The Northern Territory news Tue 30 Jul 2013
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News Corp Australia
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News Corp Australia
www.ntnews.com.au Tuesday, July 30, 2013. NT NEWS. 25 The sacrifices Aussies arewilling tomake to take a good holiday By KARINA BARRYMORE ITS not all work and no play for Australian households: travel and holidays are high on the financial priority list. The sacrifices people make to afford a holiday often involve delaying long-term plans such as buying a home, having children and purchas ing a car, according to research by online booking company lastminute.com.au. The survey of more than 7000 respondents also found that the majority of holidays were paid for with savings, not credit. Travel plays a role in our lives more than ever, so it makes sense that people are fac toring it into their household budgets, lastminute.com.au general manager Kirsty La Bruniy said. Nothing kills that holiday vibe quicker than returning to a killer credit card bill. The two in three Australians who use pure savings to fund their travels obviously recognise this. For many people, living at home with Mum and Dad, taking on another job or giving up nights at the pub is a price they are willing to pay for amazing adventures and priceless memories. Travel is an investment Australians are willing to make sacrifices for. Westpac financial planner David Simon said many of his clients objectives echo the results found in the survey. It is very common that an annual holiday is included as part of their short-term objectives, Mr Simon said. I actually break down the cost of an average trip and build it into their monthly budget rather than identifying it as a lump sum. In most cases, the holiday money is saved in their home loan offset account, or similar, although some people have a separate travel savings account. This enables clients to save for a holiday without incurring any nasty surprises, Mr Simon said. P U B : NTNE-WS-DA-TE:30-JGE:25 CO-LO-R: C-M Y-K Risk in DIY super fund With the right retirement arrangements you really can make your post-work dreams come true LATE RETURNS WE cant believe the number of people who ask our advice about lodging tax returns that are years overdue. You can see the fear in their eyes. It started out as just being slack about not lodging that first return, then it compounds and develops into inertia. For all those in this position, fess up to the taxman now and lodge the returns. Your tax returnmust be lodged by October 31 each year. If your tax return is lodged through an accountant or tax agent, there is an extension to that date. Many have until the end of March. Late fines do apply if you lodge late, and then add interest, whichwill be charged on any tax owed. Thats theminimum. If you are found to be avoiding tax, then a new range of penalties, both financial and legal, can apply. But the real sting in the penalties is that late lodgement can comewith a conviction. If you havent lodged a tax return for a number of years, its easy to think: Why bother now? Theyve obviously forgottenme. Wrong. The tax office will be a lot kinder if you front up and admit your predicament. Follow Koch on Twitter: twitter.com/kochieonline ASIC ADVICE THE tax office and ASIC reckon you need to ask yourself four important questions before deciding on setting up a self-managed fund: 1. Is the fund strictly for retirement benefits only? 2. Do you have the time and skills? Self-managedmeans that you do thework. You must work out an investment strategy. Youmust be the trustee of your own fund. You remain legally responsible. 3. Will the benefits beworth the cost? 4. Howwill switching to a self-managed fund affect your current super? Changing fundsmeans changing benefits, services and fees. Make sure you dont leave yourself without life or other important insurances, and compare costs. AFTER 21 years of compulsory superannuation, with 11 years at the 9 per cent level, retirement nest eggs have become a major component of an average Australians wealth and are among the largest in the world. About $1.3 trillion is invested in super and, as a result, Australians now have more money invested in managed funds per capita than any other country. Superannuation is now a serious investment and you must take an interest in it. Choosing the right super fund can be the difference between struggling financially in retirement and enjoying the lifestyle of your dreams. These are your biggest superannuation decisions. CHECK CONTRIBUTIONS Employee contributions usually make up the biggest portion of super accounts, so its important to ensure that the right amount is being paid in. Most employers are spot on, but some in financial trouble have been known to defer making contributions. Double check to be safe. Pay slips usually detail contributions, but if not, check your super statement. If anything is askew, ask your employer; and if that doesnt get to the bottom of it, then talk to the Australian Taxation Office. READ SUPER STATEMENTS Member statements are a rich source of information that must not go express to the recycling. They are mailed out at least once a year and detail the start and end balance of your super over the period, contributions paid into the fund, any insurance or manage ment costs, tax taken out and the value of your investment returns. The front page usually summarises the account balance and performance compared with the last period. The units in each investment option are like shares in a company. The number of units will increase with the more contributions you make, but the price will fluctuate. The second page details what options you are invested in. Specific details of the investment options are found in the annual fund booklet and on the website. Choosing an appropriate portfolio is crucial, so dig a bit deeper to see exactly what your money is invested in. Insurance information is also set out here. There will be deductions for management and administration fees, which should not exceed 1.5 per cent of a balance under $100,000 or 1 per cent of a balance of more than $100,000. CHOOSE A SUITABLE INVESTMENT OPTION This is where most super fund investors come unstuck. They simply dont know what option they have their money in. Funds offer a range of options commonly described by terms such as growth, balanced, conservative and cash, which will all have different proportions of shares, property, fixed interest, as well as cash investments. Dig into each option with consideration of your age, comfort with investment risk, how long you have until retirement, and how much you need to fund that retirement. Young people can afford a higher risk portfolio, while those closer to retirement should opt for a more conservative one. If one single investment option doesnt suit, consider splitting your super across a few different options. For example, 50 per cent in conservative, 25 per cent in growth and 25 per cent in a balanced option. These modifications are usually free. Then check the long-term performance of the fund manager during both boom and bust cycles. SELF-MANAGED OR MANAGED? The general rule of thumb is that you need to have a minimum of $200,000 invested in a self-managed super fund to make it worthwhile. Anything less and the cost of administration is just too steep and you really would be better off with an industry or retail fund.
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