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Australians are living longer. According to the World Health Organization, we enjoy the fourth best life expectancy in the world behind Japan, Switzerland and Singapore.
Great news for Millennials! Your life expectancy has been tabled at 74 for men and 80 for women. Astounding advances in medical technology could mean you will live much longer! With all that living to be done, how on earth will you fund it?
Well there’s always the Bank of Mum and Dad, right?
Doubtful, you see, according to a 2017 joint survey by National Seniors Australia and Challenger, the main issue concerning older people is ensuring they have regular and sufficient income.
This is because they are also living longer and are structuring their affairs to ensure they don’t outlive their savings. Your parents are healthier and more financially savvy than their own parents were and they’re considering their options.
It might seem like an historical event now, but self-funded retirees took an unexpected hit during the Global Financial Crisis (GFC). Ten years on, and investments have still not recovered. A recent report by the SuperGuide announced the top-performing super fund for the last ten years to June 2017 earned an average of 6.1%. That’s not much.
It’s probably not a good idea to rely on an inheritance either. From the survey mentioned above, only 3 percent of respondents planned to leave their savings to their children.
A combination of longer life expectancy and sluggish investment growth has seen many retirees opting for strategies like downsizing their homes to supplement retirement income.
It’s common to live with Mum and Dad to save a healthy home deposit. Sometimes parents even offer financial assistance to give their children a leg-up into their first home. As a result, it’s quite reasonable to assume there’ll be further help later on.
These days, it’s increasingly likely that you’ll find your parents are simply not in the position to give further help, much as they’d like to.
But independence is empowering! It means taking control.
Borrowing from family can be awkward; they may want a say in how you spend the money, or it can leave you feeling you must consult them before making decisions.
Controlling your own destiny might be challenging, but financial self-reliance is rewarding. You just need to know where to start.
Financial advisers consider your income, expenses and financial goals. They work with you to tailor a plan to manage debt and develop a good savings habit to put you on track to getting what you want.
Contribute even the smallest regular amount and you’ll be amazed at what you can achieve.
This is because interest is calculated on your savings balance. Regularly topping-up your balance – even once a month – really boosts your savings as the interest combined with your contributions compound one on top of the other, over and over. It’s like free money!
What could be better? Only the fact that professional advice costs less than you might expect.
So, next time you need a favour from your parents, why not surprise them by asking for a referral to their financial adviser?
Virtual currencies, or cyber currencies, are both a medium of exchange and a store of value, just like traditional money. However, unlike banknotes or coins cyber currencies exist only as digital data stored in computers.
Trading in virtual currencies requires membership in an online community connected by appropriate software, with the value usually being determined by a computer algorithm or simple supply and demand.
Virtual currencies are not considered legal tender in most countries, however some, including Australia, do allow purchases using this alternative money.
What is Bitcoin?
Virtual currencies appeared in the 1990s with names like Digicash, Flooz and Beenz, but most failed for various reasons. Bitcoin originated in 2008 and with the present value of Bitcoin at approximately $68.80 billion, it is currently the most popular and widely used.
An understanding of Bitcoin provides a guide to the common features of virtual currency systems.
Bitcoins are produced by computers known as ‘miners’ that are programmed to solve complex mathematical algorithms. Successful miners (the people running these computers) are rewarded by being given a block of 25 Bitcoins. The complex system of algorithms awards one block of coins approximately every 10 minutes. A total of 21 million Bitcoins are to be created with more than 16.5 million currently in circulation.
Individuals store their Bitcoins using computer programs called ‘wallets’ which can reside on a computer, mobile phone or remote online server. Individual Bitcoins are divided into 100 million subunits called Satoshi.
Transactions occur with an order being sent electronically from one wallet to pay Bitcoins directly to another wallet. These transactions are verified by comparing the private encryption key of the payer with the corresponding public key. All transactions are stored on ‘ledgers’ – other computers dispersed throughout the internet.
Are they useful?
Cyber currencies can be used to purchase the full spectrum of goods and services, from books to houses. Well-known merchants accepting Bitcoin include Amazon, PayPal, Ebay and even Subway.
The Grayscale Bitcoin Investment Trust is a managed fund investing exclusively in Bitcoins. The millionaire Winklevoss twins are also proving the investment value of virtual currencies, having established an exchange in New York, trading US dollars for Bitcoin and vice versa.
Trading in Bitcoin has seen its value triple during 2017 and, according to analysts at Goldman Sachs, it may double in value again in 2018.
Risks and Rewards
Virtual currencies offer numerous advantages over legal tender. For example, as personal details are not linked to a payment in Bitcoin, it can protect against identity theft. Also, there are no fees associated with buying or selling using Bitcoin.
But there are some risks.
A lost bank PIN can be replaced, but losing your Bitcoin private key or deleting your wallet without a backup means you can permanently lose all Bitcoins associated with that key or wallet. This happened to one user in the UK who left his private key on a hard drive which was accidentally thrown out and ended up as landfill. Over the years he has watched the value of those lost “coins” appreciate to millions of pounds.
Virtual currencies aren’t for everyone, but they do have an interesting story.