Innholdsfortegnelse for June 2017 i Money Magazine

“A budget is telling your money where to go instead of wondering where it went.” Dave Ramsey, author Whatever your thoughts are on our cover story – and, by the way, I would love to hear – I want to make it very clear that I’m a big supporter of superannuation. As founder of, and ambassador for, Money/ASFA’s Super Booster Day, I believe in super and encourage all to take advantage of the tax perks it has to offer. Having said that, the biggest issue to confront many people is that as they accumulate more assets they progressively lose the age pension. Now, having too much wealth to qualify for the age pension is a good thing, right? Well, that depends. After receiving an email from one of our readers…

EFFIE ZAHOS Effie is Money’s editor and author of The Great $20 Adventure. Effie says: “Can you tax your way to surplus? Time will tell but I did like the distinction between good debt and bad debt, plus am happy to pay a little more in Medicare if it means it’s retained and available for all.” SAVANTH SEBASTIAN Savanth is a senior economist at CommSec. Savanth says: “The government is right to focus on the need to build our infrastructure assets. And especially on transport assets. Increased spending on infrastructure is positive for a raft of industry sectors including building materials, transport, industrials, developers and contractors and consumer discretionary sectors.” SAM HENDERSON Sam, CEO of Henderson Maxwell, says: “My highlight was the ability for ALL over 65s to downsize their…

With $33 billion in credit card debt accruing interest, Australians are addicted to credit. And while we all know that something needs to be done, all that seems to ever happen is more vigorous hand wringing. But here’s a simple – some would say obvious – idea that’s been on my mind. How about banks only offering limit increases to those who actually ask for it? When banks bombard us with offers to increase our limit, we think, “What’s the harm? I’ll be alright”. But what we have been sold is an unrealistic and unsustainable idea of what is a reasonable amount of credit card debt. Many would argue that everyone should be personally responsible for their own decisions, but that approach led us to the GFC. Responsible lending laws…

REAL ESTATE ESCAPES Tim O’Dwyer For Pity Sake Publishing, RRP $24.95 There are lessons to be learned from the misfortunes of others. In his 40 years of practising law, author Tim O’Dwyer has seen a lot of property calamities. One highlight (or lowlight for the people involved) is the story of a scorned lover who decided not to sign a contract after receiving a loan of over $300,000 from her ex to help her buy a house. How did it end? You’ll have to read the book! Real Estate Escapes is filled with cautionary tales about escaping contracts, leases, persecutions and legal liability. Every anecdote provides useful insights (plus a healthy serving of schadenfreude). O’Dwyer has also slipped in a handy glossary of legal terms and a list of legal…

Amazon’s imminent arrival is set to shake up the retail sector. It plans to challenge domestic retail prices, with Australia’s relatively stable economy and high disposable incomes appealing to the fast-growing online retailer. It will focus on providing low prices, a diverse product range and fast delivery and is looking for warehouse space along the east coast. In the US, Amazon accounts for 50% of e-commerce sales. However, to be successful here its business model will need to be adapted. For example, Australia’s large geographical size and widely dispersed population will lead to higher distribution costs – and wages are higher. Before its launch, Amazon is expected to collect average prices for products across every relevant category. It plans to set prices at a 30% discount to those of domestic…

The federal government hopes the budget’s infrastructure commitments and direct housing policies combine to address the housing affordability challenges in our most populous cities. Leading the big-ticket spending is $5.3 billion for the Sydney basin’s second major airport at Badgerys Creek. The project – due to operate in 2026 – will be the catalyst for further infrastructure provisions, including new and upgraded roads in the western Sydney catchment. Houses and land in the surrounding suburbs, such as Bringelly, Austral and Luddenham, have already been the target of developers and investors looking to capitalise on the potential rezoning upside. The Melbourne-to-Brisbane inland rail line received further funding this year. As well as linking the ports in Melbourne port – Australia’s busiest commercial marine point – and Brisbane, the line will invigorate…

STEVE GREATREX Steve is a financial planner and founder of Wealth on Track, based in Adelaide.wealthontrack.com.au Glenn, my biggest concern is your long commute from Ballarat to Melbourne. You are OK with it now but it is not sustainable. The prospects for both Ballarat and Horsham seem reasonable. Ballarat is really a satellite city of Melbourne now. Horsham appears to have low vacancy rates. It has a base hospital and important transport links. Once the Horsham house is finished you believe you could rent it for $170-$200 a week. I suggest contacting an agent (not the one who sold you the property) and finding out the bare minimum you need to rent it, and what you would get. Then you can focus on what needs to happen soon and get…

Josie needn’t worry about having ... Assets in one name only Q My husband and I are in our early 50s, still employed full time and earning $58,000 and $80,000. We both salary sacrifice $80 a week. We have the following assets: own house worth $1.4 million with $450,000 loan; two investment properties worth $1.1 million, earning $1050 gross a week, with $600,000 loan; combined super of $300,000; offset account of $60,000. My questions are: 1. We would like to keep the property investments for our retirement income if possible. However, since they are under my name only, is this going to be an issue as my assets will become too much? Should I buy one new investment property now under both names and sell one existing investment before I…

The top three placegetters here are all mortgage managers. Unlike brokers, mortgage managers source funds and approve loans directly, without the need to negotiate with another lender. You continue to have a relationship with your mortgage manager through the life of your loan. James Slack, Canstar’s banking senior research analyst, says: “Compared with many lenders who have been increasing rates on investment loans, the winners in both the non-bank and bank categories offer similar pricing to both property investors and owner-occupiers.” Gold winner AMO is certainly no exception. “It offers value for money across the spectrum of all its investment loans,” says Slack. Its standout product is its two-year fixed loan. “Unlikely many other lenders, AMO is not charging more for interest-only versus principal and interest repayments.” Aussie comes in…

The lead-up to the 2017 federal budget was a whirlwind of on-again, off-again priorities. What we thought was the housing affordability budget, and then the health budget, and then the education budget, turned out to be an all-round affair focused on lowering the cost of living. There’s a range of new levies and lots of spending (not to mention a few controversies, such as the new Skilling Australians Fund levy and the new $6.2 billion major bank levy) but the overall economic outlook from Treasurer Scott Morrison is optimistic. Although he had to axe $13 billion worth of zombie measures from the previous two budgets, the treasurer expects the budget to return to balance in 2020-21 and to remain in the surplus over the medium term. Wage growth is also…

Would you move your home loan if the interest rate increased by 0.15%. In dollar terms that’s around $35 a month extra on a $400,000 loan at 5%. What if the hike was more, say 0.25%. That’s a jump of $59 a month in repayments. I guess the answer really depends on how good your interest rate was to start with and if there was a better one available. As we were heading to the printers, analysts were suggesting this is how much the big five banks – which were hit with a levy in last month’s budget – would have to reprice their mortgages if they were to offset the full cost (see “Cheat sheet”). For shareholders, the news isn’t that good either as the levy does represent a…

While birds of a feather flock together, opposites attract and love is blind. So what do you do when you’re desperately head over heels for someone who doesn’t share your commitment to financial freedom, your discipline for saving and your mindset about building an asset base for retirement? Well, you’re not alone. It’s been suggested that around 85% of couples argue regularly over money. In fact, for many couples it’s the No. 1 issue in their relationship for a variety of reasons, such as illness, disability, redundancy, gambling, alcohol or drug addiction, spending addictions, pay disparity, childhood experience of money and many other factors that shape one’s spending habits. But that doesn’t mean you have to risk everything for love. In a News Corp story by Karina Barrymore from 2014,…

1. Stay cool Ignore the sun at your peril, warns Fred Schultz, from Fred’s Tiny Houses. “You’ll need to factor in direct sunlight, shade and think about radiant barriers [reflective insulation], otherwise you’ll be cooked up like a sausage.” 2. Declutter your life Do you really need that ice-cream maker? Downsize one appliance at a time, keeping your absolute essentials and designing your new space around them. “A tiny house can become cluttered fast,” says Lara Nobel, from The Tiny House Company. “You’ll be clearing away, and cleaning up, frequently.” 3. Be space smart Living small is all about collapsible and multifunctional furniture such as a pull-down wall bed, a folding breakfast bar (instead of a dining table), floor-to-ceiling bookcases and retractable storage. 4. Plan ahead Crack out the tape…

SHOULD I HOLD MY BREATH? That’s always dangerous in the current political climate. Labor says it will oppose the proposed changes, preferring cuts to negative gearing. But let’s look at what’s on the table. FIRST-HOME OWNERS No, you’re not going to be able to draw down on your super to fund that home deposit. But the government will allow you to contribute up to $15,000 a year – with a total limit of $30,000 – to fund your first purchase. You can ask your employer to salary sacrifice the extra money so that it comes out of your salary before tax, or contribute yourself and claim a tax deduction. So instead of being taxed on that salary at your marginal tax rate, it will be taxed at the 15% that…

Be sure to ask these questions before handing over any money to invest in shipping containers: 1 Is the business registered with the investment watchdog ASIC? If it’s not, you may not be protected by Australian law. 2 How long has the company been around? 3 Have you spoken to a financial adviser or another independent expert about the proposal? 4 Is the investment provider able to give you contact details of real clients who have made money using this method? 5 Can you afford to lose money invested in this scheme? Source: Western Australia Department of Commerce…

There is a group of exchange traded funds (ETFs) that are designed to deliver extra income above what is available from the Australian sharemarket. They are known as smart beta exchange traded products (ETPs). Just as active value fund managers seek out companies and strategies or “factors” that will deliver a higher return, so too do smart beta ETPs. Their number is growing and there are currently about 25. Of these, 13 are screened or weighted to dividends. There are lots of advantages to buying smart beta ETFs. First off, instead of paying active management fees, you pay less for funds that are listed on the ASX. Technology allows ETFs to deliver what active managers do for a fraction of the cost – a big advantage for investors. It is…

In less than 30 days the biggest changes to super in a decade take effect. That’s not a lot of time but there are some last-minute checks you can do to make sure you clear the deadline unscathed. Even if the new rules don’t affect you, reviewing your eligibility for valuable super benefits and concessions before June 30 can help turbocharge your super. Last opportunity The limits to put money into super are shrinking, making this month the last opportunity to contribute after-tax savings of up to $180,000 or, if you are under 65 and can use the bring-forward rule, up to $540,000. From July 1 the limit drops to $100,000pa (or up to $300,000 using the bring-forward rule) and you won’t be able to make any non-concessional contributions if…

Now is a good time to talk about tax-loss selling in stocks – something that we really should all think about in May rather than June. But better late than never. It works like this. Assuming you pay capital gains tax (though many of you don't), on June 30 the tax man will freeze your portfolio, add up all the capital gains you've made this year, and all the capital losses, offset the losses against the gains and come after you for CGT on any net profit. If your accountant hasn't mentioned it, then this is a reminder that you can minimise ("defer" really) your CGT liability this year by realising some losses as well as gains before the year end, rather than just holding on. Basically, if you have…

“I do feel that we should, like all other first world economies, provide more incentives for the genuine homeowner and less for investors” In the last issue I thought it was worth writing about the so-called “housing price bubble” in the big cities in the eastern states, and also the vexed issue of housing affordability. You are correct if you are thinking that they are pretty much the same issue. But apart from bumping up interest rates, population growth slowing or declining or our economy going into recession, property prices in Sydney, Melbourne and Brisbane, while likely to slow after a long boom, are not likely to fall. My position on property is built around very basic common sense. We have a rapidly growing population in Australia and globally. As…

Digital investing platform Acorns has launched a new “My Finances” feature to help users keep track of their spending. As you spend, the app can now analyse your behaviour and identify where you can make potential savings. For example, the new feature can alert you when you’re coming close to spending more on your lunch than you did the previous week. Changes to the Qantas Cash program will mean that frequent flyers can now earn more points when spending money overseas. When foreign currency is loaded onto the Qantas Cash card, the member is now entitled to 1.5 points per $1 spent. Qantas also says users can now enjoy more competitive exchange rates when they pre-load currency on their cards. BetaShares has launched a new small-cap fund. The Australian Small…

PURPOSIT COST: FREE OS:IOS If you’ve got children, you’ll know that birthdays and Christmas can mean an excess of toys and gadgets – most of which they don’t really need and possibly don’t even want. Sometimes one well-thought-out gift is a better way to go but big gestures often come with a big cost. This is where Purposit can help. The new app helps you to bring family together to pitch in for a gift your child will really appreciate. It might be a dog, a small motorbike or their first (hopefully fairly cheap) car. The app enables you to crowd-fund meaningful purchases exclusively with family and close friends. Contributors can deposit funds into your bank account via the app, and see how you’re progressing towards your goal in real…

Participants of the share economy may soon be able to look forward to better pay and working conditions. A landmark agreement was struck on May 1 between Unions NSW and the jobs marketplace app AirTasker to better align employment conditions with industry standards. Mark Morey, secretary of Unions NSW, says the organisation is working with AirTasker to promote higher rates of pay, and will soon offer contractors an insurance product similar to workers’ compensation for workplace injuries and illness. Contractors are also being promised an independent dispute resolution process, which will be overseen by the Fair Work Commission. “It doesn’t matter if work is arranged through an app or website. Fairness is what counts and it’s what we will fight for,” says Morey.…

The real estate industry has not been immune to technological disruption over the past few years. Purplebricks, Hello and buyMyplace have aimed to cut the middle man, saving sellers and buyers the large costs of real estate commissions. Now the battleground is renting and leasing, with a flood of new apps and platforms on their way to allow tenants and landlords to negotiate terms without an agent. There are three to look out for: LiveOffer, backed by US-headquartered and ASX-listed Property Connect; Rentwolf, a local start-up; and Rentberry, a US start-up coming soon to Australia. The apps aim to facilitate a rent-bidding process, allowing renters to compete against each other for a property. Some also allow you to bargain with the landlord. Tenants’ unions in NSW and Victoria are pushing…

We have a negative stance on the Aussie banks with no buys, three sells and four neutral ratings. We see significant risk from the bank levy announced in the federal budget (0.06% of liabilities, raising $1.55 billion a year or 5% of net profit after tax). While we expect banks to pass much of this onto customers, a Pandora’s box has been opened. Bank repricing could easily earn the wrath of the government, which may react by increasing the bank levy rate (the UK bank levy was hiked nine times). Future governments could also raise the bank levy as an easy source of revenue to fund spending, tax cuts or the deficit, especially as none of the political parties opposes this policy. If the banks reprice their mortgage books this…

ROY AGRANAT Roy has 35 years’ experience assisting people with their insurance needs and is a director of Fairbridge Financial Services, which specialises in insurance and corporate superannuation. Glenn aims to build assets to fund future income needs for when he enters his retirement years. His plan includes taking on debt against the investments being made. His ability to generate income from employment will ultimately determine the success of the investment strategy. As the income “engine room” he understands the consequences for his investment strategy and lifestyle if he could not work, temporarily or permanently. Because he is single, life cover does not hold the same priority as disability protection. For income protection In addition to being insured for the monthly benefit amount, there are a few additional product features…

What is it? Friday, June 30, is Red Nose Day, which supports families affected by sudden infant death syndrome (SIDS) and stillbirth. Charity organisation Red Nose aims to raise $100,000 this year to fund SIDS research. Individuals can take on a physical challenge (such as wearing a red nose for a day), host a fundraising event or volunteer to sell merchandise. Families with children should also look out for Red Nose discos at schools and childcare centres. Where your money goes: More than 3200 families are affected by SIDS each year. Through education and research, Red Nose hopes to eventually reduce the number of SIDS deaths from nine a day to zero. Since Red Nose Day last year, $238,000 has been raised to fund research. As well, 1.3 million educational…

Westpac has maintained the top margin lender spot for the second consecutive year by continuing to offer the lowest fixed interest rate of 4.7%pa and variable rate of 5.2%pa. Margin lending rates can vary significantly between margin lenders, explains Canstar’s research analyst Julie Nguyen. Westpac’s fixed interest rate on a $50,000 loan is 1.5%pa lower than the market average and 2.5%pa below the most expensive. Westpac’s variable rate is 1.5%pa cheaper than the market average and 1.98%pa below the most expensive. Canstar judges the gearing products for both shares and managed funds equally for investors who want to borrow to maximise their returns. Westpac offers margin lending on a broad list of securities that includes 162 ASX 200 shares, 79 other shares, 260 managed funds and 216 exchange traded funds…

Testamentary trusts aren’t for everyone. But they can solve a dilemma for some parents who want to leave their assets to their children and grandchildren with tax advantages or to protect their assets so they don’t fall into the wrong hands. A discretionary testamentary trust is incorporated in a will by a lawyer and it doesn’t start until the person with the will dies. It is up to the will maker to decide which assets are held in the trust and who will receive them. Most importantly, the testamentary trust – not the beneficiaries – legally owns the assets. Why bother to set one up? Rather than distributing assets to your beneficiaries via a will, a trust is worth considering if you are worried your kids could divorce, face bankruptcy…

People often think about changing their financial situation because they want a better life for themselves. But how do you move from that state of “wanting” to that state of “having”? There is a lot you can do but the first step is to be clear about what you want. Establish your goals Getting clear about your aspirations requires giving yourself permission to just “be” and to reflect on what inspires and motivates you. Tapping into your genuine desire for something vastly improves your chances of success. Forget about what you think you “should” achieve, or what Mike and Mary from down the road are doing. Someone else’s goals simply won’t work for you. Ideally, when you picture yourself in that state of having achieved your goal, it should feel…

Property investors need to hold overseas real estate if they want to be diversified and reduce the risk that comes with only having domestic property in their portfolio. This argument has become more compelling, with many analysts predicting that Sydney and Melbourne residential prices will fall over the next few years, perhaps quite substantially. Investors who have a residential property or two plus blue-chip shares, including the big banks, may have more eggs in one basket than they think, says Chris Bedingfield, principal and portfolio manager at Quay Global Investors, “especially so since mortgages are the bread and butter of the big banks’ business, accounting for about 60%”. Last month we looked at local alternatives to direct residential investments but offshore property is a much bigger universe. And for many…

One of the expenses that comes with being a property investor is land tax. This is a state-based tax that is levied on the land value component of property held by investors. All states and territories, except the Northern Territory, charge land tax at different rates and using different thresholds. In NSW, for example, land tax in 2017 kicks in when the value is more than $549,000 and is charged at a rate of $100 plus 1.6% up to the premium threshold of $3,357,000, where the rate is $45,028 for the first $3,357,000 then 2% over that. So for a land value of $1 million your land tax bill would be $7316. If you get a huge land tax bill you may be able to lodge an objection if you…

Q Can I transfer investments I already own into my self-managed super fund and if so how? SMSF members have the valuable flexibility of being able to accept in-specie transfers. While residential property cannot be transferred into an SMSF, listed shares and certain business premises you already own personally can be (subject to contribution limits and capital gains). You may choose to house all your investments in an SMSF to improve admin efficiency or potentially access the favourable tax environment. With a maximum 15% tax rate, 10% on capital gains if held for at least 12 months and no tax on amounts up to $1.6 million in retirement phase, this will allow a part or full refund of franking credits – a very attractive prospect for share investors. If the…

“There are quite a few situations where you don’t really get good records from your broker” Are you a self-directed investor who muddles through at tax time using a combination of broker records, spreadsheets and crossed fingers? I must confess I am. I hope, rather than know, that what I’m delivering my accountant will minimise my tax bill. And because I don’t have an accurate picture of my portfolio I sometimes make buy, hold and sell decisions based more on gut feeling than cold, hard facts. Fellow self-directed investor Tony Ryburn became so frustrated that he, with his son and two software experts, developed a portfolio management program, Sharesight. “Record-keeping was a nightmare and working out the true performance of my portfolio so that I knew whether it was worth…

“The gains might not be stellar but they will be reliable” A subtle message was sent to all investors in the federal budget. The hint is that economic growth is going to pick up, that profits and wages should improve and, if these projections are correct, that investment markets should remain robust for the coming three years. In other words, it was a buy signal from the government. The first hurdle to clear to take heed of this message is basic: do you believe the information or not? Many won’t. The key information is this: economic growth is forecast at 2.75% this financial year followed by three successive years with 3% growth. The long-term trend of economic growth is 3.2%. So you can see this is not stellar but it's…

Home ownership’s unexpected expenses Here is some food for thought for all those young people bellyaching about not being able to buy a house and how hard it is to save a deposit. Never mind the deposit; it’s all the unexpected expenses that can come with a house or unit once it is yours. I bought my house nearly four years ago. Things are tight as I pay more than I need to offset my mortgage to brace for the interest rate rise that is coming. But now the 20-year-old timber retaining wall that runs along the border of my property needs to be replaced. This will cost $20,000 to $30,000 and my neighbour is not keen to contribute towards the project. So now the stress begins. Do I just…

The federal government’s sweeping changes to the 457 visa scheme have created confusion and concern among employers and workers across many industries, including IT, mining, oil and gas, retail and hospitality. The 457 program has worked effectively as a demand-driven, temporary-skilled visa program, with the number of visas granted rising and falling with changing circumstances in the labour market. For example, according to the government’s own statistics, cooks, IT programmers and restaurant managers were the top three occupations granted 457 visas in the second half of 2016. The changes affect the hospitality and IT sectors, and others, by tightening criteria, removing the right of some skilled workers to apply for a 457 visa or by reducing the visa term from four years to two. Under the changes, workers such as…

It’s becoming more difficult to refinance. If you have multiple loans, chances are you have found it increasingly difficult to refinance over the past few months. Banks are now reassessing you at up to 7-9% instead of the 4.5% that you may currently be paying. In many respects property investors have life easy, in general – once a property is bought, it is simply a matter of sitting back and reaping the rewards for little effort. While we do pay land tax, we do not pay high income taxes – as we are geared – or capital gains taxes, if we never sell. Your ability to obtain money from the banks and keep repeating is what property investing is really about – refinancing provides you with ongoing equity to reinvest…

For many people saving for retirement, possibly the most significant change in superannuation rules is a cut in the amount that can be contributed from pre-tax income. These are called concessional contributions. From July 1, you can concessionally contribute up to $25,000 into your super fund each financial year. This includes your employer’s 9.5% SG contribution, any salary sacrificed amounts and tax-deductible personal contributions (typically paid by the self-employed). Until June 30, the concessional cap is substantially higher at $30,000 (under 49) or $35,000 (49 or over). If you can make additional concessional contributions, it’s a good idea to get the ball rolling as soon as possible to take advantage of the current higher cap. For many people who already salary sacrifice the maximum amount, now is very much the…

When using your credit card, there are a few neat perks you should know about. If you’ve got a rewards card, it’s a great time to check what extras it offers, as the Reserve Bank’s crackdown on interchange fees may lead to providers slashing the value of their rewards. Complimentary insurance You’ll find that many gold or platinum cards come with purchase-protection insurance, which covers your items against theft and damages for a limited time. Others offer price-protection insurance, which entitles you to a refund if you find an item you’ve purchased on your card at a lower price. You might also be able to take advantage of complimentary travel insurance, but first check the extent of the coverage and terms and conditions. Cash in your points Some schemes apply…

An important term for investors to be aware of is “style drift”, where fund managers move away from their stated investment style or broad investment parameters to find better short-term returns for their investors. Investors must be clear about their investment strategy, their mix of managers and what they are looking for from their managers. There will be times when the best money managers in the world – as judged by various market metrics – underperform and the temptation will be strong for them to take advantage of short-term market sentiment. For example, a growth-style manager, seeing their growth assets under pressure as future growth is heavily discounted by investors, considers buying value stocks to improve their performance. While this style drift may create a short-term benefit, it usually doesn’t…

As labour becomes more automated, Clime is keeping Qube (ASX: QUB), SpeedCast (SDA) and Domino’s Pizza (DMP) in its sights. All very different companies, says Clime, but automation is a big part of their plans and stands to be a source of incremental efficiency gains for years to come. Over the next 10 years, Qube will develop a multi-billion-dollar intermodal terminal in Sydney with a fully automated terminal and precinct. SpeedCast’s domination of oceanic connectivity extends into the energy sector, where it services many of the world’s largest offshore oil rigs while Domino’s, says Clime, has proven a master of automation and technological utilisation.…

JILL WEEKS Jill is a retirement speaker and author of 21 Ways to Retire and co-author of Where to Retire in Australia and Retire Bizzi. Although there are many ways to get to know the local community, Glenn would be wise to seek professional help (financial and legal) in becoming involved in an investment group. ASIC’s MoneySmart website may also prove helpful. Networks and organisations that may be of interest include Business Ballarat and Commerce Ballarat, which run numerous events. BisNet breakfasts have been running for over 16 years; there’s an interesting speaker each month. Regarding a renovation group, why not visit the local hardware store? Many such stores run DIY events and you may meet other renovators. Sue Ellson, the founder of Newcomers Network, suggests that before you join…

I’m 34 and earn $100,000 a year. We currently have a one-year-old baby and my wife (30) is a full-time mum. We have combined super of $160,000 and currently owe $440,000 on our mortgage (two years into repayments) with the house being valued at around $700,000, leaving us $260,000 equity with minimal savings (and no other debt). My wife is looking to go back to work, where she would earn about $70,000pa. We are just wondering what our next best move would be at this stage. We are looking at the options: buying shares, or should we prioritise the mortgage, or place cash aside for the baby’s future expenses? Would a self-managed super fund be a sensible option? David Congratulations on the birth of your first child. Enjoy every moment.…

For 13 years now Money and Canstar have been bringing these awards to our readers, and if you’ve been with us for some time then you can vouch that the winners do chop and change. As Canstar’s research manager, Mitchell Watson, says, with all the changes in the home loan market it was very difficult to predict who was going to win. “bcu’s win of Investment Lender of the Year was surprising,” he says. “Not because it was bcu, as they are very worth recipients. It’s more that over the past year there has been a range of changes in the market, with lenders either jostling to attract business or limit the business coming through the door.” To win here it’s not just a matter of having one strong product.…

BANK OF THE YEAR The winner had the highest aggregate score of the institutions competing in seven 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 2017. Mutual banks were considered in this category. The weightings are: • Home lender 22.5% • Money minder 20% • Credit card issuer 17.5% • Customer satisfaction 10% • Investment lender 10% • Personal lender 7.5% • Business bank 7.5% • Mobile banking 5% WINNER: BANKWEST CREDIT UNION OF THE YEAR The winner had the highest aggregate score of the institutions competing in six of the individual categories. Customer satisfaction was not factored in because Roy Morgan’s data on customer satisfaction for credit unions is not extensive. The…

The NDIS looks like nothing we’ve seen before. Also some services currently provided by governments may move to the not-for-profit sector, a change that may cause some distress for people with disabilities. I have a brother with an intellectual disability and even the smallest change to his routine can be difficult for both him and my elderly parents. That said, he’s been a client of House with No Steps for 15 years, and I’m confident he’s in good hands. While you’re getting your head around how this new scheme works, it may at times feel as if you’re trying to nail down jelly, so to cut through some of the confusion, here’s a step-by-step breakdown of how to get onto the NDIS: Step 1: Access request. An access request is…

As you’ll discover when starting a small business and employing staff, it’s critical you arrange business cover such as workers’ compensation insurance. This is purchased by business owners to protect themselves and their workers, and it pays benefits in the event of a workplace or work-related accident, injury or illness, according to Fred Schebesta, co-founder of Finder.com.au. Workers’ compensation schemes are managed at a state level, and the cost of the policies and their benefits will vary by location. Unlike other types of insurance, workers’ compensation insurance is compulsory if you employ staff and the premiums will also differ depending on the size of the business, the number of employees and your industry. The latest statistics from Safe Work Australia show that in 2014-15 there were more than 107,000 serious…

YES PHILIP HORAN Founder, Hello Real Estate The fixed-fee model is rapidly growing in Australia with numerous real estate agents adopting it and vendors embracing the savings and positive advantages that fixed fees provide. The standard agent response to fee versus commission is that a percentage is an incentive for the agent to achieve the highest price. But is it? Can agents who are solely rewarded by commissions and instant results act in the best interest of vendors? No, they can’t. It is a flawed concept that nurtures and produces conflicts of interest and does not produce the best outcomes for vendors. The agent’s motives and rewards are in direct competition with those of the vendor. Selling as quickly as possible is what motivates percentage commission agents. The difference in…

“What has performed well in the past isn’t necessarily going to perform well in the future” Investing for income in this low-return climate is a big challenge but it's not impossible. If you are fairly risk averse, though, you have a dilemma. Cash rates are 1.5%, term deposits pay around 2.5% and long bond yields are 2.8%. With the Reserve Bank expecting inflation of around 2% over the next year, the return from your cash after tax isn’t keeping up with the cost of living. If you keep a large slab in term deposits paying 2.5%, the net return is 1.3% if you are on the top marginal tax rate. But this is below expected inflation. To avoid your money going backwards, you need to find income beyond traditional income…

• AUSTRALIAN SHAREMANAGER V6 (sharemanager.com.au) What it does: Provides stockmarket investors with the means to record their share purchases, sales, capital gains and dividends in an orderly way and generate reports for performance review or end-year tax purposes. Cost: Full version $280; upgrade $140 for 12 months. Pluses: Also available for Mac users; “what if?” sales and capital gains/loss liability projections. Drawbacks: No free trial. • EZYMANAGER 5 (ezychart.com) What it does: Complete portfolio management system with inbuilt capital gains tax calculations. Facilities for dividend imputation, bonus and rights issues, and financial reporting. Can be updated manually or electronically. Cost: $378; upgrade to include ASX Elite pack, which includes one-year end-of-day ASX data and 20 years of historical data for a total of $689. Pluses: 30-day free trial; education centre;…

“People in their 60s have a wealth of experience” Working beyond 65, either part time or as a casual, can be financially beneficial when it comes to boosting your super. But to make any contributions – concessional or non-concessional – you need to first satisfy certain rules. “If you want to contribute to super from the age of 65 to 74, you have to meet the work test. If you can’t meet the work test you cannot put money into super,” says Claire Mackay, an independent financial planner and owner of Quantum Financial, a multi-award-winning advisory firm. “You have to be in paid employment and you must work for at least 40 hours over a consecutive 30-day period in the financial year in which you want to make the contribution.…

“All the pieces of the economic growth ‘jigsaw puzzle’ will be put together” The end of the financial year is almost upon us. And no doubt businesses will be focused on attempting to lift foot traffic and revenue with end-of-financial-year sales. For most Australian households the focus will be on their finances and the impending tax returns. And let’s not forget there is a lot on the radar for investors to digest. From an international perspective, not only will the US Federal Reserve feature heavily, but US politics and potential US tax cuts will be dominant factors. The Federal Reserve kept the federal funds rate unchanged at 0.75%-1% in May. However, the accompanying statement from policymakers was rather bullish, highlighting that the slowdown in the March quarter economic growth as…

The telecommunications sector endured an annus horribilis in 2016, with slumping share prices reflecting the uncertainty of the viability of various business models ahead of the completion of the NBN roll-out. Downgrades, writedowns and capital raisings are just some of the events shareholders have had to endure. So how should investors think about a complex and extremely dynamic sector and what are some of the considerations before deciding whether valuations have become attractive since the sell-off? Fifteen years ago life was simpler: a residence enjoyed dial-up internet access, with speeds 100 times slower than today, shopping catalogues clogged mailboxes, CDs and DVDs clogged shelves and drawers, and teens argued about who could use the phone next. Smartphones didn’t exist and the only wireless devices were the TV and roller door…

What was your first job? I was 14 years old and it was picking strawberries at the local farm. I was paid per weight. Even then I used to use it as a competition to see if I could pick the fastest and the heaviest. What’s the best money advice you’ve ever received? Look after the pennies and the dollars look after themselves. This helped me understand that you have to watch every dollar, not just the big ones, as the little spending adds up. I always self-managed the budget and still do to this day. Watch all your expenses and work hard at keeping them at a minimum. Make sure that you are always negotiating for the best price. What’s the best investment decision you’ve ever made? I am…