Tips for 2008 from NW Advice

Neville Ward Advice Eight for 2008 from NW Advice
Andrew Reeve-Parker, Director of NW Advice, offers his eight top tips for the year ahead
Andrew Reeve-Parker
1. Give your Tax File Number to your Super Fund
If you don’t, the ATO will deduct 46.5% from your employer contributions and deny your personal contributions.
2. Timing your Investment

if you are sitting on cash, resign yourself to never being able to pick the bottom of the market. You can however put the odds in your favour by researching the various financial ratios such as the Price to Earnings and Price to Book Value ratios. If you don’t have the time, employ a competent fund manager to look after your investments.

3. Update your insurance policies
The cost of life insurance has come down over the years, if you’ve held your policy for a number of years, you may find that you can now get a much larger amount of cover for the same premium. Underinsurance is one of the most common problems we see among clients, re-broking cover can be a simple solution in obtaining additional cover with no cost.
4. Self Funding Instalment Warrants – the smart way to leverage
If you want to increase your investment exposure, franking credits and tax deductions whilst eliminating the dreaded ‘margin call’, use SFI warrants to give your wealth a boost. Think of it as putting shares on lay-by whilst enjoying all the benefits now.
5. Review your asset allocation
Strong results in our local market will have distorted your portfolio weightings and, as a result, increased the risk of your portfolio and in some cases potentially reduced your future returns. Evaluate your portfolio allocation and take steps to find the right balance. Correctly balanced portfolios can reduce the volatility of your investments by using asset classes which perform at different stages in the market.
6. Review your home loan
It never ceases to amaze me how many people just sit on the standard variable rate on their home loan. For most, this is by far their biggest expense and with many of the mortgage lenders falling over themselves to get your business, you would be mad not to look at some of the reduced rates available to entice your business over to them.
7. Set up a regular payment

Its human nature to panic and sell when the market has fallen and want to invest when the market has risen. Unfortunately, this is probably the worst thing you can do.

Dollar cost averaging removes the emotional aspect of investing, if the markets fall, you’ll be buying more shares/units at a lower price and if markets rise, less shares/units at the higher price.

8. Over 55 & working, start a Transition to Retirement pension
This is by far and away, the most satisfying financial planning solution we provide. Eliminate the 15% earnings tax on your superannuation by setting up a pension. To make the process even more tax effective, salary sacrifice your surplus income to reduce your personal tax rate.

NW Advice is an independently operated, non-aligned financial planning practice offering fee for service advice. Any opinion and recommendation within this newsletter by NW Advice are independent of our own view and should not in any way be construed as personal advice.