Do I need an accountant?

Accountant - tax return time
 
Accountants sort out your taxes and finances. Deciding if it’s time to pay and bring in an expert or do it yourself can be confusing, particularly if you have investments.

We spoke to Anna Kyriacou, CEO of AKA Group Accountants Advisors Mentors about when you should consider getting an accountant and stepping away from a DIY tax approach.

What does an accountant do for an individual?

There’s a misconception that accountants are just number crunchers and are only required if you’re in business. This couldn’t be further from the truth.

Most accountants that offer tax solutions work in small accounting firms based in the suburbs and many today do not even have physical offices as they are cloud based and tend to have clients they’ve looked after for many years.

A good accountant will not only assist with getting the most from an end of year tax refund, but will provide guidance on your future tax and structuring needs which will make a huge impact to your current and future wellbeing.
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How much do you need for a rainy day fund

Umbrella for a rainy day
 
Sometimes the weather folk at the Bureau of Meteorology get it wrong and it rains when you least expect it. You’re caught outside in your thongs without an umbrella and frankly, it’s not fun.

What’s worse than being in the rain sans umbrella? Needing money in an emergency and not having any set aside to cover the cost of an urgent or unexpected expense.

That’s why having some money set aside for unexpected events is advice we give to all clients. This is money that should be readily available in a bank savings account rather than invested.
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Finding freedom from the Bank of Mum and Dad

Parent and child - Future Affordability Report
 
Financial freedom is the most important factor in our ability to achieve our lifestyle goals and lead our life the way we should reasonably expect to. Yet, this is no longer guaranteed for future generations.

According to the 2016 HILDA Report, future generations of young people in Australia are, for the first time, set to be worse off than their parents.

To help understand parents’ views on their children’s financial future, Stockspot has partnered with Galaxy Research to produce the Future Affordability Report. We looked into parents’ concerns about young people’s finances, the cost of housing and living, and what do they think the fallout will be in later life for their children and themselves.
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Jargon busting the finance dictionary

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You’re watching the tele as you get ready for work. The 7.20AM finance news comes on and you dash to brush your teeth.

You know for the next 5 minutes the finance expert is going to stand in front of a ridiculous number of computer monitors and ‘blah blah blah’ their way through the ‘market update’ and use finance jargon you don’t understand. It’s enough to make you weep into your first coffee of the day.

It often seems like the finance industry is created on a house of jargon designed to keep people baffled to the point that they just give up and collectively say ‘take my money’.

Here’s a list of some financial jargon terms you’ll probably come across at some point and what they mean in plain English.
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Why you shouldn’t feel bad about renting

Renting a property
 
The property market is rarely out of the news in Australia, with regular predictions of house prices collapsing being followed by weekends of record auctions and prices.

Property has certainly had a good run over the past few years. According to CoreLogic RP Data, the average house in Sydney has increased in value from $650,000 in 2012 to over $1,066,000 in 2017. That’s a 64% rise in 5 years!

Average house prices in major Australian cities
Sources: CoreLogic RP Data; RBA

As property has become less affordable, more people are looking at a popular alternative which is to rent and invest their savings in a portfolio of shares instead.

Over the last 30 years, both property and shares in Australia have returned between 11.0% and 11.5% per year so both are proven ways to grow your long term wealth.

But which is better today?
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Diversifying your investments – how to put eggs in different baskets

Eggs in one basket
 
You know the expression ‘don’t put all your eggs in one basket’? This should be the first lesson taught at investment school (if there were such a thing).

Placing your eggs in a variety of baskets or spreading your money across many different investments is diversification 101. If there are 2 lessons everyone should be required to learn before they invest they are:

1.  How compounding works
2. What is diversification and how does it work.

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Procrastination is your financial enemy

Procrastination is your financial enemy
 
Procrastination is one of those human foibles we all do at some point. It’s something we all knowingly shake our heads and chuckle at because it’s not quite the same as being lazy or incompetent.

Weirdly it has almost become socially acceptable. When the tools of our productivity (our laptop and smartphone) also provide our entertainment, procrastination is as easy and tempting.

Even the most motivated people on Earth can tell you about ‘that one time’ they procrastinated. For more normal people we do it regularly over major and minor things and it’s hugely frustrating. When we’re honest with ourselves, we know we could have done better by starting earlier.
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Pay your future self – Best way to save money in your 20s & 30s

Saving money in your 20s and 30s
 
Saving money and getting started investing in your 20s and 30s is something everyone knows you should do. However life gets in the way and saving can take a back seat to fun and entertainment when you’re young.

There’s nothing wrong with clocking up experiences, smashed avo brunches and great dinners out, but living pay-cheque to pay-cheque isn’t sustainable as you get older.

As a (reformed) lover of spending my dosh I’m here to strongly encourage you to start saving now. Today! The reason why is simple, saving money earlier in life has an EXPONENTIAL impact on your long term wealth. Start 10 years later and the maths could make it impossible to get where you want to be.
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Are your savings going backwards?

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Have you ever thought you were doing something good for yourself only to find out it was having the reverse effect? Like having a caffeine-hit only to end up in an even bigger slump, or dry-cleaning that expensive jacket and having it returned ruined. Unfortunately the same can be said for many Australians who keep their savings in a high-interest bank account.

If the prices of the things you want are rising faster than the interest you’re receiving, you’re actually going backwards. This situation is now common for many Australians because interest rates have fallen to a historic low and are now below the rate of inflation.

This means that each year you’ll be able to buy less stuff with the same money than you could the year before.
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We need to talk about finance

We need to talk about finance
 
I love emojis. Admittedly I was a latecomer to the emoji party I (to my shame) thought I was above them. I was then convinced by a clever friend that they’re like modern hieroglyphics and a valid form of communication. I’m not going to argue with that.

What do emojis have to do with finance? Aside from my personal desire to see the finance news reported in a variety of smiley, joyous or sad faces, not a great deal… but this blog is about why we need to talk about finance more.
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How can I save and invest for my kids?

How can I save and invest for my kids?
 
Let’s be honest – saving and investing isn’t something a lot of kids think about. Life is mostly about friends, school, sports, parties, fancying someone, studying, learning to drive and trying to work out what to do with the rest of your life.

When it comes to talking about finances, the vast majority of people want to close their eyes, put their hands on their ears and sing ‘lalalala’ really loudly. Probably because the government, media, parents and well intentioned bloggers do a royal job of making it DULL. And scary. And way more difficult than it needs to be.
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Should you rentvest instead of buying a home?

Rentvest or buying a home?
 
Buy or rent? Rent to own? Or avoid investing in property at all? If you’re planning to be a first homeowner it’s likely you’ve heard the term ‘rentvest’ as an alternative to buying a home.

Rentvest is the latest portmanteau (also known as a word blend, ie ‘hangry’ or ‘brangelina’) given to a recent millennial buying trend.

Rent-vesting lets you buy an investment property without living in it

Millennials living in metropolitan Australian cities can no longer afford to buy a home in their chosen suburb. Many now opt to buy an investment property in a more affordable location which they rent out while also renting in their chosen location.

It’s a foot onto the property ladder and because the deposit and mortgage payments are lower, the millennials penchant for a flexible lifestyle still allows them to travel, eat out and the freedom to move around.
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How to quit your job and travel

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It’s okay to quit your job and travel. Dropping out of ‘the real’ world for a while is good for your health. It’s fine to go and find yourself, travel the world, become a digital nomad or bake cakes every day for 3 months. If your career is holding you back from achieving a dream or a life goal you probably need to quit your job.

I quit my job to travel in November 2015, I was in my early 30s and cruising up the career ladder. I had a great London job at an awesome company, lots of perks and brilliant minds. Not the most ideal time to take time out.

But sometimes life happens and you realise the amazing career is less important than taking time to clear your head, hike up big mountains or start a business selling organic beef burgers at farmer’s markets.
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Property or shares? What is the best investment?

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What is the best investment? Property and shares are the 2 most common ways of building wealth in Australia outside of superannuation.

The topic of whether to invest in property, shares (or both) often leads to heated debate. The 67% of Australians who own the house they live in are usually passionate about they believe is their best investment decision.

Shares and real estate have both generated reliable income and capital returns for Australians over the long-term.

property-vs-shares-aus-wealth
Source: Corelogic, Housing Market and Economic Update March 2016
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17 money saving tips

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Often the best money saving tips aren’t the ones you read in personal finance columns, but the insights discovered by real people. That’s why we recently ran a competition asking Stockspot clients to share their top tips.

We were inundated with entries which drew inspiration from many aspects of life, from budgeting & goal setting to negotiation, lifestyle & shopping.
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How to save an extra $2,016 in 2016

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As we near the end of another year, many of us, for better or worse, will attempt to make New Year’s resolutions. It seems the food coma between Christmas and New Year’s provides the motivation for us to sit back and reflect on how we could have done things better, saved more, achieved more, made more healthy choices, kicked a bad habit – the list is endless.

Before you sit down and ponder what you’ll do differently in 2016, here are 4 simple ways you could increase your general wealth and save more money…
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Top purchases Aussies regret

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According to market research by IBISWorld, the Australian Online Shopping Industry is growing at a much faster rate than the bricks-and-mortar retailing, with e-Commerce sales in Australia topping $16 billon in the past year and now employing over 62,000 Australians.

Each online consumer in Australia spends more than $2,000 per year, with the most popular online purchase categories being travel & accommodation, music & DVDs and clothing & jewellery.

purchases-regret-online-sales
Source: ACMA

But with wasteful consumption in Australia amounting to over $10.5 billion annually spent on goods and services that are never or hardly ever used, it seems as though the ability to buy online has just made it that much easier for us to make impulsive and regrettable purchases.
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Money tips for your next holiday

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The cost of travelling overseas can quickly add up so it pays to know some tips and tricks so you can avoid being ripped off on exchange rates and unnecessary fees as well as get a better deal on your flights.

As someone who constantly has the travel bug, I’m always on the lookout for ways to get more out of my money so that I can afford to squeeze in more trips each year. Here are things that I’ve discovered from my travels over the years.
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Fun ways to use your tax refund

budget-app-banner
 
The end of the financial year means that many Australians will find themselves a few thousand dollars richer thanks to a tax refund. According to the ATO, 77% of taxpayers received a tax return in the 2013/14 financial year with an average refund amount of $3,630.

A tax refund can provide a timely opportunity to get your finances in order, a chance to splurge on something you’ve wanted or discover something new. The trick is in finding the right balance between these competing urges so you don’t feel regret once the money is used-up.
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Money apps: best budgeting apps in Australia

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Managing your spending is getting easier with the growing number of free money apps now available. The more difficult task is trying to figure out which of these money apps best matches what you need.

Having recently returned from an overseas trip with twice the amount of luggage and a slightly dented credit card, I decided it was a good time to start tracking my spending and be more disciplined with my budget. After some investigation, I decided to road test some of the more highly-rated money apps currently available and share my findings.
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How fees kill your savings

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We all know that fees eat into our savings and investments but how much of an impact do they really have? When we did the calculations, the difference in final amounts after fees ended up being hugely different.

Paying a few per cent per year may not sound like much, but it could easily end up making you poorer by $100,000.

Let’s say you invest $50,000 in a diversified portfolio and top-up $5,000 each year after that. If you were to invest in a traditional managed fund which costs 3% per year in total fees, you would end up with a balance of $292,995. On the other hand, if you invested in a low-cost option with 1% in total fees, you would end with a balance of $393,462 after 20 years*.

That’s a $100,000 difference from paying just 2% less in fees over 20 years.

fees-poorer-chart
* Assuming an investment return of 8% per year
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