Electric vehicles have been around for many years. While they were traditionally viewed as either a plaything of the wealthy or the chosen transport of eco-warriors, a rising global appetite to tackle climate change and a growing range of electric vehicles have seen consumers around the world shifting towards this renewable form of transport.
In 2019, electric vehicle sales increased by 200% in Australia and 56% of Australians claimed that when it comes to their next vehicle purchase, they would consider electric. These positive shifts in consumer preference and behaviour go hand-in-hand with increased government support for a more renewable future. Some states are offering discounts on registration for electric cars, and the federal government is looking at making the road system better equipped to account for a projected 30% electric fleet nationwide by 2040. So does the future look electric?
The benefits of electric cars
- Reduced environmental impact – fully electric vehicles produce no emissions, so your carbon footprint and your noise pollution are greatly reduced (although not as low as cycling or walking, of course). No petrol engine usually means easier upkeep too, with less maintenance required to keep the car running.
- Economic benefit – some economists were concerned that electric vehicles’ role in reducing fuel tax along with the up-front investment required to improve infrastructure would mean electric vehicles would cost the nation. In fact, it’s estimated that electric vehicles could provide a net revenue benefit to the government versus fossil fuels, partly thanks to the reduced health bills generated by people suffering from pollution-related disease.
- Tax benefit – In the recent Federal Budget, the Government introduced legislation to exempt certain "eligible" electric vehicles from fringe benefits tax. Removing the FBT on eligible electric cars means that an employee can use their pre-tax salary (through a salary sacrifice arrangement) to fund the lease of a car for private use without having additional amounts deducted from their salary to fund the FBT rules.
The challenges of electric cars
- Affordability – while they may not cost the Earth as much, electric cars are generally more expensive than their fossil fuel friends – in part due to the lack of second-hand market. While there are 28 models of electric vehicles available to purchase in Australia, only 8 cost less than $65,000, putting them out of reach for a lot of families.
- Infrastructure – a solid investment in infrastructure will be required for Australia to become truly friendly to the electric vehicle owner. While the government is moving closer towards making electric cars cheaper and easier to maintain in this country, there’s still a way to go before they could be deemed a truly accessible mode of transport for regional areas as well as metropolitan centres.
What this means for investors
Buying shares in electric vehicle manufacturers may be an obvious consideration for interested investors, but it’s also worth thinking about the wider industry players who could be buoyed by an upturn in the electric vehicle market (and those who will be set back).
The battery supply chain, which relies on resources available in Australia such as nickel, lithium and cobalt could be of interest, while oil prices may be affected in the longer term. Further sources of renewable energy, such as hydrogen, may see success over the coming years as the world turns its mind to championing greater sustainability.
Finances are one of the biggest sources of stress in Australia. Whether it’s worrying about making ends meet or planning for the future, anxiety around money can be a huge burden and can affect the quality of your work, life and relationships. I want to use this article to provide you with a few proactive steps you can take to lighten the mental load.
1. Recognise your anxiety and try to determine the source
Anxiety can rear its head in lots of ways – maybe you’re short-tempered, not sleeping well or lacking the motivation to do things around the house. The first step to ridding yourself of money anxiety is to acknowledge that it is affecting you, and to try to pin down what specifically is causing you concern. Rather than feeling overwhelmed, work with friends, family or an adviser to narrow down the real problem. Even the biggest issues can be solved if you know exactly what they are.
2. Make a plan
When it comes to money worries it can be easy to get into a spin. Rather than dreaming up the worst-case scenario, to begin with, make a tangible plan to get yourself back on track in the short-term. Once this is in place, turn your attention to the medium and longer-term to make sure you’re doing everything you can to set yourself up for future success.
3. Get expert advice
Whether it’s from your financial adviser or a free government service, there are people who can help you to manage your money effectively. Choosing the right service will depend on the nature of your concern, but talking about your problems with people who can provide you with accurate, practical advice can be an effective way to reduce your stress.
4. Learn what you can Money management is a skill, and if your concern is longer-term, then taking some classes either online or in person could help you to take control and achieve your objectives.
Money anxiety can play on anyone's mind. Don’t be ashamed to speak up, ask for help and take the right steps for you and your family. If you’d like to discuss your specific concerns then please don’t hesitate to get in touch.
The Buy Now Pay Later (BNPL) market has exploded in Australia over the past couple of years, as new players like Humm and Klarna join more established market favourites like Afterpay. As BNPL becomes increasingly popular as a flexible repayment tool, shops around the country are signing up to make it an option for their customers. So what does this mean for the consumer, and how does BNPL compare to traditional credit cards?
Repayments
Both BNPL and credit cards allow the purchaser to delay handing over a total purchase amount at the time that they buy a product. Which BNPL product you choose will determine your repayment schedule, both in terms of the minimum necessary instalments and the timeline for making your repayments. Afterpay, for example, requires you to make four repayments every two weeks while Humm allows up to five repayments on a fortnightly basis for purchases under $2,000. Crucially, most BNPL services charge no interest, allowing you to make timely repayments of the total amount at no extra cost.
Credit cards also give you a chance to make your repayments at no extra cost. Most come with an interest free period – on average around 44 or 55 days – meaning that effective management of your repayments can see you swerve any extra charges. However, if you fail to make all of your repayments within this window you’ll be charged interest on what you haven’t paid back.
Interestingly, and perhaps inspired by growing consumer trends towards BNPL, a number of credit card providers are now offering 0% interest products – like CommBank’s Neo card.
Fees and charges
There are fees and charges associated with both BNPL services and credit cards. While there’s no formal ‘interest’ on BNPL repayments, providers will charge a late fee if you do not repay what you owe according to the schedule, and these fees can increase with each late repayment or follow-up reminder. In addition to charging interest, credit cards usually come with a sign up fee and an annual fee, although occasionally these will be waived in promotional periods.
Be sure to look into all the fees and charges associated with a financial product before making a commitment.
Joining up
The rules for signing up to BNPL and obtaining a credit card are relatively similar. Both require users to be residents in Australia and over 18 years old, and both reserve the right to perform a credit check to ensure you are sufficiently well equipped to make repayments.
What’s really clear is that whether you decide to use BNPL services or stick to the traditional credit card, making timely repayments and avoiding overstretching yourself financially are crucial to staying comfortable and in control.
B. Comm (Acc) Adv Dip FP
Principal | Financial Adviser
Authorised Representative No. 268816
PlanRight Financial Services Pty Ltd
ABN 88 607 059 585
Corporate Authorised Representative (No.1242808) of Nest Advisory Pty Ltd ABN 70 636 147 361
| AFSL No 519569 Level 4,
15 Moore Street, Canberra ACT 2601.
General Advice Warning - This information may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. PlanRight Financial Services Pty Ltd ABN 88 607 059 585 Corporate Authorised Representative (No. 1242808) of Nest Advisory Pty Ltd ABN 70 636 147 361 | AFSL No 519569 Level 4, 15 Moore Street Canberra ACT 2601.
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