There's no arguing that right now, we are facing uncertain times.

Investors don't like it, and nor do investment markets.

However, we only have to look at recent history to see how investors can navigate a path to bring stability to their portfolio - and their wealth.

Learnings from the COVID pandemic that apply today

It's been six years since the start of the COVID pandemic. At the time, it was an incredibly destabilising event that saw sharemarkets tank, and sent consumers panic-buying.

Sound familiar?

Of course, the underlying cause of instability was very different from today.

Even so, we can take three valuable lessons from the pandemic, and apply these to invest for stability in today's uncertain times:

1. Don't ignore your investments

Back in 2020, we saw plenty of people who were so worried by the situation that they overlooked their investments.

That's a mistake. Yes, there is a lot to unpack right now, and it can all seem overwhelming.

But your money matters. Keep an eye on your investments, and be mindful of how they could be impacted by current events.

2. Investors tend to focus on homegrown assets

When global issues arise, investors tend to bring things closer to home. We saw this during the pandemic when investors typically focused on homegrown investments while shunning overseas asset markets.

The good news is that Australia is a well-regulated market with plenty of quality investment opportunities.

3. Investors look for flexibility

When surrounded by uncertainty, investors seek the reassurance of being able to access their money sooner. They don't want to be locked in for the long term or face rigid terms.

This trend drove GPS Investments to launch our Arkus Fund, which has been an instant hit with Aussie investors. By offering slightly lower returns, we are able to give investors the reassurance of increased access to their money - this resonated with Australians during the pandemic, and continues to do so today.

We're seeing a flight to safety

The feedback we are getting from investors right now is that they want to keep their money working hard.

At the same time they are concerned about investing in listed companies that may have a connection to the oil industry, or which could be impacted by conflict in the Middle East.

Overarching these concerns, no one knows if the current conflict could last for days, weeks, or even months.

The uncertainty is seeing Australians embrace investments that don't demand large chunks of capital. This has driven a fresh wave of interest in the Arkus Fund.

Investors can get started in Arkus as little as $1, and make regular transfers into the fund - so you're still actively investing. Distributions are paid monthly (extra income to help cover rising fuel bills), and Arkus still offers the freedom to make monthly withdrawals, so you're not locked in.

Better still, the Arkus Fund has that reassuring homegrown element.  The underlying asset is first registered mortgages over residential townhouse and apartment developments within a 2-hour drive of Brisbane - a growth corridor that KPMG says is outpacing the rest of Australia for population growth.

Time to invest in experience

One thing is for sure.

Now is the time to focus on investment providers with experience spanning past uncertainty.

With our 30-year track record, GPS Investments has been through it all - from the Asian financial crisis of the late 90s and the Dot Com bubble of 2000, through to the Global Financial Crisis of 2008-09, the COVID pandemic of 2020 and of course, today's Middle East crisis

Let me stress, none of us is enjoying the current instability. As human beings, the GPS team shares the same concerns as all Australians.

But as investment professionals we have been through this before, and we have the experience to know the path forward.

Take a fresh look at your investments, be mindful of being able to access your money if it's needed, and look for an investment provider that has stood the test of time.

Tick these boxes, and you can be confident of bringing stability to your portfolio even in these uncertain times.

Australians are good at growing their super. We're not so good at switching from the accumulation phase to spending our super in retirement.

That's largely because of FORO - the 'fear of running out' of money. And it's understandable. Today's retirees may need to stretch their super over 20, even 30, years of retirement.

Retirees often try to reduce longevity risk by saving their savings - living frugally, instead of relishing retirement.

This has fuelled regret risk. That's when retirees realise all too late that they've missed the boat to go harder on super savings at an early stage, when they were better placed physically to enjoy the lifestyle pursuits we dream of in retirement. Fortunately, there is a solution.

Lifetime annuities can hold the key

More than four in five retirees invest their super in an account-based pension. It's an appealing option with tax-free returns and the flexibility to make lump-sum withdrawals.

The downside is no guarantees about how long the money will last. That's where lifetime annuities can make a difference.

Lifetime annuities pay an income guaranteed for life 

When an annuity is purchased with super savings, investment returns and the income received are tax-free.

Even better, usually only 60% of a lifetime annuity is included in the age pension assets test.

The drawback is less flexible access to your money.

That's why an account-based pension combined with a lifetime annuity can provide the best of both worlds - income for life plus flexible access to super savings.

Lifetime annuities have evolved

Lifetime annuities, which are offered by some super funds as well as leading life insurance companies like Generation Life, have come a long way in recent years.

Every lifetime annuity now pays a death benefit - either passing on the income stream to a spouse or paying a lump sum to other beneficiaries.

More recently, we've seen the rise of investment-linked lifetime annuities. These still offer income for life but have the added opportunity of the investment growing over time depending on the chosen investment options.

More bang for your super buck

If you're in or near retirement, it's worth taking a fresh look at lifetime annuities.

Coupled with an account-based pension, annuities can give you the confidence to embrace a rewarding lifestyle without regrets about missing out on everything retirement has to offer.

Every day of our adult lives we are called on to make complex decisions. Many of them revolve around money.

The sheer complexity of all this decision-making can be exhausting.

So, when it comes to investing, there is a lot to be said for low-maintenance, hands-free investments that help us reach our financial goals.

Add in 'easy to understand', and it's fair to say these 'simple' investments hold plenty of appeal.

Yet as investors, we often have a bias towards complexity.

It's easy to assume that complicated structures must be superior to simple ones -and deliver higher returns.

But this is not always the case.

Complex investments can bring increased risk. And higher fees.

The more 'moving parts' an investment has, the more can go wrong - and, most importantly, the harder it is to understand what your true risk position really is.

On the other hand, the simpler an investment is, the easier it is to understand what can go right, and what can go wrong. And the lower the cost tends to be.

With this in mind, let's take a closer look to see if investors can earn healthy returns just by committing to simplicity.

How does the 'simplicity premium' work?

When it comes to investing, the 'simplicity premium' is all about sticking to straightforward, low-cost, and easy-to-understand investments.

As a guide to simplicity, let's look at the private credit market, which is essentially all about non-bank lending.

On one side, non-bank lenders pool investors' money, typically via a managed fund structure.

This capital is then used to provide loans to borrowers - it may be a family buying a home, a business expanding, or a developer completing a project.

On the flipside, investors can receive regular income generated by interest on the underlying loans.

And, if they choose the right manager, they can be confident their capital is being put to good use and may also enjoy low volatility.

People love to overcomplicate things, but in essence, this is what private credit is all about.

If you've ever taken out a loan, you already have a sense of how private credit works.

So, does this simplicity pay a premium?

Yes, simplicity can pay a premium.

An example is La Trobe Financial's award-winning^ 12 Month Investment Account.

This fund is big - really big - with over $11 billion in funds under management.

It is underpinned by a granular portfolio of over 12,000 loans, so there is tremendous depth and breadth of borrowers (great for diversification, which lowers risk).

It's a classic example of how simplicity doesn't have to mean compromising on strong returns.

The simplicity premium goes beyond financial gains

Of course, the concept of simplicity also relates to understanding what you want from your investments - be it regular income, low volatility, capital growth, or a mix of all three.

Either way, the simplicity premium can extend well beyond financial returns.

Investors who understand how their money is being put to work - and, by extension, what could go wrong - are better placed to feel relaxed about their portfolio. For example, bank hybrids were widely misunderstood, particularly in relation to where they ranked in the capital structure. In reality, they were complex instruments that did not perform predictably during periods of stress.

Put simply, investors who understand exactly how an investment works tend to sleep more easily at night, rather than stressing over their portfolio.

Simplicity isn't always equal

Within any asset class there are grades of simplicity.

Not all private credit funds for example, are created equal, and not all underlying assets are the same.

At La Trobe Financial, we focus on quality assets, disciplined borrower selection, and careful portfolio construction - all wrapped in skilled management.

The bottom line is that we take a far from simple approach to managing our investment opportunities.

But by doing the hard work behind the scenes, our investors can enjoy a simple investment that delivers premium returns.

Explore how La Trobe Financial's income strategies are designed to support dependable monthly income. Call the La Trobe Financial team on 1800 818 818 or visit latrobefinancial.com.au.

La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 Australian Financial Services Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321. It is important that you consider the Product Disclosure Statement (PDS) before deciding whether to invest or continue to invest in any of the funds. The PDSs and Target Market Determinations are available on La Trobe Financial's website.

When considering whether to invest or continue investing in the La Trobe Australian Credit Fund, you should be aware that (1) an investment in the Credit Fund is not a term deposit, and your investment is not covered by the Australian Government's deposit guarantee scheme. Investing in the Credit Fund has a higher level of risk compared to investing in a term deposit issued by a bank and (2) there are other risks associated with an investment in the Credit Fund. The key risks of investing in the Credit Fund are explained in section 9 of the PDS, available on our website.

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Investing isn't just the foundation for building wealth, it can also help Australians reach major life goals like buying a home, funding education or enjoying a comfortable retirement.

Investments can also generate passive income, potentially lift living standards over time, and even support emotional well-being by giving people a sense of agency over their financial future.

What many people don't realise is that investing can be simple - especially if you stick to a few sound principles.

Here are three 'golden rules' that, when followed consistently, tend to deliver better outcomes over the long run.

While no approach guarantees success, these principles provide a practical starting point.

1. Keep it simple

As human beings, we often assume that 'complex is better'.

When it comes to investing, nothing could be further from the truth.

Complicated investments may sound sophisticated, but complexity can make it harder to understand how you might make - or lose - money. And that plays a crucial role in deciding whether an investment suits your goals and appetite for risk.

Pro tip: Focus on investments that are both simple and transparent.

Always look for investments that make it crystal clear how, and where, your money will be put to work.

Warning bells should start ringing if an investment provider is vague about providing this sort of information, or if you can't explain easily to a friend or family member how an investment works.

2. Be patient

Patience may be a virtue, but for investors it can be a competitive advantage.

One of the most challenging things we can do as investors is...nothing.

It can be hard to resist the urge to continually tweak or finetune a portfolio - and it's a lot harder these days given the 24/7 news cycle and social media.

The thing is, patience can make a meaningful difference over time.

Letting quality investments do their thing, working hard for you behind the scenes is both simple and cost-effective. Continually chopping and changing investments can rack up unnecessary costs that eat into returns.

Pro tip: 'Getting rich slowly' never goes out of fashion. 

Rather than chasing every hot new prospect or 'next big thing', aim to build a portfolio of quality investments that have a proven performance record across the entire economic cycle.

If you can tick this box, all that remains is to wait. Sit tight, monitor your investments, and see first-hand how patience can be rewarded over time.

3. Embrace diversification

Variety is the spice of life. And it brings real upsides to your portfolio.

Asset markets don't all move in the same direction at the same time.

That's why spreading your money across different asset classes and geographic regions - a process known as diversification -  is a proven way to help manage risk and smooth returns over time.

Diversification can go a step further.

A portfolio that combines growth assets with income-generating investments can help investors enjoy the best of both worlds - regular passive income backed by the capital growth needed  for a portfolio to outpace inflation.

Pro tip: Consider investments that boost your portfolio's diversity.

Some investments bring additional diversification to the table, and this can help to reduce risk without compromising healthy returns.

One example of this approach is La Trobe Financial's award-winning 12 Month Investment Account. It is backed by a portfolio of over 12,081 loans including more than 8,300 residential mortgages. This level of diversification offers investors valuable protection, and has contributed to La Trobe Financial's long term track record of 100% return of capital to investors.

The bottom line

These three simple golden rules are relevant for investors at all stages of their wealth creation story.

Investing doesn't have to be intimidating. These three rules- simplicity, patience and diversification - are not just straightforward, they also hold up under scrutiny and are widely supported by financial research.

If you build your investment approach around these principles, you'll be better positioned to navigate market ups and downs, and better placed to pursue the kind of long term outcomes that matter.

Explore how La Trobe Financial's income strategies are designed to support dependable monthly income. Call the La Trobe Financial team on 1800 818 818 or visit latrobefinancial.com.au.

Any financial product advice is general only and has been prepared without considering your objectives, financial situation or needs. You should, before investing or continuing to invest in the La Trobe Australian Credit Fund, consider the appropriateness of the advice having regard to your objectives, financial situation or needs and consider the PDS for the fund.

La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 Australian Financial Services Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321. It is important that you consider the Product Disclosure Statement (PDS) before deciding whether to invest or continue to invest in any of the funds. The PDSs and Target Market Determinations are available on La Trobe Financial's website.

When considering whether to invest or continue investing in the La Trobe Australian Credit Fund, you should be aware that there are other risks associated with an investment in the fund. The key risks of investing in the fund are explained in section 9 of the PDS, available on our website.

Most assume their existing super fund will take care of everything, and for many, that's exactly what happens. They leave their money where it is.

But is that the best strategy for dependable income and risk-adjusted returns in retirement? Evidence suggests it may not be.

The status quo: most stay put 

Research shows that most retirees keep their savings with their existing super provider and product mix rather than exploring alternatives.

This inertia is driven by convenience, comfort and a lack of awareness of other options. The findings also suggest a lack of adviser relationship and independent financial advice through the critical transition phase.

The Household, Income and Labour Dynamics in Australia (HILDA) survey, a major, long-term national study that tracks the life circumstances of thousands of Australians over time, and Australian Prudential Regulatory Authority (APRA) data confirm engagement with super members is low: with many remaining in accumulation phase longer than necessary, and even when they move to pension phase, they rarely diversify beyond their fund.

Why that's a problem 

Concentration risk: staying with one provider means relying on a single investment philosophy and product set.

Limited innovation: APRA's Retirement Income Covenant review highlights that many funds are still playing catch-up on decumulation strategies, with regulators urging improvement.

Performance gap: according to the SMSF Association, self-managed funds consistently outperform APRA-regulated funds over five-year periods, delivering 0.3%-1.3% higher annualised returns, a meaningful difference over a 20-year retirement.

The case for alternatives 

Private credit and real assets offer stable, low-volatility income streams that complement traditional super options. La Trobe Financial's own track record, of portfolio investments providing decades of low volatility returns for investors, demonstrates how disciplined credit strategies can deliver resilience across market cycles.

These strategies are designed for income and low volatility, with granular diversification and conservative risk management, features often missing in growth-oriented super portfolios.

Super funds are outsourcing too 

The industry knows it can't do it alone. Under the Retirement Income Covenant, super funds are increasingly partnering with external managers to deliver dependable income solutions. APRA and ASIC have flagged this trend as essential for improving member outcomes.

This trend is blurring lines between traditional super and specialist asset managers and validates the role of external expertise in retirement income.

Sequencing risk and tax efficiency 

Sequencing risk refers to the danger that the order and timing of investment returns can negatively impact retirement outcomes.  This is heightened during the transition phase when you start drawing income from your portfolio.

Transition-to-retirement strategies can help manage sequencing risk and optimise tax outcomes, but they work best when combined with diversified income sources, not just a single super fund.

When transitioning into retirement, it's not the time to set and forget. For investors seeking better risk-adjusted returns, durable income and resilience, considering alternatives, like private credit and real assets, alongside super is no longer optional. It's essential.

Explore how La Trobe Financial's income strategies can complement your super and deliver dependable returns in retirement. Call the La Trobe Financial team on 1800 818 818 or visit latrobefinancial.com.au. Past performance is not a reliable indicator of future performance. Withdrawal rights are subject to liquidity and may be delayed or suspended. La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 Australian Financial Services Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321. It is important that you consider the Product Disclosure Statement (PDS) before deciding whether to invest or continue to invest in any of the funds. The PDSs and Target Market Determinations are available on La Trobe Financial's website. Any Financial product advice is general only and has been prepared without considering your objectives, financial situation or needs. You should, before investing or continuing to invest in the La Trobe Australian Credit Fund, consider the appropriateness of the advice having regard to your objectives, financial situation or needs and consider the PDS for the fund.

Warren Buffett, one of the world's richest people, isn't making life easy for his kids. The 95-year-old has instructed his children to give his $US140 billion wealth away within 10 years of his death.

It's not the sort of financial challenge many of us will face.

That said, Australians are currently leaving larger estates than at any point in history. But far from bringing families together, the inheritance boom has fuelled significant court action. Inheritance disputes in NSW alone have almost tripled since 2005.

Why estate planning can be emotional

There's nothing new about inheritance disputes. Just ask King Lear.

However, along with larger estates, family dynamics are evolving.

The growth of 'blended' families and a rise in family estrangements can see estate planning trigger a spectrum of emotions - from guilt and anxiety to fear and anger.

Your will may not be a failsafe option 

I know from conversations with financial planners that Australians are often concerned about how long their wealth may last after they pass away.

That's understandable.

Wealth-building often carries memories of hard work, risk and sacrifice, as well as moments of growth, progress and opportunity.

So, when we hand over wealth, we also pass on values, expectations and responsibility.

The problem is that even the most carefully worded will may not always control how a beneficiary will use their inheritance, nor prevent legal actions.

The good news? There are other solutions

While wills play an essential role in estate planning, once a will is admitted to probate, it becomes a public document.

Fortunately, there are flexible - and more discreet, alternatives.

Superannuation and investment bonds are both non-estate assets.

The downside of super is that fund trustees can end up having the final say on who gets your money.

By contrast, investment bonds can be tailored to suit the needs of individual beneficiaries - and be designed to generate income, rather than just handing over a lump sum, or even skip entire generations.

And investment bonds have seen far fewer court disputes than assets within a will.

There's no denying that estate planning can be emotionally challenging. I'm sure even Warren Buffet would agree with that.

But understanding the options to pass on your wealth, your way can make the journey easier and help your family thrive long term.

Felipe Araujo is Generation Life's chief executive officer. He joined the group in October 2017 as head of national key accounts and in January 2019 was appointed general manager of distribution. Felipe joined the group from the Westpac Bank where he held several leadership and national strategy positions, most recently as director of the Westpac Premium Victoria team, responsible for the first acquisition focused team. He has over 16 years of experience in financial services across Australia and Brazil. Previously, Felipe held key positions at Accenture Group, Investments XP based in Brazil and a director role at the Australia Brazil Chamber of Commerce. Felipe holds a Bachelor of Economics and Finance and is currently studying to complete his Level 2 Chartered Financial Analyst (CFA) certification.

With the right planning and advice, however, the transition can be both secure and rewarding.

Start planning early 

Think of retirement planning like planting a tree, the sooner you start, the stronger and more fruitful it will be.  And, if you consider estate planning as part of your wealth management strategies, consider the writing of Cicerio, 'He plants trees, which will be of use to another age'.

Ask yourself:

• How long will I be in retirement? 
• What income will I need to maintain my lifestyle? 
• When can I access my superannuation? 

Example: a 55-year-old investor dreams of retiring at 65. After crunching the numbers, they realise they'll need about $60,000 a year to live comfortably. Starting early means they can boost contributions and clear debt before the big day. That's peace of mind in action.

Tip: use retirement calculators to estimate your future income and expenses. And don't forget inflation and healthcare costs, they have a sneaky way of creeping up.

Understand your income options 

Your retirement income might come from a mix of sources:

• Superannuation - your main savings pot. 
• Investments - shares, managed funds, property, and yes, even private credit for diversification and potentially higher yields. 
• Age pension - if you qualify. 

What's a TTR strategy? 

Transition to retirement (TTR) lets you access part of your superannuation while continuing to work, often reduced hours. It's a handy way to ease into retirement without sacrificing lifestyle.

Example: an investor reduces their work hours to three days a week. Using a TTR strategy, they draw a modest income from their super to top up their salary. More time for hobbies, less stress about bills. That's what balance looks like.

Leverage expert advice

Retirement planning can feel like a maze and involves balancing income needs, investment risk and longevity.  A financial adviser can help you:

• Balance risk and reward. 
• Avoid sequencing risk; that's the danger of poor returns early in retirement, which can shrink your savings faster. 
• Tailor strategies to your goals. 

Example: during a period of market volatility, an adviser helps an investor rebalance and add more defensive assets during market volatility. This kept income steady when things got rocky. That's the power of professional guidance.

Embrace a staged approach 

Trees grow from seedlings into saplings and ultimately into maturity. Likewise, retirement planning can be approached in stages:

1. Education - read, learn, attend webinars. 
2. Activation - test strategies, talk to experts. 
3. Implementation - set up income streams and estate plans. 

Taking it step by step makes the process less daunting and more empowering.

Redefine your goals

Your priorities will shift over time. Early years might be about travel and adventure; later years may focus on health and security.

Example: an investor initially budgets for overseas travel but later reallocates funds toward home renovations and healthcare. Flexibility is key - your plan should evolve with you.

Avoid common pitfalls 

• Underestimating expenses - include healthcare and lifestyle costs. 
• Ignoring inflation - prices rise over time, so plan accordingly. 
• Delaying advice - the longer you wait, the fewer options you have. 

Confidence comes from clarity 

Retirement is about confidence, not just cash. Start early, explore your options, including private credit for diversification, and always seek independent financial advice before making decisions.

With the right plan, you can step into retirement with peace of mind and a sense of excitement for what's ahead.

There's another quote regarding timing: "The best time to plant a tree was 30 years ago. The second best time is now."

Designed for reliability in retirement 

For retirees and pre-retirees, dependable income and capital preservation are central to maintaining confidence in retirement. Managing sequencing risk, avoiding unnecessary volatility and maintaining diversification can be particularly important during periods of market uncertainty.

This is where specialist income managers can play a role.

La Trobe Financial's Australian Credit Fund portfolios have delivered steady income and full capital returns since their respective inception dates, including through periods of significant market stress. At La Trobe Financial we believe that income-focused investing means never taking unnecessary risks with investors' capital. With the right approach, it's possible to earn strong, steady returns while safeguarding your investment.

If you're looking for a durable retirement income solution, call the La Trobe Financial team on 1800 818 818 or visit latrobefinancial.com.au.

La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 Australian Financial Services Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321. It is important that you consider the Product Disclosure Statement (PDS) before deciding whether to invest or continue to invest in any of the funds. The PDSs and Target Market Determinations are available on La Trobe Financial's website. Any Financial product advice is general only and has been prepared without considering your objectives, financial situation or needs. You should, before investing or continuing to invest in the La Trobe Australian Credit Fund, consider the appropriateness of the advice having regard to your objectives, financial situation or needs and consider the PDS for the fund. 

When considering whether to invest or continue investing in the La Trobe Australian Credit Fund, you should be aware that (1) an investment in the fund is not a term deposit, and your investment is not covered by the Australian Government's deposit guarantee scheme. Investing in the fund has a higher level of risk compared to investing in a term deposit issued by a bank and (2) there are other risks associated with an investment in the fund. The key risks of investing in the fund are explained in section 9 of the PDS, available on our website. 

A well-constructed portfolio is like a major infrastructure project. It isn't built to avoid pressure; it's built to withstand it. Engineers don't design a skyscraper hoping it will never face high winds, or a tunnel assuming the earth will remain perfectly still. They use quality materials, robust structures and disciplined testing so the system performs reliably when stress arrives.

The same philosophy applies to income investing and, in particular to private credit. Resilience is not something discovered in hindsight; it is engineered long before uncertainty hits.

What makes a portfolio resilient?

The past two decades have tested investors through financial crises, global pandemics, supply-chain shocks and geopolitical tensions. Yet quality-focused income strategies have continued to deliver steady returns with low volatility, some without recording a single investor loss.

The difference lies not in finding the perfect individual asset, but in locating the well-constructed portfolio. Like a well-engineered structure, a portfolio must be designed so that when real-world forces push against it, it flexes rather than fails.

This comes down to a few core design principles.

1. Assessing and assembling the building blocks (borrower quality)

Even the best materials need skilled hands to assemble them.

Private credit can involve lending to complex prime borrowers, individuals with strong financial positions whose circumstances no longer fit rigid bank algorithms. Doctors, pilots, business owners, trustees of self-managed super funds and high net worth individuals increasingly sit outside automated bank processes despite demonstrating strong long-term financial behaviour.

Assessing these borrowers requires experience and judgement. At La Trobe Financial, 96% of borrowers have no credit impairments (as at January 30, 2026), and their profiles are consistent with those seen at major banks. Their complexity is our strength.

2. Quality materials (quality assets)

Engineers begin with strong materials; investors should do the same.

In real estate private credit, asset quality is largely defined by the loan-to-value ratio (LVR) and the robustness of the underlying collateral. While loans can extend to or beyond 80% LVR, a more conservative approach provides a meaningful buffer. Just as steel reinforcement strengthens a load-bearing wall, lower LVRs strengthen the margin of safety when markets come under pressure.

A portfolio built on quality assets isn't designed for a perfect day scenario, it's designed to withstand the unexpected.

3. Structural redundancy (diversification)

Every reliable structure incorporates multiple supports so that no single component determines whether it will stand.

The same applies to private credit. Portfolios built from many smaller, carefully assessed loans, diversified across borrowers, industries and geographies, ensure outcomes aren't dictated by any one event. This is not about eliminating risk, but distributing it in a way that maintains stability.

Diversification is the portfolio's cross-bracing system.

4. Human oversight beats automation

Over the past decades, Australian banks continue to push toward rigid and automated credit systems. It's a hands-off approach, and the equivalent of replacing humans with robots.

La Trobe Financial remains 'hands-on'. While we embrace technology for productivity and efficiency, every loan is still reviewed by at least two credit assessors, ensuring decisions are judgement-driven and grounded in experience. This is quality assurance before the loan becomes part of the structure.

Resilience in practice

Results speak louder than blueprints.

In our experience, private credit portfolios built on conservative structures, diversification and disciplined credit assessment have tended to perform more consistently across market cycles. While no investment is risk-free, this approach has supported steady income delivery and capital preservation through periods of heightened volatility.

Investors cannot control economic stress. But they can choose a portfolio engineered to withstand it. Just as the best towers, bridges and tunnels are built to endure forces far greater than what they encounter on a normal day, well-constructed portfolios stand firm through changing markets.

For income investors, resilience is not an accident. It is the result of deliberate choices made long before uncertainty appears. When quality is the foundation, resilience is the outcome.

If you're seeking durable, resilient income solutions, contact the La Trobe Financial team on 1800 818 818 or visit latrobefinancial.com.au.

La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 Australian Financial Services Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321. It is important that you consider the Product Disclosure Statement (PDS) before deciding whether to invest or continue to invest in any of the funds. The PDSs and Target Market Determinations are available on La Trobe Financial's website.

Past Performance is not a reliable indicator of future performance. 

Any Financial product advice is general only and has been prepared without considering your objectives, financial situation or needs. You should, before investing or continuing to invest in the La Trobe Australian Credit Fund, consider the appropriateness of the advice having regard to your objectives, financial situation or needs and consider the PDS for the fund.

When considering whether to invest or continue investing in the La Trobe Australian Credit Fund, you should be aware that (1) an investment in the fund is not a term deposit, and your investment is not covered by the Australian Government's deposit guarantee scheme. Investing in the fund has a higher level of risk compared to investing in a term deposit issued by a bank and (2) there are other risks associated with an investment in the fund. The key risks of investing in the fund are explained in section 9 of the PDS, available on our website.

Strong investment portfolios don't happen by chance.

They're built with care, discipline and a clear focus on quality.

What makes a portfolio resilient?

The past 20 years have brought major challenges for investors. From financial crises to global pandemics and trade disruptions, markets have faced serious uncertainty. Yet, investment strategies that prioritise quality have continued to deliver steady income, protect capital and maintain access to funds. Some have even done so without a single investor loss.

The key is how the portfolio is built.

Diversification plays a big role. For example, a mortgage investment strategy can include thousands of individual loans, each carefully selected and spread across different borrowers, industries and locations. This helps reduce the impact of any single event or downturn.

In the private credit space, a key measure of quality is the loan-to-value ratio (LVR). While loans may go up to 80% LVR, keeping it closer to 65% provides a strong buffer. This means that even if property values fall, the loan is still well covered by the value of the property.

A lower LVR also reflects careful lending and a focus on protecting investor capital. It supports steady income and keeps arrears and losses low. In short, LVR is more than a number - it's a key part of a quality-first approach that delivers reliable returns without taking on unnecessary risk.

Who are private credit's borrowers?

Private credit mortgage investments often involve lending to 'complex prime' borrowers. These are financially strong individuals, such as doctors, pilots, business owners and self-managed super funds, who may not meet the strict rules of traditional banks. Their finances may be more complex, but they are still creditworthy.

At La Trobe Financial, 96% of borrowers have no history of credit issues. Their credit scores are similar to those of customers at Australia's major banks.

A personal approach to lending

Banks, particularly post-global financial crisis, tend to rely heavily on regimented and automated lending systems.

This has seen them withdraw from lending into the economy where a more specialised or personalised approach is required to achieve an acceptable outcome for both the borrower and lender. Just because a bank is unable to make the loan, does not mean that one should not be provided.

Private credit lenders, like La Trobe Financial, take a more personal approach. Every loan application is reviewed by at least two experienced credit assessors. This hands-on process ensures that only high-quality borrowers are approved.

Mortgage brokers also play a key role. They help connect lenders with borrowers who need tailored solutions, helping to build a strong and stable portfolio for investors.

Different to a bank

Private credit funds are not bank accounts. They are investment funds, and their managers aren't banks they are asset managers.

By focusing on high-quality assets, strong credit checks and a well-diversified portfolio, private credit has and can continued to deliver for investors through all kinds of market conditions.

The numbers speak for themselves. La Trobe Financial's Australian Credit Fund portfolios have delivered steady income and full capital returns - even during market stress.

The 12 Month Term Account, for example, has a seven-year average annual loss rate of just 0.03%. And, this has been fully covered by the investor reserve, a built-in safeguard that protects against loan defaults.

At La Trobe Financial we believe that income-focused investing means not taking unnecessary risks with investors' capital. With the right approach, it's possible to earn strong, steady returns while safeguarding your capital.

*The variable rate of return is current as at November 1, 2025. The rate of return is reviewed and determined monthly, are not guaranteed, and may be lower than expected. The rate of return is determined by the future revenue of the credit fund, and distributions for any given month are paid within 14 days after month-end.  An investment in the credit fund is not a bank deposit, and investors risk losing some or all of their principal investment. Past performance is not a reliable indicator of future performance. Withdrawal rights are subject to liquidity and may be delayed or suspended."

La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 Australian Financial Services Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321. It is important that you consider the Product Disclosure Statement (PDS) before deciding whether to invest or continue to invest in any of the funds. The PDSs and Target Market Determinations are available on La Trobe Financial's website. Any Financial product advice is general only and has been prepared without considering your objectives, financial situation or needs. You should, before investing or continuing to invest in the La Trobe Australian Credit Fund, consider the appropriateness of the advice having regard to your objectives, financial situation or needs and consider the PDS for the fund.

When considering whether to invest or continue investing in the La Trobe Australian Credit Fund, you should be aware that (1) an investment in the fund is not a term deposit, and your investment is not covered by the Australian Government's deposit guarantee scheme. Investing in the fund has a higher level of risk compared to investing in a term deposit issued by a bank and (2) there are other risks associated with an investment in the fund. The key risks of investing in the fund are explained in section 9 of the PDS, available on our website.

Australians are searching for stable income and lower volatility. Explore the rising investment strategies offering reliable returns and what to consider before diving in.

If regular, reliable income is high on your investment wish list, you're not alone. Global private credit can tick the box for reliable returns, but it pays to know where your money is going.

As the cost-of-living crunch grinds on, inflation-weary Australians are looking for investments with income-boosting potential.

The most recent investor survey by the Australian Securities Exchange (ASX) found more than one in four (28%) investors says their main aim is to build a sustainable income stream - double the 14% of investors whose top priority is maximising capital growth.

The hunt for income isn't the only thing shaping investment choices. It seems many of us are losing our appetite for market volatility: the ASX found that almost one in two (48%) investors is looking for stable, reliable returns - a figure that rises to 55% among women.

What's driving the search for income?

The quest for regular income coupled with low volatility comes as no surprise to Dean Weinbren, managing executive of TermPlus. The Australian fixed-term account platform is powered by Pengana Capital Group and, in association with global investment leader Mercer, offers fixed-term accounts backed by global private credit.

Weinbren explains, "I don't think there has ever been a time when investors weren't conscious of sharemarket volatility - it's part of investing in listed markets." Despite the potential of shares to deliver high, long-term returns, he adds, "the journey has never been smooth.

"Geopolitical tensions, policy changes or trade measures can move markets sharply, often in ways that have little to do with the underlying health of (ASX-listed) businesses," says Weinbren. "That disconnect is something many investors are increasingly aware of. For some investors, particularly those focused on income or capital stability, that can be unsettling."

Investors are embracing alternatives

As investor preferences evolve, the world's largest fund manager - BlackRock, says "more and more investors" are shifting to alternative investments in a bid to turbocharge returns, generate income and diversify portfolios.

So-called alternative investments are not new. While the term covers a variety of asset classes from infrastructure to hedge funds, some investment markets, such as private credit, have been around for decades.

Historically, global private credit has been the playground for institutional and high net worth investors due, in part, to substantial capital commitments and extended lock-in periods.

What has changed is that global private credit is becoming increasingly open to retail investors, typically through a managed fund structure, often with a minimum investment as low as $2000 (through platforms such as TermPlus).

Vince Scully, founder of financial advice service Life Sherpa, adds that awareness of private credit funds is increasing as more is spent on promotion.

"Our clients are raising the sector more because they are seeing it in the media and being promoted by finfluencers," 
says Scully.

That said, it's not just individual investors exploring private credit opportunities. Superannuation funds are too. Research by Rainmaker Information, publisher of Money, shows several of the nation's biggest super funds have invested in this asset class.

Simone Constant, commissioner of the Australian Securities and Investments Commission (ASIC), expects super funds to take an even greater interest in global private credit "as they expand and look for new areas to grow".

With so much interest in private credit markets, let's unpack what this asset class involves, and the pros and cons investors should be aware of.

What is global private credit?

The term 'private credit' simply refers to non-bank lending.

It's a market that has been growing rapidly since the global financial crisis of 2008-09, when a number of international banks failed, never to return. Tighter regulations saw a further pullback in bank lending, creating a gap in the market.

This gap has largely been filled by specialist private credit providers who do not fall prey to many of the limitations of the banking structure when it comes to the provision of credit - in particular on the international front, where private credit makes up 84% of lending markets compared to only 10% in Australia.

Along with demand from borrowers, investor demand for high-yield assets has seen a surge in private credit funds, which offer the potential for reliable returns (driven by interest on the underlying loans) without the volatility of listed markets.

Australian versus global private credit

As a guide to the scale of private credit, ASIC estimates the local market is worth about $200 billion. It's a figure dwarfed by the international market, which the Reserve Bank of Australia (RBA) says has quadrupled in value over the past decade, reaching $US2.1 trillion ($3.1 trillion) in 2023.

That growth isn't expected to stop any time soon. According to data analyst firm Preqin, the global private credit market is expected to reach $US4.5 trillion ($6.7 trillion) by 2030.

Size isn't the only factor separating the Australian market from global private credit.

Domestic private credit tends to focus on property-backed lending. The global market typically involves commercial loans to mid-size businesses. We're not talking corner stores. Target businesses typically earn between $US50 million and $US250 million in annual profit.

More broadly, Dean Weinbren believes global private credit offers several distinct advantages over the local sector. The international market has been around a lot longer, and Weinbren says this has "allowed robust processes, operational frameworks, risk controls and market infrastructure to develop over time".

For investors, that maturity translates into clearer standards, deeper data and more predictable behaviour through different market cycles.

The global market also provides access to managers with longer track records.

"That experience matters," says Weinbren. "It influences how loans are structured, how risks are assessed and how portfolios are managed when conditions change."

As the global private credit market is significantly larger than the Australian market, it can provide a significant diversification advantage, and as Weinbren notes, "a more resilient source of income".

What sort of returns can you expect?

The RBA acknowledges that private credit has an attractive risk-return trade-off, paying a relatively high interest rate with low volatility compared to publicly traded assets (such as shares) and other fixed income asset classes.

Even so, returns vary between providers, and depend on whether the fund's underlying focus is local or global private credit.

An ASIC review of 20 private credit funds open to retail investors showed target returns ranging from 4% to 10%.

As a guide, TermPlus, with its focus on global private credit, targets payment of the RBA cash rate plus a fixed 3% on a one-year term, or an additional 4.15% on top of the cash rate for terms of five years1.

Regulator says 'room for improvement'

The rapid growth of private credit funds has not escaped the regulator's attention.

Following a review of the sector, ASIC noted "private credit is good for Australia's economy, borrowers and investors, but only if done well". And it turns out, several aspects of the private credit market have room for improvement.

As Scully explains, "Disclosure is poor, particular around the rate paid by the ultimate borrower, fees, related party transactions and use of internal credit ratings."

He adds, "Most of these funds are investing in longer-term debt while advertising daily redemptions. Improved disclosure and better matching of underlying investments with the advertised redemption liquidity would help."

ASIC's Constant also doesn't mince her words.

"It is clear increased oversight of private markets is essential," she says. "And ASIC will continue its surveillance and enforcement work in private credit to ensure compliance with the law. If we do not see material improvements, we are prepared to pursue stronger regulatory action."

It remains to be seen if ASIC's message to 'lift your game' will result in change. However, Weinbren regards ASIC's review as a plus for the market and investors.

"Clearer guidelines [for the local private credit sector] will help level the playing field for product providers and, importantly, make it easier for investors to compare offerings on a like-for-like basis," he says. "That transparency reduces the risk of poor behaviour and ultimately strengthens confidence in the sector."

Greater scrutiny by regulators is also likely to clarify the differences between global private credit and the local market.

"There are meaningful differences between domestic private credit strategies and those investing in established global markets," says Weinbren. "ASIC's closer scrutiny encourages these distinctions to be clearly communicated, rather than treating private credit as a single, uniform category. That's a good outcome for investors."

Ultimately, Weinbren believes it will help ensure people understand what they're investing in, how risks are managed and where returns are coming from - which is exactly what a growing and evolving market needs.

New to investing and confused by the stockmarket? Having limited funds to invest doesn't have to be a roadblock to getting started.

In the face of it, investing is easy.

You put your spare cash into an investment, then steadily add to it over time, allowing your investment to compound and grow.

So far, so good. Where theory collides with reality is the notion of 'spare cash'.

Having battled a cost-of-living crisis for the past few years, plenty of people don't have a lot of surplus cash.

According to Finder's latest Consumer Sentiment Tracker, two in five (43%) Australians have less than $1000 in their bank account.

It's not an issue limited to low-income earners. Twenty-five per cent of households earning between $100,000 and $250,000 annually have less than $1000 in their bank accounts. This can be a real stumbling block when it comes to investing.

Shares and exchange traded funds (ETFs) may require a minimum initial investment of $500 (plus brokerage).

Managed funds may have an initial outlay as low as $1000, but you'll typically need about $5000 to get started, potentially more.

Not surprisingly, Shelby Clark, chief operating officer at GPS Investment Fund, says, "In Australia the biggest hurdle to investing isn't motivation, it's access. Many funds still ask for $10,000 or more before you can even get started. For younger Australians and first-time investors that's a brick wall."

Busting the 'big money' myth  

Along with the reality of high capital requirements, it's common for Australians to view investing as something that calls for significant sums of money.

According to HSBC's latest Investor Insights Survey, younger Australians believe that it takes more than $20,000 to start investing (Gen Z $20,840 and Millennials $20,275).

The reality couldn't be further from the truth. Quite simply, you don't need a huge lump sum to start growing wealth through investing.

The barriers are breaking down

As Clark notes, "For too long investing has looked like an exclusive club with rules and thresholds that kept most people out. Once the barriers are gone, people can begin earlier, build habits and stay invested. That is what changes behaviour."

Vince Scully is the founder of financial advice service Life Sherpa. He says the past 40 years have seen the cost of investing fall dramatically. "The internet and social media, in particular, have democratised investing."

Even so, Scully believes that in many cases, this has only made it easier to make poor decisions faster, cheaper and more conveniently. The key to success, he believes, is getting started.

"Get invested, stay invested, then invest some more - consistency matters," says Scully.

Is micro-investing the answer?

Investments are available that allow beginners to dip their toe in markets and steadily build confidence.

Platforms such as Raiz, Pearler and Sharesies, provide access to ETFs and, in some cases, individual shares.

"There is clearly a market for micro-investing," says Scully. "Making the leap from saving to investing is easier if you can do it with a smaller sum - you don't have to wait until you have thousands to invest."

Micro-investing platforms can let investors get started with as little as $5, although there can be downsides to this.

Platform fees mean it isn't always financially viable to invest very small amounts. Raiz, for example, charges fees of $5.50 per month for accounts with a balance of less than $26,000. Very low balances could easily see any gains wiped out by platform fees.

In addition, micro-investments typically focus on sharemarkets. And that's not where every investor wants to be.

The good news is that there are investment managers who offer low-capital access to other asset markets.

An alternative solution

GPS Investment Fund recently launched its new fund - Arkus. It's a private credit fund, meaning investors' money is pooled and invested in registered first mortgages over residential development projects in south-east Queensland.

"Basically, we fund developers who then build units and townhouses," says Clark.

"Arkus invests in the mortgage on the land (in first position). This is then repaid when the developer sells the units or townhouses. We sit first in line for that repayment over any other loans associated with the project. So, you're investing in real property - not intangible shares or crypto coins."

There is nothing new about private credit, which is essentially non-bank lending. However, this is an asset class that has seen investor interest surge in recent years.

Reserve Bank data shows the Australian private credit market is currently worth around $40 billion.

A key point of difference of Arkus is the minimum investment requirement of $1 in a market where investors are typically asked to stump up a lot more.

"We wanted to get rid of the biggest barrier, which is the minimum investment," says Clark. "We wanted something steadier than shares, not as time-consuming, and without such a high entry point.

"We created Arkus to break that barrier so that anyone, whether they have one dollar or 10 thousand to invest, can start putting money into something real."

Unlike many micro-investing platforms, where investors only have beneficial ownership, Arkus investors have both legal and beneficial ownership of the underlying mortgages. "It is full ownership, not half measures," says Clark.

Arkus offers an expected net return of 6.50%pa. The fund doesn't charge investors fees as the fund manager's expenses are paid by the underlying borrowers.

According to Clark, Arkus is best suited as a medium- to long-term investment "because compounding works better the longer you stay in."

She adds, "It is not about hype or fast wins. It is about steady returns and being accessible."

Investors are keen to start small

According to Scully, young Australians are keen to start investing. "They are used to being investors from a lifetime of compulsory super, which has turned us all into mini fund managers responsible for our own retirement."

That said, Scully believes many may struggle with the first step. "Previous generations were unable to make this leap into investing so early, and many never made it, sticking to bank deposits or paying off their mortgages."

For some Australians, micro-investing is an alternative to home buying. As Scully observes,

"For others, it is the path to homeownership."

Clark also recognises the need for flexibility.

"Investors in Arkus can request redemptions monthly," she says. "That flexibility matters, especially for younger Australians who lived through Covid and the global financial crisis. They know how quickly things can change. Locking their money away never felt fair. Flexibility makes it easier for people to get started."

Not just about younger investors

While it's easy to assume that low capital investments are pitched at, or appeal to, younger investors, that's not always the case.

Clark says, "We expected Arkus to appeal mainly to 18-35-year-olds who wanted to build wealth but couldn't meet the usual minimum investment limits. Once Arkus launched, we realised it went further than that.

"Parents are using the fund for school savings, grandparents are teaching their grandkids and plenty of younger people are using it as their first serious step. The common thread isn't age. It's that they had been shut out of other funds."

Discover who you are as an investor

The appeal of investments with very low capital requirements goes beyond an opportunity to start growing a portfolio even when cash is tight. It can also make diversification a lot easier by spreading a little here and a little there.

Sure, micro-investing platforms that focus on shares can offer easy diversity across equity markets. But newer options such as Arkus make it easy to spread your money across entirely different asset classes.

This diversity helps to smooth returns and reduce the impact of volatility in any one market.

As Scully notes, the benefits of low initial capital requirements can go even further.

"Seeing your balance grow, even if much of the growth comes from your contributions, creates a sense of progress, making it easier to keep going," he says.

Scully adds that micro-investing apps or products can help newcomers "discover what sort of investor you are, how you behave when the market is up or down and build on these lessons for life".

This report is sponsored by TermPlus. It was independently researched and written.

Reliable income, healthy returns and a path away from sharemarket volatility. Global private credit can tick plenty of boxes.

While millions of mortgage holders celebrate rate cuts, plenty more Australians are feeling the pinch of lower returns on deposits.

Ironically, it comes at a time when household savings are hitting new highs.

According to bank regulator the Australian Prudential Regulation Authority (APRA), household deposits totalled $1.64 trillion in July 2025, up from $1.60 trillion a month earlier.

As interest rates trend lower, many Australians are questioning how best to position their savings. Traditional deposit-style products provide stability, but often at levels that may not keep pace with long-term needs.

On the other hand, the share market can feel too volatile for those seeking dependable income. For investors caught between these two extremes, alternatives like TermPlus offer a way to allocate savings into a vehicle designed to generate reliable, monthly income without tying outcomes to the ups and downs of equity markets.

A rapidly growing asset class

'Private credit' refers to any form of non-bank lending.

Helen Baker, a licenced financial adviser and author of Money for Life explains, "Many people, developers and businesses are looking for an alternative source to the bank" and this is driving demand for private credit.

Here in Australia, the private credit market is relatively small as banks tend to dominate the lending market, and where private credit does exist in the Australian market, it is often concentrated to certain sectors like property.

That's not the case internationally.

In the US and Europe, private credit is a major source of lending particularly to mid-market companies. While banks make up 90% of the lending market in Australia, in the US, banks make up just 16% the market.

A report by McKinsey notes that in the US, an additional $US5-6 trillion worth of loans could shift to the private credit market over the next decade.

This growth is creating valuable opportunities for investors - that's because non-banks and private credit managers rely on investor capital, rather than customer deposits, to fund private credit loans.

New opportunities for Australian investors

Dean Weinbren is managing executive of TermPlus, part of the ASX-listed Pengana Capital Group. He explains that global private credit has traditionally been popular among large institutional investors seeking healthy, regular income returns, but has long been out of reach for everyday Australian investors.

In fact, if you're with a big super fund, chances are you already have some exposure to global private credit.

In an exciting breakthrough for Australian investors, global private credit is becoming available to retail investors.

Products such as TermPlus, for example, offer online term accounts that deliver attractive and reliable monthly income to account holders, and can be opened with as little as $2000.

Four key benefits of global private credit

Global private credit offers four main points of appeal to retail investors:

1. Regular, passive income

As an asset class, private credit allows investors to experience some of the benefits that major global lenders enjoy - notably, earning regular, steady and passive income generated by the underlying contractual loans.

2. Attractive returns

Dean Weinbren says global private credit securities are "mainly floating rate".

This means the returns are set as a fixed percentage above the Reserve Bank of Australia (RBA) cash rate.

In addition, Weinbren points out that investors can earn an "illiquidity premium". The longer the investment timeframe you commit to, the higher the targeted return.

"TermPlus calculates rates targeted for account holders as a fixed margin above the RBA cash rate in order to provide reliable returns, that are unaffected by inflation.

As a guide, a one-year term account with TermPlus has a target rate of the RBA cash rate (3.6% at the time of publishing) plus a fixed 3% margin on top of that.

A two-year term will have a fixed margin of 3.65%, and a five-year term will pay a fixed margin of 4.15% above the RBA cash rate, with returns able to be paid directly into your bank account every month, or reinvested for compounding over the duration of your term.

3. Returns not linked to equity markets

While shares can also be a source of healthy, regular dividend income, there is a catch.

Helen Baker explains, "Share prices will move - and do move constantly - and there is risk of volatility." This being the case, she adds, "It is important that any investment aligns strategically with your goals and needs for capital and income, so you don't have to sell in a bad time."

For some investors, this need to plan ahead for equity market volatility can be a major deterrent. For others, the potential for volatility will simply be at odds with their personal risk appetite.

As Weinbren points out, "Global private credit has a track record of delivering attractive returns with lower volatility than listed investments."

4. Portfolio diversification

As part of the fixed interest class of investments, global private credit brings much-needed diversification to an investor's portfolio.

The added appeal of global private credit is that investors gain even more diversification through assets located across different geographic markets and sectors.

"The global aspect provides important diversification for Australian investors with the opportunity to spread risk via investments into a totally new, and established sector of top-tier global private credit securities," says Dean Weinbren.

"TermPlus is an easy way to diversify into these global private credit markets for income returns."

Investing in global private credit - what to know

An investment in global private credit is usually made via a managed fund structure. Unlike bank deposits, your money is not guaranteed.

As Helen Baker notes, "Private credit is another option to service the market as well as being an investment for those who wish to take extra risk."

This extra risk above cash accounts makes it important to choose an investment manager with care.

"Investors can benefit from doing their homework," says Weinbren, who adds that risk and return profiles can vary dramatically across the private credit sector. Investors should avoid "comparing apples with oranges" in the local and global markets.

He suggests looking at the investment manager's track record - in particular, whether it spans several cycles, including down markets.

"Investors should also be mindful of what protections may be available," notes Weinbren. "TermPlus offers investors three layers of protection, underpinned by a support account co-investment alongside account holders, made by Pengana Capital Group."

More broadly, investors should be mindful of the investment's underlying diversification.

Weinbren says, "There is a big difference between Australian private credit and global private credit, regarding risk exposure and returns potential.

"Global private credit offers much broader and deeper investment opportunities, across various sectors and businesses."

The next must-have for income investors?

While global private credit is currently less familiar to Australian investors, in time Weinbren believes it will track a similar path to global equities.

Weinbren says it wouldn't be surprising to see global private credit become a staple must-have for all income investors.

A handy guide to retirement to help you plan a smooth transition into your golden years.

Decades of raising a family, paying off a mortgage and climbing the career ladder can pass in the blink of an eye.

All too soon we find ourselves looking down the barrel of retirement, and it can bring real uncertainties about what lies ahead. Planning ahead is key.

This timeline to retirement will help fill the knowledge gaps to get you on the right track.

10 years from retirement

There's no set date when we have to retire. According to the Australian Bureau of Statistics women retire, on average, at age 63. Men stay at the coalface slightly longer, typically retiring closer to age 67.

That makes our 50s a key time to lay foundations.

Steve Travis, group executive, member growth at Aware Super, says, "Many people aren't engaged with their super until they hit what we call the 'Oh crap!' moment.

This tends to happen between 55-65 years when retirement is in the not-too-distant future."

Paul Wratten, financial adviser with Statewide Advice, says our 50s are often the time when we start asking 'Will I have enough?', 'Can I retire sooner?' and 'How can I improve my chance of a great retirement?'

While there are no one-size-fits-all answers, your super fund should have a range of resources to help you start planning.

Aware Super, for example, has an online tool, My Retirement Planner. It takes a member's balance today and estimates their likely income in retirement. For some members this can provide reassurance they're on the right track. For others it may be a wake-up call. Either way, these tools can remove a lot of the guesswork around retirement savings.

1. Consider how much super you'll need

Not sure how much super you should aim for? Travis says, "First, understand what you're spending now and the lifestyle you want in retirement. Factors like whether you still have a mortgage, your eligibility to receive the age pension and how long you're likely to live for all play into how much you'll need."

As Travis notes, "We are living longer, healthier lives than in the past. The retirement phase of your life could be 30 years or more." He believes this longevity is "an amazing opportunity 
to reimagine the way you want your life to be".

2. Give your super a boost

Making tax-deductible contributions from your own pocket or organising salary-sacrificed contributions can boost your super in the run-up to retirement.

Wratten adds that selecting a fund with low fees and reviewing your choice of investment options can also accelerate your balance. "Understand the risk versus return trade-off," says Wratten.

"The more risk you can accommodate, the higher the returns you should expect."

3. Check your fund's investment performance

According to Travis, investment returns on super "make up to as much as 50% of your balance at retirement".

He says a fund that consistently delivers 0.75% above average in annual investment returns can lead to an extra $22,000 over 15 years*.

"So it's important you check how your superannuation is invested and how well it performs against other funds," says Travis.

Five years from retirement

By our late 50s - and definitely early 60s - retirement is starting to look real.

1. Review your super investment options 

Travis says, "As you approach retirement, you may want to reduce exposure to riskier assets to protect your savings from market downturns.

Conservative or balanced options can offer more stability although, depending on your circumstances, it might still be important to maintain some level of growth exposure."

2. Using your super to ease into retirement

It's possible to ease your way into retirement by dialling down working hours. Investing part of your super in a transition-to-retirement (TTR) account can help fill the income gap. Travis says the minimum drawdown from a TTR is 4% of the balance annually, rising to a maximum of 10%.

"The 10% maximum drawdown limit provides some protection against excessive withdrawals," says Travis.

While TTR drawdowns are tax-free for members aged 60 and over, investment returns will still be taxed at 15% (same as the accumulation phase), and capital gains on assets held longer than 12 months are taxed at 10%.

12 months from retirement

No matter when you plan to retire, turning 65 is a major milestone. Travis says, "Reaching age 65 removes all restrictions on super access. You can withdraw some or all of your super completely tax-free, regardless of whether or not you've retired."

This makes it important to weigh up what you'll do with your super.

1. Why it's worth leaving super in super 

It can be tempting to pull money out of super on retirement, however Wratten points to compelling reasons to keep your nest egg in the broader super environment:

• Personal tax Investments outside of super will be subject to your personal tax rate. The tax benefits of super can stretch your retirement savings further.
• Contribution caps Once you meet a condition of release, taking money out of super is relatively easy. Getting it back in is subject to a range of caps that can limit your ability to reverse course.
• Estate planning Funds in super can be passed to certain family members or dependants as a 'non-estate' asset, meaning it is not subject to the terms of your will (and therefore not subject to any challenges to your estate). 

As an added plus, a number of super funds such as Aware Super, pay a retirement bonus when you move your accumulated super into one of the fund's retirement income options.

2. Map out a retirement budget

"Planning for, and understanding, your day-to-day living costs in retirement is important," says Travis.

Think through how your expenses might change.

Some costs may decrease while others, such as healthcare, could increase.

3. Build your knowledge bank

The more you know, the more you can plan ahead. Travis says the best first place to go for information is your super fund.

Along with online tools and general advice at no extra cost, larger funds offer webinars and even in-person seminars. If you need more comprehensive advice, your fund can usually help with this too.

Six months from retirement

Happy days lie ahead! There is still a critical step to work through - turning your super savings into a retirement income stream.

1. Prepare to switch from accumulation to drawdown

Your super can be transferred to a retirement income account when you reach age 60 and are retired, or if you are 65 or older, with no work test required.

Travis suggests reaching out to your super fund 4-8 weeks before retirement to discuss your options.

2. Decide how to use your super

In general your super can be used to invest in two main options within the super environment.

"Account based or 'allocated' pensions are the favoured options for most retirees in my experience," says Wratten.

"There is a wide range of investments and you can access your capital at short notice with most funds."

Payments from allocated pensions are tax-free from age 60.

You can make small cash withdrawals at any time and set your preferred regular payments (minimum 4%-5% of your balance yearly, based on age) while your money stays invested and keeps growing.

If you're concerned about outliving your money, a lifetime annuity provides guaranteed income for a set period, even for life.

Your super fund can explain the choices available, and the pros and cons of each.

3. Apply for the age pension

Before reaching for the champagne to celebrate your retirement, make a diary note to apply for the age pension 13 weeks before turning 67. Getting in early means your pension can be ready to go by your 67th birthday.

Research by Aware Super shows that one in three (31%) people who applies for the age pension waits for 12 months or more after turning 67 (pension-eligibility age) to submit their application.

This can mean missing out on $18,000 in age pension payments.

It's not often a financial product can truly claim to have revolutionised our lives. But that's certainly the case with exchange traded funds.

Ten years ago, just 1.3% of Australians invested in exchange traded funds (ETFs), according to the ASX.

Fast forward to 2025, and one in five Australians own ETFs. These investors are reaping the rewards of low fees, high diversity and an ever-expanded choice of asset classes to invest in.

But the ETF revolution is about more than numbers.

With their low capital requirements, super-low fees, and built-in diversification, ETFs have made investing easier and more affordable.

Today, one in three young investors (average age 21) own ETFs. Over one in 10 ETF investors are women, and countless others are adding ETFs to their self-managed super fund.

Tim Bradbury, Head of Intermediary, Australia at State Street Investment Management,  which introduced ETFs to Australia in August 2001, sums up the impact, saying, "ETFs have brought Wall Street to Main Street."

Giving individual investors the same tools as the big end of town

Bradbury observes, "The incredible thing about ETFs is that they have allowed investors from all walks of life to access many of the same asset allocation tools and portfolio construction methods used by the large institutional investors.

"This has seen investors reap the rewards of choice, diversification and portfolio control - all at very low cost."

Rakesh Shah, principal of Perth-based wealth advisers, Capital Partners, explains the impact of ETFs saying, "Historically, investing for mum and dad investors typically meant buying individual stocks because managed funds were locked away behind premium platforms.

"Then along came ETFs, which are accessible to almost everyone, opening up a whole new market for retail investors. This ability to access new investment products at a time when the general public is getting educated on the power of index funds has improved investment outcomes for millions of Australians."

The upshot is that since the launch of State Street's ground-breaking series of ETFs in 2001, Australia's ETF market has surged to be worth $272 billion. Globally, the ETF market is valued at $US13.8 trillion as of December 31, 2024, according to Morningstar Direct.

The 'why' behind the rise of ETFs

Glen Hare, co-founder of Fox & Hare Financial Advice agrees that ETFs have "totally shaken up how everyday people invest".

Part of the appeal, he believes, is that ETFs have "made it super easy and affordable to spread your money across different investments and markets around the world, something that used to be a real pain."

This diversification is central to how ETFs work.

As a guide, one of the market giants - the $6 billion SPDR® S&P®/ASX 200 ETF, holds shares in over 200 listed companies, spanning 11 industry sectors from financials and materials through to health care, technology and real estate.  So, in a single fund holding, and potentially in just a single trade, an investor can gain low cost exposure to the broader Aussie share market.

Achieving the same level of diversification as a direct shareholder, would require significant capital, and quite likely involve paying substantial brokerage fees.

As Tim Bradbury observes, "Buying into just one or two ETFs offers wide exposure across a variety of underlying assets or markets, which investors can easily build on."

Bradbury points to other advantages that ETFs bring to a portfolio.

This includes the liquidity of being a listed fund, which allows investors to react to market events in real time.

ETFs are also very transparent. "ETF managers are required to disclose their investment holdings daily on their website, " Bradbury says. "This gives investors transparency into portfolio composition and risk exposure."

For many investors, it is the exceptionally low fees - the median expense ratio is around 0.44%  - that have seen ETFs form a core component of their portfolio.

Benefits beyond equity markets

While the early ETFs focused on shares, today's investors can pick from close to 400 ETFs listed on the ASX, with exposure to a whole spectrum of asset classes.

This is democratising access to once hard-to-access investments such as government bonds.

It is also letting investors take advantage of defensive strategies, such as allocating part of the portfolio to gold as a hedge against inflation or geopolitical risks.

Interestingly, State Street Investment Management's 2025-26 ETF Impact report reveals that investors believe ETFs are allowing them to be more innovative - something made possible through ETFs covering alternative asset classes such as commodities, private credit, hedge funds, infrastructure, and even cryptocurrencies.

Selecting the ETFs that are right for you

With so many ETFs to pick from, it can be hard narrowing down the choice.

Glen Hare says investors need to align the ETF's investment objective(s) with their own financial goals and risk tolerance.

He adds, "It is also crucial to meticulously assess the associated costs, including the investment fee and potential brokerage fees, as these can significantly impact long term returns."

As smaller providers come onto the market, Tim Bradbury recommends looking at the brand name, track record, and the size of the fund and fund provider. Larger ETFs can exploit economies of scale to lower their fees. And, as Rakesh Shah adds, a fund with smaller assets under management could be at risk of closing down.

What lies ahead

Over the almost quarter-century since their launch in Australia, ETFs have consistently showcased their growth and innovation. And this is expected to continue.

As Tim Bradbury observes, "Markets are never predictable - and never will be. But if there's one lesson investors have learned over the years, it's that adaptability and flexibility matter.

"ETFs have expanded and evolved to become valuable tools that help investors to create and build wealth through being able to capitalise on opportunities, manage risks and optimise portfolio construction - all at very low cost."

It is these qualities that could see ETFs play a key role in your portfolio.

Important disclosure: Issued by State Street Global Advisors, Australia Services Limited (AFSL Number 274900, ABN 16 108 671 441). Investing involves risk including the risk of loss of principal. You should seek professional advice and consider the product disclosure statement and target market determination, available at www.ssga.com/au, before deciding whether to acquire or continue to hold units in an ETF.

As more families find themselves at loggerheads over disputed inheritances, investment bonds can offer a less contentious, more tailored solution for estate planning.

A recent question in the Ask Paul section of Money generated heated debate on the issue of inheritances. The view of many readers was that bequests should be split down the middle. But for plenty of families the picture is more nuanced, and an equal share isn't always the answer.

For Australia's 100,000 blended families and 182,000 stepfamilies, equal - and unequal - inheritances can become a minefield of mixed emotions.

That's not to say inheritance issues are the sole domain of blended families.

In traditional families, it's not uncommon for one adult child to feel they are entitled to a bigger share of an estate because they have spent years caring for ageing parents while a sibling got off scot-free.

Adding to the problem is the fact that people don't always simply sit seething on the sidelines - many take their grievances to court.

Research by investment bond provider Generation Life found that 86% of claims over an estate are brought by the immediate family - adult children as well as current or former partners. And these cases can have a high success rate.

An estimated 74% of contested estates end up being distributed in a way that differs from the original will.

Of course, all these figures assume that a will exists. In fact, as many as three in five Australians do not have a will, a situation that could lead to major legal issues when they die.

What's fanning the flames of family disputes

Previous generations may have squabbled over who would inherit Aunt Ethel's Wedgwood figurines. Today, the stakes are far higher.

The Baby Boomer generation, with its $4.9 trillion in wealth, is expected to pass on about $224 billion annually in bequests between now and 2050.

While there is no suggestion that modern Australians are money grabbers, the high proportion of wills being contested suggests that, for some, the money is worth fighting for.

Given the potential for wills to be a legal minefield, and the sheer scale of wealth to be distributed, it may be time to rethink estate planning.

A report by Generation Life shows that the vast majority of Australians - almost seven in 10 - want to leave a legacy for future generations. The problem is that only 14% have a plan set in place to ensure this happens.

Not only does the desire to leave an inheritance make it essential to plan ahead, it also means careful planning is needed so that your legacy doesn't spark a family feud that has the potential to last 
for years.

Options beyond a will

While it seems that many Australians don't have a will, most of us do, however, have superannuation - and our $4.1 billion pool of super savings isn't only used to fund retirement.

A Fidelity survey reveals that three in five Australians plan to leave their super to loved ones when they pass away. Already, up to one-fifth of all super withdrawals are bequests.

But super was never designed for this purpose. Les McGuire, a financial adviser and managing director 
of Future Proof Wealth, explains: "Many people have taxable components within their super funds, which means that upon death, the super benefits will be taxed at 17%, resulting in your children receiving less."

There is another option for estate planning - one that is less susceptible to being contested, and without the punitive tax take of super bequests.

The solution can lie with investment bonds.

How investment bonds work

Investment bonds (no relation to government bonds) work much like a managed fund, providing a menu of investment options to select from.

Unlike super, there are no restrictions on when money in an investment bond can be accessed. That said, if you hold onto an investment bond for 10 years, withdrawals are regarded as 'tax paid', meaning they are free of any personal tax.

While there are no caps on the initial sum invested, additional contributions are limited to 125% of the previous year's contributions. Exceed this limit, and you reset the 10-year clock for tax-paid withdrawals.

Dig deeper, and there are aspects of investment bonds that can make them an effective estate-planning tool.

Felipe Araujo, chief executive of Generation Life, explains: "Estate planning is about structuring your affairs so that the right assets go to the right people. Investment bonds bring certainty over the assets that Australians have worked hard to achieve."

Investment bonds are reshaping inheritances

Hamish Clark is a senior financial adviser and director of Choice Capital. He believes investment bonds can play a key role in protecting a person's wishes when it comes to the distribution of their estate. He points to the strength of the Life Insurance Act, which governs investment bonds, that "makes it highly unlikely any disgruntled relatives can mount a successful challenge - something that can be less certain with a will".

The upsides of investment bonds can go further.

Clark notes that today's high rates of separation and divorce make it likely that more Australians will be concerned that their adult children, who may be happily married today, may separate and divorce 
or become estranged at some point in the future.

"This brings real concerns that the wealth a person has worked hard to build up could be split across non-family members," says Clark. "Or even go to other current/ex-family members who may have largely abandoned their ageing parents, yet still feel entitled to their wealth."

He adds: "For this reason, I believe that investment bonds, as a non-estate asset, have a significant role to play in estate plans, both today and in the future."

Investment bonds also give older Australians the option to skip a generation altogether. Araujo notes that 80% of inheritances passed down from parents currently go to people older than 50 years. By this time, beneficiaries have often accumulated significant wealth of their own. "In some cases, the inheritance may be small relative to the beneficiary's own wealth," adds Araujo.

He says this is seeing growing interest among grandparents using investment bonds to give their grandchildren a healthy financial start in life, for example, by bequeathing the funds to buy a first home.

"It can ensure a bequest makes a lasting difference," says Araujo.

McGuire believes people of all wealth levels can benefit from holding investment bonds, ensuring their assets are allocated to the desired recipients at the right time and in the right way, tax-free.

He notes also that investment bonds can be used to navigate what may be deeply challenging family circumstances.

"One elderly client of mine sadly has no contact with her grandchildren, but still wants to leave a legacy for them," says McGuire. "By setting up separate investment bonds for each grandchild, there will be complete discretion about the inheritance. In this way, investment bonds have allowed my client to ensure she is remembered by her estranged grandchildren, without fear of legal wrangling that could see her final wishes overruled."

What to weigh up

You don't need much upfront cash to get started with an investment bond. Minimum opening investments can be as low as $1000. If you start small, bear in mind the 125% rule that will limit subsequent contributions. If you wish to add more, the answer can be to open another investment bond.

Investment bonds are known for their tax-efficiency because no tax is payable by the investor provided the investment bond is held for at least 10 years. However, the investment is taxed internally at the company tax rate of 30%, or potentially less after the benefit of franking credits and other concessions.

This makes investment bonds particularly attractive for anyone with a marginal tax rate of more than 30%, though potentially less tax-effective for those on a lower marginal tax rate.

Like all managed investments, investment bonds come with fees. Read the fine print to understand the fees you'll be asked to pay.

Three key pluses of investment bonds for estate planning

Generation Life's Felipe Araujo points to three features that are unique to investment bonds.

1. Certainty -  investment bonds sit outside a will

An investment bond nominated in favour of a particular beneficiary is a non-estate asset that cannot be challenged in the same way as a will. Araujo says this provides the upside that "investment bonds bypass probate, ensuring faster distribution of asset".

2. Confidentiality

As investment bonds don't need to go through probate, the proceeds of an investment bond can be paid confidentially.

As McGuire puts it: "No other family member knows who received a particular inheritance." This makes it possible to pass on wealth to a particular beneficiary without raising the ire of other relatives.

3. Control - a direct say in who gets what and when

Araujo explains that an investment bond gives control over "how and when intended recipients can access the money".

For instance, the proceeds of an investment bond can be drip-fed to a beneficiary over a specified period - perhaps years.

This level of control can be a real plus for anyone wanting to provide for the long-term financial needs of, say, children with special needs or adult children who lack experience managing large sums of money.

On this episode of the Friends With Money podcast, Money's Tom Watson is joined by Andrew Dinsdale-Scanlon from TelstraSuper Financial Planning.

They run through the financial strategies that could help Australians maximise their age pension entitlements.

00:00 Introduction

00:41 Overview on maximising the age pension

01:48 Strategies to reduce assets

03:31 Spousal contributions

05:13 Understanding lifetime pensions

08:07 The impact of debt on the age pension

09:49 Conclusion

*Proudly brought to you by Telstra Super

Disclaimer: Andrew Dinsdale-Scanlon is a financial adviser with Telstra Super Financial Planning Pty Ltd ABN 74 097 777 725 AFS Licence No. 218705. TelstraSuper Financial Planning provides financial advice service to members of TelstraSuper ABN 85 502 108 833. Telstra Super Pty Ltd ABN 86 007 422 522 is the trustee of TelstraSuper and wholly owns TelstraSuper Financial Planning. Advice that Andrew gives is of a general nature and does not take into account the particular circumstances or needs of any specific person and because of that, you should consider your own circumstances before acting on any advice . Additionally, the scenarios discussed are based on the relevant superannuation rates and thresholds for 2024/25 and may change in future years. If you are considering acquiring a financial product from TelstraSuper you should read the relevant product disclosure statement and target market determination before making a decision which are available at www.telstrasuper.com.au. The financial services guide for TelstraSuper Financial Planning is available at www.telstrasuper.com.au.

Listen to this episode of Friends With Money

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Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

In this episode of the Friends With Money podcast, Michelle Baltazar, editor-in-chief of Money Magazine, discusses the concept and benefits of global private credit with Nehemiah Richardson, chief executive and managing director of Pengana Credit.

The discussion centers around why diversification, especially in financial uncertain times, is important and how global private credit can offer attractive investment opportunities.

They also touch on how retail investors can access this asset class and introduce Pengana's TermPlus product.

00:19 Market whiplash and diversification

00:56 Understanding global private credit

01:51 Investment characteristics and benefits

04:14 Risk mitigation and manager selection

06:17 Local vs. global private credit

10:12 Innovations in global private credit

10:56 TermPlus: A new investment product

14:37 Final thoughts and advice

*This podcast is proudly brought to you by Pengana Capital.

Disclaimer: Pengana Capital Limited (Pengana) (ABN 30 103 800 568, AFSL 226 566) is the issuer of units (Term Accounts) in TermPlus (ARSN 668 902 323). Any advice provided is general in nature and does not take into account your particular objectives, financial situation or needs. You should consider the PDS and TMD available at www.termplus.com.au before investing in TermPlus. For further details, please see the Important Information page at www.termplus.com.au/important-information.

Listen to this episode of Friends With Money

Listen on Apple Podcasts

Listen on Spotify

Watch on YouTube for closed captions

Subscribe to Friends With Money

Subscribe wherever you get your podcasts

Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

On this episode of the Friends With Money podcast, Money's Tom Watson is joined by Sarah Forman, chief retirement officer at Team Super, to discuss the benefits of taking an active interest in super (and how to get started).

00:00 Introduction

01:27 Three things every super member should know

04:02 Insurance and superannuation

05:32 Practical tips for managing super

08:01 The role of financial advice

10:46 Making superannuation relatable

13:03 Conclusion

*This podcast is proudly brought to you by Team Super. Sarah Forman is the Chief Retirement Officer of Team Super.

Issued by Team Super Pty Ltd ABN 70 003 566 989 AFS licence 246864 as Trustee for the Team Superannuation Fund ABN 16 457 520 308. Any financial advice in this podcast does not take into account your financial situation, needs or objectives. Before acting, consider if the information is right for your needs and circumstances and read the relevant Product Disclosure Statement (PDS) at teamsuper.com. The Target Market Determinations for our financial products can be found at teamsuper.com/tmd. Financial planning services are provided by Team Super Financial Advice a trading name of Team Super Services Pty Ltd ABN 49 051 315 014 AFS licence 502700 and is a wholly owned subsidiary of Team Super Pty Ltd.

Listen to this episode of Friends With Money

Listen on Apple Podcasts

Listen on Spotify

Watch on YouTube for closed captions

Subscribe to Friends With Money

Subscribe wherever you get your podcasts

Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

Interest rates look set to fall and sharemarkets remain volatile. For investors seeking regular returns that outpace inflation, the options seem to be narrowing. But there is an asset class that can tick all the boxes.

There's a growing consensus that the next move for interest rates is down.

Depending on which big bank economists you listen to, we could be looking at decent falls, possibly a cascade of rate cuts, which could run through to early 2026.

This may be welcome news for the one in three Australians with a mortgage. But for investors looking for healthy, reliable returns - and this includes many of the nation's 4.2 million retirees - lower interest rates can go hand-in-hand with loss of income.

It's not just retirees likely to feel the pinch.

Australia's 619,000 self-managed super funds (SMSFs) typically have a significant investment in cash and term deposits - around 16% of net assets nationally, according to Australian Taxation Office data.

For the 1.1 million Australians who are members of an SMSF, softer interest rates have the potential to reshape retirement plans.

This raises the question 'where to from here?' for investors looking for regular returns that beat inflation.

There is a potential solution. The answer can lie with global private credit.

What is global private credit?

Private credit simply refers to non-bank lending.

When we talk about global private credit, it means the international market for non-bank loans to private companies. In practical terms, we're talking about North America and, to a lesser extent, Europe, which dominate the global private credit market.

Demand for private credit globally has been rising for some time, fuelled by the tightening of banks' capital requirements in the aftermath of the 2008-09 global financial crisis.

For borrowers (usually medium-sized businesses), the appeal of private credit is the opportunity for more bespoke financing solutions compared to traditional bank lending. However, this level of tailoring comes at 
a premium. For investors, that premium translates into the potential for higher yields.

The upshot is that both borrowers and investors have been keen to tap into global private credit opportunities, and this has driven substantial market growth.

By way of example, the Reserve Bank of Australia (RBA) says the global private credit market has quadrupled in value over the past decade, reaching $US2.1 trillion ($3.25 trillion) in 2023.

What sort of returns does global private credit generate?

According to the RBA, private credit has 'an attractive risk-return trade-off', with a relatively high interest rate coupled with low volatility. That's very appealing for investors.

Even so, unlike sharemarkets, private credit is not a publicly traded market. So, there is no single index or benchmark that shows past or current returns.

NAB estimates that returns can vary from around 7% through to 15%, though the higher the return, the greater the risk for investors.

The key is to look for transparency around likely returns.

As a guide, global private credit fund manager - Pengana Capital Group - offers an online term account product called TermPlus, which targets monthly returns linked to the RBA cash rate plus a fixed spread.

A 1-year TermPlus account, for instance, aims to return 6.85%pa based on the RBA's cash rate plus 3%.

Choose a 5-year TermPlus product and you can expect a variable return of 8.00% comprising the official cash rate plus an extra 4.15%.

It's a no-brainer that these are attractive returns for many investors. And with Pengana's TermPlus account, investors can choose how they are paid - either receiving monthly income or reinvesting it for compound returns. Better still, the minimum investment is just $2000, so the product is available to a wide range of investors.

That said, investors need to be aware of - and weigh up - the risks of global private credit.

Understanding the risks

To begin with, global private credit is not the same as savings in the bank account. You won't get the protection of the Federal government's guarantee on deposits.

This makes it essential to understand the potential risks involved.

Earlier in 2025, investment regulator ASIC announced it is taking a closer look at private credit in Australia.

ASIC Chair Joe Longo has expressed concern about the local private credit market. He notes, "While it does not appear to be systemically important in Australia,  failures are on the horizon and, at current volumes, it is untested by prior crises."

Nehemiah Richardson, chief executive of Pengana Credit, says that with more options becoming available it's important to recognise not all private credit is the same.

"There are some key characteristics of private credit investing that all investors should consider before taking the leap into this asset class," he says.

Diversification is key

An investment in private credit can bring valuable diversity to a portfolio.

According to Richardson, investors should ideally be diversified across geography, strategy, manager, industry, loan origination and more.

The problem, he explains, is that this level of diversification is difficult to achieve in Australia's domestic private credit market.

By contrast, Richardson points out that the leading global private credit funds, like TermPlus, may invest in up to two dozen managers and have 2000 or more underlying loans.

Moreover, he says banking industries behave very differently in Australia compared with the US and Europe.

"The Australian private credit market is skewed to areas where banks don't lend," says Richardson.

"Global private credit, on the other hand, is skewed to defensive industries such as business services, infrastructure services, healthcare, and consumer staples."

Within these industries, Richardson says quality fund managers will focus on companies with strong market positions, pricing power and stable cashflows - qualities he believes that are "critical to managing downside risk".

Additional layers of protection

Individual fund managers may also offer their own safety measures.

Pengana Capital, for example, adds an additional layer of security to its TermPlus accounts through its Support Account - effectively a co-investment by Pengana that provides an extra pool of funds and returns to underpin monthly payments and investor savings.

The verdict

In volatile times, such as we are seeing at present, investors typically seek growth and resilience - qualities that accounting firm EY says private credit markets have demonstrated in abundance in recent years.

By following some simple strategies, it may be possible to enjoy the best of both worlds - strong, regular returns while minimising risk.

These steps can include:

• Taking a global rather than local outlook
• Seeking out an experienced private credit fund and 
• Knowing the risks involved.

Tick these boxes and investors can be rewarded with healthy returns and the added sweetener of portfolio diversification.

Money's Vanessa Walker chats with Telstra Super's Rebecca Cheevers and Sophie McRae about downsizing contributions, the impact of selling your home on pension entitlements, and strategies for couples where one partner is still working.

They also explore the benefits and drawbacks of reverse mortgages and the Home Equity Access Scheme for retirees.

00:15 Exploring the role of the family home in retirement

01:00 Downsizing and super contributions

03:34 Impact on age pension and financial strategies

05:54 Home equity access schemes and reverse mortgages

07:56 Using the family home for aged care

*Proudly brought to you by Telstra Super

Disclaimer: Rebecca Cheevers and Sophie McRae are financial advisers with Telstra Super Financial Planning Pty Ltd ABN 74 097 777 725 AFS Licence No. 218705. TelstraSuper Financial Planning provides financial advice service to members of TelstraSuper ABN 85 502 108 833. Telstra Super Pty Ltd ABN 86 007 422 522 is the trustee of TelstraSuper and wholly owns TelstraSuper Financial Planning. Advice that Rebecca or Sophie gives is of a general nature and does not take into account the particular circumstances or needs of any specific person and because of that, you should consider your own circumstances before acting on any advice . Additionally, the scenarios discussed are based on the relevant superannuation rates and thresholds for 2024/25 and may change in future years. If you are considering acquiring a financial product from TelstraSuper you should read the relevant product disclosure statement and target market determination before making a decision which are available at www.telstrasuper.com.au. The financial services guide for TelstraSuper Financial Planning is available at www.telstrasuper.com.au.

Listen to this episode of Friends With Money

Listen on Apple Podcasts

Listen on Spotify

Watch on YouTube for closed captions

Subscribe to Friends With Money

Subscribe wherever you get your podcasts

Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

Australians have a lot to look forward to.

I'm not talking about the footy match that might be happening this week, or the vacation that's fast approaching.

I'm thinking much further ahead - to retirement.

Australians are living longer. Better still, we are enjoying healthier lives.

It means retirement has the potential to be a long - and with the right planning - very rewarding life stage.

Retirees will have the weight of numbers

It's amazing to think that by 2050, nearly one in four Australians will be aged over 65.

This demographic shift is already underway.

The number of Australians aged 65-plus is forecast to overtake the number of children aged 0-14 years in 2025.

The fact is, many of us will live to a ripe old age, and we need to plan for a retirement that could stretch for 30 years or more.

Planning for a retirement spanning 30 years

Members of Commonwealth Super Corporation (CSC) have traditionally retired earlier than the general population, with an average retirement age of 57. Many are still with us, aged well into their 90s.

More recently, in keeping with broader social trends, we have seen a shift as some CSC members are choosing to work for longer before transitioning into retirement.

Either way, many Australians could spend close to one-third of their life in retirement, and planning for such a lengthy life stage should go beyond the financial. Money remains a crucial factor in retirement. But it is just one piece of the broader retirement picture.

The need for a holistic approach

Ask any retiree, and they are likely to tell you that retirement brings a new mindset, emotional shifts and social changes.

CSC recognised this some time ago, and we realised that as a super fund, we needed to think holistically.

The result is that we have aimed to partner with our customers to deliver tailored support, not just in terms of their super savings, but across their broader retirement journey.

A key element of this has been achieved through our innovative Retirement Income Strategy (RIS).

Tailored support before, during and after retirement

CSC's Retirement Income Strategy encompasses a suite of retirement resources that aim to smooth the path to, and throughout, retirement.

It all begins with our customers completing a profile by ticking various boxes that reflect their lifestyle, such as whether they are a renter, home owner, a single person or part of a couple.

This matters because singles, for instance, may have very different income needs in retirement compared to couples.

With their customer profile completed, our Retirement Income Strategy takes the guesswork out of customer's retirement incomes by linking their personal circumstances to the appropriate product solutions.

In this way, our Retirement Income Strategy is playing a pivotal role, ensuring financial security and stability for retirees. This is especially valuable for those with cognitive decline, allowing retirees to focus on their health without financial stress.

Leading the way

As a super fund, CSC has always had a core focus on education and guidance for all our customers, even if they are a decade or more away from retirement.

When our big wave of retirees comes in, we will have been continuously testing, learning and enhancing our retirement journey so both our customers, and CSC, will be prepared.

With more than 100 years of experience, CSC is committed to supporting our customers in retirement through valuable innovations because we know that financial comfort in retirement correlates with higher happiness levels across the board.

Try this brain teaser: How much do you pay your super fund in fees each year?

If you're not sure, or you just don't know, you're not alone.

The fact is, the majority of Australians are in the dark about the cost of their super.

That's not surprising.

You're paying multiple types of fees. Yet Vanguard research shows two in three Australians aren't aware of this.

Why fund fees matter

By the time you retire, your super is likely to be your second biggest investment, just behind the family home.

However, unlike your home, super provides regular income in retirement.

It makes super a critical investment for your future.

Yet it's surprising how much of your super savings can be siphoned off in fund fees.

Last financial year, $10 billion in fees was paid to super funds collectively. Almost 90% of this was paid out of members' super balances - money that could have been invested for their retirement.

The fee drain adds up over time.

The Productivity Commission found that an increase in fees of 0.5% can cost a typical full-time worker more than $100,000 by the time they reach retirement.

So, while you may not feel any hip pocket impact from fees today, you certainly will by the time you're ready to hang up your work boots.

Why the confusion over fund fees?

It's no surprise many Australians are unsure what they're paying in fees.

Super funds are often quick to spruik low administration fees.

All funds charge investment management and transaction fees, but you could also be paying a variety of other fees including performance fees and investment switching fees.

Yet when it comes to how all these fees are presented on websites, social media and in advertising, there is no consistency. It's confusing, unclear, and almost impossible to compare between funds.

The upshot is that while you may think your fund charges competitive fees, the reality can be very different.

What do 'low fees' look like?

There is a way to gauge where your fund sits on the fee spectrum if you invest in the fund's MySuper offer. The solution is the online YourSuper comparison tool available on the Australian Taxation Office website.

It pulls together fees from over 50 MySuper products using data collected by fund regulator APRA.

A user can enter their age and super balance to get more personalised results. They can also log in to MyGov to prefill this information.

By clicking on the 'Annual fee' tab, you can see funds ranked by the fees they charge on a $50,000 balance.

The YourSuper tool shows Vanguard Super ranks third lowest for fees, with an annual fee of just $280. In practical terms though Vanguard ranks higher as at least one of the top two funds is not open to the public.

At the other end of the scale, the most expensive fund charges annual fees of $659 - a difference of $379 each year.

It's not hard to see how over 30 or 40 years in the workforce, the savings of a low fee fund can really stack up.

It's never too late to check your fund's fees

There are clear opportunities to improve fee transparency for Australians when it comes to their super. And Vanguard would welcome initiatives that would make it easier for all Australians to know what they're being charged.

Until this happens, the onus is on fund members to work out what they're really paying.

Back to that brain teaser.

If you're among the millions of people who are unsure how much your super fund is costing you each year, it's time to take a closer look.

Check your super account online. Review your most recent fund statement. Or simply pick up the phone and ask your fund.

Chances are, you're paying more than you realise.

If that's the case, it's time to think about switching to a fund with lower fees. It can see more of your money invested for the future, and after all, that's exactly what superannuation is designed to do.

This week on the Friends With Money podcast, Money's Tom Watson is joined by Jeremy Lack, financial adviser with TelstraSuper Financial Planning, to chat about the emerging digital tools assisting superannuation members with retirement planning. They discuss:

• The types of digital super tools already out there
• Which super members can benefit from using them
• Navigating investment options and risk
• Working out how long super will last in retirement
• How digital tools fit in with traditional financial advice

*This episode is proudly brought to you by Telstra Super.

Listen to this episode of Friends With Money

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Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

Consolidation among Australian superannuation funds continues, driven by regulatory changes and market forces. This is positive for members, providing super funds with the scale necessary to deliver efficiencies and enhance retirement outcomes.

An example is the merger between Mine Super and TWUSUPER, a strategic move that enhances the sustainability of the combined entity, Team Super.

"By pooling resources, Team Super will be better positioned to deliver lower fees, enhance investment returns, invest in technology and offer a broader range of services. The rebrand to Team Super is more than just a change in name," says Mine Super chief executive Vasyl Nair, who will head the combined fund.

"It is a symbol of the fund's commitment to championing Aussie workers and their retirement outcomes. This follows a transformative period for

Mine Super where our strong investment performance is just one part of a larger story of transformation," he says.

KPMG predicts there will be ongoing consolidation in the superannuation sector.

"Members can get good outcomes given how competitive these mergers are and the strength of the resulting superannuation businesses," says Linda Elkins, head of superannuation at KPMG Australia.

"The ongoing consolidation is likely to be driven by sustainability concerns, as superannuation funds deal with the need to increase their operational resilience and continually improve member services."

University of Sydney's Professor of Finance Susan Thorp says that members benefit from lower administration fees when fund mergers create economies of scale.

"Members of underperforming funds that merge with more efficient funds may pay lower administration fees if efficiencies transfer to the new accounts. These members may also feel more confident that their savings are being well managed," says Thorp.

She notes there are pros and cons when it comes to a superannuation fund's size.

"While greater scale may open up new investment opportunities for super funds, these opportunities do not always come with lower investment fees and higher returns," says Thorp.

"But as more members move into retirement, larger scale superannuation funds can develop the sophisticated decision supports and retirement products retiring members need," she adds.

For Mine Super, the journey to merge and increase its scale has been years in the making with the fund delivering a series of changes over recent years. This has translated into market-leading investment performance and the realisation of member benefits that make a real difference.

This includes a 25% reduction in the fund's fixed administration fee and further enhancements to the insurance offer and investments menu.

"Our part in the consolidation narrative is a really positive one," says Nair. "We're a great example of how two strong-performing funds like Mine Super and TWUSUPER can continue to enhance their offers and value to members, without losing their connection to members."

Superior retirement outcomes 

Mine Super has a rich history spanning more than 80 years, serving the retirement needs of workers in mining and related industries. It was established with a deep understanding of the unique challenges and risks faced by these workers.

Over the years, Mine Super has grown and adapted, always with the focus on protecting and growing its members' retirement savings. The merger with TWUSUPER is testament to this commitment, as it allows the combined entity to offer enhanced services and even better returns, safeguarding members' retirement nest eggs.

"Superannuation plays a crucial role in supporting the retirement outcomes of Australian workers. It is designed to provide savings that can support individuals during their retirement years, ensuring they can maintain a reasonable standard of living without relying solely on the age pension," says Nair.

"Mine Super recognises the importance of offering products and services that align with the core purpose of superannuation."

This includes investment options that cater to members' risk profiles and life stages. Insurance appropriate for its members is key and Mine Super's insurance policies are tailored to the needs of workers in high-risk occupations.

While investment markets are inherently volatile, Mine Super maintains a long-term focus, understanding that the true value of superannuation is realised over decades. The fund's investment strategy is designed to weather market volatility, with a mix of growth and defensive assets that align with members' life stages. This ensures members' retirement savings are positioned for long-term growth, despite the inevitable ups and downs of the market.

"Mine Super has the scale and performance of a large fund, but it retains the personal touch and commitment of a smaller fund," says Nair.

"Our approach is rooted in a deep understanding of the industries its members work in, so the fund's products and services are tailored to their needs. This combination of scale and personalisation allows Mine Super to deliver exceptional outcomes for its members."

Empowering members 

Education is a cornerstone of Mine Super's approach to supporting members. This is because the fund understands that some members, particularly younger ones, may not fully grasp the importance of superannuation or the power of compound interest.

"Compound interest is a fundamental concept in retirement planning, yet it can be challenging to explain to young people, who may be focused on immediate financial concerns. Mine Super tackles this challenge by using clear, simple language and real-life examples 
to illustrate how small contributions can grow into substantial retirement savings over time," says Nair.

Through on-site seminars, workshops and digital resources Mine Super aims to demystify super and empower members to take control of their retirement savings. The fund's team regularly visits work sites and industry events, delivering seminars and one-on-one consultations. "This boots-on-the-ground approach ensures education is accessible and relevant, helping members to make informed decisions at every stage of their working lives," says Nair.

Mine Super gives members access to financial advisers who can help plan retirement outcomes.

"We believe in the value of advice and the role it can play in helping members achieve the retirement outcome they deserve. As we increase in scale, we remain committed to ensuring advice remains accessible to our members, wherever they live," says Nair.

Move towards sustainability

Mine Super's investment performance has been positive over recent years and the fund is optimistic that with increased scale it can continue to deliver strong results for members.

Building on the performance success of recent years reflects strong product design and an investment strategy that is regularly monitored, with the fund agile enough to pivot when needed.

"The rebrand to Team Super is a powerful statement of the fund's purpose and values. It reflects Mine Super's long-standing heritage in the mining industry and its commitment to supporting workers in high-risk occupations. It solidifies Mine Super's position as a champion for Aussie workers, dedicated to protecting and growing their retirement savings," says Nair.

The consolidation of the super sector is a trend that is set to continue, driven by the clear benefits it offers to fund members.

This week on the Friends With Money Podcast, financial expert Michelle Baltazar and aged care specialist Caroline Rees tackle your questions about:

• Key considerations for making informed decisions
• Funding options to navigate the financial aspects
• Tax implications to understand the financial landscape
• Getting started on the planning process

Disclaimer: Caroline Rees is a financial adviser with Telstra Super Financial Planning Pty Ltd ABN 74 097 777 725 AFS Licence No. 218705. TelstraSuper Financial Planning provides  financial advice service to members of TelstraSuper ABN 85 502 108 833. Telstra Super Pty Ltd ABN 86 007 422 522 is the trustee of TelstraSuper and wholly owns TelstraSuper Financial Planning  Advice that Jeremy gives is of a general nature and does not take into account the particular circumstances or needs of any specific person and because of that, you should consider your own circumstances before acting on any advice. If you are considering acquiring a financial product from TelstraSuper you should read the relevant product disclosure statement and target market determination before making a decision which are available at  www.telstrasuper.com.au.

Listen to this episode of Friends With Money

Listen on Apple Podcasts

Listen on Spotify

Watch on YouTube for closed captions

Subscribe to Friends With Money

Subscribe wherever you get your podcasts

Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

This week on the Friends With Money podcast, Money's Tom Watson is joined by Janine Grainger, founder and chief executive of cryptocurrency trading platform EasyCrypto, to chat about some of the basics of cryptocurrency.

• What is cryptocurrency?
• Are there different types of cryptocurrency?
• Why should Australians care about it?
• What are some of the potential benefits and risks of holding crypto?
• How can cryptocurrency be purchased and held?
• Is cryptocurrency regulated in Australia?

Listen to this episode of Friends With Money

Listen on Apple Podcasts

Listen on Spotify

Watch on YouTube for closed captions

Subscribe to Friends With Money

Subscribe wherever you get your podcasts

Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

This week on the Friends With Money podcast, Money's Tom Watson is joined by director of tax communications at H&R Block, Mark Chapman, to talk all things tax in the lead up to the 2024/25 financial year. They discuss:

• Stage three tax cuts and small business changes
• Property, crypto and other ATO focus areas
• Working from home deductions
• How to start getting prepared 
• The last-minute deductions worth considering

Listen to this episode of Friends With Money

Listen on Apple Podcasts

Listen on Spotify

Watch on YouTube for closed captions

Subscribe to Friends With Money

Subscribe wherever you get your podcasts

Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

This week on the Friends With Money podcast, Money's Tom Watson is joined by Renae Anderson, manager of select advice at UniSuper, to chat about the super moves worth considering before and after July 1. They discuss:

• When and how to make a personal contribution
• Whether it's possible to top up a spouse or partner's super
• The new super guarantee rate in 2024-25
• Advice for women looking to boost their super balances
• The range of advice available from super funds

This episode is brought to you by UniSuper.

• For calculators: UniSuper calculators and tools
• For upcoming webcasts: UniSuper Learning Hub 

The information in this podcast is of a general nature and doesn't consider your personal circumstances. Before making decisions, you should consider whether the information is appropriate for your circumstances otherwise seek financial advice.

Listen to this episode of Friends With Money

Listen on Apple Podcasts

Listen on Spotify

Watch on YouTube for closed captions

Subscribe to Friends With Money

Subscribe wherever you get your podcasts

Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

Australians increasingly want their money invested ethically, and there are now a number of ways to do that. They include shares, exchange traded funds and managed funds.

But more and more investors are looking at a wider universe of opportunities when deciding how to allocate their money. They are incorporating alternative investments in their portfolio to meet their individual goals, get access to reliable returns and diversify their assets.

Specialist disability accommodation (SDA) is one opportunity that has the potential to meet a variety of investor needs. But it's essential for anyone allocating money to this area to choose a support team with a good track record and a reputation for quality developments.

Research shows how important ethical investing is becoming. According to the Responsible Investment Association Australasia's report From Values to Riches 2022: Charting consumer demand for responsible investing in Australia, 83% of Aussies expect their bank account and super to be invested responsibly and ethically.

At the same time, demand for accessible housing among National Disability Insurance Scheme (NDIS) participants has never been higher. Research in 2020 by the Summer Foundation found there was a shortfall of more than 7700 housing places for NDIS participants.

It's likely that four years on and during an affordable housing crisis, the number of NDIS participants who need housing is now considerably higher.

The Summer Foundation's report, Getting the NDIS back on track: A survey of people with disability, November 2022, has shown NDIS participants are frustrated with long wait times for decisions about funding for housing. They also want better access to independent housing and housing choices, in addition to better access to home modifications and equipment.

This research explores the fundamentals of SDA housing and its distinctive characteristics, how it compares with other investments and its potential returns and associated risks.

Long-term income

SDA housing is a vehicle that can help connect investors wanting to make a difference with people who need access to appropriate housing. This term refers to purpose-built accommodation designed to support individuals with complex, specific needs, offering a range of features and modifications to facilitate independent living.

The NDIS provides financial support for accommodation for eligible individuals. Investors in SDA housing can secure long-term rental income through NDIS funding, which helps to mitigate the risk of vacancy and rental market fluctuations. The SDA payment is a standard, annual amount based on the property's location, features, size and level of accessibility.

"Often, people with disabilities find they are living in housing that's not appropriate for their needs. Developing SDA housing as an asset class can help
to address that," says Nic Alessio, group head of acquisitions, Apollo Investment.

Before investing, it's essential to understand how SDA housing generates its return.

It is designed to accommodate individuals with significant functional impairments or high support needs. The dwellings are purpose-built and incorporate features such as wider doorways, specialised bathroom facilities and advanced technology, to enhance accessibility.

The need for inclusive and supportive housing options for individuals with disabilities has grown significantly in recent years. SDA housing addresses this demand by providing specialised living arrangements that cater to the unique requirements of people with disabilities.

"Investing in SDA housing not only aligns with ethical considerations but also presents an opportunity for long-term financial stability and growth," says Alessio.

Hedge against inflation

When evaluating SDA housing, it is crucial to understand how it compares with other property investments.

Unlike standard residential properties, SDA housing benefits from a government-backed funding model, creating a reliable income stream. The typical entry level investment is between $900,000 and $1 million, and returns are around 13% to 15% a year.

"Demand for specialised accommodation will only continue to rise, providing stability and a potential appreciation in property value," says Alessio.

Importantly, SDA housing investments have the potential to act as a hedge against inflation.

As property values tend to appreciate over time, investors may experience capital growth that outpaces inflation rates, preserving and potentially enhancing their wealth. SDA income is also annually indexed to the CPI.

Beyond financial returns, investing in SDA housing aligns with investors' ethical considerations. Supporting individuals with disabilities by providing safe and accessible housing contributes to positive social impact, which enhances the overall appeal of these investments.

Risk versus reward

While SDA housing may present an interesting investment opportunity, it's vital to understand the potential risks. "It's important to understand that the NDIS is legislated. So a change of government does not necessarily impact how it operates," says Alessio.

Although the NDIS is legislated, changes in government policies or NDIS funding mechanisms may impact the returns on SDA housing investments in the future. So, it's important for investors to keep up to date with regulatory developments to mitigate the impact of potential policy shifts on returns.

SDA housing also requires specialised property management to ensure properties comply with disability accommodation standards and to maintain tenant satisfaction. Partnering with experienced property managers who are familiar with the unique requirements of SDA housing can mitigate operational risks.

As with any investment, SDA housing is susceptible to broader economic conditions and market fluctuations. So, it's essential to do thorough market research and stay informed about demographic trends to make informed decisions and navigate potential challenges associated with a relatively new investment opportunity.

How it works

One SDA property investment that Apollo Investment Australia recently finalised was a two-bedroom, high-physical support property north of Perth. It means two young women, who had lived in institutional accommodation for a number of years, found their forever home.

"They have been best friends since they were teenagers, but they suffer from muscular dystrophy. We got to be there on the day they moved in.

It's massively rewarding to be involved in situations like this," says Nic Alessio.

The investor paid $946,800 for the property, which will return $190,769 for 2023-24.

This week on the Friends With Money podcast, Money's Tom Watson is joined by Jeremy Lack from TelstraSuper Financial Planning to discuss picking an investment option in your superannuation.

• How do super funds invest?
• What investment options can members choose from?
• How can super members get their investment mix right?
• What kind of impact can investment options have come retirement?
• Where can super members go for guidance?

This episode is brought to you by TelstraSuper.

Jeremy Lack is a financial adviser with Telstra Super Financial Planning Pty Ltd ABN 74 097 777 725 AFS Licence No. 218705. TelstraSuper Financial Planning provides financial advice service to members of TelstraSuper ABN 85 502 108 833. Telstra Super Pty Ltd ABN 86 007 422 522 is the trustee of TelstraSuper and wholly owns TelstraSuper Financial Planning. Advice that Jeremy gives is of a general nature and does not take into account the particular circumstances or needs of any specific person and because of that, you should consider your own circumstances before acting on any advice . If you are considering acquiring a financial product from TelstraSuper you should read the relevant product disclosure statement and target market determination before making a decision which are available at www.telstrasuper.com.au. The financial services guide for TelstraSuper Financial Planning is available at www.telstrasuper.com.au

Listen to this episode of Friends With Money

Listen on Apple Podcasts

Listen on Spotify

Watch on YouTube for closed captions

Subscribe to Friends With Money

Subscribe wherever you get your podcasts

Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

Individual investors can now more easily access mortgage funds, an investment opportunity that has traditionally only been available to institutional investors and high net-worth individuals, and benefit from the regular income and diversification advantages these funds deliver.

Before allocating money to mortgage funds, however, it's important for investors to ensure that the fund manager has a strong track record in the asset class and a proven method for managing risk through market cycles.

How mortgage funds work

A mortgage fund is an investment product that is on-lent to borrowers who use the funds to buy or develop properties or for other investments. In return, the fund promises to pay investors a regular income with the interest paid by the fund's borrowers.

Investors typically allocate money to a mortgage fund because they want access to a regular stream of income and attractive rates of return, generated by a fixed, short- to medium-term investment, secured by real estate.

"Mortgage funds are becoming an increasingly popular investment with retail investors, sophisticated investors and self-managed super funds," says Morgan Ng, managing director, Maxiron Wealth.

Pooled funds

Mortgage funds come in two main categories: pooled and contributory funds.

A pooled fund is an investment vehicle through which multiple investors contribute funds that are used to invest in a diversified portfolio of mortgages.

The Maxiron Monthly Income Trust, for example, is structured so that the fund lends to a special purpose vehicle which on-lends to borrowers. For added security, the special purpose vehicle holds additional capital and promises to pay the trust a fixed rate of return.

Fixed-rate funds give investors exposure to a source of regular, passive income at a known target rate of return for a fixed term. Some funds also offer a variable rate of return, but investors have less certainty about the income their investment will generate with these funds.

Pooled mortgage funds may offer a range of short- to medium-term investment options, to allow investors to manage their cashflow requirements.

"These structures offer diversification benefits, as investors are able to spread their money across a pool of mortgages. This may reduce the risk because the money is apportioned over a number of loans, rather than simply being exposed to a single loan or borrower," explains Ng.

This diversification mitigates the risk of investors losing money in the event any borrowers default on a mortgage, as the other investments will continue to generate interest to pay investors a return.

More recently, pooled mortgage funds have become more accessible to investors, as options in this asset class have emerged that have a lower minimum investment amount than wholesale mortgage funds generally require.

These retail investment funds must meet stringent regulatory requirements to ensure investors' funds are properly protected and managed.

"This has opened up the mortgage fund opportunity to a larger group of individual investors," says Ray Saedi, executive fund manager, vice president, Maxiron Wealth.

The way funds work, provided the special purpose vehicle manages its loans well, is that investors earn interest regardless of the performance of the underlying loans, which may impact returns. They have no influence over where the funds are invested.

Contributory funds

By contrast, with a contributory fund, investors have direct control over where their funds are invested and can choose their level of exposure to particular properties.

The main disadvantage of contributory mortgages is that there is normally a smaller number of assets in the fund versus pooled funds, which increases risk on a relative basis, especially if any borrowers default.

With contributory mortgages, interest isn't usually paid until the loan has been fully funded. Plus, investors are normally required to allocate a large minimum amount - often hundreds of thousands of dollars - to these funds. This is because there is a limit to the number of investors who are part of the fund.

Additionally, contributory mortgages come with liquidity limitations. Each mortgage in the fund has different terms and conditions, so investors may not be able to access their capital on a short-term basis, with their funds tied up for months or years.

"You can't easily withdraw your investment until the loan is repaid by the borrower. This can be a problem if you need extra funds for unbudgeted expenses or emergencies," says Saedi.

As for the impact of different variables on performance, pooled mortgage funds with a fixed target return rate are often attractive to investors looking for investments whose returns are uncorrelated to the current economic cycle or interest rate movements.

This is because the unit price, rate of return and term are fixed. So, the target rate the fund earns doesn't change within the term of the investment, no matter where the cash rate cycle is.

Nevertheless, it's vital for mortgage funds to adjust their strategies to take into account current market conditions.

For instance, during periods of economic uncertainty, fund managers may shorten borrowing terms from 18 months to 12 months, for example. Or they may reduce loan sizes.

"This can increase the turnover of loans and reduces the risk of default or late payments," says Saedi.

What to consider first

Investors need to explore many factors before allocating money to a mortgage fund.

As a starting point, it is worth looking into the different types of borrowers in the fund.

For example, develop a picture of the credit quality of the entities whose loans are in the fund, the industries in which they operate and the type of properties to which the fund managers are prepared to lend.

The wider the universe of borrowers - for instance, a healthy range of different residential and commercial loans, and the industries and geographies of the properties in the fund - the lower the risk to investors.

It's essential to understand how the fund manager assesses borrower risk.

"Ideally, borrowers pay interest based on risk-adjusted rates. So, when borrowers are assessed as higher risk, they pay interest at a higher rate than borrowers who are assessed as representing a relatively lower risk," says Ng.

It's also important to unpack how the fund is governed. The best funds will have independent oversight and auditing - that is, the trustee is totally independent of the manager of the fund.

Do some research into the fund manager and management team's background and experience to develop a level of comfort about how the fund's assets are managed.

The key is to understand how the fund generates a return, manages risk and performs through the economic cycle. That's the best way to ensure the investment is aligned to your long-term investment goals and can help support your income and cashflow requirements.

This report is sponsored by Maxiron Wealth. It was independently researched and written.

Global exposure and diversification are the talk of the town. But not, it would seem, among all the nation's 600,000-plus self-managed super funds (SMSFs).

The Australian Taxation Office (ATO) publishes quarterly data on SMSF asset allocations. The latest figures (June 2023) confirm that the $876 billion invested in SMSFs is heavily concentrated in just two asset classes: cash ($147 billion) and Australian shares ($260 billion).

Together, these two asset classes account for close to half of all SMSF assets.

Even within their sharemarket holdings, SMSFs tend to focus on a limited number of names. A report by the SMSF software company Class shows that BHP and Woodside Energy are the two most commonly held stocks, favoured by almost one in two SMSFs.

Along with the resources sector, SMSFs also gravitate to financial stocks. The top 10 shareholdings are dominated by Westpac (held by 41% of SMSFs), CommBank (39%), NAB (39%), ANZ (38%) and Macquarie Group (28%).

This can be a red flag for SMSF trustees.

James Kingston is head of wealth solutions and insights, Australasia, at BlackRock, which manages the iShares suite of exchange traded funds (ETFs). "A high concentration in individual stocks can be rewarding, but it can also carry significant risks," he says.

"Individual stock returns can constantly fluctuate. An investor's risk appetite and time horizon - that is, how long they want to invest for - will determine whether they can withstand this volatility."

One strategy to help manage volatility is to invest in multi-asset ETFs.

Core of a portfolio

Just as ETFs have surged in popularity among individual investors who are attracted to their low-cost diversification, the ATO data confirms SMSF holdings in listed funds have jumped 70% over the past five years.

Broadly speaking, ETFs can focus on one, or many, asset classes.

"Single-asset class ETFs provide exposure to a particular asset class, such as stocks or bonds," says Kingston. "They can cover a broad range of sectors and geographies by tracking the performance of a representative index, such as the S&P/ASX 200 for Australian stocks."

However, for time-poor trustees, or those who aren't confident about selecting investments, Kingston says a multi-asset ETF can be used to form the core of the SMSF's portfolio.

"A multi-asset ETF, such as the iShares Balanced ESG ETF (ASX: IBAL), provides exposure to multiple asset classes, each with different characteristics. The benefit is that if one asset class performs negatively, the other asset classes within the ETF can potentially cushion some of those losses."

Multi-asset ETFs can also allow SMSFs to tap into hard-to-access asset classes, such as bonds, which can provide an element of capital stability.

As a guide, the iShares Balanced ESG ETF has a portfolio evenly allocated between global equities (50%) and global fixed income (50%). "In a single trade, investors can tap into more than 7000 stocks and bonds spanning nine regions across the globe," says Kingston.

"For investors with a moderate risk tolerance, who are seeking a balance between capital preservation and growth, a multi-asset ETF, such as IBAL, may offer additional ballast to their SMSF in terms of stabilising portfolio volatility and risk, and preserving future income."

Global markets in the mix

ATO data also reveals a surprising homegrown bias among SMSF investments. Just $14 billion is collectively held in overseas shares, a tiny fraction of the $260 billion allocated to Australian stocks.

"Having a high concentration of risk in a particular market is akin to putting all your eggs in one basket," cautions Kingston.

"It not only means losing out on winning markets, it also means losing the opportunity to offset losses occurring in one market, for example Australia, when other markets might be faring better.

"Global diversification through a multi-asset ETF helps investors navigate fast-changing markets around the world and stay the course 
to pursue their financial goals."

Another BlackRock fund - the iShares High Growth ESG ETF (ASX: IGRO) - features a globally diversified high-growth portfolio, with 90% invested in global equities and the remaining 10% in global fixed income.

It is a blend that has been thoughtfully put together by the BlackRock team.

"Within the equities sleeve, 56% is allocated to international equities and 34% is in Australian equities," says Kingston.

"Similar to the IBAL ETF, it has more than 7000 stocks across more than nine global borders - all in one single trade."

A key point of difference is the higher growth tilt of the iShares High Growth ESG ETF. There is still an exposure to bonds, although smaller, and this broad diversification allows SMSFs to potentially lower volatility and risk, yet still seek high returns.

According to Kingston, the balanced product could be more suited to investors seeking capital growth with a medium risk-return profile, while the high-growth version is worth a look by investors seeking capital growth with a medium to high risk-return profile.

Both the iShares ETFs pay distributions quarterly, which makes them a source of regular income for SMSF members in the drawdown phase.

The catch is that while retirement is meant to be a time of relaxation, two out of three Australians worry that they won't have enough money to enjoy a decent lifestyle.

But Jacki Ellis, head of retirement at Aware Super, says five simple steps can supercharge our super balances and allow more people to head into retirement with optimism and confidence.

1. Understand how much superannuation you need 

It's easy to be unsure or confused about how much super you need to enjoy a quality retirement. Many figures are bandied about and in some cases the numbers can be overwhelming.

Ellis says a simple rule of thumb can help.

"Most people need about 70% of their pre-retirement working income," she says. "That's because you'll likely be paying less income tax, you're no longer having to save for retirement, and hopefully the majority of personal debt will be paid off."

Explaining how this baseline translates into super balances, she says a typical Aware Super member who gives up work at 67 and has before-tax retirement income of $80,000 annually has about $460,000 in accumulated super as a single or $570,000 as a couple combined.

These balances can sound daunting. But the thing to remember is that there is no one-size-fits-all level of super savings that is right for everyone.

"Retirement is very personal," says Ellis. "What matters is that you think about retirement goals, and how much you're likely to spend on your lifestyle as a starting point to understanding how much super you will need."

It's worth pointing out, too, that income derived from a super pension is tax-free. So, the money goes a lot further than in our working days. "That drives better retirement incomes," says Ellis.

In addition, many Australians can expect a helping hand from the government age pension. Three out of five over-65s currently receive a full or partial age pension and Ellis expects this to continue.

"Knowing how the government age pension and super interact provides peace of mind," she says.

2. Know if you are on track to reach your ideal target

Once you have an idea of your preferred retirement income, it's a lot easier to work out how much you'll need in super. This provides a clear target to work towards, and lets you know if you are on track to achieve your ideal balance.

Fortunately, plenty of online calculators can help. Aware Super has gone a step further, launching a new online tool - My Retirement Planner - that personalises results for members.

It estimates how much money they'll need in retirement, their likely super balance on retirement, and how much income they will receive based on their super plus age pension.

My Retirement Planner also provides a retirement confidence score. This shows how close you are to achieving your goals - the higher the score, the more likely you are to have a retirement income approaching what you want.

"What's really exciting about My Retirement Planner is that it provides a step-by-step action plan to help members get started growing their super," says Ellis.

3. Consider changes to boost your balance

One of the great aspects of superannuation is that there are many ways to grow your balance - and it really is never too late to start.
From age 55, for instance, Australians can make a downsizer super contribution of up to $300,000 ($600,000 for a couple combined) from the proceeds of a home sale.

There is no maximum age limit, and downsizer contributions aren't limited by normal contribution caps.

Simple steps such as consolidating multiple accounts into a single fund can boost your super by saving on doubled-up fees or insurance premiums.

Making personal contributions can also have a profound impact on your final balance, thanks to the phenomenal power of compounding. "Every $1 extra contributed to super in your 20s increases your final retirement savings by $3," says Ellis.

However, you don't need to be a 20-something to benefit from compounding. "Contributing an extra $1000 each year to super from age 45 can bring forward retirement by one year," says Ellis.

4. Talk to your super fund

Super funds aren't just a place to grow retirement savings. They can also be a valuable source of free advice.

That matters because a survey by Adviser Ratings, a service that helps people find an adviser, confirms Australians are keen to get advice about preparing for retirement.

The problem is that the average cost of financial advice is about $4215, making it an option beyond the reach of many.

The solution is to speak to your super fund.

Most funds offer personalised advice about super at no extra cost. It's a great way for members to make informed plans for retirement. That said, the quality of the advice service can differ significantly between funds.

Aware Super has recognised that when it comes to financial advice, it generally prefers to connect with real people. This has underpinned the launch of its new Super Helpful Check-in.

It's a personalised service that allows fund members to have an online video meeting with an adviser to discuss everything from ways to boost their savings through to developing retirement strategies.

"Helping our members develop a plan for retirement so that they know what the future holds is a huge focus for us," says Ellis. "It allows Aware Super members to put themselves in the best possible position for retirement.

"We understand there can be a sense of fear around seeking advice, or a perception that good advice is only for the wealthy. But it's been very rewarding to see how providing access to support, guidance and help is setting our members up for retirement."

According to Ellis, Aware Super members who take up available advice and guidance offerings will be 2.5 times more likely to make voluntary contributions because "they understand the importance of driving long-term positive impact to balances".

5. Choose the right fund

By the time most of us retire, our super could be our second most valuable asset behind our homes. That makes it worth taking a good look at your fund to be sure it is delivering the right combination of healthy investment returns and competitive fees to grow your balance over time.

The super regulator, APRA, undertakes regular reviews that show how each fund performs in terms of returns and fees. However, Ellis believes there is an additional factor to look for.

"It's important to make sure your fund can give you the help and service you need to develop a plan for retirement."

On this score, the larger funds typically have the scale needed to deliver a range of services, such as apps, online calculators and tailored advice.

"The easier it is for members to access help and support, the more empowered and confident they feel about retirement," says Ellis.

The good news is that the super industry as a whole has worked hard in recent years to make it easier to switch funds. So, you don't have to stick with a fund that's underperforming or not looking after its members properly.

Some planning, your fund's retirement tools and a regular check-in with its advice service can be the key to looking forward to retirement, confident that it will be everything you hope for.

This report was sponsored by Aware Super. It was independently researched and written.

This week on the Friends With Money podcast, Money's Michelle Baltazar speaks with Virgin Money Super's general manager, Christopher Sozou, about the facts and figures of retirement. They discuss:

• Contributions vs earnings
• Is super a good investment nest egg?
• What's the magic number needed to retire?
• What if I don't own a home?
• Accumulation vs pension phase
• Where to get advice?

Check out these links for more:

• virginmoney.com.au
• superannuation.asn.au

*Our thanks to Virgin Money Super for sponsoring this podcast

**Figures quoted in the podcast are updated frequently on the ASFA website

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There's a real buzz around refinancing right now.

Figures from CoreLogic show 67% of property valuations currently relate to home loan refinancing - up 32% from last year, and Glenn Haslam, executive general manager, lending at Suncorp Bank - Money's 2020 Bank of the Year, says he is definitely seeing more refinancing activity at present.

Haslam puts this down to "a combination of competitive offers and historically low home loan interest rates". But he says the impacts of COVID-19 - from employment changes to spending more time at home - have given us a chance to think about how we can better manage our finances.

What is refinancing?

Despite the enthusiasm for refinancing, it's something of a grey area for many homeowners. A survey by Aussie found that 78% of mortgage holders are confused about exactly what's involved.

To be clear, refinancing means replacing your current loan with a new one. It's a step that can offer plenty of pluses including a chance to trim your loan rate.

As Haslam explains, "This can lower monthly repayments and potentially see homeowners pocket substantial savings over the life of their loan."

There is certainly plenty of scope to save by refinancing, especially as many lenders are reserving their best deals for new customers. As a guide, Reserve Bank figures show the average variable rate is currently 3.22%, but among new loans taken out in May 2020, the average was 2.93%. The average across fixed rates for terms of three years or less is 2.33%, but you can do even better, potentially paying as little as 2.29% on Suncorp home loans.

Refinancers can also pocket valuable cashbacks. Refinance your home loan with Suncorp, for instance, and you could receive up to $3000 as a cash bonus - or as much as $4000 if you're a frontline worker in health, education or emergency services.

When is it time to think about refinancing?

Suncorp's Haslam says, "As a general rule, it is worth taking a good look at your home loan every two to three years - not just in terms of refinancing but also to be sure your loan is structured in the best possible way for your individual needs."

He notes, "The key is to know that home loans should not be a 'set and forget' product. It's all about having the right product and structure for your current situation."

It can also be a good idea to consider refinancing if you're about to come off a fixed rate. Bailing out of a fixed rate loan early can come with 'break costs'. How much you pay will vary depending on your lender and the size of your loan.

The common thread is that you're more likely to pay a break cost if market rates have dropped since you locked in your rate. As interest rates have fallen this year, it could be cost-effective to wait until your fixed rate term has expired before switching to a new loan.

Talk to your lender first

Before getting the ball rolling with a refinance, it's worth asking your lender if they're willing to discount the rate you're currently paying.

Haslam says, "Lenders are typically open to negotiating home loan rates with established customers. So, I would encourage home owners to talk to their bank to see what's available - or partner with a mortgage broker, who can act as an advocate on your behalf."

If the lender won't come to the party, it might be time to think about taking your business elsewhere.

Finding a new loan calls for some research. Or, if you're pressed for time, partner with a mortgage broker to know which loan is best suited to your needs. Either way, don't simply focus on the headline rate. Haslam cautions, "It is important to look at a home loan's comparison rate to be able to compare costs between different loans."

How refinancing works

When you've found a loan you're happy with, the refinancing process works in much the same way as when you applied for your current loan. The new lender will want to see evidence of income and, typically, three months of bank statements to show living expenses, plus three to six months of loan statements.

Sydney-based Mortgage Choice broker James Algar says that along with filling out a loan application, your home will likely be valued as part of the refinance.

However, it may not be necessary to give the place a spruce up. Algar says, "Most valuations can be conducted without a physical inspection of the property - unless you are borrowing 80% or more of the property's value."

If all goes well and your new loan is approved, the two lenders - old and new - will arrange for the old loan to be paid out. From here, you start making repayments on the new loan. Algar says the whole process typically takes about four to six weeks, athough he adds that the impact of COVID-19 has extended this timeframe to about six to seven weeks with some lenders.

Will refinancing put you in front financially?

Making the move out of your old loan and into a new one should be a fairly streamlined process. But it can come with costs including possible discharge fees on the old loan, application fees on the new mortgage, and state/territory government charges related to registering a mortgage.

Your lender or broker will be able to provide a firm figure of the total cost to refinance your mortgage. The important thing is to compare this against the savings you'll pocket each month.

If, for instance, it's going to cost $600 to refinance but your new loan provides savings of $100 each month, it will take six months before you break even. The shorter the timeframe, the better, letting you reap the rewards of your new loan sooner.

These three steps can help you prepare for a refinance - or decide if it makes sense to hold off.

1. Have an idea of your home's market value

If you need to borrow more than 80% of the value of your property, you could be up for lenders mortgage insurance (LMI). This applies even you paid LMI when you first purchased your home. Algar explains, "LMI is not transferrable between lenders and any premium you paid initially isn't refundable when you switch to a new lender."

If it looks as though you're below the 20% equity mark, it may be more economical to approach your current lender to renegotiate your rate, or delay refinancing until you've built up additional home equity.

2. Review your regular expenses

In today's environment of responsible lending, Haslam says one of the key issues lenders will address is a borrower's regular living expenses.

He notes, "Lenders will look for three months' worth of spending activity, to see how the borrower manages their income and what their typical expenses are." This could be a cue to review your budget, looking for areas where regular spending could be cut back.

3. Think about lowering credit card limits

Lenders will usually want to see statements for any credit facilities like, say, personal loans. When it comes to credit cards, however, lenders don't simply look at the amount owing, they also want to know the overall credit limit. After all, you could potentially max out your card the day after your new home loan settles.

According to Algar, "Having a card credit limit of $15,000 to $20,000 can knock around $100,000 off your borrowing capacity. Cancelling the card, or at least requesting a reduction in the maximum credit limit, can make a big difference to how much you can borrow."

Haslam adds that becoming refinance-ready is all about understanding your full financial picture. "In some cases that may mean using the next 12 months to prepare for a refinance," he explains. "Ideally, sit down with your lender or mortgage broker to see what's available and what will best suit your circumstances."

Case study: Refinancing to fund renovations

Refinancing isn't always about paying a lower rate. Switching to a new home loan can be a way to tap into home equity to access low-rate funds to achieve other goals such as completing a few home renovations - something that's looking very attractive right now, thanks to the new $25,000 HomeBuilder cash grant.

Home improvements were definitely the main driver for Victorian homeowner Michelle Delaney when she refinanced her home loan recently.

Michelle explains, "When my partner and I decided to renovate our home with new bathrooms and wet areas, we thought it was a good opportunity to look at our current mortgage and what else was in the market."

Michelle admits that the refinancing process seemed daunting but she says, "We felt we were making the right choice to move to a different bank to expand our home loan for renovations."

The couple got in touch with a mobile lending manager from Suncorp and enjoyed a stress-free lending process. "The level of communication and attention to detail was high and, most importantly, we were able to save money on our loan," adds Michelle.

Out of the blue you get some shock news that forces you out of the workforce.

A company restructuring could mean you are facing a redundancy; or you receive unexpected news about your health; or a loved one needs you to care for them; or your adult kids require your grandparenting skills so they can participate in the workforce.

It means you are suddenly retired, years before you had planned to. It can be traumatic and few people are prepared - emotionally and financially - for a sudden end to their career.

For many people the peak earning years are the 40s and 50s, not the 60s, says David Knox, senior actuary at Mercer. He points out the average retirement age is 63 - four years short of the age pension age, if born on or after January 1, 1957.

He says people suddenly find themselves retired and may be able to find only part-time work.

For example, only 62% of 60- to 64-year-olds work full time while 38% are employed part-time. This is sharply lower than the 71% of people aged 55-59 who work full time and the 29% who work part time.

"It is quite a complicated problem," says Melinda Howes, general manager of superannuation at BT.

She says if you are in your 50s you probably belong to the "sandwich generation" wedged between teenage or adult children and ageing parents with plenty of financial commitments.

Howes says everybody should have a plan in place no matter how secure they think their job is.

"It can happen to anyone in any industry," she says. "If this happens to you it is going to be quite an emotionally traumatic process, so it is good to have thought about it ahead of time."

Howe's advice is to run a "what if" scenario long before anything happens for your own peace of mind so you don't panic when it does. Ask yourself: "How would I get on if my income stopped?"

But financial planner Jonathan Philpot says preparing for the unexpected is difficult. It requires saving and planning.

"In an ideal situation, if you are able to reach the sum of money that will provide for a comfortable retirement before your planned retirement date, this will give you some level of flexibility if you were forced to finish work earlier than expected," he says.

What do you do?

Don't freak out or rush to make any major financial decisions such as selling your house or cashing in your superannuation.

They could have drastic implications for your future, often sparking tax liabilities or preventing you from claiming benefits from the government.

"If you have some money available, it will give you peace of mind and you don't have to panic from day one," says Howes.

Work out your entitlements

If you are made redundant, hopefully you will receive a payout with your unused annual leave and long service leave. Long service and annual leave are taxed at 32%.

If you are on a high tax rate of 39% or 47%, this is beneficial.

Working out the tax on your genuine redundancy payment depends on how many years you worked for the company. There is a tax-free limit but only if your job needs to be abolished and you are terminated.

Everyone has different circumstances.

Philpot gives an example of Berta, who receives a $100,000 redundancy payment. Of this, $62,399 would be tax free and the remainder is an employment termination payment (ETP) of $37,601.

The tax on this amount depends on whether you are under or over preservation age. For example, a 61-year-old pays 15% tax on the ETP but a 55-year-old would pay 30% and both must pay the Medicare levy on it.

Government benefits

You can't receive the age pension until you are 65 or older (depending on date of birth) and if you are in your late 50s you will need an income.

There are other government benefits, such as Newstart, that you can apply for if you are looking for work.

If you are over 55 you will need to spend at least 30 hours a fortnight on either voluntary or suitable paid work to qualify for a maximum of $555 a fortnight.

If you have a medical condition that stops you from working 30 hours a fortnight, you may qualify for the disability support pension, which pays up to $926 a fortnight for a single. Or if you are caring for someone with a disability or who is elderly and frail, you can get a carer's allowance.

Change career paths

Philpot points out that the reality for those who lose their job is that they often need to find replacement work. It may not be with the desired income but they need something, even part time, to support their lifestyle.

Every dollar earned means you don't touch your savings and super. If you work part time for a while, you have the time and flexibility to look for a job you want.

Age discrimination means it takes those unemployed over 55 an average of 68 weeks to find a job compared with 49 weeks for 25- to 49-year-olds.

Howes suggests you consider retraining if you are in your early 50s as you could have another 20 productive years ahead. Empathetic workers with good people skills are in demand in the workforce.

Can you access your super?

To access your super, you need to have reached your preservation age and have permanently retired from work.

If you are working part time and over 55 you could set up a transition to retirement income stream (TRIS) so you can access your super to help top up your income.

Howes says you need to look into this carefully to see if it is worthwhile, as the government has cut some of the strategy's earlier tax benefits.

A tax-free pension from your super fund in the form of an account-based pension will only commence after age 60, so it may not be the best tax outcome to commence a pension in your 50s.

If you have a major illness or are in severe hardship you can qualify for the release of some of your super. Contact your super fund.

Does your insurance help?

Insurance can only be claimed if you are ill or injured and prevented from working.

Some people think that salary continuance or income protection insurance will support them if they are made redundant, but it is only for illness or disability unless it has a special feature for unemployment.

Philpot says losing your ability to work because of a health emergency highlights why it is important to maintain a level of personal insurance cover. If you have substantial savings to support you in an emergency, you are effectively self-insured.

Can you afford to retire?

If you retire early you may have to use your super to bridge the years leading up to the age pension.

Work out how long your super will last by using a calculator such as the one on the MoneySmart website to see if you are on track.

A simple rule is a 10% drawdown test, says Philpot.

If you want to have $50,000 to live on in retirement and you have $300,000 in retirement savings, this means that you would be drawing about 17% in the first year and an even greater percentage in the second - and clearly the earnings are never going to get close to what is being withdrawn, he says.

However, at 10%pa this would mean the person would need $500,000 of savings and at a long-term earnings rate of 7%pa the money may last for the rest of their lifetime.

"However this is a big 'may'. If a GFC was to hit at retirement your earnings would be negative and by drawing 10% per annum you will again quickly run out of money."

Philpot prefers a drawdown rate closer to 5%-6% to have greater confidence that money will not run out in retirement.

Retire on your home

When you own your own home, you are living rent free and better off than if you pay rent. But the number of Australians owning their own home is falling, says Knox.

If you own it you can also use your home as a cashbox. Consider taking in students or short-term travellers if you have spare bedrooms. You can also downsize or take a sea change or tree change to an area where property prices are cheaper.

"This is a really big decision that needs to be carefully considered," says Philpot.

"I often hear, as part of retirement planning, that people will downsize and have some capital for retirement. In reality I see very few people realising capital from the selling of the family home. They often move to a better suburb or closer to children and in the end, after all the transaction costs, have very little extra to put into retirement."

Once you are 65 or older and you meet the requirements, you can add up to $300,000 from downsizing your home to your super fund.

It doesn't count in your contribution caps and it can be made even if your super balance is more than $1.6 million.

Philpot says the downsizer contribution may start to encourage more people to properly consider it as a strategy to build wealth outside the family home.

None of us like to consider our own demise but as actor Anthony Hopkins once said, "None of us are getting out of here alive", and having insurance is especially important if you're carrying big debts or have a family.

Life cover has the potential to let you or your family dodge financial hardship if tragedy strikes. But this hinges on having the right level of cover.

Nine out of 10 working Australians have life insurance, usually through their super fund. However, it may not be enough.

According to actuaries Rice Warner, among those Australians who have life insurance the median level of cover is just $143,500.

That's double the median household income but Rice Warner cautions that we typically need cover worth three to six times annual income, depending on our age. This makes it important to contact your super fund to check your cover. Chances are you could be underinsured.

Cover through super may not be the best option

One way to solve the underinsurance problem is to top up the cover you have through super. This can seem like an easy option though it may not be the best one.

Buying life insurance through super means you won't have to dip into your pocket today. The catch is that premiums are paid out of your super account each year, and over time this can substantially erode retirement savings.

A 2018 report by the Productivity Commission found that life insurance premiums can reduce retirement balances by 14%. If you're a low-income earner or have broken work patterns, premiums on life cover can slash your final fund payout by more than a quarter.

One way to combat the effect of premiums on your super balance is to make sure you top up your super with extra money to cover the costs.

Of course, you can also look at buying life cover outside super. In some cases it may be cheaper to buy through your super fund but don't just assume that this will be the case. It's best to compare prices for yourself and also take into account the type of cover you're getting for your money.

Protection tailored to your needs

Tania Milnes, general manager at Mortgage Choice Financial Planning, says policies within super are generally "group" policies (a bit like buying in bulk) and quite often are cheaper. The downside is that the cover isn't designed for your personal situation.

Anthony Brown, CEO of insurer NobleOak, says buying life insurance outside super is an opportunity to have cover that "takes your individual health into account".

A survey by Canstar found that for 83% of Australians, the cost is the key stumbling block for life insurance. But it can be more affordable than you think. Premiums hinge on your age and lifestyle (for example, smokers are heavily penalised). Canstar found a 40-something non-smoker could pay less than $50 a month for cover

Know how much you need

Comparison sites offer an easy way to shop around, though it helps to know what you're looking for.

"How much cover people should have is based on their individual circumstances - their age, whether they are single or not, and whether they have dependents such as children," says Brown.

Financial obligations such as your mortgage, credit card debts, living expenses and costs associated with children's education should also go into the mix.

MoneySmart and industry website Lifewise both have online calculators that can help you decide how much cover you need. From here, it's a matter of following our five tips to get the cover that suits your needs and budget.

1. Check age limits

Australians are living longer and enjoying better health but many 60-somethings still have major debts such as a mortgage. Brown says that cover in super automatically terminates when you reach retirement age (usually 65 or 70). By contrast, through independent insurers you may be able to hold onto life insurance all the way to 99.

2. Understand the different types of premiums

Premiums for life cover are levied in a variety of ways. Tania Milnes says "stepped" premiums are by far the most common. She explains that the cost rises over time "as you get older and are more likely to make a claim".

"Level" premiums stay the same each year (except for increases in inflation), and while Brown says they are more expensive in the early years they can work out cheaper if you hold onto cover for the long term. The catch is that level premiums generally revert to stepped premiums from 65.

A third option, "hybrid" premiums, gradually increase for a defined period, usually to 65, then fix at a set rate.

The key, according to Milnes, is to "match the premium type to how long you'll need to keep each particular cover".

3. Look for "guaranteed renewable" cover

"Guaranteed renewable means that as long as you pay your premiums, the insurer guarantees to keep your cover in place, even if your health, occupation or pastime change," says Brown.

Cancellable contracts, on the other hand, give the insurer the right to refuse to renew your policy.

Miles says premiums for guaranteed renewable cover can cost more.

"The certainty that your cover will stay in place on the same or better terms as long as you pay your premiums comes at an additional cost. But most people would rather have the comfort of knowing that the insurance company must honour your policy."

4. Add up the add-ons

We all like a few extra perks with purchases, and life insurance is no exception. Add-ons vary between insurers but can include things like funeral advance benefit, grief counselling, nursing care and spouse benefit.

As with any type of insurance, only pay for the features that matter to you.

5. Skip the quick fix

Life cover is one area where it's worth spending time getting things right in the first place. As Brown says, "That way, if you make a claim there are no surprises at a critically important time."

Life policies can either be underwritten - or not fully underwritten - at the time of taking out cover. It's an important distinction.

Underwriting is the industry term used to assess risk. According to Brown, an underwritten policy typically involves a complete health assessment, including a discussion of any pre-existing conditions, when you apply for cover.

Yes, it may call for an investment of your time initially but the premium you pay will be tailored to your situation and, more importantly, Brown says that any claims are likely to be processed with minimum delay.

Policies that are not fully underwritten can be quicker to organise - many can be arranged online just by answering a short questionnaire. The catch is that with non-underwritten policies, the detailed review will be completed after you make a claim.

"This process will nearly always delay payment," says Brown. It also creates more scope for claims to be reduced or denied altogether.

The bottom line is to know how much cover you need, check what your super fund is offering, and shop around to be sure you have a competitively priced policy that will meet your needs over time.

If 2019 brings plans to retire, it's time to view your super through fresh eyes

After decades of growing your super, it can call for a very different mindset to start drawing down the money in retirement. But thinking about how to make the most of your nest egg is critical to this new life stage.

Lump sum or pension?

Retirement brings two main choices about how you use your super - withdraw the money as a lump sum or leave it in the super system.

It can be tempting to cash in a nest egg worth a few hundred thousand dollars, especially if you're wearing significant debt - and one in five over-55s are still paying off a mortgage. If you have debt it's best to get advice about how to handle that.

Taking your super as a lump sum means shifting the money out of a low-tax environment into one that may be fully taxed. The alternative is keeping your nest egg in the super environment by investing it in a private pension through the same fund. Your super savings will be drip-fed to you as regular payments much like a normal wage or salary, making budgeting easier while still letting you benefit from super's tax concessions.

Moving from accumulation to pension phase

Making the transition from the accumulation phase into the drawdown (or pension) phase is simple enough. You need to fill out the appropriate form, which should be available on your fund's website.

Kajanga Kulatunga, senior manager, investment research and advice capability at QInvest, which provides advice and education services to members of QSuper, says it can take seven to 10 working days to process your request. If you're sweating on your super for cash, check the processing time with your fund. Kulatunga cautions that smaller super funds can take longer.

From here, the regular payments out of your super can be made direct to your bank account fortnightly, monthly, quarterly or annually. The real challenge is deciding how much you'd like to be paid.

In the pension phase, those under 65 are generally required to drawdown a minimum of 4% of their super annually - a figure that rises with age. Interestingly, a CSIRO study found most retirees stick close to the minimum allowable drawdown, with the likely outcome that many will pass away with substantial amounts of their nest egg unspent.

Rather than scrimping on lifestyle, Kulatunga advises taking a look at the income you're likely to need in retirement, bearing in mind any age pension payments you may be entitled to.

If you're concerned about exhausting your super at an early stage, the MoneySmart website has an online calculator that lets you play around with the numbers to see how long your super will last depending on how much you drawdown each year.

You'll get a better idea of your income needs as you settle into retirement, and happily, some flexibility is available. "While pension payments can be set, they can also be varied and partial withdrawals can be made," says Kulatunga. He notes too that if you need extra cash in an emergency, some funds offer a special service to speed up claims.

Reviewing your current fund

The shift from accumulation to the drawdown phase should also be a cue to review your super fund. A fund that served you well in the workforce may not be the best choice for retirement.

The first issue to address is fees. At the point of retirement, your super savings are at their peak, and even a small difference in fees can add up to a significant drain on your account balance over time.

Across the industry, the fees on $250,000 in a pension account average $2922 annually though it's possible to pay much less.

Your choice of investment strategy plays a role too. Australians are living longer. "Your investment horizon in the drawdown phase may well be up to 30 years. Your investment strategy should reflect your goals and values and give you the highest probability of giving you the lifestyle you desire," points out Kulatunga.

If your current fund doesn't tick all the boxes in terms of competitive fees for the investment options you're looking for, it can make sense to switch funds. Just be sure to look before you leap.

The hidden costs of switching

Bailing out of your old fund has the potential to trigger unwanted costs. Kulatunga warns that exit fees may be applicable to older-style super funds, though from July 1, 2019 exit fees on super funds will be banned altogether.

A less obvious but potentially more costly issue can be the buy/sell spread.

Put simply, the buy/sell spread is the difference between the cost per unit to buy into a super fund, and the sell price per unit when you pull money out of a fund. A buy/sell spread can also apply when switching between investment options within the same fund.

To understand how it works, let's say Sue wants to move $50,000 of her super from a growth investment option to a conservative option. If the buy/sell spread is 0.10%, it will cost Sue $50 to make the switch, so she'll end up with $49,950 in her account after the transaction is processed.

Not all super funds impose a buy/sell spread, but it's definitely something to check before you start moving money around.

Loyalty perks

A handful of super funds encourage members to remain loyal to their fund in retirement through a variety of rewards.

Sunsuper pays a Retirement Bonus worth 0.30% of the account balance up to a maximum of $4800.

QSuper offers an uncapped "transfer bonus". The way this works is that QSuper sets money aside to pay capital gains tax that may apply when investments are sold during the accumulation phase of super. In the pension phase however, all investment earnings, whether income or capital gains, are exempt from tax.

So when a member transfers money from their QSuper accumulation account to a QSuper income account, the money previously set aside for tax is returned as a transfer bonus.

It can be a very handy boost indeed - some members have received transfer bonuses of up to $42,996.

Industry fund BUSSQ pays a "retirement reward" to members who switch to a retirement pension account.

The reward is worth 0.5% of the opening balance of the pension account, but members who've been with BUSSQ for more than five years can have their reward boosted by an extra 20%. This loyalty bonus works in a similar way to QSuper's transfer bonus in that it represents taxes set aside while your money was in the accumulation phase.

Making the most of your super in retirement can be easier with the benefit of professional advice.

Plenty of funds hold free pre-retirement seminars backed by free or low-cost advice relating to your nest egg. The Department of Human Services has a free financial information service including seminars, on how to use your super in retirement.

Refinancing the mortgage can come with hidden costs. Here's what to watch out for.

Australians owe an average of $388,000 on their home loan, and with that sort of debt to manage it doesn't pay to take a set-and-forget approach.

The good news is that lenders are hungry for new business.

In fact, many of the best home loan deals are reserved for new customers, and it can make switching to a new home loan a smart financial move. It turns out plenty of people are doing just that, with around 17,000 mortgages refinanced each month across the country.

It makes refinancing part of today's home loan landscape.

"Moving to a new financial institution is easier than ever," says Simon Charters, regional sales manager with Greater Bank, winner of Money's 2018 Home Lender of the Year award.

He says it's a good idea to review your home loan every two years to be sure you've got the one that's right for you at the best possible rate. Any major shift in your personal or financial circumstances should also trigger an evaluation.

"This doesn't mean you will automatically refinance each time," says Charters. "It allows you to determine whether a change in loan will help you achieve your financial goals."

That said, Whitlam Malkoun, a Melbourne-based senior broker with Aussie Home Loans, says one of the most common triggers for refinancing boils down to the mention of interest rates in the media.

"It gets people thinking about the rate they're paying on their own loan," he says.

While homeowners are already embracing opportunities to save on their loan rate, Charters believes this will become more important when interest rates eventually rise.

With the Reserve Bank having flagged that the next rate move is likely to be up rather than down, it's worth understanding what's involved in refinancing.

The chance to cut interest costs may be a strong motivator but it's not the only reason to consider switching. Charters says he's often asked about ways to access home equity.

"Many customers choose to refinance to use their equity to fund major purchases such as renovations or extensions, or even go on a family holiday."

Refinancing can also be a way of freeing up low-cost funds to invest in a rental property or shares.

In addition, refinancing can be a possible strategy for debt consolidation, says Charters. Folding credit card balances and personal loans into your mortgage means managing just one monthly payment. And because home loans often come with the lowest rate across all types of credit, consolidating debt this way has the potential to trim your total monthly repayments.

How to handle the paperwork

On the face of it, refinancing can seem like a complex process. But it shouldn't be.

The inevitable paperwork can be a small price to pay in return for what may be valuable savings, and a sensible starting point is to know the interest rate you're paying on your current home loan.

HSBC research indicates that one in four homeowners don't know this figure, yet it's the main benchmark that shows if a new loan will help you save. If you're unsure what your home loan rate is, take a look at your latest mortgage statement or contact your lender or mortgage broker.

Follow this up with research to confirm that a new loan is the right move. Look online or, better still, talk to lenders or a mortgage broker. Malkoun says refinancing is a major step that "calls for personal interaction".

For the best possible deal, be prepared to cast your net wide. Many smaller lenders offer excellent value on home loans without scrimping on features. And, as tempting as it may be, avoid focusing solely on interest rates.

Malkoun acknowledges that most people refinance to save money but, "don't worry about the rate - worry about the product", he cautions. "Refinancing should be about having the home loan that ticks all the boxes for your needs, both in terms of rate and features. If the home loan features are used correctly they can help you save big dollars."

Greater Bank's Charters agrees. "Consider the features that will assist your financial situation, such as flexible repayments options, variable or fixed rates, redraw facility or offset accounts."

Having identified the loan that suits your needs, what follows is the application process. This should be similar to when you took out your current loan. "Lenders will require information and supporting documents such as identification, bank statements, pay slips and/or tax returns to assess whether you can afford the new loan repayments," says Charters.

Remember, too, your new mortgage will be secured by your home, so the new lender may want to value your property to determine how much it's worth.

"If the lender approves your loan application, you will receive a formal loan offer to sign and return," says Charters. "The new lender then submits a discharge form to your current lender. Settlement will occur, and your new mortgage is used to pay off your old mortgage." At this point you simply start making repayments on the new loan.

It all sounds easy enough - and it can be. Don't simply assume, though, that refinancing will save you money. Malkoun says it pays to be "quite sure about how much you have to spend in order to save money on your home loan. In many cases, a very small rate difference won't produce valuable savings once you've taken the cost of refinancing into account."

Indeed, the cost of refinancing can pose the biggest pitfalls for unwary homeowners.

Some refinancing costs are set in stone - such as the discharge fee on your old loan. This is essentially an administration charge that usually comes to around $350, sometimes less. Application fees on the new loan can be more flexible, and you may be able to negotiate your way out of the cost. "In a competitive market, lenders will often waive the application fee on a new standard variable rate home loan," says Malkoun.

Be aware that your new lender may also charge upfront legal or valuation fees, which may not be so flexible.

Exit fees on variable rate loans have been banned for some years. However, if you're refinancing a fixed-rate loan it's important to consider timing. "The end of a fixed term may be an ideal time to consider your options," says Charters. "If you're still in the fixed term, though, you may be faced with penalties to refinance."

These penalties can come in the form of "break" costs, which are designed to compensate your lender for loss of revenue if you bail out of a fixed rate prematurely. How much you pay will vary according to a range of factors, including the size of your loan, how variable rates have moved and how far into the fixed term you are.

In the worst-case scenario, you could face break costs running into thousands of dollars, particularly if market rates have dropped since you locked into a fixed rate. The only way to know exactly what you could be up for is to speak to your lender. If the break costs are high, it can be more cost effective to sit out the remainder of your fixed-rate term and refinance when the loan reverts to a variable rate.

Another danger can arise if your new loan will be for more than 80% of your home's current market value. In this case you can expect to pay lenders mortgage insurance (LMI) even if you paid it when you first took out your loan.

LMI is not cheap - as a guide, if you're refinancing a $380,000 loan on a home worth $440,000 (meaning you're borrowing 86% of the property's value), LMI could cost $5340, potentially wiping out the savings of shifting to a new loan.

Malkoun says it's uncommon for refinancers to be hit with LMI given property price growth over recent years.

Nevertheless, he cautions that one situation where LMI can be payable is where a first homeowner refinances a family pledge loan for which relatives (often mum and dad) have acted as guarantor.

If that sounds like you, check the LMI calculator on the website of mortgage insurer Genworth (genworth.com.au) for the likely premium. Bear in mind that LMI protects the lender, not the homeowner, so it's a cost worth avoiding or at least keeping to a minimum.

Possibly the biggest trap of refinancing is not going "like for like". Malkoun says a homeowner may be five years into a 25-year home loan but refinancing could see the new loan have a term of 25 or even 30 years. Dragging out the time it will take to pay off your home may lower the monthly repayments but the downside can be a significantly higher long-term interest cost. The way around this problem is to explain to your new lender or broker that you want a term that matches the term remaining on your current home loan, says Malkoun.

With a firm figure of what it's going to cost to refinance your mortgage, it's possible to calculate how long it will take to recoup these expenses. If, for instance, your new loan provides savings of $50 a month, and it's going to cost $600 to refinance, you could be looking at 12 months before you break even. "Ideally, it should be a short time frame to recover the costs of refinancing," says Malkoun. "Three to six months is a benchmark worth aiming for." Much longer than this and you run the risk that an even better deal will come along.

Three steps to make refinancing easier

Greater Bank's Simon Charters says homeowners can take three important steps to prepare for refinancing.

1. Spruce up your collateral

To maximise the value of your home and help ensure the loan to value ratio is above 80%, make sure your property is in good order. Make minor repairs, add a fresh coat of paint and give it a good tidy up, inside and out.

2. Show you can handle the repayments

Minimising your credit card and other personal debt will show good financial discipline. Maintaining a good repayment history on all your existing debts is important - failing to meet repayments won't be viewed favourably by the new lender when assessing your application.

3. Get a headstart on the application

Pull together documentation such as ID, payslips and/or tax returns, as well as recent statements for all the debts being refinanced.

Across the nation something scary is happening to household savings. They're dwindling.

These days, our savings ratio has fallen to 3.2%, meaning for every $100 we pocket after tax we're saving just $3.20. It's not enough to fund more than a few Freddo Frogs, yet just three years ago we were saving three times this amount. In the 1970s, Australians were tucking away more than 20% of household income.

The fact is we've lost our savings mojo.

To find out why, we look at research commissioned by ING, putting Australia's savings habits under the spotlight to see what drives us to save, what we're doing well - and where we're going wrong - as well as talking to experts to understand the brain barriers that hold us back from saving.

The good news first. ING found that 70% of Australians have savings goals they're working towards and about the same proportion have a savings plan in place to set money aside on a regular basis.

Building a pool of emergency money is the big driver for saving, and while the average level of savings that would make us happy is a lofty $350,000, plenty of Australians have far more modest targets, with one in five saying they'd be happy to have just $10,000 in the kitty.

On the downside, one in four Aussie adults do not have a regular savings plan in place, preferring a hit-and-miss approach of saving when they've got some spare cash (and, let's face it, who has spare cash?). Even among those who do have a savings plan, only one in four actually achieve their savings goals.

Guido Swinkels, ING Australia's savings product manager, is not surprised by these findings.

"It's recently been reported in the news that two-thirds of Australian households could not easily raise $3000 for an emergency, and one in four Australian households have less than $1000 in savings," he says. "This really highlights why it's so crucial to find a savings account that will help you to get ahead."

Why it's so hard

Sure, we can all face practical barriers to saving. Two out of five Australians, for instance, say they have copped a larger-than-expected bill.

But it's often simply the case that saving draws the short straw in our money management. ING's study found that one in three of us admits to spending up big on unplanned purchases such as a holiday or new car. One in five confesses to being an impulse buyer and 24% blame having kids for sabotaging their plans.

The thing is, lots of people are successful savers - and no, they're not just the high income earners. As a guide, close to 30% of both high and low income earners say they're able to tuck away savings every fortnight.

Beat the brain barriers

When it comes to saving, our brain isn't always our best friend. Economists and psychologists have long recognised the behavioural science issues that can hold us back from saving. Seen through this lens, the hurdles to building a nest egg of cash become a lot clearer.

Shane Oliver, chief economist and head of investment strategy at AMP Capital, says one of the main stumbling blocks is "present bias". That's our tendency to value things we can enjoy today more highly than those we have to wait for. This bias can be overcome if the future payoff is good enough but right now that's not the case.

"Interest earned on savings is the compensation for giving up current consumption, and today's savings accounts are paying low returns," he says. "So while present bias is always a phenomenon, it can be accentuated in a low-rate environment."

Claudia Hammond, UK-based psychologist and author of Mind Over Money, agrees that "our minds are always going to prioritise the present over the future".

But she believes there is another aspect to the savings dilemma.

"The vast majority of people believe that in the future they will earn more, become better at saving and better at spending less.

If you're lucky and your career and the economy go well, then maybe you will earn more in the future, but unless you make a deliberate change there's no reason why you should automatically get better at saving instead of spending. It's much more likely that if your income rises your tastes for the finer things in life will gradually rise too."

A further pressure to put spending ahead of saving comes down to what Oliver calls "crowd psychology", which works like peer pressure. "We see people around us with lots of possessions and gadgets and we want to enjoy the same things," he says.

There are ways to overcome these behavioural traps.

"You can try tricking yourself," says Hammond. "If you're considering when you need to save for your old age, work out how many days it is until you retire. Research has shown that 3652 days feels shorter than 10 years, so it might make you save faster."

Another strategy is to put your savings in an online account with a name that makes it sound far away. "If your money feels geographically distant, you're less likely to dip into it."

A bit of self-analysis doesn't go astray either. "If you've found saving difficult until now, it's no good just deciding to turn over a new leaf. You need to look back at why you found it hard to save before."

Ultimately, Oliver believes overcoming psychological hurdles can come down to "thinking about what we really want from life. How much does the pleasure of current consumption outweigh the reassurance of having savings to cope with possible future emergencies?"

The joy of saving

Oliver could be onto something. Studies show it's the anticipation rather than making a purchase that gives our brains a boost of the feel-good chemical dopamine. This leads to so-called "shopper's high" though the effect lasts only a short time and is often followed by regret or "buyer's remorse".

The flipside, according to Hammond, is that having rainy day savings can be very reassuring.

"It can reduce the anxiety that things might go wrong and leave people freer to make the decisions that will make them happiest. Some people leave more than they need to in savings accounts, rather than investing it. This can leave financial planners in despair because you might well be getting a low interest rate but this doesn't take into account the psychological benefits of having savings."

This report was sponsored by ING but was independently researched and written

Launching a small business is extremely solid work and keeping it purring along is equally demanding.

To ensure your venture remains a growing (and going) concern, it's important to give it regular "health checks".

Whether it's reviewing the business planning and recruitment processes, along with its technology and marketing campaigns, a regular health check can help your operation stay ahead of the competition and financially viable.

Review your strategy

Having a business plan, even if it is only a basic, single-page strategy, is crucial. I and my long-term business partner, the late Chris Walker, spent a decent amount of time on a business plan for our marketing and communications firm, Corpwrite Australia, when we launched it in 2008.

Over the years we regularly returned to the plan to assess our progress, which didn't always make for pleasant reading and usually we weren't spending enough time on generating new business. Yet the exercise always helped us to get back on track.

"A business plan is a constructive checking tool for business owners to ensure they do the things they said they would at the time they opened the doors for business," says Luke Maddison, my new business partner.

A business plan should be a living document that doesn't simply collect dust on a bookshelf.

"Take the marketing component of your business plan," says Maddison. "The strategy usually covers the next 12 months. However, the activation elements, such as the advertising, marketing, public relations or social media campaigns, should be locked in for three to six months only. This way you can tweak the plan after you've market-tested it with the campaigns, to ensure it's hitting the spot."

The right team

A business will only move to the next level if its recruits add value.

"This usually means employing staff who bring additional skills to your business," says Janeece Keller, the managing director of business consultancy the Third Floor and family travel website boundround.com.

Keller employs six full-timers and many part-time contractors in the two businesses.

"I'm not a developer, so I regularly bring web developers into the fold to ensure we are continually boosting the website's functionality with families in mind."

Fred Schebesta, founder of comparison website finder.com.au, who employs almost 160 people globally, says aligning a staff member's personal objectives with the goals of the business is critical to keeping them.

"If they are meeting their personal goals, which help to achieve the company's goals, there will be great long-term alignment," says Schebesta, who quirkily took to New York's famous Times Square with a message board in search of content managers and SEO (search engine optimisation) experts for Finder's new US operation.

Interviewing is the most crucial part of building the right team, says Schebesta. "Your interviews should be a test of the core skills a candidate needs to be successful in their role. If you are hiring a salesperson, make the candidate sell themselves to you. If they are an engineer, make them solve engineering problems."

The right technology

Small business owners don't expect to be the technology experts when they launch their operation, says Andy Ellis, group managing director, Telstra Business.

"They start a business because they had an idea, a passion and the confidence to back themselves," he says. "They need help to get back to what they're passionate about, so they can be the best business they can be."

The internet and phone are the lifeline of many small businesses.

"Fast and reliable broadband is the foundation for powering a business and the tech gadgets it uses," says Ellis. Think about what your needs are, how much data you use and whether the plan you are on still works for you.

You may also consider making the switch to NBN. The NBN is a fibre-optic, fixed-wireless and satellite system that will replace Australia's existing broadband infrastructure with a faster, more reliable service.

It's predicted to deliver download speeds up to four times faster than ADSL2+, making it a game changer for small businesses.

For example, 41% of small to medium businesses that have moved to the NBN network report improved productivity due to faster connections, according to Telstra research. A smaller number (15%) report cost savings since switching to NBN, while 5% report revenue increases.

"If you're an SME, plan to move to the NBN network before the old copper network in your area is decommissioned and your internet and phone services are at risk of disconnection," suggests Ellis. You can check the availability of the NBN network in your area at nbnco.com.au.

Something to be aware of is that not all devices are NBN compatible so it's a good time to think about what devices you are and aren't using as you may have to upgrade some of them.

You should also review your phone plan to make sure it is still meeting your needs. Also ask yourself whether you even need a landline or whether a mobile would be enough.

When it comes to mobile plans, you shouldn't pay more than $50 or $60 a month, which will give you around 3GB of data. See whistleout.com.au to compare mobile plans.

It can pay to bundle your internet and phone, especially from a cash flow perspective, but do the sums to make sure you are actually saving money.

Cloud services are another option SMEs should investigate. The cloud is a way to network computing resources and to store and access data such as documents, images and spreadsheets. If data is stored in the cloud, staff can access the information they need to do their jobs from almost anywhere, at any time of day, on any device connected to the internet.

There are also a range of apps and technologies that help businesses stay connected to their customers and clients.

"With Telstra's App Marketplace, you can trial a variety of applications at no or low cost to see if they are right for your business," says Ellis. One of the apps featured is BlueJeans. "Save yourself the commute time and cost by hosting high-definition video meetings from the comfort of your couch using BlueJeans," says Ellis. This conferencing app is an easy-to-use, cloud-based application compatible with almost any device and is very secure, says Telstra.

Another app businesses might find useful is Docusign, which enables the signing, sending, tracking and storing of documents on your mobile device. You'll do your bit for the environment and also cut back on paper and ink as well as postage costs.

Make the most of social media

Consistency is critical to social media success, says Kate Mather, from marketing communication agency Profile Digital Group, whose clients include leading real estate brands and online retailers.

"Every platform, whether it's Twitter, Facebook, Instagram or Pinterest, requires consistently unique content from a business and plenty of sharing, liking and comments about the posts made by your customers and contacts," she says.

Hashtagging, using the "#" symbol on platforms such as Instagram, Twitter and Pinterest, is a valuable strategy. "Hashtagging enables people to search for products on social media platforms," says Mather. It's also an avenue for businesses to reach potential customers.

"If a cosmetics firm, for example, is seeking to grow its Instagram following, it could search hashtag #blueglittereyeshadow," says Mather. Through this hashtag, a cosmetics firm will find a community seeking information about the latest products, make-up tips and, more importantly, posts by consumers about the latest make-ups, eyeshadows and lipsticks.

"By 'liking' these posts (if they are indeed likeable) and posting some quality content of its own, the cosmetics firm can start to build a presence at #blueglittereyeshadow," says Mather. "Using social media in this way enables a business to grow its brand awareness and create a dialogue with consumers who might be influenced to buy its products."

If you're new to social media, or wish to make greater use of the many platforms, you can outsource this function. Expect to pay $250 a month per platform for a bargain-basement plan, says Mather.

"This will cover the cost of some daily posts and implementing a few strategies such as hashtagging and liking posts," she says. "For social media training or project work, expect to pay between $80 and $100 an hour." M

What to look for in your review

Cash flow is the lifeblood of a business and, if money is tight, there are a few steps you could take to fix this obstruction.

Often slow-paying customers will be at the root of cash flow problems. If you don't have a process to manage your debt collection, put something in place fast.

Better still, try automation. Accounting software provider Xero, for example, offers an automated reminder service with its invoicing functionality. Businesses using Xero can set overdue alerts for seven, 14 and 21 days, which are emailed to overdue debtors.

If this strategy fails, try old-fashioned diplomacy. By talking to your customers directly, you can find out if there is a problem at their end. If there is an issue, discuss whether they'd be amenable to a payment plan that will help you recover the debt.

If there is no clear-cut issue affecting a customer's ability to pay an invoice, then don't be afraid to ask them to settle the debt by a specific date. Only if the matter drags on should you consider legal action.

On the accounts payable side, review the payments to your suppliers. For many businesses, suppliers are as critical to long-term success as employees, and it's important to keep them happy. However, this doesn't mean paying them prematurely. If you're having a few customer-based cash flow issues, get on the phone to your suppliers and seek payment extensions. Likewise talk to your suppliers about if they'd be prepared to give you discounts for early payment or volume discounts.

Consider ways to trim costs such as insurance, phone and electricity. Check which companies are more motivated to make your life easier as a business owner.

"Some energy provider plans, for example, will allow you to pick your billing days, which can make it easier for companies that send out their invoices on set days," says Laura Crowden, public relations manager at iSelect.

"If your business income varies over time and you sometimes have to pay invoices late, you may be better choosing a plan that provides a guaranteed discount rate rather than a conditional discount that only applies if you pay on time."

Finally, re-examine your loans and commercial leases. Again, shop around and ask your bank or finance company to match the best deal.