Fire Your Bank! Money Tip without the Boring Stuff

Not happy with your bank, credit union or building society, but overwhelmed by the thought of canceling and re-activating all those direct debits?  The Government introduced new rules from November 2008 which should make it easier (in theory anyway).  Following is a link to http://www.fido.gov.au/fido/fido.nsf/byheadline/Switching%20bank%20accounts?opendocument#2 which provides a step by step process.

For people who love detail, included in the information is a  booklet published by APCA (Australian Payments Clearing Association) which includes lots of good information.  There is also a copy of the  Code of Conduct that the financial institutions need to adhere to.   Just go to Part D.  It states they have to provide you with the information within five working days.  Make sure you keep them on their toes. Read more

Save big $$$ on hire car excess insurance - Money Tip without the Boring Stuff

A big thank you to Mick for this one.

Mick travels a lot and has shared this fantastic tip to save money on Damage Waiver Excess Insurance that car hire companies entice you to pay.    You know the drill.  You front up to pick up the keys and sort out the paperwork and then they ask if you would like to purchase insurance to waive the excess which is usually a daily charge.  You smell a rat, but you are in a bind as you don’t want to risk it.  If you had an accident or your car was stolen you might be liable to pay  thousands of dollars.  It would certainly put a dampener on the holiday.

However, did you know that travel insurance provided by various companies already covers this excess (in the fine print)?   Even if you travel domestically you can purchase travel insurance for medical, unexpected cancellation, lost luggage etc. Read more

First Home Owner’s Grant - Grab it or leave it be? Money Tip without the BS

The Government’s announcement that they would temporarily double the First Home Owner’s Grant from $7,000 to $14,000 if you purchase an existing home and triple it to $21,000 if you purchase a brand new home was welcomed by the housing industry.   They certainly need a boost at the moment.

I remember the days when I was itching to buy a home and it felt great when I was able to purchase a little three bedroom home in the burbs on my own.   This was back in the early 1990s.   I sold this house in only a few years ago and it did increase in value.  However, after I calculated interest costs and ongoing maintenance I made very little from it.    At least it forced me to save. Read more

Is my financial planner overcharging me?

Q I have a financial planner who charged $7700 for an initial investment of around $30000. This gave me a credit until $100000. Every time I do additional investing (capital +or margin loan) they charge 5.5% of that extra investment amount (after $50000 it becoms 3.5%). Also the index fund, MLC-Vanguard Aus share index charges its 0.54% with a 0.3% rebate + the margin loan interest of approx 10%. My question is, this seems extreme to me. is it? The value of the portfolio would have to increase by at least 4% + 4% dividends for this investment to even break even. Am I right?

Josie’s answer: ‘Watch out.  Everyone is after your money.   Learn how to outsmart them! (also applies to financial planners).

Thanks for your question and I am gobsmacked.     Read more

Margin Lending - the good, bad and the ugly.

Margin loans are simply an investment loan that is secured against the assets you are purchasing, such as shares and managed funds.   You don’t need to sign over your house and that is why so many people like them.    However, investors can get into trouble if their investment falls below a certain level, known as the loan to valuation ratio (LVR).

You may have heard of margin calls.   When these happen, investors are in a bind.  They can either sell down their investment to restore the LVR,  in other words forced to crystalize losses, or have to find the funds to top it up.  What a tough decision to make in this current economic climate.  You could be buying bargains, or perhaps throwing good money after bad.    Some institutions also allow you to assign other assets.  Read more

Institutions covered by the Guarantee?

Q.  Can you send me a list of all in financial institution covered by the government guarrentee of savings?

Josie’s answer: I think this is an easy one to answer.   The following documents were published by the Government in October 2008.  Remember, things are changing by the day.    If in doubt, contact the financial institution and ask for something in writing.

government-guarantee-eligible-accounts-and-institutions

government-guarantee-paramaters-oct-08

The website that I sourced this information is www.treasury.gov.au (I call it the horse’s mouth) Read more

Financial Planning Factories - Money Tip without the Boring Stuff

It is a tough world out there.   How do you find a financial planner that you can trust?   First and foremost, we are not demigods (although I think I have met some that believe they are half human, half God).

It is not the first time you have heard me say that finance professionals cannot predict the future (obviously).   It worries me no end that people (known as prospects to the financial planner) walk into extravagant financial planning offices and think to themselves ‘Wow, this guy must know what he is talking about!’   Look he is so successful!.

Intelligent investors know if anyone possessed the ability to consistently and accurately time the market, they would be instant billionaires.   Why didn’t Warren Buffet, Bill Gates, anyone in the Top 500 Rich List walk into the same office?   Oh that’s right.. I forgot they genuinely care about the little people.  Codswallop! (not even sure if it is a word).   If that is the case, why do they need to charge ridiculous fees?  Why do they have to preach to the masses?  Why do they need to advertise to get people to attend their seminars? Read more

Are the savings in our bank safe?

Q. I am wondering about savings we have with Suncorp Bank.  Is it safe or should we pull it out for the time being also which banks have frozen accounts already?

Josie’s answer: If your money is sitting in a savings account within a bank, building society or credit union that is based in Australia, then the Government has guaranteed that you will not lose your money, for the next three years anyway.    You will not find a better guarantor.

Foreign banks may be covered by the guarantee, provided they agree to pay a fee, but this can be a little confusing.  For example, ING’s parent is based in Holland, but they are covered by the guarantee as they have an Australian subsidiary (up to a $1M.  If greater than $1M then they will be charged a fee).

For example, institutions such as Duetche, Credit Suisse do not have an Australian subsidiary in Australia, just a branch office who reports to their parent overseas.   Therefore, different rules apply to them.  Some commentators argue that this is fair as they made the decisions they didn’t want to operate under the same rules and regulations that apply to our banks, building society and credit unions. Read more

Money Tip without the boring stuff - Is My Money Safe?

Even though the Government announced on Sunday 12th October, 2008 they would guarantee all savings within banks, building society and credit unions, I am still getting lots of queries.

Must admit it is confusing as the Government didn’t include the fine print.    You will not find a better guarantor than the Australian government.   Following is a link to the Treasury Department - www.treasury.gov.au.

Read more

Josie v Money Matters listener - understanding economics

Q. I was listening to your program on GoldFM last Sunday morning. I found it amazing the number of incorrect economic statements that were made concerning the federal governments “stimulus”package.

The bottom line is that the so called stimulus will have no impact as it is based on the mistaken belief that consumer spending drives the economy, when in fact business spending is the driver.

Any surplus is held by the Reserve Bank, and is still part of the money supply, so that it is money created out of thin air (as central banks have an addiction to which is one of the causes of inflation), but a draw down in money balances (often erroneously referred to as idle balances). Read more

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