With June consistently being the most popular month to buy a car – particularly in 2012 when sales rose 17 per cent compared to June 2011* and with demand in Europe slumping by as much as 20 per cent – Australian car prices are falling, making it a buyers’ market.

It’s easy to get swept up in the excitement of shopping for a car, particularly during the promotional periods, but buyers could save hundreds of dollars more if they sort out their finance first.

Sorting out your finances before shopping around helps give some clarity on what you can afford. It also gives you better bargaining power, especially if you get your loan pre-approved because you know your budget and can negotiate a deal straight away. This could save you thousands of dollars and could potentially offset any lower finance rates offered by the dealership.

Dealer finance packages can have appealing interest rates and be very convenient but you should consider the fine print.

Our top five tips to consider when securing car finance include:
1. Before you start test-driving, get a car loan pre-approved
2. Consider all the terms and conditions on your car loan, not just the interest rate – do you need a deposit, is it a short-term agreement, can you make extra payments?
3. Read the fine print, particularly with highly promoted low rate loans – is this loan for a particular car, e.g. new not used, and is it available for a limited time?
4. Consider all expenses, not just the cost of the car – this includes stamp duty, insurance, running costs and interest
5. Explore a few loan options – talk to financial institutions

Shane Townsend from East Maitland decided to get pre-approved finance for a new work vehicle, before shopping around to help make the process easier.

“I knew from past experiences that the buying process would be easier if I got pre-approved finance for my Toyota Hilux first because I’d know how much I had to spend and could negotiate a deal with the provider straight away,” Mr Townsend said.

“Companion Credit Union helped me work out a realistic loan amount which was affordable and allowed me to buy the heavy duty car I needed for my building business.

“Getting a car loan this time with Companion Credit Union was simple and convenient compared with my past experiences because they were helpful throughout the process,” he said.

Do you have any questions about taking out a car loan? Feel free to leave a comment below.

^Ray – General Manager, Distribution

*Source: Federal Chamber of Automotive Industries

Stay Smart Online

This week is National Cyber Security Awareness Week – an annual Australian Government initiative held in partnership with industry, community and consumer organisations and all levels of government.

The aim of Awareness Week is to help Australians using the internet – whether at home, the workplace or school – understand the simple steps they can take to protect their personal and financial information online.

Stay Smart Online encourages all Australians to remember these ten simple tips to improve their online security:
1. Install and update your security software and set it to scan regularly
2. Turn on automatic updates on all your software, particularly your operating system and applications
3. Use strong passwords and different passwords for different uses
4. Stop and think before you click on links and attachments
5. Take care when buying online – research the supplier and use a safe payment method
6. Only download “apps” from reputable publishers and read all permission requests
7. Regularly check your privacy settings on social networking sites
8. Stop and think before you post any photos or financial information online
9. Talk with your child about staying safe online, including on their smart phone or mobile device
10. Report or talk to someone if you feel uncomfortable or threatened online – download the Government’s Cybersafety Help Button

Stay Smart Online offers a free Alert Service for Australian internet users, to explain recent online threats and how they can be managed which you can register for here: www.staysmartonline.gov.au/alert_service

^Sharon – Financial Crimes Analyst

As your lifestyle changes, it’s important that your insurance cover adapts with it – otherwise you risk being underinsured, which can have devastating financial effects on you and your family.

Here are four types of insurance and why they are ‘must-haves’:

Income Protection – This is the most important type of insurance as it covers you if you’re unable to work due to an illness or accident. While Centrelink benefits may be available, they often are below what you would otherwise earn, and may not be enough to cover mortgage payments and living expenses.

Home Building Insurance – This provides cover for damages to your home building. It’s important to make sure you have sufficient cover for your building at all times and that you remember to update your policy if you make any extensions or modifications to your home. Some policies will also cover the flow-on effects of damage caused to your home. For example, if you were to suffer permanent injuries as a result of damage to your building by an insured event, you may be able to claim back some of the costs of modifying your home to accommodate your needs.

Home Contents Insurance – As well as the ‘big ticket’ items in your home such as furniture and televisions, your home contents also includes all the other bits and pieces you might accumulate over time. Think about your clothing, kitchenware, books, tools and more. Contents insurance can also cover your legal liability for payment of compensation to others where an incident occurs outside the home. For example, if you injured someone while playing golf, you may also be covered for legal costs that may arise as a result of that incident.

Personal Effects Insurance – This is usually an extension of contents insurance and covers personal valuables that are portable, such as bikes, jewellery and phones when you take them away from home. People often underestimate the value of personal effects but these are the items that can be more susceptible to loss, theft or damage when you are out and about.

When you receive your insurance renewal in the mail, take the time to review the level of cover you’ve selected and assess whether your policies need to be updated.

Insurance brokers and financial institutions can provide advice on the different types of insurance and help you understand what’s needed for your individual circumstances.

If you have any questions about insurance feel free to leave a comment below.

^Robert – Chief Executive Officer

Things you should know>

In the event something was to happen to your son or daughter which left their family without any means of support, it would most likely be you who the family turns to for support.

We encountered a situation recently with a retired couple whose financial situation was well secured with a self-funded pension arrangement. Unfortunately, their daughter suffered a serious and sudden long term health issue and they are now looking after the two grandchildren, both physically and, to a worrying extent, financially.

Thankfully their daughter had some insurance that assisted with the family’s cashflow needs; however the son-in-law had to stop work to care for her and the insurance funds were not sufficient to replace his necessary income and pay their liabilities.

The question arises – would you want to be the only source of support if something happened to your grown children? Circumstances such as this could place serious financial pressure on your retirement funds and in turn your overall retirement plans.

Whether you are already retired or about to retire, talk to your son or daughter about their financial obligations, and make sure they have a plan in place to protect their family’s financial future. And if they are not in a position to do so themselves, it could be something you pay for on their behalf.

We strongly recommend you conduct an ‘audit’ on how vulnerable you are to an unexpected event happening to your children. Our financial planners are available for a free audit of your children’s personal insurance needs.  If you have any questions, feel free to leave a comment on this blog post or call Eastwoods Wealth Management on 8132 9288.

^Michael – Practice Development Manager

Late last year, we saw the number of refinanced loans almost double when compared to the same period in 2011 and we experienced a 20% increase in the number of people bringing their home loans across from another lender.

We predict the trend towards switching will continue, particularly following the Federal Government’s new legislation on switching financial institutions, which came into effect from 1 July 2012.

The new legislation gives homeowners the ability to change financial institutions without having to go back and forth with their current provider. The new provider now arranges the switch, making it easier for the homeowner.

We will see more and more people looking for alternative products as home loan packages become more competitive, which actually works in the consumers’ favour.

People can save thousands by switching providers, for example, if they can find a home loan product that reduces their interest rate from 6.69% to 6.49% they could save up to $450 a year – based on a standard mortgage of $300,000. This would be a saving of more than $11,000 over the course of a 25 year loan.

We recommend the following to those who are considering a switch:

• Assess – is your current home loan still the best solution for you? Has your lifestyle changed since you first took out the loan and what loan features are most important
• Research – see what other financial institutions – including credit unions and building societies – are offering and which package meets your needs.
• Compare – Ask for a Home Loan Key Fact Sheet from your existing and potential providers for an easy method of comparing home loans.
• Understand your existing terms – find out whether you will have to pay any exit fees and if so, will this be worth it in the long term.
• Speak to the professionals – after doing your own research, it’s a good idea to talk to your existing and potential provider to get the best possible product.

Homeowner, Vince Alvaro (pictured) refinanced his $220,000 home loan with us recently and is now saving $300 a month with a restructured repayment plan.

“I already had my car loan with the credit union and decided to discuss refinancing my home loan because I wasn’t happy with what other institutions were offering,” he said.

“They had a very competitive interest rate and allowed me to tailor the repayment plan to suit my needs. As a result, I am now saving hundreds of dollars on fees, which means I can pay off my loans quicker.”

“Aside from the financial benefits, I felt like a valued member and found the switching process very easy,” he said.

If you have any questions about home loans or how to switch, feel free to leave a comment on this post.

^Michelle – State Manager, WA

Fixed rate home loans

Fixed interest rates allow you to lock in an interest rate for an agreed period (usually 1-5 years). For the fixed rate period you select, your interest rate does not change and your regular repayments remain the same. At the end of any fixed rate period you can have your loan convert to a variable interest rate or select another fixed rate period.

The benefits are:
• You will know how much your loan repayments will be for a fixed period, regardless of market interest rate changes
• You will be protected against interest rate rises
• You can pick the time period to suit you – fixed terms are available from 1 to 5 years

At Community CPS, we also provide the ability to make extra payments up to $25,000 per fixed year and the flexibility of redrawing additional repayments on fixed rate home loans*.

Fixed interest rates can safeguard against interest rate increases but also mean you will miss out if interest rates decrease during your fixed rate term. And if you want to repay all or part of your loan during your fixed rate period you may have to pay break costs.

Variable rate home loans

Variable interest rates are influenced by market conditions and during the term of a loan can increase or decrease many times over. If interest rates increase so will the regular repayments you must make. If interest rates decrease your regular repayments will also decrease.

The benefits are:
• Your home loan repayments will fall when interest rates fall
• You have the opportunity to reduce your home loan balance faster
• It can be very flexible and allow unlimited additional repayments and loan redraw

If you like flexibility in your loan and the ability to redraw, then a variable rate home loan might be best for you. However, it can be risky to take out a variable rate home loan if you have borrowed at or near your repayment capacity and interest rates do rise.

Split rates

The question about fixed vs variable interest rates is not always an easy one with the experts even having differing opinions on when and when not to fix. To get the best of both worlds you could consider splitting your loan into two; selecting a fixed rate term for one loan and a variable interest rate for the other. That way you get the security of knowing that your repayments won’t change on the fixed rate portion and flexibility to repay extra and take advantage of any interest rate decreases on the variable rate loan.

How to choose

When choosing whether to select a variable or fixed interest rate for your home loan you need to decide whether you want the security of knowing your repayments will not change or the flexibility of a variable rate loan, or alternatively a bit of both with a split loan.

If you have any questions about our fixed rate, variable or split home loans feel free to leave a comment.

^Scott – State Manager, SA

Things to consider>

*Terms, conditions, fees and charges, and lending criteria apply to all loans. Full details are available at the time of application or by contacting us. All loans are provided by Community CPS Australia Ltd ABN 15 087 651 143 AFSL/Australian Credit License 237856. Interest rates are subject to change without notice.

Personal loans and credit cards are both good options to finance smaller projects, such as a holiday or minor home renovations. Which one is the best solution for you depends on your personal circumstances, so here are some points to consider to make your choice a little easier.

Personal loans are a once-off, lump sum payment to be paid off over time. Some benefits include:

• Personal loans typically have lower interest rates than credit cards. If you are using the loan to pay off a product or service over a few years, such as a car or a holiday, a loan may offer better value.
• Personal loans are repaid over a set length of time, such as three years, meaning you know exactly what your repayments are and when you will have the debt paid off.
• The temptation to redraw on payments already made is limited with a personal loan. Some products do offer redraw options, but only if you’re ahead on repayments. That means the loan will still be paid off within the agreed timeframe.
• If you have several smaller loans and credit card debts to manage, a personal loan is an ideal way of consolidating all debts and streamlining transactions to one repayment, saving you fees and potentially offering a lower interest rate.

Credit cards offer instant and ongoing access to funds and can be used for all kinds of transactions. You will receive a monthly bill for what you charge to your card. In addition to increased flexibility, credit cards offer the following benefits:

• Most credit cards offer an introductory or balance transfer rate as low as 0% for the first few months. If you can pay off your loan within this introductory period, a credit card could be an option. However, be aware that after the introductory period the interest rate will automatically go up to the standard or a higher rate.
• Credit cards will generally have an interest free period whereby interest is not charged until after a certain amount of time.
• Many credit cards offer reward programs, offering points to collect with each purchase, which can later be redeemed for gifts or vouchers.

If you are thinking about borrowing some money for your next project feel free to leave a comment and we will help you find a solution that is suitable for you.

^Robert Keogh – Chief Executive Officer

Planning ahead not only allows you to save for your holiday, it can also allow you to take advantage of special offers and shop around to get the best price on airfares and accommodation.

Here are some tips on how you can stretch your holiday budget further:

1. Fly when airfares are at their cheapest – look out for mid-week flights and if you don’t travel with children, book your trips outside of peak time such as school holidays.

2. Sign up to airline e-newsletters to receive special offers. Often subscribers get first option on reduced fares.

3. When choosing a destination, consider travelling during the off-season when there are fewer tourists.

4. Stay at places located in the city where there is no need for a rental car as you can get around by walking and taking public transportation. You’ll see more that way and it will help to offset the holiday diet.

5. Many hotels and motels have frequent customer programs. If you find that you use a hotel or motel frequently, sign up for their loyalty program. You can usually save 10% or more off the regular room rate.

6. Create a daily budget while you are away. That way you can estimate how much the holiday will cost you in total, and it makes it easier to track how much you spend.

7. Try saving enough money for your holiday before you go. Many financial institutions have special savings accounts designed to help you save for something special, by rewarding you with bonus interest if you make regular deposits into the account. Saving before you go means you won’t have to use your credit card as much, avoiding a high bill – including interest – upon your return.

8. Avoid using ATMs overseas on a daily basis. While withdrawing cash in the local currency is convenient, every transaction attracts a fee, which will ultimately eat into your holiday budget.

^Robert Keogh – Chief Executive Officer

Congratulations to the

Licensee Select is a division of Westpac and provides various financial planning support services to independent financial planning firms across Australia.

Eastwoods Wealth Management has previously won seven SA/NT state based awards and one National award.

By winning the State award Eastwoods is now eligible for the national title which is announced in May.

The award represents an outstanding team effort dedicated to the provision of quality financial planning advice across Australia. I’m very proud of our team and the service we provide our clients.

^ Michael – Practice Development Manager

With constantly evolving product packages and changing interest rates, being able to simply compare institutions and their offering is important when seeking the best financial institution for your individual needs and lifestyle.

Here are some handy tips on what to look for in a financial institution:

• Security – It’s essential that your financial institution is trustworthy and is a safe, reliable and credible organisation. All financial institutions are regulated by the Australian Prudential Regulation Authority who ensures financial stability. Make sure you are comfortable with the people you deal with and the organisation’s values – this will give you peace of mind that your money is in good hands.
• Service – Every financial institution should provide high quality customer service and always tailor its advice, including recommending alternative products to suit your changing circumstances.
• Convenience – Understand your own banking habits, whether it is going into a branch on a regular basis, having access to Internet and phone banking or just being able to easily find an ATM. Take these preferences into consideration when choosing your financial institution.
• Features – The products offered need to meet your individual needs, so make sure there is a good selection of packages available that suit your lifestyle.
• Interest rates and fees – Find an institution that will provide a strong return on your savings, while charging low fees on borrowed funds. Ideally you want to find a balance between your desired product features and the interest and fees associated with it.

How to compare

Use these five considerations to assess the institutions you’ve selected, and make use of the numerous online tools available to help you compare financial products and services. They also provide valuable insights into the performance of various institutions. Useful sites include:

• www.mozo.com.au

• www.ratecity.com.au

• www.infochoice.com.au

Once you’ve done your own research, make a time to meet with financial institutions to discuss your individual needs and get a real feel for the nature of the organisation and what you can expect.

^ Robert Keogh – Chief Executive Officer

With festive spirits high, the Christmas period is the time when families are most likely to under estimate the financial burden. Often people forget about the myriad of other expenses beyond presents, such as food and drinks and of course any travel expenses such as petrol and accommodation.

The good news is that it’s never too late for those who haven’t yet considered budgeting for the Christmas period. Here are a few tips:

• Reflect on last year …consider how much you spent last year and what you could have done without. How much difference will it make?
•  Make a list …make a list of all the expenses you can foresee during that period, including presents, food, alcohol, flights, accommodation and decorations.
•  Draw a line …buying Christmas presents can be the most costly of all, so allocate an overall budget for presents and divide it among your list of friends and family and stick to it.
•  Do it differently …as families grow so does the financial outlay for presents. Consider doing a draw whereby you only buy for one immediate family member.
•  Plan ahead and do your research …write down who you’re buying presents for and what you’re wanting to buy before you step foot in a shop to avoid buying on impulse.
•  Avoid getting swept up …it’s easy to get swept up in the moment and buy things that were not originally budgeted for or spend a little over the budgeted amount – it all adds up.
•  Think outside the square …why not take the opportunity to show your creative side. Often things you make yourself are more personal than something you’ve bought in a store.
•  Keep track …hold on to receipts so you know exactly how much you are spending which could assist with budgeting in the future.
•  Be a bargain hunter …don’t be afraid to take advantage of the pre Christmas sales, no matter how far out from Christmas they are.
•  Avoid credit …avoid using high interest credit cards or store cards unless you know that you will be in a position to pay it off. If in fact you must use credit, choose a personal loan so the amount is fixed and will not blow out as it can with a credit card. It also gives the advantage of shopping with cash and achieving a better discount on a chosen item.
•  Start early for next year …start your savings a few months before Christmas. Check if your credit union or bank offers a high interest Christmas savings account that automatically deducts money from your pay to give you a lump sum in time for Christmas.

To make saving for Christmas a little easier, we’ve developed an easy-to-use online budgeting calculator, together with a Christmas Club Account designed to help members save for their Christmas related expenses.

The Christmas Club Account features a limited access option, a higher rate of interest, no monthly account keeping fees and the option of having part of your wage deposited directly into your account.

No one really notices a small amount deducted from their wage each week, and it’s comforting to know that when December comes around you have a lump sum ready to spend without having to rely heavily on credit cards.

The last thing we want people to do is start 2013 with financial difficulties so we’re advising people to plan ahead to avoid a festive season credit card hangover.

^Wayne Matters – Chief Financial Officer

Shop around

Shop around for a car, don’t just settle for the first one you see because you might get a similar model for less money or with less kilometres at another dealer or through a private sale. Consider car yards, private sales and online.

Ensure the vehicle is unencumbered.

You need to conduct a Personal Properties Security Register (PPSR) search to determine if they is any finance owing on the vehicle.

Beware of Scams and Fraud

The biggest risks are from fraudulent ads or vehicles that are stolen or written off. So protect yourself and do your checks!

Research the vehicle’s registration status, financial records and whether the vehicle is stolen. This can be done with your state/territory road traffic authority:

• New South Wales, Northern Territory & ACT

• Victoria

• Tasmania

• Queensland

• South Australia

• Western Australia

How much can you afford?

Before buying a car consider how much you can afford to pay for the car and the running costs; petrol, servicing, registration and insurance.

If you need a car loan, shop around for the loan. Compare interest rates, fees and charges from different financiers to find the best deal, ensure you can make flexible repayments when you can afford it.

Contact the seller

Contact the seller and ask losts of questions about the car.

Test drive your car

Make sure you have a thorough look over the car yourself, and best of all, have an independent mechanic or automotive centre check it out properly. It could save you thousands by revealing mechanical problems and previous damage.

Insuring your car

Insure your car when you buy it. Third party insurance is compulsory and will cover injuries caused to other people if your car is in an accident, without it you cannot register your car. The other types of car insurance include comprehensive insurance, third party fire and theft insurance and third party property insurance.

Good luck!

^Paul – Lending Services Manager

Things you should consider>

Here are some things to consider when planning to buy…

• There are more expenses than just mortgage repayments. Think council rates, stamp duty, mortgage duty (NSW only) and a deposit need to be paid. Also, when it comes time for settlement you will need to pay your conveyancer or solicitor legal fees as well.

• Draw up a budget to make sure you can meet mortgage repayments. Include all the things you pay for, like phone bills, car insurance and registration and day to day expenses like food and petrol. To afford the house you want, you may need to cut back on some expenses.

• If you are a first home buyer, you may be eligible for the ‘First Home Owner Grant’ that the Federal Government provides. State and Territory governments may also offer stamp duty or tax concessions if you are a first home buyer.

• Make sure you work out exactly what you want. It may help to write down what kind of things you want your house to have (double garage or perhaps two bathrooms), what suburbs you want to live in and the average prices for houses in those areas.

• Find out how much you can borrow!

• Check out our home loan tips

• Start your search! Check out online advertisements as well as advertisements in your local paper. Always get as many opinions as you can, particularly from experts, as you may not want to buy a house which is structurally unsound, or which has a heritage listed tree you can’t remove.

Good Luck!

^ Paul – Lending Services Manager

Things to consider>

Buying a product interest free is a loan. The store or a financing company will be lending you the money to pay for something on the terms that you pay them back. The primary difference with the loan is that they offer an interest free period instead of charging you with interest when you first buy it.

Buying interest free doesn’t equal free. It just means that you won’t be charged a percentage of what you owe each month.

There are usually two ways you can pay for interest-free deals:

• Payment by instalments – you make regular payments each month, with the aim of paying off your purchase by the end of the interest-free period
• Buy now, pay later – you don’t make any payments until the end of the interest-free period, at which time you pay the full amount, plus fees and charges

Things to be aware of:

You may also have to pay a deposit upfront. Additionally, if you can’t repay this loan within the interest free period, you may be charged a high interest rate on the amount you owe, the interest rate could be up to 30% so always aim to repay your debt early and the store or financing company may backdate the interest so it’s charged from the day you bought the goods.

If you’re paying by instalment, the minimum monthly payments suggested by the store or financing company are often not enough to pay off the full purchase price before the interest-free period ends. Do your own sums and work out what you actually need to pay each month to repay the full amount by the end of the interest-free period. It’s probably going to be more than the minimum amount suggested by the store or financing company.

Different retailers offer different deals, so make sure you know exactly what you’re being offered. There may be a few hidden traps so read your contract and ask questions if you don’t understand something.

Make sure you can afford it! Don’t rely on the retailer who is providing you the interest free deal to tell you whether you can afford it. Unlike your financial institution who will generally only lend amounts to you that they believe, on the information available that you can reasonably afford to repay.

I hope this gives you a better understanding of how an Intrest free loan works.

^ Paul – Lending Services Manager

Things you should consider>

A family guarantee enables a parent or immediate family member to act as a guarantor for an adult child by using the equity in their own home or a term deposit as security for a loan.

Family guarantee home loans give the guarantee a head start by letting them purchase a property without a deposit.

If you agree to be a guarantor you are legally bound to repay the loan if for some reason the guarantee cannot. It is a large step to take and you should seriously consider the consequences of being a guarantor.

How does it work?

The family guarantee can work in a variety of ways, depending on what you would like to use the guarantee for. The family guarantee will work by:

• Family members equity – when you get a family guarantee you will be using the equity that your family member has gained in their property as security on your loan.

• How much do they have to guarantee – the family member will be able to choose how much they will guarantee. While there will be minimum limits the more the family member can guarantee the more benefit you will be able to get from the agreement.

What does the Family Guarantee allow the borrower to do?

The family guarantee will allow the borrower to do many things that they would have previously been unable to do. The main things the family guarantee will allow them to do will be:

• Buy a home sooner. Most loans will have a minimum deposit that will have to be paid upfront in order to be accepted. This will usually be around 20% or less if the borrower(s) are willing to pay lenders mortgage insurance. With a family guarantee they will be able to borrow more money and provide less of a deposit which will allow them to buy a home sooner.

• Reduce the need for lenders mortgage insurance. If the borrower was only able to give less than a 20% deposit then they would generally still have to pay lenders mortgage insurance. However, with a family guarantee covering the rest of the deposit money they may be able to avoid paying lenders mortgage insurance, which will save them money.

• Maximise the amount the borrower can borrow. By getting the family guarantee they may be able to borrow more money than they would have originally been able to. The family guarantee will often be used to cover a deposit that can’t be paid so they will be able to borrow close to 100% of the loan in some cases if properly secured.

Many financial institutions have different types of Family Guarantee loans so it’s good to compare them.

If you have any questions about our Parent Equity Loan or how Family Guarantee loans work, whether you are or may be the Guarantor or Guarantee feel free to leave a comment.

^ Paul – Lending Services Manager

Things you should know>

As part of the Mozo Awards, more than 25,000 banking and finance customers across the country rated close to 180 financial institutions, judging them on overall consumer satisfaction, price, features, customer service, convenience and trust.

The Mozo People’s Choice Awards, now in their third year and are a leading, nationally recognised finance comparison and reviews website. The award was nationally regarded as the most comprehensive consumer report card on the Australian financial services industry, and receiving the top award was an exceptional achievement.

Winning the Mozo Award and being recognised as Australia’s Best Credit Union for the second time this year is great feedback that we are meeting consumers’ needs in a wide range of categories.

This award is mainly the result of our staff’s exceptional work, who go above and beyond consumer expectations, and of our members’ ongoing support and feedback, which helps us to tailor our products and services to meet the highest standards.

The fact that these awards are based on consumer feedback makes this win particularly rewarding for us – the people have chosen us as Australia’s Best Credit Union, agreeing with Money magazine experts’ verdict earlier in the year.

Thank you to everyone who voted, to our staff and to our members.

^Robert Keogh – Chief Executive Officer

So what is superannuation?

Superannuation is an investment that provides money for retirement. Employers must currently pay the equivalent of a minimum of nine percent of your base income into your nominated superannuation fund. Superannuation funds invest your money with the objective of providing a positive return on it.  However, depending on your investment strategy your returns will vary from year to year.  These savings should have grown significantly over your working life and are expected to provide you with the income necessary to fund your retirement. You can also make personal contributions to boost your superannuation and you may be eligible for the Government Co-contribution scheme.

Superannuation may not be covered by your Will so ensure you have nominated the beneficiaries who will receive the money in your superannuation in the event of your death.

How do you access your superannuation?

A superannuation fund has restrictions on when the funds can be accessed. Superannuation funds can be made up of three different types of funds.

1.    preserved
2.    restricted non-preserved
3.    unrestricted non-preserved

To be access preserved funds you must satisfy one of the following conditions:

•    permanently retired after reaching your preservation age (55 if born before June 1960)
•    stopped gainful employment after turning age 60
•    reached age 65
•    left Australia permanently after having been a temporary resident on a specified class of visa;
•    meet special circumstances such as permanent incapacity, compassionate grounds, severe financial hardship; or
•    died.

It is a similar situation with restricted non-preserved funds, although they can be paid to you on leaving an employer.

Unrestricted non-preserved funds can be accessed any time. If you access part of your benefit before age 60, the payment will include both tax-free and taxable components.

Are you making the most of your superannuation?

It is generally in your best interests to make extra contributions to your superannuation when you can afford it, as you will generally be able to live a more comfortable retirement later in life.

Investigate whether you are eligible for Co-contribution, which the Australian Taxation Office calculates and pays, based on your tax return and information received from your superannuation fund.

‘Salary sacrificing’ is useful for high income earners if their employer will allow them to top up super before paying personal tax.  If a person has an income of $100,000 and decides to contribute $10,000 of this to their superannuation, the $10,000 is taxed at a lower rate then their standard income tax rate.

Getting advice

A financial planner can give you up-to-date advice and figures on the best ways to save  and plan for your retirement.  It is also important to have regular financial health checks to ensure you are on the right path on your way to, and during retirement.

Michael – Eastwoods Wealth Management Practice Development Manager

Things you should know>

The annual awards examine and compare more than 200 financial institutions and 16,000 products and we’ve been acknowledged for our outstanding member services, competitive products and strong performance in challenging market conditions.

This is not a first time win either, we were named Money Magazine’s Credit Union of the Year in 2008 and we were recognised as Best Credit Union 2005 too.

We’re member owned and exist for the benefit of our members and we couldn’t have achieved Credit Union of the Year without our staff, members and the community.

Sharing our success with our members makes it even more worthwhile. So join us in celebrating, drop into a branch near you on Wednesday the 4th of July to celebrate with us!

We’re excited about our win and look forward to continually providing our members what we call banking that does good!

We hope to see you!

Robert Keogh – Chief Executive Officer

A few tips to get you started as we kick off the new financial year :-

• Do something productive with your tax refund- If you’re fortunate enough to get a tax refund, use it to kick start one of your financial goals

• Manage your finances -find out where all your money went – and budget for the year ahead. Recording your expenses can help you understand where your money goes.

• Prepare for unexpected expenses – set aside some funds for those just-in-case moments!

• Plan to save – Start off slowly and set yourself short term goals and work your way up from there

• Talk to us– If you need a little help getting started, or you’d like to talk to a professional, we are here to help. Get in touch!

Michael – Practice Development Manager -Eastwoods 

Things you should know >

While superannuation provides funds once our working years are over, it’s important to consider how much money is needed per year to live comfortably and if your super will cover this – in a lot of cases, it just isn’t enough.

Australians often leave planning for their retirement until it’s too late, either forcing them to remain in the workforce for longer to boost their bank balance, sell assets such as their family home, or make considerable compromises when it comes to their lifestyle.

Being well prepared for your retirement, even if it is still a while away, is a good idea and will assist in less stress as your life changes down the track. Here are some helpful tips on how to prepare your nest egg for the golden years:

• Start planning your retirement finances in your early forties: that way you have time to build your assets and ride out any market volatility that may occur
• Speak to a financial planner about your goals and objectives: they will then work with you to develop a plan to reach your financial goals, taking into consideration your personal situation and your risk tolerance for investment portfolios
• Diversify your investments: try to spread your wealth across cash, property, shares and managed funds to gain a mix of growth and stability
• Consider adding income: generating investments (such as investment properties, term deposits or high-yielding shares) to your portfolio, to help provide a regular income once you stop working; and
• Reassess your finances once a year to make sure you are comfortable with your investments and your arrangements still meet your needs.

Following these steps will give you peace of mind that your hard-earned money is in safe hands, and you can enjoy retirement to the fullest without compromising your lifestyle. After all, this is the time you have worked towards for decades, you deserve to make it the best it can be.

Michael – Eastwoods Wealth Management Administration Manager

General Advice Warning: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information. Investment Performance: Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.

Personal Loans
• Lower interest rate: Personal loans will typically have a lower interest rate than credit cards. If the borrower has collateral available, like a car, a secured personal loan could be an option where the rates will be lower. There are some exceptions with most credit cards offering a very low balance transfer rate (some as low as 0%) for a certain period, usually 6–12 months.
• Choice of fixed or variable rate: Personal loans provide a choice of fixed or variable rate. With a fixed rate you are locking in your repayments for the period the loan is fixed, which for personal loans is generally the life of the loan. Credit cards are variable only, meaning the rate can change with market conditions.
• Structured repayment schedule: Personal loans are repaid over a set length of time (eg. 5 years). This means the borrower knows exactly what their repayments will be based on the current interest rate and when the debt will be paid off.
• No temptation: A personal loan removes the temptation of habitual spending. Credit cards enable you to easily redraw your repayments, which can cause you to become stuck in a ‘credit card rut’ if your spending is not managed. Some personal loans will have a redraw facility that allows the borrower to redraw from their additional payments not affecting their principal payments made with the loan still paid off within the required time.
• Debt consolidation: Personal loans are an ideal avenue to consolidate multiple debts (including credit cards) into a low rate loan, with one simple payment.

Credit Cards
• Balance transfers and introductory offers: Most credit cards usually offer an introductory or balance transfer rate, in some instances as low as 0%. The catch is it will only last for a short period of time – usually between 6–12 months, after which they convert to the standard, higher rate and generally only apply to the balance transferred with all new purchases made with the card incurring interest immediately. Many card issuers are also now charging a fixed fee for handling the balance transfer. Balance transfers and introductory offers are great if the debt will be repaid within the applicable time frame but are not suited for longer term debt.
• Interest free period: Credit cards will generally have an interest free period whereby interest is not charged until after a certain amount of time.
• Ongoing credit facility: A credit card is an ongoing facility; you can continually access the funds you have repaid (up to the applicable limit). Once a personal loan has been repaid, to access more credit you need to reapply.
• Credit cards will generally have an ongoing annual fee. Personal loans generally have a one-off application/establishment fee, which may be waived if certain criteria are met.
• Reward/loyalty programs: Often credit cards have a reward or loyalty program or ‘chance to win’ associated with them. Most loyalty schemes work by giving you points for dollars you have spent which can then be redeemed. Usually there is a minimum number of points that needs to be acquired and often the accrued points expire after a certain period if they are not redeemed. It’s important to remember that with each spend on your credit card, you are still incurring debt.

If you are still unsure which would benefit your situation, please chat to your financial institution, or to read more about the variety of personal loans and credit cards we offer, please visit our website.

It’s comforting to know that home contents insurance protects our valuables from theft or accidental damage inside the home. But if you take your camcorder or digital camera to the football or a barbecue this winter, you might find they are not covered if they are lost, damaged or stolen.

The fact is home contents insurance generally covers your precious possessions only in specified locations or circumstances. As a result, valuables like cameras, musical equipment, jewellery, watches and sunglasses may need additional cover to ensure they are fully protected outside the home.

So if you’re someone who gets out and about on weekends and you want to protect your valuables at all times, it might make sense to consider including Personal Effects cover under your existing home contents policy.

Commonly there are two types of Personal Effects cover – Specified and Unspecified – and your personal situation will determine the best type for you.

With Specified Personal Effects cover you can insure high value items that are special to you – like an engagement or wedding ring – and protect them individually for an agreed sum.

If you have a number of valuables that you wish to cover without specifying them – maybe a musical instrument, personal organiser or photographic equipment – you can select Unspecified Personal Effects cover. This provides protection for a broad range of personal items, subject to agreed limits for each item and in total for any one claim.

When you consider what it would cost to replace your most valuable possessions individually, Personal Effects cover really does provide peace of mind for not much extra cost?

Talk to your insurance provider for more information. To find out more about the insurance we can offer, please visit our website.

Well, the weather is starting to feel wintery and the end of the financial year is coming closer. This means it’s that time of the year again when we need to start thinking about our Tax! Do you know what you’re able to claim back on your Tax Return? It’s important to understand exactly what you can and can’t claim to help you get the most from your return.

Here are some handy hints from our tax and accounting experts to give you an idea of what you may be entitled to.

WORK RELATED EXPENSES

Things to remember when claiming your work-related expenses:
The expense you are claiming must be work related and not a private expense.  If you have been reimbursed by your employer for the expense, it cannot be claimed.

Receiving an allowance from your employer does not automatically entitle you to a deduction.

If your claims total more than $300 you need to keep receipts for the amounts claimed as evidence.

EDUCATION TAX REFUND

If you have purchased equipment like computers, textbooks or stationery for your children’s schoolwork you can take advantage of the 50% education tax offset.

You qualify for the Education Tax Refund if you have one or more children that are registered or enrolled in a primary or secondary school and;

• you received family tax benefit Part A for your child
• a payment was made for your child which prevented you from receiving FTB Part A
• your child stopped full-time school during the year and received income over the cut-out amount which prevented you from receiving FTB Part A for the child

CLAIM YOUR CHARITABLE DONATIONS

Don’t forget any charitable donation that is over $2 is tax deductible but you’ll need a receipt to claim for the donation.

UNDERSTAND YOUR OFFSETS

There are a lot of offsets available and it’s a good idea to check whether you are eligible for one. These include the dependant spouse tax offset, private health insurance rebate or medical expenses over $2,000. You can find out more about the offsets that are available here.

If you can’t find a receipt but know where you spent the money, see if you can obtain a second copy of the receipt or invoice.  Statements from your financial institution showing details of purchases and electronic transfers can be used in some instances in lieu of receipts.

If you want to make sure you don’t miss out on any entitlements, deductions or rebates, we offer a tax and accounting service through our subsidiary, Eastwoods Accounting and Taxation. There is also a taxation checklist available on our website to guide you through.

To make an appointment with one of our professional tax accountants please contact us.

John- Executive for Professional Services

Eastwoods Accounting and Taxation Pty Ltd ABN 32 008 214 033 is a subsidiary of Eastwoods Group Pty Ltd ABN 94 008 618 193 which is a subsidiary of Community CPS Australia Ltd ABN 15 087 651 143 AFSL/ACL 237856. Eastwoods Tax & Accounting services are available in SA, ACT & WA only.   This information is general in nature only and has been provided without taking account of your objectives, financial situation or needs.  Because of this, we recommend you consider, with or without the assistance of a licensed professional, whether the information is appropriate in light of your particular needs and circumstances. For more information, please visit the Australian Taxation Office website.

Following on from my previous posts about the impact the RBA has on the Australian market and why there is a difference between the RBA rate and that of a financial institution, in this post I’ll be covering off another common question we are asked – when the RBA changes interest rates doe that mean my financial institution will too?

When the RBA changes official interest rates, this will influence the FIs cost of funds but there is not a direct correlation. For example, money borrowed from overseas might not be influenced at all and it will take a number of months for term deposits to mature and reset to the new rates. FIs also operate in a competitive environment and will need to monitor what rates its competitors offer to ensure that its rates remain relatively attractive.

Each FI must make its own decisions about its interest rates based on all these factors; the rates are not set by a regulator. These factors will determine how much an FI changes its interest rates by, and when, following a change in the RBA official interest rate. In fact, it is common for retail rates to shift up and down even when the official rate doesn’t change, just less so with variable home loan rates because these are politically sensitive.

If you have any questions about the RBA or about interest rates feel free to leave a comment on this post and I’ll get back to you.

Wayne – Chief Financial Officer

Have you ever embarked on an overseas adventure only to find you’re woefully under-prepared? What would you do if you had lost your passport and credit cards and were stranded in a foreign country? Are you a seasoned traveller who knows the ins and outs of travelling and has knowledge to share? Well, you could win 1 of 5 AU$1000 Cash Passports simply by telling us your ‘Top Travel Tips’!!

Some areas that you might like to consider when crafting your entry are:

• Safety and security
• Being thrifty
• Managing foreign currency
• Staying in touch with home
• Make a long plane ride entertaining

The best tips will win the $1000 Cash Passport! But hurry, entries close on the 31^st May! Enter Now!

If you would like more information on our Cash Passport and why it’s so useful, click here.

Inside super

1) You might have some already. If you’re an employee, you may already have some death and total and permanent disability (TPD) cover in your super fund. This can be an easy and cost-effective way to get basic cover without the usual medical tests.

2) You can pay premiums using super. Super funds can claim a tax deduction for some insurance premiums paid inside the super fund. This means your insurance premiums may be effectively paid with pre-tax dollars. This can help you take a higher amount of cover and use the tax savings to cover the additional premiums.

3) You can salary sacrifice. If you want to pay your insurance premiums inside super but don’t want to reduce your retirement benefits, you can top-up your super by setting up a salary sacrifice arrangement. However, if you do this you need to keep an eye on your concessional contributions caps (see below).

Outside super

1) You can protect your income tax-effectively. Income protection premiums are generally tax-deductible outside super – meaning there’s no tax benefit to holding this cover inside super.

2) You can use your concessional contributions caps for super, not insurance. There’s a limit to how much you can contribute tax-effectively to super each financial year. Currently, the limit is:
• $25,000 per year if you’re under age 50, or
• $50,000 per year if you’re age 50 or over (this is a transitional cap that applies until 30 June 2012).
If you have sizeable insurance premiums inside super and you need to make additional contributions to pay them, you could be limiting how much you’re able to put away tax-effectively for your retirement.

3) Your benefit is easier to access. Outside super, you are the owner of the insurance policy, and any benefits are paid directly to you or your beneficiaries. Inside super, the super fund owns the policy and your super account receives any benefits. To get that money out of super, you then have to satisfy a ‘condition of release’.  If you don’t, you may have to wait until your retirement age to get this money out of your super account.

With the 30th June approaching, it’s a good time to review your insurance needs to make sure you have the right cover in place, and that you’re making the most of the strategies available. For advice specific to you and your family, talk to your financial adviser today.

General Advice Warning:  This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances.  Please seek personal financial advice prior to acting on this information.

An estimated 1.2 million Australians aged 15 years and over have been a victim of personal fraud in 2010/2011, ­causing an overall financial loss of $1.4 billion. Credit card fraud is the most common form of personal fraud, affecting 3.7% of the population.

While some credit card fraud schemes are very complex, caution and close attention to how you use your credit card can help to reduce the risk of fraud. 

Following the tips below can help to ensure that your card details remain safe and don’t fall into the wrong hands.

1. Never let your card out of your sight during any transaction. That means if you’re at a shop, watch the sales assistant, and if you’re at a restaurant, go to the counter and pay the bill – this is particularly important if you are overseas where you could be identified as a tourist and a ‘soft target’.
2. If you’re buying goods online, make sure the site is reputable and well-established. Be wary of unfamiliar sites that are identified through searches – giving them your credit card details is the same as sharing your card number with a stranger on the street.
3. Make sure you have anti-­virus software installed on your computer as viruses can be used to obtain personal information.
4. Put a padlock on your home letterbox so that your credit card statement, which contains your card number and full name, or any other sensitive personal mail, cannot be stolen.
5. Never, ever, write your PIN down anywhere or share it with anyone.
6. Use internet banking to regularly check that only your transactions are going through your credit card.

For more information on scams that are currently circulating, please see the Fraud and Security page on our website.

 How you can benefit

The end of financial year is a great time to think about how you can boost your super savings before 30 June, and get your financial affairs in order.

 There are many strategies you can implement before the end of financial year to boost your retirement savings and achieve tax savings, such as taking advantage of the government co-contribution scheme, or benefiting from spouse contributions and salary sacrificing.

 End of financial year planning opportunities are different for everyone, because they depend on your life stage and personal circumstances.

 A financial adviser is the best person to work out which strategy best suits your personal circumstances. They will also make sure you and your family don’t miss out on any opportunities at the end of the financial year.

 Pay less tax via salary sacrifice

Salary sacrifice means putting part of your pre-tax income into your super and potentially paying less tax because concessional contributions are taxed at 15% (up to the concessional contribution caps). This is compared to investing your after-tax money into super which may have been taxed the highest marginal tax rate of up to 46.5% (inc Medicare levy).

 Whether salary sacrifice is right for you will depend on your personal circumstances and level of income.

 Take advantage of Government concessions

Many people can take advantage of the Government concessions available to increase their super savings, such as the Federal Government co-contribution scheme.

 If you are a low to middle income earner and eligible for the co-contribution scheme, the Government currently contributes up to $1 for each $1 of personal after-tax contributions you make to your super. This could mean up to an extra $1,000 in your super account – a significant amount.

 Boost your spouse’s super savings

If you have a low income earning spouse, you can help to top up their retirement savings by contributing to their super and reduce your income tax at the same time. You may be entitled to a tax offset of up to $540 if you contribute to their super.

 You could also split your employer super contributions or personal deductible contributions with your spouse. This strategy may reduce your tax liability, and if you contribute more into the older spouse’s super, it may mean accessing tax-free benefits sooner.

 Act now so you don’t miss out

As you can see, there are many super strategies you can put into place to boost your retirement savings and achieve tax effective outcomes before 30 June and thereafter. “And even though there is a special focus on utilising these opportunities before 30 June, these strategies can actually be used all year round to grow your retirement savings.”

 For more information on these super strategies and end of financial year planning, speak to your financial adviser or contact Eastwoods Wealth Management on 08 8132 9288

 This material is current as at March 2012, but may be subject to change. It has been prepared without taking into account your objectives, personal financial situation or needs. This information does not constitute tax advice and before making any financial decision, Eastwoods Wealth Management Pty Ltd recommends you obtain professional financial and taxation advice specific to your circumstances.

Because Financial institutions (FIs) operate by borrowing money from some people to lend to others; The average rate at which a FI lends must be higher than the rate at which it borrows (i.e. a positive interest margin) in order to cover its operating costs and deliver a return to its owners (i.e. a profit). FIs borrow money from individuals (retail deposits), professional investors (e.g. superannuation funds) and other FIs (interbank loans) both in their home country and, often, overseas. The rate it pays on all this funding is driven by the type of borrowing (and the credit risk and other commercial terms applicable), the country the money is borrowed from and the term (expectations of future rates). It is the weighted average cost of all these sources of funding that constitutes the FIs cost of funds, upon which it must base its lending rates to derive a positive interest margin.

If you have any questions about the RBA or about interest rates feel free to leave a comment on this post and I’ll get back to you.

Wayne – Chief Financial Officer

I have had a busy couple of months! I have just started doing shopping centre visits, which can be quite scary for a small puppy. But I am no ordinary puppy and took it in my stride! One of the most challenging things about shopping centres has been the travelators and elevators, but I have mastered them already!

As you can imagine, I attract a lot of attention in the supermarkets and lots of people like to say hello to me. However, I am learning that when I have my coat on I need to focus on the task at hand. This is great training for someday when I might be a Guide Dog or Autism Assistance Dog. I need to stay focused while out working.

I have also been into a café with my Puppy Raising family. It can be quite challenging to ignore all the distractions and to sit still under the table, but I am learning and I think I am starting to get the hang of it.

I have attended some group puppy training sessions in the past few weeks. Of course I love to play with my littermates and friends, but now the challenge is to learn to walk side-by-side on lead and ignore each other. It’s very hard but I am picking it up!

I am having lots of fun with my Puppy Raising family. I really enjoy playing with the kids and they are so happy to have me living with them. The family lives near the beach and I just love walking along the esplanade with the wind in my ears!

I recently attended the “Lollipop Markets,” which is run by my Puppy Raiser. I ended up being one of the main attractions and even appearing in the event’s photo collage!

Soon I’ll begin taking trips on public transport, a big step in a Guide Dog puppy’s life, so wish me luck and I look forward to telling you all about it soon.

Love
Eastwood the Guide Dog

In 2012 Eastwoods sponsored a Guide Dog pup- called Eastwood, we will continue to provide updates on his progress here.

But what does this really mean for you the consumer? This post covers one of the most common questions we’re asked about the RBA. We’ll be covering off a few more questions in other posts too.

Does the RBA set interest rates for financial institutions?
The RBA does not set interest rates for Australian financial institutions, despite common misconceptions. The RBA sets a target for the interest rate on overnight loans between financial institutions in the wholesale money market. The wholesale money market is the market where financial institutions borrow and lend to each other.

The RBA then borrows and lends overnight money on the wholesale markets (i.e. influencing the supply of, and demand for, overnight money) to ensure the actual overnight interest rate remains as close as possible to its target rate. Other interest rates (e.g. on home loans, personal loans, term deposits etc) in the economy are influenced by this interest rate (and many other factors) to varying degrees, so that the behaviour of borrowers and lenders in the financial markets is affected by the RBA’s monetary policy.

Two other key influences on other interest rates are credit risk and tenor (term). Most interest rates have two key components, a risk free base rate plus a margin to compensate the lender for the credit risk they’re assuming (i.e. the risk that the money won’t be repaid). Overnight money, and particularly Reserve Bank funding, has low credit risk and therefore tends to form the base rate for short term interest rates.

The second key influencer on interest rates is term. For example, it is expected that a 30 year loan will have a different rate than a 1 year loan because of expectations/uncertainty about how interest rates might change over the longer term and the longer period over which the lender is exposed to credit risk. Government Bonds tend to form the risk-free base rate for longer term interest rates. These two factors will mean that the interest rate on, say, a 25 year home loan will be higher than the RBA’s official interest rate.

If you have any questions about the RBA or about interest rates feel free to leave a comment on this post and I’ll get back to you.

Wayne – Chief Financial Officer

•  The best place to start is to do your own research. Use the Internet to gather basic home loan information and to compare different types of loans. The main loans to look into include standard variable rate loans, fixed interest rate loans and parent equity loans. To help you decide, consider which option you think best suits your circumstances with a list of pros and cons for each loan type.
• Speak to your financial institution or a broker. This is an opportunity to ask questions and clear up any grey areas. Be aware that brokers are paid by the lenders they recommend. To ensure the recommended deal is best for you, research a range of lenders yourself and speak to a few different institutions.
• Compare the key loan terms and conditions. It can be difficult to know what to look for in a good loan and what terms and conditions are most important to compare. Most people compare the advertised interest rates, but you should also consider other fees, the loan’s flexibility, exit arrangements, repayment terms and redraw conditions. The Federal Government now requires lenders to provide Home Loan Key Fact Sheets on their products so that borrowers can make direct comparisons between loans. All facts must be presented in the same way, so you can clearly see the product differences between institutions.
• Think long term and consider your individual requirements. Consider the broader relationship with your lender. It is likely that you will be dealing with this financial institution for many years, so it’s worth considering things like the quality of service, branch locations, and wider product offering. Will these features suit you now and in the future?
• Don’t be afraid to negotiate a package deal. Most lenders are happy to offer a better deal if you transfer your entire banking relationship to one lender. Don’t be afraid to ask for a discount on interest rates, loan service fees or monthly account keeping fees if you bundle all your banking needs and deal with one institution.

Wayne- Chief Financial Officer

The Education Tax Refund (ETR) is the Australian Governments way of helping with the cost of educating primary and secondary school children. Eligible parents, carers, legal guardians and independent students are able to get money back on education expenses like computers, educational software, textbooks and stationery.

Many types of education expenses are claimable under the Education Tax Refund as long as you have a receipt for your expense of course. Find out more about what you can claim on the government education refund website.

Who is eligible?

To claim the ETR, a person must have had eligible education expenses during the financial year for a child, who meets the schooling requirement, and:

•  they received Family Tax Benefit (FTB) Part A for the child, or
• a payment was made for the child which prevented them from receiving FTB Part A, or
• their child stopped full-time school during the year and received income over the cut-out amount which prevented the claimant from receiving FTB Part A for the child.

If you are not entitled to receive FTB Part A, you may still be entitled to claim the ETR if you receive any of the following payments:

• Youth Allowance
• Disability Support Pension
• ABSTUDY Living Allowance
• the Veterans’ Children Education Scheme
• Student Financial Supplement Scheme, and
• the scheme to provide education and training under s258 of the Military Rehabilitation and Compensation Act 2004.

For more information on eligibility for the ETR visit the government education tax refund website.

Expenses

Eligible expenses

Many types of education expenses are eligible for the ETR and include the cost of buying, establishing, repairing and maintaining any of the following items:

• home computers and laptops
• computer-related equipment such as printers, USB flash drives, and disability aids to assist in the use of computer equipment for students with special needs
• computer repairs
• home internet connections
•  computer software for educational use
• school textbooks and other printed learning material, including prescribed textbooks, associated learning materials, study guides and stationery
• prescribed trade tools for secondary school trade courses, and
• school uniform expenses (uniforms purchased after 1 July 2011 are claimable in the 2011/12 financial year).

Find out more about eligible expense from the education tax refund website.

Expenses which cannot be claimed

• school fees
• student attendance at school-based extra-curricular activities such as excursions and camps
• tutoring costs
• sporting equipment
• musical instruments
• school subject levies – for example, payment for consumables for particular subjects such as woodwork, art or home science
•  building levies
• library book fees
• school photos
• donations
• tuck shop expenses
• waiting list fees
• transport
• membership fees, and
• computer games and consoles.

Find out more about what you cannot claim from the education tax refund website.

Sharing eligible expenses

Where eligible education expenses are incurred for more than one eligible child, you can share the expense between their children. But all the children must use the purchased items and the you must buy the item on a day when they satisfied the eligibility requirements for the ETR for each child. This is called pooling.

Claiming the Education Tax Refund

If you are eligible for the Education Tax Refund (ETR) because you receive FTB Part A, only you can claim the refund. For example, your spouse cannot claim the Education Tax Refund in their tax return if you receive FTB Part A.

Find out more about how to claim on the education tax refund website or by talking to a Tax & Accounting expert.

Michael – Eastwoods Practice Development Manager

Things you should know>

This information and advice is general in nature only and has been prepared without taking into account your individual objectives, financial situation or needs. Before implementing any recommendations that you may make based on the information contained here we recommend that you see a registered tax agent or legal adviser. The information in this article has been sourced from the Australian Government’s Education Tax Refund website http://www.educationtaxrefund.gov.au/index.html

Licensee Select is a division of Westpac and provides various financial planning support services to independent financial planning firms across Australia.

Eastwoods Wealth Management has previously won five SA/NT state based awards and has won the “Licensee Select National Practice of the Year” award 2012.

By winning the State award Eastwoods is now eligible for the national title which is announced in April.

The award represents an outstanding team effort dedicated to the provision of quality financial planning advice across Australia. I’m very proud of my team and the service we provide our clients.

John – General Manager Professional Services

The legislation gives effect to 2009 Federal Budget announcements concerning the private health insurance rebate and Medicare Levy Surcharge changes. The proposed changes mean than an income test to the 30% private health insurance rebate will apply for individuals whose income for Medicare levy surcharge purposes is more than $83,000pa and for families where that income is more than $166,000pa.

What does this mean?

It means individuals and families may not be eligible for the full 30% rebate for their private health insurance premiums. In conjunction with this, also from July 1, 2012, the rate of Medicare levy surcharge for individuals and families without private patient hospital cover may increase depending on their level of income.

The effect of these new tiers would be no rebate where individual income is over $129,000pa and families over $258,000pa.

For the purpose of calculating your income threshold, it is based on the definition of income used to calculate Medicarelevy surcharge for individuals or families.

Information and Table sourced from the Department of Health and Aging website

http://health.gov.au/internet/main/publishing.nsf/Content/currentissue-P11000027

If you are unsure on how you may be affected, contact the team at Eastwoods Accountants & Taxation on 08 8132 9222 to speak to us to see how you may be impacted.

John- Executive for Professional Services

Eastwoods Tax & Accounting

Things you should know>

Strength in diversity: How to spread your wealth effectively

Diversifying your investments is an important aspect of growing your wealth over time and minimising the risk of volatile markets without forgoing returns. Basically, it means not putting all your eggs in one basket, but spreading your investments across a diverse range of assets, such as property, cash, shares and fixed interest.

People often focus on only one type of investment, mostly cash or property, which is not an ideal long-term approach as all markets are subject to volatility at some stage – and if you are forced to sell your assets when the market is down, you will most likely incur a loss.

The main benefit of diversifying your investments is that the low correlation of the asset classes – meaning the performance of one class is not affected by the performance of the other – helps reduce volatility in your portfolio because they respond to different market trends at different rates. Therefore, having a portfolio diversified among different classes creates more consistency and can improve overall portfolio performance.

Another possibility of diversifying is within the same asset class, such as buying shares from different companies and industry sectors. The less these companies and industries are correlated to each other, the less risk you take. In other words if you buy shares in three different oil companies, the risk is almost the same as investing in just one of those companies, as the industry factors that affect one oil company are most likely to equally impact all companies within the oil industry.

Many people find planning their financial future daunting and don’t quite know where to start, so here are some tips to keep in mind when developing your investment strategy:

Seek professional advice

Speak to a professional financial planner about your investment goals and objectives and the level of risk you are willing to take. The adviser will then develop a long-term investment strategy that supports your goals, and take you through the risk assessment of each investment class. In most cases a diversified investment portfolio is spread across property, cash, fixed interest, managed funds and shares.

Plan for the long-term

There are many schemes out there that promise quick returns, but the 20 per cent return within 12 months is simply unrealistic. By spreading your investments you can ride out the storm in some markets without incurring losses. With a long-term, diversified strategy you can afford to wait for market conditions to recover again – which is the normal cycle of every market – and therefore protect the value of your assets.

Don’t be emotional

Fight the temptation to spontaneously invest in a scheme you read or heard about. Stick to your strategy and avoid knee-jerk reactions to chop and change your investments to follow potential trends. Sustainable growth can only happen over time.

Review your portfolio regularly

Review your portfolio with your financial planner every 12 months to potentially adjust risk levels. In volatile market conditions a 6-monthly review is recommended.

In summary, diversifying your investments helps you spread your risk, so that a loss on one investment may be balanced out by a gain in another, creating sustainable growth over time.

John – General Manager Professional Services Eastwoods

Things you should know>

Most importantly ensure you choose a lender you are comfortable with, who is up front with you about all the costs involved and takes the time to answer your questions. A home loan lasts for a long time so it is important to have a good relationship with your lender and ensure that their after sales service is as good after you’ve taken out the loan.

1. What loan will suit me best?

Review all the loan features such as whether you can redraw or make extra payments.

2. What is the interest rate?

The interest rate will either be fixed or variable and is used to calculate your repayments. It will determine how much you’ll pay over the life of the loan.

3. How much can I borrow?

Depending on the loan provider you can borrow a maximum 80-95 per cent of the value of the property. However you should always consider how much you could comfortably afford to pay each month by discussing the monthly repayment amount.

4. What deposit do I need?

Most lenders require a minimum deposit of 5 per cent of the property’s value. If your deposit is less than 20 per cent, you may need to take out Lenders Mortgage Insurance. The higher your deposit the better as it will enable you to absorb fluctuations in interest rates which will impact on your repayment levels and the total amount of interest you pay on the loan.

5. What fees do I have to pay up front?

Discuss all fees involved in taking out a loan, such as loan application fees and government charges – including stamp duty, mortgage registration, mortgage transfer and Certificate of Title search fees.

6. What other fees are payable?

Make sure you are aware of the all additional fees and costs associated with the loan. For example, are there any monthly fees or charges to redraw?

7. What is the total cost of the loan?

Ask for the Comparison Rate for the loan you are considering. This rate includes both the interest rate and most fees and charges payable during the life of the loan, which is useful when comparing loans.

8. Are there any benefits available to me when I take out a home loan?

Check if your lender offers any benefits for taking out a loan. For example, Community CPS offers its free pinnacle +plus program to members borrowing $200,000 or more, which entitles them to no transaction or loan establishment fees, discounts on loans and bonus interest on term deposit rates.

9. Can I pay the loan off early?

Chances are you may want to refinance your mortgage before the term is complete, so check whether a lender will charge you a penalty for doing so.

10. What will repayments be if interest rates increase by 3 to 4 per cent?

Ask your lender how much your repayments will be if this happened. It’s important to consider whether you would still be able to afford the loan if interest rates were to increase substantially.

Ross – General Manager Operations

Things you should know>

The key is getting started. The first step should be creating a budget so you know exactly where your money goes.

Create a budget

Gather your bills and make a list of all debts, including the name of the creditor, your total balance, minimum monthly payment and interest rates. You should also list other necessary expenses, such as groceries, fuel and other transport costs, insurances, rent and school fees.

Add up all the minimum debt repayments and in a separate column document essential expenditure – the total of both columns will be the minimum you need to cover for the month.

This exercise may reveal your income is not enough to meet all your expenses. If that’s the case, you may need to reduce some costs, such as pay TV or your mobile phone.

Prioritise

The next step is to focus on repaying the debt with the highest interest rate first. Put as much towards these repayments as possible – the sooner the debt is cleared, the less interest you will pay over the life of the loan.

It’s important to continue repaying other debts and if possible, repay slightly more than the minimum so the balances can be reduced.

Consider debt consolidation

Depending on the size of the debts and the interest rates charged, it may be worth taking out a Debt Consolidation Loan. Instead of paying multiple creditors a variety of interest rates, you take out one loan to pay off all those accounts and make one single, monthly repayment.

However, be sure that the costs of the new, bundled loan are less than the total of current interest costs, otherwise there will be little to gain.

Assess your credit card debt

For those with a growing credit card debt, it may be beneficial to transfer the balance to a card with a zero per cent interest rate for a fixed period. For this strategy to work, it is vital that the balance is paid off before the no interest period ends.

There is one other important ingredient in a successful debt reduction strategy – discipline. By staying focused on the end goal, you’ll be well on the road to better money management.

Ross – General Manager – Operations

Here are a few tips to help you spot some of the credit card myths:

• Low rate credit cards have a low rate – it’s all relative and still best to shop around. The so-called low rate card from one organisation might still have a higher rate than those from other institutions. Also don’t forget the annual fee in this equation and make sure the low rate is not just an introductory offer.

• Low interest balance transfers are a good deal – they can be but you might find that you’ve switched to an expensive card once the honeymoon is over. Make sure you check how long the low (or no) interest balance period is and which interest rate applies after that period.

• Reward schemes are worth a slightly higher interest rate – reward schemes are great if you pay your card off each month to avoid interest but, if you don’t, the rewards are often negligible relative to the extra interest you have to pay. Also, be careful of the monthly card fee!

• Interest free days apply to all purchases – not true! Generally interest free periods only extend to the next repayment date. This could be up to 55 days for purchases made just after a statement cut-off date but can be as little as 10 days for purchases made just before a cut-off date. Make sure you are aware of the cut-off dates for your cards so you can manage your card activity.

• The higher interest rate on a credit card is not significant because the debt amount is usually small – be careful, it all adds up! Even if you’re carrying forward and paying interest on as little as $1,000 each month you’d be better off drawing down on your home loan, or taking out a personal loan to pay this off, as interest rates on those loans are much lower. Avoid paying interest on your credit card and focus on paying back the higher loan as quickly as possible.

• It’s just too tempting to spend on the credit card – the repayment pain comes later! This is not a myth and is exactly how credit card providers make money. The key is spending discipline. Credit cards are a convenient way to buy but the golden rule is to not spend what you can’t afford to pay in full when the credit card bill arrives.

^Wayne - Chief Financial Officer