Investopoly

This blog summarises the initiative contained in the 2022 Federal Budget announced on 29 March 2022. Budget initiatives that might affect you Extended the home loan guarantee scheme The First Home Loan Deposit Scheme (FHLDS) allows borrowers to borrow more than 80% of a property’s value whilst avoiding the cost of lenders mortgage insurance (LMI), because the government guarantees part of the loan...

It is very common for people to make an initial investment e.g., buy a parcel of shares or an investment property, but fail to make any further investments for many years or decades. Why does this happen? What is paralysing their ability to make investment decisions? Perhaps you don’t have enough time We use lack of time as an excuse for not doing many things. But if we are honest with ourselves,...

Even though its compulsory to invest money in superannuation, many people do not understand their options once they retire. This blog provides a summary. However, of course, everyone’s situation is different. Some super funds have different rules and there may be exceptions to some rules, so it’s important you receive personalised advice from an independent financial advisor. When can you access y...

Vocal market commentor and fund manager, Chris Joye wrote in the AFR in November last year that Australian house prices could fall by 15% to 25% after the RBA starts increasing interest rates (here’s a copy of that article ). Of course, there are many property doomsayers that perpetually (and often inaccurately) predict property market crashes. However, Chris is not one of these people. In fact, C...

The value of a property consists of two components being the land plus any improvements i.e., the dwelling. Generally, land appreciates in value whereas buildings depreciate over time due to wear and tear. It is possible to manufacture equity in a property by making improvements e.g. renovating/rebuilding the existing dwelling or constructing multiple dwellings. This occurs when the end value of t...

In my book, Investopoly, I outlined 8 investing rules that if followed, will help you build wealth and avoid making costly mistakes. These 8 rules are evidenced-based which I have refined over the past 20+ years. Rule number one is; play the long game . Arguably, it’s the most important rule because I’ve observed that this is the most common mistakes investors make i.e., they don’t play the long g...

There is one property investing golden rule that is more important than everything else. And if you nail this ‘one thing’, you are guaranteed to build wealth over the long run. This statement might sound sensationist, but I honestly cannot overstate this point. The golden rule is that the quality of the property you invest in will drive its long-term investment returns. If you invest in an average...

This is the second part of a two-part blog about investing in commercial property (you can read part one here ). Now that you have a broad understanding of commercial property attributes, the next topic to discuss is how you can successfully invest in commercial property. Why type of commercial property do I recommend? Personally, at the moment I invest in commercial offices, and recommend the sam...

I believe that most people would be well-served by investing in various asset classes, including shares and property. I do not believe that any one asset class is superior. They all have their pros and cons which you can balance out in a diversified investment portfolio, which could include commercial property. Commercial property does have some wonderfully attractive attributes but it’s important...

Last week, I shared what risks and opportunities investment markets could offer us during 2022. These market expectations helped my wife and I set our personal, relationship, business and financial goals for 2022. It is stating the obvious to so say that goal setting is important. I believe that if you aim at nothing, often that is exactly what you will achieve; nothing! Goal setting gives you mor...

It is stating the obvious to say that goal setting is important. The fact is, if you aim at nothing, often that is exactly what you will achieve; nothing! Each year my wife and I set personal, relationship, business and financial goals. We almost always achieve all the goals we set for ourselves each year. I want to share the process which we’ve just completed and share what I think 2022 might bri...

For my final podcast for 2021, I thought it would be interesting to look back to see how various investment asset-classes performed. This is important for two reasons. Firstly, it is wise to benchmark your investment returns so that you can assess relative performance. Secondly, it serves as a salient reminder about the cost of delay and procrastination. Short-term returns are unimportant In isola...

Paying Capital Gains Tax (CGT) isn’t necessarily a bad thing because it means that you have sold an asset and made a profit, which is better than a loss, of course. That said, I’m certain that most people would prefer to pay less tax, not more. Therefore, it’s important to understand the ins and outs of CGT. Capital Gain Tax basics The amount of tax you must pay on any capital gain is calculated u...

After almost 20 years of interacting with investors (and potential investors) on a daily basis, I’ve noticed some common themes that prevent investors from achieving their potential. If you can avoid all three, you are almost guaranteed to achieve financial security. Whilst some of these matters seem relatively simple, you should not let their simplicity fool you into thinking that they are anythi...

With property and share markets trading at all-time highs, it’s reasonable and perhaps prudent to consider whether we are in a (asset price) bubble. Bubbles cannot grow indefinitely and at some point, all bubbles burst. Is the share market about to crash? Share markets around the world have been incredibly resilient throughout the pandemic and almost all markets are trading above pre-pandemic leve...

A financial advisor’s job is to develop a plan and help you implement that plan over many years, so that you achieve your financial and lifestyle goals. This includes navigating the inevitable changes in your circumstances, markets, investments and so forth – knowing when to stick to the plan and when to alter it. Achieving your financial and lifestyle goals is an incredibly valuable outcome. Ther...

It is becoming increasingly difficult to buy an investment-grade house for under $1 million in Brisbane, Melbourne and Sydney. This begs the question; if your investment property budget is less than $1 million, where and how do you invest it? Brisbane is becoming more difficult In early August 2021, I presented an investment case for buying an investment-grade home in Brisbane. My wife and I subse...

The topic of rising inflation and its potential impact on interest rates has been dominating the financial press over the past few weeks. The bond markets expect that higher inflation readings will force central banks to raise interest rates. It’s my opinion that higher inflation is likely to be temporary. And it’s also useful to remember that “markets” (and popular opinion) are not always right....

Will the property market ever crash? I started ProSolution almost 20 years ago and if there’s been one common theme over that time, it is how “expensive” property is. This theme can be expressed in many ways such as predictions of property market crashes, housing affordability “crisis”, comparison of Australian property prices to other parts of the world and so forth. This noise is often unhelpful...

I wrote a blog in February 2020 highlighting the first phase of government mandated changes to income protection insurance products. The second phase of changes were implemented at the beginning of this month, and they are very significant. This blog discusses these important changes and how they may affect you. Background In December 2019, the insurance industry’s regulator (APRA), released a rep...

I have noticed that more people are attracted to seeking out work that they have a personal connection with, particularly since the beginning of Covid. That is, for a growing number of people, the emotional rewards (satisfaction) that their work offers is becoming more important than the financial rewards. This might include working in the not-for-profit sector, working for a socially conscious or...

Federal Treasurer, Josh Frydenberg has asked the Council of Financial Regulators to investigate the fact that credit growth is materially outpacing growth in household income and to advise on any policy responses. In lay terms, the Treasurer is worried that people are borrowing too much money compared to their incomes and that could be risky for the economy. Increase in home lending is pronounced...

Personal insurance is becoming more difficult to obtain and increasingly costly to maintain. This blog outlines the approach we take when formulating how much insurance our clients need and strategies to manage its cost. What is personal insurance? This blog refers to personal insurance only. That typically includes up to four products: § Income protection insurance – which pays a monthly benefit...

How to value stocks – an introduction to valuation concepts Two years ago I wrote a popular blog that explained some simple share market concepts and jargon (see here ). Building on this introductory information, I thought it was timely to discuss basic share market valuation principles to help investors assess whether a stock is over or under valued. To be clear, I’m not advocating investing in d...

Over the past 20 years, the US share market has risen 5-fold, the Australian share market 5.4-fold and Australian property 4.2-fold. That means if you invested half a million dollars 20 years ago, in either shares or property, it should be worth between $2 and $2.5 million today. You’d have even more money if you added some gearing . This observation raises an interesting question. That is, why ar...