General Archives - Page 2 of 3

February 22, 2013 by John Duncan

Super Steal Happening Now !!

Not sure how well I’m read by Generation Y, but if you’re a parent or grandparent reading this you might want to pass on the message.

Kids, the government will soon be soon swallowing your superannuation!

Before I’m being accused of being dramatic, in a nutshell that’s what’s about to happen.

After December 31, the government started transferring ‘lost’ accounts to the Tax Office.

The benefit for the government will be the boosting of Treasury’s wallet by over $550 million in this financial year.

This issue generally focuses on the younger generation because it’s accounts worth less than $2000 that the government will be targeting.

Unidentifiable accounts under $2000 without contributions for 12 months will be transferred.

While accounts under $2000, where owners are contactable, but there’s been no activity for five years, will also be hoovered up.

Essentially, if dormant and under $2000, it might be under threat if you don’t make a move.

That means your money’s future return is dictated by CPI and any insurance policies you had will be eliminated.

Odds are for some young people they’ve had few jobs, possibly accrued a few super accounts and have tallied a small sum of money in each.

That money needs to be consolidated into one active account to avoid it possibly going into a future government black hole.

Now only a cynic would believe that the government truly hopes you won’t come looking, but let’s be realistic, they’ve probably got their fingers crossed you won’t.

And down the line it could be a costly loss for a 20 year old.

$2,000 left untouched in a balanced portfolio from January 1970 would have grown to $110,318 by the end of October 2012, excluding any fees.

The grab for super accounts serves as a timely reminder for those under 30 to get their finances in order.

A good place to start is at www.ato.gov.au/superseeker

January 29, 2013 by John Duncan

Year In Review – 2012

2012 Year in Review

Economy & Markets: Overview

Throughout 2012, investors did not have to look hard for reasons to avoid the financial markets. Economic news provided abundant cause for anxiety, prompting some investors to consider fleeing to cash. Some investors responded to the headlines and acted on their fears. Unfortunately, on the sidelines they missed the opportunity to capture the strong returns across the markets in 2012.

The year opened with lingering concern about the weak US recovery and debt crisis. Many pundits predicted another lacklustre year for stocks and more volatility. Some predicted a euro zone breakup. The global economy was showing signs of a slowdown, while the US elections and spectre of the “fiscal cliff” prompted caution.

Despite the steady stream of bad news, major market indices around the world delivered double-digit total returns, with Australia outperforming most other developed markets. And while the media constantly talked about volatility driving investors away, market wide volatility actually fell to its lowest level in six years.

[Read more…]

October 3, 2012 by John Duncan

Hands off our super

Many media reports are suggesting Bill Shorten the minister for Financial Services and Superannuation is about to raid the superannuation piggy bank to keep their promise of a budget surplus. (Labor is reportedly considering increasing superannuation tax) While it is prudent to ensure governments are run on budget over the business cycle it is very poor governments that try to achieve surplus at all cost. Superannuation is a great structure for building wealth for retirement see What is Super but many Australians are distrustful of the super system and constantly changing superannuation rules. I can certainly understand their distrust and confusion. Over the last number of federal labor budgets we have seen continuous tweeks to the system to help improve the budget bottom line.

Salary sacrifice contribution limit was $50,000 in 2007 for those under age 50 and $100,000 for those above age 50. The current [Read more…]

December 19, 2011 by John Duncan

The Silver Lining

Uncertainty in Europe, a volatile share market and falling property prices; there has to be some good news! Today I feel a little like Santa Clause for those with large debts as there is a silver lining. With inflation on the way down and predictions of a slowing economy we have now seen interest rates fall two months in a row. Interest rates have now fallen half of a percent, equating to $1500 saving a year or $125 a month, for those with a $300,000 mortgage. With a couple more interest rate falls predicted by a number of economists, do we just ride the gravy train all the way down and hope they stay down long enough to get some real benefit? Or do we take advantage of some very competitive fixed rates and lock them in for a period of time? [Read more…]

December 16, 2011 by John Duncan

Things Change

It’s that time of again, when harried finance editors ask reporters to call investment professionals and cobble together top predictions for the coming year. These are fun to write. But for readers, they’re more entertaining a year later.

Take the late 2010 Barclays Capital Global Macro Survey of more than two thousand institutional investors. The pick for the best performing asset class in 2011 was equities (with 40% support), followed by commodities (34%) and bonds (less than 10%).¹ The consensus prediction was a 15% gain in the US S&P-500 for the year to around 1,420.

As we now know, the truth turned out to be rather different. To the beginning of December and using broad indices, diversified fixed income was the best performing asset class of the year, followed by government bonds. Returns from commodities and equities were negative. The year-to-date return for the S&P-500 was close to zero. (And remember, these are the forecasts of big institutional investors.) [Read more…]

August 10, 2011 by John Duncan

Living with Volatility

The current renewed volatility in financial markets is reviving unwelcome feelings among many investors—feelings of anxiety, fear and a sense of powerlessness. These are completely natural responses. Acting on those emotions, though, can end up doing us more harm than good.

At base, the increase in market volatility is an expression of uncertainty. The sovereign debt strains in the US and Europe, together with renewed worries over financial institutions and fears of another recession, are leading market participants to apply a higher discount to risky assets.

So developed world equities, oil and industrial commodities, emerging markets and commodity-related currencies like the Australian dollar are weakening as risk aversion drives investors to the perceived safe havens of government bonds, gold and Swiss francs.

It is all reminiscent of the events of 2008 when the collapse of Lehman Brothers and the sub-prime mortgage crisis triggered a global market correction. This time, however, the focus of concern has turned from private sector to public sector balance sheets.

As to what happens next, no-one knows for sure. That is the nature of risk. But there are seven simple lessons that individual investors can keep in mind to make living with this volatility more bearable. [Read more…]

April 12, 2011 by John Duncan

Try our Solar Calculator

The Government grant for solar installation will be reduced by 20% in July 2011 (an approximate reduction of $1200). This reduction in government support will mean that solar will become more expensive to install after 1 July 2011. The rebates will continue to decrease until 2015 when rebates will no longer be offered, as the Government believes solar prices will have decreased enough to be affordable.

To make your life easier in deciding what system is suitable for you and in fact whether you feel it is a worthwhile investment, we have created a solar calculator that takes into account your changing electricity consumption or production and the financing costs of installing. We have built the solar calculator so you can estimate what you think will be the increase in the cost of electricity into the future. The higher you think electricity prices will increase the more you will benefit by installing solar. [Read more…]

March 8, 2011 by John Duncan

The Forest and the Trees

Many investors cherish the notion that if they only had instant access to the information sources of market professionals—the stock research and broker calls and economic forecasts—their wealth-building dreams would be much further advanced. So, what if you had acted on those big professional calls in the past year?

Financial information group Bloomberg¹ recently carried out an analysis of broker recommendations for stocks in the US equity benchmark, the S&P 500 index. It found that the companies that analysts recommended most highly rose by 73 per cent on average in the period from the trough of the market in March 2009 until early 2011.

That sounds pretty good until you realise that the index itself rose by 88 per cent in the same period. Now, compare the performances of the most loved stocks against those with the fewest buy recommendations in the Bloomberg survey. This latter group rose by 165 per cent on average during that period, or more than twice as much as the “top” stocks.

Why analysts get it so wrong can be easily explained: [Read more…]

March 4, 2011 by John Duncan

Medical Tax offset

Did you know that you can claim your medical tax offset for medical expenses paid for or on behalf of dependants in your tax return? A medical tax offset can be claimed for you, your spouse, your children and even possibly an invalid relative.

The medical tax offset is calculated based on your net out of pocket expenses. That is your total medical expenses less any refunds that either yourself or your dependants have received or are entitled to receive. This includes refunds from both Medicare and your private health insurer.

You can claim the following for your medical tax offset: [Read more…]

January 20, 2011 by John Duncan

The Price of Bad Advice

Question: How to compare the price of a client-centred fee-only financial advisor with the “free” services supplied by a broker?

Answer: In the second instance, the bill comes much later and at potentially far higher cost.

Pursuing sales people masquerading as advisors has been a major focus in the past year for the Australian Securities and Investments Commission, a watchdog which shares this column’s view about the risks of investing “outside the flags“.

In one of its most high-profile recent actions, ASIC instigated court proceedings against the promoter of a fraudulent investment scheme that robbed hard-working Australians of more than $100 million in retirement savings.

[Read more…]