number of high-yielding financial stocks, for instance, are trading at or near to record highs.

Predictably, in the prevailing low-interest environment, many investors are now turning to more concentrated portfolios of high-yielding shares in an effort to maintain their investment yields and their lifestyles. But, unfortunately, this pursuit of yields comes at the cost of undertaking a higher level of risk for an investor's overall investment portfolio.

Rather than exposing portfolios to higher risk and upsetting carefully diversified portfolios in a hunt for income, investors should focus more on a portfolio's total return – that is the combination of its income and capital growth. With this approach, investors in need of more income than produced by a portfolio draw an amount taken from their portfolio's total return, taking into account cash-flow and capital appreciation.

In this way, investors can remain on track to achieving their long-time goals without upsetting their portfolio's diversification and without taking greater risks. Rick Maggi (Westmount. Financial Solutions.)

24/10/13: A new warning on SMSF spruikers

NRAS on ASIC's radar...

The corporate regulator has issued a warning about SMSF spruikers who are encouraging consumers to invest in residential property via the National Rental Affordability Scheme (NRAS).

“ASIC is aware that a number of SMSF promoters include misleading statements in their ads about the grants that may be available under NRAS,” said the regulator.

The NRAS offers property investors direct payments and tax offsets for building and leasing to moderate income earners at a rate that is 20 per cent below market value.

“ASIC has seen ads stating that consumers can use their superannuation to purchase a property using the scheme and receive ‘$100,000 tax free’,” said the statement.

The regulator said the advertisements do not provide balanced messages about the “features, benefits and risks” of investing in an NRAS property via an SMSF.

The advertisements fail to mention that the eligibility to participate in the scheme is subject to restrictions; there are fees associated with purchasing, tenanting and managing NRAS properties; to receive a total financial incentive of $100,000 consumers need to remain in the scheme for 10 years; consumers will be required to rent out the property at 20 per cent below market value to eligible tenants, said the Australian Securities and Investments Commission (ASIC).

The regulator noted that if consumers purchase an NRAS property through an ‘approved participant’ there is no requirement for the incentives to be passed on.

In addition, any contractual arrangements should be checked to ensure the relevant NRAS-approved participant will comply with all legislative requirements, said ASIC.

ASIC commissioner Greg Tanzer said consumers need to be cautious when approached with an offer that appears too good to be true.

“ASIC is focused on protecting consumers and where we see people recommending consumers invest using their SMSF, we want to ensure they are providing balanced messages that comply with the law,” he said.

“It is important that ads are clear, accurate and balanced, especially when consumers are looking for investments for their long-term retirement,” said Mr Tanzer.  Rick Maggi (Westmount. Financial Solutions.)