According to Chinese Five Element Astrology Calendar, 2012 is the Year of the Water Dragon.

The colour of Water in the Five Elements system is related to Black. Therefore we can say 2012 is a Black Dragon, Water Dragon or Black Water Dragon year.

Chinese Astrology is a Balance Theory of Five Elements. Each animal can be converted into Five Elements. Dragon contains Earth, Water and Wood. It’s a source of Water and it is also called the Water Dam in Chinese astrology. Since Water of 2012 comes with Dragon. It implied Water from the sky makes a dam overflow. Therefore 2012 is a strong Water year.

Dragon is a legendary creature and is the symbol of the emperor in China. Since the Dragon is coated with mysterious colour, Chinese consider that the dragon is unpredictable, untouchable and people cannot see its head and tail at the same time. Therefore, we might see something unexpected happening in 2012. Also a person with too many dragons in the Chinese astrology birth chart is said to become smarter and unpredictable in the coming year.

Before predicting your luck in 2012, you have to know what Type of Element you are and what your Lucky Element is from your astrology birth chart. Your luck element is the major factor to determine people’s fortune. 2012 is the Year of the Black Water Dragon, which contains Earth, Water and Wood. If your Lucky Element is Earth, Water or Wood, then 2012 is said to bring you some degree of luck. Since 2012 is Water Dragon, people whose lucky element is Water will benefit more in 2012. Fire is the opposite element of Water. People whose lucky element is Fire will have more impact in 2012.

Whilst the reference to the astrology is a bit of fun, we want to use it as a means of introducing a number of underlying messages that might help your relationship with us and overall business and our role in that.

As such this February we are focusing on a number of issues relating to mitigating risk, business and personal planning as well as some tidbits we have picked up over the break.

We hope you enjoy the upcoming posts and that 2012 is a great and happy year for you.

We enjoy working with all of our clients and hope you take the time to read the newsletter. If you need our assistance in any of the areas discussed within the newsletter, please contact us so we can be of support to you.

The head of the household, a self employed 38 year old carpenter, suffered a stroke. His wife and two children, under 5 years old, spent the last few weeks in a hotel room in Brisbane while their bread winner was in hospital recovering.

There wasn’t any income, only expenses and the mortgage payments back home, still had to be paid.

They received a lot of support in the small mining town where they lived. Getting home they found the lawn had been mowed, the dog washed, and the fridge full of food.

Their friends gave them some breathing space to settle back before they all called in.

The good news is that a general insurance broker had referred this young fellow to Belmont Financial Solutions back in 2003, for Income Protection insurance.

We provided him with Income Protection and Trauma insurance. This is the GOOD NEWS. This wouldn’t have happened without the referral from the General Insurer broker.

The following is his words:

“Hello John

I would first of all like to thank you in writing for helping me through this difficult time of my life. As you seemed to know, these situations arise to those who expect things to happen, and in my case, those who don’t expect something to happen. With your expert advice, I have been blessed by the right insurance for my needs, to help me recover from this event. In the past i couldn’t see how I could afford to pay the premiums each month, so I thought of cancelling one of my policies. It was your professionalism and expertise that convinced me to keep up with the policy at an affordable level, and this was one of the greatest pieces of advice I have ever received.

Without the insurance, the past events would have gone for scary to terrifying. When you have a health emergency, the only thing that could make you feel any worse would be to be in a financial emergency as well.

I will be ever grateful to you for your help in this assistance in what has been such a difficult time to get through.

Please use my story for any future clients who don’t have insurance, or are deciding on giving up theirs for financial reasons.”

Data from the Australian Bureau of Statistics shows consumer caution continues to sit at an all-time high, despite the fact that rates have not increased since November last year.

Annual retail sales have endured sluggish growth of just 2 to 3 per cent. Pre-GFC, this growth historically hovered around the 6 per cent mark. Similarly, the household savings ratio has increased to 11.5 per cent from zero just six years ago.

So why have consumers become so cautious?

AMP’s chief economist Shane Oliver says there are several factors at play behind the new found caution of consumers, mainly an attitudinal change towards debt and savings.

“From the mid-1980s until about five years ago, consumer spending was supercharged by a combination of rising household debt levels and a fall in the household savings rate from around 15 per cent to zero,” he says.

“Debt was in, saving was out. This was driven by a combination of easy credit post financial deregulation, falling interest rates making debt more affordable, younger generations becoming more comfortable with debt as memories of serious economic problems faded, and rapidly rising wealth levels making active savings seemingly less necessary.”

But this trend has since reversed. The GFC provided consumers with a long overdue reminder that debt is indeed risky. In addition,

it warned borrowers that their jobs aren’t as secure as they first thought.

As a result, savings are now back en vogue and the pace of increase in household debt slowing to a crawl.

In addition, the debt build-up of the past has left households very vulnerable to higher interest rates. This is particularly so for those who entered the housing market on the back of the first home owners’ boost and generational lows in mortgage rates in late 2008 and 2009.

So talk and the reality of higher interest rates have only added to a more cautious attitude on the part of consumers.

Moreover, the portion of the household budget allocated to necessities such as power and water bills, fuel, rent, insurance and health is rising rapidly.

Genworth Financial’s mortgage trends report released earlier this year found the rising cost of living was deterring Australians from jumping onto the property ladder. And this is now evidenced in falling auction clearance rates.

Data from the Real Estate Institute of Australia shows auction clearance rates have slumped to 60 per cent from 75 per cent this time last year.

It seems Australians feel happier and safer saving their money rather than investing it in property. And the RBA’s decision to leave the cash rate on hold at 4.75 per cent in June is unlikely to change this trend.

Nobody likes to think about falling ill, suffering a serious accident, or worse still, dying, but the truth is sometimes serious illnesses or misfortunes may happen.

If you have substantial obligations, such as a loan for a family home, and have a family to think of, what would you and your family do should you no longer be able to earn an income?

When it comes to taking out a home loan you may wish to consider whether it is appropriate to take out mortgage protection insurance, illness, accident, or total or permanent disability insurance, to cover you if anything goes wrong.

Covers, types and levels will vary from one provider to another but usually you will be able to take out cover for the total value of your home loan. There could be a cap or limit or different circumstances when cover could apply.

Types of illness cover vary but can include Life Cover and Terminal Illness which provides lump sum benefits in the event of loss of life or terminal illness. Some types of insurance may also cover you in the case of accident and trauma. It may also cover heart attack, cancer, stroke and coronary artery bypass surgery.

Cover can vary according to your individual needs and budget and you may be able to pay for your insurance in full or via instalments.

If you’re a household with limited assets and you depend largely on one income, you may wish to consider your insurance needs. Call us today and we can put you in touch with qualified insurance advisers who will look after your needs.

There are a number of key reasons why borrowers should consider refinancing. Importantly, while your home loan might have been right for you when you purchased your property, there’s a good chance there might be a more appropriate product on the market that meets your changing needs.

Perhaps you’ve recently had a child and moved to one income, for example; maybe you’ve changed jobs and have greater earning capacity – all of these factors can influence the relevance of your mortgage.

As well as ensuring that your mortgage is right for your current situation, refinancing has a range of other usages.

You can refinance your mortgage to finance a renovation, free up funds to cover the deposit on an investment property, consolidate high interest rate debts, or even help your children raise a deposit for their first home.

The good news is that if you’d like to take advantage of refinancing your mortgage, it’s easy to arrange. However there a number of key points you need to consider.

Importantly, there may be fees and charges associated with refinancing – so before you make any decision to move your

mortgage do your sums to ensure you will be better off in the short and long term.

If you are unsure whether refinancing is right for you, give us a call. We can determine whether refinancing is the best option as well as assist you with identifying the products most suitable plus coordinate the application process.

The cost of refinancing

While it certainly has its advantages, refinancing also has its pitfalls – including potential fees and charges.

To avoid being caught off guard and out of pocket, here are a few fees you may possibly incur:

• Applications, establishment and handling fees when applying for your new loan
• Early settlement fees on your existing loan
• Valuation fees
• Mortgage insurance
• Discharge fees on your existing mortgage and registration fees on your new one
• Stamp duty

In those areas, there’s a widening gap between demand for property compared to the number of properties available – there is greater latitude for buyers to negotiate on price. Combined, for many home owners these dynamics may influence your decision to not sell now.

If you’re looking for a new home or more space, rather than selling why not look at improving your current property – and, potentially, adding to its value to boot.

Before you seek to renovate it is crucial to have a game plan to ensure the most successful outcome. Here’s five sure fire ways to capitalise on a renovation.

Research

Seek out a professional, such as a licensed builder, structural engineer or a certified plumber, for advice to determine whether there is enough scope in your property to benefit from renovation.

Understand what adds value

Different features hold different value on different properties, so focus on identifying what additions are likely to generate the most interest from prospective buyers for your specific property.

Plan

Even though the sums may add up and a profit (should you choose to sell) can be turned, all your hard work can be undone if you don’t plan which areas to direct your funds to.

Make sure you set a budget and stick to it so you don’t over capitalise the property. It’s all too easy to let prices spiral out of control… successful renovators know their limits and know when to stop.

Finance

How you choose to finance your renovation can have a lasting impact on how much profit you make, plus the scope of works you’re able to undertake.

There are a number of different scenarios to finance your renovation, such as refinancing or using equity currently in your home. Give us a call and we can determine the best plan of attack.

Seek advice from the experts

Get a building inspector to take one last look to see if your property is structurally sound and doesn’t have any major problems. Renovations can sometimes reveal significant problems you were unaware of; for this reason be conservative in your estimates and factor additional funds into your budget in preparation for unexpected expenses.

There are now sections of the property market in Australia that are flat. Opportunities emerge for a savvy buyer with the finances organised and proactive strategy in place.

Where there are fewer buyers in the market for the number of properties available for sale, and properties taking longer to sell, that is a ‘buyer’s market’. In those circumstances there is greater scope for driving vendors down on price.

Buyers that have sound negotiation skills can score themselves a better deal. Here are some key tactics for becoming a smooth property operator.

Know the market

Attend as many inspections and auctions as you can to find out what’s on the market, in the area you want to buy, and at what price properties are selling. Talk to agents and compare quoted prices with final prices. You might think a property is worth $500,000, but in that market it may be worth less. By knowing what properties are selling in your market for you’ll avoid over-paying.

Don’t be afraid to start low

Where there is a buyer’s market, properties will usually sell for less than their quoted price.
There is no golden rule, but start seeking a discount upwards to 10 per cent (or more) than the price the vendor has listed. You’ll be surprised what you might be able to drive the price down to.

Consider a professional valuation

This may help you determine whether you’re paying fair market value.

Don’t set your limit at an obvious, rounded number, because most people will do the same

Put your final price in at a more unusual number such as $358,500 rather than $360,000.

Get in quick

The early bird catches the worm… so move fast.

Know thy vendor

Find out as much as you can about the seller, including why they are selling, why they’ve set the price they have, how long the property has been listed for and how much interest/ how many offers they’ve had. The more you know the more power you’ll have in terms of negotiation.

Keep your cards close to your chest

Play it cool and don’t reveal too much to the agent. If you’re really keen you don’t want them to know it.

How low should you go?

When making your initial offer the trick is to make it low but not so low that your offer is dismissed. You want to offer enough to get the seller interested.

If you are making a low offer, afford a decent reason – perhaps there’s no garage or the house needs a paint job, for example.

To get a lower price, you may also need to offer the seller some kind of incentive. One of the best ways to become an attractive buyer is to offer a quick sale, or if required, an extended settlement time.

Remember: find out what’s important to the vendor, use it as leverage.

The facility ideally works for businesses such as:

• Labour hire
• Crash repairs
• Quarries
• Distribution
• Wholesale fashion
• Manufacturing
• Wholesale
• Business services
• Transport
• Printing

Secondly, the facility operates like a line of credit secured against your invoices. There are lots of different options in regards to lenders and products.

These products are particularly useful for Growing businesses – accelerating cash receipts from debtors assists businesses with ongoing (and growing) working capital commitments. Often businesses in a growth cycle do not have sufficient cash flow funding facilities to accommodate the growing commitments required to increase sales. Debtor Finance offers a growing facility in line with the sales growth of the business. More Debtors = More Cash.

As a means of Risk Protection – Many small / medium sized businesses who trade with a cash gap fund their working capital with bank facilities secured by personal assets. It is highly usual for businesses to use a bank overdraft that is secured by the owner’s home. Risk protection is an important strategy for personal wealth creation and peace of mind. Funding the business by leveraging the business assets allows personal assets to be kept separate and safe from the business commitments. Standard Debtor Finance facilities do not require real estate security.

To assist with your personal/family Financial Planning – Not only does removing the personal real estate from securing business finance facilities add risk protection (an important financial planning strategy) but alleviates the equity in the property to be utilised proactively for wealth creation strategies.

Debtor Finance helps create equity for these purposes.

If you are looking to grow your business by way of Acquisitions – Leveraging assets to raise funds for acquisition purposes is a very important component. Debtor Finance offers maximum leverage against assets. Up to 90% can be advanced against debtors with standard facilities which offers greater leveraging opportunities. More access to cash through Debtor Finance allows for a more efficient use of equity in acquisition transactions.

Should you be interested in obtaining any further information please contact our office to discuss.

Traditionally, year end tax planning for small business is based around two simple concepts— accelerating business deductions and deferring income. However Small Business Entities (SBE’s) have greater access to year end tax planning due to particular concessions that only apply to them. Tax payers that qualify as an SBE can pick and choose which of the concessions they wish to use each year (although some restrictions still remain in relation to the SBE depreciation rules). The basic requirement to be eligible is that the business taxpayers annual turnover (including that of some entities) is less than $2 million.

Deductions for SBE taxpayers

• Accelerating expenditure – all SBE taxpayers can choose to write off depreciable assets costing less than $1000 in the year of purchase. Also all assets costing more than $1000 or more with an effective life of less than 25 years can be depreciated at 15%(which is half the full rate of 30%) in their first year.
• Prepayment strategies including rent on business premises and equipment, lease payments, interest prepayments if possible. Business trips, training courses and cleaning

Deductions for non SBE taxpayers

• Prepayment of expenditure under $1000, salary and wages or expenditure incurred under the law
• Accelerating expenditure whereby the taxpayer brings forward the expenditure on a regular ongoing deductible basis. The following is a checklist of possible items:
  • Depreciating assets costing $100 or less can be written off in the year of purchase
  • Repairs
  • Consumables/spare parts
  • Client gifts
  • Advertising
  • Fringe benefits
  • Superannuation (that are actually made they cannot be accrued
• Accrued Expenditure (including the following:
  • Salary or wages and bonuses
  • Interest
  • Commercial Bills
  • Commissions
  • Fringe benefits Tax
  • Directors fees

Common work related claims made by individuals

Depreciable plant, etc. costing $300 or less

salary wage earners and rental property owners will generally be entitle to an immediate deduction if plant costing $300 or less is purchased before July 1 2011.

Some purchases you may consider include:

• Fax machines
• Beepers and pagers
• Books and journals
• Briefcases and luggage
• Calculators
• Software and Stationary
• Tools of trade

Clothing expenses

Purchase or pay for work related clothing expenses prior to the end of the income year, such as:

• Compulsory (or non compulsory and registered) uniforms, and occupation specific clothing
• Other expenses associated with such work related clothing such as dry cleaning, laundry and repair expenses

Self Education Expenses

Consider pre paying the following self education items before the end of the income year:

• Course fees (but not HECS HELP fees), student union fees and tutorial fees
• Bring forward the purchase of stationary items and text books

Other work related expenses

• Unions fees
• Subscriptions to trade, professional or business associations
• Magazine and newspaper subscriptions
• Seminars and conferences
• Income protection (excluding death and total permanent disability)