1. You think your days as an investor are over once you have retired.

This is a very common mistake. Many people think that once they have retired they will need to access all their money immediately and so will no longer have an opportunity to invest. In reality, most people will continue to have a large portion of their money invested for at least 15 years after they retire.

Therefore, it is essential that these funds are properly invested so that you can maximise the expected return from your assets.

2. Your assets are not invested with an appropriate mix of different investments.

Many retirees think that investing their money into Term Deposits with the bank is safe, secure and the right thing to do. This can, in fact, end up costing them thousands of dollars throughout their retirement as these investments tend to have lower rates of return than the average return from a properly diversified portfolio.

By having an appropriate mix of different investments you may be many, many thousands of dollars better off.

3. You are paying too much tax throughout your retirement.

When some people retire they withdraw all their money from their superannuation and invest it in Term Deposits and other similar investments. Not only may they pay lump sum tax on the withdrawal, but they will also pay tax every year on the interest earned on their investments.

Leaving money within the superannuation environment can save thousands of dollars in tax - money that will stay in your pocket rather than the tax man's.

4. You miss out on Centrelink benefits that you could be eligible for.

Many people don't realise that they may be missing out on Centrelink Age Pension benefits. By appropriately structuring your finances you may be eligible for part or full Age Pension - potentially up to $12,069* per year (single person) or $20,155* per year (couple combined)!

By being eligible for at least $1 per fortnight of Age Pension you would be entitled to a range of concessions that could save you several hundred dollars per year on pharmaceuticals, winter energy bills, car registration, etc.

* From Centrelink website, as at 20 September 2004.

5. You don't seek professional advice in relation to your finances.

This is perhaps the biggest and most costly mistake of all. There are many areas that a competent financial adviser can assist in when it comes to retirement planning, and a good financial adviser should be able to clearly and in a measurable way demonstrate their value to you.

You wouldn't perform your own open heart surgery, yet many people think they can properly and thoroughly plan and manage their own finances in the most effective manner.

If you would like further information about how to avoid making these mistakes please contact Alkimia Financial for a no obligation initial appointment.

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1. They pay too much accommodation bond/charge.

2. They pay too much Income Tested Daily Care Fee.

3. They don't maximise the Age Pension they are entitled to.

Many people unwittingly disadvantage themselves by not organising their finances prior to making an enquiry at an accommodation facility. They make a general enquiry with a provider and before they know it they are being told how much their accommodation bond will be if they decide to move in.

What most people don't realise is that the amount of accommodation bond payable is partly determined by the resident's assessable assets at the time of making the initial enquiry. Therefore, with careful planning before making an enquiry you can reduce the amount of bond payable (which is after all simply an interest free loan to the accommodation provider) and also potentially increase the amount of Centrelink Age Pension/DVA Service Pension you receive.

The other benefit, of course, is that you and your family can make these important decisions without the urgency, anxiety and uncertainty that often surrounds a move into aged care accommodation.

So before you make an enquiry with an Aged Care Accommodation provider talk to a financial adviser who has expertise in this area. Contact Alkimia Financial.

Even if you don't think you'll need Aged Care Accommodation for some time yet, it pays to plan early and be prepared!

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1. You have not made adequate provision for your dependants in the event of your premature death.

Most people are not aware of how much money their spouse and children would require to live on if either income earner(s) were to pass away prematurely.

Whilst the amount of money required might seem like a lot, there is a very simple and cost-effective solution for most people.

2. The provision you have made is not structured in the most tax-effective manner.

Life insurance can be structured in a number of ways. Some of these ways are more tax-efficient than others.

By correctly structuring your life insurance, your dependants can potentially save hundreds of thousands of dollars in tax.

3. The provision you have made requires a regular cash flow out of your own pocket.

Life insurance can often be funded from an existing superannuation account. This way your day to day cash flow need not be impacted.

There are some pitfalls to be aware of, however, so it's important that you get this right.

4. You have not made adequate provision for yourself and your dependants in the event that you are unable to work for an extended period of time.

Many people think that WorkCover and the Transport Accident Commission will provide an income for them if they are injured at work or in a motor vehicle accident. This is a very dangerous presumption to make as these indemnity type policies are quite limited in what they pay out for.

Other people think that the insurance they have via their superannuation fund will provide an ongoing income for them. Some superannuation funds do provide this, however it is only for two years at the most (the maximum allowed under government legislation), which raises the question - what do you live on after those two years?

Many people think that extended illness, major injury or premature death won't happen to them and so they live their lives ignoring the potential impact on the people they care most about.

Illness, injury and death can and do have a major impact on more people than we care to think about. For a relatively small investment you can have peace of mind knowing that should you or your family be impacted by these events, you will at least be able to provide for their day to day needs - food, household bills, school fees.

For further information about how to adequately and properly protect the people who rely on you for their financial wellbeing please contact Alkimia Financial.

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1. You are paying more interest than you need to be.

Many people aren't aware of this, and banks don't like to advertise this fact, but it is possible to obtain discounted interest rates if you know who to ask. We have several key contacts at a number of lending institutions who offer discounted rates to our clients.

2. Your loan structure is wrong.

Rather than have maybe a couple of thousand dollars in a bank account earning 1% pa (if you're lucky!!), it is possible to have this money held against your loan so that you are only charged interest on the net amount owing. This money can either be in an offset type account, or deposited into a line of credit type loan structure - either way the benefit to you is the same.

3. You won't be able to make repayments in the event you cannot work.

For most people, being able to make their loan repayments is contingent on them being able to work and earn their wage. What would happen if this was not possible? The bank might give you a couple of months grace, but sooner or later (and typically it's sooner!) they want you to keep repaying the loan.

A properly prepared personal insurance portfolio is essential to ensuring that, in the event of injury or illness to the wage earner, you will at least be able to continue making your loan repayments.

Even if you have mortgage insurance a personal insurance portfolio is still necessary. The mortgage insurance only covers the bank in the event that they foreclose on your loan, sell your property and are left with a shortfall. IT DOES NOT PROTECT YOU…ONLY THE BANK!!

4. You don't realise the difference between efficient and inefficient debt.

A lot of people have both personal debt and investment debt. The interest payable on investment debt is tax deductible, whereas the interest payable on personal debt is not.

By directing all available income into paying off the personal debt first, and just meeting your interest obligations on the investment debt you minimise the interest on your inefficient debt.

These mistakes could end up costing you many thousands of dollars over the term of your loan. If you haven't reviewed your loan in the past 12 months, or if you made direct contact with the lending institution when initially setting up your loan, we may be able to assist.

For further information about avoiding or rectifying these mistakes or for a no obligation appraisal of your existing loan facility contact Alkimia Financial.

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1. You are waiting for the "right" time to invest into the market.

Many people with a Self-Managed Super Fund (SMSF) have a large portion of their investment in a cash fund, while they wait for the right time to invest into the markets. Often after a couple of years they are still waiting, while the market has produced returns maybe 2 or 3 times the cash rates.

Timing the markets is inherently dangerous and most often unsuccessful.

2. Your assets are not invested in an appropriate mix of investments.

Diversification is one of the key factors in reducing investment risk, yet many SMSFs hold only a very small number of investments, and even these are not always appropriate for their stated risk tolerance.

3. You don't maximise the tax benefit capabilities of an SMSF

A SMSF can be a very effective vehicle for legally reducing tax obligations, yet a lot of investors don't set their SMSFs up in a manner that will enable them to maximise the tax benefits available.

4. You inadvertently breach your legal obligations as Trustee.

This is one of the most serious mistakes that can be made - whilst the other mistakes mentioned here may impact the amount of money available for your retirement, breaching your legal obligations as Trustee of your SMSF can potentially result in criminal charges against you. Therefore it is essential that you are aware of your obligations and are attending to them on a regular basis.

SMSFs can be a very effective way of structuring your superannuation funds, however most miss out on the advantages because they aren't managed properly. By working with your accountant and a financial adviser you are much more likely to maximise the benefits available via an SMSF and avoid the common mistakes made.

For further information about avoiding or rectifying these mistakes contact Alkimia Financial.

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