Imagine yourself at the races. You study the field, choose your horse and then place your bet. And then you hope that your horse runs stone cold last! “Slow down, Wynxie! Let someone else finish first today.” Sound crazy? Well, if you’re betting on horses, it is. But there are other kinds of ‘bet’ where this is exactly what you want to happen. You want to come last. You want… Read more
The concept of self managed superannuation is not new; there are many of these funds that have existed for over 30 years. Today, there are over 1 million Australian’s managing their own superannuation. The majority sight the reasons for managing their own superannuation as being flexibility, control and cost. Like any financial decision, managing your own superannuation needs appropriate research to be undertaken, time to be allocated and knowledge to… Read more
The Federal Budget was handed down last Tuesday, May 8, 2018. While the measures announced in the budget are yet to be passed by Parliament, we can generally assume that most of the announcements will become reality. From an individual perspective – especially if you do not grow illegal tobacco or participate in the black economy – this year’s budget was actually a bit of a nonevent. For those clients… Read more
Ah. The second Tuesday in May. The most exciting day of the year for all accountants! This year’s federal budget contains mostly good news for our clients – as you would expect given that an election is anticipated before the next budget comes around. This is not the time for Treasurers to make life harder. ScoMo wants to be everyone’s best mate! Next week, we will provide a detailed analysis… Read more
Income protection insurance is essential for anyone who would suffer financially if they could not earn income from working. This includes single people whose own lifestyle depends on their income, as well as people who have financial dependants, such as parents. The concept of income protection insurance is simple. You purchase a policy and if you become unable to work due to illness or injury, the insurer will pay you… Read more
As of 2017, almost all tax-payers can make a private, personal contribution into their superannuation fund and then claim the contribution as a personal deduction when they do their tax return. You can contribute any amount provided that your total concessional contributions are not more than $25,000 in a particular year. Remember, the compulsory 9.5% superannuation guarantee contributions that your employer must make is included within this $25,000 limit. So,… Read more
You might have heard the terms ‘income return’ and ‘capital return.’ These are the two different ways to make money on an investment. Income return is the return you receive while you continue to hold an investment. In the sharemarket, the income return comes as dividends. In the property market, the income return comes as rent. If you have a term deposit or make a loan to somebody, the income… Read more
An exchange traded fund (ETF) is a managed investment fund that can be bought or sold on a stock exchange. In many ways, ETF combines favourable elements of a managed fund with favourable elements of the listed investment company. But an ETF is not the same as either a managed fund or a listed investment company. Many people argue that an ETF combines the best of both of these forms… Read more
Positive gearing is the opposite of negative gearing. It is jargon for borrowing to buy an investment where the expected assessable income is more than the expected deductible interest cost (and other costs), with a resultant increase in assessable income. In the context of housing prices, this means buying on a rental yield of at least 5% or more. This is a very unusual phenomenon. Most residential property will not… Read more
Negative gearing occurs where the income from a ‘geared’ asset is less than the interest and other holding costs, creating a loss while the asset is held. A ‘geared’ asset is one that is at least partly financed using debt. Investors can usually offset the loss from negative gearing against other income for tax purposes. This creates a tax benefit, in the form of less tax being paid than otherwise,… Read more
Imagine yourself at the races. You study the field, choose your horse and then place your bet. And then you hope that your horse run stone cold last! Sound crazy? Well, if you’re betting on horses, it is. But there are other kinds of ‘bet’ where this is exactly what you want to happen. Those bets are also known as ‘life insurance.’ Some people call life insurance a ‘grudge purchase.’… Read more
Here’s something you might not expect to hear a financial planner say: maybe repaying your debt is the last thing you should do. We should explain. Not all debt is equal. Financial planners divide debt into two broad types: deductible and non-deductible. As these names suggest, deductible debt lets you claim a tax deduction for the interest that you pay. Non-deductible debt does not. This means that you have to pay the… Read more
We will start this blog with a question. When you spend money, how often do you ask yourself what you won’t be buying as a result of your spend? After all, you can only spend a dollar once. Whenever you buy something, that means there is something else that you cannot buy. Financial advisers call this the ‘opportunity cost.’ Instead of expressing the price of something in simple dollar terms, the price… Read more
Financial planners divide debt into two types: deductible debt and non-deductible debt. Deductible debt lets the borrower claim a tax deduction for the interest incurred on the debt. Non-deductible debt does not. Whether interest is deductible or not can have a massive impact on how expensive that debt actually is. When interest is not deductible, you have to pay tax before you pay the interest. You can see this with… Read more
Not all debt is the same. Even if the interest rate is. One of the main differentiators between debt is whether or not you can claim a deduction for the interest. If interest is not deductible, then the interest rate paid is much higher than you might think. When interest is not deductible, you have to pay tax before you pay the interest. You can see this with an example:… Read more
I know what you’re saying; “We have barely got through Christmas and now your talking about the New Year”! If you are like me, it only felt like a few weeks ago that we were ringing in 2017 and now it is nearly done. In all seriousness, managing your finances should be a year round responsibility however the New Year is the perfect time to review, evaluate and reset. In… Read more
Here is an idea for you. There is no such thing as a discount. There is just the price. As we head into Christmas, many people will be lured into retailers with the promise of discounts or price reductions. Many people can’t resist the potential for a bargain – a sign promising 30% off is simply impossible to ignore! Often, these people are giving in to a cognitive bias called anchoring.… Read more
Last week, we introduced the concept of mental accounting. We want to continue the theme this week as part of our ‘behavioural economics month.’ Mental accounting can be seen every day with little expenditures like gift vouchers. However, sometimes people apply mental accounting to much bigger parts of their financial management. And that is where it can get expensive. To recap, mental accounting is a common mistake people make with… Read more
Christmas is coming and you probably know someone who is really hard to buy a present for. You might be tempted to buy them a gift voucher. Can we suggest you think again? Unfortunately, gift vouchers are generally a really bad idea. We know, we know – we sound like the Grinch. But let us explain. You’ve probably heard of the Nobel Prize. This year’s peace prize was awarded to… Read more
In our final article this month on managing family wealth, we look at the First Home Super Saver Scheme. This is relatively new with the scheme having been announced in the last Federal Budget and legislation only recently being enacted. We have put together a quick fact sheet on the topic which you can access here. Whether it is you, a child, grandchild or a friend that could benefit, please… Read more