August 2024 eGrow

August 2024 eGrow

Dear Friends

Getting our young people off to a good financial start

So, how do we help our young ones get ahead – particularly to help them save for a home?

Here are some tips and thoughts to share with them:

• Encourage setting a budget, with the aim to spend no more than 75% of income (or less if their wages are relatively high).
• Put the excess into a high interest account – labelled savings, not holidays.
• When the balance gets to $10,000, it is time to make a firm financial plan – write down the savings goal.
• A holiday – or even a car – should be considered consumables. Save for them separately in another account.
• The greatest source of financial security in Australia is owning a home. We all know how expensive that is, but it has always been tough – and sometimes, with the right legal protections, the bank of Mum and Dad may have a role to play… but that’s down the track.
• Aim for at least 20% of the cost of a home in the savings account.
• There is always going to be a temptation to ‘save’ via the stock market – or by buying managed funds or ETFs (Exchange Traded Funds). We all ‘know someone’ who ‘got rich quick’… but the problem with the market is that it is not great in the short-term, it is a vehicle for medium to long term savings. There is no point saving $200,000 only to see a ‘correction’ strip away 40% overnight, which does happen from time to time.
• Make sure your young people have life insurance and income protection at a realistic level via their superannuation; this will help to protect them or their partner if something terrible occurs.
• And keep them reading the Barefoot Investor!

In addition to the above, there are some truisms that most of us with ‘lived experience’ know and understand, but for the younger generation there may need to be some uncomfortable discussions:

• You can’t have everything.
• Buy the worst house in the best street you can afford – and do it up.
• Get on the property escalator – be prepared to ‘flip’ to create wealth.
• Regional Australia does not do as well as the big cities due to lack of demand.
• You may have to pay stamp duty. In South Australia eligible first home buyers will now receive stamp duty relief. For more information refer to: https://www.revenuesa.sa.gov.au/stampduty/first-home-buyer-relief

And another thing

With the news of the Federal Government's 'stage three tax cuts', many have missed that there is also a 0.5% increase in the Superannuation Guarantee from 1 July 2024, taking it to 11.5% of salaried earnings. It is a small, but important change. It remains my view, however, that we should all be striving to put away 15% of our income over a lifetime in order to retire well.

And one more REAL thing

Over the last 12 months or so I have been reminding everyone to be on guard against scammers and to follow the Federal Government’s scam watch: http://www.cyber.gov.au/protect-yourself

This advice was recently reinforced when Marinis Financial Group received two emails purporting to be from two separate clients, asking us to engage with them by email as they would have called but were having serious throat pain caused by laryngitis.

In line with our established cyber security protocols, we did not act on these directions but contacted our clients directly to confirm the emails were not sent by them, and therefore advise that they had most likely been compromised by hackers.

One of the layers of security our clients have is the personal relationship with their adviser and our team. We recognise voices, we know the individuals, we are business ‘friends.’

As always, please don’t hesitate to contact me or any of the team if this edition of eGrow raises any questions; call (08) 8130 5130 or email admin@marinisgroup.com.au

 

Yours sincerely

Theo Marinis CFP®, B.A., B.Ec., CPA., MCIFAA
Financial Strategist
Authorised Representative