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Monday, 23 July 2012 02:23

Tips on how you can save money on your power bill

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1)  Check to see if you can get a better contract, or make payments based on average monthly cost.

Check to see if you can get a better contract, or make payments based on average monthly cost.

  • Determine how much electricity you use. Use the monthly electric bills from the last year to calculate an approximate value.
  • (If possible) Compare different offers from electrical companies; chose the one that is the cheapest (lowest cost per kilowatt hour).
  • Find out if there is an OFF-PEAK time of the day when the rate is lower and use that time for most electricity needs (e.g. running washing machine, dish washer, or cooking). This will likely require additional costs for special metering hardware to track usage during those times.

2)  Buy energy efficient devices.

  • Don't buy devices that are bigger than necessary (buy and use small pressure cookers whenever possible). Ask for energy efficient devices. Don't forget to check the stand-by consumption. Check if there is a label like Energy Star.

3)  Switch off or unplug devices when not in use

Switch off or unplug devices when not in use.

  • If a device doesn't have an on/off switch, use a plug connector with an on/off switch. Connect for example your TV and the loudspeakers with a plug connector. You can switch off both devices by just one action. Connect your DVD recorder with a separate socket since it is likely that you have to readjust it if you would switch it off.
  • Don't forget that power adapters (transformers for rechargeable appliances) also consume energy. Unplug them when not in use.
4)  Be aware of the energy consumers in the household
     Refrigerator, Freezer and Fridge:
  1. Put each cooling device on a place which is as cold as possible, away from heat sources like radiators, direct sunlight or other big energy consuming devices.
  2. Check that the cooling device is at least 5cm (2 inches) away from the wall and that the air can circulate well.
  3. Increase the inner temperature of the cooling devices. 7°C (45°F) are enough for the fridge and -18°C (0°F) are enough for the freezer.
  4. Keep the cooling devices tidy, label the items in the freezer, so that you can get the food item as quick as possible.
  5. Fill unused space with padding such as polystyrene or just a blanket.
  6. Keep the door of these devices closed.
  7. Check the sealing gasket of the cooling devices: Put a switched on torch (lamp) in the fridge and close the door. Check if the sealing gasket is damaged and buy a new one if necessary.
  8. Act energy efficient. Let the food cool down before you put them in a cooling device and warm up frozen food in the fridge.
  9. Defrost the freezer if there's a layer of ice.


  1. Find effective places for lights and light switches.
  2. Paint your rooms in a bright color. More light is reflected by those brighter walls and so you need less light to make your room bright.
  3. Replace regular light bulbs with compact fluorescent bulbs. It is economical to replace a light bulb if it burns for more than half an hour a day. Use high quality L.E.D. - Light Emitting Diode (Best type) or C.F.L - compact fluorescent bulbs.
  4. Don't use ceiling floodlights, unless there L.E.D. types.


  1. Use the right pots. Use pots with a diameter that is as small as possible. Put these pots only on hobs that fit to them or are smaller. Try to use a pressure cooker if you're cooking for a considerable time. Check that the bottom of the pot is even. Keep the pots closed as long as possible. Without a lid you'll loose about 2/3 of the energy.
  2. Reduce the amount of water you use while cooking.
  3. Turn the stove off 5 minutes before you reach the cooking time.
  4. Chose a gas stove or an induction cooker if you buy a new stove.
  5. Boil water with an electric kettle instead of the stove.


  1. Don't preheat the oven.
  2. Bake with circulating air.
  3. Use the oven several times if it's already hot.
  4. Keep the oven's door closed as long as possible.
  5. If the oven has already reached the final temperature turn it off 10 minutes before the food is ready.
  6. Use a toaster or the microwave if possible instead of the oven.

Dishwasher and washing machine:

  1. Check if these devices are connected with the hot water pipe.
  2. Make the devices as full as possible.
  3. Reduce the water temperature and use energy and/or water saving modes.

Avoid the air conditioner. (You need 3 times more energy per degree to cool a room than to heat a room).

  1. Ventilate during the night or early in the morning in order to store the coolness for the day.
  2. Keep the coolness in the house during the day. Close the shutters and keep your windows and doors closed.
  3. Use a fan instead of an air conditioner.

Avoid heating with electric energy.

  1. While electric heat is the most efficient, it is often the most costly. If you can't change this or you use another energy source (natural gas, propane or heating oil) you can save money on electricity if you lower your heating costs.

Avoid the clothes dryer.

  1. Dry your wet clothes on a laundry line. If you can't follow this step try to fill the drier as full as possible and use the mode "iron-dry".

Optimize the energy consumption of your PC

  1. Modern PCs can be set up to enter energy saving modes from both the BIOS settings page and directly from the Windows Operating system. Enable "Sleep" and "Hybrid Sleep" for desktops and "Hibernation" for notebook PCs running Windows.


Monday, 23 July 2012 01:30

Greek Economy

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Greek Village

It is a slow day in a little Greek Village. The rain is beating down and the streets are deserted.    Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a $100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the $100 note and runs next door to pay his debt to the butcher.

The butcher takes the $100 note and runs down the street to repay his debt to the pig farmer.   The pig farmer takes the $100 note and heads off to pay his bill at the supplier of feed and fuel.   The guy at the Farmers' Co-op takes the $100 note and runs to pay his drinks bill at the taverna.   The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit.    The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the $100 note.

The hotel proprietor then places the $100 note back on the counter so the rich traveller will not suspect anything.   At that moment the traveller comes down the stairs, picks up the $100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything.

No one earned anything.

However, the whole village is now out of debt and looking to the future with a lot more optimism.

And that, Ladies and Gentlemen, is how the Greek Economy works.

Thursday, 19 July 2012 22:32

Government Ad on Tax Cuts - Deceptive Conduct

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This is the advertisement that is being prominently displayed around the country (at great expense to the taxpayer) relating to the tax cuts that become effective from 1st July 2012 to offset the impact of the carbon tax.

This ad should be accompanied by the sort of warning you would expect to find on your car side mirrors "Tax Cuts are smaller than they appear".

Our issue lies with the assertion in the ad that the tax free threshold is tripling to $18,200.  This leaves the reader with the feeling that they are about to receive a  very generous tax cut and fails to state that the current effective tax free threshold is currently $16,000 when the low income rebate is considered.

The Government goes to great lengths with retailers to ensure that prices must be expressed as a dollar figure per litre of drink, or per tissue etc.  Financial services providers must disclose in dollar terms as well, rather than using percentages as apparently studies suggest that more than half of Australians do not understand how to calculate them (note I did not use the term 50%).

Despite the Government insisting that business openly disclose facts in a manner that the average member of the public can understand, there appears to be a double standard when it comes to Government advertising.

The reality of the July 2012 tax cuts is that an average Australian taxpayer earning less than $80,000pa receives a tax cut of around $300 when all of the various changes to the tax free threshold, marginal rates and rebates are considered.  Refer our previous blog article on what the tax cuts mean for you at

But then I don't suppose that a $300 tax cut sounds anywhere near as good as tripling the tax free threshold.

There shouldn't be a rule for us and a separate rule for the Government and the Unions when it comes to advertising




Wednesday, 18 July 2012 10:59

Logitech Keyboard/Cover for iPad

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For the gadget minded who own an iPad 2 or the new iPad, you may prefer to use a normal type of keyboard rather than the onscreen keyboard for better feel when typing.

Logitech recently released a lightweight keyboard which doubles as an iPad cover and attaches itself to the iPad magnetically, in a similar way to Apple's "Smart Covers".

This product has received excellent reviews - so we bring you a video of its features and how it works.


Wednesday, 11 July 2012 07:04

8 Common mistakes made by investors

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Elinor at computer

Mistake 1: Excessive Buying and Selling

A study of more than 66,000 households found that investors who traded most frequently underperformed those who traded the least. For the study, investors were split into five groups based on their trading activity. The returns achieved by the 20 percent of investors who traded the most lagged the least active group of investors by 5.5% annually. Another study showed that men trade 45 percent more than women, and consequently, women outperformed men.

Mistake 2: Information Overload

Those who monitor the market too closely have a tendency to undermine their portfolios with self-destructive behavior. Richard Thaler, a professor at the University of Chicago, conducted a 25-year study where he divided investors into three groups: one group who checked their investment performance every month, one that checked performance once per year, and one that checked performance every five years. The study concluded that individuals who check performance the most obtain the lowest investment return and are most likely to sell an investment immediately after a loss. Of course, selling low is not a good strategy for making money.

Mistake 3: Market Timing

History has shown that the market rises about 70 percent of the time.

Market timers tend to find themselves out of the market during the 70 percent of the time that it is going up because they are trying to avoid the 30 percent of the time the market is falling.

Market timing is typically driven by emotion. Investors tend to buy stocks when they feel good and sell when they feel bad. Unfortunately, investors tend to feel good once the market has run up 20 percent and feel bad when their portfolio is down 20 percent. With the feel good/bad strategy, investors will always buy after the market has already gone up and sell when the market has already fallen.

Mistake 4: Chasing Returns

Guess which managed funds attract the most new money each year? Money flows into managed funds that have just enjoyed the greatest performance in the previous year. Unfortunately, investors are often late to the party with this strategy. It shouldn't be surprising that chasing returns is a very common mistake. The entire financial media industry is built around a common theme: Don't Miss Out on the Ten Hottest Stocks. When the fine print says past investment performance is no guarantee of future returns, believe it!

Mistake 5: Poor Diversification

You may have seen this mistake coming. Investors tend to be concentrated in one or two companies or sectors of the market.

Over-concentration can hurt a portfolio, whether the market is performing well or poorly. Poor diversification leads to excessive volatility and excessive volatility causes investors to make hasty, poor decisions.

Mistake 6: Lack of Patience

Most managed fund investors hold their funds for only two or three years before impatience gets the best of them. Individual stock investors are even less patient, turning over about 70 percent of their portfolios each year. It's difficult to realize good returns from the stock market if you invest for only weeks, months, or even a couple of years. When investing in stocks or funds, investors must learn to set their investment sights on five and ten-year periods.

Mistake 7: Not Understanding the Downside

When you buy an investment, you should plan on worst-case scenarios occurring when you invest. It is true that past performance isn't guaranteed to repeat, but it does give us an indication of what to expect on the downside. Know how your investments performed during recessions, wars, terrorist attacks, and elections. If you don't understand the risks at the outset, you are more likely to react poorly during periodic market setbacks and get scared out of the market.

Mistake 8: Focusing on Individual Investment Performance Rather than Your Portfolio as a Whole

One way to know you are diversified is that you will always dislike a portion of your portfolio. If you are properly diversified, I can guarantee you that each year some of your investments will lag behind others in your portfolio. If you look at investments in isolation rather in context of your overall portfolio, you will be tempted to make poor decisions. You can get yourself into trouble by getting rid of investments when theyr'e low in value and replacing them with those that just experienced a nice run.


Most of these mistakes can be avoided by having a clearly defined, long term investment strategy. Before investing, develop a proper diversification strategy, a system for evaluating the performance of investments, and solidify your long term investment goals. Then, turn off the TV and refer back to the systems and principles of your strategy when it is time to make investment decisions.

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. We strongly suggest that no person should act specifically on the basis of the information contained herein, but should obtain appropriate professional advice based upon their own personal circumstances including personal financial advice from a licensed financial adviser and legal advice. RI Advice Group Pty Limited ABN 23 001 774 125  AFSL 238 429.


Wednesday, 04 July 2012 06:32

Australian Housing - is it about to crash?

Written by
Suburban Houses, Hobart, Tasmania, Australia

Key points

  • Australian housing is still overvalued, leaving it, banks & the broader economy somewhat vulnerable. Undersupply provides some support but the two key threats are a Chinese hard landing and selling by investors.
  • The most likely scenario is many years of range bound house prices around a flat trend in real terms.
  • Right now house prices may slip a further 3% or so in the short term but lower mortgage rates are likely to lead to a bounce in prices from later this year/early next year.

After the surge in Australian house prices from the mid 1990s into last decade my view was that while the risks of a sharp fall back in house prices were high, the most likely scenario was an extended period of range bound house prices in real terms. If anything most of the surprise has been on the upside – although not by much in real terms. But
despite the fears of many, house prices have not plunged like those in the US and elsewhere, despite a bigger boom.

However, the risks are rising again. Prices have slid 6% since their 2010 high and worries that the GFC is about to finally catch up with Australian housing are on the rise again. Excessive house prices and the excessive level of household debt that has come with it are Australia’s Achilles heal. Housing is 60% of household wealth and so movements
in house prices have a big impact on household financial well being and spending. Housing credit also amounts to 59% of total private credit so what happens to house prices is critically important to Australian banks. And as we have seen in Ireland and now Spain, what happens to banks can have a big impact on public debt levels.

Still overvalued, but not by as much

The bad news is Australian housing is still way overvalued. The good news is it is less so, with real house prices going nowhere for the last four years:

  • According to the OECD, the ratio of house prices to incomes in Australia is 28% above its long term average, putting it at the top end of OECD countries, although several other countries are more extreme. The US is now
    below its long term average on this measure.

  • According to the 2012 Demographia International Housing Affordability Survey, Australian housing trades on a median multiple of house prices to annual household income which is double that of the US. In Sydney, median house prices are $637,600 compared to $324,800 in Los Angeles. In Perth they are $450,000 compared to $159,500 in Houston, Texas.
  • However, it is apparent in the next chart that while real house prices are still above their long term trend, the divergence has narrowed to 13% from a peak of 33%.

Real house prices have now fallen back to 2008 levels.

  • Another way of looking at property valuations is to look at the ratio of price to rents (sometimes referred to as a PE ratio for housing) and adjust for inflation. On this basis Australian housing is still overvalued relative to its long term average by 10%, but at least this is down from a peak overvaluation of 38% in 2003.

The bottom line is while it may not be as stretched as was the case a few years ago, Australian housing is still overvalued. This combined with still high household debt to
income ratios leaves Australia vulnerable. Still undersupplied, but maybe not as much
One of the big supports for the Australian housing market is thought to be a shortage of housing with the National Housing Supply Council estimating a cumulative shortfall of
more than 200,000 dwellings. However, the just released 2011 ABS census wiped almost 300,000 off previous population estimates suggesting that the undersupply may not be as chronic as thought, and along with slowing population growth, has potentially reduced a support for house prices. Our assessment though is that while the undersupply of housing may not be as severe as thought, low vacancy rates still attest to some undersupply. And
Australia has not had anything like the residential property construction boom that the US had last decade, which accentuated the downwards pressure on its house prices. In Australia, housing starts and approvals are at cycle lows.

Where to from here?

Right now the Australian residential property market is chronically weak. Finance approvals & new home sales are depressed, first home buyer activity is subdued, prices are down, listings are up and auction clearance rates have been weak for 18 months. In fact, the failure of timely data like auction clearances to spring back into life despite mortgage rates starting to fall 8 months ago is a sign of how weak things are. Since the GFC, Australians have become fearful of taking on more debt and the once strongly held belief that house prices can only go up has long been ditched.

However, while fears are growing of a deep house price slump ahead, the most likely scenario remains a lengthy period of range bound house prices around a flat trend in
real terms. Just as we have seen nationally over the last few years and in Sydney since 2003. Essentially poor affordability, overvaluation and high household debt levels have put a cap on house prices whereas undersupply should limit their downside, within which, prices will cycle up and down in lagged response to falls and rises mortgage rates.

Australia did not experience the same deterioration in lending standards that occurred in other countries last decade. Home ownership rates didn’t increase. Most of the increase in mortgage debt went to older and wealthier Australians better able to service loans. And this has all been reflected in still low arrears rates of around 0.6%, and something like 50% of borrowers being ahead on payments.

Nevertheless, there are two key threats. First, a hard landing in China, resulting in a collapse in export earnings could drive unemployment sharply higher threatening a sharp risein delinquencies and forced sales. However, while this risk has increased given the threat from Europe, a sustained hard landing in China seems unlikely given China’s low
tolerance for social unrest and falling Chinese inflation.

Second, property investors who make up a third of housing debt may loose patience with the lack of capital growth and sell, leading to sharp falls in house prices. However, while it’s hard to see investors piling into residential property now, why would those who are already in suddenly sell now? Real estate investors are usually in there for the long term, made necessary by large transaction costs.

A third threat was coming from interest rates but with rates falling since last November, this has turned into a positive for the housing market. Affordability is still poor, but at least it’s improving and our assessment is that a further improvement in affordability lies ahead as interest rates are likely to fall another 0.75% by year end.

Bottom line – in the very short term house prices could fall a bit further as economic uncertainty continues to impact, but providing Europe doesn’t plunge China and the world into a renewed recession, falling mortgage rates are likely to drive a cyclical recovery in the housing market from later this year/early next. However, the most likely profile over the next 5 to ten years is for house prices to be stuck in a 10% or so range around a broadly flat trend in real house prices.

This is consistent with the 10-20 year pattern of alternating long term bull & bear phases seen in real Australian house prices since the 1920s. See third chart on page 1. The long
term bull phase of Australian house prices that started in the mid 1990s is now giving way to a long term bear phase.

Housing as an investment

After allowing for costs, residential property has historically provided a similar return over the long term to shares. This can be seen in the next chart, which shows an estimate of
the long term return from housing, shares, bonds and cash.

Since the 1920s, housing has returned 11.1% pa after allowing for capital growth and rents and shares have returned 11.4% pa after allowing for capital growth and dividends. While housing is less volatile than shares and for many seems safer, it offers a lower level of liquidity and diversification. Once the similar returns of housing and shares are allowed for there is a case for both in investors’ portfolios over the long term. Right now though, housing looks somewhat less attractive continuing to offer much lower yields. The gross rental yield on housing is around 3.7%, compared to yields of 7% on unlisted commercial
property, 6% for listed property (or A-REITs) and 6.5% for Australian shares (with franking credits). So for an investor, these other assets represent much better value.

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. We strongly suggest that no person should act specifically on the basis of the information contained herein, but should obtain appropriate professional advice based upon their own personal circumstances including personal financial advice from a licensed financial adviser and legal advice. RI Advice Group Pty Limited ABN 23 001 774 125  AFSL 238 429.

Wednesday, 04 July 2012 06:50

Euro Crisis cartoon explanation

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For anybody who doesnt fully understand the Euro situation,
it is explained very simply in the picture below.........




Friday, 22 June 2012 06:29

What is your most Important Asset?

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Most people readily accept the value of insuring their car and their house but do not insure their most valuable asset which is their ability to earn an income.


Below is a table about insurance and claims history designed to provide food for thought about what really is your most important asset.  This table highlights that the take-up rate for car insurance is 71% but only a 6% take-up rate of income protection.  The grey bars show the average claim size.  (you will need to increase the size of the table below)


Did you know that a car is stolen every 10 minutes in Australia and that someone is burgled every 2 minutes.  Also 1 in 6 men and 1 in 4 women are expected to suffer a disability from the age of 35 to 65 that causes a loss of six months or more from work.


When you think about it - how would you pay for your car insurance if you didn't have an income?








The ban on off-market transfers for self-managed superannuation funds (SMSFs) will not go ahead as planned from 1 July 2012, and is likely to be delayed for one year, according to Self-Managed Super Fund Professionals' Association (SPAA) technical directorPeter Burgess.

SPAA understands that the Minister for Financial Services and Superannuation, Bill Shorten, will announce the delay of the measure to 1 July 2013 before the end of the month.

Treasury is currently experiencing some "drafting issues" with the proposed ban on off-market transfers, which is "causing it a few headaches", Burgess said.

"In addition to the brokerage costs that SMSF trustees are going to have to incur because they have to go on market, they also run the risk of the market moving against them," he said.

"Since they can't be the other side to the trade, they have to wait until there's been a market price that determines the asset value. Then they can get into the market and buy it back," Burgess said.

"We continue to advocate for the removal of this proposal and for the introduction of an operating standard," he added.

SPAA director of education Graeme Colley said the ban on off-market transfers would have implications for employee share issue arrangements.

"If a public company wants to issue shares under employee share issue arrangements they can be transferred directly to the superannuation fund," he said.

But things would get complicated if the employee has an SMSF, Colley said.

"The question then becomes: does that company have to put the shares on the market before they can be transferred to the superannuation fund?" he said.

Monday, 25 June 2012 01:47

Understanding the ownership of your assets

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'Many people, particularly the wealthy, have structures in place but little idea how they are set up, and therefore little idea how to protect themselves against issues that can, and do, come up over a lifetime.'

Estate Law

A woman once came to see me about purchasing an annuity and, to make sure I could offer her the best advice, I began asking a few questions about her financial circumstances.  She told me her income largely came from commercial properties owned by a family trust and, when I questioned her further, it turned out that she had split with her husband 15 years earlier and even though she was a director of the trustee company, her ex-husband was the sole appointor of the trust which she didn't realise.  This meant that her ex-husband was in total control of the trust.

I decided to dig a little deeper and when I saw copies of all the documents it confirmed two things that were a problem. Firstly, as he was the sole appointor of the trust, he could hire and fire the trustee, get rid of the trustee company and even install his new partner - with whom my client shared a mutual loathing.  On top of that there was no reference at all to what happens if her ex-husband died - would his new partner take control of the trust - who arguably wouldn't continue paying income to my client?  This type of example is incredibly common.

Those who own assets in a Family Trust must ensure their adviser has recently read the trust deed to make sure that the deed continues to be appropriate for the present time.

Everyone needs to ensure that they understand the nature of ownership of all of their assets and how differing forms of ownership can impact the ability to control those assets both while you are alive and upon death.

'If you own assets through a legal structure (such as superannuation or a family trust), make sure you understand exactly what it is and - just as importantly - what happens to that legal structure in the event of the death of any one of the parties.'