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Why Choose a Self Managed Super Fund



Thinking of moving to self-managed Super? Money editor Caitlin Fitzsimmons outlines the things to watch out for.

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SMSF's - Peace of mind for small business

 SMSF's - one of the main reasons people establish an SMSF is for Peace of Mind.

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7 Entrepreneurial Traits to Teach Your Child

 These are the skills kids need most now to succeed when they grow up. -


I own an international PR firm and my brother is an artist, writer and naturalist. We both became entrepreneurs in our early 20s. People often ask if our parents did anything special in raising us. When I had my daughter in 2007, the question took on new meaning-I wanted to know if parents could influence their child's entrepreneurial IQ.

To help answer the question, I contacted Richard Rende, Ph.D., who studies child development, and together we identified a number of areas where parents can have a great impact.

Why does it matter? In our fast-changing world, kids need a whole new set of skills to succeed. Helping children gain entrepreneurial traits will give them a solid foundation for defining, pursuing and achieving their own success.

Here are seven entrepreneurial traits well worth cultivating in your child:

1. Openness to Experience

Babies and children are born to explore. They are open and curious about the world around them. Free form "playful learning" is a proven way to advance academic readiness and lifelong curiosity. Let your kids follow their instincts and discover-and reinforce that with enthusiasm and wonder. Adults who are open to experiences have their "radar screens" on all the time. They see opportunities where others don't and welcome challenges, hallmarks of success in the workplace and in life.

2. An Innovator's Perspective

Innovation isn't just for people who will create new technologies or businesses. Kids growing up today will need to be perpetual innovators, devising new solutions and approaches to problems. Permit kids to test out their ideas when playing or doing schoolwork (without critique). Coming up with their own solutions helps develop and reinforce creativity and critical thinking skills. And make sure to cultivate an environment where failure is tolerated. Innovators embrace experimentation and know that you must fail in order to succeed.

3. Optimism

If there's one trait associated with entrepreneurs, it's optimism. Successful entrepreneurs believe they can change things for the better through their own efforts. Being optimistic confers real life, career and health advantages. To encourage optimism, frame the day in a positive way, model optimistic thinking and problem solving and cultivate gratitude. And remember that optimism is contagious. If Mom and Dad's outlook on life is positive, it will rub off on the kids.

Related: What Separates Chronically Positive People from Everyone Else

4. Industriousness

Whether they're children or adults, successful people get their hands dirty, sometimes literally. To help kids develop a strong work ethic, they need to learn the intrinsic rewards of a job well done. Parents should resist the urge to smooth their child's path or do for them what they can do for themselves. One time-tested way to build industriousness is by giving kids chores. Researchers have found that participating in chores early in life was strongly associated with personal and academic success 20 years later.

5. Opportunity Seeking

Children need to feel comfortable seeking out opportunities-academic, social, personal and physical-without fear of negative consequences. When children feel secure and supported, they develop the self-confidence they need to trust their judgment and instincts and are free to embrace opportunity when they see it.

6. Likeability

Likeability in childhood translates to success in adulthood. It's important to note that likeability is not the same as popularity. Likeability is about getting along well with the people around you. Parents play a big role in helping kids develop social proficiency. They can help them negotiate conflicts without becoming disagreeable, model how to collaborate with others and boost their communication skills.

7. Empathy

There is one tendency above all others that entrepreneurs endorse as key to achievement: serving others. In any endeavor, if people don't contribute something that is wanted or needed, they can't succeed. Kids today can have extraordinary "résumés," but having a sense of entitlement and a lack of empathy will ultimately hinder them. Talk about your emotions and help your child understand that the feelings of others matter. Compassion and empathy will change their world and their lives for the better.

Not every child will grow up to be an entrepreneur but every child can benefit from having entrepreneurial skills to help navigate our complex world. As traditional life and career paths disappear, children will have to be able to adapt and learn at every stage of life. Like entrepreneurs, they must make their way in the world with no roadmap to guide them. Parents can help set them on a path to use their talents and abilities to create success for themselves and others.

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Ignore the Share Bears and Look Long Term

 A FAMILIAR feeling of fear has been haunting investors, super fund members and self-funded retirees.

A shocking start to 2016 for the sharemarket has rekindled memories of the Global Financial Crisis, and worries worsened last week when global bank RBS warned of a "cataclysmic year" and urged investors to "sell everything".

A few finance experts have joined in the gloomy chorus, but many have criticised it, and others have forecast good gains for Aussie shares between now and December.

RBS warned that global sharemarkets might fall by 20 per cent in 2016, which is not that nasty compared with the GFC when Aussie shares tumbled 55 per cent from late-2007 to early-2009.

GFC throwback ... how will the stock market measure up in 2016? Picture: iStock


The All Ordinaries index, which tracks the value of 500 listed companies, has slumped 7 per cent in the first two weeks of January.

"People hate losing money more than they like making it - it's the way we are wired," he said.

"The problem with 'sell everything' is when do you buy back in? There will always be volatility and a big variance in opinions - sometimes it's the people at the extreme at either end who get the most airtime."



 What is so great about the number 72?

Let me explain what makes 72 the answer
Using an example, if you invested $10,000 that earned you 10% per annum, how much would that investment be worth after 7 years ?
You may expect the answer to be $17,000, as 10% return on $10,000 for each of 7 years would be $7,000. However, the answer is actually $19,487.17 to be exact. This is because your investment earns interest on the interest each year, in jargon speak, compound interest.
What this means is, at the end of the first year, you would have $10,000 plus $1,000 of return, and at the end of the second year, you would have 10% on this $11,000 (rather than just on the initial $10,000). Each year this happens, the greater the effect on your long-term returns. Of course, if you spend the 10% return each year, you will still have $10,000 at the end of 7 years.

What about the number 72? How does that fit in?
The number 72 allows you to quickly and easily work out how much investments may be worth over time. It works like this - if you divide 72 by the interest rate, this will estimate how long it takes to double your investment.
Using the example above, 72 divided by 10% equals 7.2. So your initial investment doubles from $10,000 to $20,000 after 7.2 years. This sounds pretty good, but it gets better as this doubling effect continues. After 14.4 years, you would have $40,000, then $80,000 after 21.5 years, $160,000 after 28.8 years, and $320,000 after 36 years. So in this example, your $10,000 investment would increase to $360,000 after 36 years. Pretty cool, isn't it?

Another great way to use this method is to work out the effect of inflation on your investments.
Let's say you have 24 years left before you retire, and you think you will need $1 million in today's money to retire on. If you had one million dollars and put it under your mattress for "safekeeping", that one million dollars would buy more today than it would in 24 years' time because of the impact of inflation.
If we estimate that inflation is 3% per annum, then 72 divided by 3%  gives us an answer of 24 years. This means that having $1 million today is the same as having $2 million in 24 years' time, because of the impact of inflation.
Considering inflation then, the $360,000 after 36 years in the first example is actually closer to $125,000 in today's dollars. This is still pretty good, but does prove that the earlier you start putting savings away, the more time The Answer 72 has to work its' magic! Compounding is a wonderful thing. Give it time to work for you.

John Clarke - Clarke McEwan Accountants and Business Advisors.


10 companies your SMSF needs to own in 2016

2016 may well be a year for traders and those SMSF trustees willing to lock in short term profits.  The old adage, "The bull goes up the stairs and the bear goes out the window" probably won't get much of a look in if the last week of December and the first week of 2016 trading is anything to go by.  Markets finally had their Santa Claus rally jumping some 400 points on the ASX within days as the sun set on 2015 and then losing 200 points several days into the new year.

Had you bought the All Ordinaries (say using an ETF or a balanced portfolio of shares) around the 4950 and ridden the market to 5350 you'd be staring down the barrel of an 8 per cent return.  That's probably better than you did all last year and it all happened in two weeks.  The point I'm trying to make is that if you lock in your profits several times a year with a basic understanding of the market, you can improve your chances of investment success.

You will also need a basic understanding of value on both individual stocks and the market as a whole.  The market appears expensive at 5,950 and cheap at 4,950 with fair value rated around the 5400 to 5600 region on the All ords.  Remember, as Warren Buffett says Mr Market can be highly emotional and whilst the daily business news can fluctuate from optimism to pessimism on a flash release of a single piece of economic data, the stocks that we are trading are in fact real businesses with real customers, staff, products, services, income, expenses and profits.  Some insights into their operations and thus valuations is essential if you plan on a successful retirement using your SMSF. 

Of course, transaction costs need to be factored in.  You may have brokerage, capital gains tax or advice fees to pay but never be afraid to make a profit and you'll never go bust! If you're lucky enough to be in pension mode, there is no capital gains tax no matter if you're in transition to retirement mode or account based pension mode.  Your ability to trade successfully virtually cost fee is significantly greater.

Ramsay is #1 stock pick.
Ramsay is #1 stock pick. Bloomberg

So lets consider the macro environment. Interest rates are going up in the US and markets are cautious.  Our dollar may be under pressure as a result of rising US rates and unemployment in the US remains low and business conditions strong.  China is still growing but they are not booming and therefore our resources are may remain under pressure, and this too is a contributor to a lower dollar.  Oil prices too remain subdued sitting at multi-year lows so the cost of business for many US companies remains cheap and the consumers will have more money in their pockets unless OPEC gets their act together and curbs supply. 

Whilst global growth rates remain subdued and the outlook for the share market is forecast to run at parallels, the share market will be a stock pickers market in 2016.  Banks still need to raise capital so it may be worth taking up potential further offers as interest rates are low and housing remains strong.  Banks have an uncanny reputation to hang onto their profits despite short term regulatory headwinds. Health care has been a bellweather for growth but an impending government review on bulk billing has rained on the likes of Primary and Sonic but keep an eye on value in this sector.  Ramsay (no. 1) remains a key holding for me and I've been topping up on the dips. 

Consumer goods and services have been strong in our low interest rate environment and I'd urge some caution in the face of the Dick Smith failure but some common sense can be applied here.  Interest rates are low, unemployment is low and house prices have been moving north (in most populous states) so consumers are active.  Just watch for the switch in rates bias that can rain on this parade (possibly end of 2016) but there's little sign of that yet (read the free downloadable Westpac weekly economic report from their website). Every builder, architect and renovation related business I know is absolutely flat out and that should flow through to building and renovation-related businesses such as JB Hi Fi, Breville, Kresta, James Hardie and GWA.  So too AP Eagers may work as a holding as more people upgrade the family sled and motor vehicle sales touch records.  A word of caution though, these stocks can be fickle, must be watched very closely and are not in my top 10 despite strong results.

I'll be watching less of the old stalwarts (although I like the first three) such as CBA (no. 2), NAB (no. 3), Telstra (no. 4), Woolworths and Wesfarmers and more of other large cap stocks in the form of Seek (no. 5), Crown (no. 6) and REA Group (no. 7).  Woolworths is a sell in my books. Never lose sight of dividends and the banks again remain strong contenders for income and CBA is my favourite and Macquarie (no. 8) appears a reasonable prospect to me with the possibility of greater corporate activity and their expansion of recurring revenue streams, as does Challenger (No. 9).  Just be cautious of dividend traps such as BHP (no. 10) although it has looks like good value at the moment and we'll be watching their results very closely this year as it remains in portfolios coupled with Woodside as the only resources contenders for our very conservative clients.

All in all, 2016 may be a subdued year overall but like always opportunity will abound and your results will simply be a function of how you capitalise on the potentially fleeting moment of portfolio profit.  Some logical application of basic economics, consumer behaviour and market and company valuations can have a significant impact on your superannuation balance. Your retirement depends upon it.

Contact Clarke McEwan