Innholdsfortegnelse for June 2016 i Money Magazine

Realistic life insurance In his column on jargon, Paul Clitheroe (In Your Interest, May) writes: “Life insurance is also a good one. It is actually death insurance. I, very sensibly, carried life insurance in my super fund for decades while I had debts and young kids.” I agree that it is very sensible. Of course, it also clearly points to another story about the purpose of life insurance and when it is not good value or may not be appropriate. In particular, I think it is worth running an article on life insurance and older people. Life insurance is not for life. It is likely that as you get older any stepped premium policy will become completely unaffordable. At the Insurance Law Service (a free legal advice service) we get…

He leapt onto the kitchen bench to devour the turkey THIS MONTH I AM BEING self-indulgent. Please excuse me. At one of the first Money magazine Christmas lunches 14 years ago, I announced to the team that we had decided to buy a family dog. This bit, I think, is pretty typical. Our two older kids were then early teenagers but our youngest, Ellie, who was seven, put up a determined effort to get a dog. The older kids had also asked for one but young Ellie was impressive. Having provided bedtime books about dogs for a year, even the school librarian had got in on the act. So it was decided we were getting a dog. Vicki and I both had west highland terriers as kids, so I thought…

Have you got what it takes to lead a team? Learn how to think like a boss with Soozey Johnstone’s I Am the Problem. An experienced executive adviser, Johnstone explains the dynamics of leadership and reveals how to carry a team out of defeat and into success. Successful leadership is about going beyond the ordinary and creating a culture of sustainability, flexibility and productivity, and Johnstone’s book can help you get there by showing you the nine key hurdles you must overcome first. The pressure of running any business – be it a small operation or a busy team in a workplace – can eventually take its toll if you don’t have the right mindset. I Am the Problem can help you to achieve business success by giving you the…

It’s a fresh concept. While Canstar says this kind of arrangement is common with store cards, it hasn’t seen one as flexible as this option from Citibank. Expect to see more card issuers coming out with something similar. As long as the fixed rate is at a competitive rate it’s a feature that could save you some cash – especially if you do have a hard core credit card debt that you can’t repay and or are too lazy to refinance to a personal loan. No fees (yet) apply to the Citibank cards for this feature.…

Sœntre Group, the shopping giant created from the Westfield restructure in 2014, is going green. The company’s latest sustainability report, released in late April, sets new environmental benchmarks for the group. To reduce its carbon footprint, a Westfield shopping centre in Marion, Adelaide, will have a solar-powered car park canopy, planned to cover 240 car spaces and generate more than 647kW of power each year, helping it reduce carbon emissions by about 650 tonnes. Scentre has also introduced GoGet car-sharing services at seven centres in Sydney, with more to be rolled out later in the year. ETFs break new ground Investment company VanEck recently launched two Australian-first exchange traded funds (ETFs). Vectors FTSE Global Infrastructure (Hedged) (ASX: IFRA) is the first ETF to give investors access to global infrastructure securities.…

NAME: Emma Norris STATUS: 24 and a renter; the rent is about to go up by 50%. QUESTIONS: I want to set up a budget and stick to it – what is the best way? What is the best way to save and not touch my savings? How do I check my credit score? How do I find out about my HELP debt? ANSWERS: Draw up a budget that sets out your expenses and identify surplus cash. Set up three bank accounts, preferably with different banks. Go to creditsavvy.com.au to find your credit rating at no cost. Create a myGov account via the tax office website to check your HELP debt and consider paying off some debt to take advantage of an incentive that ends on December 31. Saving is…

The easiest way to stay on top of your HELP loan is through the tax office’s online services. Simply create a myGov account and link it to the ATO. You can then log in to view your loan balance, make additional repayments and much more. On average it takes someone nine years to pay off their HELP debt. By paying an extra $20 a week you could significantly reduce the amount of time it takes you to repay it. Your student debt will then no longer be weighing you down! If you voluntarily repay $500 or more at a time you can take advantage of the 5% repayment bonus. If you do want to take advantage of the bonus you need to get in quickly as it won’t be available…

Q I am 45, married with two dependants (high school students). We’re a single-income family with a primary income of $120,000 before tax. We have a primary residence worth about $1.7 million (with a mortgage of $380,000), $110,000 in a savings account, a line of credit of $110,000 (just sitting there) and super of $190,000. I bought an investment property in Queensland in 2008 and sold it in 2011. I could not hang on to it with so much ongoing cost so I eventually had to sell at a big loss. I want to start my investment journey again in 2016, leveraging low interest and equity in my house. Is it too late to start again? Should I invest in property or shares or managed funds? A Good grief, Darren,…

There are plenty of reasons for splurging with this rare gem from the Hesketh family and winemaker Phil Lehmann. It is sourced from a small parcel of mature cabernet and petit verdot vines on a single site on the Parker Estate in the heart of Coonawarra. The Parker cabernets are on song and this is distinctly different from the flagship ‘First Growth’ and the more affordable ‘Terra Rosa’ wines. In 2013, it has a sumptuous, plush texture, ripe blackcurrant, mulberry and bramble flavours, a hint of vanilla and a rich, concentrated structure. While it has years ahead of it, it’s approachable now.…

What is it? Hisense 29-bottle wine cooler How much? $389 Info: Made of glass and stainless steel, this temperature-controlled fridge can store 29 bottles of your favourite tipple. The temperature ranges from 7.2C to 18C. What is it? Eurocave 12-bottle Tête à Tête wine cabinet How much? From $1795 Info: This cabinet uses an oxygen extraction system to prevent the oxidation of your opened bottles. It is also multi-temperature controlled, meaning you can store your whites on the bottom and your reds on the top.…

Investing is what old people do, right? Nope, nope, nope. Look around you, it’s what your most successful peers do in their 20s. Money you save sitting in a bank will not make you wealthy; it is great for short-term goals but most years it will take you backwards over time after inflation. Instead, invest and put your money to work for you. $50,000 sounds like a lot of money, right? Rather than let it daunt you, think of it this way – $50,000 is the first step you take on the road to creating financial independence. For a first financial goal, it’s certainly not an easy one – but you know life wasn’t meant to be easy. If you can follow these smart strategies to turbocharge your savings, I…

NATIONAL AUSTRALIA BANK HAS taken the top honours for the second time in the award’s 12-year history. The last time NAB was Money’s Bank of the Year was back in 2006. Andrew Thorburn, the chief executive of NAB, says the award is a great achievement for the bank’s staff. “The vision, the purpose, the drive for us is to serve our customers – and I’m very pleased we have won Bank of the Year. We’ve got a lot of ambition. We want to be the best, the most respected bank – by our customers, our shareholders and the community,” he says. “It’s a great achievement for our 35,000 people, who are focused on our customers – on serving them, retaining them – and giving them simple, appropriate products and services…

THE 2016 TOP THREE CONTENDERS FOR Home Lender of the Year demonstrate just how competitive mutuals and small banks are in the home loan market. This is especially the case following moves in 2014 and 2015 by the banking regulator, the Australian Prudential Regulation Authority (APRA), to change the rules for investment lending that advantaged the four major banks. This has paved the way for smaller lenders to forge ahead – often by simply holding their rates steady while the major banks lifted theirs. Money’s 2016 winner, Queenslanders Credit Union, has pushed last year’s frontrunner, Newcastle Permanent, into second place by offering what Canstar analyst Yulia Batsman describes as “consistent, outstanding value across both variable and fixed rate loans”. “The potential savings home loan borrowers can enjoy with Queenslanders Credit…

THE MAJORITY OF AUSTRALIANS, reports securities regulator ASIC’s MoneySmart website have two major saving goals: saving for a home to buy (36%) or to renovate (14%) and saving for a holiday within Australia (18%) or overseas (39%). Other reasons for saving include putting money away for the future, an emergency fund, a car, education, furniture or a wedding. Another interesting fact is that women are more likely than men to save for more than one thing at a time. And while a recent study revealed Australians slip, on average, $427 under their mattress each month, this strategy certainly won’t make the most of your savings. So what are your options? Enter the Money Minder of the Year category. This highlights the providers most likely to have an account that delivers…

COMPUTERS, SMARTPHONES AND tablets have changed the way we do our banking and it is constantly evolving. “Mobile banking is ever changing, always expanding with the introduction of innovative features and services that make consumers life easier,” says Canstar research analyst Yulia Batsman. “As consumers we want seamless integration of banking services across all of our devices. We want our banking services to be personalised to our needs and wants and we want it to be convenient.” And our winner does just that. Commonwealth Bank has led the pack since 2011. “The reason that Commonwealth Bank has won this category for the past six years is because it has a good vision of what mobile users want from their mobile banking and is able to deliver it,” says Batsman. “Commonwealth…

BANK OF THE YEAR The winner had the highest aggregate score of the institutions competing in six of the individual categories. Customer satisfaction also played a part and data from Roy Morgan Research was used for a rolling 12-month period to February 2016. Mutual banks were considered in this category. The weightings are: Home lender 30% Money minder 20% Credit card issuer 17.5% Customer satisfaction 15% Personal lender 7.5% Business bank 7.5% Margin lender 2.5% WINNER: NAB BUILDING SOCIETY OF THE YEAR The winner had the highest aggregate score of the institutions competing in five of the individual categories. Customer satisfaction was not factored in because Roy Morgan’s data on customer satisfaction for building societies is not extensive. The weightings are: Home lender 40% Money minder 30% Personal lender 15%…

IF YOU HAVE A LIMIT OF $10,000 on your credit card, be aware that it will reduce your borrowing power for a home loan by around $40,000. And that’s regardless of what you owe. A $16,000 car loan cuts your loan amount by $46,000 and a personal loan of just $6000 can see you with $19,000 less. You can play around with the figures yourself on one of the many online borrowing calculators. I’ve used comparison site finder.com.au’s calculator for these examples. Clearly personal debts can have a big impact on how much you can borrow but there are plenty of other things that can hold back your borrowing power. A second car, store cards, pay TV, a third child (I don’t recommend you get rid of that one), the…

BY THE TIME YOUR KIDS START university, you will have shelled out for 13 years of combined primary and high school education plus childcare. It is a long and costly path. Most parents of young children are unlikely to have thought too much about navigating the costs of university. Besides, students can fund their own degree through the higher education loan program (HELP), which they start repaying when they get a job and their income reaches about $54,000. The tax office says it takes an average of nine years for kids to repay their HELP debt. Not surprisingly, some parents or grandparents with the means will step in so their kids don’t start their working life with a debt that reduces their ability to save and get a foothold in…

While Coles and Woolworths are the two behemoths of the supermarket industry, Aldi and IGA are getting closer in terms of popularity. Aldi, the German giant, doesn’t have a rewards scheme but its foreign-labelled products are usually cheaper. For instance, Aldi’s Baker’s Life Bakehouse wholemeal bread costs 33¢ per 100g, while at Coles’s Helga’s Continental Bakehouse, traditional wholemeal bread costs 47¢ per 100g. IGA, the independent supermarket, has a rewards card but it’s only available at certain branches. Ask your local branch if the program is available there. If it is, you can register to receive exclusive offers and discounts – but all discounts and offers vary from store to store, if they participate. Some might also offer loyalty points that can be redeemed for a discount at the checkout.…

After May’s Reserve Bank rate cut to a new low of 1.75%, AMP Capital is reporting a strong interest in commercial real estate among its investors. Commercial property is currently offering higher yields than bonds and term deposits but AMP says investors should make their selection carefully. It recommends “gentrified” markets close to the Melbourne and Sydney CBDs for the best growth prospects over the next five years. It is important to identify any structural headwinds that could affect a property’s rental growth, such as high land supply for commercial development in the area. And if there is an interest rate rise and rents can’t keep up, earnings growth will be undermined. AMP recommends investors position a portfolio for volatility and headwinds in the medium term and disregard assets unlikely…

JUST AS THE ECONOMY WORKS IN cycles, so too do companies. The big question investors should ponder is whether the age of mega-companies is over. The problem of becoming too big is that it becomes harder and harder to achieve double-digit growth, so shareholder returns eventually fall and profits, dividends and share prices come under pressure. In the past, an advantage of being part of the Australian economy was that strong population and wages growth would drive the earnings of companies large and small. Because Australia was a relatively protected island with a small population, there was limited competition for anything: so two major airlines, four big banks, two big supermarket chains, two major department store chains and so on. But the online world changed the face of competition here,…

YOU MAY BE RICHER THAN YOU think. Most people have multiple super accounts as a result of changing jobs and lose track of how much they actually have. Once all their balances are added up, people are often pleasantly surprised. Research by Rice Warner found that if all super fund members were to consolidate their multiple accounts, the average Australian account balance of $50,300 would jump to $90,000 – an increase of 79%. Policymakers and the super industry tend to concentrate on the average account balance when discussing national retirement savings rather than the average member balance, a more realistic, less bleak figure. Rice Warner says people who focus on their full super savings may feel more of an incentive to save for retirement and more inclined to consolidate their…

NOW THE BUDGET IS WELL out of the way, we are hurtling towards the end of the financial year again. And what better time to get your superannuation organised? After recent announcements, super remains a low-tax saving environment designed to fund your retirement and this is your opportunity to make the most of it. 1. Do a “lost super” search. With more than $17 billion in lost super, there’s a chance that a few of those dollars might be yours. Search the internet for “superseeker” and it will take you to the tax office's super search tool. You will just need to enter your name, tax file number and date of birth in the search bars and you’re set. 2. Consolidate your funds. Dig up your past statements and make…

IT’S APPROACHING THE time of year when you receive a letter or email reminding you of your all-important superannuation. Retirement may be the last thing on your mind, especially if you’re young, but it’s still worth checking your statement every year to make sure your savings are in good health. One weak spot can undermine your entire investment, so follow these six tips to protect your financial future. 1. YOUR BALANCE Once you’ve made sure your contact details are up to date, look at your balance and see how much you have in withdrawal benefits. Unless you’ve been a member of a super fund since before July 1999, you should see only a fully preserved withdrawal benefit. For those with balances predating July 1, 1999, you may find that some…

Lithium stocks have emerged as a particularly bright spot on the ASX this year. Hot demand has caused the traded price of lithium in China to more than double. Investors are asking if these levels are sustainable, or whether we are seeing another flash-in-the-pan like the runs on uranium in 2007 and rare earths in 2011. Lithium ion batteries are found in electric vehicles and have storage applications; both are large markets now exploding from a standing start. Now they are past their infancy, it is credible that both those uses can accelerate for many years ahead. At Canaccord Genuity we have been following the sector closely for many years. And while the demand growth is fast, a supply response is hard to bring on quickly to meet it. Which…

IT BEGINS. BABIES BEWARE. THE election campaign, one of the longest in our history, has begun. Generally, the impacts of an election include: • Uncertainty Domestic institutions that hold anywhere between 40% and 60% of the Australian sharemarket don’t usually care too much about elections, Their job is to outperform and an election doesn’t really make much difference to stock selection – they have to be in the market, because that’s their benchmark, and they stay in. The main impact is for international institutions, which tend to own 20% to 40% of our market and are the swing factor in terms of weight of money flowing in and out – most of the major banks have about 20% to 25% of their shareholder registers with international institutions. They are the…

May’s unexpected rate cut has done wonders for our confidence. The Westpac-Melbourne Institute Consumer Sentiment Index jumped 8.5% to 103.2 index points last month, compared with a 4% drop in April. It’s the highest reading since January 2014. Having said that, though, many of us are still holding back. Record low interest rates are starving investors of income and the cost of living still comes in as the No. 1 short-term concern for Money readers. Saving $50,000 in five years may sound simple but the reality is that plenty of us struggle to live the life we want to live and build wealth at the same time. This month we tackle the lifestyles of five very different people and not only show them how they can save but where they…

In the dying hours of the 44th parliament, the federal Treasury released a discussion paper titled “Credit cards: improving consumer outcomes and enhancing competition”. The paper notes that for a particular subset of consumers, credit cards “may impose a substantial burden on financial wellbeing”. We couldn’t agree more. Australians hold $32 billion in credit card debt at an average of around $4300 a card (paying $700-plus interest). At Consumer Action, we often deal with credit card debts of more than $10,000, $50,000 and sometimes $100,000. That subset of struggling consumers is substantial. To address this, the paper proposes two reform phases. Phase 1 tightens responsible lending rules and broadens the prohibition on unsolicited offers. It prohibits backdating of interest charges and charging interest on the paid portion of balances. Providers…

Citibank has introduced a fixed payment option on all its credit cards that allows you to convert part of your revolving credit card balance to a term payment arrangement at a lower interest rate. Think of it like a personal loan attached to your credit card. You can request that payments for individual purchases over $500 or fund transfers over $1000 to be converted to a fixed payment option. You just need to notify Citibank before your next statement date to get this done. The good news is that this won’t affect the interest-free days on your other credit card purchases. You can choose between 12, 24 or 36 month terms – but you can pay the loan out earlier. Interest rates start at 12.99%pa but Citibank says it may…

It’s nearly the end of the tax year and time to consider some last-minute planning to minimise your tax obligations. If you’ve disposed of shares or any other investment for a capital gain, look at your investment portfolio and consider disposing of any assets that sit at a loss. such losses can be offset against your gains. Be careful, though, if you sell shares at a loss and then buy them back in the new tax year. The tax office takes a hard line against so-called “wash sales”. This refers to the sale of an asset before the year’s end and the purchase of a largely identical asset immediately after year-end, so that the owner has a continuing economic exposure to the asset. The ATO can apply the anti-avoidance provisions…

Going from $200 to $340 a week (including your travel to work) in your fixed personal expenses is a huge increase, so I can understand why you’re keen to ensure you stay on top of your budget and still have room for savings. The best place to start is to create a budget and it’s not as daunting as it sounds. There are loads of templates online – for example, Wealth Enhancers, an advisory service geared towards Gen Y, emails a template to everyone who subscribes to our newsletter. Simply start with the amount of money you receive each week (your income after tax has been taken out), which by my calculations would be around $790, and then list all your weekly expenses and look for anything you can cut…

Q My wife Nikki and I and our five-year-old boy, Tully, have just spent 12 months in Alice Springs. Tully and I would walk the dogs and collect cans and bottles as we went. He now has $1000 to invest. I was thinking of putting it into Australia Foundation shares for him. What are your thoughts? A Hi guys. I always enjoying answering readers’ questions and this month there is such a variety but I must say yours is my favourite. I remember that as a young kid in Griffith my mates and I used to go to the races and collect cans and bottles, making a few dollars. Great memories. I would be very happy for you to buy young Tully shares in Australian Foundation Investment Company. It holds…

Q I am a single 26-year-old professional living in inner Melbourne. I earn $85,000pa plus super. I have no debt, $85,000 in a managed fund portfolio, $30,000 in a share portfolio, $12,000 in the bank, a $5000 car and $28,000 in super. I deposit $270 weekly into my fund portfolio and have made larger one-off investments when unit prices were low. Do you have any advice for me for the next one to three years if I remain in the same rental position in Melbourne ($800 a month)? I would like to buy a property but feel this may have to be outside Melbourne. Or do you believe increasing my portfolio by investing in shares and managed funds is sustainable while researching the property market for my first purchase and…

What is it? The annual Dry July fundraising challenge encourages participants to spend a month off the booze to raise money for people with cancer. Can you hold out for an entire month? Ask your friends, family and colleagues to place their bets. Each participant, whether registered as an individual or as part of a team, receives a unique URL that sponsors can access to make their donations online. Where your money goes: The aim is to ease the burden and reduce the stress that comes with cancer diagnosis. Funds are used for building accommodation near hospitals and for providing patients and their carers free wi-fi access, complementary therapies and wellness programs, and comfortable living spaces. How to donate: Go to DryJuly.com Dry-July.com to register for the challenge and to…

The best thing you can do to increase your net wealth before retirement is to focus on a regular savings plan. It is the ability to save that often determines a person’s level of wealth, rather than investment returns. Putting away the same amount on a regular basis will allow you to build wealth. One of the biggest mistakes you can make in pre-retirement is to spend most of, or more than, your earnings. It’s tempting to think that this is the time to enjoy yourself and do the big overseas trips; however, if you are reducing your savings, you may well leave yourself with a shortfall of wealth at retirement and be more reliant on the age pension. Savings and spending tips • Commit to a regular savings plan…

NEWCASTLE PERMANENT HAS DONE it again, taking out Money’s Building Society of the Year award for the fifth year in a row and the seventh time in the awards’ 12-year history. “To top the building society category five years in a row really is testament that our business strategy is working. It’s not an accident that we’ve won again this year, and we’ll certainly be hoping and doing all we can to win again next year,” says Terry Millett, Newcastle Permanent’s chief executive. “Consistency is one of the key attributes of Newcastle Permanent’s performance, both in a customer’s experience, project delivery and in our annual results. Customers know that they get great value and exceptional service day after day and year after year and we continue to invest in our…

COLES HAS COME SEEMINGLY FROM nowhere to pick up the Credit Card Issuer of the Year award in 2016. This is partly because Coles has expanded its offering in the past 12 months and introduced a low-rate credit card. Being without one last year meant Coles was ineligible for the award. The Coles Low Rate MasterCard costs 9.99%pa on purchases and 19.99%pa on cash advances and has an annual fee of $49. It also comes with up to 62 days interest free, which is one of the highest interest-free periods around. You can also earn one flybuys point for each $2 you spend at a Coles supermarket. In fact, all Coles credit cards are linked to the popular flybuys program, which has more than 20 earning partners, including several outside…

WESTPAC HAS SCORED A MAJOR COUP with its new margin loan product to win Margin Lender of the Year and knock off the winner of the last six consecutive years, CommSec. Last year Westpac was not even represented in the top three winning spots. Then it launched its Online Investment Loan in 2015 with the lowest rates in the margin lending market. Westpac’s margin loan rate of 4.7%pa for its fixed-rate-in-advance product is 1.49% lower than the market average. The 5.45%pa rate for their variable-rate product is 1.46% lower than the market average. Canstar partly judges the providers on the number of shares and managed funds for which their geared product is available. Westpac offers margin lending on 749 shares and 564 managed funds, including exchange traded funds (ETFs). “Westpac…

THE BUDGET INTRODUCED MEASURES designed to support the business sector, including a lowering of the small business company tax rate from 28.5% to 27.5% in 2016-17. In addition, small businesses are still able to claim an immediate tax write-off for plant and equipment costing up to $20,000. Along with a supportive federal government, the small business sector can also tap into some of the lowest commercial lending rates seen in decades. This is an area where Suncorp Bank – Money’s 2016 Business Bank of the Year – stands out. Suncorp has made a big push, climbing from second place in 2015 behind that year’s winner, Commonwealth Bank. “Suncorp has fulfilled its promise to be a genuine alternative for business customers, offering a full suite of fully featured products including transaction…

With the end of the financial year looming, it pays to get your paperwork in order to make the most of deductions and benefits. 1. Fill out your car log book If you use your car for work purposes, keep a 12-week log book. Keep all costs associated with the car’s running for the whole year, not just the log book period. 2. Super top-up No matter what your income, superannuation is a great tax-reduction tool. You can contribute up to $30,000 ($35,000 for those aged over 49) at a concessional rate. If you earn less than $35,454, take advantage of the super co-contribution by putting in $1000, which the government will match by half. Free money! Also, if you earn less than $10,800, your spouse can put up to…

It’s about balance – you can still go out and have fun THE GEN Y LIFESTYLE CAN BE pretty expensive. It all comes down to how much disposable cash you have to spend and, if you don’t have the phone, the clothes, the food or the travel snaps you can start to question your own relevance. The worst part is that these days you don’t even have to be rich to live large. If you’ve got access to a credit card you can have any social image you want. But if you look at the greater scheme of things (as I tend to do), overspending leads to debt, a bad credit score and a strike against your name for any future borrowings. If you want to get serious about your…

You don’t need to be online to have your credit card details stolen. RFID (radio frequency identification) skimming allows tech-savvy criminals to steal information from your credit card just by walking past with an RFID reader. You can minimise the risk of contactless skimming by using an RFID blocking device in the form of a wallet, sleeve or card. Generally, the devices work by blocking the fraudster’s RFID reader with an aluminium or steel sleeve, or with a card that reflects the scammer’s RFID signal using its own chip. The Travel Guard RFID blocking card is an example of a card-sized blocker that uses e-field technology. It reflects the scammer’s RFID signal with its own chip, which jams the radio signal. All you have to do is slip it into…

New infrastructure expenditure in any government budget is always positive for property markets. This is because major transport projects help to reduce commute times, increase productivity, and make outer suburbs and new housing areas more accessible and attractive while boosting local employment opportunities. Positively, the federal budget has allocated additional spending for new and existing infrastructure projects across the country. Victoria is a big winner, with $1.5 billion for transport infrastructure. Upgrading the Monash Freeway is expected to improve accessibility to Melbourne’s south-east, benefiting suburbs such as Narre Warren, Hampton Park, Hallam, Berwick and as far out as Pakenham. The additional funds allocated for the M80 Ring Road should also support property markets along its route from Laverton North to Greensborough. NSW receives an additional $115 million for the new…

It’s one of the biggest mistakes property investors make – they insist on buying locally. They cling to the notion that it’s smart to buy in the area in which they live. It usually isn’t. Some property buyers want to be able to “drive past and keep an eye on it”. Others think it makes sense because they understand their own market. Still others reason that if they buy close to home they can self-manage it and save money. And there are many who believe that you must personally inspect any property. None of these arguments stands up to scrutiny. The key point is this: when you buy an investment property you want to make the best purchase possible. It’s highly unlikely that the best buy right now is just…

Blockchain is the new buzzword. As enigmatic as it sounds, it is a reasonably simple concept: a blockchain is just another way to record transactions. It is a public database of all transactions made among all the parties participating in a particular network – in other words, a public ledger. Built into blockchain is the concept of public verification: it is revolutionary because it removes the need for an intermediary to verify the authenticity of participants and transactions and, depending on the rules of the particular blockchain, verification can happen in real time. This can simplify the payments system and significantly speed up transactions. The most well-known application of blockchain technology is the digital currency bitcoin. There are many bitcoin detractors who don’t believe in the ultimate success of bitcoin…

THIS ISN’T SO MUCH A QUESTION of whether the rules will be changed but of how. Both the Coalition and Labor intend to curb the tax concessions for higher-income earners, though they are quibbling about how to do it. May’s budget set out the Coalition’s measures, which are a mix of good and bad news, depending on your savings. Labor says it will not support the changes it deems to be retrospective, despite similarities to its own proposals. CONTRIBUTIONS The Coalition will reduce, for everyone, the concessional (before-tax) contributions cap to $25,000 a year from July 1, 2017. Currently you can make concessionally taxed contributions (employer contributions plus personal deductible contributions) of up to $30,000 or $35,000 depending on your age. But there are a couple of sweeteners. First, the…

You can view and combine your super accounts via the Australian Government’s myGov website at my.gov. au. It also provides useful information. First check what life insurance you are losing before exiting a fund and make sure you are consolidating into the best fund. It’s not necessarily the one with the biggest balance or the one you have with your current employer. Make sure your employer can contribute to your chosen fund. • Log in to myGov, or create an account if you haven’t used it before, and link your account to the Australian Tax Office. • You’ll be able to see details of all your super accounts, including any you have “lost” or forgotten about. • If the government, your super fund or your employer can’t find an account…

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Small Aussie tech companies are delivering some great returns for investors. Two companies that stand out in the micro-cap space are Emerchants and Pro Medicus. Both have capable management teams and viable, well-executed business plans – characteristics usually indicative of future growth. As well they have strong market opportunity that is either misunderstood or overly discounted by investors. Emerchants, a prepaid debit card solution, was awarded a contract with the Britain’s Bet365 to provide a payment card. Emerchants offers transparency, flexibility and control of funds and is a beneficiary of increasing electronic transactions. It offers a scalable solution (no significant cost required to grow) that is relevant to a range of industries and countries, signalling global growth potential. This contract win is a significant milestone in creating sustainable long-term business.…

Professionally managed investment funds can be the way to go if you don’t have the time or expertise to manage your own investments. For a fee, the professionals do the work for you. Morningstar (www.morningstar.com.au), a leading global provider of investment research, supplies our managed funds data. There were more than 6000 funds on offer when Morningstar launched its star rating system to help investors to initially identify quality funds. The ratings are not for predicting future performance. Funds less than three years old are not rated and funds smaller than $10 million and with a minimum investment of more than $25,000 have been filtered out. Morningstar relies on the fund managers to supply data monthly; if updates have not been provided, a fund may be omitted. Here you’ll find…

I read with interest Paul Clitheroe’s column (In Your Interest, May) about creating wealth. Spending less than you earn is the cornerstone of building wealth. I have been budgeting for years and have “paid” myself a regular amount each pay period. I export my bank accounts to Excel and keep track of all spending on my debit card. I seldom go over the budget. Another human trait is to always spend to the maximum of what you have and I have done this on most occasions with my regular payments to myself. So now I have changed tactics. Instead of paying myself a regular amount, I keep a small amount of cash in my purse. I use my debit card to make purchases instead and really think about using it…

The first consideration relates to identifying the likely purchaser. Do you intend to sell on the open market or through a family succession strategy? If you intend to sell within the family, it’s important to have a formal succession agreement in place to avoid conflict among siblings. If the business is being sold on the open market, an owner must ensure that this plan does not cut across the expectations of a family member. The next consideration is to decide what will be sold: the business or the underlying structure that owns the business (usually a share sale where a company carries on the business). Sometimes careful planning in the lead-up to a sale can achieve big tax benefits. You then need to consider the factors that will influence the…

I’m sorry to learn of your partner’s recent redundancy. My key piece of advice to anyone who has been made redundant and is thinking about claiming income support is to contact the Department of Human Services immediately. Redundancy payouts can delay the date from which you can start receiving income support. This is because the department is usually required to apply an income maintenance period to your claim, which means any redundancy payments you receive are treated as income for a period equal to the length of time the leave was paid. This period applies from the date you receive your redundancy payment – not the date you claim – which is why you should speak to us as soon as possible. Our financial information service officers can be contacted…

Looking for a friendlier, more social approach to your share trading? The Simply Wall St app aims to make share trading easier. The platform adopts a Tinder-style swiping action for searching through stocks. You can swipe left to scroll through US, UK and Australian listed companies, swipe up to dismiss a stock and swipe right to select one. You can then perform your due diligence via Simply Wall St’s easy-to-read infographic reports, which are created and updated every six hours from Standard and Poor’s research. Each report uses a snowflake graph for a snapshot of the company, which is based on cash flow and past performance data. You can choose from a range of stocks that have been curated under various investor profiles, including “top dividend payer” for those looking…

“I have been a banker all my career and it has always been about helping people with money” WHEN ANDREW Thorburn recently released upbeat financial results for National Australia Bank, investors quickly snapped up the bank’s shares. In contrast, just days earlier they had dumped Westpac and ANZ after both reported weaker numbers. Investors are closely watching banks right now as their earnings and dividends come under threat from a softening economy. Yet NAB’s go-go CEO has been basking in positive headlines since taking the hot seat two years ago from Cameron Clyne, a man criticised for being tardy in revamping the sector’s perennial bridesmaid. Thorburn hasn’t put a foot wrong – but that could change. Asked how good it gets for NAB, he replies: “In terms of what we…

Obtaining her credit score is relatively easy for Emma, thanks to websites such as creditsavvy.com.au, where she can check her score instantly and for free. It is a great starting point for Emma to see where she stands and what’s on her credit file. Understanding which factors may have an impact on her score can really put her on the front foot when it comes to her ability to obtain credit and what interest she may pay for a loan. Key points to be aware of are that all credit inquiries stay on your file for five years and that multiple credit applications in a short time frame can have a negative impact on your score. To protect her score, Emma needs to make her loan repayments on time and…

It’s been a long, hard road for Franklin Tate since the heady days when he was involved in the family company, Evans & Tate. The focus of his attention is still Margaret River, where the family vineyards provide the grapes for these wines. This range offers smartly packaged, well-priced regional varietals with a couple of blends. My favourite is the Margaret River Shiraz, which is very smooth and approachable, offering attractive, ripe, deep blackberry flavours. It is soft in mid-palate and on the finish: ideal for mid-week winter quaffing.…

Exercise used to just be exercise. If you went for a walk or a run, or worked out in the gym, there was no particularly easy way to log all your stats (short of taking notes by hand, for the diehards). These days, however, we live in the era of the “quantified self”, so all that data can be kept at your fingertips. But before you rush out to buy a dedicated tracker, bear in mind you might already be carrying around a device that can perform some of these features: your smartphone. There are a number of apps that incorporate things such as pedometer functions to count your steps or track your runs. But smartphones are a tad bulky and you wouldn’t necessarily want to keep one on your…

I am 33 and my husband is 35. We have a mortgage of $37,000 with $48,000 in an offset account and savings of $31,000. Our house is valued at around $1.1 million and we have shares worth about $31,000. We have two children, aged three and one. I work part time ($53,000) and my husband works full time ($125,000) with super of $37,000 and $85,000 respectively. We recently started salary sacrificing $100 a week each into super. We would like to extend our house in the next few years, at an approximate cost $400,000. In the long term we would like to have a passive income so we can retire comfortably at 60. Should we invest in property and shares now so they are paid off when we retire and…

MORE THAN 15,000 financial products and services from over 200 financial institutions were closely scrutinised for Money’s 2016 Consumer Finance Awards. For the past 12 years Money has partnered with Canstar to bring you these awards, which cover 12 categories. Canstar is a leading research company that has been around for over 20 years and is used by financial institutions to fine-tune their own products, and by Australian consumers, offering them the opportunity to review financial product performance. As Canstar’s research manager, Mitchell Watson, says: “These awards are all about identifying the institutions which have excelled either overall or in particular product areas.” He says that while the May interest rate cut will help property investors, who in the past six months have been the hardest hit with out-of-cycle increases,…

LAST YEAR’S RUNNER-UP BCU HAS RISEN to top spot this year in Money’s Credit Union of the Year category. “What people are looking for in their banking institution is one that consistently delivers quality products,” says Mitchell Watson, group manager, research and ratings at Canstar. “This outcome for bcu is recognition of exactly that and matches their aim of delivering relevant products with fair fees to their customers.” Lyndon Kingston, head of bcu, describes winning this award as a huge honour. “There are some great financial institutions in the running for this award offering some fantastic products, and for bcu to top the list is a testament to bcu’s staff,” he says. “We are proud of all of our products and services as we believe they offer value, which is…

CONFIRMING THE STRENGTH OF DEMAND for personal loans, comparison site Finder reported a 40% increase in traffic for personal loans in the first quarter of 2016 compared with the same period in 2015. Finder says the average Australian personal loan balance sits at $12,643 and the most common reason to take out a personal loans is the purchase of a car, followed by debt consolidation and holidays. An average rate of 12.91% means a personal loan can be cheaper than many credit cards but it pays to shop around. Newcastle Permanent – Money’s 2016 Personal Lender of the Year – offers considerably lower rates. The mutual has taken out this award for three consecutive years. “Newcastle Permanent have historically offered an outstanding value product overall in both car loans and…

YOUR HOME AND CAR ARE PROBABLY two of your most valuable assets so it makes sense to insure them. In fact, it’s usually a condition of your mortgage or car loan that you have appropriate cover in place. Our 2016 Insurer of the Year, the Commonwealth Bank, is up from third place in 2015 and Canstar analyst Yulia Batsman says: “CommInsure’s strength lies in offering an outstanding value product that combines great features with a competitive premium.” Looking first at home and contents cover, Batsman notes CommInsure is one of the few providers to include storm, flood, accidental damage and breakage, fusion of electric motors and theft in its standard policy. Other noteworthy features that come as standard include animal damage, vandalism and accidental glass breakage, which helps home owners…

FOLLOWING THE RESERVE BANK’S MAY decision to cut the official cash rate to a new low of 1.75%, Australians are benefiting from some of the lowest interest rates in generations. But with a wide range of rates on offer, it pays not to be complacent about looking for a great-value loan, and that’s exactly what Pacific Mortgage Group, Money’s 2016 Non-Bank Lender of the Year, delivers – wafer-thin rates on home and investment property loans. Pacific Mortgage Group didn’t make the top three in this category in 2015 but in 2016 it has bumped State Custodians out of top place – a position it had held for five consecutive years. “Pacific Mortgage Group offers outstanding value across multiple product types, and its real strength is the interest rate they offer…

Middle-income earners and small-to medium-sized businesses won generous tax cuts in the May budget. Businesses with an annual turnover of less than $10 million will have a tax rate of 27.5% and the 32.5% (excluding Medicare) income tax threshold will increase from $80,000 to $87,000, from July 1 this year The government is getting tough on multinationals. A new diverted profits tax introduces a 40% penalty rate for companies that shift their profits offshore. More jobs have been promised in the defence and infrastructure sectors. The new Prepare, Trial, Hire (PaTH) initiative gives businesses a $1000 incentive to take on an intern. They will also receive up to a $10,000 subsidy over six months if they then employ an intern. The rollout of the new childcare scheme has been deferred…

ABOUT 2600 MORTGAGE products compete on the market for your attention. That’s why finding the home loan just right for you can be a gruelling exercise. And it is why most borrowers take a short cut and go straight to a bank or a mortgage broker to help them navigate their way through the product range. But if you take this route you are likely to be offered a product from a very biased product range: either a mortgage designed by the bank (it won’t offer you any other mortgage provider’s loan); or a loan from a range of providers that a mortgage broker is licensed to sell (they earn a commission and may favour the loan paying the highest commission). Now an online service, Unbiased Mortgage Brokers (UBM), enables…

The NSW government has proposed more regulations to support the modernised strata laws that were approved by parliament last year. (They are due to come into effect midyear). Under the extra proposals, attendance at annual general meetings can be via tele- or video conference and voting can occur via email, text, letter or website, except for committee elections, where votes must be cast in person using a blank ballot form. Pen-and-paper votes are intended to make the system fairer and discourage members from cross-nominating each other. And the government is proposing new limits on the number of proxy votes each owner can cast. SN…

In what was a surprise move for many economists, the Reserve Bank reduced the official cash rate in May to a record low of 1.75%. Any decision like this is not taken lightly. The RBA considers a number of key economic indicators such as jobs growth, inflationary pressure and, importantly, the strength of the housing market. It would be very aware of the flow-on effects that an interest rate cut could have on buying behaviour. The fact the RBA was comfortable to make the decision to cut the rate demonstrates it sees stability in the property market, suggesting there is less concern of overheating. For buyers looking to enter the property market for the first time, or investors wanting to expand their portfolio, now may be an opportune time to…

High income earners will need alternative ways to invest from July 2017, when non-concessional contributions to super will be capped at $500,000 over a lifetime. The current low-interest-rate environment presents a problem for investors who are struggling to find strong, reliable returns. An alternative that shows promise is peer-to-peer (P2P) lending, which has gained considerable momentum in the past year. P2P lender ThinCats says its investors have earned returns of up to 14% by lending money to small businesses. ThinCats expects the budget’s tax cut for small businesses will boost peer-to-business lending, with an exponential rise in the number of lenders on its platform over the next year. Other P2P lenders have also grown. For example, La Trobe Financial was awarded a “superior” four-star rating by SQM for its P2P…

IF YOU HAVE MONEY IN A FUND THAT is performing poorly, at some stage you may decide it is time to cut your losses. And as the end of the tax year looms, many investors will probably think it is a good time to sell a dud so they can reduce their tax bill. But that will be possible only if you have made a capital gain against which you can offset the loss. A capital loss cannot be offset against income from other sources, explains the tax office. So you can’t offset a capital loss from selling an investment against your salary, for example. But if you sell an investment for a $100,000 gain and lose $20,000 on another investment, your capital gain is reduced to $80,000 and capital…

A big issue for responsible investing is its definition. Funds adopt a wide range of descriptions, including ethical, socially responsible, sustainable and ESG (environmental, social and governance). In this article Money has used the umbrella term “responsible”. Also funds use different ways to invest responsibly, with super funds employing specialist researchers to screen or choose investments. The approaches include: • Screening. The most common sustainable investing strategy, making up 68% of Australian responsible investing, is negative screening, where the fund manager excludes certain investments. • Environmental, social and governance. ESG factors are applied to the analysis of every investment. This makes up around 25% of all responsible funds. • Impact investing. Positive screening for companies that have a good social impact, such as community or environmental infrastructure, is the strategy…

Contact us To send a letter to the editor, write to Money, GPO Box 4088, Sydney NSW 2001 or email money@bauer-media.com.au For all inquiries and letters, please include name, address and phone details. Letters may be edited for clarity or space. Because of the high number of letters received, no personal replies are possible. How to get Money 1 Subscribe to Money: Phone: 136 116 Online: magshop.com.au 2 Subscribe to the Money digital edition for your iPad at magshop.com.au/digital/subscribe/moneydigital 3 Visit our website moneymag.com.au and sign up for our free weekly newsletter. You’ll get our top money stories plus exclusive finance tips. Follow Money on facebook.com/ moneymagaus @moneymagAUS…

AS THE SAYING GOES, IT IS always darkest before the dawn. Just when all hope in equity markets looked lost in the first weeks of 2016, investor sentiment turned on a dime and has improved markedly since mid-February. All the unloved investment themes – resources, commodities and emerging markets – have had their time again in the sun. Such a startling rebound prompts the question: is this merely five minutes of sunshine and is it time to sell in May and go away? This time last year the correct move would have been to batten down the hatches. After briefly hitting new highs, Wall Street stocks sank though much of 2015 under the weight of falling earnings, high valuations, a rising US dollar and the looming threat of US Federal…

Looking to invest in Australia’s No. 1 growth market? Thanks to PPI Advice, Money readers have free access to a webinar hosted by managing director Josh Atherton and Terry Ryder from hotspotting.com.au. Go to ppiadvice.com.au/webinars, submit your details and quote the code word MONEYMAG to access not only this webinar but past material to help you maximise your returns. For a limited time you can also access a special capital city report on the Greater Brisbane region. This offer is valid from June 1 to June 30, 2016.…