Are we paying more than we should in Superannuation?

The Commonwealth Treasury has revealed that Australians are paying $20 billion annually for Superannuation at an average of $726 for each member – that’s three times more than what we’re supposed to pay, according to Treasury Director David Gruen.

Addressing the Committee for the Economic Development of Australia, Mr. Gruen pointed out a recent study by Grattan Institute that slashing fees to half of the lump sum can result to a 20% increase in retirement incomes. He also reveals that Australian fees cost three times more than Britain, calling for significant reduction of fees would benefit the country as a whole. He points out that government initiatives, such as MySuper and Superstream have to be reviewed, as these products are deficient in covering for longevity risks.

Read more about this on the Sydney Morning Herald website.

10 Property figures you should be aware of

Whether you’re a property investor or buyer, these key figures will aid in your decision making as we go through several capital city values that affected the property landscape in the country.

1%. Sydney’s capital growth for homes for the 2nd quarter of the year, making it the best performing capital city.

-2.4%. On the other hand, Melbourne’s capital growth was at the bottom for the 2nd quarter, with home values dropping to -2.4%.

$328,250. This is the median dwelling price of the most affordable capital city in Australia, Hobart.

6.1%. Darwin has the highest rental yield in Australia for houses with 6.1%.

3.4%. Despite having the most expensive median price in Australia, Sydney’s home values have only increased to a modest 3.4% for the past decade.

$468,000. Melbourne’s median price is affected by an oversupply in inner city suburbs. Economists predict property values to drop further in the future.

4.3%. Melbourne’s unit yield, the lowest for all capital cities.

10.6%. Dwelling values increase for the middle 50% of all capital cities for the past year.

7.0%. Brisbane is slowly gaining steam, with home values increasing to 7% in the past year.

5.6%. The smallest capital gain for all capital cities is in Adelaide, finishing at a measly 5.6%.

Read more about this on the Property Observer website.

Are you getting the most out of your Financial Planner?

When the time comes for you to put your money towards an investment, your financial planner should be knowledgeable in accommodating any inquiries and provide you with appropriate suggestions on how to achieve your investment goals. Are you getting any form of skepticism or hesitation from your financial planner? Here are key signs to consider in spotting a poor financial planner:

Vague explanations. Providing clients with vague explanations show inexperience in certain investment types. Your financial planner should be able to explain all key points in detail and accommodate all your inquiries as specific as possible.

Dismissing the idea right away. As their job involves explaining the investment types that suit you, dismissing the idea outright is a key sign of a poor financial planner. They are more concerned about what’s easy and not what is best for you.

Encouraging you to invest without saying why. Sure, they see that the investment type is perfect for you, but why should you invest? If they are unable to provide you with an answer that you’re satisfied with, move on as your financial planner should provide advise that is not only suitable for you, but something that you should be comfortable with.

Read more about this on the Your Investment Property website.

What type of buyer are you?

have clear goals when purchasing. Understanding where you fit in as a property buyer will help you purchase property based on what is most important to you.

Here are the 3 types of property buyers:

House buyer. Are you more concerned about the look and the feel of the property? Does a pretty façade attract you regardless of the type of property location? A house buyer is focused on how property looks to his liking.

Location buyer. This type of buyer may be willing to compromise on the looks for as long as the property is located in a favourable location, accessible to major amenities that meet their needs.

Price buyer. If you are more concerned about how much the property costs regardless of the look and location, then you are a price buyer. A price buyer is more concerned about aligning the property with their budget.

Most property buyers may be any mix of the three, but you should be able to identify which is most important to you. This helps you avoid any risks and regrets when purchasing.

Read more about this on the Property Observer website.

Brace yourself: Home construction boom in the next 3 years

New dwelling construction in the residential sector has performed impressively this year with a value of $51 billion. Master Builders Australia forecasts this to grow to $68 billion in 2016 – 2017, exceeding the 200,000 properties in the market around that time.

The strong growth in construction has been driven by units and apartments for the past year, with around 70,000 apartments built as of June 2013. Detached houses are set to follow suit despite a slow start, with only 93,000 houses built at the same time. Forecasts show that built houses will balloon to 122,000 by June 2017. The strong growth in residential property will continue to be driven by the low interest rates to address demand and rising population in the country.

Read more about this on Your Investment Property website.

New law to allow First Home Buyers to purchase property using Superannuation

Parliament is set to debate whether First Home Buyers should be allowed to purchase property by having early access to their Superannuation. Proposed by Senator Nick Xenophon, this scheme will be similar to the one already in effect in Canada, where people can borrow as much as $25,000 from their Super and repay it in 15 years.

The proposed law has been met with mixed reactions; with others citing that this idea was taking government assistance too far, as this would create complications in cases of separation and if other circumstances take place. Others believe that the idea should be expanded to accommodate as much as $100,000 in borrowings to their Superannuation, as property values are expected to grow over time to cover this amount.

Will this new law serve as a solution to the Australian dream of owning a house, or will this pose a huge risk for one’s nest egg? The debate will be settled soon enough.

Read more about this on the Adviser website.

Unemployment at highest level in 12 years

The unemployment rate rose to 6.4% in June, the highest it has been since August 2002. 14,500 full time positions were added but 14,800 part time jobs were lost, causing the economy to lose around 300 jobs in July.

The labour force data is causing some analysts to worry, with HSBC Chief Economist Paul Bloxham calling the labour market “weak”. This is the first time since 2007 that the country’s unemployment rate finished higher than the United States, currently at 6.2%. The recent announcements caused the Australian dollar to drop to 92.96 US cents from 93.55 US cents.

Read more about this on the Sydney Morning Herald website.

Can ASIC repair the credit repair industry?

The Consumer Action Law Centre has called for reforms to the credit repair industry to safeguard the interest of clients. Concerns for the industry have moved the Australian Securities and Investments Commission into the spotlight to regulate credit repair and eliminate rouge operators.

The report claims that credit repair companies are charging high fees and tend to complicate client issues instead of resolving them. Allowing ASIC to manage this industry will force credit repair companies to outline their duties publicly and publish fees, terms and other information on their website. ASIC can then appoint an Ombudsman to assist clients in lodging a formal complaint without having to go to court.

Read more about this on the Adviser website.

8 reasons why you should stop renting and start owning

Home affordability issues have caused experts to ponder whether now is a good time to rent or buy. Last July, the Reserve Bank of Australia has released data showing that house prices are rising at a constant rate for the past 6 decades that people may be better off renting than owning property. Wealth advisory group Chan & Naylor believes otherwise, providing us with 8 reasons why you should stop renting and start owning property.

Owning a house is forced savings. Putting your money in a long term investment, such as property offers reassurance in later life.

Owning a house can cover your retirement cost. With the growing issues that the government has in sustaining retirees, a house can be used to pay for retirement.

Break free from the rental market. Renting puts you at the mercy of your landlord who, depending on market conditions, can raise rent at any time and evict you if you fail to meet your obligations.

Owning a house gives you financial certainty. Rent increases with values on the market. Paying for rent will eventually become unaffordable in the future.

Owning a house gives you peace of mind. You are basically purchasing what you can afford. You may need to readjust your finances as rents change.

Owning a house can be passed on to future generations. A house is a great asset that you can easily pass on to the younger generation.

Owning a house is less volatile than stocks and other investment types. Housing may have had its up and downs, but nothing as drastic as the stock market.

Rent options are limited. Only 30% of the housing sector is owned by investors. This is a limited number when looking for properties to rent.

Read more about this on the Property Observer website.

Macquarie in hot water for bad financial advice

Global banking group Macquarie will start contacting clients for bad financial advice provided by their financial advisory arm, Macquarie Private Wealth. 160,000 will be sent out to affected clients, after the Australian Securities and Investments Commission flagged them for poor compliance.

ASIC has called on Macquarie to entertain clients in the remediation process within 5 months and compensate those that suffered financial losses due to bad advice.

Read more about this on the Sydney Morning Herald website.