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Human behavior flows from three main sources: desire, emotion, and knowledge.

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Westpac Reports Cash Profit of $4.02 Billion

Westpac has reported an interim first-half cash profit of $4.02 billion, an increase of three per cent as expected by market.

Cash earnings from the consumer bank rose five per cent to $1.511 billion for the six month to March 31, while total loans were up six per cent and deposits seven per cent.

However, the bank said the demand for housing loans, which supported its performance in the consumer sector, is expected to slow down. “We remain positive about the Australian housing market, although we expect price growth to moderate through 2017,” said Brian Hartzer, chief executive at Westpac.

The interim dividend was set at 94 cents per share and will be paid on July 4.

News: Chinese Investment in Australia Reaches $15.4b, Highest Since GFC

Chinese investment in Australia has reached a record high since the Global Financial Crisis to $15.4 billion, a report found.

A record 103 deals were signed with Chinese companies in 2016, according to the report “Demystifying Chinese Investment in Australia” from the University of Sydney and KPMG.

Commercial real estate accounted for 36 per cent of Chinese direct investment, followed by infrastructure with 28 per cent and a record amount of $4.34 billion thanks to the purchase of stakes in Asciano and the Port of Melbourne. In agribusiness, there were 12 deals with a record of $1.2 billion invested, threefold of the 2015 amount.

Despite the high record, report co-author Professor Hans Hendrischke from the University of Sydney Business School said investment from China is slowing down.

“Australia has proven itself to be a preferred destination for Chinese capital, but we must be cognisant that the growth in investment is slowing compared to other parts of the world such as the United States and the EU,” Hendrischke told ABC.

The report found that Australia is the second biggest destination of new Chinese investment with a total of $US90 billion ($120 billion) since 2007, losing only to the US with over $US100 billion.

Australian Housing Market Has ‘Peaked’, According to UBS

The Australian housing prices boom has reached its peak, investment bank UBS said.

“After housing activity rose consecutively for over four years, its longest ever boom, we are now calling the top and think that housing activity has already peaked,” UBS economists Scott Haslem, George Tharenou and Jim Xu wrote in a note.

“Mortgage rates are rising, and sentiment of home buying collapsed to a [near] record low… Hence, we are ‘calling the top’, but stick to our forecasts for [dwelling construction] commencements to ‘correct but not collapse’ to 200,000 in 2017 and 180,000 in 2018.”

National house price growth is currently at 13 per cent, the highest in seven years, but UBS expected the growth to fall to 7 per cent this year, and 0-3 per cent next year. “We see a moderation ahead amid record supply and poor affordability, with the new buyer mortgage repayment share of income spiking to a decade high,” UBS said.

While house prices will still be out of reach from first home buyers, the bank said more rental options will be available following completion of units this year, allowing rents to rise more slowly than incomes.

The bank also warned that while the risks for housing slump are low, considering strong population growth and stable employment, the country’s record household debt and high housing prices could still cause trouble.

The Majority of Australians Are Not Saving Enough for Retirement

Roger Wilkins, University of Melbourne and Carsten Murawski, University of Melbourne

Only 53% of couples and 22% of single people are on track to achieve a comfortable level of retirement income, according to an in-depth study of the adequacy of retirement savings. The Conversation

The outcome of a collaboration between researchers at the University of Melbourne and Towers Watson, the study has found a significant number of Australians are not likely to achieve adequate retirement incomes, even when all sources of savings are considered.

The research sought to address the considerable uncertainty among policy makers and the broader community about the extent and nature of retirement savings deficiencies in Australia. To do so, we developed a set of metrics indicating the adequacy of retirement savings and applied those metrics to a large representative sample of the Australian population.

The clear finding is that most Australians are still not on track towards reaching a comfortable income during retirement, and will continue to draw a large part of retirement income from the age pension. The implication is that, despite superannuation reforms dating back over 20 years, the problem of inadequate retirement savings remains a significant public policy issue for Australia.

An important innovation of our study is that the metrics we developed take into account not only superannuation holdings (and projected growth in superannuation holdings through investment returns and future contributions) and the projected age pension entitlement, but also a variety of other household assets that could be used to fund retirement, including various financial assets and property.

Using this information, we are able to forecast a person’s expected income throughout retirement. We then compare this income to a “target” income, which is provided by the Association of Superannuation Funds in Australia (ASFA) Retirement Standard for a “comfortable” lifestyle. The ASFA standard for a comfortable lifestyle is a widely used benchmark, and specifies a minimum income of A$57,665 for couples and $42,158 for single people.

The ASFA benchmarks are very close to both current average income levels of retirees in Australia and the income levels that pre-retirement Australians on average believe they will need for a satisfactory lifestyle in retirement. While this concordance may seem reassuring, our findings for the projected retirement incomes of pre-retirement Australians were not.

We projected retirement income levels for a large, representative sample of Australians aged 40 to 64 ­– drawn from the nationally representative Household, Income and Labour Dynamics in Australia (HILDA) Survey – and compared our projections to the income required to sustain a comfortable lifestyle.

Based on our calculations, only 53% of couples and 22% of singles are on track to achieve a comfortable level of retirement income.

Our study also shows the relative importance of different sources of retirement income. If we ignore all sources of retirement income other than superannuation, only 15% of couples and 5% of singles are projected to achieve the target. Indeed, applying the OECD poverty benchmark of half median income, most retirees would be living in poverty.

Factoring in the age pension improves projected retirement incomes for many people, but still only 32% of couples and 11% of singles are on track to have a comfortable retirement income.

Our calculations have several implications. First, they show that, for most people, superannuation is not sufficient to fund a comfortable retirement, even if they have contributed to superannuation for most of their working lives.

Second, it is important to take into account all potential sources of retirement income, including non-superannuation assets, when computing the adequacy of retirement savings. Omitting any of these sources will likely lead to substantial under-estimation of adequacy.

Third, single people are particularly under-prepared for retirement, being three times more likely than couples to have severely inadequate projected retirement incomes.

Fourth, there is a gap between expectations about the importance of the different sources of retirement income and the likely reality. Data from the Australian Bureau of Statistics show that over half of men and two-fifths of women expect superannuation to be the main source of retirement income. However, our projections show that the age pension will provide 61% of the retirement income of single people, and 39% of the retirement income of couples. Moreover, 96% of single people and 89% of couples aged 40 to 64 today are expected to receive at least a partial age pension at some stage during retirement.

Our analyses show that most people need to think ahead to their financial situation in retirement and, if possible, make some changes – the sooner, the better. The first step is to find out whether your savings are likely to be adequate – and you can now do this easily on the ASIC MoneySmart web site.

The site offers a calculator based on a simplified version of the algorithm we used in our study. It takes less than 10 minutes to enter the required information and obtain an estimate of the adequacy of your retirement savings.

Knowing now whether you need to save more towards your retirement is an essential first step towards a retirement in which you don’t have to fear running out of money.


Professor Kevin Davis contributed to this study, which began prior to his appointment as a panel member of the Financial System Inquiry.

Roger Wilkins, Principal Research Fellow and Deputy Director (Research), HILDA Survey, Melbourne Institute of Applied Economic and Social Research, University of Melbourne and Carsten Murawski, Senior Lecturer in the Department of Finance and co-head of the Decision Neuroscience Lab, University of Melbourne

This article was originally published on The Conversation. Read the original article.

Bank Regulators Hint Further Loan Curbs

Bank regulators may take further actions to limit home lending in an effort to mitigate risks from the booming housing market.

The statement came less than a week after the Australian Prudential Regulation Authority (APRA) introduced restrictions on interest-only loans to 30 per cent of all mortgage lendings.

In a speech in Sydney on Wednesday, APRA Chairman Warne Byres described the restriction as a “tactical response” to the growth in lending property investors, especially in the south-east Australian property market.

Byres said the rules were to ensure that banks hold bigger reserves in case of housing-related crises. The regulator would also review the lenders’ capital requirement for mortgages.

“The capital adequacy framework needs to address the concentration in housing lending that has built up in the banking system over time,” said Byres. “If we are going to put an increasing number of eggs into a single basket, we’d better make sure that basket is an unquestionably strong one.”

News: Tesla Shares Slump after Goldman Sachs Downgrade

Tesla’s shares slumped more than 4 per cent on Monday after Goldman Sachs downgraded the stock, citing concerns over the company’s cash needs and ability to deliver the launch of new Model 3 vehicle on time.

Goldman Sachs analyst David Tamberrino said worries over Model 3’s delayed production, along with the carmaker’s acquisition of SolarCity and expected stock sales to raise $1.7billion, led him to downgrade Tesla’s shares from “sell” to “neutral”.

“While we believe Tesla currently has a lead relative to OEM (original equipment manufacturer) peers with respect to vehicle technology adoption, electric vehicle architecture, and (potentially) battery scale, our concerns are more near-term oriented with respect to operational execution on the Model 3 launch, an unproven solar business, and cash needs,” Tamberrino wrote in a statement.

This pushed Tesla’s shares down 4.83 per cent to $244.52, cutting the company’s year-to-date gains to 15.2 per cent. Despite this, Tesla’s stock has jumped 30 per cent in the last 12 months, while the S&P 500 has gained only 22 per cent. Tesla’s shares have also gained more than 30 per cent since early December.

Ways to Cut Spending on Monthly Expenses

Personal finance might seem to cover only the big stuff – student loans, house mortgage, income taxes. However, in this case, small daily expenses matter, as they add up to significant amount of your spending. By cutting seemingly negligible costs, you can earn tremendous cumulated savings and avoid unnoticeable drain on your bank account.

Here are a few ways to cut spending on your monthly expenses:

Buy Refills and Refillables

By purchasing refillable products, you can save up on a lot of consumer goods. For example, using refillable bottles would encourage you to get free tap water instead of getting ready-to-buy packaged water. Other goods such as handwash, laundry liquid, and cleaner also come cheaper in refill than in regular packages.

Set Up Limits

Want to curb the urge to shop? Set up a credit card limit and a spending cap to ensure you don’t go past a certain amount. You can go even further by setting up limit per transaction and daily card withdrawal limit.

Pay Your Debts in Full, Right Away

When it comes to credit cards, always strive to pay the bills in time, in full amount to avoid extra surcharges. You can do this by opting for automatic bill payment with your bank.

Re-evaluate Your Current Utilities and Services

You indeed need electricity, phone and entertainment plan, but are you sure your current plan brings the most value for money? Contact the customer service to see if there is any way to reduce the bills without losing the essential features that you need. Chances are you might not actually need that second Netflix screen!

Go for Home Brands

If you don’t have any preferred brand for a household product, you might be better off purchasing the more affordable home brands – they can do the same job for less dollar per gram.

Walk or Ride a Bike

Bus ticket fees might seem inconsequential, but you’ll be surprised by how much it costs when you walk or bike for a change. This might not be applicable for long commutes, but this would still be great for going places locally. Bonus point: walking and biking are great exercises. Who says you need gym membership to stay fit?

Shop Smart

In buying groceries and other household goods, opt for discount retailers and thrift shops – the competitive price will lift the burden off your wallet.

News: Unilever Shares Fell by 7 per cent Following Kraft Heinz’s Bid Pullout

Shares in Unilever have slumped by 7 per cent after Kraft Heinz withdrew its takeover bid of $US143 billion.

Kraft sought to buy Unilever, merging the two companies into a global consumer goods giant. However, a joint statement released on Sunday revealed that Kraft had “amicably agreed” to pull its offer.

Unilever’s London-listed shares, which rose by 13 per cent to set a record high when the bid was announced on Friday, were down 8 per cent after the withdrawal, while its Dutch-listed shares fell 7 per cent.

Despite the fall in stock prices, analysts and shareholders believed it was unlikely for Unilever to discuss another takeover deal. “A takeover at a later stage seems unlikely to me as Unilever will build their defense and sharpen their focus on profitability,” a major Unilever stockholder told Reuters.

Raphael Moreau, food analyst at Euromonitor said it was unlikely that any other company would be able to handle the acquisition of a company as big as Unilever. “Maybe they realised the price would have been too high to be feasible or that the corporate culture would be too different or too much of a hurdle and that created a long and convoluted process that would ultimately damage both companies,” said Moreau.

22 Ways to Cut Your Energy Bills (Before Spending on Solar Panels)

Tim Forcey, University of Melbourne

Despite many Australians opting not to heat their homes to the point of complete comfort, many of us nevertheless will soon receive a nasty surprise when the energy bills arrive.

With Australia’s historically cheap energy, old housing stock in many areas, mild climate and frequent emphasis on low building costs, many homes are little more than “glorified tents” when it comes to thermal performance.

Besides wanting smaller bills, many residents also want to improve comfort, lessen their environmental impact and boost their home’s value.

So here is a list of 22 things you can do to improve your home’s energy performance – some cheap, some free, and some that can even make you some money up-front as well as cutting your bills. Of course, to reach the ultimate goal of a home heated and powered by 100% renewable electricity you may still wish to put some solar panels on your roof, but why not consider the following actions first?

1. Make sure you get the maximum discount on your energy bills. Although not available everywhere, in Victoria discounts of up to 38% are available on gas or electricity. Ring up your retailer and just ask, or threaten to switch, or better yet seek out a retailer that doesn’t treat their discounts like state secrets.

2. Monitor your power usage with the help of a “smart” electricity meter or in-home electricity display. This real-time (or near-real-time) information is more useful than the coarse monthly data commonly printed on energy bills. It can help identify appliances that have inadvertently been left on or those that draw excessive power when not in use.

3. Heat your water off-peak. If you have a resistive-electric hot water storage tank, make sure it heats up at night, when off-peak power rates apply. In some areas, “time of use” rates are available.

4. Get rid of your ‘garage fridge’. It can cost hundreds of dollars a year to run an inefficient 20-year-old fridge, especially if it’s in a garage that hits 50℃ in summer.

5. Ditch your super-hot plasma. If you have a 10-year-old television that gets so hot you can fry an egg on the screen, check out the newer models that can use one-tenth of the electricity.

6. Install a modern showerhead, such as those designed with double-impinging jet technology that use only 5 litres of water per minute. Old showerheads can pass up to 35 litres per minute. Why not grab a bucket and stopwatch and test yours?

7. Insulate any exposed hot water pipes, including the pressure-relief valve on your hot water tank. Make sure hot water pipes do not run uninsulated straight into the soil in your garden. Insulate electrically heated storage tanks where it is safe to do so.

8. Check your heaters and air conditioning. Gas heating systems should be checked at least every two years by a qualified person, not least to keep poisonous carbon monoxide gas at bay. All heating or cooling system filters should be cleaned regularly to improve energy efficiency and air quality.

9. Inspect your ducts. Poorly installed or degraded ductwork can lead to big energy losses, which can go unnoticed for decades. Ensure that small children or animals have not gone under your house and damaged your gas heating ducts. Check also that air returns are properly “boxed-in” and do not draw air in from the wall cavity instead of from the living space. However, cleaning the inside of your ducts is not critical for energy saving, and risks damaging them in the process.

10. Banish drafts, for instance by plastering over those ubiquitous wall vents – relics from the days when homes relied on unflued heaters or gas lights. Seal off unused chimneys and fill any other cracks, gaps or holes around doors, windows, skirting boards, floorboards and architraves. Remember to close air-conditioning ceiling vents in winter. Ventilation should be controlled by opening windows, not by having permanent holes in the walls.

Older houses can be full of drafts, including from wall vents which are a throwback to times when homes were full of indoor pollution.
Bidgee/Wikimedia Commons, CC BY-SA

11. Eliminate ceiling-mounted downlights wherever possible. A small number of modern wide-beam LEDs can adequately replace a larger quantity of narrow-beam halogen downlights. Aim to have as few holes cut into your ceiling as possible, because these holes let heat escape in winter and let it in during summer.

12. Install downlight covers over all downlights that protrude into accessible attic spaces. Not only does this reduce fire hazards and keep out insects, but it will also reduce air flow through the roof.

13. Replace all regularly used lights with LEDs. LEDs use a tenth of the energy of halogen or incandescent bulbs, so will pay for themselves in just a few months (even less in places where free replacement is on offer). Replace less regularly used bulbs with LEDs as and when they burn out, and vow never to buy a non-LED bulb again.

14. Insulate your attic…. If you don’t have roof insulation, buy some. If you do, check it meets the recommended “R value” for your climate. Ensure all vertical attic surfaces (walls, skylight tunnels) are also insulated, and include a layer of aluminium in your attic space. Thermal imaging can be used to identify existing flaws, such as gaps or sections of insulation inadvertently moved by tradespeople working in the attic.

15. …and your floors and walls too. In cooler Australian climate zones, floor and wall insulation can help keep heat in, making your home warmer and cheaper to operate.

16. Cover your windows from the inside… with drapes, curtains or blinds. This will keep in heat at night and on cold winter days, and keep out the sun in summer. Cheaper or do-it-yourself thermal window treatments such as plastic films or even bubble wrap can be applied in some situations (just don’t expect to win any design awards).

17. …and the outside. Trees, plants, external awnings, blinds or shade sails can all keep out the summer sun and stop windows getting hot. Remember that significant heat will reflect onto windows from sizzling decks, paved areas and walls (but not lawns). It’s better to keep out the sun in the first place rather than try to cool your house down.

18. Double glazing for windows cuts out noise, improves security and saves energy too. For many Australian climate zones, I recommend that homeowners never buy a window in future that isn’t double-glazed. Retrofit options options such as “secondary glazing” are also available.

19. Fit a pool cover if you have a swimming pool. Not only will this stop the water cooling down overnight in summer, but a cover can also minimise cleaning, chemical use and the running time for your filter pump. Consider upgrading to a more efficient pump if yours is more than a decade old, and ensure it does not run for more hours each day than required.

Remember to cover up when not sunbathing.
Kgbo/Wikimedia Commons, CC BY-SA

20. Use reverse-cycle to heat your home…. If your home has reverse-cycle air conditioning (also known as a heat pump), this may be the cheapest way to heat, especially as gas prices rise. On heat mode, reverse-cycle units harvest free renewable ambient heat from the air outside your home and pump it up to the toasty temperature you need inside. Having installed high-efficiency reverse-cycle units, I can heat my own home for one-third of the cost of ducted gas heating.

21. …and your water. If your hot water system is nearing its use-by date, consider replacing it with a heat pump. This is an especially good option for homes that already have solar panels and low feed-in tariffs.

22. If you can eliminate all gas use in your home (for space heating, water heating and cooking), you can eliminate your gas bill with its nearly A$1 per day fixed supply charges.

And then there is solar…

In Australia these days, you won’t be paid much money for selling your electricity back to the grid. However, it might still pay to install solar if you can consume most of the energy yourself, by running your pool pumps, appliances, space heating and cooling devices, hot water system and even an electric car with solar electricity harvested during the day.

In future, as electricity storage batteries get cheaper, there may be even more economic reasons to have solar panels on your roof.

This article doesn’t list every possible behavioural trick or home improvement. Sadly, some homes will never be fantastic energy performers without significant modification. But hopefully there are a few things on this list that will work for you – even if it’s only a case of finally covering that drafty doorstep, or giving your creaking “beer fridge” a dignified retirement.

The Conversation

Tim Forcey, Energy Advisor, Melbourne Energy Institute, University of Melbourne

This article was originally published on The Conversation. Read the original article.

How to Manage Your Finance when Freelancing

Freelancing has become a dream for many due to its promising freedom – being able to choose your own jobs, set your own working hours, and avoid the usual office structures. However, there are also more risks in freelancing, such as irregular income, lack of health insurance and more. Here are a few tips to help you manage your finances as a freelancer.

Save up for emergency fund

The common advice is to save up three to six months-worth of living expenses as an emergency fund, but Bundle suggests freelancers should save up six to nine months. This is to prevent financial breakdown when there are no jobs, or when the payment from client doesn’t come on time. Jamie Beckman, New York-based freelance writer and author of The Frisky 30-Day Breakup Guide, saved about seven months’ worth of money before jumping into the field. “In retrospect, I’d probably recommend saving more than that just in case,” said Jamie.

“I was able to get a good amount of work right off the bat, so I haven’t been dependent on my savings (knock on wood!), but having a healthy financial cushion buys me peace of mind.”

Track your time

According to freelance writer Laura Shin, tracking the time spent on work will help you calculate your income per hour, per job. “A freelancer’s main currency besides money is time, so it’s imperative to know how you’re spending it,” said Shin. “That per-hour “rate” also helps me see what places I should work for less, where I should try to work more, or even where I might want to request a raise.”

Set your rate accordingly

“If you’re used to thinking about the $X/hour rate from your old job, that rate won’t work now that you freelance, unless you are able to fill all 40 hours of your week working on projects,” said Shin. “Most freelancers will need to charge rates that take into account the time you’re running your business but not necessarily charging a client, plus the additional expenses of paying your own benefits.”

For example, a freelance graphic designer should not only charge for hours spent working on an ordered project, but also the hours spent on researching, liaising with the client(s), and other additional expenses which might not be directly related to the project, such as electricity, internet, health insurance and more.

Discuss milestone payment plans with your clients

When involved in a long-term project that spans multiple weeks or months, it is wise to discuss a milestone payment option with your client to make sure you receive income on a regular basis throughout the period rather than having it all sent in one go at the end of the project. Walter Green of Lifehacker suggests three ways to make it work:

“If a job is for a certain time period or number of hours, make sure you can bill your client each month or for every so many hours you log. If there are obvious milestones within the project, set up your billing around those. If nothing else, break the job up into 25% blocks and bill for each of those.”