Money & Legal

Welcome to the AboutSeniors finance pages. Find out about insurance and legal matters, retirement income issues, reverse mortgages and much more.

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Money safe travelling

With summer holidays just around the corner, many of us will be making use of our credit cards when travelling.  But just how do we keep our hard earned money safe?

VISA have issued a guide to using your credit card when travelling overseas. Common sense should prevail but with the excitement of being in an exotic land, it’s easy to forget the basics

For money safe travelling, view VISA’s top tips or for more information on using VISA when travelling overseas, visit www.visa.com.au

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Balance transfer pitfalls

Getting financially fit for summer may mean transferring your credit card balance to a card with a lower interest rate.  But after the introductory period, you could find yourself worse off than before.

The Australian Securities and Investments Commission (ASIC) has issued some guidelines on what you should be asking card issuers before transferring your balance. You should find out what the standard interest rate is after the introductory period, and if the introductory rate includes all transfers and purchases.

Also, you should ask yourself if transferring your credit card balance will really benefit you and if you can find a cheaper way of borrowing money. 

Finally, take your time and read through the fine print. As tedious as this may be, it could save you from any nasty surprises in the future.

For more details of what to look out for when thinking of transferring your credit card balance, visit FIDO.

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Ten worst money mistakes

Successful investment is not about reacting to market turbulence. It is based on a clear understanding of the long-term nature of wealth creation and how making sensible, unemotional decisions about where and when you will invest. This week we share a downloadable PDF on the Ten Worst Money Mistakes – and how to avoid them written by financial services guru, Louise Biti. 

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Paper no more

In this technological age, by the time you get your daily paper, the news is old. Break the habit of having a hard copy of your newspaper and save yourself money.

Reading your newspaper online is a great way to cut costs, save time and the environment.  You can get your news instantly, keeping up-to-date with things as they happen. And you needn’t miss out on your favourites such as crosswords, horoscopes and funnies.

These days, all newspapers have online versions, making news from all over the world available at your fingertips.  Simply choose what you fancy reading over your morning coffee, whether it’s The New York Times, The Daily Telegraph of the good old Herald Sun. 

Save yourself the subscription fee and switch to online reading.  For more information on which newspapers are available, visit Online Newspapers.

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Make your own Christmas Cards

Christmas cards are expensive to buy and then you have to pay for the postage. Not sending cards is one way of saving money but making your own is a more creative way of being frugal. With the multicultural nation that Australia has become, people celebrate not only Christmas but also many different holidays around this time of the year. Finding cards that suit can be difficult, another good reason for making your own. Hewlett Packard, the printer manufacturers have a very useful site which allows you to print your own cards, design cards with photos and be more creative with craft ideas. In addition, as these cards are all free to print, this is a great money saving idea, as well as something to keep you busy and your mind active. For creative card ideas, or to print some ready-designed options, visit Hewlett Packard.

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Missing money

With the economic downturn being experienced by many, claiming missing money is surely more important than ever.

The Australian Investment Strategies Commission (ASIC) is urging Australians to lay their claim on $500 million, which has recently been turned over by banks, credit unions, insurance companies and companies taken over in 2007.

Amounts owed to individuals range from $1 to $3 million.  With last year’s campaign reuniting one lucky person with over $742,000, it may be worth investigating if you’re entitled to any of this unclaimed money.

ASIC provides an information line, where customer service consultants will conduct a thorough search, based on simple questions, for forgotten funds.  A search for money left behind by deceased relatives can also be carried out online at www.fido.gov.au, although for privacy reasons, some information may be withheld.

You can contact ASIC during office hours on 1300 300 630 or email .  For more information on claiming lost money, visit FIDO. 

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Frozen funds

Frozen funds – the facts, some useful Q&A and some Centrelink Q&A…
Government guarantees bank accounts
(With thanks to centrelink, IFSA and ASIC)

On 12 October the Federal Government guaranteed 15 million deposit accounts, covering $800 billion, and fund raising facilities of $1.2 trillion used by financial institutions to finance small business investments and home loans.

The Federal Government has also stated:

The non-prudentially regulated investment sector typically includes mortgage trusts, non-listed property trusts and debentures. It provides investment capital to a range of projects (e.g. property development) and offers investment returns to retail investors. These vehicles are an important form of capital for the real economy.

The Government has requested ASIC provide urgent advice in relation to retail investor hardship cases where redemptions may have been frozen, including using its modification powers under the Corporations Act to provide additional flexibility to fund managers and trustees.

No guarantee for mortgage trusts

The Federal Government has not guaranteed mortgage trusts. Some funds have frozen these investments so investors cannot withdraw their capital, although nearly all appear to be still paying.

Useful Q&A
Q. What does it mean when companies such as AXA, Perpetual and Colonial First State “freeze” funds?

A. They have stopped withdrawal of lump sums but in most cases are paying out interest and dividends on funds invested. Trustees must make sure there are no winners and losers if there is a run on funds, this triggers a clause in legislation forcing trustees to act on behalf of all unit holders, making sure that the remaining unit holders adversely affected. Sometimes the freeze is just until the organisation can communicate all with all holders as well as allow advisers to get in touch with them. The mortgage trust industry has been around for more than 40 years and weathered times of low liquidity before.

Q. Are these companies legally entitled to freeze these funds?

A. Yes – in fact they have a fiduciary duty to do this as they have to act in best interests of all unit holders.

Q. What sort of people are likely to be affected?

A. The average age of an investor is late 60s

Q. How do I know if I am personally affected? (Who should I contact?)

A. In the first instance checks out the website of the company, then with your investment number in hand, email or telephone for further advice. If you invested using a financial adviser, contact this adviser in the first instance. Keep a record (written) of all correspondence.

Q. Are all the companies who have frozen funds still paying income from these funds or have some frozen both?

A. We believe this to be the case – but you will need to check with your investment house to confirm.

Q. What can I do if I need emergency relief?

A. Contact the trustees of your fund – there may be provision for special case release for genuine hardship. If you already qualify for a pension, you can contact Centrelink as well. If you feel you may now qualify for a pension because of reduced assets, also contact Centrelink.

Q. Where can I find out more about market volatility?

A. The IFSA website

And some Centrelink specific Q&A

The Government is closely monitoring the global financial crisis and its impact on pensioners and has asked Centrelink make a special one-off update of our system with the current value of any shares and managed investments that pensioners might hold. This will be done in the next few weeks to ensure pension payments are based on the most up-to-date asset values available.
Q. How often asset evaluations are carried out for full or part Age pensioners?
A. Generally, updates on shares and investments are only made twice a year in March and September, however people can ask for a revaluation of their personal financial situation at any time.
Q. Is this review a one off? Has it been brought forward? If so, when was it originally scheduled?
A. Centrelink will automatically reassess the share values it has on customer files and adjust people’s payment rates where necessary. If customers who have investments and who are on a part rate were expecting a change in their payment and this doesn’t happen after several few weeks, they should call Centrelink on 13 2300 to discuss the situation. If possible, people should have their investment certificates handy to help speed up the process.
Q. What of those NOT on an age pension who may now be eligible because of lower assets – how do these people go about applying?

A. If affected investors are not currently Centrelink customers then they can test their eligibility for a Centrelink payment or ask to talk to a Financial Information Service Officer by calling 13 2300. Claims for Age Pension can be lodged online at http://www.centrelink.gov.au, over the phone or at Centrelink offices.

Q. For those whose assets are NOT FROZEN but need money urgently, an Advance payment may be available – can you share a brief synopsis of what an advance payment is and when/how it needs to be paid back?

A. Advance payments are an advance on a person’s regular pension payment, up to $500. The advance always has to be paid back through a reduction in a person’s fortnightly pension. People can only get an Advance Payment if they are on certain Centrelink payments (including the Age Pension) and can only have one advance in a 12 month period. More information is on the Centrelink website here: Advance Payment

Centrelink also have a Hardship information factsheet.

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What to do when the market falls

It’s hard to sit tight in a falling stock market, grin and bear it, stay calm. So this week we are offering a useful “how-to” on What to do when the market falls. Written by Dante de Gori, Technical Manager of Clearview Retirement Solutions, it offers a plain-English understanding of how a “steady as she goes” approach to the stock market can result in a more predictable retirement income in a downloadable PDF format. Written before the very sharp falls in recent weeks, it nevertheless shows how you can manage your holdings – even in times of volatility.

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Online investment courses

The media is awash with news of stock market falls and the share price crisis but what does all the terminology really mean?

The Australian Stock Exchange (ASX) has developed a new range on online courses which are geared towards providing an understanding of the sharemarket and investing.  The 11 courses each take 10-15 minutes to complete and cover the following topics:

1. What is a share?
2. Why and how to invest
3. Risks and benefits of shares
4. What to consider in an investment
5. How to buy and sell shares
6. Trading simulation
7. Record keeping
8. Market indices and market sectors
9. Sharemarket investment strategies
10. Fundamental analysis
11. Technical analysis

The first course covers the basics and as you move on through each course, they gradually become more detailed as your understanding grows.  Each course has easy to follow graphics and printable PDF versions are available.  Whether you’re a complete novice or looking to improve your understanding of investments to help you through these difficult times, there is a course for you.

To view details of theses free online courses, visit the ASX.

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Financial counselling

With the financial uncertainty facing many Australians, now is a good time to review your money situation with the help of a financial counsellor.

The cost of living has crept up on most of us and what we could comfortably afford last month, may be a financial burden next month.  The important thing is not to bury your head in the sand and hope that things will improve.  Financial counsellors help people, free of charge, who are in financial difficulty or who may shortly be facing money problems and they are available in every state and territory.

Financial counsellors will help you take control of you finances, get your debt to a manageable level and can refer you to support services, such as gambling, family or personal counselling.

For more information on how financial counsellors can help or where to find your nearest counselling organisation, visit the Australian Securities & Investment Commission.

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Legal powers

Most people know of the importance of making a will but have you ever considered how your affairs would be managed if you were suddenly incapacitated.

Creating a Power of Attorney is quick, simple, can be cost free and is an essential document to have on standby, to ensure your financial affairs are properly managed. Power of Attornies can include giving people access to your utility and bank accounts to ensure your bills are paid or giving them the ability to sell your house and deal with large financial decisions on your behalf.

It should be noted that a Power of Attorney will cease should you become incapable of making your own legal decisions.  If you consider that this may be the case at some point in the future, you should opt for an Enduring Power of Attorney.  Each state has their own legalities for Power of Attorney so for more information, click on your state below.

SA
VIC
NSW
QLD
TAS
WA
ACT

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Financial choices confusing

Almost one in two Australians believe that financial investments and superannuation are too complicated to understand properly, according to a report from the Australia Institute. A similar proportion or respondents also consider mobile phone contracts and private health insurance to be too complicated.

The findings are reported in a new Discussion Paper, Choice Overload: Australians Coping with Financial Decisions, by Institute Research Fellow Josh Fear. The research also revealed that many Australians, particularly older people and those on lower incomes, are uneasy about the increasing complexity of financial decision-making.

The report recommends that governments should:
· provide consumers with simple, independent information to compare superannuation and investment products;
· make financial advice more widely available to people who do not wish to use a commercial financial adviser; among other measures
The full paper can be read on the Institute’s website

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Lifelong mortgages

Australia’s economy is booming but high inflation and interest rates are making it more difficult for those Australians in the 50-64 year-old demographic to own their own home.

In pursuit of the great Australian dream of owning our own home, mortgages are a necessary evil, however, many of us may never actually own our own home outright. The percentage of households owning their dwelling fully has fallen to 35.9% in 2006 from 44% in 2001, according to the Australian Bureau of Statistics (ABS). A rise of almost 10% has occurred in empty nester households (50-64 year olds) since 2001, and with reverse mortgages becoming a common way to release capital, lifelong mortgages may be the only way of buying your own home.

Contributing factors to the growing trend of over 50s still paying a mortgage may be:
· purchasing later in life
· redrawing on home loan for travel or household items
· additional loans for renovations
· children staying at home for longer
· compulsory superannuation
· using equity for loans to adult children

To read the full report by BIS Shrapnel, click here.

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Fair go

All most people ask for in life is a fair go. Stand up and be counted and help make Australia Fair for all.

This is your opportunity to be heard and get your point across. Issues such as poverty, the environment, housing and welfare, are but a few being tackled by Australia Fair, an organisation geared to towards giving all Australians a fair go.

You can post messages, comment on messages already posted, find out what events are in your area and read publications relevant to your area of concern. Campaigns such as this one need support to build momentum and make a difference. You can help by getting involved in your community, or nationally, as an organisation, or an individual.

To have your say, click here.

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Scam awards

The sheer stupidity of internet and financial scams would be laughable – if they weren’t so serious.

The Australian Securities and Investments Commission’s (ASIC) annual Pie In The Sky awards act as a timely reminder that there is always someone willing to take advantage of an unfortunate event. Topping the list of disturbing scams is the Togo lawyer acting on the behalf of a deceased family who were killed in the Boxing Day Tsunami. Sent to people who coincidentally have the same name as the deceased and offering a share of US$17m from the estate, this is also known as a ‘Nigerian letter’ scam. Those targeted are asked to respond by email, claiming a share of the wealth but need to pay a fee upfront.  Needless to say, once the fee is received by the “lawyer”, no money is forthcoming.

The ability to succeed in many of these scams is being able to be unabashed about what you’re doing. Instep Super, Pie In The Sky runner-up were just that.  Advertising on radio, TV and online, they promised returns of between 8 and 20% on superannuation and claimed to be “the best performing superannuation fund in Australia”. Most people assume that if they hear or see an advertisement in the mainstream media then it must be by a legal company. Not so in this case. When investigated, ASIC found that Instep Super did not have the required financial license nor did they have evidence to back up their “best performing super” claim.

Don’t be fooled into thinking it could never happen to you. Financial scammers are getting more and more sophisticated, using the growth in online media to their advantage. Many financially savvy people have been stung. For the chance to win $100 for nominating a scam for the 2009 Pie In The Sky Award or to find our more about the scams going around, visit FIDO’s website.

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Loveless scam

Looking for love online might be bad for your bank balance. Be aware of the latest scam doing the rounds.

Hundreds, if not thousands of Australians every day are being scammed for thousands of dollars all in the name of love. Men and women are lured by the promise of a loving relationship by online Nigerian fraudsters posing as Australian retirees. 

It’s estimated that victims stump up and average of $35,000 when given the sob story by someone they believe to be having a loving relationship with and they’re prepared to take time laying the groundwork before asking for money. In one case, Patricia developed a relationship with “David’ over six months, and, during a trip to Nigeria, he claimed he was mugged and needed $8,500, a substantial sum of money for anyone. She never saw him again and when realising she had been scammed, felt suicidal.

A good rule to keep in mind would be that if you can’t afford to loose it, don’t give it. To read more, click here.

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Mym’s top tips on saving money

· Save trips to the shop, have a well stocked pantry
· Enjoy the simple things in life; if your budget doesn’t stretch to a three course meal at a posh restaurant, try fish ’n’ chips at home and “jazz up” your dinner table.
· The expense of a night at the cinema can add up, how about a DVD at home or try one of SelectV’s television packages – microwave popcorn tastes OK!
· Rather than buy book, borrow them from your local library.
· Always ask your pharmacist for generic medications, don’t assume you’re getting the cheapest.
· Fill up the car on a Monday or Tuesday
· Substitute expensive cleaning products for good old fashioned substitutes and help save the environment!
· Don’t spend lots of money trying to entertain visiting grandchildren, get their imaginations working by making up games or telling stories. 

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Shop free days

Could you go for 24 hours without buying anything?
It seems that we’ve no sooner shopped until we’ve dropped for Christmas than we’re being bombarded with adverts for holidays and household goods at “amazing sale prices”.  With the nations’ average credit card debt rising from $946 to $2700 in the past decade, is it time to buck the growing trend in consumerism?

Culture Jammers are trying to convince people to do just that.  On international Buy Nothing Day, the fourth Thursday in November, which is spearheaded by Canadian based Adbusters, it estimates that $38,000 was taken out of circulation by offering to cut up shoppers’ credit cards in Bourke Street mall, Melbourne.  On an average retail day, $22million is spent on household goods alone, making $38,000 a drop in the ocean but a very good place to start. 
With the fourth Thursday in November still some time away, why not try keeping your purse or wallet closed for one day a month, or better still, one day a week and we don’t mean buying more on the days either side!  If you put aside the money you’ve saved on each of these days and invest it, we’re sure it will bring you more joy and peace of mind in the long term than the sum total of consumer goods, you probably won’t even be using in a few months time.

For more information on Buy Nothing Day, click here.

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Smart investors

Smart investor is a label we would all like to wear, and smart usually means you have done the research and made the right choice. @boutSeniors website has teamed with the InvestSMART website to offer some excellent financial services tools for our subscribers so you can keep your finger on the pulse when it comes to funds performance.
These tools take the form of comparative tables which enable http://www.aboutseniors.com.au subscribers to compare the top performing, and most popular, managed funds, retirement income funds and superannuation funds. These are graded according to whether the fund has a conservative, balanced or growth emphasis, and rated according to statistics from Morningstar Research and Standard & Poor’s. At a time of massive confusion regarding superannuation and retirement income streams, we have also offered some background on how these structures can fit with your income needs.

Under managed funds, find out the definition of a managed fund, the different types you can purchase, what they do for you, and then compare the top performing and most popular. Click here

On the superannuation page, read why this is a tax-effective way of boosting your savings before comparing most popular and top performing funds. Click here

And on the retirement income streams page find out what retirement income streams are, how you set one up, and which type has the most suitable features for your situation. Then check out the top performing – and the most popular (not always the same thing!). Click here

IMPORTANT: This information has been prepared for distribution over the internet and without taking into account the investment objectives, financial situation and particular needs of any particular person. Neither InvestSMART Financial Services Pty Ltd nor www.aboutseniors.com.au makes any recommendations as to the merits of any investment opportunity referred to on www.aboutseniors.com.au or any related websites. All indications of performance returns are historical and can not be relied upon as an indicator for future performance.

© 2007 Morningstar Research Pty Ltd. All rights reserved. To the extent that the above constitutes general advice by Morningstar, this advice has been prepared by Morningstar Research Pty Ltd ABN: 83 062 096 342, AFSL: 243 161 and does not take account of your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. Please refer to Morningstar’s Financial Service Guide (FSG) for more information at www.morningstar.com.au/fsg.asp and consider the product disclosure statement before making a decision to acquire the financial product.