6 YOUR MONEY thewest.com.au Monday, November 3, 2014

If you are feeling a bit pessimisticabout how well your investmentsare doing, you are not alone.

The latest investor confidenceindex survey by global advisorycompany State Street showed European investors see particu-larly grey clouds on the horizon.

“Investors in Europe showedlower risk appetite, with theEuropean ICI falling 24.3 pointsto 115.5,” State Street reported.

“In North America, by con-trast, the ICI rose 5.9 points to108.5. The Asian ICI rose by 2.1points to 99.5.”

The investor confidence indexmeasures confidence or risk ap-petite by analysing buying andselling patterns of institutionalinvestors. A greater allocation toequities indicates a higher riskappetite or confidence and a read-ing of 100.

“European investor confidencehad crested in September at anall-time high, so it is perhaps notsurprising to see it come downthis month,” State Street said.

“The decline may be driven bydeflationary fears in the region.Although the European CentralBank has engaged in covered-bond purchases, German opposi-tion to full-blown quantitativeeasing may have left investorswondering whether or not theECB can do enough to combatheadwinds to growth.

“The correction in global investor confidence occurred despite a rise in the US. Thishighlights the weakness outsidethe US as the main cause of the re-cent turbulence in markets.”

Europeansfeel down■ Ben Harvey

Local super fund WA Super ishoping to poach the retirementnest eggs of the tens of thousandsof New Zealanders who settle inAustralia each year.

Last year’s Trans-Tasman Por-tability scheme allowed migrat-ing New Zealanders to transfertheir KiwiSaver funds to an Aus-tralian Prudential RegulationAuthority-approved fund.

But few Australian fundsactively solicit for these funds.

“The announcement of WA Su-per accepting funds transferredfrom KiwiSaver accounts is greatnews for New Zealanders whohave or who are planning to settlein Australia,” WA Super chief executive John McNally said.

WA Super said customers musttransfer the full amount fromtheir KiwiSaver account andwarned that scheme did not allowfor the funds to be transferredagain should the individual relo-cate to a third country.

Super NZopportunity■ Ben Harvey

A drop in the value of the Austra-lian dollar made internationalshares the best-performing assetclass over the past three months,according to Perpetual’s Septem-ber-quarterly review.

Foreign shares returned 5.7 percent, compared with a 0.7 per centloss for Australian equities. Cashreturned 0.7 per cent, Australianbonds one per cent and Austra-lian real estate trusts 1.2 per cent.

Global real estate trusts took apummelling, losing 4.4 per centover the quarter, Perpetualreported.

Foreignshares up

I was recently contacted by aclient who wanted to change hisnon-concessional contributionsmade into his self-managedsuperannuation fund intoconcessional contributionsbecause he realised he hadexceeded his non-concessionalcontributions cap by $100,000.

I explained to him that youcannot simply just change thecharacter of the contribution toavoid paying excesscontributions tax.

Under the taxation law, onceyou’ve make concessionalcontributions in excess of theconcessional contributions cap(that is $30,000 or $35,000), the

excess amount will auto-matically be treated as anon-concessional contributionand count towards thenon-concessional contributionscap (that is, $180,000 or $540,000).

However, if you exceed thenon-concessional contributionscap, you cannot automaticallytreat the excess non-con-cessional contributions as aconcessional contribution, evenif you have not made anyconcessional contributions intoyour SMSF.

Concessional contributionsare contributions that usuallyfall under three categories: � Those made by an employerunder superannuationguarantee law;� Salary-sacrificedcontributions made by anemployee due to an agreemententered into by the employerand the employee; or � Personal super contributions

(that is, non-concessionalcontributions) made into anSMSF where the SMSF memberhas claimed a tax deduction intheir personal income taxreturn.

Most full-time employees canonly make concessionalcontributions under asalary-sacrifice arrangementwith their employer.

For the arrangement to betreated as an effectivesalary-sacrifice arrangementunder the law, it needs to beentered into before the employeeis entitled to receive the salary.

This means a legitimatesalary-sacrificed arrangementcannot be made retrospectively.

People who are able to claimtax deductions on their personalsuperannuation contributions(that is non-concessionalcontributions) are those who areunemployed or retired,self-employed, or people who

receive income from employ-ment that is less than 10 per centof their total income.

They must also have lodgedthe paperwork with their SMSFbefore filing their tax returnand their SMSF must haveacknowledged their intention toclaim the tax deduction.

The person must also beunder the age of 75. Once allthese requirements are mettheir non-concessionalcontributions can then betreated as concessionalcontributions.

Just because there are twotypes of contributions and twocontributions caps does notmake them available toeveryone. Sometimes you mayjust have to pay tax on excesscontributions.

Two contributions, two capsbut if you owe tax, just pay it

super■ Monica Rule

.................................................................................■ Monica Rule is a self-managed super

fund expert and the author of theSelf-Managed Super Handbook.

Leavers or Schoolies Week — theextended teenage celebrationthat marks the end of Year 12 —officially runs from November 24to 27.

There are personal safety tipsfor parents and kids on the offi-cial WA Government website, butone glaring omission is the im-portance of having financial pro-tection. Whether your kids areheading overseas or interstate, acomprehensive travel insurancepolicy should be a must.

The combination of low-costtravel packages and cashed-upkids means that overseas holidaydestinations such as Bali and Fijiare increasingly popular for leav-ers. But while food, accommoda-tion and shopping can be cheap,international party destinationscome with increased risk of severe financial loss.

Food poisoning, drink spikingor a punch-up outside a nightclubcan all end in a local hospital staythat costs more than the originaltrip. In a worse-case scenario, pri-vate jet charter company, Pri-vatefly, advise that a rescue flightfrom Bali to Perth is likely to set

you back by about $80,000. TheAustralian Embassy in Indonesiaadvises that evacuation fundsusually need to be paid upfront.

On the other hand, Canstar hascalculated that a travel insurancepolicy for 10 days in Bali will setyour school leaver back an aver-age of $79. Japan is a little moreexpensive, at about $102, andThailand costs an average of $92per person for a 10-day policy. It’sa small price to pay.

If your kids are partying with-in Australia, domestic travelinsurance can cover incidentssuch as stolen belongings, rentalvehicle excess and cancellationdue to illness or perhaps naturaldisaster. While the potential forfinding yourself tens of thou-sands of dollars out of pocket because of a mishap within Aus-tralia is much less, insurance isstill worth considering.

Canstar found the average costof a domestic travel insurancepolicy for 10 days to be $61.

However, be warned.Your kids might have the best

policy in the world but there areplenty of things that void the in-surance. Doing something sillywhile drunk is one example —

most insurers exclude claimsthat occur either directly or indi-rectly from using alcohol.

Any illegal activity is also excluded. And whatever you do,don’t let your child ride a mopedwithout a valid Australian motorcycle licence (or ride pil-lion with someone unlicensed).

Chances are your kids will befine. But a relatively small premi-um may buy extra peace of mind.

Cheap drinks, high costs: School leavers in Bali. International party destinations come with a higher risk of severe financial loss. Picture: Lincoln Baker

Schoolies week, relaxation and risk

Rottnest: Alcohol or illegal activity voids most insurance. Picture: Ben Crabtree

■ Justine Davies

.................................................................................■ Justine Davies is finance editor at

ratings company Canstar

10-DAY INSURANCECost for a 10-day travel insurance policy, per person for selected destinations:Where Min. Max. Av.Australia $29 $121 $61Bali $33 $172 $79Brazil $50 $220 $114Thailand $42 $172 $92US $50 $221 $120Japan $50 $176 $102

Rounded to nearest dollarSOURCE: CANSTAR