Know Archives - CommonCents Financial Planning

The Illusion of Safety — When “Low Risk” Investments Cost You the Most

Nick Girle — Mon, 23 Mar 2026 05:44:44 +0000

“I just want to play it safe.”

It’s one of the most common things people say when talking about their money — particularly as they approach retirement. Usually, “safe” means cash, bank accounts or term deposits.

While these options feel stable and reassuring, they often create a different kind of risk — one that doesn’t show up on your statement, but quietly undermines your financial security over time.

A Real‑World Example of Inflation at Work

In the early 1990s, a widowed woman received a $130,000 superannuation payout after her husband passed away. At the time, this was a significant amount of money. The average home in Toowoomba cost around $65,000 — meaning she could have bought two homes outright.

Concerned about economic uncertainty, she placed most of the money into term deposits. Interest rates were high, and in the first year she earned around $14,000 — close to two‑thirds of an average full‑time salary at the time.

It felt like a sensible, low‑risk decision.

What Happened Over the Long Term

Fast forward 35 years.

That same $100,000 now generates less than $5,000 per year in interest. Over the same period, everyday living costs have more than doubled, bread prices have more than tripled, and the average Toowoomba home is now worth around $670,000.

Her income fell dramatically while her expenses rose — not because of poor decisions in the moment, but because inflation quietly eroded her purchasing power.

This is the hidden risk of “safe” investments.

Understanding the Different Types of Risk

Market volatility risk is obvious and uncomfortable. Inflation risk is quiet and persistent and un-noticed.

Avoiding all risk isn’t possible. The real question is which risks you choose to manage.

Assets such as shares and property experience ups and downs, but they also tend to grow and adapt over time. Businesses increase profits and dividends. Rents rise gradually. These features help protect against inflation in ways cash simply cannot.

Diversification is key. Different assets play different roles — stability, income, growth and long‑term purchasing power.

True financial safety isn’t about avoiding uncomfortable market movements. It’s about protecting your lifestyle over decades.

While cash and term deposits feel safe, relying on them too heavily can expose you to significant inflation risk. A balanced strategy — one that accepts some short‑term uncertainty — often provides far greater long‑term security.

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Why Inflation Is the Quietest — and Most Dangerous — Risk to Your Wealth

Nick Girle — Mon, 16 Mar 2026 05:12:08 +0000

When people think about financial risk, they usually focus on the big, dramatic events — market crashes, recessions, interest rate shocks or global uncertainty. These risks feel immediate and frightening, so they naturally get most of our attention.

But the most dangerous threat to your long‑term financial security doesn’t usually make headlines. It works quietly in the background, year after year, steadily eroding the value of your money.

That threat is inflation.

Inflation Is Not a Possibility — It’s a Certainty

From a risk‑management perspective, we always look at two things: the likelihood of a risk occurring, and the damage it can cause.

Many investment risks are possible but uncertain. Inflation is different. In Australia, inflation has existed every single year of our economic history. Some years it’s low and some years it’s uncomfortable, but it is always present.

That makes inflation a guaranteed risk, not a hypothetical one.

Because it happens gradually, inflation is easy to underestimate. A small increase in prices from one year to the next doesn’t feel alarming. But over long periods, those small increases compound into a significant loss of purchasing power.

Why Inflation Becomes Dangerous Over Decades

Most people don’t plan their finances over five‑year timeframes. Retirement planning often spans 25 to 35 years.

For couples approaching retirement in their early 60s, there is roughly a 50% chance one partner will live into their mid‑90s. That means your money needs to keep working for decades after you stop earning an income.

Over those timeframes, inflation becomes far more dangerous than short‑term market volatility. It steadily increases the income you need just to maintain the same lifestyle, while reducing what your savings can buy.

This is why inflation risk was identified as the most significant threat in a major Australian retirement income study — ahead of market crashes and economic downturns.

The Mistake of Focusing Only on “Safety”

Many people assume that cash and term deposits are low‑risk investments because their balances don’t fluctuate.

While they may feel safe in the short term, these assets offer little protection against inflation. Over long periods, money that doesn’t grow loses real (purchasing) value — even if the balance never goes down.

Managing inflation risk doesn’t mean ignoring volatility or taking reckless risks. It means accepting that some exposure to growth assets is necessary if your lifestyle is to remain secure over decades.

A well‑structured portfolio doesn’t eliminate risk — it balances different risks intelligently.

Inflation is quiet, predictable and relentless. Unlike market downturns, it doesn’t arrive suddenly — but over time, it does far more damage to purchasing power.

Protecting your wealth isn’t about reacting to headlines. It’s about planning decades ahead and ensuring your money can grow and adapt as the cost of living rises.

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Why “Safe” Investments Aren’t Always Safe

Nick Girle — Fri, 30 Jan 2026 07:58:00 +0000

It’s natural to want safety when investing. After all, nobody enjoys uncertainty.

That’s why terms like “guaranteed returns” and “low risk” feel so appealing. But one of the biggest myths in personal finance is the idea that truly risk‑free investments exist.

At CommonCents Financial Planning, we believe that the truth is that even the safest‑seeming strategies carry risks—just not the kind you immediately see.

The Hidden Risk: Inflation

Term deposits, savings accounts, and government bonds don’t fluctuate like shares, which is why they’re considered safe. But they have another problem: inflation quietly eats into their value.

If your term deposit earns 5% but inflation is 3.5%, your real return is only 1.5%. And over years—even decades—that gap becomes significant.

A Real‑World Example

I once met a retiree who had kept $100,000 in a term deposit for nearly 20 years. Her hope was that the money would eventually be divided among her children to help them buy homes.

But the balance of course didn’t grow, it remained at $100,000. When it came time to distribute the money, each child received $25,000—not nearly enough to achieve what she always imagined.

She didn’t lose money on paper, but she lost a great deal of purchasing power.

Even Defensive Assets Carry Risk

Cash loses value when inflation rises.
Bonds fall when interest rates increase.
Government guarantees protect the balance—not your future buying power.

So while these products feel safe, they may not support your long‑term goals.

A Smarter Approach

The aim is not to avoid risk—that’s impossible. The aim is to manage risk properly.

1. Understand the risk‑return trade‑off.
Higher returns mean higher volatility. Lower volatility means lower growth. Both have a place that aligns with your purpose for investing.

2. Diversify across asset classes.
A balanced mix of shares, property, bonds, and cash protects you from relying on one outcome.

3. Review your strategy regularly.
Your needs change therefore your portfolio should change with them.

Safety Is Not a Product

It’s a strategy.

A genuinely safe financial strategy:

protects your long‑term purchasing power
manages market volatility
supports your goals
grows your wealth appropriately

Avoiding risk entirely usually creates a different – and often more damaging – risk: the slow erosion of your financial security.

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The Wealth‑Building Myth Holding Too Many Australians Back

Nick Girle — Wed, 28 Jan 2026 06:50:53 +0000

Many Australians grow up believing that building wealth is something reserved for “other people”—high earners, business owners and those who were fortunate enough to inherit money. It’s a belief that comes up at family BBQs, in workplace conversations and even in the minds of clients who are otherwise doing perfectly well financially.

But here’s the reality: you don’t need to be wealthy to start building wealth.

And believing that you do often causes people to delay taking action.

Why This Myth Persists

When we think of “wealth,” we tend to picture the finish line. We imagine the big super balance, the investment portfolio or the financial freedom that comes later in life. Because we only look at the destination, we assume it must take huge resources to get there.

But almost all wealth is built the same way: small, consistent habits repeated over long periods.

The Power of Starting Small

A clear illustration of this is compounding.

If an investor puts away $5,000 a year and earns around 7.5% annually—a rate consistent with long‑term balanced or growth portfolios—they can end up with more than $500,000 after 30 years. No inheritance. No windfall. Just disciplined, repeated saving.

An even more powerful example:

Person A invests $5,000 a year from age 25 to 35, then stops.
Person B invests the same $5,000 a year from age 35 to 65.

Even though Person B contributes three times the amount of money, Person A ends up with more thanks to starting earlier and letting compounding do its work.

“But I Didn’t Start Early…”

The good news is that it’s never too late. Whether you’re planning for retirement, wanting to help your children or saving for a major life change, the same principles apply:

Start today
Be consistent
Give your money a purpose

Ten or fifteen years of steady saving and investing can still dramatically improve your financial position.

Why It’s Easier Than Ever

Today’s investment landscape is more accessible than ever:

Lower minimum investment amounts
Automated contributions
Easy‑to‑use digital platforms

You no longer need $100,000 to get started.

For households with above‑average incomes, this accessibility is especially powerful because you can direct meaningful amounts into long‑term strategies without compromising lifestyle.

Simple Steps to Begin

1. Automate your savings.
Set up transfers that occur automatically each payday. If you don’t see it, you won’t spend it!

2. Use the 50/30/20 rule.
ASIC’s guideline is simple and effective:

50% needs
30% wants
20% saving or investing

3. Make wealth‑building “lazy-proof.”
Remove friction. Keep the process boring and consistent.

The Bottom Line

You don’t need a high income or a head start to build wealth. You need time, consistency, and a plan that matches your goals. Your starting point is far less important than what you choose to do next.

At CommonCents Financial Planning we excel at facilitating comfortable productive conversations through clear and genuine illustrations of why doing it is so important and the potential risks of not doing it.

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Halt Tech Support and Remote Access Scammers in their tracks

Nick Girle — Fri, 05 Dec 2025 06:32:14 +0000

Two years ago, an elderly client of ours clicked on a link that purported to update the security software on her computer. Within minutes a scammer had called her and pressured her to transfer money from an online savings account to one of her own transaction accounts.

Over the next hour the scammer bombarded her with high pressure language and demands to act quickly to save her money. They had her drive to the local branch all whilst they remained on the phone demanding her to hurry. They demanded she withdraw $9,000 in cash and then return home where a courier was waiting to collect a package. The courier was unrelated to the crime and had responded to an online order to collect the package and deliver to another location.

Police had nothing to work with and the advice was to get a new computer, such was the speed and sleekness of the scam.

Tech support scams are one of the fastest-growing threats we see – someone rings claiming to be from Telstra, Microsoft, or NBN saying your computer has a virus and they need remote access “right now.”

Here are some ways you can be safer.

1. Legitimate companies almost never cold-call about computer problems

Telstra, Microsoft, and Apple do NOT ring unsolicited to tell you your computer is infected.

If you get such a call, hang up immediately.

We’ve had clients who let the caller remote in—within minutes malware is installed, banking details stolen, and sometimes ransomware locks everything.

2. Never grant remote access to an unsolicited caller

Even if they sound convincing and show you “proof” of errors, it’s fake.

Once they’re in, they can install keyloggers that record every password you type.

We had one client who caught it halfway and yanked the power cord. That’s the only thing that saved them.

The safest response is purely to say, “I’ll call you back on an official number” and then don’t.

3. Keep software updated and use proper antivirus

Enable automatic updates on your computer and phone, most patches fix security holes that scammers commonly exploit.

We also recommend installing reputable antivirus with real-time protection and regular scans.

Another great security option is to set your internet banking apps to require device approval for large transfers. This then adds an extra barrier even if someone gets temporary access.

Tech support scams rely on urgency and fear.

Slow down, hang up, and verify.

Assume the worst of every caller and rely on the defence that you will call them back on an official number.

It’s much better to do a quick check than get a total clean-out.

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Alternative Ways to Gift your Inheritance

Nick Girle — Fri, 31 Oct 2025 05:00:00 +0000

At CommonCents Financial Planning, we see money as a tool for legacies, and early gifting doesn’t always mean large sums.

Alternatives like funding insurance premiums or experiences can help adult children without overwhelming them.

Here are three ways we guide families toward meaningful, low-risk gifting.

1. Fund Insurance for Long-Term Protection
We often suggest paying for your children’s insurance premiums as a practical gift.

For $500–$1,000 annually, income protection and life insurance cover provides security against illness or loss.

One family we advised funded their children’s insurance policies which prevented significant financial strain when one of the children faced health issues. A bonus to this was that our clients were not relied upon to fund their sick child’s finances.

We help to review policies, ensuring adequate coverage like $5,000 monthly income replacement which protects both generations from unexpected burdens.

2. Gift Shared Experiences Like Holidays
We love recommending family holidays as non-monetary gifts, creating memories while aiding kids.

You can book a $10,000 Sunshine Coast getaway for two weeks, inviting children and grandkids to join.

This eases their budgets as often mortgages limit vacations all the while fostering bonds.

With the right budget, you can turn your gift into joyful, tax-free experiences that don’t risk misuse.

3. Opt for Smaller, Regular Gifts
We often advise smaller amounts for gifting, like $5,000–$10,000 yearly, to test impacts without Centrelink penalties.

For a $50,000 total over five years, this builds habits gradually—perhaps toward education or debt.

We help to model scenarios, ensuring gifts remain under thresholds to maintain your pension, and suggest tying to milestones like birthdays for ongoing support without disrupting work ethic.

Gift Wisely

Alternative gifting builds legacies thoughtfully and a good way to do this is to start with insurance reviews or holiday planning.

We’re here at CommonCents Financial Planning to tailor strategies and ensure your generosity lasts.

Reach out to discover ways to gift wisely for your family’s future!

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How to know if you should Use a Self-Managed Super Fund

Nick Girle — Mon, 27 Oct 2025 05:30:00 +0000

At CommonCents Financial Planning, we believe your money should fuel your dreams—especially when it comes to building a secure retirement through super.

Self-managed super funds (SMSFs) currently manage around $1 trillion across Australia, but they’re not right option for everyone. We help you decide if an SMSF truly fits your goals by focusing on specific and practical use cases.

SMSF’s are used too often and in situations where it’s inappropriate but to show where they can add value, here are three scenarios where an SMSF might make sense.

1. Investing in Direct Property
If you’re a business owner leasing a warehouse or office, using an SMSF to purchase the property directly can make a lot of sense.

Let’s say your business buys a $1 million commercial space — your business pays rent to your super instead of to a third party thereby gaining you the control and all the potential growth.

We assess your balance (e.g., $500,000 in super), guide you on borrowing rules and help to ensure compliance.

2. Pooling Balances for Bigger Opportunities
You may have found an opportunity to invest in a private scheme that is developing a specific block of land but the pricing is beyond the scope of your superannuation resources.

In this case you and a group of others could each invest into a trust vehicle where the development would take place. The only way for you to invest your share using your superannuation savings would be via a SMSF.

Some families also do similar large scale investments by combining up to six related super balances into one SMSF.

There are specific rules to what a SMSF can invest in so there are some protections but this does not eliminate the extremely high risk of failure that a lack of diversification would bring to this option.

3. Borrowing or Speculative Strategies
Though we rarely recommend borrowing inside super, an SMSF allows it under strict rules—ideal if you’re set on leverage.

For speculative moves like Bitcoin (often capped at 5% of your fund), SMSFs offer flexibility unavailable in public options like a retail or industry super fund.

Borrowing and speculative strategies increase your risk greatly, especially when you use your retirement strategies to do it. When you take a high risk there is the expectation of a high reward but the risk of failure with borrowing and speculative strategies in super can mean that you’re left with nothing.

Proceed with extreme caution

An SMSF can empower your super strategy, but only when it solves a specific need.

Start by reviewing your overall goals and then truly try to justify why you can’t or wouldn’t pursue just a standard retail or industry super fund.

At CommonCents Financial Planning, we’re here to help you live your richest life.

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How CommonCents Uses Investment Bonds for Controlled Gifting

Nick Girle — Fri, 24 Oct 2025 03:12:00 +0000

We believe money fuels dreams, including passing wealth to future generations thoughtfully.

Investment bonds help to offer control when gifting early to adult children or grandchildren, bypassing risks of misuse.

Here are three ways we leverage investment bonds to create secure and flexible legacies.

1. Provide Structure for Adult Children
We recommend investment bonds for gifting to adult kids when you want oversight.

For a $150,000 gift tied to a future date, we suggest an investment bond where you retain control as owner.

Funds then grow tax-paid at 30% and because you retain the control it means you can withdraw if needed if for example the financial situation of your adult child has deteriorated.

2. Skip Generations for Grandchildren
We use specialised investment bonds to bypass adult children and directly benefit grandkids.

An education bond, for instance, names grandchildren as beneficiaries, with parents managing investments but not withdrawing personally.

For $50,000 per grandchild, funds cover schooling—tuition or books—with great tax advantages when used for education.

3. Ensure Estate Protection and Flexibility
We integrate investment bonds into legacy plans for non-estate assets, avoiding probate delays.

With a $100,000 investment bond you can nominate specific beneficiaries, transferring the benefits directly upon your passing which then sidesteps wills that could be at risk or get caught up in probate.

Investment bonds allow outstanding flexibility, lets you reclaim funds if circumstances shift and provides tax-efficient wealth creation for the beneficiary of your choice.

Investment bonds add control to early gifting and you can start by defining goals and consulting on tax rules.

At CommonCents Financial Planning, we’re here to help you build and protect your legacy.

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How CommonCents Simplifies Aged Care Costs for Families

Nick Girle — Fri, 25 Jul 2025 07:37:00 +0000

Hello, families! At CommonCents Financial Planning, we view money as fuel for dreams, including securing quality aged care for loved ones.

Aged care costs can be complex, but we’re here to break them down.

Here are three ways we help families understand and manage fees, ensuring both the resident and staying spouse are financially secure.

1. Understand Accommodation Payment Options
We guide families through accommodation fees, which include a Refundable Accommodation Deposit (RAD), a Daily Accommodation Payment (DAP), or a combination.

You could think of the RAD as “buying” the room as it is paid as a lump sum. While the DAP could be considered as “renting” the room, as it is paid as a daily sum with interest. The interest rate is set by the Government and currently sits at 7.78%. For example, a $500,000 RAD with $400,000 paid leaves $100,000 to be converted into a DAP of $21.32/day. We help you understand the costs of your chosen facility and work to find the best option for your circumstances.

2. Navigate Care and Additional Fees
We clarify care fees, starting with the basic daily fee, currently $63.82, this fee is paid by all residents.

On top of the basic daily fee, if you have the means, you will be asked to pay a Means-tested care fee. This fee can range from $0 up to $407.33 daily, however, it has an annual cap of $34,311.23 and a lifetime cap of $82,347.13. These caps are indexed March and September each year.

We can assist to complete any Services Australia forms required for them to confirm fees. The only other fee is known as the Additional/Extra services fees this fee is set by the facility and includes extras like hairdressers, premium meals, activities, outings or companions.

3. Plan for Proposed Fee Changes
There are upcoming changes to Aged care fees, effective November 1, 2025. Facilities will retain 2% of the RAD balance annually for five years, reducing refunds back to estates. A new non-clinical care contribution, up to $101.16 daily, replaces the means-tested fee, it will be capped at $130,000 or four years, whichever comes first. A Hotelling Supplement Contribution could also be charged depending on assets and income. Previously government-funded, you could be asked to pay up to $12.55 daily or annually $4,580.75.

Managing aged care costs ensures peace of mind.

We recommend reviewing payment options, verifying service delivery, and planning for fee changes. At CommonCents Financial Planning, we’re here to simplify finances, protecting both your loved one in care and the family at home.

CommonCents Financial Planning can help you navigate the complexities of aged care, from understanding options to managing finances and planning for the future. We can help navigate the emotional complexities of moving a loved one into care, providing reassurance, and offer a listening ear, reducing the feelings of isolation and anxiety.

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Are New Year’s Resolutions Worth It

Nick Girle — Fri, 31 Dec 2021 06:55:25 +0000

A friend of mine recently told me that they cannot be bothered making goals for the new year anymore because they’ve tried them that many times and they have never come to fruition.

They said that they have always felt positive about them, they’ve even written them down and shown them to others so that they feel more compelled to ‘not fail’.

However their end result is the same, either not reaching the goal or just giving up on them early in the year.

The New Beginning

Remember the last twelve months and all the things that didn’t work out the way you had hoped for? Losing that extra kilo or two, reducing your alcohol or perhaps improving your fitness a little bit?

They’re something that you’ve given up on now, let’s face it those goals were so last year, right? Better left to memory and hopefully not dwell on it too much.

There’s no point in dwelling on last year because you can’t change it, but you can work out what worked and what could be improved.

What’s ahead is based on the ‘new you’, what’s behind is the ‘old you’.

This effect, known as the Fresh Start Effect, has shown to be highly influential in feelings of motivation and optimism and is the key reason why we are all so keen to make New Year’s Resolutions even when we don’t believe they’re ultimately going to work.

The SMART Framework

Many resolutions and goals are made with more of a focus on a dream outcome with little regard to how it’s going to happen. It’s almost a form of wishing rather than goal setting.

A commonly used structure to clever goal setting is by using the SMART method. SMART is an acronym for Specific, Measurable, Achievable, Realistic and Time-bound.

Being specific is the most important out of the lot. Just saying you want to save more money is a little too vague but saying you want to save $1,000 is better.

Put in place a date that you want to achieve your goal by so that you know when you should have reached the end.

Can you actually do this? Using the $1,000 example, if you don’t have a job then maybe saving any money is not achievable or realistic.

By following the SMART goal setting method, you will know what you’re aiming for and even more importantly you will know if you’ve achieved it!

Get Started

If you’re a novice at setting goals, be vigilant for the temptation to set overly big goals as it’s very easy to be daunted by these and be frozen into a state of procrastination.

Break your goals into smaller, more realistic and achievable chunks so that you can celebrate the success of reaching some mini milestones.

When his first child was born, a cousin of mine desperately wanted to save for his children to attend a private high school. He worked out that to fund six years of private high school for three children was going to cost almost ten times his annual salary.

Rather than wallow in despair he literally started to save a small amount (he started with $5 per day) for each child and invest this to a diversified share fund. He grew the daily savings amount over time, but it never became a burden for him.

His goal was achieved for each of his children which he attributes to firstly the breaking down of the goal into smaller yet more manageable chunks and then secondly because these smaller amounts were so achievable, he never felt the need to procrastinate and was able to get started immediately.

Where is this year going to take you?

New year’s resolutions are just goal setting made at a time when collectively it seems like there’s a bright future in front of us and the mistakes of last year are not going to be repeated.

Be aware of why you’re making the goal, put a framework to the goal itself and then build out the action plan of how you’re going to do it.

The 7% who achieve their goals aren’t lucky nor are they some superhuman weirdos that behave completely different to the rest of us. They just follow a process that little by little, brings them to their goals.

What does the next 12 months bring for you?

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