10 Steps To Save For Your Retirement

Many of the brightest and hardest-working marketing and advertising people in the country are obsessed with getting you to spend money and, if necessary, to go into debt to do so. Absolutely all the media that reach you every day are designed to get you to spend money. In order to save money in this environment, you will need determination to withstand the constant pressures to spend now.

Successful individuals have a strong personal vision of what they want and why they want it. That vision gives them the strength to stick to their strategies even when doing so is uncomfortable. It gives them the determination to persist when they are discouraged.

1. Increase your contributions to the maximum that you can manage.

2. Invest at the start of each year instead of taking a little bit out of each paycheck. By investing early, you
wíll put your money to work sooner for your benefit.

3. Put more of your investment fund in equities and less in money-market funds.

4. Research indicates that over long periods of time, small-company stocks outperform large-company stocks. In the equity part of your portfolio, shift some of your money into funds that invest in small companies. Do not put your entire equity portfolio in small-company stocks.

5. Rebalance your portfolio once a year. Your asset allocation plan calls for a certain percentage to be invested in each of several kinds of assets. Rebalancing restores your asset balance and allows for the possibility that last year ís losers may be this year ís gainers.

6. Without compromising proper asset allocation use the funds in your plan that have the lowest operating expenses. Choose funds with low turnover in their portfolios.

7. Do not borrow or make early withdrawals from your super unless that is the only way to respond to a life-threatening emergency.

8. Here ís the most important thing you can do to maximize your super. Keep your contributions automatically payroll deducted, and make them no matter what.

Remember, to be successful, first, imagine your early retirement; the Caribbean condo, the yacht, the new Lexus. Luxury and pleasure as far as your eyes can see. Create a strong vision, and then do not let go. The power of a clear, strong vision applies to more than just your retirement savings. Let your vision shape your life, instead of the other way around, and all of the time in the world can be yours. You won’t be spending your Golden Years working at the Golden Arches.

Are stricter rules slowing down home-loan approvals?

Banks’ more stringent credit checks seem to be affecting the way they approve new home loans, two of the biggest Australian lenders say.

In a Reuters report, NAB interim CEO Philip Chronican said the stricter lending rules are affecting loan approvals and are inhibiting loan growth.

“Most borrowers who previously would have qualified for a home loan continue to qualify for a home loan,” he said before the House of Representatives Economics Committee in Canberra.

However, he said potential borrowers now have to verify up to 13 claims about their spending.

“However, the documentary requirements that are now being asked of our frontline bankers are such that it slows the process down and as a result, we are lending less in home lending that we might otherwise be able to,” he said.

NAB chief financial officer Gary Lennon shared the same insight, adding that while home-loan approval rates remain unchanged, the number of applications numbers have significantly gone down “as a result of the difficulty getting all the information together.”

Speaking at the same hearing, ANZ chief executive Shayne Elliott said the banks are still willing to lend despite the greater focus on responsible lending.

“Let me assure you that ANZ is ready to lend, especially for housing and small businesses. After a period of perhaps being too cautious, ANZ is easing back towards a sensible equilibrium,” he said.

However, Elliot noted that the debate on responsible lending has led to banks becoming more conservative in approving home loans.

“As a result of that, Australians … some, not all, will find it a little bit harder to either get credit or get the amount of credit that they would have otherwise had in the past or would like, and I’m not suggesting for a minute that’s wrong, it’s just the reality,” he said.

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Do High Rental Yields Always Translate to High Returns?

When it comes to property investing, getting higher rental yields and achieving higher returns are the ultimate goals. However, new research shows that the former does not necessarily result in the latter.

According to a report by RiskWise Property Research, which analysed five-year trends across Australia’s housing market, higher rental yields do not automatically translate to high overall returns for investors. In fact, while properties in cheaper areas were able to give investors a steady stream of income in the short term, they resulted in lower overall returns in the medium to longer term. Closely looking at it, it does not seem surprising as home values in cheaper markets take more time to appreciate.

RiskWise chief executive Doron Peleg told The New Daily that low-rent houses would be able to realize a 63.1% increase in net equity assuming a 20% deposit. On the other hand, high-return homes would be able to clock only a 29.5% increase. This means that low-rent dwellings were able to improve their values by more than twice that of the high-rent ones.

“When you break down properties with high rental returns and low rental returns, you see purchasing the high rental returns is extremely affordable, whereas a low-rental-return dwelling costs roughly three times more, which generally means they are blue chip,” he said.

This also means, as Peleg puts it, that while many properties can “pretty much pay for themselves,” investors might be missing significant overall returns in the long run.