John Cameron's personal blog

One of the major messages that superfunds direct to young people is not as straight forward as it seems – and may even hurt them financially.

You see, superannuation funds often encourage young people to put extra money into superannuation, so that they can reap the long term benefits of compounding.  The logic is simple – put more money in now and there will be more there to grow and compound over the long term – possibly lots more.

The result of the funds’ projections is pure mathematics – and maths does not lie. 

Income Protection insurance is about to make a change – for the worse.

The gold standard of income protection, has long been “agreed value” policies, and these have been the products that most advisers have recommended to their clients.

With agreed value contracts, the amount that you will receive when you go “on claim”, is agreed up front, at the time of taking out the policy, and is based on your income at the time of taking the policy out. This provides a high level of certainty of your cover. As Always, there is a catch. If the insurance company needs to (e.g. if it is losing money), then it can increase your premium (well, not just your premium but the premiums of everybody who has that sort of cover).

Whenever you invest, there is a trade-off between risk and return, and this is undoubtedly true.

But, when it comes to measuring risk, things are not always what they seem.

The problem arises with the way in which analysts measure this risk.

One of my favourite pastimes each Saturday is reading the weekly column by Nikki Gemmell, in The Weekend Australian magazine. She writes about life and the lives of herself, her family and people she has known, and gently draws valuable lessons from them.

Last Saturday, she wrote about 2 people who had been high profile in their day, earning big money. However, their later years were nothing like their early years. The money ran out, their health deteriorated and they spent their last days in relative poverty.

That’s a story that we are likely to hear more of, as the population ages, but it is a problem that Financial Planners are well positioned to help you avoid.

Most of us had retirement dreams, and couldn’t wait to finish work. So once retired, why haven’t we started ticking items off the bucket list? There’s no time like now for living your dreams.

When Tony and Chris retired they had grand plans involving a campervan, Kakadu and a rescue-dog. Their great Australian road-trip was happening the very next year, after they, “just got few things out of the way”.

Things like their daughter’s November wedding, then the kitchen reno in January. Kakadu wasn’t going anywhere; it would wait until July – after Chris’s knee reconstruction.