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Managing risks associated with investing

Whenever or however you choose to invest, there will always be risk involved. Luckily, there are strategies you can adopt to manage this risk in the best way possible for you and your investment goals.

Unfortunately, volatility in financial markets can cause an investor to lose their confidence. The Australian Government has provided Australians with a number of tips on how to minimise the risks involved in investing, to ensure they remain confident and their investments stay strong.

Consider the following:

Set goals

Goal setting is particularly important in a volatile market. Without a plan in place, when the market drops, an individual can be quick to panic and pull their money out. Reacting like this can cause you to lose out, so ensuring you have a goal and a plan will help you handle these times, without losing your head.

Diversify

A profile that is diversified is much more secure in times of market volatility because it is less exposed to the negative impacts of a specific economic event. Investing in a number of different industry sectors, asset classes and even geographic locations will see your portfolio become more diversified.

Stay involved

Knowing what is going on with your investments is important, as a significant loss in one or more of your assets could cause your portfolio to become unbalanced and less secure. You should receive periodic transaction statements that indicate the value of your investments, as well as the fees and taxes paid. Analysing and responding to this will help you stay involved.

Look out for scams

When markets are volatile, investors are more vulnerable and this is the time that scammers will arise and try to take advantage of the situation. Many scammers catch people out by offering something that sounds too good to be true, by saying they are a representative of a well-known company when they aren’t, or when they contact you in a way that seems suspicious, like a random phone call or through social media. Scammers may offer you investment options that provide high and quick returns, tax free benefits, no risk or low risk investments or even a discount for investing early before a public float. Be weary of all of these. If you are interested, you should always say you need time to think about it and do your own research before committing.

Guidance

Financial advisors are there to offer you assistance and to help you make the best possible decisions for your investment portfolio. Find a professional that you feel confident with, and don’t hesitate to contact them for help and guidance.

Posted on 23 February '18, under Money. No Comments.

Considerations before accepting a job offer

Accepting a new job offer can be exhilarating; you’ve put yourself out there, gone for an interview, waited to hear back and you finally get the good news.

While it is all very exciting, before accepting any new job, you need to ask yourself a few questions about the new workplace and most importantly your new employer or manager. Jumping ship without knowing what you’re getting yourself into can land you in an uncomfortable situation.

Consider the following before making the big leap:

Personality

The ability to be yourself is important whether you realise it or not. Does the workplace allow for you to thrive and flourish, not just as an employee but as an individual? One of the most relevant aspects of job satisfaction is feeling like you are valued and an important member of your team. If you accept a position in a company that is not accepting of you, you are not likely to be satisfied long-term.

Employee benefits

Many employees have a skill for making job applicants feel like they are extremely lucky to be given the position with the company. While it might be a great career opportunity, companies don’t hire people just to give them a great opportunity, they hire because they are short-staffed, they are losing a team member, or there is a skill-set lacking in their current team. In other words, the business needs you. Don’t get caught up in thinking the business is doing you a favour and you are extremely lucky, without finding out what benefits you will get for joining the team and sharing your skills.

Job role

Understanding your job role and what is required of you is essential. Ask plenty of questions in your interview and save any documentation such as the advertisement for the position that indicates what is required of you. Ask for a formal job description, and research how performing the role corresponds to what you will be paid and what minimum wages for this kind of role include. Ask in your interview if there are any additional jobs you will have to perform and if so, can these be given to you in writing in an amended job description.

Opportunity for growth

Being satisfied with a job that doesn’t offer opportunities for professional development or for growth is desirable for many applicants. However, if this is not for you and you are looking for a career with pathways for growth, you should voice this in your resume and in your interview. Ask the interviewee what the structure of the business is and if there are opportunities for professional development and advanced training, as well as opportunities to advance in terms of wage and job role.

Management style

Before accepting any kind of job, do your research on the company. Nowadays, it is naive not to investigate online and see what kind of company you are entering into. Research business reviews on Facebook and look up the business on LinkedIn. When in your interview, don’t be too shy to ask what the employee or manager’s management and leadership styles are. In a structured and professional environment, the interviewee should be able to answer this question for you. Asking questions of this nature also show that you are assertive and are thinking long-term about whether this position is the right fit for you, not just trying to sell yourself to the business, allowing you to come across as an asset.

Posted on 23 February '18, under Business. No Comments.

The in’s and out’s of asset allocation

Deciding where to allocate your assets can be confusing and even daunting, particularly if you aren’t confident in your knowledge of the current financial sphere.

Consider the following in’s and out’s of asset allocation to make the process much easier:

Set goals

Goal-setting is extremely important, particularly when it comes to your money. When deciding out where to allocate assets, you should set both short-term and long-term goals. If you are planning to save for a vacation or a new car, this would be a short-term goal, a mortgage would be a medium-term goal and your nest egg would be a long-term financial goal. The goals you set should be SMART; specific, measurable, achievable, realistic and timely. You should also revisit your SMART goals and assess how well you are doing, thus allowing you to make appropriate adjustments if need be.

Risks

The more open an individual is to risk, the greater the opportunities for where they allocate their assets. If an individual is open to investing in higher-risk assets, they can consider options such as investing in shares. If they are more attracted to low-risk assets, options such as a term deposit are more suitable.

Speak to a professional

If you make it known to friends and family that you are deciding where to allocate your assets, you will become inundated with tips and advice of what and where you need to invest. This can become overwhelming and more of a hindrance than a help. The best person you can talk to is a professional you trust, such as your financial advisor. They will be able to give you all the information you need, they will be able to answer all your questions, and they will be unbiased.

Posted on 23 February '18, under Super. No Comments.

The ATO targeting record keeping of small businesses

The Australian Tax Office is honing in on small businesses failing to comply with guidelines regarding appropriate record keeping.

Findings from the ATO’s Protecting Honest Business campaign indicated that one of the leading factors for small business failure is their poor record keeping practices. Small business owners are required to disclose particular information, and keep records of the following:

By law, all Australian businesses must keep these records for a period of five years. These records must be in writing, either on paper or electronically. Dedicating time each week, fortnight or month to compile all the above-listed information will prevent you incurring fines and possibly losing your business.

Posted on 23 February '18, under Tax. No Comments.

Maximising your accounts receivable

Freeing up working capital can help businesses fund growth, reduce debt levels and lower costs. One way to improve working capital is by managing your accounts receivable.

Many businesses fall into the trap of poor accounts receivable management, for various reasons from extending credit to customers, to ignoring payments terms to guarantee a new sale. These behaviours and behaviours like these can quickly cause disastrous effects on your cash flow.

There are a number of strategies you can practice to improve your accounts receivable process, including:

Customer credit approval policies

One great strategy is to create a clear customer credit approval policy before entering into any business deals with a customer. By assigning credit limits, payment terms, discounts and return policies to specific customers, you are protecting yourself from getting caught out. Introduce a system to determine a new customer’s creditworthiness, such as background and credit history checks.

Criteria for approving or rejecting requests for credit

Reviewing your credit approval process is an essential component of business, as a customer’s financial situation may cause a change to warranting a reviewal of their credit terms.

Sound invoicing procedure

One of the necessary strategies to maximise accounts receivable is to establish a solid invoicing and billing procedure, as generating timely invoices is a major aspect of collecting account receivables on time. Do your research and create a strategy that works best logistically for your business; perhaps it includes a staff member taking on this role, or perhaps you will look for automated options. Sending electronic invoices is ideal as it fast tracks the process due to reduced delivery time.

Efficient collection process

Developing a collection process for all staff to follow will increase efficiency, ultimately resulting in improved management of accounts receivable. You can do this by training all staff on the necessary process for collecting money owed, and train them in how to deal with difficult or non-compliant customers. They should be aware of how to apply discounts, how to negotiate payment plans, and how these aspects should be sufficiently documented.

Posted on 16 February '18, under Money. No Comments.

Understanding various kinds of super fees

No matter the kind of superfund you opt for, you will be subject to super fees. Understanding how these fees work and the difference they can make to your next egg is vital.

When it comes to superfund fees, there are two factors you need to get your head around; the kinds of fees you are being charged and the rate of fees you pay. Opting for a superfund based on these two factors can see you retire with hundreds of thousands more money.

You should be aware of the various types of fees you are being charged. If you would like to find out the fees you are being charged, you should do two things. Firstly, Google your fund’s product disclosure statement and scroll through to the fees section. You should see a list of different types of fees, with an explanation of what they are, how they are applied, and how often they will be incurred. Secondly, you should log in to your superfund account and take note of all the fees being charged to you. Investigate how closely these correspond and correlate with the product disclosure statement.

If you feel there are discrepancies, do not hesitate to contact your superfund or financial advisor and ask for clarification. It is worthwhile doing your research and comparing the fees you are being charged against other super funds and what they charge. Being complacent and not paying attention to your super is extremely irresponsible; the dividends you will receive later in life for being diligent now outweighs the burden of taking time to be informed today.

Some of the common super fees across the board include:

Another major factor contributing to how much you accumulate in your super account throughout your working life is the rate of fees you pay. Plain and simple, some funds offer much lower fees than other, creating a difference of hundreds of thousands of dollars when it comes time to retire.

Generally, funds are categorised into three groups; low super fees, medium super fees and high super fees. Ultimately, you want to be in a fund that charges low super fees. In saying this, it’s not only about super fees, as some funds have medium-high super fees but also perform better based on investment strategy, meaning you will get more back from your investments.

Posted on 16 February '18, under Super. No Comments.

Minimising the risk of fraud

The Australian Taxation Office is urging all businesses and individuals to take care in relation to avoiding the risk of fraud.

With a focus on criminals lodging fraudulent returns in order to obtain unwarranted refunds through accessing banking information that is not their own, the ATO recommends businesses and individuals practice the following:

Discussions with staff and clients

Keep your employees and your clients about safe behaviours to protect them from being vulnerable to criminals, such as not clicking on downloads, hyperlinks or opening attachments in unsolicited emails.

Protection on devices

Ensuring the devices you use for confidential information such as transferring funds and purchasing goods and services are all up to date with protective software, such as malware detectors and firewalls. Also, ensure autofill forms are not saved or used.

Proof of identity

Before taking on new clients, ensure they provide numerous pieces of proof of identity. You should also question discrepancies before lodging their tax returns.

Internal security

Ensure all employees have access to only what they need in order to perform their role within the company. When employees cease employment, cancel their AUSkeys.

Posted on 16 February '18, under Tax. No Comments.

How to avoid failing

In any business environment, there are constant challenges that can see you fail or can be tools for success. Channelling these challenges and turning them into strengths is necessary.

Consider the following failures business owners commonly make and reflect on how these apply to your business:

Multitasking

For a lengthy period, the ability to multitask has been seen as a sort after skill. With the growth of technology and its emergence into every aspect of our lives, research is now suggesting that the ability to single task is becoming more and more important. The ability to focus in on one project at a time, without being distracted by things such as emails, phones or social media is extremely valuable. Being present and not being distracted means you are more likely to perform any one task better.

Values

Most businesses start out small and with strong core values. However, as the business grows, many owners become too focused on profit and growth, rather than remaining true to these values. This attitude will see you lose your core, loyal customers, who have been with your from the start. You may not care, as you are bringing in lots of new customers at great numbers, but if your customers are not loyal to the business, you will lose them just as quickly as you gained them with the fast-paced consumer environment that has been developed over the past couple of decades.

Money management

Poor management of money will see any business plummet. Most businesses will experience periods of negative cash flow, particularly seasonal businesses. It is not the issue of negative cash flow that will see a business fail, but rather the inability to prepare for these lulls.

Hiring

The team you hire should be seen as an extension of yourself. They should share your vision for the business and should be passionate about supporting the business grow. Hiring people with the best skills and a great attitude is the first step, but keeping them long term involves nurturing their professional growth and continued respect for the value they bring to the business.

Posted on 6 February '18, under Business. No Comments.

Understanding the First Home Super Saver Scheme

With much controversial discussion surrounding the First Home Super Saver Scheme, understanding exactly what the Scheme entails is necessary.

The scheme was announced in the 2017-18 Federal Budget as a means to reduce the pressure surrounding housing affordability across Australia.

The formalities of the scheme are as follows:

As of 1 July 2017, individuals can make voluntary contributions, both concessional and non-concessional, into their super fund. As of 1 July 2018, individuals can release these contributions, as well as their associated earnings, and use this money to help purchase their first home. Individuals eligible for this scheme are able to use up to $15,000 per financial year, with a total maximum of $30,000 for all years you have earned super.

To be eligible for the First Home Super Saver Scheme, individuals must meet the following criteria:

Posted on 6 February '18, under Super. No Comments.

ATO cracking down on developers avoiding GST

This year, the Australian Taxation Office has placed a greater focus on property developers and are particularly watching company directors with a history of GST obligations avoidance.

As of May 2017, the Government announced new requirements on those purchasing newly constructed residential properties or new subdivisions to remit the GST directly to the ATO as part of the settlement process. The ATO has placed a strong emphasis on making sure this occurs legitimately, ensuring property developers do not get away with failing to meet their GST obligations.

These proposed requirements were addressed in consultation in November 2017 and are to be implemented as of 1 July 2018. The impending changes will mean that developers no longer have a three-month period to remit GST; hence they no longer have time to be dishonest and avoid GST evasion through phoenixing.

For contracts already entered into, there will be a two-year transitional period, allowing developers involved in these contracts a grace period to adjust to the extensive reforms. Contracts entered into prior to 1 July 2018 will not be affected by these reforms, provided they are settled prior to 1 July 2020.

Posted on 6 February '18, under Tax. No Comments.

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