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Welcome to the October 2007 edition of Your Financial Future. In this issue, we expose two types of "get rich quick" scams, and provide some perspective on volatile world share markets.
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Further, we provide you with some tips to help you save for your dreams, and we re-examine the strategy of splitting your super with your spouse.
You can also read about the property market as being an investment alternative.
As usual, we also include the latest offers from the Fair Go Member Benefits program, and update you on how the different asset classes and investment markets have performed in the past quarter.
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We need your Tax File Number
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Please note that from 1 July 2007 if the Fund does not have your Tax File Number (TFN):
- The Fund won't be able to accept any personal contributions made by you or your spouse from after-tax money;
- You may miss out on Super Co-contribution payments you could be eligible for; and
- You could pay up to 46.5% tax on some of your super contributions.
You are not obligated to provide your TFN to the Fund, of course, but not doing so may result in you having less money saved into your super account when you retire.
If you haven't previously provided us with your TFN, the Australian Tax Office may have written to you recently advising that it intended to give your TFN to the Fund. If it hasn't, you may provide your TFN to the Fund, by calling Member Services on 1800 067 059 or your employer can pass it on to the Fund with your permission.
If you don't know your TFN, you can call the Australian Taxation Office on 13 28 61 or talk to your HR or payroll department. You should also check your Fund Member Benefit Statement to ensure that your TFN is correctly recorded.
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The myths of financial planning
In these days of financial information overload, it's often difficult to discern fact from fiction. For this reason, we expose a financial planning myth in each issue of Your Financial Future to help guide you through the maze of information out there in the marketplace.
Myth: I can safely expect to make that much money that quickly.
You've probably heard the saying "If it sounds too good to be true, it probably is" many times before and sadly, there's a reason why it's often repeated. Thousands of Australians have lost their life savings in get rich schemes that never worked out. Sometimes they were caught in a fraudulent scam while at others times, they were blinded by high returns without considering the risks involved. In a previous newsletter, we have discussed the link between risks and rewards. Click here for more information on this.
In this newsletter, we alert you to two types of scams out there which use the promise of quick riches and pretend to be legitimate financial services organisations to rob Australians of their hard-earned savings.
Scam 1: Telephone calls offering services
Telephone investment frauds or cold calling scams put a lot of effort into disguising themselves and appearing business like and reputable. Even people with significant business and professional experience have been swindled.
The Australian Securities and Investments Commission (ASIC) believes that Australians have lost at least $400 million to telephone investment fraud. So beware of phone calls out of the blue selling investments, financial advice and financial products.
Cold calling about financial products or services is illegal if the caller does not have an Australian Financial Services Licence from ASIC.
ASIC says if the caller avoids your questions, or doesn't have a licence, do not deal with them. It adds that even if they are not selling or advising but 'just inviting you to an information session', you will be safer by refusing the invitation.
ASIC warns that phone scammers, based in Australia and overseas, often sound like professionals, have reputable sounding company names and glossy, well designed brochures and websites. They may also dress up documents to resemble prospectuses, but these don't follow the legal requirements of Australian law.
Almost every victim tells a similar story of incredible persistence by the caller once they have expressed even the slightest interest. The victims are often harassed with repeated phone calls, often lasting more than half an hour, with the message that they can deliver great wealth.
ASIC advises that if someone cold calls you offering financial services, products or an invitation to a seminar, protect yourself by asking these questions:
- What is your name, address and phone number?
- Do you hold an Australian financial services licence?
- What is the name of the company holding the licence?
- What is the licence number?
- What is the licence holder's address?
If the caller answers your questions, make a note of the details and check the information after the call on ASIC's website database or by contacting its Infoline on 1300 300 630. If they don't answer your questions, just hang up.
Scam 2: Investment seminars
You've probably seen ads for investment seminars that claim: 'You can become a millionaire in three years' or 'Traditional investments are too slow and lack excitement' or 'Turn your financial dreams into reality'.
As with all other scams, many seminars look slick and professional, but often are more about making money out of you, than by offering you good information. According to ASIC, you should treat seminars that make claims like these with caution. This is because experience has shown that some of these seminars may be overpriced and offer poor value for money, may make misleading or deceptive claims, or push strategies that could be financially dangerous. In fact, these seminars could just be outright scams.
ASIC says many of these seminars make money from attendance fees, over-priced reports or books, or from selling property and investments from which the promoters rake off fees, commissions and other profits. In addition, some seminars try to get you to invest in offshore schemes where Australian laws cannot protect you and you will probably never see your money again.
As a result, ASIC says it's usually safer and far better value to attend seminars run by reputable organisations and financial services businesses licensed in Australia.
Utilise your Fund's services instead
Fortunately, you are able to attend one of the wealth creation or pre-retirement seminars run across NSW which we offer as part of our drive to provide great service to all members. For more information, call 1800 067 059 or click here to view our seminar schedules. Once you have been to a seminar, you can then discuss anything further with one of our financial planners, at no additional cost.
When stock markets get bumpy
Since late February, world share markets have been extremely volatile, sometimes shooting up one day and then falling the next.
While the initial concerns were sparked by changes on the Chinese stock market, most of the anxiety has been caused as a result of the repricing of the risk of debt in the US. This has been caused by changes in the expectations of defaults on 'subprime' mortgages in the US.
Subprime mortgages are mortgages provided to people that often don't meet all the requirements for a 'regular'' mortgage loan. As a result the default expectations on these loans are higher than normal on 'prime' mortgages. After a time when in spite of these higher default expectations, the market accepted these risks for a lower premium, the sentiment has reversed and the cost of debt has soared.
A number of Australian companies have been affected, but Australia's direct exposure to the US low quality or subprime market is very small. More importantly, the problems have resulted in a global credit crunch - that's where lenders stop lending, credit becomes tough to obtain and the cost of debt to rises. The concern now is that the problems experienced in the US could cause its economy to slump.
That said, local economists believe that the Australian economy is still fundamentally sound.
The drought has hurt rural sectors, the housing sector has been patchy and the NSW economy has underperformed other state economies. But economists point to the solid profit reporting season that has just passed where many listed companies performed better than expected, and to a strong global economy, which continues to lift the demand and prices for Australia's mining and rural resources.
So what should you do during such volatile times?
The experts caution against switching money out of shares into other assets, such as property, just because it may be performing better right now. In the past, this switching strategy has often failed. You might end up selling near the bottom of the share market to buy in near the top of the property market and lose money twice over.
Falling markets are the risk that one must bear, as a shareholder, in return for the extra returns one may expect to make. However, many advisers believe that while there may be short-term dips in markets, most carefully selected and age-appropriate strategies work well for investors over the long-term.
It's important to remember why you selected your investment strategy in the first place. You might have chosen it for a number of reasons, such as:
Hear from our financial planners online
Our financial planners discuss the latest super reforms via the Budgetary changes in detail in online interviews.
Hear about these changes and how they relate to you by visiting www.chifley.com
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- To meet your financial goals;
- Because of the number of years you had left until retirement;
- Because of your level of risk tolerance;
- To diversify your investments and spread your risks;
- Because it was generally the right strategy for your life stage; or
- You have recently retired and are investing for 'the long haul'.
If your reasons haven't changed, perhaps it's best to sit tight even if the ride gets a bit bumpy.
If you feel uncomfortable with this, believe that this is a good time to review your investment portfolio, or in fact, your reasons for selecting your investment strategy have changed, then you should speak with your financial planner by calling 1800 800 002.
What kind of saver are you?
You may have a short-term goal to save for something, whether it is for a new car, furniture or an overseas holiday. But how you save money, or more importantly, where you save money, can make a big difference in how successful you will be.
Unfortunately, many people don't take full advantage of the available savings options that may help them achieve their goals a lot faster. Are you one of these people?
There are some basic steps to saving. Setting up a separate savings account is the first step. Keeping your savings separate from your spending is one of the most basic and effective ways to save, as this will reduce your tendency to dip into your savings!
While many people may be well aware of this and may be putting it into practice, some don't choose an appropriate savings account. There are many savings products on the market; the trick is finding the one that suits you.
What to look for?
A high interest rate will help you reach your goal faster. Check out both variable and fixed interest rates and determine which you prefer. Accounts that offer high interest may exclude ATM cards for this benefit, but then again you are trying to save!
Compound interest is a great feature to look for when selecting a product. It simply refers to the fact that interest is paid on interest, that is, you are paid this month's interest on top of last month's interest. The more frequently you are paid interest, the greater the compound effect and the more you will save.
While interest will help your savings grow, bank fees can deplete your savings. Make sure you avoid paying bank fees where possible. This may sound easier said than done, but it's really not that hard. Believe it or not, some savings accounts don't charge bank fees! Look out for fine print such as a minimum monthly balance, transaction fees and penalties for withdrawing your money.
You can open some savings accounts with as little as $1, so starting now is really up to you.
Also, check out savings accounts with phone and internet access. Many of these operate with lower overheads so they can pass on extra benefits to you.
So what are you waiting for? Start saving to make your dreams come true!
Are you splitting your super with your spouse?
If you are splitting your super with your spouse, you may want to re-examine whether this strategy still suits you.
Legislation which came into effect from January 2006 allowed you to split both your personal and Superannuation Guarantee (employer) contributions with your spouse.
This legislation benefited families which had a single breadwinner or families which had one partner who had large super savings while the other had little or none. The advantages were that it provided the family with two tax-free thresholds and two reasonable benefit limits (RBLs) on retirement.
However, the Better Super reforms, first announced in last year's Federal Budget, may make splitting your super with your spouse less attractive than it was before.
This is because the reforms abolished RBLs and removed any tax on lump sums or pensions paid to people who are 60 years of age or older.
That said, there still may be some tax benefits to be gained from splitting your super with your spouse, for example, if one of you will have earlier access to your benefit due to Scheme rules or age difference. You may also prefer to continue to split your super with your spouse for personal reasons.
To find out what best suits your situation, please contact our financial planning team on 1800 800 002.
Making that leap into the property market
If you are ready for the leap into the property market, one way of making it work is to ensure that you lock in the best mortgage deal possible so that you are not giving away money that you don't have to.
The home loan market is extremely competitive at present with a wide range of different deals on offer. As a member of this Scheme, you are able to secure one of the most competitive home loans in the market.
Why is that? Because you and Chifley are part of a member-based organisation and so our services are designed to benefit members, not shareholders.
Therefore, both you and your family are able to benefit from Chifley's lower interest rate home loans products that don't have application or monthly account keeping fees.
We also have experienced and helpful staff who can advise you on any aspect of home loan lending - without obligation.
Chifley Homes Loans are 5 star rated
Chifley's Super Mortgage Loans and Super Investment Loans have been rated "superior value" and awarded 5 stars by CANNEX, the independent financial services monitoring agency.
A CANNEX 5 star rating places Chifley within the top 5% of home loan products, a pretty super endorsement when you consider there are over 2,000 products in the mortgage category.
Apply for a super home loan today
So if you're interested in a loan for a new home, an investment or if you simply want to re-finance your existing loan, why waste your money on higher rates or unnecessary fees? Talk to Chifley instead. Call us on 1800 800 002 or check out our website at www.chifley.com to find out about our 5 star, fee-free*, lower-rate loans.
* Conditions apply. Legal and government and other fees may apply. Fees, charges and all loan details will be disclosed in the loan contract. Some charges such as valuation fees and costs charged by the lender's solicitors are payable. These charges may be non-refundable should they be incurred and the loan is not proceeded with. An early repayment fee may be payable. Chifley Financial Services Limited (ABN 75 053 704 706, AFSL: 231148), trading as Chifley Home Loans, provides services through an agreement with Select Credit Union Ltd (ABN: 20 058 538 140, AFSL: 238257). Chifley Financial Services Limited does not guarantee the obligations of Select Credit Union Ltd. Chifley Financial Services Limited is co-owned by the Local Government Superannuation Scheme, the Energy Industries Superannuation Scheme and Unions NSW.
The latest from Fair Go
EcoPoint Resorts Hot Deal: Stay one night free!
Stay two nights at EcoPoint Myall Shores Resort on the NSW Mid-North Coast or EcoPoint Murramarang Resort on the NSW South Coast and receive the third night absolutely free*.
 EcoPoint Resorts invite Chifley members to experience nature at its absolute best with a range of accommodation options ideal for couples, families and friends. Facilities at both Resorts include a swimming pool, restaurant, bar, free Eco Kids Club**; or get busy bushwalking, fishing, kayaking, cycling and more.
Book online at www.ecopoint.com.au
EcoPoint Myall Shores Resort 1300 769 566
EcoPoint Murramarang Resort 1300 767 255
Please quote FP0708
*Conditions apply. Subject to availability. Not valid during peak periods. This offer is valid for bookings of three consecutive nights only. Offer valid to 30 June 2008. Please quote FP0708
**Eco Kids Club is free for Villa guests only and is open seasonally and subject to availability.
Notebooks & Desktop PCs
Lenovo, the largest PC vendor in Asia Pacific, is delighted to offer members the opportunity of purchasing notebooks and PCs at great prices.
Benefits include:
- Discounts* on the standard public web price on the entire range of Lenovo Notebook and Desktop PCs, Monitors and Accessories.
- Access to special offers that provide even greater value.
- Easy ordering from the Lenovo Affinity website or call centre.
- Flexible payment methods - pay via credit card, direct deposit, or finance through FlexirentTM.
For more information on current offers visit www.fairgo.com.au or contact Lenovo on
1300 550 479 and don't forget to quote Fair Go Member Benefits.
*May exclude selected clearance models.
Flexirent also lets you access the hottest computer technology, Plasma screen TVs and other selected items from over 7,000 retail partners in Australia including Harvey Norman and Domayne, by arranging manageable fixed monthly payments.
Members will also receive a bonus e voucher* over and above the great deals Flexirent normally offer.
For more information on current promotions, visit www.fairgo.com.au or call Flexirent directly on 1300 655 744 and quote Member Benefits.
*Terms & conditions apply. Offers change regularly.
30%* savings on travel insurance - 100% more relaxed!
When you're thinking about your next trip, you really don't want to think about the potential risks of experiencing lost luggage, flight cancellations or even worse, if you become sick while overseas.
AIG Australia's travel insurance cover includes:
 Overseas medical, cancellation, loss of luggage and theft
24-hour worldwide emergency assist with International SOS
International & domestic cover
Individual & family cover
It's fast, easy and secure.
For more information and on-line quotes click here.
*Terms and conditions apply.
Investment and market commentary
Click here for commentary on how investment markets performed over the September 2007 quarter.
Come along to a seminar
Are you looking to set aside some money for a house, a holiday or perhaps for your children's education? Would you like to know more about investment options, risk and return and managed funds? Are you wondering whether you will have enough money to retire on?
You could get the answers to these questions, and more, by attending one of the free wealth creation or pre-retirement planning seminars we are running at a venue close to you. To find out more, click here, or contact Member Services on 1800 067 059.
Contact us
Chifley Financial Services Limited
Ground Floor
28 Margaret Street
Sydney, NSW 2000
Member Services
T: 1800 067 059
F: (02) 9273 0033
Financial Planning
T: 1800 800 002
Please note that the information contained in this document is of a general nature only and is not for personal advice and has not taken into account your personal objectives, financial situation or needs. Any advice in this document is provided by Chifley Financial Services Limited (ABN 75 053 704 706), as an Australian Financial Services Licensee (AFSL 231148). Chifley Financial Services Limited is an APRA Registrable Superannuation Entity Licensee (RSEL: L0001120) and the trustee of FuturePlus Super (ABN 76 829 356 693). FuturePlus Super is a Registered Superannuation Entity (RSE: R1004366). Chifley Financial Services Limited is co-owned by the Local Government Superannuation Scheme, the Energy Industries Superannuation Scheme and Unions NSW. Members should not rely solely on this information and should consider their own personal objectives, financial situation and needs before acting on this information. Prior to making any decision you should obtain and consider the relevant Product Disclosure Statement (PDS) pertaining to your membership.
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