Investopoly

One of the Australian Labor Party’s (ALP) big election promises in the 2019 federal election was to abolish negative gearing. It would be logical to think that the ALP’s shock election loss in 2019 will serve as a warning for policy makers. That is, banning negative gearing is an unpopular policy. However, I would caution investors against assuming that negative gearing is here to stay. What is ne...

Active fund managers use their skill and experience to pick which stocks to invest in. An alternative to active investing is to invest in low-cost index funds. One criticism of index funds is that they blindly invest in a broad index which might not always make sense. Index funds participate in the highs and lows. This led me to consider how well actively managed funds did last year. Last year’s s...

Many lenders are taking a number of weeks (sometimes months) to approve loans at the moment. These delays have been caused mainly by significantly higher mortgage application volumes and the operational disruption from onshoring back-office services due to Covid lockdowns in the Philippines and India. As such, banks are prioritising applications for borrowers that have already purchased property a...

Treasurer Frydenberg handed down the federal budget last night and to be honest, there’s not a lot in it for individuals and investors. However, there are some real positives for small business, first home buyers and retirees. This blog provides a summary of the initiatives announced on 11 May 2021. First home buyers’ to be able to access more super for a deposit The First Home Super Saver (FHSS)...

After 1 July this year, your employer must increase your super contributions from 9.5% to 10% of your salary . This contribution rate will then increase by 0.5% p.a. for the subsequent 4 years until it reaches 12%. This could boost your retirement savings but only if you optimise two things. The government was tempted to delay this increase It has been reported that the government was contemplatin...

Tax isn’t necessarily a bad thing. If you’re paying tax, it means that you are making money (income or capital gains). But of course, there’s no need to pay any more than you legally have to. I discuss our common-sense approach to saving tax below. Minimising risk is often more important than saving tax It is not worth it to bend or break the law to save a few hundred dollars in tax. For example,...

It’s stating the obvious to say interest rates are very low at the moment. But what can be easily missed is how powerful low rates can be for investors. And arguably, the next few decades could provide the best opportunities in a lifetime for investors, if they are diligent and invest in high quality assets. When will interest rates rise? That is the million-dollar question. The short answer is th...

Growth investors have been well-rewarded over the past decade. For example, the S&P500 index (US market) has delivered an average return of 14.5% p.a. over the past 10 years solely off the back of growth stocks, mainly technology. However, this year to date, value has outperformed growth . If this continues, it could have significant implications for investors. Value versus growth A ‘value’ ap...

The internet and newspapers are awash with stories of properties selling for amounts wildly above reserve. Such news can create FOMO and fuel buyer demand. But buyer overexuberance is rarely sustained for long periods of time. My feeling is that price growth will level out this year and I set out the reasons why below. Properties can sell above reserve for many reasons Last month, a property locat...

The word ‘holistic’ is defined by Oxford Languages as “characterised by the belief that the parts of something are intimately interconnected and explicable only by reference to the whole.” This definition implies what a holistic accountant is positioned to offer you the most value. But not all accountants are able to adopt a holistic approach. This blog sets out the key considerations to help you...

Almost everyone is predicting that property prices will surge higher this year. In fact, the newspapers are already full of stories about properties selling well above reserves. Low stock levels are partly responsible for the currently exuberant property market. That exuberance might cool as more stock becomes available. But the RBA and the government do not want prices to rise too quick as it mig...

It is alleged that Sydney-based financial advisor, Melissa Caddick stole $25 million from her clients. She has recently gone “missing”, leaving a trail of disaster for her clients and family members. Many con artists are very cunning and go to great lengths to conceal their wrongdoings. But there are a few simple steps you can take which will virtually eliminate any chance of you being ripped off....

Do you realise that $10,000 invested in Bitcoin 5 years ago would be worth over $1.1 million today? Makes you think, right? With lockdowns occurring almost everywhere around the world, no one is travelling and AirBNB’s business has been decimated. Yet, its share price has risen by more than 40% over the past year, and it is currently worth nearly $160 billion. That is $10 billion more than Austral...

Choosing the right accountant can make a world of difference. A proactive accountant will share tax-saving and wealth-building ideas, be available to answer questions during the year and ensure you never end up in the ATO’s ‘bad-books’. Common complaints There are two common complaints about accountants. Firstly, that they don’t provide proactive advice, including wealth building ideas. They are s...

If the recent property price growth predictions become reality over the next couple of years, more homeowners may become ‘priced out’ of their desired location. What might be affordable today, could quickly become unaffordable, as prices can rise quickly. Sometimes it’s not possible to buy your dream home in one fell swoop. But do not despair. A steppingstone strategy could be the solution. Buying...

Exchange Traded Funds (or ETF’s) have become very popular, particularly over the past 5 years. In fact, the amounts invested in ETF’s has doubled over this time. Last year (2020), Australians invested over $20 billion in ETFs. It is true that there are some advantages to investing in ETF’s. However, of course, not all ETF’s make good investments and there are some common pitfalls you must be aware...

It is generally an accepted investment principal that diversification can reduce your risk and improve investment returns. The common vernacular is, spread your eggs amongst various baskets. I would agree with this principle, so long as it doesn't result in deterioration of investment asset quality. Sometimes property investors should not diversify. That's because the quality of your inv...

One good financial decision will have positive consequences. But five good decisions in a row will be life changing. It will create a lot more than five times the positive outcomes than one good decision will. That’s because good decisions are a compounding asset. Our lives are a sum total of the choices we have made - Wayne Dyer. When it comes to building wealth and fulfilling your lifestyles goa...

A common question people ask is, “can property values continue to rise at the same rate which they have over the past 3 to 4 decades?” The short answer is no, they cannot. Mathematically, this is unlikely to occur as incomes are not rising at the same pace. I came across the interesting graphic/visualisation (below) which sets out how property values have changed in real terms (excluding inflation...

Interest rates on savings accounts were over 5% p.a. in 2011… only 10 years ago. Today, you would be lucky to receive more than 0.5% p.a.! That means your savings won’t even keep pace with inflation, let alone provide you with any investment return. As such, many investors are wondering what to do with their cash savings, other than depositing the money with a bank. This blog discusses some altern...

The beginning of a new year is a great time to take stock and set personal and financial goals for the coming year. I wanted to share the process that I use personally. It has worked well for me and of course, I use the same approach when advising my clients too. It’s particularly useful to undertake this exercise after you have had a break, which most of us do over the Christmas/New Year period....

During 2020, most economists and commentators predicted that property values would plummet by 10%, 20% or even 30%! In May I wrote a blog outlining the reasons why I disagreed with these overly bearish forecasts. We now know that property prices didn’t fall by any more than 2% to 3% and have since recovered. In 2021, I predict the property market rhetoric will switch from “values will fall” to “va...

One of the advantages of investing in property is that you can make improvements to enhance its value and consequently your personal wealth. A disadvantage is that dwellings require ongoing maintenance, and this expense reduces an investment property’s cash flow. Minimising or avoiding maintenance costs is often a false economy. Maintenance cannot be avoided, only deferred. Problems either remain...

Without wanting to seem too philosophical, I believe that life offers us lessons, but we must be prepared to look for them. As we are approaching the end of 2020, I thought it would be a good idea to reflect on what Covid has taught us about our financial decisions. I have been very proud of how my clients have stayed-the-course this year. Only one client insisted on selling down some investments...

Interest expenses are often an investors largest tax deduction. You must realise that the onus of proof is on the taxpayer (you), not the ATO. That is, you must be able to prove to the ATO that your deductions are legitimate. If you are not able to do that unequivocally, you risk the tax deduction being denied in full (and you will have to pay interest and penalties). Therefore, it is wise to unde...