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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…]

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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…]

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Tax planning is essential to minimize your tax bill

It is no use getting to the accountant in September and asking them to save you tax. While they can claim all you’re entitled to, they can’t take advantage of things you could have done to reduce your tax.

There are a number of aspects to tax planning, including:

• Deferral of income
• Splitting of income to take advantage of lower tax rates and tax offsets
• Bringing forward expenses to the current tax year

We have broken tax planning down into 3 categories. [Read more…]

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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…]

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Housing affordability

The residential property market in Australia is easily the most favored asset class by Australian Investors. Residential property is a tangible asset that people can see and experience. Most Australian property investors experience from the past 10 years has given the investor the inner belief that by holding the asset they will reap incredible rewards well into the future. They believe they understand the asset class and will benefit similarly into the future by holding the asset. Most of the last 10 years have been an extraordinary time for property investors with property returning well into the double digits.  Rents have also risen at astonishing rates making negatively geared properties cash flow positive after only a few short years. What were the main factors driving property prices so high and in my view highly overvalued by historical standards? [Read more…]

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