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Why would you use a financial planner?

Why would you use a financial planner?

21 Mar 2017 | Personal Finance

We have all seen the headlines about financial planner’s, they just seem to keep coming year after year….

  • Fee for no service the latest scandal for banks behaving badly

  • ASIC charges former Commonwealth Bank financial planner with forgery

  • Financial advice scandal: Banks face $178m compo bill

  • CBA, NAB, Macquarie, ANZ front Senate over financial planning scandals

Brendan Barker - Home Financing Specialist - Home Loans - Car Loans - Personal Loans

With a new skeleton being found in the closet of the financial planning industry on a regular basis, it is hard to know where to turn for trusted advice.

Many people choose to manage their investments on their own.

But for some that’s not an option, whether you are having trouble planning for your retirement, or you have an estate you want to leave to your heirs, here’s a look at five reasons for getting the help of a financial planner.

  • You Don’t Know How To Save For Retirement

Retirement planning is more than your employer paying they superannuation guarantee contribution into your nominated fund.

A financial planner will go over your current financial situation, they will help you figure out how much you realistically need in retirement and structure a plan that meets your goals and needs.

  • A Marriage Or A Divorce Is In The Cards

One of the main reasons for divorce is financial woes… Marriage means the mingling of income, assets, and debts and a financial planner can help both husband and wife budget their money, save for common goals and make the right investment choices.

The same can be said for a divorce.  A financial planner can help you untangle your finances, you may have been left with a windfall or a large debt to service.  They can help you put a plan in place to achieve your goals.

  • You’re Caring For An Aging Or Sick Parent

Nobody wants to see their mom or dad become ill as they age, but unfortunately, that is a reality for many people.  It is not only about caring for their health, but also assisting them with managing their finances.

This is where a financial planner can help, to ensure they are getting access to all the government benefits they are entitled to and ensure their super/pension is set up correctly.

  • You Receive a Sudden Windfall

Whether your windfall is from an inheritance, winning the lottery or landing a lucrative job, managing large amounts of money can be complicated.  A few bad mistakes and in a blink of an eye it’s all gone.

A financial planner will give you sound advice and help you put in place a plan to grow your windfall so that it meets your long-term goals.

  • You have or going to have a large Mortgage

Buying a home is the largest purchase most of us will ever make, and for most of us it comes with the biggest debt we will ever have.  While we never plan to get sick, lose our jobs, or pass away, these are naturally the sorts of things that can take a toll on your family and on the mortgage repayments.

A financial planner can assist in putting in place various insurance policies which will ensure that the mortgage and your loved ones are looked after if something unforeseen happens.

So, you have decided that you need to talk with a financial planner. Your best chance of getting good advice is to ask them the following 5 questions.  They won’t guarantee a planner you can trust or of their competence, but it will increase the odds of you getting reasonable advice.

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5 Questions to Ask a Financial Planner!

  • What company owns their advice licence?

You want to find out if they or their employer receives any benefits for recommending their products.  For example, a planner working for one of our major banks which is incentivised to recommend the products of their wealth arm.

If they do…. Walk out…. Quickly

  • Have they ever recommended a managed agricultural scheme?

You know the schemes, get the big tax deduction upfront and make a huge profit in 10 years time (or not seeing most of them went bust during the GFC).  These schemes paid advisers huge fees of 10 per cent or more. If they succumbed to this temptation in the past, no matter how reformed they claim to be, don’t just walk away.  RUN.

  • Will my money be put into your firm’s funds and products?

If they answer YES, find out what steps they take to source other alternative products and to manage any conflicts of interest.

  • How do you get paid?

Is it a flat fee, commission on sales or a percentage of an asset based fee.  However they are getting paid, you have to be comfortable that there is no conflict of interest and you are getting quality advice.

  • Ask to see a sample statement of advice?

A statement of advice should cover the following major points budgeting, cash flow projections, a comparison of multiple strategies and a discussion about what you can realistically except in retirement. If the document is difficult to understand or is unnecessarily long, the adviser has missed the point and it’s time to leave.

Going it alone may seem like the cheapest way to manage your money and investments, but it can end up costing you a lot in the long-run. The help of a knowledgeable and reputable financial planner can go a long way in making sure you stay on course to meet your unique financial needs and goals.

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How $5 can change your life!

How $5 can change your life!

14 Mar 2017 | Personal Finance

Can you afford to save $5 a day?

Brendan Barker - Home Financing Specialist - Home Loans - Car Loans - Personal Loans

How much do you spend on a daily basis? The morning coffee, a sandwich at lunch time, a coke mid-afternoon or a snack while doing the shopping, all these little things add up very quickly.

What if you decided not to purchase one of those indulgences and instead saved $5 each day.  Instead of picking up a coffee from the local café, make one a home before leave the house.

Instead of buying a sandwich at lunch, make a little bit more for dinner each night and bring leftovers for lunch.  Drink water instead of getting that coke, which is a much healthier option anyway.

There is so many little things we can do which would save us $5 just on the little luxuries.

What I hear you say, $5, that’s not going to change my life.

Read on and see how the simple $5 note is going to make the world of difference.

What if you saved $5 a day for a month?

You would have saved $150.  While it is a great achievement (whether you saved $10 or $1,000 it is a great result), is having $150 going to change your life?

Well if you bought a new bike and started riding it everywhere, it could have a significant difference on your health and your life.  If you went and bought a new outfit, while enjoyable not so much a difference on your life.

You could have a romantic dinner with your partner or you could spend it on the children.  While saving could make a change in your life, it most likely won’t be significant.

What if you kept on saving, say for 3 or 6 months?

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What if you saved $5 a day for 6 months?

You would have saved $900.  Congratulations this is starting to look like some serious savings, but will $900 change your life?

That would be a great weekend getaway for the away for the family. That start of an emergency fund so you don’t have to reach for a credit card each time something from left field crops up.

For only the cost of a cup a coffee a day, this is starting to look like it could change your life…

What if you kept saving for a year?

What if you saved $5 a day for a year?

You would have saved $1,800.  Now if your partner had joined in on the challenge, so you both were saving $5 a day, $10 in total.  Yep, $3,600.

Now we are starting to talk about some serious money.  If you had $3,600 saved come the end of the year, what could you do?

Take the family on an overseas holiday? How about a cruise? Pay off the credit card once and for all (wouldn’t that be a great feeling).

What if $3,600 is not enough for you to reach your dream?  Nothing stopping you from continuing to save.  5 years and you would have $18,000, yep more than enough for a deposit on a new home or to buy a second car outright.

What if you don’t want to spend 5 years to get to $18,000 in savings.  There is nothing stopping you from saving a little more each day.  Instead of $5 a day or $35 a week, you could aim to save $50 per week each or you might go for $10 per day.

All it takes is looking at the little luxuries we enjoy each day and cutting one or two out.  You don’t have to cut them all out, just enough so that you can save for the future.

Uncertain how $5 a day can change your life?  Don’t know where to start?  Click here to get your free budget planner here to help you get under way.

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How to get rid of credit card debt

How to get rid of credit card debt

7 Mar 2017 | Personal Finance, Refinancing

How consolidating your credit card debt can save you money.

Brendan Barker - Home Financing Specialist - Home Loans - Car Loans - Personal Loans

$32,000,000,000. Yes Thirty Two Billion Dollars.  That is the credit card debt currently owed by Australians, that’s an average of around $4,300 per card holder.

With interest rates on credit cards typically running at 15% to 24% the average credit card owner would be paying $650 to $1,000 per year in interest.

This doesn’t include any fee’s and charges the credit card provider may charge.

Add in a second credit card or a personal loan or two, and it is not difficult to see why it is so easy to get yourself into financial strife with debt.

How do you get on top and manage your credit card debt?  Read on to find out…..

Top Three Tips for Managing Credit Card Debt

Your individual situation will most likely be very different to the national averages.  You may have significantly more credit card debt or you may have none.

Regardless of how much or little credit card debt you may have, the following 3 tips are worth following (at least the first two if you have no debt).

  • Have a budget – if you don’t know what your income and expenditure looks like each month, there is no way to know if you can afford that new dress, latest iPhone or that cruise you have been dying to take.
  • Set up a regular savings – savings form an important part of your household finances, allowing you to afford the bigger ticket items or pay for those unexpected expenses.
  • Consolidate your debts – This simplifies your repayments and means you only have to deal with one interest rate. Typically you will end up paying a lower amount of interest which will save you money.

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How to get on top of your finances with Debt Consolidation

What exactly is “Debt Consolidation” – it means refinancing your debt onto the lowest interest rate possible – and setting up a realistic repayment plan to get it paid off!

The key here is having the plan to pay off the debt.  If you don’t budget to pay off the debt, all that will happen is that you will keep on getting further and further into debt.

So what are the 3 Main Options for Consolidating Credit Card Debt?

  • Transfer your Credit Card Debt onto another Credit Card offering Balance Transfer Rates

This can be a great option, as there are many Credit Card providers offering 0% on balance transfers for 6 or 12 months.  However, this only works if you can pay off the debt within that time period.

While you can continue to transfer the debt from card to card, this will start impacting your credit score and could impact on what lenders will give you in the future.

  • Consolidate your Credit Card Debt with a personal loan

Using a personal loan for debt consolidation has the significant benefit of the personal loan having a defined lifespan.  The repayments will have been calculated so you pay off the loan over a certain timeframe (3 to 7 years).

This will save you a significant amount of money in interest, but you may end up having to repay more each month on the personal loan than you currently paying off the credit cards.

  • Incorporate your Credit Card Debt into your Home Loan

Provided you actual have a mortgage and equity in your home that can be used for debt consolidation.

By incorporating your credit card / personal loan debt into the home loan, and increasing your home loan repayments accordingly will not only save you on interest but will allow you to pay off the home loan sooner.

Of course these strategies will only work if you stop adding to your current credit card debt.  If you cannot control your spending habits the best option is to cut up the credit card.  If you can commit to controlling your spending, then debt consolidation can save you a lot of money.

Would you like some help to save money while getting rid of unwanted credit card debt?  Don’t know where to start?  Give me a call on 07 3423 8730 or fill in the enquiry form here to set up a free and no-obligation chat to see how I can help you get rid of your unwanted debt and to save money.

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Top 5 home loan mistakes to avoid when refinancing

Top 5 home loan mistakes to avoid when refinancing

28 Feb 2017 | Home Loans, News, Refinancing

There has never been a better time to refinance the home loan. Interest rates are at the lowest levels we have ever seen or are likely to see in our lifetime.

It is a great idea to regularly assess your home loan to see if refinancing can save you money or provide you with additional benefits.  However any home loan mistakes made while refinancing can become very costly.

Brendan Barker - Home Financing Specialist - Home Loans - Car Loans - Personal Loans

When refinancing your home loan you will either switch to a new product with your current lender or move your mortgage to another bank. Refinancing provides you with a wonderful opportunity to save money, access additional features, consolidate debt or access the equity in your home.

While there are plenty of people which will readily tell you why you should refinance your home. Today we are going to look at 5 common mistakes people make when refinancing and how to avoid them.

TOP 5 HOME LOAN MISTAKES TO AVOID WHEN REFINANCING

MISTAKE #1: SHOPPING WITH 1 LENDER

Whether it’s a new car or the latest gadget, you know it pays to shop around for the best deal. When it comes to the home loan mistakes, the most common is home owners going back to the same lender that they are currently using.  Why not you have had a relationship with them for years.

Each lender has only a limited number of loan products and cannot offer you true choice. For example a small difference in interest rate can have a big impact on the cost to you. On a $400,000 home loan with a 30 year term, a 0.25% difference in interest rate could cost you $59 per month, which adds up to $3,535 over the first 5 years of the loan.

Shopping around for better home refinance rates from reputable brokers is always a better alternative. Reputable finance brokers have access to many lenders and can help find a lender and product which meets your needs and requirements.

MISTAKE #2: FAILING TO SEEK OBJECTIVE INFORMATION

When questions about home loans come up, most borrowers turn to their friends, family, work colleagues, the media or their local bank. Friends, family and work colleagues are often unreliable sources of information because what has worked for one person may not be suitable for the next.

The media can be good places to get high level view of what is available, but will not shed much light on your individual situation. Banks and other lenders are good sources of information and will advise on how it suits your individual circumstances, however are limited to the products which they offer.

A reputable finance broker will provide you with information and expert advice which takes your needs and circumstances into account helping you avoid this common home loan mistake.

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MISTAKE #3: NOT LEARNING ABOUT THE PROCESS

Talk to homeowners and they’ll likely tell you about how complex, confusing and time-consuming getting a home loan can be. Knowing that, it’s certainly a good idea to arm yourself with as much knowledge about borrowing as possible.

Talk to your finance broker who can educate you on the process, providing details on what is required from the application to settlement.

MISTAKE #4: FOCUSING ON IRRELEVANT MATTERS

Given that so many homeowners look to a single lender when shopping for their mortgage, it’s not surprising that most borrowers will pick lenders based on geographic proximity, a pre-existing financial relationship, or other factors, like reputation, none of which may be relevant to the loan’s total cost.

The downside of picking a lender based on location, an existing relationship or reputation is that they can lose out on getting a loan which suits your needs and requirements, resulting in long-term money going out the window.

But the best deal isn’t necessarily the lowest rate, different loan products may have the same rate but substantially different costs, which underscores the need to learn about the variety of loans available.  This common home loan mistakes is easy to avoid by focusing on your needs and requirements.

MISTAKE #5: STICKING WITH THE SAME MORTGAGE ‘TIL THE END

Your home loan could become uncompetitive in only a few years. Lenders are always reassessing their interest rates and may have jacked up the rate of your loan so that it is longer competitive. The competition among lenders is such that new loan features and other innovations are being added all the time, and you might be missing out on benefits which can help you save money in the long term.

Your circumstances may have changed, a new bubbling baby on the way, the kids about to start university or parents needing your support. Whatever the reason your needs and requirements will change over time and what was a suitable loan a few short years ago may not be suitable for you now.

You should review your home loan at least every 2 years. Of all the home loan mistakes, if costs nothing to check and could save you thousands of dollars a year.

If you’re considering refinancing your home loan, your next step should be to read our Consumer’s Guide to Refinancing Your Home. In this fact-filled booklet, you’ll discover the risks and benefits of refinancing your home loan, 10 costly errors when refinancing your home, and 4 steps to hassle free refinancing of your home.

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To fix or not to fix? Should I go with a fixed rate home loan?

To fix or not to fix? Should I go with a fixed rate home loan?

21 Feb 2017 | First Home Buyers, Home Loans, Investor Loans, Personal Finance, Refinancing

A common question I get when working with my clients is “should I go with a fixed rate home loan”?

Brendan Barker - Home Financing Specialist - Home Loans - Car Loans - Personal Loans

Before we answer that question lets first have a quick look at the differences between a variable rate home loan and a fixed rate home loan.

VARIABLE RATE LOANS

This is the most common loan offered by lenders and is used by many people to buy their homes. These loans have repayment periods usually of either 25 or 30 years.

Often lending institutions will offer a Honeymoon period with lower (discounted) interest rates to motivate you to choose their loan over the competition. The benefits of this discount (or honeymoon period) are short-lived as the remaining years on your loan are charged at a higher standard variable rate.

ADVANTAGES
  • Discipline of making regular repayments
  • Ability to make extra repayments without penalty
  • Offset accounts and redraw are a common feature
  • Discounts available for most variable loans
  • If the RBA cuts rates then the variable rate will follow (but not all ways)
DISADVANTAGES
  • Interest rate fluctuations.
  • When the RBA raises rates the lenders are usually quick to pass it along.
  • Not all variable loans are the same
  • May have a large jump in interest rate after the honeymoon period ends.

FIXED RATE LOANS

This loan has a set interest rate for a set period of time. This means you know exactly what your repayments will be for the term of the fixed rate loan and in a market with rising interest rates this could save you thousands of dollars over the loan term.

ADVANTAGES
  • Fixing the interest rate for a period of time insures against future interest rate rises.
  • It is easy to budget for the same regular repayment each month.
DISADVANTAGES
  • Do not get the benefit of falling interest rates.
  • Most lenders limit the amount of extra repayments that can be made each year.
  • You cannot access the extra repayments until the end of the fixed term.
  • You may be penalised if you pay off your home loan before the due date.

That is all good I hear you say, but should I fix my home loan?

The simple answer is there is no simple answer.  It all depends on how those advantages and disadvantages mentioned above fit with your financial needs and requirements.

Let’s take Matt for example, Matt is looking to buy a house to live in with a friend.  They are both sick of paying rent and want a place to call their own.  Matt already has a loan on an investment property.  Fixing the interest rate on the investment property would provide Matt the comfort of knowing what the repayments would be each month.  Thus allowing him to focus on paying down the loan on the new property.

On the other had we’ve got Jeff.  He is a high-flying professional, who regularly receives large bonuses from his employer.  His priority is to pay off the home loan as quickly as possible.  A variable rate loan, which allows him to make additional deposits is best suited to his needs.

That is why I invest the time with my clients so that I get to understand their financial situation, needs and requirements. So, that I can help them structure their finances so that they can achieve their goals and dreams.

In the current market, with interest rates starting to rise.  Fixing the home loan may be a good strategy, but is it the right strategy for you?  Give me a call today on 0428 162 602 or fill in the enquiry form here, to receive a free and no-obligation strategy session to find out if fixing is the right option for you.

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