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10Aug

Mistakes new investors should avoid

August 10, 2021 hejazfs Investments 173

The next generation of investors are here and ready to take on the investment world. They are enthusiastic but limited in knowledge. This article provides advice on how to start your investment journey and the costly mistakes that should be avoided.

You’re young, expecting a satisfying future brimming with friends, family and a comfortable lifestyle.

You’re a Next Generation Investor, likely aged between 18 and 25, and you’re starting to think about financial security.

According to an Australian Stock Exchange study, nearly a quarter of all investors over the past two years were Next Generation Investors. Additionally, some 27% of surveyed people under age 25 intend to invest over the next year.

The excitement of embarking on a journey toward financial freedom is common, as is confusion, after all, in the rush of enthusiasm, how can you ensure you get the decisions made for the future, right today? Further, what are investors rookie mistakes to watch out for?

Here are a few that can be easily avoided.

 

Not clearing debt first

Student loans and credit cards have a knack for eating away income. We’re not saying don’t save at all, but we’re recommending you clear as much debt as possible before committing to serious investments.

Track your spending to spot potential savings, then channel that cash towards your debts. Every little bit helps.

 

No strategy

Desire to build wealth through investment is not a strategy. Saving for a new car, a home deposit? Perhaps you’re planning to retire in your 40s? The end game determines which investments will be most suitable.

Now, consider how you feel about risk and whether you’ll need access to your money. Successful investment strategies are planned.

If it feels overwhelming, seek professional advice to help you build your strategy. You’ll be surprised at how inexpensive a financial adviser can be.

 

Not diversifying

Generally speaking, the higher the potential return, the higher the potential risk.

Market-linked investments, like shares, can be big-earners, but you’ll have to ride economic ups-and-downs to get there – sometimes for ten years or more.

If this worries you, consider lower-risk investments. Conservative in nature, their returns are generally lower, but you’ll probably sleep better.

Decide how much risk you’re comfortable with. You may be better off minimising exposure to high-risk assets by diversifying your portfolio with a variety of investment types.

 

Trying to predict the market

Investment markets are notoriously unpredictable; even experienced traders sometimes get their timing wrong. Buying shares at the wrong time can mean you pay more than you should, similarly selling at the wrong time can result in losses.

Short-term buying and selling might seem exciting, but it’s a fast-track to losing money. The way around this, as previously mentioned, is research, diversification and being prepared to stay the distance.

The magic word is patience.

 

Review

No investment is a set-and-forget scheme. Always keep track of your savings and your ongoing investment plan, ensuring that it continues to align with your goals, particularly as they change over time.

A flash car may be your priority today, but fast-forward a couple of years and perhaps marriage and children are your priorities.

As your goals change, so must your investment strategy.

 

A few other things…

Fees and taxes are unavoidable and various investments attract different expenses and tax structures. Find out what you’re up for before making financial decisions.

Feeling lost? The Australian Stock Exchange offers free online courses and the Government’s MoneySmart website has a free info Starter Pack to get you underway.

Of course, nothing beats professional advice tailored to your needs. Be sure to seek specialist advice from your accountant or financial adviser.

Strategic investing sets you up financially, and helps create a savings habit for life. Your financial future begins today.

 

Visit https://www.hejazfs.com.au/investments/ to learn more about our Islamic investment options or give us a call at 1300 043 529 to talk to our financial adviser about what best suits your situation. Our financial advisers can help you understand your risk comfort level and design an investment strategy that is right for you.

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06Aug

NAB taps into Islamic finance market with sharia-compliant loans

August 6, 2021 hejazfs Media 135

With 1.2 mil Muslims living in Australia, there is a growing need for Sharia-compliant financial products in the market. Hejaz was founded to cater to the needs of our community without compromising on their beliefs or quality. We are excited to continue the pursuit of being Australia’s leading Islamic financial services provider and soon to be Australia’s first Islamic bank.

 

Read the article: https://bit.ly/3xvacUZ

Learn more about our range of premier Islamic financial services: https://www.hejazfs.com.au/

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06Jul

Quarterly economic update 2021 (April to June)

July 6, 2021 hejazfs Lifestyle 121

Quarterly economic update 2021 (April to June)

With unemployment rates decreasing, housing prices rising and the share market performing strongly, the last quarter has been very positive for the economy and investors alike. In this article, we summarise the key standouts from the April to June 2021 quarter.

 

Employment surprise

JobKeeper was a cornerstone of Australia’s response to the coronavirus pandemic. It provided millions of Australians with an ongoing income and kept thousands of businesses afloat, so when it came to an end in March expectations were that there would be a sharp spike in unemployment. One estimate was that 150,000 workers would lose their jobs.

Happily, that wasn’t what happened. From March to April the unemployment rate dropped from 5.7% to 5.5%, then fell to just 5.1% in May. That’s below the 5.2% that applied in January 2020 before the pandemic hit, and an amazing outcome given the damage that COVID-19 continues to inflict on a virus-weary world.

 

Housing continued to sizzle…

Aspiring homeowners and upsizers endured another quarter of woe as home prices continued to soar. Nationally, dwelling prices were up 6.1% for the quarter and 13.5% for the year, with houses outperforming units. Of course, on the other side of the equation are homeowners, many of whom are delighted by the significant boost to their wealth.

Continuing low interest rates remain the key driver, but other issues have played a part, including stamp duty discounts and households redirecting the cash they would otherwise have spent on overseas holidays. Lockdowns last year also affected the normal supply of property leading to pent-up demand. As subsidies are rolled back, supply and demand normalise and if population growth remains low, property price growth may well come back to ‘normal’ levels.

And despite the RBA not expecting to raise interest rates until at least 2024, some economists are pointing to the low unemployment figures to predict that interest rates may begin to rise by the end of 2022. There is also growing speculation that the RBA and APRA will lift lending standards (e.g. requiring lower loan to valuation ratios) in order to rein in galloping price growth.

 

… as did share markets

Global markets performed strongly over the quarter with many setting record highs. Locally the S&P/ASX200 rose 7.7%, beating the MSCI All-Country World Equity Index, which was up 6.9%. Tech shares were back in the lead with NASDAQ gaining 11.2%, while the S&P500 rose steadily to gain 8.6%.

The Aussie dollar fell slightly against the major currencies weakening late in the quarter following talk that the next move in US interest rates may be up.

Iron ore continued to astound, up 30% for the quarter to US$215.50 per tonne.

 

Also…

  • Workers receiving the minimum wage will see a boost in their pay packets from July, with the minimum wage rising by 2.5% to $772.60 per week or $20.33 per hour.
  • Most people will see the Superannuation Guarantee (SG) payment from their employer rise by 0.5% to 10% of normal wages. This is one step on the path to raising the SG to 12% by 2025.
  • According to Credit Suisse, nearly one in ten Australians are now millionaires. Twenty years ago the figure was less than 1%. Of course a million dollars today doesn’t have the buying power it did 20 years ago, but only Switzerland has more millionaires per capita than we do.
  • Massive infrastructure projects and home renovation booms have caused a global shortage of building materials. An indicator, perhaps, that some COVID-19 stimulus measures have been a tad overdone?

 

If you are interested in Islamic Superannuation, Islamic Investments or Islamic Home Finance, learn more about them here.

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29Jun

How an increase in Superannuation Guarantee may result in a pay cut

June 29, 2021 hejazfs Superannuation 177

Superannuation guarantee (SG) rates will increase from 1 July 2021. While this is good news for our retirement nest eggs, some employees may feel the impact with a deduction to their take-home pay. This article explains the SG rate changes, salary differences, and options available to those who are affected by a deduction to their wage.

The superannuation guarantee (SG) is the minimum percentage of ordinary earnings that employers must contribute to superannuation for their eligible employees.

After years being stuck at 9.5% the Superannuation Guarantee (SG) rate is on the move again. It increased from 9.5% to 10% on 1 July 2021, and will increase by a further 0.5% each year until it reaches 12% from July 2025.

More money into super to provide a more secure retirement? What’s not to like about that? Well, it depends on your employment contract as to whether you are in for a welcome bonus or a nasty surprise when each annual increase in the SG kicks in.

 

Salary plus super, or super included?

If you are paid a base rate plus super then your employer should increase your super contributions by 0.5% with no change to your take-home pay. This is the likely to be the most common (and the best) outcome. It’s possible some employers may take the increases in SG into account when negotiating future wage increases, but this is an indirect and by no means certain outcome.

It’s a different story if you are paid on the basis of a total package, including super. In this case, and provided it doesn’t drop your pay rate below award minimums or the minimum wage, your employer may deduct the additional SG from your take-home pay. Not such a desirable outcome.

 

What can you do about it?

Just because an employer can reduce take-home pay to make up for the higher SG doesn’t mean they will. Many employers will wear the cost, and if that’s the case with your employer, all well and good. Also bear in mind that employers may use both types of contract, so just because your colleague at the next desk is paid on a salary plus super arrangement, you may not be.

With the outcome entirely up to your employer it’s important to talk to them. Find out if you are affected, what they plan to do, and if necessary see if you can negotiate an appropriate increase to your total package. If you have union representation this may be helpful.

It will all come down to the strength of your bargaining position. Employers who want to keep good employees and avoid the cost of employee turnover may be more willing to carry the cost of the increase. It’s also possible for your employer to take one approach this year and another next year, depending on business conditions.

While the drop in take-home pay after the initial SG increase may be relatively small, by 2025 it will be a much greater amount. It’s important to have that conversation with your employer as soon as possible.

 

Learn more about the SG rate increase here.

 

At Hejaz Financial Services, our Islamic Superannuation has a range of investment options designed to help you achieve your long term goals. We are also known to have outstanding performances and we keep our costs low to pass on your Superannuation returns to you.

If you wish to speak to one of our qualified wealth advisers, you can schedule an appointment or give us a call at 1300 043 529. To find out more about Australia’s Best Performing Islamic Super Option FY19/20* you can visit our website.

We are also Australia’s First and Only Islamic Pension Option, you can count on us to help you retire Islamically.

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09Jun

Getting ready for Tax Time

June 9, 2021 hejazfs Blog 147

As tax time nears, here are some things to think about to get the most out of this EOFY.

The end of another financial year is looming, and with that may come thoughts about your tax return and how your wealth has tracked throughout the year.

Whether you’re nearing retirement, a high-income earner looking to reduce your taxable income, or you’re on a lower income and looking for ways to maximise your super contributions; there are a few things you can consider at tax time. Read this article to finish this financial year on the right foot.

 

Nearing retirement? Maximise your super contributions

If you’re nearing retirement, putting as much money into your superannuation account now is a good way to make sure you build up a healthy nest egg to live off in your golden years. To maximise your super contributions, consider salary sacrificing to put more money into your super account.

Salary sacrificed super payments take money out of your pre-tax income. These are called concessional contributions and are taxed at 15%. This rate is lower than most taxpayers’ marginal tax rates, so it can be an excellent way to reduce your taxable income while increasing your superannuation savings.

The maximum employer and salary sacrificed contributions that can be made each financial year is $25,000. And remember, if you’re self-employed, your concessional contributions are a tax deduction.

Non-concessional contributions of up to $100,000 can also be made each financial year. These contributions come from your after-tax income.

 

Consider a one-off contribution to lower your income tax

Let’s say you’re on an income of $170,000. If you haven’t opted to salary sacrifice, your employer contributions to super will be $14,748.86 in the financial year. Therefore, your taxable income will be $155,251.14.

To lower your taxable income, you could make a one-off concessional contribution of $10,000. This will reduce your taxable income and still come in under the concessional contribution cap of $25,000.

 

Are you eligible for the Government co-contributions to super?

If you earn less than $54,837 per year (20/21 financial year) before tax, you could be eligible for the Government’s co-contribution on after-tax super contributions.

Those who earn under the threshold can make an after-tax contribution, and the Government will calculate your co-contribution amount when you submit your tax return. The co-contribution will be deposited directly to your superannuation account.

Taking advantage of Government co-contributions can be a great way to boost your superannuation savings, either for retirement or to save towards buying your first home.

 

Review your records now

It just wouldn’t be tax time without the fun of sorting through your receipts and documents. If you stay organised throughout the year, however, it doesn’t need to be a headache.

Now is the time to check you’ve been keeping good records. Have you got a record of relevant receipts and policy statements for items such as income protection policies you have outside superannuation?

Understanding the paperwork you require now to maximise your deductions will save you time when it comes to completing your tax return. If you haven’t got all of your records organised, review your spending throughout the year, identify transactions that may be a tax deduction, and put aside those receipts for tax time.

 

Looking for more help?

If you’re looking to maximise your tax return and get ready for a successful financial year ahead, talk to a financial adviser about your options.

It doesn’t matter your circumstances; there are options available to help you boost your super savings and get the best tax return possible.

At Hejaz Financial Services, we have an expert team that comprises of Tax Financial Advisers, Tax Agents and Accountants. We can therefore advise and assist on matters relating to Tax Minimisation, Tax Strategy, and Investment Structuring. Learn more about our tax services here.

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04Jun

Making the financial advice industry sustainable

June 4, 2021 hejazfs Finance, Media 142

Our CEO, Hakan Ozyon, shares his thoughts on making the financial advice industry sustainable. There will always be a need for sound financial advice.

The question is how can the sector adapt to strike the right balance between quality and affordability?

Read the article: https://www.fsadvice.com.au/blogs/view/making-the-financial-advice-industry-sustainable-179774097?q=hejaz

Learn more about our range of premier Islamic financial services: https://www.hejazfs.com.au/

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27May

2021 Federal Budget Highlights

May 27, 2021 hejazfs Finance 171

This budget recap summarises major government announcements from the 2021 Federal Budget including retirement savings proposals, business support programs, new home owner initiatives and aged care announcements.

Greater flexibility for older Australians to boost superannuation, continued support for small business, and extra help for struggling homebuyers are key drivers in the Federal Government’s 2021 Budget, designed to steer Australia away from a pandemic recession.

 

Retirement savings proposals

Australians aged 67 to 74 will no longer need to satisfy the ‘work test’ requirements in order to make super contributions, while the age requirement on “downsizer” contributions, which allows top-ups of up to $300,000 per person, will drop from 65 to 60.

While these changes will not come into effect until 1 July 2022, they will allow many older Australians to make significant super contributions and effectively restructure their financial affairs, even after they have retired and left the workforce.

Approximately 300,000 working Australians, mostly women, earning $450 or less a month from a single employer will now receive full super guarantee contribution entitlements, providing a significant boost to their retirement savings.

 

Business Support Programs Extended

The Government will further accelerate economic growth by extending three of its most successful small business support programs.

Temporary full expensing will continue until 30 June 2023. Small business owners can claim the full cost of buying a car or piece of equipment as an immediate tax deduction.

Temporary loss carry-back provisions will now include the 2023 financial year. Businesses can claim a tax refund with ‘carry-back’ losses from one trading period used to offset a profit from a previous trading period.

The Job Trainer program will also continue with the Government providing a 50 per cent wage subsidiary for another 270,000 new apprentices and trainees hired by Australian businesses, as well as a raft of other employment boosting initiatives.

 

Help for Potential Homeowners

Those struggling to take their first step on the property ladder will benefit from the Federal Government’s decision to allow first home buyers to access $50,000, up from $30,000, from their superannuation savings to contribute to their deposit.

Some 10,000 Australians will be able to buy a new home with just a five per cent deposit under the New Home Guarantee, while a further 10,000 single parent families will be able to buy a home with just a two per cent deposit under the Family Home Guarantee.

 

Social Initiatives

Other initiatives include:

• $353.9 million for a range of initiatives supporting women’s health.
• An extra 80,000 in-home aged care packages over the next two years.
• $7.8 billion to aged care providers over the next five years.
• $1.7 billion for childcare effective from 1 July 2022. This will include the removal of the subsidy cap for high-income earners and increased subsidies for families with two or more children under five years.
• The extension of the temporary low- and middle-income earners tax offset, where those earning less than $126,000 will receive a $1,080 tax offset until 2022.

Many of these announcements will not come into effect for some time, so to find out how and when you can benefit, be sure to seek specialist advice from your accountant or financial adviser.

 

Source: https://budget.gov.au/

Want to learn more about our Premier Islamic Financial Products? Click here.

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17May

Wealth firm eyes $250b Islamic finance market gap

May 17, 2021 hejazfs Finance, Media 135

Our mission has always been to help the Australian Muslims gain better access to wealth creation in line with their faith and values.⁠
⁠
With a banking license, this would open up more opportunities for the community to access a holistic range of financial products and services without compromising on quality and performance.⁠
⁠
Thank you Aleks Vickovich and The Australian Financial Review for the chat and write up.⁠
⁠
Read the article: https://www.afr.com/companies/financial-services/wealth-firm-eyes-250b-islamic-finance-market-gap-20210514-p57s3a

Learn more about Hejaz Financial Services Islamic products: https://www.hejazfs.com.au/

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06May

Hejaz launches Australia’s first Islamic-specialist financial adviser network

May 6, 2021 hejazfs Finance, Media 128

In an Australian first, Hejaz Financial Services, Australia’s leading diversified provider of Islamic financial products and services, has announced the launch of the Hejaz Financial Advisers network dedicated to advising clients on Islamic-compliant investments.

Advisers joining the network will operate under Hejaz’s master license (AFSL) to give Australian Muslims access, for the first time, to a professional financial adviser to help them secure and grow their wealth in a Sharia compliant way.

The network, which will comprise both Islamic and non-Islamic financial specialists, will advise clients on investment products that are aligned to Islamic investment principles and tailored to their individual financial needs.

Hakan Ozyon, Chief Executive Officer at Hejaz Financial Services said, “Muslims are a growing but underserved financial services market in Australia. To date, they have not been able to access specialist advice or products designed to help them achieve their financial goals in a way that reflects their religious faith.

“By establishing a network of advisers who deeply understand the customers they serve, Hejaz is helping to make wealth management more accessible to Islamic communities. We believe we are also setting an example at a time when questions have been raised about how aligned advisers are to their clients’ needs.”

Hejaz expects to recruit up to 50 advisers to the network within 12 months and is seeking to eventually license between 150 and 200 specialist financial advisers.

Among other investments, Hejaz-affiliated advisers will be equipped to advise clients on Hejaz’s flagship Islamic investment products, the Global Ethical Fund and Ethical Income Fund.

The Global Ethical Fund is a multi-asset balanced fund applying a Sharia-compliant strategy that aims to achieve CPI plus a 3% total return per annum. Since inception in 2017, it has returned 6.0% per annum. Established in 2019, Hejaz’s Ethical Income Fund is designed to generate a steady, Sharia-compliant income stream. It has a target return of between 5% and 7% per annum.

Hejaz’s total funds under management (FUM) currently stand at $170 million.

Susan Wolff, an experienced CFO, Operations and Governance Manager, has been appointed to lead the development and growth of the financial adviser network. Ms Wolff has worked previously at Challenger International, IOOF Holdings, Capstone Financial Planning, AMP and most recently, as Chief Operating Officer at MSC Group.

“Hejaz is taking steps to make wealth creation more customer-centric. The market potential here is enormous – Muslim Australians are diligent savers and, given the choice, will always gravitate to financial products that align with their faith and values,” said Ms Wolff, General Manager – Wealth Management at Hejaz Financial Services.

“I am pleased to be joining Hakan and the leadership team as Hejaz continues to create innovative new funds and solutions to everyday problems. A laser focus on what our Muslim and non-Muslim customers are actually looking for is exactly what the industry needs.”

 

This article was first published in Adviser Voice on 6th May 2021 and is republished with permission. Click here to view the original article.

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