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adfconsumer.gov.au 2
DON’T TAKE IT PERSONALLY
This session is about independent financial education
This session is not about personal advice
None of this is rocket science
Simply to help you think and act
adfconsumer.gov.au 3
Understanding superannuation
Insurances that you may want to replace
Setting new financial goals and revising your budget
Dealing with debt
Protecting your Assets
Getting professional advice
PROGRAM OUTLINE
adfconsumer.gov.au 4
UNDERSTANDING YOUR SUPER
Understand your entitlements
Benefits will be based on your age and why you are leaving the service
Generally can’t access super unless retiring and have met a condition of release
Defined benefit - pension and/or lump sum on retirement or invalidity
Accumulation – if resigning, leave where it is or rollover to another fund
adfconsumer.gov.au 5
YOUR POST-ADF PRIVATE SECTOR SUPER CHOICES
INDUSTRY RETAIL SELF-MANAGED
Profits Members Shareholders Members
Investment choices Limited High Unlimited
Need for advice Little Some Lots
Cost Low - mid Mid - high High - very high
Conclusion Simple, low cost More choice, higher cost
Greater control, more cost effective for larger balances
adfconsumer.gov.au 6
ADF members have statutory death and invalidity cover through ADF Cover, MSBS or DFRDB; DVA rehabilitation and compensation schemes
This cover will cease when you leave the ADF
Personal insurance includes Death/Invalidity/Trauma/Income protection
May be able to get cover through civilian super fund
Most life insurance and personal accident insurance policies contain war, war-like activity and notice of deployment exclusions
Comparison websites can help you calculate your insurance needs and compare policies from different insurers
PERSONAL INSURANCE
adfconsumer.gov.au 7
WHERE DO YOU WANT TO BE?REASSESS YOUR FINANCIAL GOALS
WRITE YOUR GOALS DOWN
EXAMPLES
Short-term Emergency fund Holiday
Medium-term Home deposit Starting a business
Long-term Investment portfolio Retirement
adfconsumer.gov.au 8
WHAT ARE YOU WORKING WITH?BUDGETING
How will your income and expenses change?
Using a budgeting tool can help you plan
Allows you to decide what’s really important
ASIC’s MoneySmart Budget Planner
o Use onlineo Download Excel versiono moneysmart.gov.au
adfconsumer.gov.au 9
If you are retiring, have you worked out how much income you will need?
Typically when you retire some expenses will decrease while others will increase, for example:
o Work related expenses
o Leisure activity expenses
Some experts suggest aiming for 2/3 of your pre-retirement income
Everyone’s different - you may need less or want a lot more
HOW MUCH WILL YOU NEED IN RETIREMENT?
adfconsumer.gov.au 10
Three common investment classes:o Cash (including fixed income and bonds) o Property (real estate)o Shares (equities)
Investments should match your goals / timeframe
Consider how much time you have to monitor investments
Don’t invest in anything you don’t fully understand
Get help if you need it
SAVINGS & INVESTMENTS
AustralianShares
GlobalShares
adfconsumer.gov.au 11
Not always low risk
Cash (e.g. bank accounts, term deposits) –Government guaranteed – apra.gov.au
Bondso Government – lower risk (depending on
which Government!)o Corporate – higher risk
Debentures, secured & unsecured notes –higher risk
INVESTMENT CLASSESCASH, BONDS & FIXED INCOME
adfconsumer.gov.au 12
Buy for the investment potential, not for the tax breaks
Negative gearing means you are making a loss
Be wary of ‘guaranteed’ real estate rental deals– do your own research
You can lose money on real estate, especially if you borrow too much
Consider Australian Real Estate Investment Trusts (A-REITs) and Exchange Traded Funds (ETFs)
INVESTMENT CLASSESREAL ESTATE
adfconsumer.gov.au 13
Buying a piece of the company
Diversification lowers risko Different companieso Across industrieso Across markets
Active v passive investment – extremely difficult to consistently pick shares
Consider a passive Exchange Traded Fund (ETF) or managed fund
SHARE MARKET
BANKS MINING CONSUMER UTILITIES
CO
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INVESTMENT CLASSESSHARES
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Don’t go into any financial products or services with your eyes closed
Take your time, be comfortable with your decisions
You can’t control returns but you can control fees
1% differential – a huge difference to the outcome
Consider using diversification to manage risk
adfconsumer.gov.au 14
CHOOSING ASSETSDOING YOUR HOMEWORK
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Too much debt causes of many financial problems
Our personal debt is among highest in the world
Financial institutions sell debt
Debt is not all bad, just too much of it (especially for high-risk ventures and depreciating assets)
Have a fall-back position
Consider holding 3 – 6 months worth of cash
DEALING WITH DEBT
adfconsumer.gov.au 16
Legal document – dictates how your assets are distributed when you die
Update your will when things changeo Marriage, divorceo Become a parent
Never use a will kit – use a qualified legal professional
Wills can usually be prepared by ADF legal offices for free
Can operate anywhere in Australia
PROTECTING YOUR ASSETSWILLS
adfconsumer.gov.au 17
Gives somebody power to act on your behalfo Make financial decisionso Buy or sell assetso Operate your bank account
You can limit the power given
Requirements vary by State and Territory
Always seek legal advice
Make sure you can trust your attorney!
PROTECTING YOUR ASSETSPOWERS OF ATTORNEY
adfconsumer.gov.au 18
ADF Financial Advice Referral Programo Genuine fee-for-service, free from conflicts o Private relationship: you and the adviser (not Defence)o Watch our video: Financial Advisers: the Facts and the Fiction
Accountantso Registered tax agents can help with simple tax returnso Find university-trained CPAs at cpaaustralia.com.au or Chartered Accountants
at charteredaccountantsanz.com
Legal issueso First point of call on base ADF legal officer (may refer to Reserve Legal officer)
CHOOSING PROFESSIONAL ADVISERS
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