Finance

 

Pensions: A Beginner’s Guide

If you watch the news or read a digital or print newspaper – which we imagine applies to nearly everybody – you’ve probably read that there’s a pensions crisis brewing, and one which will have severe implications for the United Kingdom and the United States of America. If you’ve grown up and spent your life in the United Kingdom, you’ve probably always expected that the state will care for you during your retirement years. Such talk is therefore quite alarming.

Because of this, we thought it would be a good idea to put together a basic guide on where we stand with pensions, and which types of pension are available. We’ll also discuss what action you might want to consider taking to ensure that you’re adequately looked after in years to come.

We’ll start with the type of pension that almost every British citizen is entitled to expect; the state pension.

What Is The State Pension?

The state pension is a financial provision that the United Kingdom makes for every single one of its citizens, with the intention of supporting them in retirement. Every qualifying citizen automatically becomes eligible to receive the state pension when they reach their retirement age, which at the time of writing is 65 got both men and women. For a single individual, the current rate of the state pension is £168.60 for each individual claimant. Should that not be sufficient for people to survive, a state second pension is also available to some claimants, and is means-tested to maximize the level of benefit awarded to those most in need.

Does Everybody Receive The State Pension?

Almost everybody. In order to qualify for the full state pension, you must have paid 35 years worth of National Insurance contributions during your working life. You’ll still receive a partial payment so long as you’ve paid in at least ten years worth of National Insurance contributions. This is sometimes an issue for self-employed persons who haven’t maintained their tax obligations.

What If The Investments Don’t Go Well?

With this type of scheme, it’s possible that the amount of money you’ll receive will be less than the total sum you’ve paid in during your working life. That may not seem fair, but investments are a gamble. Just like not every spin of the reels on a mobile slots game will result in a win, not every fund you invest in will generate a profit. Stock traders, like mobile slots players, are betting and speculating on the outcome of their actions. A stock trader will tell you that they have more control of the outcome of their bets than someone playing Vegas Slots, but the reality is they’re just powerless to stop things going wrong when they back a loser.

Understandably, that type of scheme isn’t for everybody. That’s why there’s another form of workplace pension available.

That Doesn’t Sound Like Enough Money

It isn’t. It’s an open secret that the state pension is woefully inadequate for its intended purpose, and will likely have to be topped up with additional benefits for most claimants in order for them to avoid collapsing into poverty (hence the coming pensions crisis). It might get worse, too – the eligibility age for the state pension is due to increase to 67 in the mid-2020s, and 68 in the mid-2030s. Young people currently at university may find themselves working into their 70s before they become eligible to receive the pension – presuming it still exists by then.

Clearly, the state pension alone isn’t sufficient to support us in retirement, so what else is out there for us? One additional provision is the Government’s workplace pension initiative. Since 2017, every employer in the county has been required to make contributions into a workplace pension for their employees – unless the employee has specifically opted out of the scheme. What benefits do we get from that?

What Is A Workplace Pension?

It’s a pension plan which is usually contributed to by both you and your employer together. Unlike the state pension, the funds become available at the age of 55 – although you’re free to carry on working and adding to your pension pot if you wish to do so. The more you pay in, the more valuable it will ultimately become. Workplace pensions are set up one of two ways.

Defined Contribution Pension Plans

Under the terms of a defined pension contribution plan, the money paid into your pension scheme by yourself and your employer is invested. Provided the investment scheme goes well, this will increase the level of funding available to you when you eventually choose to draw down on the retirement plan after reaching the age of 55 or later.

Defined Benefit Pension Plans

Under the terms of a defined benefit pension plan, you receive a promise from your employer that you’ll receive a specific income when you choose to retire. That income will be based on how many years you spend working for that employer, and the level of your income when you stop working for them. You don’t stand to receive as much money as you would from a defined contribution pension plan if everything went well, but you also aren’t subject to the risks which come from underperforming funds. When you reach 55, just as in the other scheme, you’ll have three options.

What Are The Three Options?

Unlike your state pension, you have some freedom of choice when it comes to your workplace pension. You could choose to take it all as a cash lump sum at the age of 55 if you so desired, although you’d have to be conscious that you’ll receive no more money from it for the rest of your life. You could treat it like a savings account and dip into it as and when you wish to. Option three would be to treat it like a regular pension, and receive a monthly income from it for the rest of your life.

Will The State Pension And The Workplace Pension Together Be Enough?

We don’t know. Nobody knows what the state of national or personal finances will look like twenty or thirty years from now. That’s why it always makes sense to speak to a professional pensions adviser if you have concerns about your financial future when you reach retirement age.

What Might A Pensions Adviser Direct Me To Look At?

Personal pensions. These are pension schemes which are nothing to do with the Government; they’re set up by you (under the guidance of your adviser), and maintained by you (with your adviser’s assistance). Your financial adviser will assess your current income and expenditure, determine how much money you’d require to maintain your current quality of life in retirement, and address any potential shortfalls. From there, they will make a recommendation as to how much, if anything, you should consider paying into a personal pension.

What Options Might They Have For Me?

Too many for us to discuss here, and their range of products may vary depending on who they’re affiliated with! As a general rule, a fully qualified pensions adviser should be able to provide advice on a range of different pension products, ranging from those suited to people with a large risk tolerance to those who want to play as safely as possible.

This article doesn’t constitute financial advice, but the information you’d get from a qualified pensions adviser does – so go and see one!

 

Finding yourself in debt can be a very frightening experience, particularly if you are not completely financially literate. Not being able to afford the pleasantries and luxuries of life is one thing, and we all feel this stress more keenly at Christmas time. However, not being able to purchase basic necessities, like food and clothing, or not being able to keep up with rent payments is not only scary but can also be detrimental to your health, both physical and mental,

The worst thing you can do if you find yourself in debt is to panic. If you have no family or friends that you can approach to help or offer advice, it’s all too easy to jump out of the frying pan into the fire. By this, we mean doing something silly like borrowing money from loan sharks.

Loan sharks are thriving in South Africa

According to a recent report on Businesstech, there are many more loan sharks in existence than was previously thought to be the case. It is estimated that there are approximately 40,000 of these operations in business now all across South Africa.

Mashonisas, as these loan sharks are nationally known across South Africa, are illegal and unregulated. They don’t follow the rules and regulation issued by the National Credit Act, and this is where the danger lies. You can find yourself subjected to enormous pressure if you cannot make repayments in time, and in some cases, this pressure can turn into physical violence.

Part of the social fabric

Despite that popular conception that loan sharks are all violent crooks, some of them are not. They are in actual fact an established and accepted part of the South African social structure. This is because it is far easier to get loans from these illegal sources that it is from regulated sources such as Banks and NCR approved finance houses.

But nonetheless, these illegal sharks are dubious people who should be avoided where possible. They charge high interest rates, use unsavoury tactics such as taking people’s ID cards and bank cards as security on otherwise unsecured loans, and they can remove borrower’s assets if payments are late or not forthcoming.

They use weapons such as intimidation and shaming people, and occasionally they resort to physical violence. The problem though is that they do fill a niche, providing easy to obtain loans.

Using family and friends to help

Using family and friends if you have them to help when you are in financial difficulty should be prioritised over going to Mashonisas. But you do need to tread carefully. If you are not able to afford to repay any money you could be offered, it can destroy relationships if it hasn’t been agreed on beforehand. If the shoe is on the other foot and you are approached by a friend or relative for financial help you need to be aware of the options that are open to you.

The best thing you can do when you are in debt is to try and solve the problem yourself without involving people you know personally. Getting debt counselling is a good place to start – especially if you are not financially literate. Leave borrowing from friends and relatives as a last option and try to avoid contacting loan sharks completely.

 

 

A car lease may not be as expensive as purchasing a vehicle, but it will still involve spending a significant amount of money, which is why it’s something that you should do only if you’re sure about it. In a nutshell, leasing a car means that you will be paying for the use of a vehicle for a certain period, then returning or buying it when the lease term ends. Before deciding to lease a car, here are vital details that you need to know.

The lease rate will depend on the depreciation value

Depreciation is the decrease in the value of the vehicle. Cars depreciate fast. Most of them decrease in value by 50% in the first three years of their use. This will determine the cost of your lease as you will pay for its depreciation value. Find a car with a lower depreciation value within the lease term, so you will pay less.

Down payment is non-refundable

Leasing a vehicle requires a down payment too. However, the price is not as high as the down payment of a purchased car. Once you decide to get a lease, the down payment will not be refunded, which can be a drawback in case you end up returning the car earlier than expected. Moreover, cancelling the lease before the term expires will also result in fines.

A lower monthly rate is not always equal to a cheaper deal

Leased cars also have lower monthly fees than financed vehicles. Do not be easily persuaded by a lower monthly fee because this is not the only factor to determine if you are getting cheap car lease deals. Compute the total cost that you will pay and make the comparison to see which has the best offer. For example, the monthly fee may be lower, but the total cost may not be if you add up everything including the down payment and other charges.

There is a mileage limit on the leased vehicle

When you own the car, you are not limited in the mileage that you drive. It’s not the same with a leased vehicle as it has a mileage limit per year, which is usually 12,000 to 15,000 miles. Determine how often and far you will drive and if the mileage limit will be enough. You will be charged extra for the miles that you drive over that. You can also buy additional mileage or negotiate the rate.

The lease price is negotiable

The amount that the dealer gives you doesn’t have to be the final price. You can negotiate to get a lower rate. There is nothing wrong with negotiating a lease. The worse that can happen is that you get a no.

You will take care of the repairs after the warranty

Leased cars come with a warranty, which often lasts for three years. This is also why most terms are offered for three years. If the vehicle requires repair or maintenance and it’s under warranty, you don’t have to worry about the cost. However, you’ll have to pay for it once the warranty expires.

Explore your options and make sure that you understand everything in the contract before signing up for it.

To read more on topics like this, check out the finance category.

 

Have you ever dreamt of a four-poster bed, chaise longue sofa, and chest drawers with light colors like Jennifer Lopez’s bedroom? Or just a bedroom that is cozy, elegant, and a place to rest and relax? Meeting both criteria – a luxurious but relaxing bedroom is a must for those people who treat their bedroom as the place where they can celebrate their success or fame.

Personalize your dream bedroom

To achieve the kind of bedroom that you dream of, it is a must to identify the things you want, like the kind of bed – is it wooden, metal or sleigh bed frame, four-poster, canopy, or winged? How big does the wardrobe or armoire need to be? What shape should the mirror be? What colors should be chosen to complement the furniture? Having your dream bedroom gives a rewarding feeling, and all these are personal choices.

The theme of your bedroom

Harmony and balance are essential in making a dream bedroom and acquiring the right furniture will make it perfect. Choosing the right bedroom set – be it contemporary, traditional, or modern, can easily be achieved. You can have the effect provided by eclectic king bedroom sets or rustic king bedroom sets. There are many varieties to choose from based on the desired ambience to be reflected in the bedroom.

Keep a view of nature

Even the most sophisticated bedroom needs fresh air; that is why some provide space to keep in touch with nature in their bedrooms. Maybe a huge floor to ceiling window with a view of the sunrise in the morning will serve as a reminder of a new day. Or a pathway connecting the bedroom to the garden, a place to go to when needing to breathe after a week of stressful work.

It need not be too expensive

The importance of knowing first the desired design of a dream bedroom will be the guide in choosing elements needed and exploring every practical way of achieving it. Remember that no one shop can give the exact materials for what a dream bedroom should have. Having a huge budget for buying new furniture is good. But looking for auction sales of bedroom sets can be an option, too. From there, ideas may arise as to what style will be applied to your dream bedroom.

Retain a piece of you

Some people make their bedroom a reflection of self because this room gives the utmost privacy that every person needs. It can even manifest your interests and likes, or the other side of you that you want to keep for yourself, like your collection of paintings, toys from childhood, or old records. These can give the feeling of having your own personal space.

And what would complete a dream bedroom? It is the love and care shared with people special to you, like the comfort that the bedroom gives to everyone. Let it be the place for your alone time. And, lastly, let your dream bedroom be the place to make more dreams flourish.

If you want to learn more about our blog, please click here.

Australia has become a very attractive location for foreign investors over the last decades. With Sydney and Melbourne having a majority of the property market value. However, buyers face the challenge of deciding whether to buy or rent a house in Australia.

There are many considerations that go into buying or renting a house which vary from one person to another. For some it’s the monetary value while others have a more emotional outlook. Whatever the case maybe, here we discuss some factors that makes investing in real estate properties in Australia extremely attractive.

Buying Vs. Renting

Many migrants prefer to rent as it is a simpler process than buying a house. Rental houses are not usually furnished and the common practice is for the tenants to make an advance deposit of 4-6 weeks as a security bond and a 4 weeks rent in advance.

The problem with renting a house is that you are continually at the mercy of the landlord. You can be kicked-out of the apartment, rents could be raised when your lease expires, leaky pipes may take forever to be fixed, you are not allowed to keep pets in the building and you have to be forced to save.

However, you can avoid worrying by simply buying your own house in Australia. One intangible benefit of buying an Australian house instead of simply renting an apartment, is the security owning a house provides you.

Buying in Australia

You can make arrangements for a temporary accommodation in Australia before you move there. This can prove a profitable venture, which provides you a temporary form of comfort before your properties arrive.

You can go house hunting, if you want to buy a house to get the feel of the neighborhood. Alternatively, you can visit simply visit Aussie’s real estate websites for the best deals. This include but not limited to:

Additionally, when you are considering the option of buying a house in Australia, it is advisable to contact and get to know local agents in the city or location you plan to stay. These agents will keep you updated of the availability and prices of houses.

You should come along with your previous rental reference, a letter to show you have an Australian bank account, a photo of identification, proof of recent employment and salary, as well as copies of your passport, to speed up rental processes. Landlords and agencies require more documentations from tenants in Australia than in Ireland.

10 Most Affordable Suburbs to invest in Australia

If you are planning on moving to a low-cost, yet beautiful rental property in Australian suburbs, you should consider the following.

1. Karama, NT
2. Coopers Plains, QLD
3. Risdon Vale, TAS
4. Chigwell, TAS
5. Muirhead, NT
6. Cedar Vale, QLD
7. New Norfolk, TAS
8. Bridgewater, TAS
9. Malak, NT
10. Davoren Park, SA
11. Smithfield Plain, SA
12. Elizabeth North, SA
13. Elizabeth East, SA
14. Russell Island, QLD
15. Wagaman, NT
16. Blackstone, QLD
17. Gailes, QLD
18. Virginia, NT
19. Hackham West, SA
20. Brookdale, WA

Why should you invest in real estate property in Australia?

Investing in real estate properties can be daunting, especially if it’s your first time of buying or investing. Here are the 6 reasons why you should invest in Australian real estates:

1. The real estate market in Australia has a proven record of stability with about 70% of Australian households privately owned.
2. Investing in real estate is relatively easy in Australia compared to other countries.
3. There is a reduced economic, political and social instability and you don’t have to establish a company before buying.
4. Australian real estates are affordable.
5. Properties have consistent capital growth.
6. Australian banks lend you a high percentage of the total value of the property, which affords you the means to use the borrowed money to invest in real estate properties.

Tips for buying a house in Australia

Do not buy before you visit

Buying a house before you move in or conduct a proper building inspection can lead to regrets and issues with the agent. It is advisable to visit the property.

Determine your budget and plan

Before you begin your big move, ensure you plan and budget your property purchase.

You can hunt for a loan or borrow

You can seek mortgage from any mortgage bank in that location or ask mortgage brokers for directions. You need to be financially literate in areas like home loans, interest rates and product features.

Compare the deals in the market

Go online to check for vacant and affordable houses within your budget. Compare the numerous prices in the market and make a valid selection. You can also contact a professional real estate agent or a broker, to help you find other alternatives and keep you on the loop of the best deals in your location.

Get approvals and make it legal

Obtain formal mortgage approval, exchange contracts after your loan has been approved, and seek the FIRB approval. It is unreasonable to sign a contract without your lawyer’s input. Also, sort out any tax issues to avoid getting into trouble with the authorities.

Conclusion

Investing in real-estate properties in Australia can be quite beneficial as illustrated above but you also need to carry out your own market survey before making investment decisions. You don’t have to wait till the market value of the house you want to buy drops, Australian policies make a handsome provision for that. So invest now!

If you are looking for new ways to increasing your savings’ balance, continue reading to discover a simple guide to saving money in a short amount of time.

How to save money: A simple guide to increasing your savings’ balance

1. Be clear about your priorities

As an example, if your top priority is to save enough money for a house deposit, you may be more likely to stick to your budget so that you’ll be able to put an offer on a home, in the near future.

You should find that giving up small luxuries such as cafe meals and fast fashion a whole lot easier if you’re clear on what you’re saving for. Both in the short term and in the long term.

2. Save as much money as you spend on treats

As an example, if you spend $5 on a coffee, opt to transfer $5 from your everyday bank account to your long-term bank account. If you’re unable to do both, hold back on the purchasing the treat, which you were tempted to purchase for yourself.

3. Think about how many hours you had to work to purchase items, instead of their dollar cost

If you look at each item, which you’re interested in purchasing and calculate how many hours you would have to work to purchase the item in question, you may be put off blowing your budget on an item that you don’t really need. Remember that there’s no more valuable resource than your time as time is limited.

4. Pay off your credit card debt each month

Never purchase an item on credit, if you won’t be able to pay the sum of the item in question off in full by the end of the same month. One huge benefit of paying off all of your debt in full each month is that you won’t be charged extra interest on your credit card repayments. Which will help you be able to save a greater proportion of your disposable income.

5. Pay your bills each month using automatic payments

It’s well worth contacting your local bank to set up monthly automatic payments in order to pay your bills such as your rent, your mortgage or your power bill. Doing so will ensure that you’ll never have to pay late fees on your bills.

6. Purchase your friends and family members gifts on sale

It’s well worth thinking ahead and electing to purchase your friends and family members birthday and Christmas gifts on sale. As an example, you may want to buy some of your presents on Black Friday each year, when you’ll be able to take advantage of crazy sales. If you don’t want to face insane crowds, simply shop online, instead of visiting physical stores.

7. Drink water when you dine out, instead of wine or soda

If you drink water when you dine out, instead of wine or soda you’ll be sure to save at least a few hundred dollars per year.

So if you’re interested in fast-tracking your savings, it’s well worth following all 7 of the effective saving tips outlined above.