Innholdsfortegnelse for May 2017 i Money Magazine

“An investment in knowledge pays the best interest.” Benjamin Franklin Welcome to our 200th issue ... who would have thought that a magazine that came off the back of a TV show would still have a voice after 18 years. Happy birthday, Money! A big thankyou to everyone who brings this wonderful brand to life and an even bigger thankyou to all our readers for their ongoing support. If you’ve been with us since the very beginning, then you may recognise the cover above – it’s the very first issue of Money. Flicking through it, I noticed that, other than Paul Clitheroe looking absurdly young, our money woes are much the same. Strategies and products have become more sophisticated but our needs really haven’t changed – we still want financial…

STEVE GREATREX Steve is the principal at Wealth On Track. Steve says: “My favourite is The Millionaire Next Door. They studied actual millionaires and found that they spend modestly on things like cars but tend to buy existing homes in established areas.” NICOLA FIELD Nicola is a former chartered accountant and Money contributor. Nicola says: “Effie Zahos’s The Great $20 Adventure. I used this book to teach each of my children basic money skills – distinguishing wants from needs, planning ahead and budgeting. The illustrations are charming and the core messages will last a lifetime.” CHRIS SMITH Chris is founding partner at VISIS Private Wealth. Chris says: “The most inspiring for me was Making Money Made Simple by Noel Whittaker.” MICHAEL SLOAN Michael, director of property advisory firm The Successful Investor, says:…

When I bought my first home in the late 1980s, I didn’t care that it was ramshackle, I just wanted to get my foot on the property ladder. Now you hardly ever hear the term ‘property ladder’, and millennials want their dream family home now – not in 20 years. But that’s how long it took me to progress through a series of houses until I bought my current family home. I’m calling for a cultural shift: we need to return to viewing property ownership as a long-term, gradual strategy. So, if you’re a first-home buyer, just how do you climb the property ladder? First, you might need to rethink your expectations of a first home. Buying in the best location you can afford is more important than getting the perfect home immediately. And…

AGE PENSION MADE SIMPLE Trish Power Wilkinson Publishing RRP: $24.99 Around 80% of retirees receive a part or full age pension but at the start of the year 330,000 people lost some or all of their entitlement due to the new assets test. The changes have given older Australians a lot to think about: what does it mean for their retirement, and how can they minimise the impact of a partially reduced, or no, pension? Age Pension Made Simple sets out what you need to know about the new rules, including what income you’re entitled to and how the assets and income tests work. Ten readers can win a copy In 25 words or less, tell us how you make your money go further each week. Send entries to Book…

The rollout of the government’s national broadband network (NBN) is finally gaining momentum. After years as a talking point in newspapers and parliament, the NBN is now in millions of homes, and families are moving en masse to the new network. This is exciting: you should take up the NBN as soon as you can. But as you make the move, it is worth weighing up your options. There are a few things to know upfront. First, switching to the NBN is compulsory. After your house is connected there is an 18-month window before the old systems are disconnected. A recent survey suggested that as many as one-third of Australians didn’t know that the NBN is designed to replace the existing phone services and ADSL internet, so be sure to spread…

If you’re daunted by the cost of Australian property and have thought about getting into the international real estate market, now might be the time to do so. A new white paper from AMP Capital reveals that US apartment real estate investment trusts (REITs) are set to benefit from the mass migration of gen Y into rental accommodation. US apartment REITs make up around 8% of the global real estate benchmark, which is equivalent to more than $US100 billion ($132 billion) of equity market capitalisation. The paper shows that the most popular destinations for US renters are Miami, New York and Boston. Chris Deves, manager of AMP’s global listed real estate portfolio, says the rental boom is positive for both landlords and investors in listed property trusts with exposure to…

JILL WEEKS Jill is a retirement speaker and the author of 21 Ways To Retire and co-author of Where To Retire In Australiaand Retire Bizzi. A big move can be financially and emotionally costly. It’s not just the cost of the removalist, but there are also other costs such as legal fees, stamp duty and the buying of various household appliances. Moving away from a city where the property value has escalated in a suburb close to the CBD is likely to mean that Michele is very unlikely to return to the same suburb should she change her mind in the future. People who try to move back to the place they once lived are known as “half backs”, as they can often usually only afford to move “halfway back”. Before…

What is it? Take your dog on a walk that will help save the lives of animals in need. On Sunday, May 21, this annual event will kick off to help raise funds for the care of more than 35,000 animals. More than 70 different walks are planned across the country, so check out your nearest route on millionpawswalk.com.au. Registration on the day will cost $30 for a family or $20 per adult and $10 per child (free for kids under three). Registration is cheaper online so grab your earlybird tickets now. Where your money goes: The walk was held for the first time in 1994 and since then it has attracted tens of thousands of supporters each year. All funds raised through event activities, donations and merchandise sales go…

Recent increases in variable interest rates have reignited the fixed-rate debate. So what are the potential benefits of fixing? Just as with any home loan product, there are various features to consider. Fixed-rate loans offer certainty in future repayments for up to 10 years. Generally the additional amounts you are allowed to repay will be limited but most lenders will split your loan so that you can enjoy the benefits of both fixed and variable rates. Some lenders’ fixed rates are lower if taken as part of a home loan package (potentially including an annual fee) but some loans come with no monthly fees and allow additional repayments and repayment holidays. Some lenders also charge a “rate lock fee” to guarantee that the advertised rate will not increase after you…

Name: Martin Age: 31 State: NSW Sydney man Martin is constantly on the move, with cricket every summer, football in winter, spin classes, running festivals and yoga. He is healthy – and committed to staying that way – but he’s always had health insurance. “I’ve always found it an investment worth paying for,” he says. “There’s a lot of debate, and I think what potentially confuses the issue is when the focus is on taxes and rebates and not on health coverage and treatment outcomes. We are fortunate to have a world-class public hospital system, but I believe it’s good to have additional cover for elective treatments that you know you will need.” Martin had four impacted wisdom teeth surgically removed in his early 20s, and hospital cover provided peace…

“It’s important to have a stash of cash to meet minimum repayments” I’ll be honest – I hate generalisations. I don’t like reading that the majority of young people feel entitled. That our apparent excessive spending habits are why we can’t get into overly inflated housing markets. Assigning labels to people can be troublesome and is often offensive. However, there is an element of truth to the great myth of the millennial spender. While it’s incorrect to claim that most millennials have an excessive spending problem, research shows that people in our age bracket are in more debt than gen Xers or baby boomers. But there are reasons for this. According to research by credit bureau Experian, millennials with a mortgage, credit card or personal loan have an average debt of…

HEALTH FACILITIES Check out the medical facilities and the number of doctors and other professionals in the area. Ask for a copy of the health service’s annual report, speak to the hospital manager, director of nursing, doctors, and retirement and nursing home managers. SECURITY Speak to the local police and Neighbourhood Watch and ask about crime in the area and innovative programs. A GOOD READ Subscribe to the local newspaper for at least 18 months before moving. It will give you an idea of the community issues and social, sporting and recreational opportunities. LOCAL FEEL Chat with the locals. What are the good and not-so-good things? INFORMATION Visit the information centre and ask about the area. Often the volunteers are retirees who have moved there. NEW RESIDENT KITS Check with…

If you subdivide, developing in itself doesn’t attract a tax because technically you haven’t sold anything. You only need to worry about tax after you start selling off or renting out the new lots. Perhaps the sweetest tax perk when it comes to subdividing is the main residence exemption, which disqualifies the property you’re living in from attracting capital gains tax at the point of sale. Mark Chapman, from H&R Block, says that potentially if you lived in each of your new developments you could sell all the new blocks, one by one, free of capital gains tax. “Your current house is covered by the main residence exemption so that’s CGT free when you sell, and if you build a house on the other block and move into it, then that…

If you are a member of a defined benefit scheme with a considerable pension income it is best to seek advice. The rules state that defined benefit pensions will have a value that counts towards the $1.6 million cap by multiplying the full value of the pensions by 16. The amount used for the calculation is the gross pension including all tax components – tax free, taxable and untaxed amounts. What this means is that anyone with a defined benefit pension of more than $100,000 will exceed the cap and payments will be taxed differently. See the Australian Tax Office website for examples. (Currently the unfunded components of these pensions are taxed at your full marginal tax rate but you receive a 10% offset on this amount once you reach 60.)…

Transition to retirement pensions (TTRPs) aren’t limited by the $1.6 million pension transfer cap but from July 1 they are facing a separate change. In brief, there will now be two types of taxes that will apply to new and existing TTRPs, regardless of the balance. So here’s what you need to consider if you set one up, or are assessing if you should keep your existing account going. Two types of tax TTRPs can pay out between 4% and 10% of the balance each year. Fortunately, the tax on payments coming out of the account won’t change after July 1. If you are 60 or over, payments are tax free and for those 56-59 the tax remains the same as in previous years – 15% less than your personal…

SPOILT FOR CHOICE As anyone who has taken an interest in their super would know, there are thousands of funds and investment choices available. Not surprisingly, this is all too hard for most people and two-thirds of fund members stay with the default fund chosen by their employer. How employers choose default funds varies. It may be part of an industrial award, contract or agreement or a different arrangement. Under recent reforms, default funds must be designated as a MySuper product, which is a simple, lower-cost fund with a single diversified or lifestyle investment option to ensure members are not paying for bells and whistles they don’t need. Employers have been required to pay your super to a fund that offers MySuper since January 2014 and if you were within…

Chris Gray Founder and CEO of Empire. He hosts Your Property Empire on Sky News Business Channel, features as a property expert on Channel 9’s MyHome TV, and is a judge on Channel 10’s The Renovators. Chris is a qualified accountant, mortgage broker and buyer’s agent. He started investing in property at 22 and has been semiretired from the age of 31. He is also the author of The Effortless Empire property guide. What was your first job? It was at a mobile phone company in north London in 1992, when mobile phones entered the market and cost £1000 (about $1600). The company went into voluntary administration, morphing into another one, which also went into receivership. I asked my boss if he could then do a bankruptcy just to round…

‘One thing is for sure. When it comes to property it is all about supply and demand.’ “Affordable housing” and the “housing price bubble” are dominating conversation about the property market. Ironically, the much debated housing price bubble popping would certainly sort the affordable housing issue, as a collapse in prices is a very effective way to make housing more affordable. As far as I can tell from following the debate, what we really seem to want is for housing prices to remain strong for those who own property but to fall for those, in particular young first-home buyers, who are yet to buy. Clearly this is not going to happen. Prices will either broadly rise or broadly fall, so large numbers of people will be unhappy regardless. Our politicians…

If it’s been a few years since you last changed your mobile phone plan, the market as it is today may surprise you. The telcos are throwing data at us, encouraging us to do more – watch more, listen more, play more – and filling plans to the brim with internet data. The thing is, prices are creeping up in line with these generous increases. The difference in price between the various phone plan tiers tends to be between $10 and $20 a month. This may sound like small change to some but it adds up to several hundred dollars over a two-year contract. And the kicker is that every dollar you spend on data you don’t use disappears. You can’t donate your spare data to charity or hand it down…

BEEPIT COST: FREE OS: IOS, ANDROID Are you a serial deal finder? Do you have multiple memberships to discount sites such as Groupon, Scoopon and Cudo? Good news – there’s a new app that consolidates all your favourite deal-finder sites in one place. Beepit is like a marketplace for different types of deals. It sorts them into several categories so you can only see the ones that appeal to you. They cover restaurants, beauty and wellness, travel and leisure activities, and products. To sort through them, you can swipe left to reject or right to save. What really sets this app apart is its algorithm to customise your deals. As you swipe, Beepit takes note of what you like and dislike, and uses this information to show only the offers…

The future of the automotive industry is exciting indeed. Roy Morgan reports that by 2025 the industry will see increased car sharing, driverless cars and purely online sales. Millennials are the most keen to go green, with 32% of those surveyed willing to consider an electric vehicle and 50% a hybrid. However, Australians don’t seem too keen on driverless vehicles. Tesla has shaken up the market in the US with the release of electric driverless cars, spurring a huge debate around the world about safety and technological disruption. But Roy Morgan says 54% of people here feel they are not yet ready to make the change. If you’re thinking of going green, the federal government has a website, greenvehicleguide.gov.au, to help you compare cars. It allows you to customise your search according to your…

As part of the May 9 budget, federal treasurer Scott Morrison has raised the possibility of allowing first-home buyers to dip into their super. Whether this happens or not – and at the time of writing prime minister Malcolm Turnbull poured cold water on the idea – it’s interesting to consider how many people this measure would target. Martin North, principal of Digital Finance Analytics, says most prospective purchasers would need a deposit of at least $50,000 to get into the current market. His data shows that of the 140,000-plus households in their early 30s who want to buy a property, less than half have a super balance of at least $50,000. This figure is even less for those in their late 20s. Younger households, who are more inclined to…

An alternative way to invest has finally been legalised in Australia. The Corporations Amendment (Crowd-Sourced Funding) Bill (2016) has passed through the senate, meaning that investors can now participate in equity crowdfunding. Until recently, crowdfunding only allowed them to receive a product or service in exchange for a contribution. But they can now legally participate in capital raisings and in return receive a share of the company. There’s a maximum of $10,000 per eligible company, which can be invested through a crowdfunding platform with a financial licence. There’s a five-day cooling-off period in case you change your mind. Companies must produce a disclosure document when they raise capital through crowd-sourced funding, so be sure to read up on the investment risks before participating. The law applies to unlisted public companies that…

Fact file Ben Osmo Award-winning movie sound recordist, called a mixer in the US. Age 65; lives on Sydney’s northern beaches. First job, mail boy in an advertising agency, then promoted to screening room. Also a singer songwriter who plays guitar and flute; travel makes it impossible to play regularly in a band. Filming takes him to exotic locations including a stormy North Sea oil rig. It goes without saying that when a movie director, especially George Miller, calls “action” or “cut”, that is exactly what he expects to happen. But what if the actors can’t hear or see him? Picture a scene from Miller’s latest action flick, Mad Max: Fury Road. The War Rig is speeding across the Wasteland. The Doof Warrior, aka rock musician iOTA, has the volume…

JASON PETERSEN Jason is a Sydney-based financial planner and head of wealth management at independently owned boutique planning business 5 Financial. With Sydney property prices showing solid growth in recent years, Michele’s question is not unusual. Financially she has options and, as we say to clients in similar situations, her primary focus can be on what’s important to her in terms of lifestyle. You could nearly say that Michele is spoilt for choice, and it’s a matter of where her lifestyle priorities lie. If Michele decides to stay in her home, she avoids transfer costs such as stamp duty and agent’s fees, which are probably likely to be in the vicinity of $50,000. Under current legislation, the benefit of maintaining equity in your home is that you can expect a larger…

I am a little unsure with the direction we should take in terms of our next investments. I am 48 and my wife is 47 with three teenagers still living at home. I earn $165,000 a year and my wife works casually. We have a mortgage and owe $110,000, a line of credit up to $235,000 and a main residence worth $1 million. We have an investment property in regional NSW worth $425,000 and owe $300,000. We purchased the property about 10 years ago and there has not been much capital gain. I am in a defined benefit super scheme with my employer and salary sacrifice the maximum $30,000 and am aware of the reduction to $25,000 from July 1. My wife contributes $25 a month to her super. We…

One question that arises quite often in the financial planning process is “What are you going to do in case of emergency?” More often than not it is met with a blank stare. Whether you’re undertaking your personal financial planning or contemplating wealth creation it is critical to plan for contingencies. The first step when building an emergency fund is to identify an affordable savings budget. Start with a breakdown of your after-tax income and subtract all your expenses broken down as fixed (such as mortgage), variable (groceries) and discretionary (holidays and gifts). When you have identified the surplus you are well on the way to wealth creation. We suggest initially basing your plan on dedicating 50% of the surplus to allow for possible budgeting errors. I have modelled the…

While many millennials are struggling to find their place in the world, Tayla Nicoll has forged ahead, going from strength to strength. The 23-year old from the NSW central coast was the only one in her group of friends who didn’t go to uni after school but she has no regrets. She has a good job with a liquor chain and a passion for property. “I started off working casually when I first started out, then within 12 months I moved on to be a trainee manager and now I am the manager of a large store, the biggest in our area, and I also work as a relief area manager,” says Tayla. Her mum opened a savings account for her when she was little, contributing regularly. She encouraged Tayla to…

For many of us, preparing a tax return is as painful as having teeth pulled but the rewards can be great. To ease the ordeal, there are five common mistakes to avoid when doing your tax this year. • Mathematical errors (stupidity). Small errors could result in big mistakes. A wrong number here or a bad calculation there may cost you thousands. So if you do your return yourself then make sure you “measure twice” and avoid any unnecessary headaches. • Car logbooks (carelessness). It is the biggest claim made in tax returns but often done incorrectly. If you make a claim for motor vehicle expenses under the logbook method, then make sure you actually have a logbook prepared in the correct format. It must be for a continuous 12-week…

Notwithstanding a net loss of $NZ82.5 million ($76 million) in 2016 and a share price that has plunged by more than 50% from its March 2014 peak of $42.10, Xero has arguably been at the vanguard of cloud-based accounting solutions for a decade. From a standing start in 2006, it has gained 1 million subscribers worldwide. In comparison, its competitor MYOB, which launched over 25 years ago, services around 1.2 million businesses in Australia and New Zealand. Fee structure Xero is far from the cheapest service. If you’re seeking an entry-level accounting solution, Xero’s Starter plan costs $25 a month. This enables a small business or start-up to send customers five invoices or quotes a month, enter five bills and reconcile 20 bank transactions. It allows for a payroll of…

No grandparent wants to see their precious grandchildren taken into foster care. But when adult children can no longer care for their own children because they are incapacitated by substance abuse, mental illness or domestic violence grandparents typically step in to mind them until their parents sort themselves out. Grandparents often have a close relationship with their grandkids and can provide much needed stability, safety, a regular routine of meals and school attendance and often improve their social skills. In some cases grandparents take over the full-time care of their grandchildren. It is a momentous task but it can keep them out of home care and adoption. There are amazing stories of tragic lives that were turned around because of grandparents. Grandparents are up for the costs of being a…

Not many share investors hold just one stock. Yet the majority of residential property investors hold just one property – about 73%, according to tax office statistics. By putting all their eggs in one basket they are breaking a golden rule of investing: diversify as broadly as possible so if one investment turns sour it doesn’t mean your entire portfolio is a lemon. One of the main reasons people invest in just one property is the massive outlay now needed to buy houses and units in high-growth cities, where median prices for some suburbs are over $1 million. To buy a $1 million property you need a $200,000 deposit to avoid expensive mortgage insurance; state stamp duty can cost up to $57,500. You’ll need to borrow $800,000, so you’ll have to be a…

Younger investors are increasingly embracing exchange traded funds. The average age of an ETF investor is 39, down from 58 five years ago. Diversification is the main driving factor for using ETFs, according to Investment Trends. “Millennials are expected to be significant drivers of future ETF growth,” says Recep Peker, the research director. Thirty-eight per cent of ETF investors invest via a self-managed super fund (SMSF). SMSF investors use ETFs for a wide range of reasons, citing their access to overseas markets and specific investment types as important factors. They are more comfortable with ETFs than they are with managed funds, according to Peter Hogan, from the SMSF Association. He says ASX data shows that financial planners struggle to get SMSF investors to invest in managed funds. “SMSF investors want to have…

‘Despite all the changes, super still has strong attractions’ Right now most Money readers need to think about their superannuation. I mean right now. This is urgent. It’s worth thousands of dollars to you if you get it right. You have a unique opportunity to put in more money than you will be able to do in the future. If you can, take advantage of it. But be quick. You have a matter of weeks. The window is closing. The first opportunity, for those aged over 50, is to salary sacrifice $35,000 this year into your super fund. Do it if you can. If you are on the 39% marginal tax rate (including Medicare) the difference in tax (15% for super versus 39% for you) is 24%. In other words you are…

Diamonds may be a girl’s best friend but gold can play an important role in an investor’s portfolio. Stockspot’s Chris Brycki says gold is an excellent portfolio risk-reduction tool. “During times when assets such as shares are falling, gold often rises, which helps to cushion the impact of sharemarket volatility,” he says. “Gold also acts an insurance policy against your home currency losing value.” So there is a strong case for holding a small amount of gold in your portfolio but it should never be a large part – many experts say no more than about 10%. One way to get exposure to gold is to invest in gold mining companies listed on the Australian sharemarket, such Newcrest Mining (NCM) and Kingsgate (KCN), or through an ETF such as the…

Financial education fails the test I loved Paul Clitheroe’s column on the need to make money “visible” for young people (In Your Interest, April). While we are making some progress we still have a very long way to go. I’ve been teaching high school mathematics for over 20 years, and am still gobsmacked at how little there is in the curriculum about real financial literacy. There are senior students, not far from finishing high school and getting ready for “adulting”, who are brilliant at calculus and abstract vector calculations but know nothing about income tax or credit cards. We do a bit of work on simple and compound interest, and cover profit and loss, but there is so much more that these students need to be covering. I’d happily remove…

On July 1, interchange fees will officially be capped by the Reserve Bank at 0.8%, severely curtailing a $2 billion revenue source for lenders, some of which have been charging up to 3% of the value of credit card transactions. Interchange fees are charged by a credit card issuer to the retailer’s bank at the point of sale. A portion goes towards covering the EFT costs; however, the fees are often a lot higher than the actual cost. The new cap could have repercussions for the millions of Australians with a rewards credit card. That’s because most rewards programs are funded by money collected from interchange fees, and that’s all about to come to a grinding halt. The credit card market is already being shaken up in anticipation of these…

Internet service provider TPG Telecom recently unveiled plans to build a new billion-dollar mobile network to compete with Telstra, Vodafone and Optus. The company plans to spend close to $600 million to roll out the network over three years and hopes to provide coverage to around 80% of the population. Randwick City Council in Sydney’s eastern suburbs has entered into an agreement with Cbus Property to create an affordable housing precinct. “Newmarket Randwick” will include a minimum of 10 affordable apartments which will be available for rent or purchase for very low to moderate income earners. The development is expected to be completed by early 2021. Colonial First State Asset Management has announced the launch of a new high-yield team to add to its global fixed-income business. The team of five…

As a general rule, if you own a rental property and undertake repairs or maintenance you can claim a tax deduction for the costs incurred. That rule may not apply, however, where you have only recently purchased the property and have undertaken repairs shortly afterwards. Such work is often referred to as “initial repairs” and treated for tax purposes as capital expenditure, meaning that instead of being tax deductible straight away these expenses are added to the cost base of the property, hence reducing the capital gain when the property is ultimately sold. The tax office considers an initial repair to be work to remedy defects, damage or deterioration existing at acquisition and applies a short cut to highlight such expenses by generally disallowing any repairs undertaken in the first…

With tax time around the corner, property investors should thinking about getting their depreciation schedule in order. Data from BMT Tax Depreciation Quantity Surveyors shows that even older properties can provide investors with lucrative tax breaks, with all properties, of varying ages, receiving an average first full-year deduction of over $9000 last financial year. Deductions are typically higher for newer properties, as owners are entitled to claim capital works for 40 years after the construction date. If you recently purchased an older dwelling (still constructed after September 15, 1987), you have only the 40 years from the construction date to claim capital works, so if time is running out it’s worth seeing what you can get back this year. Despite this, BMT data shows that the newer/older property split among…

Collectables or personal-use assets such as artwork, antiques, rare coins and vintage wine can be very lucrative investments. If you are considering investing in collectables via your self-managed super fund there are rules that you need be aware of. Primarily, the investment must satisfy the “sole purpose test”. The sole purpose of a super fund is essentially to provide retirement benefits for its members, rather than a benefit now. Furthermore, the investment must fit within the fund’s investment strategy, which must reflect the fund’s purpose and circumstances and take into account risk, diversification and liquidity. An investment in a painting by a famous artist may be great in the long-term but will it be able to provide for the member’s retirement if it was the fund’s only investment? Are there…

Investing in small companies, especially in highly specialised sectors such as technology, should not be an endeavour pursued either lightly or in a part-time manner. While the rewards are potentially high, so are the risks. We recommend investing via a professionally managed fund. If you are looking to back some strong trends, NextDC is worth considering. As time goes on we will consume ever-larger volumes of data on our mobile devices. Additionally most business software is moving to “software-as-a-service” (SaaS) over the web. This all translates to significant growth in demand for cloud-based (or data centre) storage and processing. NextDC has the largest footprint of vendor-neutral data centres in Australia and should see significant growth. Other beneficiaries of the trend include TechnologyOne, Aconex and WiseTech Global. All three businesses are…

With her job in doubt, Tess may find ... More debt is a disaster Q I am a 57-year-old widow with two children who are uni students. I work full-time and earn $71,574. I have been told my job might not exist by 2018. I inherited recently and paid off my mortgage. I recently bought an investment property based on a 20% deposit and my wage only. I have $450,000 in a term deposit and $44,000 in savings left over from the inheritance. I was thinking of purchasing another investment property and maybe salary sacrificing $400 a fortnight. Do you have any suggestions on what I should do to best utilise what I have to enable me to live comfortably and help my children and to move forward financially? My…

The average age of a first-home buyer is now in the mid-30s, according to Dominique Bergel-Grant, a director and financial planner at Leapfrog Financial. She says many of her clients are giving their children financial assistance either in the form of cash or a loan or by putting up their own property as security. “The first thing parents need to ask is, ‘If we give our children $50,000 or $100,000 to help them buy a property, are we still going to be able to live comfortably in retirement?’ If the answer is ‘yes’, then certainly, it’s a very generous thing to do. If the answer is ‘no’, giving cash shouldn’t be on the table. “The other option you’ve got as a parent, if you have an investment property or home…

“A motorist received 17 notices in five days for unpaid tolls, each with a $21.32 admin fee” The current wave of infrastructure development taking place across many Australian cities is seeing the number of toll roads expand rapidly. It means improved travel for motorists, though this convenience can come at a remarkably high price. Leave a toll unpaid and you can face a raft of fees and charges far beyond the value of the outstanding toll. As a guide to the possible financial fallout of unpaid tolls, in early 2016 The Age reported the case of a woman who amassed $50,000 worth of unpaid tolls and associated charges. It came about through a combination of personal factors including the birth of a new baby, a cancer diagnosis, a change…

A one-bedroom unit that was once a space in a roof cavity in Sydney’s prestigious suburb of Elizabeth Bay sold for $1 million last month. Yes, it has some impressive views but it came with just 50 square metres of living space and a shared balcony, and there was no garage. That’s $20,000 a square metre – talk about runaway house prices! It’s no wonder the Reserve Bank is concerned for our financial welfare. Our insane appetite for debt and a ridiculously overpriced property market is putting a lot of Aussies in a very delicate situation. Digital Finance Analytics research shows 669,000 families (22% of borrowing households) are suffering mortgage stress. Of these, 20.8% are in mild stress, meaning they are making their repayments by cutting back on other expenditure, putting more…

YES LYNNE CHESTER Associate professor, University of Sydney Anew form of regulation is needed to exert downward pressure on electricity retail charges and assist consumers to choose the best-priced offer to meet their needs. Electricity prices have escalated since 2007. A few years ago poles and wires were the culprit; now it is the retail component. Until 2009 in Victoria and mid-2015 in NSW, the retail component was regulated through a price cap. The Australian Energy Market Commission regularly reports that competition is working. Yet privatisation, competition and deregulation have not delivered lower prices. And most consumers do not opt to switch suppliers. Why? Comparison complexities and difficulties in determining the price to be paid or how a “discount” works makes choice exceedingly hard. A return to price cap regulation is…

For some people redundancy can be a blessing in disguise but for most of us it is a very stressful and destabilising experience. Unless you’re about to retire and have spent many hardworking years with the one employer, resulting in a material (and largely tax-free) windfall at retirement, redundancy is an extremely difficult time because of the unknown nature of your future income and employment prospects. If a company is trying to cut costs, making employees redundant is one way to achieve this. These days to manage workforce reductions fairly many companies offer voluntary redundancy as a first course of action to allow those people who may be considering leaving in any case the ability to do so with a payment on the way out the door. Voluntary redundancy takes…

Michael Sloan is the director of property advisory firm The Successful Investor (thesuccessfulinvestor.  com.au) and author of two books, The Formula to Successful Property Investing and Cracking the Real Estate Code. We have 10 copies of The Formula to Successful Property Investing to give away. For your chance to win tell us in 25 words or less your property investing formula. Send your entries to money@bauermedia.com.au or Money magazine, GPO Box 4088, Sydney, NSW 2001. Entries close June 7, 2017.…

VICTORIA BASS COAST (eg Phillip Island) • Natural habitat • Fresh air • Proximity to Melbourne GOLDFIELDS & SPA COUNTRY (eg Castlemaine) • Active arts scene • Diverse range of medical facilities • Relaxed village feel NSW SOUTHERN HIGHLANDS • Close to Illawarra coast • Relatively close to Canberra and Sydney • Weather is largely free from Sydney’s humidity • Rural setting close to the beach NORTH COAST (eg Port Macquarie) • Commercial airport • Range of shops • Medical facilities QLD SUNSHINE COAST (eg Buderim, Bribie Island) • Close to Brisbane • Choice of living inland or on coast • Varied housing options DARLING DOWNS (eg Toowoomba) • Recreation and cultural facilities • Ideal conditions for gardeners • Sense of community • Climate is cooler than in Brisbane TASMANIA EAST COAST…

New to the market? Or looking for subdividing opportunities? There are a few things you need to look for when searching for a good subdividable property. • Size and zoning Each council has specific rules for the minimum lot size and zoning for subdivision. When it comes to potentially subdividable properties, the rule of thumb is the bigger the better. Look for properties that are at least 700sq m – that should be able to cover you for minimum lot size. In any case, check the town plan to make sure you can subdivide before you buy. • Driveway A good subdividable property will need around 2.5m to 3.5m of space for a driveway, including landscaping. Consider the new block’s access to the road before you buy. A corner block…

The only way Australia’s housing can become affordable is for prices to drop, by a lot in some places, says respected real estate researcher Michael Matusik. While he argues that an accepted affordability benchmark sees dwelling prices as sustainable at three to four times household income, he has made some adjustments to produce the table below. For Sydney and Melbourne, which are “a bit special”, he allows six times earnings and for “the wannabes” (southeast Queensland, Canberra and Perth) he allows five times the benchmark.…

While overall the OneVue platform has recently made big advances in functionality, Netwealth maintained its top spot for having the richest features in Investment Trends’ 2016 platform benchmark and competitive analysis report. As well as receiving the award for best client portal, Netwealth ranked first for transactional tools, decision support and online business management tools. Other notable enhancements it made included: the introduction of international direct share trading, enhancements to its managed accounts offering, improved client and business reporting and greater client portal functionality. Netwealth’s Matt Heine attributes much of the current $200 million in monthly inflows to client interest in managed accounts. “The beauty of a managed account structure is clients can have direct ownership without the administrative burden of managing that equity portfolio themselves,” says Heine. “They can…

When you pay for a service or product you expect to derive a benefit from it. Otherwise, why pay? But many super fund members are paying for insurance of questionable value. Your default super automatically includes death, total and permanent disability (TPD) and often income protection cover. Many people mistakenly assume they get the cover for nothing and pay little attention to it. In reality, the premiums are automatically deducted from their super. As people move from job to job, they accumulate default accounts, all taking premiums. However, if you have previously received a TPD payment, you are unlikely to be eligible to make further TPD and income protection claims. As the CareSuper insurance guide highlights: “If you have previously been paid a TPD payment of any type as a result…

‘The reason rates are rising is because growth is better than expected’ As the weather cools off, and we complain about having to chuck on a light jumper at night, it’s easy to see how we Australians are pretty spoilt, and it’s not just with the climate … Our economy has beaten the Netherlands’ record for the longest spell without a recession, currently sitting on a 102-quarter streak. We’re enjoying a rebound in commodity prices, not only benefiting our resource-heavy index but also impacting our deficit and reflecting a renewed strength in the global economy. We continue to defy expectations with our employment market, which is stronger than most forecasts last year across a number of sectors. Despite being denied your weekend swim, there is reason for us to be optimistic…

When we visited the infrastructure sector back in 2016, we declared many of the stocks to be overpriced. They later declined by between 10% and almost 20% before recovering to be virtually unchanged. So what has changed? It remains the case that sitting down at a dinner party and stating you own a toll road like Sydney’s M2 will get jaws dropping and tongues wagging. There is no question that owning a piece of essential infrastructure will elicit all the responses experienced by monopolists. In the absence of regulation or taxation by federal, state or local governments, infrastructure owners can charge what they like thanks to the often inelastic demand for its use. And when legislation at the time of the sale of the infrastructure, or before permits are granted…

The popularity of exchange traded funds (ETFs) is overstated in Australia. It is a tiny market here with $23 billion invested, which is just 0.12% of the All Ordinaries market cap. It’s certainly growing but it is way behind managed funds, which hold $2.8 trillion, and is a tiny fraction of the ETFs globally, which is a market worth over $3 trillion. It is, however, of a similar size to the listed investment company (LIC) market in Australia, which is worth $32 billion. ETFs appear to be a thriving giant of an industry here because of prolific marketing. But that’s because the firms that are marketing them are huge US companies for which the Australian presence is subsidised by their international ETF business. The main attraction of ETFs for me…