Innholdsfortegnelse for June 2018 i Money Magazine

Along with many readers, I’ve been horrified by the revelations of the banking royal commission. I’ve touched on the topic on our social media platforms but this is the first opportunity I’ve had to address it in our magazine. First, my thanks go to those Aussies who have stood up and told their stories. Without you there’d be no change. Understandably, I’ve received a few emails and Twitter remarks about Sam Henderson. Damning evidence emerged against Mr Henderson, the founder of Henderson Maxwell. Regular readers would be aware that Mr Henderson has been a contributor to Money for a number of years and more recently to the website. During this time he provided high-quality information that fitted the Money ethos. While the information featured in the magazine is general in…

EFFIE ZAHOS Effie is Money’s editor and author of The Great $20 Adventure. Effie says: “I never understood why the Pension Loans Scheme wasn’t available to somebody on the full pension. Nice to see some flexibility and common sense. But let’s not forget that this is a type of reverse mortgage so the next generation may not be too thrilled.” MARK STORY Mark is director of Prime Strategy Media. Mark says: “Rather than paying lip service to the superannuation imbalance between men and women, the government could have used the budget to ensure that the growing cohort of ‘gig economy’ workers – predominantly women – are not shut out of the compulsory super regime.” VITA PALESTRANT Former editor of the Money section of The Sydney Morning Herald and The Age,…

Banks, life insurers, financial planning businesses and super funds have been transfixed by the revelations that came out of the Hayne royal commission. But while all the talk is about what it means for these businesses, the better question is what it means for consumers. If consumers aren’t following the news reports, the answer is nothing. But if they have been they will now know that no matter what anyone in financial services promises, in reality they are on their own. Sure, regulators, financial institutions and their representatives try to protect consumers. If representatives are people of integrity this is easy. But it’s a whole other ball game if they are not. Consumers must accept that to protect themselves against rogues they must take matters into their own hands. They…

The goal of this book is to help you understand how you can build a property portfolio that can give you a regular income, whether you would like to leave a nest egg for your children or simply want to work less. It shows you how you can calculate the net wealth required to supplement or fully replace your current income. There are tips on getting your strategy right, finding the right types of investments for your circumstances and a guide to property market cycles so you get to know what to invest in and when. Five readers can win a copy. In 25 words or less, tell us your formula for financial freedom. Send entries to Book of the Month, Money, GPO Box 4088 Sydney, NSW 2001 or enter…

Unlimited data. These are the words that data-hungry users have dreamed of since they first held a smartphone. And now it’s a reality, with Vodafone and Telstra being the first to introduce unlimited data plans for mobile phones. So how do they work, are they expensive and are they worth it? There are currently four plans available: three from Vodafone and one from Telstra. They’re all 12-month contracts that give you unlimited data but the catch is none of them gives you unlimited speed all the time. With all four plans users get full speed data up to a capped limit, and any data used after that is reduced to 1.5Mbps. For the security of data that never runs out, you’ll pay at least $60 a month. Is it worth…

It turns out the property market might not perform as well as was expected this year. SQM Research has downgraded its initial forecasts on five capital cities. When it released its annual Housing Boom and Bust report in October 2017 SQM predicted that Melbourne prices would increase by 7% to 12% over the year. Now it thinks -3% to 1% is more likely. The table shows what SQM Research predicts will happen in other cities. The decision to revise down the forecasts was made following recent market evidence that prices have been falling in Sydney and, to a lesser extent, Melbourne, and leading indicators such as auction clearance rates, total aggregated listings and asking prices suggest there will be a further deterioration in conditions, says SQM.…

Exchange traded funds will benefit from the revelations at the royal commission into financial services, predicts Arian Neiron, Van Eck’s managing director and head of Asia Pacific. “We expect a regulatory overhaul following Commissioner Hayne’s findings, if not before then. Community expectations have changed. The industry is predicated on trust and a fiduciary obligation. We anticipate a high degree of financial product scepticism and our view is that ETFs, being low cost and transparent will enable advisers to earn their clients’ trust,” he says.…

• Start saving. The key to becoming wealthy is to divert a part – even a small part – of your income into investments. Someone who saves $100 a week and earns an average annual return of 5% will save almost $662,000 in 40 years. • Reduce any bad debt. If you have money owing on a credit card or personal loan, pay it off as quickly as possible. • If you’re investing for the short term, it’s best to keep your money in cash. Savings accounts aren’t paying very much at the moment, so a term deposit may be a better option. • Exchange traded funds (ETFs) or managed funds will be a better option if you’re saving for long-term goals. Many funds let you set up a regular…

• Stop spending on your credit card. • Make extra repayments above the minimum set by the financial institution. Make debt repayment a priority in your budget. Treat it like a bill that has to be paid each month. • Create a debt list so you know where you stand. • Work on a budget to get an idea of where your money goes. • Consider taking up a balance transfer offer. • Consolidate all your debt into one loan – either a personal loan or home loan. • Use your next pay rise to put towards your debt. What you don’t see you won’t miss. • If you want to keep a credit card make sure you have the right one for your needs. • Reduce your credit limit…

Q What information is included in my credit report? Your credit report will contain personal ID verification information such as name, date of birth, residential address and employer details. Credit-specific information includes credit inquiries, credit payment defaults and serious credit infringements like bankruptcies, court orders and judgements. As of July 1, 2018, the big four banks will be required by law to provide positive payment information under the government’s comprehensive credit reporting (CCR) mandate. New CCR data elements include accounts opened, account credit limits, account opening and closing dates, and payment histories. Consumers with NAB credit cards, personal loans or overdrafts have already enjoyed the benefits of CCR since February this year, when the bank began voluntarily providing positive credit information to major Australian credit reporting bodies (CRBs). STEVE BROWN…

When my father, Bruce, told my mother, Rosemary, that their marriage was over, she hadn’t seen it coming and was overwhelmed by shock and grief. My father had been planning the separation for many years and had another partner and a son. The last thing on her mind was settling the finances and the legalities. If only she had owned a copy of Surviving Your Split, by Lucy and Rebekah Mannering, back then. The book, by two sisters, both lawyers, who separated from their husbands within four months of each other, would have helped. A separation or divorce is psychologically the second most devastating event in life, ranking just behind death of a spouse or other loved one, they explain. Around 47,000 married Australians will split up this year, plus…

YES CHRIS BRYCKI Founder and CEO, Stockspot If you’re looking to buy your first home some time in the next 10 years, the First Home Super Saver (FHSS) scheme will help you get a few thousand dollars closer to that goal. Let’s be clear: I don’t think capital city property is a great investment at the moment. Based on prevailing yields and the market cycle, you’ll probably do better in Australian shares over the next 10 years and with lower risk. However, if your heart is set on home ownership as a long-term investment, every little extra helps and the FHSS will get you closer. The scheme lets you contribute $15,000 to super in any one year and $30,000 in total. A couple can contribute $60,000. Because contributions are out…

In the 2017-18 tax year, Emily is self-employed and earns $80,000. She is not an employee for the purposes of super guarantee law. Emily makes a personal contribution of $20,000 (after tax) to her super fund. She notified her fund in writing that she intended to claim this amount as a deduction, and received an acknowledgement of that notice. Emily meets all the other eligibility criteria and can claim a deduction for her personal super contributions of $20,000 in her 2017-18 tax return.…

Going through a divorce or separation can take a heavy toll, emotionally and financially. Despite the turmoil, it’s a time when you need to have your wits about you and to be clear about what to expect. This is because divorce can have a lasting financial impact. Or as one divorcee once forlornly explained: “Together we were rich but separately we are poor.” Gone are the days when partners planning to exit their marriage could squirrel away assets into super beyond the reach of their spouse. These days super is treated like any other asset to be divided by the partners either by agreement or, if that fails, by court order. All assets and liabilities are thrown into the pool that is to be divvied up, including the family home,…

The end of the financial year is looming and even though there might not be a lot of time, there are a number of things you can do between now and June 30 that may put some money back in your pocket. Many of these relate to your investments and superannuation. An obvious tactic is to prepay next year’s interest on an investment loan so you can claim the tax deduction this year. Just make sure you get a good rate to pay in advance. This may apply to margin loans or an investment loan secured against a property. In fact, prepaying any expenses that will attract a tax deduction before June 30 is a good way to boost your refund. If you have made a capital gain this financial…

June is upon us. The tax man cometh! While the end of the financial year may not be a market-moving event, it can be a stock-moving event. Tax loss selling and fund manager portfolio “repositioning” suggest we need to be alert to “odd” share price movements in the month ahead. On the broader front, it’s encouraging to see reasonable economic growth and job creation, both in Australia and overseas. The recent federal budget, as well as Reserve Bank analysis, show that the economy is ticking along reasonably well. A positive macro environment underpins the earnings of well-managed companies but it can also hide the “dogs”. As ever, buyer beware, even as the economic tide rises. While the Australian sharemarket has gained ground since early April, investors remain skittish. And with…

“You need a reason to leap out of bed, a ‘why’ that gets you excited” What was your first job? I grew up in western Queensland on a grazing property. The policy was to have large families to supply cheap labour. Being a station hand and jackaroo provided me with some fantastic life lessons as well as a great work ethic. Every roadblock has a way around it. What’s the best money advice you’ve ever received? I am a Warren Buffett fan and most of my money advice is based on his approach. Don’t be greedy. Invest in/buy appreciating assets. Know the value of every dollar and think like a stingy small business owner no matter how big your enterprise becomes. What’s the best investment decision you’ve made? Buying my…

It comes as no surprise that I have had a lot of comments and questions such as “who do I trust?” when it comes to financial advice. I am sure the royal commission hearings have shocked you. What saddens me is that I am equally as shocked as you are. It is not just the stories of poor advice, or it seems no advice at all. What really hit me hard was the seemingly indifferent culture of our big institutions. Since I first appeared on the Money TV show in 1993, letters and then emails have been sent to me in large numbers about all sorts of awful investments and outright fraud. Things like investments that pretended to be safe but collapsed. Then we have always had the property seminar…

Roy Morgan periodically interviews Australians to discover the big issues for the person in the street. The consistent response has been a suite of pressing economic concerns for nearly a decade now following the GFC. Cost of living, unemployment, and poverty and inequality top the list while general economic problems and housing affordability are prominent but are lower than they were a year ago. Scott Morrison’s third federal budget has delivered a shot of confidence to the economy that we’ve not seen in a long time. Booming export prices mean the budget is likely to be in surplus much sooner than expected and the follow-on from this is tax cuts for middle income earners. Australians have gone without a decent tax cut for nearly a decade now so the news…

This new app is the latest way to earn cash back on online shopping purchases. You can earn up to 30% cash back at more than 500 stores including popular retailers ASOS, Chemist Warehouse, Dan Murphy’s, Rebel, Woolworths and even Menulog. You don’t have to use the app – you can still get cashback by using the website to make purchases. The app will offer app-only sales, though, giving you an extra cashback if you use the app for the transaction. If you “refer a friend” using the special link provided, you can both earn a $5 cashback bonus after your friend makes their first purchase. It will generally take about 48 hours for the cashback to be credited to your account and you’ll only be able to withdraw your…

Low-rate credit cards are the new black, according to RateCity’s money editor, Sally Tindall. Last year ANZ dropped its rates, Westpac and CBA have both put new low-rate cards on the table and now American Express has slashed the rate on its low-rate card from 11.99% to a market-leading 8.99%. “This move from Amex – one of the heavy hitters in the credit card space – breathes more fire on the competition,” says Tindall. “RateCity.com.au expects more lenders to follow suit in the next 12 months.” Take a look at the table for the lowest-rate credit cards on the RateCity.com.au database.…

NAME: Finn Irvine STATUS: A small business owner. QUESTIONS: How do I use marketing, social media and other techniques to widen my customer base and build my brand? What do I need to consider when acquiring new equipment and boats, including securing finance, insurance and tax considerations? ANSWERS: Use visual marketing on social media to build the business; insurance is strongly recommended; obtaining finance can be hard, so consider a syndicate. When Finn Irvine took over Manly Sailing, in Sydney, earlier this year he realised it was a unique opportunity. It is the only sailing school in a wide catchment area of the northern beaches. The potential client base includes schools, families and tourists. As well as offering chartering experiences such as sunset and champagne cruises on Sydney Harbour, Finn…

I am a travelling nomad and late bloomer when it comes to money and finances. I am a 45-year-old who has spent the past 10 years abroad exploring the world, finding odd jobs here and there. After returning home, I am ready to settle down but at a loss as to how to do it properly. I have no debt, $15,000 in a savings account, $110,000 in superannuation and the equivalent of $50,000 in an overseas bank account that I would like to bring home to use as a deposit for my first home. I feel that I cannot go for a loan right now as I have only been back in the workforce for less than a year earning $60,000. What is the best way to transfer my overseas…

Sometimes it feels as if life is a series of bills – there’s the phone, the gas, the electricity and so on. Then, of course, the weekly trip to the supermarket. And let’s not forget the cost of petrol and running a car – in some cases more than one. While all these expenses may be necessary, this doesn’t mean you can’t work towards making the bills smaller each month. First up, always make sure you have the right product. For example, shop around and compare the various offers from gas and electricity providers before signing up. The same goes for phone service providers – check out the deals on offer and choose the one that best suits your needs. Think about how you use the phone and what’s right…

• Automate your investments. Decide how much you’re going to invest each week or month and automatically put that aside. It’s essentially “paying yourself first” so that you make a conscious decision to invest rather than waiting to see what is left over and investing that. Let’s say you want to invest $100 a week: have that put into a dedicated account and when you have accumulated, say, $1000, invest it in your chosen investment such as an ETF or managed fund. Regularly topping up your investments will not only see your money grow faster but you’ll benefit from dollar cost averaging. • Use somebody else’s money. Borrowing to invest in shares and managed funds, also known as gearing, is a great way to build wealth. If your investment increases…

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 2018. 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: SUNCORP CUSTOMER-OWNED INSTITUTION OF THE YEAR This year we merged mutual banks, credit unions and building societies into a single category. 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…

First home buyers Sarah and Michael (not their real names) were unable to secure a home loan but had no problems getting an investment loan. Can you guess why? Apparently their age had something to do with it. While banks cannot specifically be “ageist” in a lending scenario, they do take into account the suitability of a loan to the individual, especially around their serviceability. “A client needs to be able to establish how they will meet mortgage repayments and/or articulate an exit strategy if they are nearer to a retirement,” says Michael Saliba, a Smartline mortgage broker. When Sarah and Michael applied for their first home loan she was 39 and he was 55. A 30-year mortgage would have seen Michael still paying off his first home loan in…

Make sure you have either the originals or copies of: • Birth certificates (for you and your children) • Marriage certificates • Change-of-name certificates • Passports (for you and your children) • Immigration certificates • Super statements • Debtor’s notices • Medicare cards • Driver’s licence •Tax returns • Chequebook (if you have one) • Payslips (although most are now electronically available) Source: Surviving Your Split by Lucy and Rebekah Mannering…

Given that one in four regional areas that so-called experts labelled hotspots resulted in negative capital growth last year, it’s important to know what signs to look for. Based on RiskWise Property Research’s data, the factors accounting for over 80% of the capital growth within a property market can be attributed to: • Population growth. • Growing and diversified local economy. • Low unemployment (under 4%). • Major infrastructure projects to create jobs and boost the local economy. • Rising rent yields, underpinning strong rental demand. • Median household income growth outpaces inflation. • The demographic has disposable income. • Property demand exceeds low supply.…

With interest rates at historic lows, investing for income has become a challenge for many people, especially those who have retired or are close to it. Sure, it’s safe to leave your money in the bank – where deposits of up to $250,000 with each approved institution are guaranteed by the government – but your returns are unlikely to even keep pace with inflation. “An obvious strategy for some investors has been to invest in term deposits,” says Chris Andrews, chief investment officer at La Trobe Financial. “These offer great security but very low returns. In many cases, investors are finding that the returns are inadequate to meet their needs and objectives.” The cold, hard fact is you need to take on more risk to earn better returns. But the…

The self-employed need strong willpower and discipline to make regular contributions to superannuation but the rewards include the tax benefits as well as a bigger savings pool to fund retirement. One way to make it easier is to have your contributions automatically deducted from your bank account. From July 1, 2017 the requirement that you derive less than 10% of your income from employment sources has been abolished and regardless of your employment arrangement you may be able to claim a tax deduction. Those aged 65 to 74 will still need to meet the work test in order to be eligible to make a contribution and claim a tax deduction. Here are key steps for the self-employed to follow to boost their retirement savings: • Select a super fund from…

Being prepared is half the battle in a separation. Check what happens to jointly held assets such as your mortgage, bank accounts and insurance policies. Do a stocktake of your financial position. You might be entitled to some of your partner’s super or they might be entitled to some of yours. Once your assets have been split, check your super’s death benefit nomination. Opt for a binding death benefit nomination. It instructs your fund where your money should go. The fund trustee must pay the beneficiaries you’ve nominated in the proportions you’ve set out. Make sure it is non-lapsing. Also revisit your will.…

Retailing in Australia is in the midst of unprecedented turbulence. Aside from relatively depressed consumer demand, such is the pace of change and the status of the brands being impacted that some are questioning the very viability of what were once cornerstone names in the retailing landscape. Consider, for example, the significance of chatter that Myer and David Jones – once arch rivals – may merge as their share of wallet and, more importantly, share of mind shrink. Perhaps even more importantly, the Australian Competition and Consumer Commission may now let a merger proceed, such is the weakened market power of each department store. Now Amazon plans to open a distribution centre in western Sydney, allowing it to offer same-day and next-day delivery to its biggest market, in a clear…

Young workers miss out on super guarantee I am annoyed with the rule regarding companies not having to pay the superannuation guarantee when their employees are receiving a salary/wage of less than $450 (before tax) in a calendar month or are under 18 and working less than 30 hours a week. I see this as manifestly unjust to both young people and part-time staff. I have a daughter who has been working for a well-known fast food chain for over 18 months – every week, early shifts, late shifts and weekends – and has not received a cent of super because of her age and their clever rostering system, which ensures that they don’t incur a superannuation liability. She was “onboarded” to the company and became a member of its…

‘You need to see a financial planner” is one of the mantras of the financial services industry. And, obediently, 2.3 million Australians did just that in 2016. Around 35% sought retirement advice, 25% obtained loan and investment guidance, 20% got self-managed super help while the rest received tax and estate planning advice (10% each). But going to see a financial planner has been to many people’s detriment, according to evidence uncovered by the royal commission’s investigation into financial planning. It heard how planners have been overcharging clients and forging signatures, as well as selecting expensive investments and insurance that was eroding people’s wealth. The regulator, ASIC, told the royal commission that 305,946 customers had paid for services that they didn’t receive. They were being repaid a total of $216 million…

Flybuys has teamed up with eBay to give members the opportunity to earn (and redeem) reward points on purchases made on the auction site. Customers can earn one point for every $2 spent on eligible purchases but points can only be earned and redeemed via the Australian eBay site, and not all products are eligible. A new website, heyagents.com.au, aims to help you find a real estate agent to sell your home. You enter details about your property and what you’re looking for and it gets sent to local agents. You’ll then receive proposals from a number of relevant agents, helping you narrow down your choices. Perennial Investment Management has launched its first active exchange traded fund, the eInvest Income Generator (Managed Fund) (ASX: EIGA). The fund aims to give…

Every year, about this time, the tax office announces its compliance hotspots for the year ahead. For those who are making claims in areas that the ATO has in its sights, this is a wake-up call, to ensure that you get it right this year and to go back and check that you got it right last year. At the top of the hit list this year are work-related claims, which have been increasing for some years. The ATO will look particularly closely at: • Claims for work-related clothing, dry cleaning and laundry expenses; • Deductions for using a home office; • Overtime meal claims; • Union fees and subscriptions; and • Mobile phone and internet costs. The ATO says that unusual claims will be automatically flagged before you even…

New land developments continue to grow in popularity. Here are four tips to follow before you agree to buy a block of land within an estate. 1 Get to know the developer Become familiar with the company building the estate to ensure it meets all the requirements needed to transform an area of land into a thriving neighbourhood. Find out how long the company has been operating and look at other developments the business has completed to determine the quality of its work. 2 Assess the master plan The master plan provides a glimpse into how a neighbourhood will eventually look and depicts the overall density of houses across the area. Make sure you pay particular attention to higher-density areas to ensure the traffic, parking and population have been adequately…

If you have a self-managed super fund you may soon be able to add a few more people to your fund. The government has said it will expand the limit on the maximum number of members in SMSFs from four to six. The SMSF Association has welcomed the change. CEO John Maroney says this will especially benefit family groups who want to include parents and their children (and potentially their children’s spouses) in a single SMSF. “Currently family groups may need to have multiple SMSFs to accommodate more than four members, so this proposal will allow a single SMSF for the group, bringing the benefits of reduced costs and greater scale,” he says.…

Adacel plays a dual role in the aeronautical industry: its simulation software is used to train air traffic controllers (generating about 58% of revenue in the 2017 financial year) and its air traffic management (ATM) software directs real-world flights (generating the other 42%). Both are hard to replicate and difficult to replace. Changing systems is as risky as it is costly (it took the US 12 years and many billions to replace its antiquated system), giving Adacel’s ATM business high barriers to exit and an attractive revenue stream. The moat around its air traffic control (ATC) simulation business may be even wider, with a 90% market share in the preliminary training centres and total dominance of the US Federal Aviation Administration’s training academy. But despite carving an attractive niche, Adacel…

Steve wants to play it safe but is looking for a ... Better place to park $430,000 Q I am 56 and my wife is 52. We have one 16-year-old dependant who is doing year 12, then venturing onto university. We own our house valued at $600,000, our combined super is nearly $700,000 and we hold a small share portfolio of $21,000. I have semi-retired and earn under the tax-free threshold of $18,200, and my wife works full time. Our combined income is $100,000. We have $430,000 in cash, attracting a modest 2.8%. This is invested under my name so that no tax is payable. While our savings are very secure we feel we could be earning a bit more without necessarily increasing risk too much. My question is: with…

It’s time to get back to basics. Sure, most of us know it is important to save as much as we can and work on clearing our debt. Sometimes, however, we can get caught up in the big picture and forget that it is the simple things that really help us get ahead. We’re likely to feel financially healthier to boot. A recent survey conducted by ANZ, based on a model of financial wellbeing developed by the international expert Elaine Kempson, showed that the average financial wellbeing score for adult Australians was 59 out of 100. We’re on par with New Zealand but behind Norway, where the average score is 77. Interestingly, Kempson, professor emeritus of personal finance and social policy research at the University of Bristol in the UK,…

If you’re short on possessions, think about selling a service to generate extra cash: • Tutoring – earn up to $50 an hour helping school students brush up on their skills. • Dog walking – earn a pawsome $20 per session, or pooch-sit and pocket about $50 per sleepover. List your name on sites like Mad Paws or PetCloud. • Lawn mowing – get the mower moving and earn $25-$45 per lawn depending on size. • Home cleaning – pack a mop and bucket and clean up on cash. Going rates range from around $100 for a small apartment to as much as $249 for a large home. • Cooking – turn your gourmet skills into gold. From decorating cupcakes to providing healthy home-cooked meals, sites like Airtasker list a…

In lending, the big four banks dominate, controlling more than 82% of all loans. It’s interesting to note, though, that they don’t dominate our annual consumer finance awards – in our seven lending categories only one major bank made the cut. Now I’m not suggesting that these awards are the be-all and end-all when it comes to picking your banking products. What I am suggesting, though, is that it can pay to review how your preferred institution compares and whether or not you can do better. This issue is your yearly “bank” check reminder. As Mitch Watson, of Canstar, says: “It is important to review your products on a regular basis as not only do our own needs change but how the market caters to those needs constantly changes as…

Full of pre-election goodies, the coalition government has used its generous baby boomer and pensioner package within the budget to hit back at what it regards as Labor policies designed to “attack retirees”. Based on the robust assumption that recent revenue boosts will continue, the centrepiece of treasurer Scott Morrison’s third budget are plans to hand out $140 billion in income tax over the next decade. To help you work out how you will be affected, here’s a round-up of the budget’s main features. THE WINNERS Medicare levy The 0.5% increase to the Medicare levy due to start in July 2019 will be scrapped, leaving taxpayers between $125 and $855 better off. Tax cuts Personal income taxes are now officially capped at 23.9% of GDP. Best guesses suggest the cap…

Michael McQueen is a five-time bestselling author, trends forecaster and keynote speaker. His latest book, How to Prepare Now for What’s Next (published by Wiley, RRP $26.95), examines the key disruptions that will shape the coming decade. For more information, visit michaelmcqueen.net. Money has 10 copies to give away. For your chance to win, tell us in 25 words or less what money trend you’d like to see in the future. Enter online at moneymag.com.au/win or send your entry to Money magazine, GPO Box 4088, Sydney, NSW 2001. Entries open May 28, 2018 and close on close July 4, 2018.…

Different banks have different policies for borrowers who are nearing the age of retirement. • 35: Lenders will consider your profession and likely retirement age and they may shorten your loan term. • 45: You may be required to show superannuation statements or demonstrate that you have an exit strategy in place to repay the loan when you retire. • 50: Most lenders will allow you to borrow but some may decline your application due to your age. • 55: Almost all lenders will require a written exit strategy, evidence of your superannuation and other assets that can be sold to repay the proposed debt. • 60: Most banks are likely to decline your application due to your age. However, if you’ve got a continuing source of income past retirement,…

NAME: Les Merrett BUSINESS: Nelson Bay Breeze holiday apartments. QUESTION: I need some ideas for managing the cash flow of my holiday apartment business during the holiday off-peak season from April to September. I’m the owner of Nelson Bay Breeze at Nelson Bay, in the Port Stephens district of NSW. Nelson Bay Breeze offers 36 two-bedroom apartments and four one-bedroom units. In our peak month of January, we have an average occupancy rate of 81% at an average of $300 a night. In June, occupancy drops to 36% and an average nightly tariff of $150. While we can adjust our staffing costs, our fixed costs such as insurance, telecommunications, utilities and general maintenance are no different whether it’s June or January. The off-peak months are also a great time to…

Your family home can play a big part in helping pay for the retirement of your dreams. It gives you options whether you are planning for life after work or are already living it. You can downsize to realise more funds, some of which you will be able to put into super as long as you sell after July 1, no matter what your age or work status. But this will not suit everyone. Indeed, some people may be better off upgrading their home. When Gloria (not her real name) saw her financial planner recently he suggested she use part of the funds he manages for her to buy a better home. Gloria was one of the 330,000 age pensioners who lost a part pension in the changes to asset…

One of the more intriguing measures in the federal budget was the extension of the Pension Loans Scheme to all pensioners. The scheme currently allows a part-pensioner or self-funded retiree to borrow money from the government against the value of their house or other real estate assets. The original idea of the scheme was to allow people who are asset rich but cash poor to be able to gain some cash flow. It is a government assistance package that competes (in some ways) with private operators that offer reverse mortgage schemes or equity release arrangements. I’ll be straight upfront here. I have never liked reverse mortgages, not since the 1990s when the Victorian government explored ways to create them with several friendly societies but withdrew because the risks were too…

IS THAT LIKELY? It is already getting trickier on a number of levels. For starters, the Australian Prudential and Regulation Authority’s crackdown on investor lending has already made it tougher for funds to borrow, says Elizabeth Wang, solicitor at Townsends Business & Corporate Lawyers. As fund borrowings are regarded as investor loans, banks have toughened their lending criteria. Wang says banks are now asking funds to have at least 40% of the property’s value as a deposit and have increased their interest rates on these loans. She says many lenders are also refusing to approve finance if a fund does not have at least $200,000 in assets already, and sufficient liquidity once the property has been purchased. The government is also proposing legislation to include the fund’s borrowings in a…

“Tell a European you think there’s a housing bubble and you’ll have a reasonable discussion. Tell an Australian and you’ll have World War III.” That was US fund manager Jeremy Grantham back in 2012. Australian house prices have moved up significantly since. Low interest rates have pushed down rental yields and pushed up average loan sizes. Population growth, underdevelopment (with restrictive rules), tax policies and increasing household debt have all played a part, as has unbroken economic growth for over 25 years. It’s been a great time for major banks but the future may not resemble the past. With home loans now accounting for over 60% of their loan books, a big bank’s prospects are now more than ever tied to the housing market. Many investors, fearing a property market…

I have been running education courses on how to pick stocks. It is, after all, where the rubber hits the road in this industry: helping people create money. There is a lot of fluff in the advice industry, a lot of lengthy commentary, a lot of grandstanding and a lot of time-wasting fortune telling being peddled by people trying to build their brands and be relevant. But it is wasted breath. As will become ever more apparent over time, the truth is that unless you, as a financial adviser, can tell a client what to buy and when, you are of little value. The rest is just “fugazi”, fairy dust, in the words of The Wolf of Wall Street. It doesn’t exist, it’s not on the elemental chart, it is…

‘Buy what you know.” It’s a common exhortation, made famous by high-performing US fund manager Peter Lynch. It’s a catchy slogan and formed part of the basis of his seminal book One Up On Wall Street. Anyone can, he posited, look around them and see how people are spending, working and relaxing, and potentially get an edge on the professionals, working in their out-of-touch ivory towers. They’re not out buying groceries, making the kids’ lunches, haggling for a lower interest rate or buying a new mobile phone. They’re not keeping up with the latest fashions or noticing when the local store changes its range or starts to attract more customers. So, should we buy what we know? Exhibit A is Australia’s favourite grocer, Woolworths. The company listed on the ASX…

Rank Super funds have been ranked by five-year returns. Returns are net of maximum fees. High balances may qualify for lower fees and thus better returns. Rankings for one-, three- and seven-year returns show the performance of the particular fund compared with peers. NP means membership of the fund is restricted. Pr means performance results are preliminary. Returns are as at March 31, 2018. SuperRatings rating  Platinum are best value for money funds; Gold are good value for money; Silver, reasonable value; Bronze are below average in performance and features; and Blue are bottom of the ladder.…