Innholdsfortegnelse for May 2019 i Money Magazine

It’s a humbling moment for me to write this note, my first as the new editor-in-chief of this publication. The Money team, superbly led by Pam Walkley as editor, Effie Zahos as her deputy and the iconic Paul Clitheroe as chief commentator, did something extraordinary when they started in 1999. They delivered the first practical and easy-to-understand magazine about money to everyday households. Money, in its 20th year, is moving to its new home with the Rainmaker Group, a financial services information company. While Rainmaker is little known outside the financial services industry, it has covered money-related issues for more than 28 years. It publishes Financial Standard, an industry newspaper where I cut my teeth as a finance journalist, covering superannuation, financial advice and wealth management. While Money is changing…

When it comes to money, an absolute necessity is a really good “crap meter” because, by goodness, there is so much absolute nonsense said and written about money and investment. The good news for me is that this provides an endless source of issues to write about, but the bad news is that many people seem to have some of the great money myths ingrained in their DNA. One of my favourites is the oft-quoted “good property doubles in value every seven years”. This seems to be in the real estate agent’s training manual. But it has also penetrated the minds of many investors. As with any good myth, there is always partial truth. Here the part truth is that at times property does double in seven years, but when…

Given steady demand for healthcare, the sector is more immune to an economic downturn than others. People have no choice but to spend on healthcare products, such as medicines, hearing aids and hospitals, even during an economic downturn. But some companies are safer investments than others, with more established ones generally less risky than small biotechs just establishing operations. Many larger companies boast strong export earnings that will insulate them from a domestic slowdown. Some enjoy lucrative contracts with governments worldwide to supply services or products. CSL is undoubtedly one of the top picks – over the past 10 years shares have risen an average 22% each year (as at March 28). ResMed is another high-flyer and its shares have increased an average of 20% a year in the past…

Impulse buying can blow a hole in even the best-planned budget, and online shopping is making it easier than ever to spend on things we don’t really need or want. But there is a way to combat the urge to splurge. If you use Google Chrome as your web browser, try adding the Icebox extension. It’s free from the Chrome web store. This ingenious app works on 400 popular retail websites including ASOS and eBay. Once installed, it curbs impulse buys by replacing the “buy” button on e-commerce sites with a prompt to “put it on ice”. Even if you click on the button, you’ll need to sit out the cooling period you’ve selected before you can add the item to your shopping cart. It’s a simple way to save…

The federal government’s Smartraveller website says about 1 million Australians are living and working overseas, and the number is growing. According to the Australian Bureau of Statistics, in the year ending June 30, 2018, 289,000 people left Australia to live overseas. It’s an increase of 12,200 on 2017. And if you’re soon to join the global community of working expats, creating a money checklist is a good step to ensure your financial and property affairs are in order. Alfred Moller, Omniwealth expat lending specialist, says there are many things to consider when planning to move overseas for work, including: • Find suitable schools for children. Doing some research before moving will minimise hassle and narrow your options on arrival. • The family home. Consider how it will be managed. Assess…

The financial advice industry is going through a painful change. The end of commissions and increased transparency mean that customers are increasingly having to pay upfront and in full for advice – and they’re increasingly trying to avoid doing so, by seeking more limited advice, or “robo advice”, or just figuring it out for themselves. It’s causing a headache for the owners of large financial planning networks. Their planners have been leaving in droves. For the major banks, their wealth divisions were always a sideshow to lucrative lending activities, so they’re getting out. Westpac is staying the course but will stop providing financial advice. Good riddance. It lost $53 million on financial planning in 2018. The planning business will be sold to Viridian Advisory and the bank’s customers will be…

HANK JONGEN Hank is a general manager at the Department of Human Services A one-off lump sum payment from an inheritance is exempt from the Centrelink income test, but it’s what Cheryl does with the inheritance that may affect her age pension. If she puts the money into a bank account, we will treat it as a financial asset and deem it to earn income, which will be assessed under the income test. The first $51,200 of Cheryl’s financial assets will be deemed at the rate of 1.75%, and the remaining amount over $51,200 will be deemed to earn 3.25%. These are the rates for a single person. If her total income exceeds the income test-free area of $172 a fortnight for a single person, her pension may be reduced.…

What is it? The charity is helping to end “avoidable blindness” in the developing world and among Aboriginal and Torres Strait Islander communities. Where your money goes: The foundation continues the work of celebrated ophthalmologist and humanitarian Fred Hollows, who died in 1993. Across the world, 36 million people are blind – and many don’t have to be. Conditions such as cataracts, trachoma and diabetic retinopathy can be treated or cured with access to affordable treatment. The foundation works in disadvantaged communities in Australia and globally, training local teams in eye care and helping to restore sight using cost-effective techniques. A donation of $25 can often restore the vision, and the ability to earn a living, of someone in the developing world. How to donate: Make a tax-deductible donation by…

Ahh, “Should I pay off my mortgage or invest?” If I had to declare my favourite money management question, this would be it. Why? Because it has the potential to be financially life changing. Life changing? Well, how does more than $2.4 million over 30 years sound? A figure like that should raise your curiosity levels. Now I’m not automatically suggesting that what you’re about to see illustrated is going to be the same for everyone, because it won’t be. I always recommend you seek professional advice to get your own numbers crunched before doing any investing because it’s a big financial decision and one that you need to fully plan for and understand to ensure it’s the right thing for you. Before I share with you exactly how this…

Whoever said some things cannot be measured has clearly never met an actuary. The Actuaries Institute has produced a report suggesting there is a way to avoid another royal commission into financial misconduct. The premise is simple. The board of any financial services business, particularly a bank, needs to measure what is seemingly unmeasurable: how public goodwill towards the business improves or deteriorates over time. Instinctively, we all know what unacceptable business behaviour looks like. But apart from anecdotal evidence, it’s been very hard to pin it down in numbers. The institute wants to change that with a new way of thinking: treat social capital as you would financial capital, and measure it accordingly. It suggests a living document called the Social Condition Report (SCR) that measures social relationships and…

Freelancer.com.au connects people or businesses that need a project completed with freelance contractors. The website is open to anyone regardless of skills – there is a category for handy-worker and local labour. However, the most popular categories tend to focus on IT and software, and creative skills such as content writing, design and photography. Where to start To begin pitching for work you’ll need to write a profile, noting skills and expertise, then upload a profile photo. The next step is to complete a verification centre checklist – basically a proof of identity exercise that prevents the website being used for fraud or money laundering. Price and costs It costs nothing to sign up to Freelancer, and once you’ve sorted the admin you can chat and negotiate with “employers” and…

Two practical tips to help you financially “swim between the flags”: 1. Focus your thinking. We have limited cognitive capacity, so short sprints of defined focus are needed to direct attention and remain aware. Over the course of a week pick a particular investment to research and challenge your current thinking. Find others with similar investments to talk with and ask questions such as, “What are the external forces impacting the investment?” and “Are any changes the result of others panicking or getting over-excited?” 2. Create exit strategies and visualise them. No one gets it right 100% of the time. Have a clear exit strategy for any decision and articulate the conditions that would trigger it. Then practise making this decision through visualisation. Imagining the situation and yourself making the…

The clock is ticking for wannabe negatively geared property investors and those wanting to add to their tax-advantaged real estate portfolio. The federal Labor opposition has nominated January 1, 2020 as the start date for its controversial plan to scrap negative gearing on existing properties, limiting it to new properties only, and halving capital gains tax (CGT) relief from 50% of the gain to 25%. Of course, it first has to win government at the election, but if the opinion polls (and bookies) are right, it’s a distinct possibility. And then it will also need to negotiate its changes through the upper house. Labor’s negative gearing policy will prevent investors from writing off the losses from their property investments against the tax they pay on their wages. The latest tax…

From July 1, a super account classified as having a low balance – that is, one with less than $6000 in it – will have fees capped at 3% to stop the savings from being eroded. Accounts that have not received a contribution for 16 months, have balances below $6000 and show no sign of any member activity, such as investment or insurance changes, will be transferred to the tax office. The ATO will auto-consolidate dormant accounts and reunite them with a member’s active account if it can identify one. This underlines the importance of always giving your super fund your tax file number. “There’s also some protection around insurance so students and young workers don’t end up with zombie insurance policies they don’t require,” says Andriessen. “Members under 25…

Previously only those who earned less than 10% of their total income as an employee were eligible to claim a deduction for personal super contributions. This meant full-time employees and people who were self-employed but also worked part-time for an employer were largely excluded. The 10% rule was dropped in July 1, 2017, giving people under 75 the ability to claim an income tax deduction for after-tax personal super contributions. Make sure the contribution hits your super fund before the end of the financial year. If the contribution is received after June 30 you will have to wait until the following financial year to claim it. Paperwork is also important. Once you have made your contribution either by BPay or cheque, fill in a notification form called “Notice of intent…

ALUMINA: What’s encouraging about the future sustainability of the miner’s (fully franked) dividends is the shape of its balance sheet, and strong return on equity (ROE) outlook of 32%. Further softening of the $A (below $US0.71), and stability in spot alumina prices, around 25% above long-term estimates bode well for future dividends. WHITEHAVEN COAL: Despite an encouraging set of interim numbers, including net profit up 19%, increased operating costs place downward pressure on the share price. The stock’s fortunes are wired to the coal price, but medium-term outlook is encouraging, with India and China expected to drive future demand. AIR NZ: Has been under selling pressure since late January following downgraded earnings, due to tougher trading conditions, but the 41% forecast change in value is encouraging. While the payout ratio…

With national aggregate residential building approvals plunging in recent months, it is an odds-on bet that building activity will soon do likewise. Building always comes after approvals, so if approvals have slumped, it follows that construction activity will too. Of course, there are serious second-order consequences for retailers of furniture, electronics and other household goods, not least because fewer new apartments being built and sold means fewer couches, tables and carpets. The construction industry employs 9.6% of Australia’s workforce and 37% of that number is employed directly in residential construction. That means 3.5% of the entire workforce may soon face less income or an increase in unemployment. UBS has reported that residential building approvals have fallen from about 280,000 dwellings to 170,000 most recently – a 40% decline in forthcoming…

The table on this page contains data and information to help you compare superannuation funds. It showcases MySuper investment options offered by some of Australia’s biggest super funds. MySuper options are default superannuation products that employees choose or are allocated by their employers. Most employees can choose another fund if they don’t like the one selected by their employer. The performance results displayed are the annualised investment returns each MySuper option has delivered after taking account of all taxes and fees. The table also lists each fund’s SelectingSuper Fund Quality Rating. Funds that achieve these quality standards are designated AAA. Research was prepared by Rainmaker Information, which publishes Money magazine. For more info, see www.selectingsuper.com.au.…

Letter of the month Outsourcing household jobs is the way to go Thank you for producing such a high-quality magazine on the important issue of money. I only wish I had been introduced to it when I was 18. I’m sure I would be much wealthier now if I had the benefit of the articles and advice that Money provides each month. I would like to comment on the article “Give chores the finger” (March 2019). As someone who is self-employed, I benefit by outsourcing the mowing of my lawn. Over the years my wife and I have paid for the cleaning of our house and for ironing from time to time. If you are a professional you can gain a financial benefit by putting that time into your business…

Among all the budget and election noise in April, federal parliament passed new laws that aim to improve superannuation member outcomes, including implementation of two recommendations from the banking royal commission. One of the most important was an amendment to the First Home Super Saver Scheme (FHSSS). The new legislation means individuals can enter a contract to buy or build their first home at an earlier time and still have access to the scheme rather than waiting for funds to be released from their super. They must have applied for and received a FHSSS determination and applied for their super release within 14 days of entering the contract. What will come as a relief to some first home buyers is that the new law is being retrospectively applied from July…

The VanEck Vectors FTSE International Property (Hedged) ETF has listed on the ASX with trading code REIT. VanEck managing director Arian Neiron says the ETF offers a diversified international listed property exposure at a low-cost while protecting against currency volatility. REIT is hedged to Australian dollars so returns from the fund, including income payments, are relatively unaffected by currency fluctuations. The Vanguard Global Multi-factor Active ETF (Managed Fund) is open for investment, trading with the code VGMF. Vanguard investment product strategy manager Rachel White says globally she has seen good adoption of this strategy, with the blending of factors (value, momentum and quality) helping to smooth returns, reduce downside risk and provide diversification benefits. Over the next year eInvest will partner with local and global investment managers to deliver ETF…

The findings of the recent banking royal commission have highlighted the potential traps that you can fall into when you have multiple superannuation accounts. It’s all too common for people changing jobs to automatically fall into the “default” super account offered by their employer, meaning that if you change jobs several times you can end up with multiple accounts. Fund underperformance and excessive charges levied across multiple accounts can rapidly eat into your retirement savings, leaving you thousands of dollars worse off than if you’d invested in one high-performing, low-cost fund. The good news is that you can now manage your super using the ATO’s online services through myGov. You can see details of all your accounts, including any you may have forgotten about, and amalgamate them. While it might…

The healthcare sector was the major beneficiary of Chinese investment in Australia during 2018, receiving more than $3.4 billion. It accounted for more than 41% of $8.2 billion invested here by the Chinese last year and signifies a trend away from large strategic investments in resources, energy and infrastructure. However, this total was down 36.3% year on year. A report by KPMG and the University of Sydney says that after a steady growth trajectory since 2015, healthcare represented 41.7% of total Chinese overseas direct investment (ODI) in 2018. It was followed by commercial real estate (36.7%), energy/gas and oil (8.8%) and mining (5.6%). Doug Ferguson, the report’s coauthor and KPMG head of Asia and international markets, says while this annual result brings Chinese ODI in Australia back to the second…

CHRIS SMITH Chris is a financial planner and partner of Visis Private Wealth Cheryl, after notifying the Department of Human Services of the inheritance within 14 days, a reassessment of your assets and income will be made to determine your new age pension entitlement. It will depend on your assets, including the inheritance, a deemed level of income on financial assets including cash, and any income generated from your work. You would be assessed under both an assets and income test, and whichever one results in the lesser Centrelink benefit would apply. As a single non-homeowner, if your assessable assets were less than $465,500 and your income less than $172 a fortnight you could anticipate no reduction in your benefits and a maximum age pension entitlement. Alternatively, if an inheritance…

With $75,000 cash savings to invest, John will find an ... Offset account is safe but shares should do better Q I own my Melbourne home, which is valued at $875,000 with a $563,000 debt. I also jointly own an investment property in Melbourne, with my share valued at $540,000 and an interest-only debt of $402,000. I am 37, single and earn $130,000pa with no personal debt. I am paying down my home loan by about $10,000 each year and am saving a net $19,000 each year. My super balance is $157,000 and I have $93,000 in cash. My question is: what would be the best thing to do with the cash savings in my current situation. I am considering spending $18,000 to buy CSL shares but I would like…

As it’s Margaret River, Windows is named after the nearby surf break. At this tiny Davies family winery, Chris does the glory work in the vineyard and winery and Jo slaves to maintain the cellar door’s status as one of the region’s finest. Delicately yet persistently perfumed with blackcurrant, black olive and bramble characters that flow through to the palate, this is structured yet velvety textured and balanced with fine, supple tannins to finish. Exemplary.…

I am 37 and earn $120,000pa before tax. My wife works part-time and earns $30,000-$40,000pa. We have two kids, a boy aged seven years and a girl aged three. Our house, in the inner suburbs of Brisbane, is valued at about $780,000. Including an offset of $116,000, we owe $200,000. Our loan is a mix of interest only and principal and interest. Extra money goes in the offset against the interest-only loan and we pay extra on the P&I. We have a $50,000 loan invested through the InvestSMART platform, with monthly $400 additions. This is currently worth $100,000. We have no other debts. We have renovated upstairs (deck/ kitchen with CBD views) and want to finish off the bottom by adding two bedrooms (so the kids no longer have to…

Paying down your mortgage as fast as you can – faster than minimum repayments – is a great investment plan that can save you thousands in interest costs over the term of your loan. However, if your mortgage is at a comfortable level – so that you could afford an interest rate increase or a period where, if you are a couple, one of you is between jobs – then it’s worth thinking about broadening your investment strategy. Saving for short-term goals is best done in your mortgage offset account, but if you are willing to invest for the long term (more than 10 years) then a share portfolio is a great option. Investing regularly – say monthly – into a portfolio is also a good way to mitigate risk.…

When Elizabeth’s hot water system blew up she didn’t have spare funds to fix it. The 66-year-old needed around $1200 to buy a new system and have it installed. Living alone, Elizabeth didn’t want to ask her adult children, who had their own families, for help or to load up her credit card, which already had a long-standing debt of $7000. So she had to live without hot water for six months. Before she went to hospital for a second knee operation, she visited her bank for advice. The loans manager suggested she take out a reverse mortgage. But it sounded like a lot of trouble for a hot water system. Then she heard a radio interview with a financial counsellor and booked to see Kristen Hartnett, with the Salvation…

• Freelancer.com.au is open to all-comers, though many of the projects call for IT skills (such as web design) or professional creative flair (for example, copywriting, photography or design). • Freelancers can bid for a project at the rate they choose. Or put your hat in the ring for a “contest”, by completing a piece of work specified by the client, and hoping you’re the winner to pocket a fee. No winner is guaranteed. • It’s free to join but Freelancer.com.au takes an 11% cut of a freelancer’s project fee. • You may be competing for work on a global scale and potentially be paid in a different currency. It can be an eye-opener to see what freelancers in other countries will charge for what can seem like time-consuming projects.…

A SURE THING The good news is that both Labor and the Coalition are prepared to splash cash to get your vote. Both are offering an immediate tax cut that can be claimed when you lodge your tax return this year, though there are bigger differences further down the track. THE OFFSET OFFER Both parties have promised to introduce a new low- and middle-income tax offset that can be claimed by anyone earning up to $126,000 in this year’s tax return. This is in addition to the existing low income tax offset, which is only available to a smaller group of taxpayers. After being outbid by Labor when it announced its original offset last year, the Coalition has promised to lift its offset from $200 to $255 for those earning…

RateSetter, one of the few Australian peer-to-peer (P2P) lenders enabling retail investors to participate in the lucrative consumer and business credit marketplace, is not letting a lack of competition stop it from introducing new initiatives. Investors in P2P loans enjoy superior returns – think 5% to 8% – compared with bank accounts, including term deposits. But this comes with increased risks, as investors in P2P loans do not enjoy the federal government guarantee over deposits up to $250,000 that covers banks, building societies and credit unions. RateSetter (ratesetter.com.au) has expanded into clean energy loans, changed the rules for early withdrawals and is improving its educational offering for investors. It also plans to launch an app by the end of the year. Investors can start with as little as $10, and…

If you want to boost your superannuation savings but don’t have any extra cash to kick in, there is one simple step that could deliver you more dollars when you retire. It comes down to how often your employer is paying you super. A staggering 70% of employees aren’t aware of how often employers make their super guarantee (SG) payments. Although payslips currently record super entitlements, they don’t tell you if payment has been made. It is a good idea to check with your super fund, which is easy to do online. The trick is that if you get your super quarterly instead of every pay period – usually every fortnight – you are losing valuable investment earnings that compound over time. Phil Gallagher, from Industry Super Australia (ISA), believes…

YES MICHELLE BRISBANE Financial adviser, Ethical Investment Services Why would you invest in a company you don’t believe in? As a financial adviser, I aim to not only improve my clients’ financial positions but to also get capital working for better environmental or social outcomes. We do this by having a conversation about what clients value and what they believe in and then incorporate this into their investment portfolios. Working with clients in the ethical investment area means that we also have a values conversation. The values concept is different for each of us, but that doesn’t preclude combining values with investment considerations. Proof that you can combine profit with principles has been demonstrated year on year as our portfolios deliver solid long-term results. How do you reconcile with your…

At face value, the higher the dividend a stock pays the better it is. After all, it means more money is paid to you as a dividend cheque or more shares are distributed to you by way of a dividend reinvestment scheme. But where investors often come unstuck is in assuming that a dividend of, say, 6% is indicative of a company’s future earnings (or yield), when it could be eroded by one-off events, surprise announcements, poor earnings or due to a falling share price (aka a yield trap). The recent spate of abnormally high dividends is due to a flurry of stocks, including Fortescue Metals, Rio Tinto, South32, Telstra, Wesfarmers, Caltex Australia and BHP, issuing special dividends or buybacks. Most of these special dividends can be attributed to federal…

Expectations for the Australian economy have shifted notably in recent months – and sadly not for the better. The good news, however, is that some of the worst fears for the global economy, which led to the equity market slump in late 2018, are starting to dissipate. But first, the Australian economy. The bottom line is that the housing downturn has deepened and broadened across states, so much so that it’s now posing a serious risk to consumer spending, which accounts for a considerable 60% of the economy. Having been sustained at very high levels for several years, home building approvals have finally started to slump, as the weight of house price weakness, a desertion of foreign buyers, tax-related fears and pockets of apartment oversupply all start to take their…

Few stocks, as a group, have made so much money for so many people as our banks have over the past three decades. Many a retiree portfolio (and not a few inheritances) have been swelled by the simple act of putting money into bank floats and reinvesting the dividends. In the past 25 years, the average share price gain for our big banks is 420%, meaning $10,000 has become $52,000. But add back reinvested dividends and your $10,000 investment is now worth more than $200,000. Talk about the power of both compounding and reinvesting your dividends. It’s no wonder that many investors have portfolios in which banks are 50%, 60% or more of the total. It’s a dangerous level of concentration, but it’s a nice problem to have when it’s…

Performance after fees: When calculating fees, Rainmaker assumes a member has $50,000 in their account. Strategy: Some MySuper products invest your superannuation based on age and are known as life cycle funds (marked LC). The table includes the LC option for 40-year-old members. Non life cycle funds are known as single strategy (S). Rank: Funds are ranked against all MySuper investment options available in Australia. Indices and averages: To produce these indices, Rainmaker analyses the results of more than 3300 investment options.…

The tables on these pages contain data and information to help you compare managed funds which are pooled funds managed professionally by investment experts. Managed funds displayed in these tables are multi-sector or asset class specific. Multi-sector managed funds invest across a diversified mix of asset types spanning equities, property, bonds, cash, infrastructure, private equity and alternatives. Managed funds are normally set up as unit trusts. You may be able to invest in them directly or through a platform. These products may be recommended to you by a financial adviser. The performance results displayed are the annualised investment returns each managed fund has delivered after taking into account taxes paid by the unit trust and investment fees. Research was prepared by Rainmaker Information and for more information see www.rainmaker.com.au Source:…

Performance after investment fees. Investment returns after investment fees annualised to describe each fund’s returns per annum. But if your managed fund achieves a high return and charges you an extra “performance fee”, Rainmaker has not taken this into account. Past performance is not an indicator of future performance. Rank. Funds are ranked against all managed funds in each segment, not just those included in each table. Indices and averages. Arithmetic average investment returns or average fees for all fund investment options within each category, that is, not fund size weighted.…

DARREN SNYDER Darren is managing editor of Money magazine. Darren says: “Saving during university. I started to save with a part-time job at uni but didn’t maintain my discipline. Ultimately, it was the difference in buying a home much earlier.” BEN KINGSLEY Ben is managing director of Empower Wealth. Ben says: “Way back when, I bought a property that was always destined to be an investment property. No one told me about the benefit of using an offset mortgage account instead of paying it down. Won’t make that mistake again.” JOANNA MCCREERY Joanna is a director of Majella Wealth Advisers. Joanna says: “With the benefit of hindsight, I’d have been less conservative with my finances in the early 2000s. I should have kept and rented out our Rozelle (Sydney) terrace…

Just as medical vaccinations rely on immunity of the herd to protect against diseases, superannuation relies on the participation of the herd to protect us all from poverty in retirement. Today, one in four people sits outside the super system. That may be because they are working in the gig-economy, are self-employed, are at home caring for children or parents, or other reasons. The percentage of the population covered by super is in decline and unless we act now to include these outliers many more people face a bleak retirement, living in poverty. The simple fact is that the more people in the superannuation system, the better off we will all be, for two reasons. First, increasing the level of private savings for more people in retirement means more will…

KOCHIE’S 11-STEP MONEY PLAN by David Koch (Macmillan Australia, $29.99) Co-host of the Seven Network’s Sunrise program and a respected business and finance commentator, David Koch shares his 11 steps on how to make money work for you. Whether it is paying less on a mortgage, putting $14,000 extra back into the family budget or getting your finances sorted in 15 minutes a month, Koch is in tune with how Australians think about money. The book prompts readers to activate their money plans through several information points, fun facts and self-guided calculators. It also draws on Koch’s personal experiences as a father of four children. Ten readers can win a copy. In 25 words or less, tell us how you will best clean up your money mess. Enter online at…

Mortgage brokers remain borrowers’ preferred channel for securing a mortgage despite royal commission backlash, research by Pepper shows. Pepper says that while mortgage brokers remain highly sought after, they must closely monitor issues concerning prospective borrowers and develop solutions. The non-bank lender surveyed 1126 borrowers in January, before the banking royal commission’s final report, and found the greatest concern was getting the right home loan for their circumstances. Two in five consumers (40%) said the property market weighs heavily on their minds, especially receiving a low valuation. Borrowers fretted that prices could prevent them climbing the property ladder. Thirty-seven per cent ranked ability to afford the type of property they want as a pressing concern. About a third of borrowers were worried about being declined by their bank. “With a…

Clovis Young The former Wall Street equities trader migrated to Australia with a yearn to make Mexican food. Age 45; lives in Sydney’s Rushcutters Bay. Favourite pastime is enduro dirt-bike riding because it burns a lot of nervous energy. He invests in shares, describing his philosophy as stockpiling cash to have the firepower for cheap opportunities when they arise, then buying and holding. Applies the same thinking to property, buying his first Sydney apartment last year when prices fell.…

STEVE MICKENBECKER Steve is the group executive, financial services, at research house Canstar Savings accounts are at the low-risk end of the spectrum. Provided you place your savings with an approved deposit-taking institution and keep your total deposits below $250,000, your funds are guaranteed by the federal government. Unfortunately, this security comes with a low interest rate, reflecting the current low-rate environment. There are three common savings accounts available, each having its own advantages and disadvantages: • Online savers allow access to your money at any time but generally have low base rates. The highest base rate on Canstar’s website is 2.2%. A better interest rate can be achieved by moving money around every four months or so to keep earning introductory bonuses. This can lift your rate to 3.05%,…

Everyone should try to make additional payments into their superannuation. This can seem challenging if you’re a family with bills and a mortgage to pay. However, the federal government now limits your extra payments (both non-concessional and concessional) into super so you cannot easily “catch up” once your home loan is paid off. Therefore, you are better off taking advantage of the concessional payments you can make every year and let your home loan run a little longer (though in many cases you can do both). There are two contributions you can make if you are an employee: salary sacrificing and (for lower income earners) a non-concessional payment that generates the federal government’s co-contribution. Let us take the example of John and Maria. John earns $37,000 and Maria earns $80,000…

While it is tempting to take on more debt, the best strategy is to avoid: • Taking on a payday loan; • Increasing the limit on your credit card; • Getting a rent-to-buy deal; • Going bankrupt, as it has serious consequences. Instead, talk to a professional financial counsellor who is trained to clearly explain your options. Financial counselling is free, confidential and independent. Call the National Debt Helpline, a not-for-profit service, on 1800 007 007 between 9.30am and 4.30pm, from Monday to Friday, or visit ndh.org.au. Consider a no- or low-interest loan. See nils.com.au to find out more. No-interest loans are typically for household appliances, medical emergencies, repairs, funerals, relocation, pet bills, computers, beds and much more. But they can’t be used for rent, general expenses or debt repayment.…

I recently took a family holiday to the Sunshine Coast to take advantage of the last few warm days of the year. My teenage boys and I found ourselves standing alone on an unpatrolled beach, excited and full of anticipation. As we always do before we dive in, we studied the water, pointed out where the forces coming in and out from the beach were (the rips), and talked through what we would do if we got caught in a rip or found ourselves in danger. In that moment I had a realisation that the mindset you need to keep safe at the beach was very similar to the mindset needed to confidently dive into the treacherous waters of financial markets. Diving into investments with the wrong mindset can have…

Having a car accident is never fun. With any luck, both parties have come out of it physically unscathed but chances are at least one person’s wallet will take a hit. Just who will have to pay for the repairs depends on who is at fault. In some cases – for example, if you were hit from behind or one of the drivers was drunk – it’s clear cut, but in some instances both drivers might be partly responsible. If the accident was not your fault, then the other party should pay. Ideally, you should have exchanged contact details at the time of the accident. If the other party has admitted liability and agreed to pay for the damages, then you should get two or three written quotes. The LawAccess…

This is an edited extract from Sold! by Nicole Jacobs (Hardie Grant Books, RRP $29.99) available nationally. Nicole is a property adviser, buyers advocate and expert on Channel Nine’s The Block. Money has five copies to give away. For your chance to win a copy, tell us in 25 words or less your top tip for styling a home for sale. Enter online at moneymag.com.au/winor send your entry to Money magazine, Level 7, 55 Clarence Street, Sydney NSW 2000. Entries open April 29, 2019 and close on June 5, 2019.…

It’s a little-known fact that you can withdraw your super balance if it is less than $200 and your employment has been terminated. This takes into account the fate of small account balances, which are decimated by fees. Susan Hill*, 19, found her industry fund unresponsive when she requested a refund on her super guarantee. She had worked at her first casual job over the Christmas period before starting a university degree. After checking her super account in February, she noticed her modest SG contribution of $53 was shrinking due to a $10 deduction for insurance, $1.30 per week for administration, plus an investment fee of 0.1%. Contributions tax of 15% had also been deducted. After her fund’s call centre said there was nothing it could do to help her,…

The end of the financial year is fast approaching and it’s worth checking to see how your super contributions are tracking. If, like most people, your employer’s super guarantee hasn’t hit the annual $25,000 cap you may want to top it up with a personal deductible contribution. Thanks to a rule change set in place a few years ago, fund members can make concessional contributions directly into their fund and claim a tax deduction when doing their tax returns. The rule change provides members with greater flexibility and an incentive to save. Apart from boosting savings, there are other tax benefits. Concessional contributions are taxed at just 15%. For many employees this is lower than the rate paid on their take-home pay, which can be as high as 45%. It…

The key fundamentals Money magazine looked at to arrive at 10 stocks (top 150 excluding banks) most likely to support future dividends at or above current levels include: Market cap: $1 billion-plus stocks typically have strong defensive characteristics. Forecast return on equity: Above 6% to ensure earnings cover dividend payments. Stock covered by: At least five analysts. Forecast and historical dividend: Above 4.5% ASX average. Analyst recommendations: No consensus calls to sell. Net/debt to equity: Less than 60% ensures balance sheets aren’t over-geared.…

When I retire, you would imagine that I – as a fund manager, stock-market newsletter writer, financial planning business owner, financial educator and long-time stockbroker – will relish managing my own retirement funds in perpetuity. But when I do retire, in, say, 10 years, assuming I have hit the number I currently estimate I need in retirement funds, the truth is that, like a retiring mechanic, the last thing I will probably want to do when I turn my mind to more leisurely pursuits is to fix my own car. I probably will, as do many people, but why do they take on the task of managing their own retirement funds, especially when they don’t have the history, as I do, of experience in that industry. Why would you manage…

Putting our criteria together, one name bubbles to the top. Accordingly, my pick of the ASX financial services sector is Macquarie Group (ASX: MQG). It’s not as simple a business as one of our domestic banks, to be sure, but it has both a reputation for making money and experience of innovating across both geographies and business lines as circumstances require. Its executives and employees have plenty of skin in the game, and it deserves its moniker “the millionaires’ factory”. It simply isn’t tied to a single market or asset class the way our other large banks are and offers impressive diversification. To be fair, it’s also higher risk than those banks, but the returns on offer make it a risk worth taking.…

What was your first job? I was 15 or 16 and I got a job at Target on the complaints desk. I wasn’t much good because I trusted everyone and my manager had to explain to me that people actually stole things and returned them to me and I was just giving them cash for having stolen something in the store. I remember for weeks being completely shocked that people did this. I also babysat around the neighbourhood most Saturday nights and developed a love of late-night TV and Tim Tams. What’s the best money advice you’ve received? When I began my business it was such simple and seemingly obvious advice and my accountant praises me that I’m really good at this one thing. Always have a dedicated account and…