Your Money & You

April 2011

MoneySmart – Simple guidance you can trust

Are you confident you’re getting the best deal on your credit card, mortgage or super?
Unfortunately about 50% of Australians aren’t confident they’ve made the best financial decisions and many more aren’t sure where to go to get independent financial guidance.

MoneySmart is a new website to help people make smart choices about money. The website provides free, independent and unbiased information, tools and motivation.

MoneySmart has been created by ASIC and replaces ASIC’s two previous consumer websites, FIDO and Understanding Money.

MoneySmart aims to motivate people of all ages and all walks of life to take action.

The site covers the essentials such as budgeting, saving, credit cards and loans, as well as more complex financial matters such as superannuation, margin loans, reverse mortgages and financial scams.

MoneySmart also has information for people at particular turning points in their lives such as starting work, buying a home, losing a job, having a baby or retiring.

The website includes 26 interactive calculators and tools so you can see exactly what is happening with your finances and take some simple steps that can really make a difference. There are even 5 mobile calculators for you to use on the go.

The savings goal calculator lets you set a goal to save a fixed amount regularly or save as much as possible within a certain time. The retirement planner shows you whether your super is likely to give you the level of income you want for your retirement, and what you can do to improve the situation. The super vs mortgage calculator compares the benefits of putting any spare money into super, versus making extra mortgage repayments.

For example, Warren is 24 and is planning on getting a loan to buy his first car. He visited MoneySmart and realised there are a lot of costs involved in buying a car, including insurance, registration, maintenance and fuel. Warren was relieved to read the information on MoneySmart before he bought his car because he had no idea car yard loans were so much more expensive than other loans. He decided to take more time to shop around and find the best deal on the car and the loan, so he wouldn’t be stuck in a long-term loan with a high interest rate and hefty fees.

If you or someone you know is saving for a holiday, considering a mortgage, struggling with debt or making plans for retirement, go to MoneySmart has something for everyone – it’s simple guidance you can trust.

Keep in touch by signing up to MoneySmart’s free enewsletter, MoneySmart Tips and joining in the conversation on Facebook and Twitter.

E-mail ASIC with topics that interest you at

Tony D’Aloisio BA LLB (Hons)
Australian Securities and Investments Commission

ACCC report on Scams

In February the Australian Competition and Consumer Commission (ACCC) released a report, Targeting Scams.

The report notes that in 2010 the ACCC received more than 42,000 reports of scams which was an increase of more than 50% on 2009.

The ACCC believes, with good reason, that scam activity in 2011 continues to increase.  A noticeable spike has occurred with recent natural disasters in Japan, New Zealand and Australia.

In 2010 more than $63 million was reported lost through scams.  The actual figure is probably much higher because many consumers do not report their loss to the ACCC.

More than 50% of the scams reported involved “mass marketed advance fee fraud” which includes advance fee/up-front payment, lottery and sweepstakes, unexpected prizes, and dating and romance scams (including adult services).

The ACCC has reported a steep increase in scams initiated by unsolicited telephone calls.  “Many unsolicited scam telephone calls misled consumers to believe their computer had a virus, and in some cases the call facilitated computer hacking by convincing consumers to provide scammers with remote access,” the Report said.

ACC received many complaints about online auction and shopping scams, false billing, banking and online account scams, job and employment scams, dating and romance scams, and computer prediction software scams.

People were particularly vulnerable to personally targeted scams “if they had made their personal details readily available online, for example through social networking websites” such as Facebook.

The ADF Financial Services Consumer Council encourages ADF Members to exercise extreme caution when engaging with unsolicited emails that arrive in their work or personal email inboxes.  Unfortunately this vigilance also extends to unsolicited phone calls.  If an ADF Member is stung by a scam then they should report it to the Council and the ACCC.

The price for "hard" assets and the future oil price

Throughout history humans have used a variety of things as money – cotton, shells, cattle and tobacco.

Over time however precious metals won the battle to represent a unit of exchange on account of their scarcity, durability and beauty.  Paper money, which we use a matter of course and convenience, is a relatively recent phenomenon.

Unbacked paper money (sometimes called ‘fiat money’) is a very modern invention and some economists are arguing that it may end it tears.

Modern banks operate on a fractional reserve basis – that is, only a fraction of bank deposits are kept as liquid reserves.  The rest are lent out, re-deposited and relent elsewhere.  This system appears to work well except when there is a loss of confidence which causes a run on banks.  A good example of this occurred in 2008 to the UK based Northern Rock Bank.

Some economists argue that inflation is not just defined as a rise in the prices of goods and services but a rise in monetary supply that tends to ignite prices which occurs through releasing more money into the economy by central banks.

Inflation and the devaluation of a nation’s currency are two enemies for investors.
Some people argue that one way to protect investments from these two enemies is to potentially invest in tangible assets – that is assets you can see, feel and touch.  They argue that it’s not surprising that gold has reached a new record or silver has tested a record last reached over 30 years ago.

These investors believe that gold and silver are natural money and have never been forced on anyone as a unit of exchange.  The reason for their strength is that investors are losing faith in paper and fiat money.

Similarly even before the recent political unrest in some Middle Eastern countries the oil price was increasing which the investors believe it was displaying ‘anti-paper and fiat money’ characteristics.
These some investors believe that another worthwhile investment is agricultural investments and shares in businesses and high quality land.  Interestingly these were all the best performing assets during the Weimar hyperinflation of the 1920s.

Where to with the oil price?

There seems to be general agreement amongst market commentators that the oil price will continue to increase.

Because the outcome of the Middle East unrest is unclear, Shane Oliver of AMP Capital Investors argues that “the tail risk of an escalation seriously threatening oil supplies is high enough to keep investors nervous.  This in turn has pushed oil prices up sharply.”

This unrest however merely added to what is a tightening oil market.  He claims that based on current demand projections spare global oil capacity will be depleted within three years.

The strong Australian dollar is acting as a buffer to these higher world oil prices for Australian consumers however unless the dollar continues to appreciate this protection will not reduce all the likely future increases.

Free Seminars anywhere in Australia

In addition to its commitment to financial education programs in ADF training curriculums, the Consumer Council is happy to provide expert speakers free of charge on a range of financial topics to any ADF unit in Australia.

For more information contact us via our website at (