AUTUMN 2018

It’s February and while the hot weather continues it’s back to business for most of us, with summer holidays, tennis and cricket over for another year. This is a perfect time to revisit your New Year’s resolutions and put all your good intentions to work for the remainder of 2018.

For the first time in a decade all the world’s top economies are growing. The International Monetary Fund (IMF) forecasts the global economy will expand 3.9 per cent in 2018, the fastest rate in eight years, up from 3.7 per cent last year. US growth is expected to reach 2.9 per cent this year on the back of tax cuts. The Eurozone, Japan and some emerging economies such as Brazil are also tipped to gather steam this year.

The forecast for Australia is unchanged at 2.9 per cent. On the upside, local jobs grew for the 15th straight month in December although the unemployment rate rose from 5.4 per cent to 5.5 per cent as more people entered the market. Retail sales were up 1.2 per cent in November, or 2.9 per cent over 12 months, and consumer confidence remains high. After hitting a 4-year high mid-January, the weekly ANZ/Roy Morgan consumer confidence index dipped 3.3 per cent as a potential NSW rail strike and power blackouts in some states dampened spirits, before lifting 1.3 per cent in the final week to 120.9, well above the long-term average. The Australian dollar rose from US76.5c mid-December to above US81c in January, which no doubt pleased Aussie travellers.

 

 

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Have you ever turned down an invite or a challenge and said something like “I could never see myself doing that!”?

Do you see people around you achieving amazing things, and wonder how they were able to take the plunge to start trying in the first place? If you’re having trouble reaching your goals, there’s a strategy you need to get familiar with: creative visualisation.

 

What is creative visualisation?

Creative visualisation is a concept that’s been around for some time in various forms. For example, in some religions, it’s common to include a picture or token of the goal in a prayer ritual. While in what can most politely be termed ‘new age’ philosophy, it’s thought that thinking frequently and intensely about the item or the situation in question will help it to ‘manifest’.

For most people though, it’s a matter of brief, simple meditation. If you’re having trouble being motivated by numbers on a page, try forming a mental picture of what those numbers mean to you. For example, you might have a savings target for home improvements. But can you visualise the small details of your new kitchen or bathroom – what taps and handles you might choose, the colour of the grout, the type of appliances? Can you imagine making memories entertaining friends and family in your outdoor area?

One popular technique that can be fun in and of itself is creating what’s known as a vision board. And it’s exactly what it sounds like. Take a piece of cardboard or a cork board and start attaching pictures that represent your goal, or aspects of it. You can add to your board over time as your goal becomes clearer and closer.

 

Why does it work?

Some psychologists and neuroscientists believe that visualisation works because it reinforces the same neural pathways you need to actually go out and do the thing. In other words, if you can imagine it, it’ll be easier to do it. ‘Mental rehearsal’ is something that’s been studied in many situations, from professional sports to physical rehabilitation. For example, one study found that people could actually get stronger by imagining themselves doing hand exercises, in as little as 12 weeks.

If you make your own vision board, it can also serve as a simple reminder of the tasks you need to complete to reach your goals. Coming home at the end of a long tiring day, it can be hard to resist ordering takeaway or cancelling a commitment. But it’s a smidge easier when the first thing you see is a picture of what’ll happen when you keep up your discipline.

 

The end is in sight…

When you’re pushing towards a financial goal, creative visualisation can help you stay inspired, maintain habits, and stay in touch with what motivates you. But it takes solid planning to make those final connections that take your goal from dream to reality. That’s where we come in. If you want to get started or feel like you’re making progress with your financial goals, but you want to step it up a notch, get in touch with us today.

Tips for getting it right

• If you’re having trouble picturing exactly what you want, look for general inspiration – online, in books and magazines, or in    real life.
• Practice creative visualisation regularly – not just as a once-off.
• Try to involve as many senses as possible. Imagine the sights, but also the smells, sounds and textures associated with your goal.
• Re-evaluate if you need to. If you find that imagining something no longer makes you as happy or excited as it once did, don’t be afraid to revise your plan.

 

 

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Turn your passion into your profession

There’s a famous quote, usually attributed to Mark Twain – “Find a job you enjoy doing, and you’ll never have to work a day in your life”. It’s definitely a romantic way to think about one’s profession. There’s no doubt that people who genuinely look forward to going to work and embracing the day’s challenges are happier, more fulfilled, and more successful in terms of their career paths.

Unfortunately the reality is that very few people are fortunate enough to derive income from doing something they’re passionate about. Even those that say they love their jobs don’t love them every day.

If you feel like you’re in a rut with your career, it’s something to think about. Even more so if you’ve ever thought about running a restaurant, daydreamed about dropping out (of study or work) to write your first novel or screenplay, or anything along those lines. The lucky few who do love their jobs usually do so because they’ve made a living out of something they already love – rather than trying to love what they happen to be doing.

 

Why most people stay put…

Sounds like a pretty simple approach, right? So why do so many people stay where they are?

Well, sometimes it takes a bit of creativity to turn your passion into a job or a business. It’s easy to see how a love for good food and hospitality could translate to opening a restaurant. But the writing thing could be a challenge if you’ve never drafted much more than a shopping list. Not everyone’s cut out to be the next Pulitzer Prize winner.

What you can do is look for ways to apply your current skill set in the industry or vocation of your choice. Be prepared to think laterally, your career path might not be straightforward. For example, say you love fishing. You mightn’t be able to picture yourself away from your family for months at a time on a tuna boat. But you might be able to start a fishing charter business.

Fear of the unknown can be an impediment to making a change. Your normal job means a steady pay cheque, tasks you’re familiar with, and (usually) set hours you can build your lifestyle around. Giving that up can seem reckless, especially if you’ve got dependants. You’ve also got to consider your relationships; the people who depend on you for your time, as well as your income.

The key to getting over this is to apply some principles of risk management. For example you’d start any venture with a lot of research and a solid business plan. You might go part-time while you get started up, just to keep the cash coming in.

Tips for taking the first step

• Think about how you can earn an income from your passion.
• List more than one job or business idea that centres on your passion. This way you won’t feel like you’ve only got one chance to pursue your pastime professionally.
• Look for inspirational stories on people who’ve gone where you want to be.
• Speak to people who’ve taken a leap of faith. Learn from their successes and their mistakes.
• Do your research – market research, professional development, education, etc.
• Make a plan for managing on a (temporarily, at least) lower income.
• Revisit your long-term financial plan.

 

Long story short, you don’t need to quit your job and ‘run away from real life’ today. Just take one step, however small. The thrill of moving in the right direction could be all you need to get the ball rolling…

 

 

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Transition to retirement still a smart move

They say 60 is the new 40. And while it’s true that today’s over-50s are healthy and active for longer than previous generations, many in this position begin to dream about scaling back their work commitments so they can start ticking off their bucket list.

You may want the flexibility to travel more, volunteer or take up a hobby. Perhaps you want to look after the grandkids for a day or two a week. It might be you see your 60s as an opportunity to switch careers or try your hand at freelance work or consulting where you control the amount of time you work. Services such as Airbnb and Uber are also providing opportunities to earn an income on your own terms.

Alternatively, you may have planned to retire early but now find you are not in a financial position to stop work completely. Your savings may have been adversely impacted by the GFC, divorce or remarriage or you may still have mortgage or other debts to repay.

Either way, there is a trend towards more people working well into their 60s and beyond but not necessarily full time. According to the Australian Bureau of Statistics, 56.9 per cent of 60 to 64-year-olds are in the job market, while the percentage of those working over the age of 65 has jumped to a record high of 12.7 per cent.

 

Winding back the hours

One way to achieve a better work/life balance in the lead-up to retirement is to adopt a transition to retirement income stream (TRIS). Once you have reached your preservation age, which is currently at least 57 (depending on your date of birth), then you can access between 4 per cent and 10 per cent of your superannuation as an income stream. This will let you work fewer hours but maintain your standard of living.

Despite losing some of their tax advantages on July 1 last year, a TRIS strategy still holds its appeal for people who want to use it as it was originally intended – to aid in the transition to retirement.

In the past no tax was payable on earnings from your TRIS investments; now you will be taxed at 15 per cent. But the favourable tax treatment of withdrawals remains the same. Once you reach 60, any monies withdrawn from your TRIS pension are tax free. For those aged 56 to 60, you will pay tax at your marginal rate but then enjoy a 15 per cent offset.

 

Boost your super

Another change to the super legislation is that you can only contribute a maximum of $25,000 a year as salary sacrifice regardless of your age. As a result, there may not be so much money beyond your employer’s Superannuation Guarantee contributions that you can add to your super to fully take advantage of the scheme. Even so, if you salary sacrifice as close to this limit as possible, you will help boost your super for when you do completely retire.

Despite these changes, a transition to retirement strategy can still work for you, largely because super continues to be one of the most tax-effective investment environments for your retirement savings.

Supplementing part-time income with a TRIS might also give you an opportunity to reduce your mortgage or other debts before you leave the workforce completely.

 

A win-win solution

Easing your way out of work can be as good for you financially as it is for you psychologically. To go cold turkey from working one day to retirement the next can be difficult without careful planning.

Working out what to do in the run up to retirement needs careful consideration. We can help you decide what will work best for you.