SAVING FOR EDUCATION
How can you make education costs more affordable?
A recent report* estimates the cost of raising 2 children from birth to when they leave is $812,000. Education is a large part of these expenses, particularly for higher income families who may send their children to private school. Aside from school fees, there are regular expenses such as uniforms, equipment, and excursions that can affect your budget significantly, and with tertiary education these costs might be around for more than 15 years!
What you need to know
Putting in place a regular savings or investment plan as soon as possible is the key to making sure you can afford to give your children the education they want. There are a range of options available including:
- Managed funds
- Investment bonds
- A trust
- Education funds
Getting started
- Regular contributions are key to saving for your child's education. Work out your budget and how much you can afford to save each month
- Consider investing in your name rather than your child's name. In most cases, investing in the name of a child is inefficient for tax purposes, as penalty tax rates apply to 'unearned' income for people under 18.
Count on us
A Count adviser can help you:
- Start saving for your children's future in a tax effective way
- Put in place a regular investment or savings plan
*"The cost of raising children in Australia", AMP. NATSEM May 2013.
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GET A HEAD START FOR YOUR CHILDREN
Would you like to create a nest egg for your children?
It is becoming more and more difficult for young people to buy a house without help from their parents. And future generations may have to rely solely on their own money to fund their retirement. So building a nest egg for your children has become more important than ever.
What you need to know
- The effect of compounding means the earlier you start investing for your children, the easier it is to create wealth. So it makes sense to put in place a regular savings and investment plan.
- You can start making superannuation contributions for your children while they are still under 18. Generally no tax deduction is available; however with the benefit of compounding, a relatively small contribution at birth can grow into a significant nest egg by the time the child reaches retirement.
- For example, if you were to contribute $1,000 per year from birth to age 16 (a total of $16,000), by the time your child reaches age 60 the nest egg would have grown to $66,595 in today's dollars (assuming inflation of 3% and a gross 7% annual return). A very handy head start for retirement!
Getting started
Consider investing in your name rather than your child's name. In most cases, investing in the name of a child is inefficient for tax purposes, as penalty tax rates apply to 'unearned' income for people under 18.
Count on us
A Count adviser can help you:
- Start saving for your children's future
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BOOST YOUR SUPER
Would you like to start contributing more to your super?
Adding contributions to your super directly from your pre-tax salary can be an easy, tax-effective way to top up your super. This is called salary sacrifice.
What you need to know
When you put in a place a salary sacrifice arrangement, your payments will be made automatically by your employer. So it's an easy way to get into a good habit. Plus you may be able to save on tax:
- You do not pay income tax on salary sacrifice contributions to super which can represent a significant tax saving particularly if you are on the highest marginal tax rate
- Sacrificing a portion of your pre-tax salary into superannuation could enable you to lower your tax bracket and, thus, reduce the overall amount of tax you pay
- When you pay less tax, you have more money to invest which gives you the potential to increase your returns
Getting started
- Make sure that your employer will allow you to salary sacrifice, and that your employer won't reduce the amount of super guarantee contributions they pay on your behalf.
You should also ensure that salary sacrifice plus superannuation guarantee contributions you make won't exceed the annual cap on concessional contributions.
Count on us
A Count adviser can help you:
- Put in place a salary sacrifice arrangement
- Boost your super using smart super strategies
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BUILDING WEALTH FOR THE FUTURE
How much money do you need to start investing?
Investing your money can help you make your savings work harder for you. And now may be a good time to consider starting an investment portfolio especially if you find your disposable income has increased. Importantly you don't need a large lump sum to get started.
From the experts
When you invest a set amount at regular intervals, you benefit from 'dollar cost averaging' which can help smooth out your returns by insulating you against changes in the value of the assets you are investing in.
What you need to know
One of the easiest ways to build your investment portfolio is to simply keep adding to it on a regular basis. With a regular investment plan you can start small and build your investment over time. And by putting money into an investment portfolio rather than a savings account you could earn a higher return.
For example, with an initial investment of $1,000, and by adding as little as just $100 a month, you can start a regular investment plan into a managed fund or superannuation. Assuming you earn an average of 7% each year on your investment, after 10 years your investment will have grown from $1,000 to $16,000.
Count on us
A Count adviser can help you:
- Set up a regular investment plan
- Help guide you on where to invest your money
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