Christmas is fast approaching, and with it the challenge of finding great gifts. As usual, I've done some research, and found great books on money.
Money: The True Story of a Made-Up Thing by Jacob Goldstein is a fascinating read. The author guides us through the history of money from the time of Aristotle, through the barter system, to the invention of various sorts of paper money.
Did you know there was a time in America when many banks printed their own currency? Many put out Christmas bank notes adorned with pictures of Santa Claus!
Naturally, money's history is interspersed with tales of financial crises, and how they were handled.
The book also covers the creation and abolition of the gold standard, and finishes with a detailed description of the start of cryptocurrencies and where they may be heading. It's the perfect present for anybody interested in the financial system.
Psychology of Money, byMorgan Housel,is described as "timeless lessons on wealth, greed, and happiness." Each of its 19 chapters contain a major lesson. I particularly like the way Housel stresses the importance of compounding on your long-term financial plan.
He writes: "compounding works best when you can give a plan years or decades to grow. This is true for not only savings but careers and relationships. Endurance is key. And when you consider our tendency to change who we are over time, balance at every point in your life becomes a strategy to avoid future regret and encourage endurance."
I really loved this book, and enjoyed the fact that I got a double benefit: it reinforced many of the things I've learnt over my own life, and opened my eyes to other issues I have not considered. Highly recommended for just about anyone.
Retirement Made Simple, my latest book, is the perfect gift for anyone aged 45 and over. Retirement is often touted as a worry-free time - but right now it's not easy. People are living longer, government budgets are stretched, financial markets are volatile, and interest rates are at historic lows. On top of that, there are the constant challenges of understanding investor psychology - including your own - and avoiding scams.
A major facet of a fulfilling retirement is preparation: the sooner you start to plan, the better your retirement is likely to be. Yet so many people facing retirement don't know what they don't know. Retirement Made Simple will help you avoid making costly mistakes at this time in your life, making it a gift that can pay great dividends.
As soon as you have any assets, including children, getting your estate in order becomes one of the most important things you can do. However, the sad reality is it's also one of the jobs most people are always "going to do", but never quite start.
Often people think they can't find the time to do it - but in reality, they don't want to think of their own mortality, don't know where to start, find the process so confusing and full of legal jargon they give up, or make the effort once, but don't update things as their situation changes.
This is why Legacyby Melisa Sloan, Principal at Madison Sloan Lawyers in Melbourne, would make such a great gift.
It's an easy read - only 180 pages - but sets out clearly and simply the steps you need to take to get your affairs in order.
Sloan writes: "Why am I so passionate about you creating your legacy and Estate Plan? I have seen the alternative. I have seen the pain, stress, emotional toll, and once close families destroyed when someone dies without a Will."
This book will not take the place of specific advice from a qualified professional, but it will give you a good overview of how the whole estate planning process works, and help you understand the importance of making sure your affairs are in place sooner rather than later.
So why not do friends and family a favour this Christmas, and give gifts that provide hours of interest, plus many benefits in the years ahead for those who not only read, but also act.
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Noel answers your money questions
Can you add an addendum to an existing will? For example, if I say I want to add something to my will that states I do not want my family home sold at any cost, do I just add an addendum?
The document you are referring to is called a codicil, which can be used to amend or change a will. However, this is not something I would rush into because from what you have written you would appear to be making major changes to your estate, which could have serious ramifications.
As the codicil is a separate document there is always a possibility that it may become separated from the will which means it could be overlooked or forgotten when death occurs. And, if a considerable time has passed since the original will was signed, questions could arise as to the underlying reasons for the change, especially in relation to the will maker's mental capacity and intentions.
This could be particularly relevant if the codicil envisaged changes which were quite different to what was in the will. You should be talking to a good estate lawyer, and preparing a new will to take into account your wishes.
I have been trying to find out whether my husband and I are eligible for the Commonwealth Seniors Health Card (CSHC). I have spoken to at least three people from Centrelink and I'm still unsure whether I have got all the facts I need, in particular how superannuation funds in accumulation are treated.
I have been told by the last person I spoke to at Centrelink that funds we have in accumulation in our SMSF are not subject to deeming, but if these were in an industry fund they would be subject to deeming. I queried this because it didn't make any sense but was told that the legislation treated them differently. Surely this cannot be right. Can you confirm whether this advice is correct?
The CSHC is not asset tested, it is income tested. The income cut off points are $57,761 for a single and $92,416 for a couple. The income is calculated using your taxable income as per your tax return, plus deemed amount of your superannuation that produces an income stream. Superannuation funds in accumulation mode are not tested at all, because they are not producing a taxable income, and you are not drawing an income from them. This is applicable irrespective of which superannuation fund they were in. There is a deeming calculator on my website www.noelwhittaker.com.au
I find the rules regarding pension eligibility very confusing. Is there any difference between money held in investments, and money held in savings accounts. It would seem unfair if money that was readily accessible was treated differently to money that was not. We have no investments but have our own home.
For the asset test the value of all your financial assets is used. Financial assets, such as bank accounts, investments and superannuation are all subject to the deeming rates.
A couple could have total assessable assets $405,000, and still be eligible for a full pension under the assets test. If $375,000 of that was in a bank account the deeming value would be $256 a fortnight, which is under the cut-off $320 a fortnight. Therefore they would be eligible for the full pension.
- Noel Whittaker is the author of Retirement Made Simple and numerous other books on personal finance. Send your money questions to firstname.lastname@example.org.
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