The end of the financial year is an opportunity to optimise your financial strategy, take advantage of tax deductions, and set yourself up for the new financial year.
Whether you’re looking to maximise tax benefits, rebalance your investment portfolio, or to simply ensure you’re ticking all the right boxes, smart end of financial year (EOFY) planning can make a big difference.
So, to finish the financial year on a high note, start by mapping out your finances and investment portfolio and collect all the relevant documents. It can be a tedious task if your filing isn’t up to scratch, so it can be useful to set up a system as you go to make it easier for the next financial year.
You will need your bank statements, superannuation fund statement, self- managed super fund (SMSF) paperwork if relevant, a record of any capital gains or losses from the sale of assets such as shares or property, details of share dividends including any dividends earned through a Distribution Reinvestment Plan, and records of any other investments or income received.
Looking for deductions
On the other side of the ledger, there are limits on deductions for most categories of expenses but it’s a useful exercise to gather the evidence of all costs associated with employment and income-producing investments – whether or not they’re tax deductible.
For the most part at least, some deductions are allowed for certain work-related costs, donations over $2 to approved not-for-profits, the costs of managing your tax affairs, eligible investment property expenses, income protection insurance premiums (if the premiums are paid outside of your super fund), and expenses linked to a financial investment – such as attending a seminar directly related to the investment or the cost of account keeping fees on bank accounts used only for investment.i
ATO Assistant Commissioner Rob Thomson says the ATO is keeping a close eye on work-related expenses and working from home deductions this year.ii
“Work-related expenses must have a close connection to your income earning activities, and you should be prepared to back it up with records like a receipt or invoice,” says Thomson.
“If your deductions don’t pass the ‘pub test’, it’s highly unlikely your claim would meet the ATO’s strict criteria,” he says.
Get ahead with early payments
One way of maximising deductions in this financial year is by paying early deductible expenses due next year such as insurance premiums, subscriptions, or business rent if applicable. But remember to check first to see which expenses may be eligible to prepay.
Small businesses also have access to an instant asset write-off for the business portion of assets under $20,000, that were purchased and used in this financial year. The instant asset write-off is available to businesses with an annual turnover of less than $10 million.iii
Review your portfolio
At this stage of the year, it’s a good time to take stock of your investments including shares, superannuation and property. You may want to check that your investment strategy is still appropriate for your needs and expectations and review any underperforming assets.
The review will help you to decide whether you have an opportunity to top-up your super fund or SMSF. If you have funds to spare, making the most of the total contribution amount allowed both in this financial year and for the last five years, could give your retirement planning a serious boost.
Don’t forget last year’s increases to the cap on super contributions, which may allow you to contribute more. The limit on concessional contributions (employer contributions and personal contributions that can be claimed as a tax deduction) increased to $30,000. The cap on non-concessional (or after-tax) contributions is now $120,000. You may also be eligible to carry forward unused amounts from up to five years before. Reach out to us if you are considering making any super contributions to ensure you don’t exceed the cap and your funds are deposited before the June cut-off date.
It’s also a chance to review super indexation changes due from 1 July to see if there’s a need to take action before 30 June or to wait. For example, the amount that can be transferred into the retirement phase (known as the general transfer balance cap) will increase to $2 million on 1 July, up from $1.9 million this financial year. That might affect the decision to begin a pension this month as opposed to next.
There’s a lot to consider right now to make sure you’re optimising tax savings and that your planning today leads to a financial reward tomorrow. Give us a call if we can help.
How to make use of a capital loss
Savannah bought $2,000 worth of shares (50 shares at $40 per share) in a large mining company.
After 18 months she sold the shares. They had fallen in price to $20 per share. She made a capital loss of $1,000.
Savannah also made a profit of $1,500 from selling other shares she held. She had held these shares for five years.
Savannah can deduct the $1,000 she made a loss on from the $1,500 capital gain. This leaves her with a profit of $500. As Savannah held the shares for more than 12 months, she only includes half the capital gain in her tax return. She’ll pay tax on this $250 at her marginal tax rate.
With Winter now upon us, it’s time to embrace the joys of the cooler months of the year.
Now that the federal election is out of the way, and another financial year is drawing to a close, it’s a perfect time to look back at all you’ve achieved over the past 12 months and focus on a fresh start for the financial year to come.
While market volatility continued, markets largely recovered from April’s losses in May. However, the legal and economic uncertainty of US tariffs remain a key concern for global and local markets.
The end of the month saw the S&P/ASX 200 react positively at first to the news that a US federal judge had blocked the tariffs. When an appeals court temporarily stayed the tariffs hours later, a mini sell-off followed. The index has jumpstarted its way to a three-month high, not quite back to its best in February.
There was a sigh of relief all round when the Reserve Bank lowered interest rates in May by 25 basis points to 3.85%. The RBA’s move came with a caveat that, while domestic demand “appears” to be recovering and real household incomes have picked up, the outlook is unclear because of both local and international developments.
Inflation was slightly higher than expected for the 12 months to April, but it remained within the RBA’s target range and many economists are predicting another rate cut in July.
Smart moves before the financial year ends
The end of the financial year is an opportunity to optimise your financial strategy, take advantage of tax deductions, and set yourself up for the new financial year.
Whether you’re looking to maximise tax benefits, rebalance your investment portfolio, or to simply ensure you’re ticking all the right boxes, smart end of financial year (EOFY) planning can make a big difference.
So, to finish the financial year on a high note, start by mapping out your finances and investment portfolio and collect all the relevant documents. It can be a tedious task if your filing isn’t up to scratch, so it can be useful to set up a system as you go to make it easier for the next financial year.
You will need your bank statements, superannuation fund statement, self- managed super fund (SMSF) paperwork if relevant, a record of any capital gains or losses from the sale of assets such as shares or property, details of share dividends including any dividends earned through a Distribution Reinvestment Plan, and records of any other investments or income received.
Looking for deductions
On the other side of the ledger, there are limits on deductions for most categories of expenses but it’s a useful exercise to gather the evidence of all costs associated with employment and income-producing investments – whether or not they’re tax deductible.
For the most part at least, some deductions are allowed for certain work-related costs, donations over $2 to approved not-for-profits, the costs of managing your tax affairs, eligible investment property expenses, income protection insurance premiums (if the premiums are paid outside of your super fund), and expenses linked to a financial investment – such as attending a seminar directly related to the investment or the cost of account keeping fees on bank accounts used only for investment.i
The ATO is keeping a close eye on work-related expenses and working from home deductions this year, saying there must be “a close connection to your income earning activities, and you should be prepared to back it up with records like a receipt or invoice”.ii
Get ahead with early payments
One way of maximising deductions in this financial year is by paying early deductible expenses due next year such as insurance premiums, subscriptions, or business rent if applicable. But remember to check first to see which expenses may be eligible to prepay.
Small businesses also have access to an instant asset write-off for the business portion of assets under $20,000, that were purchased and used in this financial year. The instant asset write-off is available to businesses with an annual turnover of less than $10 million.iii
Review your portfolio
At this stage of the year, it’s a good time to take stock of your investments including shares, superannuation and property. You may want to check that your investment strategy is still appropriate for your needs and expectations and review any underperforming assets.
The review will help you to decide whether you have an opportunity to top-up your super fund or SMSF. If you have funds to spare, making the most of the total contribution amount allowed both in this financial year and for the last five years, could give your retirement planning a serious boost.
It’s also a chance to review super indexation changes due from 1 July to see if there’s a need to take action before 30 June or to wait. For example, the amount that can be transferred into the retirement phase (known as the general transfer balance cap) will increase to $2 million on 1 July, up from $1.9 million this financial year. That might affect the decision to begin a pension this month as opposed to next.
There’s a lot to consider right now to make sure you’re optimising tax savings and that your planning today leads to a financial reward tomorrow. Give us a call if we can help.
How the $3m super tax may affect you (and what to do next)
As the federal government moves to introduce a new 15 per cent tax on superannuation earnings above $3 million (known as Division 296 tax), concerns and debates have emerged about the broader implications for investment strategies, retirement planning, and even the property market.
It is intended that once passed by Parliament, the new tax – which doubles the tax rate from 15 per cent to 30 per cent for balances that exceed $3 million – will apply from July 1, 2025.
The tax change is expected to directly affect less than 0.5 per cent of investors or around 80,000 people.i
Treasurer Jim Chalmers describes the increase as “a modest change” that will make “concessional treatment for people with very large superannuation balances still concessional but a little bit less so”.ii
He says it will help fund other priorities such as Medicare, cost-of-living relief and tax cuts.
The Grattan Institute says tax breaks on super contributions cost the federal budget nearly $50 billion in lost revenue each year.iii
The Institute says that, while super is intended to help fund retirement, it has become a “taxpayer-subsided inheritance scheme”. By 2060, Treasury expects one-third of super withdrawals to be as bequests – up from one-fifth today.
How will the rate be calculated?
The formula for the additional tax payment due calculates the difference between the member’s total superannuation balance for the current and previous financial years and adjusts for net contributions (which excludes contributions tax paid by the fund on behalf of the member) and withdrawals.
An earnings loss in a financial year, can be carried forward to reduce the tax liability in future years.
The calculation of earnings includes all unrealised gains and losses.
Implications for investors
The Grattan Institute says taxing capital gains as they increase removes incentives to “lock in” investments. “But it can create cash flow problems for some self-managed super fund (SMSF) members who hold assets such as business premises or a farm in their fund,” the Institute says.iv
Many commentators speculate there will be a major change to asset allocation in super, particularly in SMSFs, as a result of the move to tax unrealised gains.
Meanwhile, one property analyst predicts a structural shift in property investment with commercial real estate becoming more attractive because of its stronger income yields relative to capital growth.v
The new tax could also reduce the appeal of super as an inheritance tool with investors likely to explore alternative wealth transfer methods.
Navigating the changes
With the tax changes looming, we’re helping clients to ensure their portfolios will continue to meet their expectations.
For those looking to minimise their exposure to the tax, there are a number of strategies that may be useful.
These include:
Diversifying investments outside of superannuation by, for example, making direct investments in equities, bonds or private businesses.
Considering alternative retirement savings vehicles such as family trusts.
Actively planning to optimise tax efficiency by, for example, structured withdrawals to keep balances below the $3 million threshold, making use of tax exemptions and considering asset reallocation.
The new tax marks a significant shift in Australia’s retirement savings landscape. While the government argues that the measure is modest and targeted, its long-term implications—particularly the taxation of unrealised gains—could reshape investment strategies for high-net-worth investors.
For those nearing retirement with a high super balance, careful financial planning will be essential and all investors who could potentially be affected, should be reassessing their portfolios and weighing up whether alternate wealth management strategies may be an option.
Please get in touch if you would like help to navigate the changes.
Volunteering in retirement: finding purpose, structure, and joy
Retirement might be just around the corner, or maybe you’ve recently crossed that exciting threshold. You’ve worked hard for decades, and now ready to trade in the alarm clock for leisurely mornings and to-do lists that are actually fun. But as you move into the next phase of your life; a thought might cross your mind: What now?
While the idea of unlimited free time sounds wonderful at first, many people find that after the novelty wears off, there’s something important missing. Work often provides structure, purpose, and a sense of accomplishment. Without that, it’s easy to feel a little… adrift.
So, when you picture what your ideal retirement looks like, it can be a good time to think about what you still have to offer the world and consider volunteering. As well as helping others, you’ll also enrich your life in so many ways.
Enhance your life
A study commissioned by Apia found that more than half (56 per cent) of Australians over 50 years of age, are currently engaged with community or volunteer work.i And the benefits are not just the recipient of their support – it’s been proven that volunteering can boost your own happiness, your mental health, and even your physical well-being.ii It’s like a secret ingredient for a fulfilling retirement.
Retirement beyond the finances
Planning your retirement is more than just numbers on a spreadsheet; it’s about creating a fulfilling, meaningful lifestyle. Volunteering can help restore that sense of purpose when you are no longer working, and add structure to your days, all while benefiting others. Thinking about volunteering before you leave the workforce can give you a head start in discovering what really lights you up, and it will give you a smooth transition into the next chapter of your life.
Here are a few tips on how to get started, make your time count, and make sure you’re doing something meaningful and truly brings you joy.
Consider your skills
You have years of knowledge, skills and life experiences to draw upon and it can be enormously satisfying to use those to help others. Your contribution can reflect the skills you honed in the workplace or talents you developed along the way. Have you always been the go-to person for organising family events or helping friends with their tech problems? Think about how you can use your skills – whether that’s helping others, improving areas in your community – like gardening, or even just making someone smile.
Choose a cause that sparks your passion
Think about what has always inspired you. Volunteering is most fulfilling when it aligns with your interests and values. So, take a moment to consider what causes excite you and look for organisations that align with your passions – maybe a local food bank, animal rescue, or environmental group. Your volunteering experience should feel like a rewarding activity, not an obligation.
Start exploring early
Ideally, don’t wait until your last day of work to decide how you’ll spend your free time. Start researching volunteering opportunities in your community or online. Many organisations offer flexible, part-time opportunities, so you don’t have to dive in full force right away. There are so many options out there that can fit into your schedule.
Volunteering, however, you approach it, can open up a whole new world. Once you look for opportunities to assist others, you also enhance your own well-being in a myriad of ways. Working with other like-minded people can give you an incredible sense of community and connection, developing fantastic friendships along the way. Not to mention the sense of satisfaction you’ll feel as you learn new things and are exposed to new ideas
Consider how you can weave volunteering into your new life. It can be a way to make your retirement truly extraordinary, while also making the world a better place.
Volunteering ideas to consider
Mentoring: Share your knowledge by helping someone in need of guidance – whether that’s through career coaching, tutoring, or life skills.
Local charities: Get involved in your community by assisting with food banks, shelters, or organising fundraisers for causes you care about.
Animal shelters: If you’re an animal lover, consider helping out at your local shelter, either by walking dogs or assisting with adoptions.
Environmental causes: Join efforts to clean up parks, plant trees, or raise awareness about environmental issues.
At its latest meeting, the Reserve Bank Board announced it was reducing the cash rate to 3.85 per cent, down from 4.10 per cent.
Please click here to view the Statement by Michele Bullock, Governor: Monetary Policy Decision.
With the official rate change, we’re watching closely what the banks do with their rates, as some of Australia’s biggest lenders may make changes to their rates.
You will be notified directly by your bank if and when they change their interest rate.
Please get in touch if you would like to discuss recent rate movements or if you would like to review your finance options.
While many Australians had the opportunity to enjoy two consecutive long weekends in April, as we move into May the focus is now on the federal election.
The month of April was marked by economic uncertainty and global trade tensions that drove market declines and volatility. These events are anticipated to influence the RBA’s cash rate decisions, as will the recent decline in core inflation to within the target range.
Australian shares slumped in early April but recovered with the ASX 200 up 2.5% by month’s end. Nonetheless, the index is down nearly 1.3% since the start of the year and may fall further according to some commentators. In the United States, the S&P500 regained strength after falling to its lowest level in a year.
Unemployment increased slightly in the latest figures, up by 4.1% and consumer sentiment declined 6% in April, revealing consumer unease about developments in Australia and abroad associated with US tariff announcements.
The International Monetary Fund (IMF) delivered sombre news for Australia, predicting lower growth than forecast earlier this year. Despite the slowdown, the IMF says global growth remains “well above” recession levels.
Market movements and review video – May 2025
Stay up to date with what’s happened in the Australian economy and markets over the past month.
The month of April was marked by economic uncertainty and global trade tensions that drove market declines and volatility.
These events are anticipated to influence the RBA’s cash rate decisions, as will the recent decline in core inflation to within the target range.
Click the video below to view our update.
Please get in touch if you’d like assistance with your personal financial situation.
Scams: knowledge is protection
Scammers operate in an ever-evolving space and the scams of today are far more sophisticated than they have ever been, targeting even the most financially literate individuals.
In addition to the financial impact from a scam, it can affect your mental health as well as damage your reputation, so understanding how scammers operate is the best way protect yourself from falling victim.
A growing trend
The statistics provide a sobering reminder that no one is immune—no matter how experienced or cautious they may be – it can happen at the click of a button.
According to the Australian Competition and Consumer Commission’s (ACCC) Scamwatch, Australians lost an alarming $3.18 billion to scams last year.
The average individual loss from scams is significant, with individual losses rising by more than 50 per cent last year, to an average of almost $20,000.i This is due, in part, to scammers using new technology to lure and deceive victims and it underscores the serious financial toll scams can take.
Some of the most common scams include:
Investment scams: Investment scams continue to be a major issue, with losses reaching around $1.2 billion in 2024. These scams often involve fraudulent online trading platforms or fake cryptocurrency schemes, designed to lure investors with promises of high returns and minimal risk.
Impersonation scams: Fraudsters are increasingly using sophisticated tactics to impersonate trusted organisations, such as government bodies, banks, and financial advisers. In 2024, impersonation scams accounted for $700 million in losses, with scammers using fake emails, phone calls, and even text messages to trick victims into revealing sensitive personal information or parting with funds.
Romance and relationship scams: These scams often involve scammers establishing a personal relationship with victims before manipulating them into sending money. In 2024, these types of scams led to losses of $250 million, highlighting the emotional and financial damage they can cause.
While these figures are shocking, they also reflect the changing nature of scams. Scammers are no longer relying on clumsy, obvious frauds. Instead, they are using highly professional methods, often tailored to the specific interests, financial knowledge, and behaviours of their targets.
Why everyone is vulnerable
As scammers become more creative, even the most experienced and financially literate individuals are at risk. There are several reasons why this is the case.
Sophistication: Scammers now use advanced technology and psychological manipulation to trick their victims. They impersonate respected brands and financial institutions, and they can craft highly convincing emails, websites, and phone calls that look indistinguishable from legitimate communications.
Cryptocurrency and new technologies: The rise of digital currencies and decentralised finance (DeFi) platforms has created new opportunities for scammers to exploit. These markets are largely unregulated, making them more vulnerable to exploitation by criminals.
Deepfakes: Scammers are increasingly using deepfake technology to make their fraudulent schemes more convincing and harder to detect. By creating hyper-realistic videos or audio recordings, they can impersonate trusted individuals, such as company executives, colleagues, or even loved ones, to manipulate victims to respond to requests for urgent assistance or money. This manipulation of digital media makes it much more difficult for victims to distinguish between what’s real and what’s fabricated.
Protecting yourself
Despite the growing sophistication of scammers, there are steps you can take to protect yourself. It’s crucial to stay alert and use a combination of scepticism, knowledge, and due diligence.
Be cautious when receiving unsolicited offers or requests, whether by phone, email, or social media. If you weren’t expecting to hear from a company or individual, don’t rush to react. Don’t click on links. Take a step back and verify the legitimacy of the contact by using an email or contact number that you locate online. Always verify account details this way before transferring any money.
Scammers are constantly evolving their tactics, so it’s crucial to stay informed. Regularly educate yourself on the latest scam trends and familiarize yourself with common warning signs. Agencies like Scamwatch provide ongoing updates and resources for identifying and reporting scams.
The evolving nature of financial scams means that it’s not enough to simply be cautious; you need to stay proactive. If you’re unsure whether an opportunity is a scam or simply want a second opinion on a financial matter, we’re here to help.
If retirement is just around the corner, the current financial climate may make you feel a little uneasy. Watching the markets fluctuate might leave you worrying about whether your superannuation will be enough to see you through.
It’s not a time for hasty moves, though. If you are concerned a calm review of your current portfolio and investment strategy may be helpful.
After all, the average Australian spends around 20 years in retirement, so it’s important to create a retirement strategy that takes account not only the current market conditions but also the risks and opportunities in the years ahead.
As one of the most significant retirement assets, your superannuation needs a carefully considered assessment as you approach any new life stage.
Here are five useful tips to help ease you into the next chapter towards retirement.
1. Review your risk profile and portfolio allocation
Check your super portfolio’s risk profile. Generally speaking, investors take a high-growth approach when they’re younger to take advantage of higher returns, however, as with normal share market cycles, there will be fluctuations in the share market. Having a long-term strategy gives you the time to recover from any market downturns before retirement.
Older investors may prefer a more conservative investment strategy that can help to stabilise returns by potentially protecting super from share market volatility.
2. Calculate retirement expenses
Be realistic about the living expenses you’ll need when you finish working. For some, it may cost less to live in retirement because of reduced expenses such as commuting costs and maintaining a work wardrobe.
On the other hand, you may plan to travel more or buy a new vehicle or renovate your home, so these expenses need to be factored in when working out how much you’ll need.
According to the Association of Superannuation Funds of Australia (ASFA), the annual average budget to maintain a comfortable lifestyle in retirement is $73,077 for a couple and $51,805 for a single person.i
And to maintain a modest lifestyle, ASFA estimates a couple will need $47,470 and a single person will need $32,897. Both estimates assume you already own your own home.
You can find easy-to-use tools on the MoneySmart website to help you work out your budget and also estimate your income from super and the Age Pension.
3. Take action on mortgages and loans
Entering retirement with manageable or small levels of debt can contribute to feeling more financial stable.
If you’ll still be repaying a mortgage after you’ve retired, you could consider downsizing your home or using superannuation funds to pay down the debt, keeping in mind the tax implications and ensuring that you comply with superannuation laws. If you’re considering either of these courses of action, we’d be happy to explain your options and obligations.
4. Check your timing
Understanding when and how you can access your super is important.
You can use your super to fund your retirement when you reach “preservation age”, which is from age 60. You can also use your super to begin a transition to retirement income stream (TRIS) while continuing to work.ii
Alternatively, if you continue working beyond preservation age, you can withdraw your super once you turn 65.
There are also some circumstances in which you can access your super early such as illness and financial hardship, however, eligibility requirements do apply.iii
5. Decide how to withdraw your funds
You may be able to withdraw your super in a lump sum, if your fund allows it. This could be the entire amount you have invested, or you could receive regular payments.
If you ask your fund for regular payments (paid at least once a year), it is known as an income stream and your super account transitions from the accumulation phase – where contributions are made – to a pension.
There are minimum withdrawals that you must make once you commence an income stream from super. For example, for those aged under age 65, a minimum annual withdrawal of 4 per cent of your super balance is required and this drawdown rate increases as you get older.iv
There is a lot to think about as you approach retirement, so if you’d like to discuss your retirement income options, please give us a call.
The aged care Star Ratings are changing – here’s why
Key points:
Star ratings for residential aged care homes are changing to a redesigned Compliance rating and incorporating care minute targets for Staffing ratings from October 1, 2025
271 stakeholders informed the design changes for the aged care Star Ratings system
You can use the Find a Provider tool on the government website to gauge a provider’s quality of care
The Star Ratings system debuted in December 2022 and it was designed to help families find high-quality aged care providers.
The five-star scale was introduced in response to the Royal Commission into Aged Care Quality and Safety. It was meant to distil complex care metrics — Resident Experience (33 percent), Compliance (30 percent), Staffing (22 percent) and Quality Measures (15 percent) – into a digestible score.
The new report, informed by 271 stakeholders, such as older people, families, providers and advocates, confronts the widely reported issues with the Star Rating system.
A striking revelation to emerge from the report was the push for providers to be held accountable throughout the system.
Over three-quarters of the cohort demanded a provider’s Compliance rating drop across all its homes if it was issued a formal regulatory notice for significant or systemic non-compliance.
Although 64 percent of providers were supportive of the measure, they cautioned that home-specific factors – like a good manager or unique challenges – often outweigh corporate oversight.
They wanted to draw a line in the sand between small mistakes and major breaches, like neglecting resident safety, to avoid unjust punishment. The report acknowledges this but leaves the concern unaddressed.
Staffing, the lifeblood of aged care, emerges as another flashpoint. The consultation found 75 percent of stakeholders supported a cap of two stars on the Staffing rating for homes failing to meet both care minute targets – hours of direct care mandated per resident.
Among stakeholders, 87 percent expressed support for incorporating the 24/7 registered nursing requirement into the Staffing rating, with many advocating a two-star cap for non-compliance.
Yet, rural providers cried foul: workforce shortages, not negligence, often thwart them. They begged for exemptions, transparently flagged, lest they’re crushed by urban-centric rules.
Beneath these reforms lies a quieter, yet electrifying, thread: data integrity. Stakeholders didn’t just want new rules – they demanded the numbers be trustworthy.
The Staffing rating’s potency, they argued, hinges on accurate, reliable care minute data, especially when self-reported by providers.
Two-thirds insisted Compliance ratings rebound instantly once non-compliance is fixed, not linger in purgatory for 1 – 3 years.
The report’s call for transparent regulatory notices – 75 percent want System Governor notices published, 85 percent demand financial non-compliance hit ratings – doubles down, promising a window into a home’s soul.
The consultation leaves that gauntlet on the table, a test of whether the system can finally earn trust.
Finally, the report hints at a design revolution: half-star ratings and richer data. A narrow 51 percent endorsed half-stars for the Overall Star Rating, envisioning a ladder of incremental progress – 3.5 stars as a reachable rung, not a distant five.
The push for systemic accountability could unmask corporate culprits, staffing reforms might anchor care in reality and data integrity could rebuild faith among stakeholders. However, the report isn’t a one-size-fits-all solution for the sector.
The consultation’s 271 voices have spoken and their hopes and fears are now in the government’s hands. This year has set the stage for mass reforms, intended to make the landscape easier to navigate and safer for those seeking quality care.
Source: Aged Care Guide Reproduced with permission of DPS Publishing. This article was originally published on https://www.agedcareguide.com.au/talking-aged-care/the-aged-care-star-ratings-are-changing-heres-why. Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Any information provided by the author detailed above is separate and external to our business. Our business does not take any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
Understanding your retirement income
Work out how long your super or account-based pension will last
There are many variables that come into play when calculating how long your super or account-based pension will last in retirement, and it can be challenging to figure it out alone.
If you’ve transferred your super to a pension account already, then you can use the MoneySmart calculator to help estimate how long your pension will last. And if you haven’t, we recommend you speak to us as we can discuss with you different considerations that will impact how long your account-based pension will last.
Here are some of the fundamental things you need to know about a couple of other retirement income options.
Account-based pensions
Account-based pensions are a popular retirement income product. They fluctuate in value and are linked to the market, so your investment, and therefore your long-term income, isn’t guaranteed.
How long an account-based pension lasts will depend on:
the amount of initial capital invested
the return from the underlying investments
the amount of fees charged
how much you withdraw as income each year.
The tax benefits of account-based pension are:
you don’t pay tax on pension payments from age 60
you don’t pay tax on investment earnings.
In some cases, the underlying investments for most pension accounts are chosen to minimise fluctuations but still provide a bit of growth.
Defensive assets
These include cash and fixed income. In general, they’re lower risk and provide lower returns over the long term.
Growth assets
These include equities and property. They’re usually open to market fluctuation but tend to provide higher returns over the long term.
Generally, defensive assets provide you with a relatively steady return and, therefore, income. However, some growth assets are usually needed to keep your funds growing during your retirement, so they last longer. With an account-based pension, you can mix defensive and growth assets to a ratio that you’re comfortable with.
Annuities
Some annuities could provide you with regular and guaranteed income for either a fixed period or for life. They are more secure than account-based pensions as your income is guaranteed regardless of what the share market and interest rates do.
The downside is that you’re locked in to the agreed income for the whole term or the rest of your life. If your circumstances change, you generally can’t withdraw a lump sum. A lifetime annuity also has no residual capital value, which means you can’t leave it to someone in your will.
The best of both systems
Continuing to build your investments, including your super funds, is still crucial in retirement. They need to keep growing to ensure your retirement income lasts as long as possible.
This means it becomes increasingly important to protect your super growth funds from market falls while still allowing them to grow if the market goes up.
Other things to consider
Age pension eligibility
When it comes to the Age Pension, there are several rules to determine your eligibility. You can learn more by visiting Services Australia, but some of the basic rules are:
You must have reached your Age Pension age, which is currently 67.
You must be a resident of Australia.
You must pass income and asset tests.
If you don’t meet the income and assets tests to be eligible for the Age Pension, you may be able to access the Commonwealth Seniors Health Card (if you pass an income test). This card provides affordable medicine, bulk billed doctor visits and depending on what state you live in, there may be some other concessions that you’re entitled to. You can find out more from Services Australia.
Speaking to a financial planner
With so many options, it’s a good idea to seek help to ensure you’re investing in a way that suits you. Particularly as there are some more complex considerations, such as tax implications. You can talk to us if you need more help planning for your retirement.
When you start to plan for retirement, you’ll need to check your super:
where it is
how much you have
whether you have lost or unclaimed super
consider consolidating accounts where relevant
that your details are up-to-date with the ATO and your super funds.
You can do this in 5 simple steps with the ATO’s super health check. For most people it only takes a few minutes.
It’s important to know your total super balance and contributions caps, especially if you plan to contribute to your super. When you check your total super balance, take a note of your concessional and non-concessional contributions. These will indicate if you can make extra contributions or are approaching your limit.
Estimate how much income you will need to retire
The Australian Securities and Investment Commission’s (ASIC) Moneysmart website has information and tools to help you prepare to retire. You can use their:
Retirement planner to estimate your income from super and the age pension.
Your superfund may also offer a range of calculators to help you. You can access information to help you understand your finances at a free Financial Information Service (FIS) webinar run by Services Australia. You can book to attend a live webinar or watch recordings on their website.
How can I increase my super?
You can increase your super by making extra contributions. Before deciding whether to contribute extra, remember to consider your total super balance and contribution caps. Exceeding the caps may lead to extra tax.
If you decide to contribute extra to your super, the Moneysmart super contributions optimiser will help you work out which type of contribution will give your super the biggest boost.
The following contribution types may be available as options to increase your super (separate eligibility conditions apply):
concessional and non-concessional contributions
carry forward unused contribution cap amounts
downsizer super contribution for people over 55 who have sold their primary residence
government co-contributions to match your extra personal contributions (up to $500)
a low income super tax offset (LISTO) payment (up to $500)
spouse contributions
capital gains tax retirement exemption contribution for people under 55 if you are selling a small business.
If you are employed, it’s important to remember that your employer’s contributions will count towards your concessional contributions cap.
You may have more than one super account. Consider consolidating your super which means combining super into one account to help save on fees.
Visit ASIC’s Moneysmart to learn more about how to grow your super.
You can also talk to us about the investment options available to help you grow your super.
Considering an SMSF to grow your super?
If you’re thinking about a self-managed super fund (SMSF) to grow your super, visit Moneysmart to learn more about what is required and to understand if an SMSF is right for you.
Accessing your super to retire
When you reach your preservation age and retire, you can access your super to fund your retirement.
You can also access your super:
when you turn 65 years old
if you are aged 60 to 64 years of age, under the transition to retirement rules, while you continue to work.
You can access your super as a lump sum, income stream or a combination of both. Visit Moneysmart to learn more about your retirement income.
After you retire, you may decide to return to work, and you may be able to contribute to your super again. However, it’s essential to consider how this might affect your income, including Australian Government payments (such as the age pension) and your superannuation.
by contacting us to understand any potential impacts.
Each fund has governing rules. It’s essential that you talk to your super fund, or talk to us about how you can access your super in retirement and what options are available to you. If you’re a member of an SMSF, understand how you can be paid your benefits.
Tax on super benefits
The tax on super benefits depends on factors like your age, payment amount, and whether your super is taxed or untaxed. If you are 60 years old or older, your super payments may be tax free. For personalised advice, speak to us.
If you’re considering an income stream, check your transfer balance cap (TBC). Exceeding your TBC may lead to extra tax. TBC also applies to a death benefit income stream.
After you retire, even if you don’t need to lodge a tax return it’s important that:
your contact details with the ATO and your super funds are kept up-to-date
you regularly review your super on ATO Online
you check to see if you have any lost or unclaimed super.
Consider seeking professional advice
This information is not financial advice. We can help you make informed decisions about your super and retirement options.
Source: ato.gov.au September 2024 Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/super-and-planning-for-retirement Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
Bonds are not usually the flashy upstarts of the investment world with their every move reported, like stocks.
But the Trump Administration’s extraordinary refashioning of world trade, with on-again off-again tariffs of eye watering amounts, has put bond markets in a similar position to share markets – in turmoil.
So, with the bond markets attracting more attention than usual, we take a closer look at the asset class.
What is a bond?
A bond is a bit like an interest-only loan and there are many different types of bonds available. A government (government bond), or sometimes a large company (corporate bond), issues bonds to investors to raise funds for infrastructure or, in the case of a company, for expansion.
Large institutional investors tend to favour some of the more complex types. Retail investors are more often interested in fixed-rate bonds, known as a fixed-income investment because of the regular payments made to the investor (or the coupon interest rate). The principal (called the face value) is repaid at an agreed date when the bond matures.
These bonds can also be traded on a secondary market by those who’ve chosen to sell their bonds before maturity. In this case, depending on the state of the markets and the economy, the amount they’re worth, or their capital value, may be higher or lower than the face value, which is fixed.
The most common fixed-rate bonds, issued by governments, are generally considered more stable. Nonetheless, all bonds are assigned a credit rating by independent rating agencies such as Standard & Poor’s or Moody’s.
Australia’s Commonwealth bonds, issued by the federal government, are AAA-rated reflecting strong fiscal management, economic stability and low default risk.i
State governments and quasi-government organisations such as the World Bank also issue bonds. The risk level for this category of bonds can vary.
Large companies, looking to expand or start new projects, often use bonds as a way to raise funds. Corporate bonds generally pay higher interest but are considered slightly more risky.
How to buy bonds
Investing in bonds can help to diversify a portfolio and provide a steady stream of income but for those with no knowledge or experience of the market, it is important to get quality professional advice and speak to us.
For example, if you had been relying on the conventional wisdom that bond markets are often up when share markets are down, recent share market activity would have delivered a shock. The usual flight to safety from share price volatility to bonds did not happen in the United States where, for a time, both markets were falling.
While it is possible to buy bonds directly when there is a public offer, it can be difficult for smaller individual investors to participate because of the large minimum transactions required.
Instead, most retail investors look to bond funds, bond exchange traded funds (ETFs) or managed funds for exposure to the bond market. The variety of funds on offer can help to diversify a portfolio by giving access to a range of different markets.
What affects bond rates?
Interest rate movements directly affect bond prices on the secondary market.
When interest rates rise, bond prices fall because newly issued bonds will be at the higher rate making older bonds less attractive and reducing demand.
Conversely, bond prices rise when interest rates fall because new bonds will offer the lower rates meaning there will be higher demand for older bonds, driving their prices up.
Bond prices are also influenced by economic conditions and investor sentiment.
Rising inflation can cause bond prices to rise while strong economic growth may decrease bond prices because investors often prefer to buy shares. Bonds with a lower credit risk, such as AAA-rated government bonds, tend to attract higher prices.
Be alert for scams
The Australian Securities and Investments Commission (ASIC) is warning investors about scammers using bond investments as a lure.ii
In one report earlier this year, scammers claimed to be offering sustainability investment bonds in Bunnings Warehouse.
The scam offered higher than market returns and claimed that investments are protected by the government. It included links to Bunnings genuine website although the company does not offer bonds or any investment products.
ASIC’s MoneySmart website warns that scammers often impersonate real companies. They may use the name of a real person working at the bank or company they say they represent.iii
“Be wary of surprise contact and independently verify who you are dealing with,” says ASIC. For detailed steps, see check before you invest.
If you would like to learn more about your options for investing in bonds, please give us a call.
How do bond yields change?
When bond prices fall, yields rise because the fixed coupon rate represents a higher percentage of the lower price. Similarly, when bond prices rise, yields fall because the fixed coupon rate is then a smaller percentage of the higher price.
For example, suppose interest rates fall. New bonds that are issued will now offer lower interest payments.
This makes existing bonds that were issued before the fall in interest rates more valuable to investors, because they offer higher interest payments compared to new bonds. As a result, the price of existing bonds will increase. However, if a bond’s price increases it is now more expensive for a potential new investor to buy. The bond’s yield will then fall because the return an investor expects from purchasing this bond is now lower.iv
Australian share prices have seen record highs in 2024 after a sluggish couple of years.
The S&P ASX200 index added just under 7 per cent in the 10 months to October 31 closing at 8160.i It reached its previous all-time high of 8355 just two weeks before.
So, if you were invested in an index fund or a basket of shares mirroring the ASX200 for the entire period, it’s likely you would have added some value to your portfolio.
Over the course of the year, the index has ebbed and flowed, recording several all-time highs.
But, while 2024 has so far been a boon for some investors, there have been some jarring notes.
For example, there was the devastating drop in the first week of August when the index lost $100 million in the biggest fall since the COVID lockdown over concerns about falls in the United States and Asian markets.ii
Geopolitical tensions have also played a part in market skittishness as the wars in the Middle East and Ukraine continue and economists argue about the future impact on Australia of a Trump presidency.
US share prices surged the day after Donald Trump’s election in what many saw as a positive reaction to the returning President’s policies. Since then, prices have declined in a not-unexpected correction. Various analysts are predicting future volatility as markets respond to the proposed policies including tariffs and mass deportations promised by the President-elect.
These ups and downs in prices can have investors scurrying to hit the ‘buy’ or ‘sell’ buttons. They may be desperate to save further losses when share prices are falling rapidly or wanting to cash in on a rising market. Meanwhile, those with lump sums to invest may delay, trying to pick the time when prices are lowest.
Timing the market
It’s a strategy – known as timing the market – that may work for some, particularly if you need access to your investment in the short term. But, for mid- to long-term investors, it’s generally accepted to be problematic.
To begin with, predicting the next market movement is extremely difficult – even for experienced investors – because of the endless factors that can influence the markets.
Emotion or sentiment plays a big part too, both in the way the markets react to events and in the times that individual investors choose to buy or sell.
Reacting to major market movements by selling or keeping a lump sum in cash until ‘the time is right’ means you run the risk of missing the market’s best days and reducing your overall return.
Countless studies show that better long-term results are achieved by consistent investing over time.
In the US, for example, US$10,000 invested in the S&P 500 over the 20 years to December 2022 would have achieved a 9.8 per cent annual return.iii But, missing the 10 best days over those two decades would have seen the return almost halved to 5.6 per cent. If an investor had missed 60 best days over the 20 years, they would have been left with just $4205 of their $10,000, a fall of 4.2 per cent.
Defying conventional wisdom, seven of the 10 best days took place during bear markets and, in 2020, the second-best day happened immediately after the second worst day.
In Australia, $10,000 invested in the ASX/S&P 200 during the 20 years to October 2024 would have increased to $60,777.iv But, if you had missed the 10 best days during that time, your total investment would be just $36,014.
How values grow over time
Here is how $10,000, invested in 1994, grew over 30 years.
One way of taking the emotion and guesswork out of investing is to consider investing fixed amounts of money at regular intervals over time, ignoring any market signals.
It is a strategy known as ‘dollar cost averaging’, which works best if you are investing over the medium to long term because it helps to smooth out the price peaks and troughs.
In fact, the compulsory superannuation paid by employers is a form of dollar cost averaging. Smaller, regular amounts are invested automatically, regardless of market movements and, over time, the investment grows. Alternatively, regular amounts from after-tax salary can be invested in a similar way.
However, the jury is out on whether dollar cost averaging is a useful strategy when you have a lump sum in cash to invest. Some advocates of the strategy argue that the principles of dollar cost averaging mean a better return by not timing the markets. In particular, you reduce the risk of making a large investment just before markets plunge.
Those opposed to the strategy for lump sum investing say that, with a lump sum sitting in a bank account as you chip away at regular stock purchases, there is a risk that you will miss the best of the market. It is also a form of market timing. The argument is that, by investing your lump sum all at once, you’re putting your cash to work immediately. In any case, stockmarket returns over the long term outperform cash investments.
A 2023 study found that investing a lump sum in the markets at once over the long term delivers a better return than a dollar cost averaging strategy.v
So, avoid the risks of timing the market and consider whether dollar cost averaging might be an appropriate strategy for you.
We’d be happy to discuss how best to ensure your regular investing strategy or investment of a lump sum, takes account of future market movements and volatility.
There is no debate that Australians love investing in property. The value of Australian residential real estate at the end of August 2024 was an estimated $10.95 trillion.i
Some love it so much that they believe property is a better option for providing a retirement income. They see a bricks and mortar investment as a more tangible and solid approach than say, superannuation, preferring to take their super as a lump sum on retirement to buy property. They may also choose to invest a windfall, such as an inheritance, or the proceeds from downsizing the family home, in property instead of their super.
So, given that a retired couple above age 65 needs an estimated yearly income $73,337 to lead a comfortable lifestyle, could a property investment do the job?ii
While it’s true that a sizeable property portfolio could deliver rental income to equal a super pension, it might mean missing out on some useful benefits.
After all, super is a retirement savings structure with significant tax advantages. It also has the flexibility to provide investments in a range of different asset classes, including property.
Meanwhile, super fund performance has, generally speaking, outstripped house price movements over the past decade. Super funds (invested in an all-growth category) returned an annual average of 9.1 per cent during that time while average house prices in Australian capital cities grew 6.5 per cent per year over the same period.iii, iv
The performance of superannuation and property
Superannuation: Diversified Fund Performance
Fund category
Growth Assets (%)
1 Yr (%)
3 Yrs (% pa)
5 Yrs (% pa)
10 Yrs (% pa)
All Growth
96 – 100
12.7
6.1
8.3
9.1
High Growth
81 – 95
10.8
5.7
7.7
8.4
Growth
61 – 80
9.
4.9
6.3
7.2
Balanced
41 – 60
7.4
3.9
4.8
5.8
Conservative
21 – 40
5.5
2.6
3.3
4.3
Note: Results to 30 June 2024. Performance is shown net of investment fees and tax. It is before administration fees and adviser commissions.
Source: Chant West
Property: Capital city average prices
Source: SQM Research
Not that past performance can give you any guarantees about what will happen in the future. Indeed, the average numbers smooth out the years of high returns and the years of negative returns. More important considerations in making an informed decision are your financial goals, your investment timeframe and how much risk you’re comfortable with.
Liquidity
One of the most significant differences between super and property investments is liquidity, or how quickly you can convert your investment to cash.
With super, assuming you’re eligible, funds can be accessed relatively easily and quickly. On the other hand, if your wealth is tied up in property it may take some time to sell or it may sell at a lower price.
Nonetheless, market cycles affect both property and super investments. They can be affected by volatile conditions and deliver negative returns just at the time you need access to a lump sum.
Long-term investing
Superannuation is designed for long-term growth, often spanning decades as you accumulate wealth over your working life. The magic of compounding interest can lead to substantial growth over time, depending on your investment options and the state of the market.
Property investments, on the other hand, can be invested for short, medium, and long-term growth depending on the suburb, the street, and the type of house you invest in. Of course, there are additional costs in buying a property (such as stamp duty) plus costs in selling (including capital gains tax). If there’s a mortgage over the property, you’ll need to factor in the additional costs of repayments and interest (bearing in mind that interest on investment properties is tax deductible).
Risk appetite
Investors’ attitudes towards risk also play a role in choosing between super and property.
Superannuation funds can be diversified across various asset classes, which helps to reduce risk. But property investments expose investors to a single market meaning that while there might be a big benefit from an upswing, any downturn may be a blow to a portfolio.
Making an informed choice
Ultimately, any decision between superannuation and property should align with individual financial goals, risk tolerance, and investment strategies. And, of course, it doesn’t need to be one or the other – many choose to rely on their super while also holding investment property so it’s best to understand how super and property can complement each other in a well-rounded retirement plan.
We’d be happy to help you analyse your retirement income strategy to develop a plan that works for you.
Stay up to date with what’s happened in the Australian economy and markets over the past month.
Following March’s Federal Budget, Prime Minister Anthony Albanese announced a national election for May 3, kicking off a campaign centred on tax cuts and cost-of-living relief.
Globally, trade war worries dominated headlines and contributed to markets falls during the month.
Click the video below to view our update.
Please get in touch if you’d like assistance with your personal financial situation.
As we move into April, and hot on the heels of the recent Federal Budget, Prime Minister Anthony Albanese has announced a national election for May 3 – kicking off an April campaign centred on tax cuts and cost-of-living relief.
Meanwhile fears of inflation in the United States and alarm about unpredictable and escalating tariffs saw sharp falls on Wall Street during March, particularly in the final week.
In Australia, the events in the US, conflicts in Ukraine and the Middle East and the start of the federal election campaign have all made their mark. The S&P/ASX 200 reacted with an almost 5% drop during March.
The Australian dollar, in the doldrums all year, improved slightly during the month before ending lower at around 63US cents.
Economic growth was up 0.6% in the December quarter and 1.3% for the year and household wealth climbed 0.9% in the same period. Inflation rose 2.4% in the 12 months to February, a slight softening from the previous month’s increase of 2.5%.
Consumer sentiment recorded a 4% rise in March, according to the Melbourne Institute and Westpac Bank Sentiment index. The RBA’s decision to cut interest rates in February and a further easing in cost-of-living pressures have provided a clear lift.
Digital and skills tax incentives return
The Government has opened submissions for a 120 percent deduction for tech and training investment, bringing previous Federal Budget announcements one step closer to becoming reality.
Business leaders have applauded the move to legislate two measures that will allow organisations with turnover under $50 million to claim spending on digital solutions and training backdated to March.
In a joint announcement by Treasurer Jim Chalmers, Small Business Minister Julie Collins and Assistant Treasurer Stephen Jones, the tax incentives were described as a way to ease the burden of upskilling for small businesses.
“The Government recognises that training employees is expensive and takes time, both of which are at a premium when employers are trying to run a small business,” the ministers said.
“These measures will make it easier for small businesses and help them recoup some of the costs of the investments they make in their employees and digital operations.”
The Small Business Technology Investment Boost
Under the proposed legislation, the boost offers a bonus 20 percent deduction on business expenditure relating to support digital operations.
What can a small business deduct?
At this stage the scope for claiming the digital boost is broad, covering anything that supports the digitisation of operations as well as ongoing investments of a digital nature, such as software licenses, subscriptions and related hardware.
However, the digital tax boost only applies on expenditure up to $100,000 in total, making the maximum deduction available to small businesses $20,000.
When does it apply?
Currently, the digital boost applies to expenses incurred from 7.30pm on 29 March 2022 through to 30 June 2023.
What isn’t included?
Several types of expenditure aren’t covered by the boost, such as:
Salary and wages
Capital works that can be deducted under Division 43 of ITAA 1997
Financing
Training and education (however, these may be covered by the skills and training boost)
Similar to the tech boost, the Skills Investment Boost enables an additional 20 percent deduction on small business spending on external training and education of staff.
What can a small business deduct?
According to the draft legislation, the incentive applies to any training for employees conducted in Australia or online, however the expenditure must be charged by a Registered Training Organisation.
The training must also be already deductible under tax law and can’t be offered by the business (or an associate of the business) that is claiming the deduction.
When does it apply?
The skills boost will also be backdated to March, applying from 7.30pm 29 March 2022 and is set to continue to 30 June 2024.
With the new Government set to hand down a second Federal Budget in October, the announcement of these initiatives is being seen as a positive move by business leaders around the country.
“Businesses with meaningful engagement with digital are 50 percent more likely to grow revenue,” said MYOB CEO Greg Ellis.
“They’re eight times more likely to create jobs. They are 14 times more likely to come up with new products or services.
“Productivity is what Australia needs; making sure every business is a digital business needs to be one of our top priorities,” he said.
The sentiment was echoed in a statement from Council of Small Business Organisations Australia CEO Alexi Boyd.
“It is essential to incentivise digitisation to make our small businesses stronger, more productive, and more resilient to future economic shocks.”
Meanwhile, Australian Small Business and Family Enterprise Ombudsman Bruce Billson pointed to more specific benefits.
“The digital tax break will allow [businesses] to invest in items such as cyber security systems, cloud-based services, accounting or eInvoicing software, hardware such as laptops and portable payment devices.
“For a small business, the cost of training staff can be quite significant, and this deduction will support owners to make an investment in upskilling staff to drive productivity and competitiveness.”
The draft legislation for both initiatives is open for consultation until 19 September.
Reproduced with the permission of MYOB. This article by Campbell Phillips was originally published at https://www.myob.com/au/blog/digital-and-training-tax-incentives-return/
Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
How political events affect the markets
From the economy bending policies of Trump 2.0 to the growing strength of the far right in Europe, the new alliance between Russia and the United States, the wars in Ukraine and the Middle East, and the US President’s vow to upturn world trade rules, the markets are certainly navigating tricky times.
In recent months we’ve seen volatility in some areas but cautious optimism in others in a reflection of the hand-in-glove relationship between politics and markets.
Of course, economic policies, laws and regulations– think tax increases or decreases, new business regulations or even referendums – have a big effect on how investors allocate their portfolios and that impacts market performance.
In 2016, when the United Kingdom voted to leave the European Union, the UK pound plunged and more than US$2 trillion was wiped off global equity markets.i
In the following four years until Brexit was finally achieved in 2020, the FTSE 100 performed poorly compared to other markets as domestic and international investors looked elsewhere to avoid risk. While it has risen since a massive drop during the coronavirus pandemic, the exodus of companies from the London Stock Exchange continues with almost 90 departures in 2024.ii
Interest rate movements and any hint of political instability can also bring about a sell off or a rally in prices, with companies holding off on capital investment and causing economic growth to slow.iii
Global oil prices rose 30 per cent in 2022 when Russia invaded Ukraine causing European stock markets to plunge 4 per cent in a single day.iv Since then, oil prices have fluctuated and are now back to pre-war levels and gold has reached new heights as investors globally look for a safe haven from high geopolitical risks.
Do elections have an effect?
Elections, which almost always cause market disruptions during the uncertainty of the campaign period and shortly after the vote is known, have featured strongly in the past six months or so.
A review of 75 years of US market data has found that, while there may be outbursts of volatility in the lead up to the vote, there’s minimal impact on financial market performance in the medium to long term. The data shows that market returns are typically more dependent on economic and inflation trends rather than election results.v
Nonetheless, the noisy 2024 US Presidential campaign saw some ups and downs in markets during the Democrats’ upheaval and the switch to Kamala Harris as candidate. Donald Trump’s various policy announcements on taxes, immigration, government cost cutting and tariffs both buoyed and dismayed investors.
Analysis by Macquarie University researchers of the three days before and after election day found significant abnormal returns in US equities immediately after the vote.vi
But the surge was short-lived as investor sentiment fluctuated. Small cap equities with more domestic exposure experienced the highest returns while the energy sector also saw substantial gains, in anticipation of regulatory changes.
While currently the S&P500 and the Nasdaq have both gained overall since the election, there’s been extreme share price volatility.
How Australia has fared
Meanwhile, any impact on markets ahead of Australia’s upcoming federal election has so far been muted thanks to the volume of world events.
The on-again off-again US tariffs are causing more concern here for both policymakers and investors. Tariffs on our exports could mean higher prices and a drop in demand for our goods and services, leading to economic uncertainty.
In early February, the Australian share market took a dive immediately after President Trump’s announcement of tariffs on Mexico, Canada and China, wiping off around $50 billion from the ASX 200. They recovered slightly only to fall again later as the Reserve Bank cut interest rates. In the US, some tech companies delayed or cancelled their listing plans because of the volatility and uncertainty caused by the announcements.vii
Amid a turbulent start to 2025, most economists agree the markets are unlikely to hit last year’s 7.49 per cent achieved by the S&P ASX 200.
Reserve Bank of Australia governor Michele Bullock is similarly downbeat on the prospects for the year, saying uncertainty about the global outlook remains “significant”.viii
Please get in touch if you’re watching world events and wondering about the impact on your portfolio.
Succession planning can be difficult at the best of times without dealing with the added pressures farmers need to face including droughts, fires and floods.
And that’s why it is even more important to plan early and get it right when you are on the land. You are not just dealing with a business, but invariably also with a home.
Some 99 per cent of the 135,000 farms in Australia are family owned with the average age of farmers being 52.i It is believed that farmers are five times more likely than other Australians to be working beyond the age of 65. There are a variety of reasons for this, from a reluctance to relinquish control, to a lack of family willing to take over the reins and financial necessity.
Given the physicality of farming, it would seem to make a lot more sense to start thinking about succession planning well before that stage.
Often such planning is put into the too hard basket because there are so many variables to consider. But this will not solve the problem, so it’s better to get good advice and get it early.
Start talking
The first thing you need to do is open the doors of communication. Arrange a time to talk with your family to discuss:
Who wants to inherit and work on the farm and who wants to leave the property
Whether they agree each child should be treated equally or accept that the one inheriting the farm should receive preferential treatment
How everybody feels about splitting the property between siblings, or
The way forward if none of your children wants to stay on the land.
These are all considerations that need to be addressed and revisited over time to ensure they meet with everybody’s wishes.
If just one of the children wants to remain on the property, will they need to find the finance to pay out the other siblings? If so, then the next decision is how that finance will be found.
Perhaps the answer is to transfer the property before you die. If that is the case, then where will you live in retirement and what will be your source of income once you retire? Again, you need to examine the options. Perhaps you may receive an ongoing income from the property, or maybe find income from other investments. Importantly, you also need to revisit these options over time to ensure they still work for you.
One danger of not having a succession plan and working well beyond your best years, is that you can run the farm into the ground and make it a far less attractive property to sell.
Structure your plans
There are so many questions to ask and what is right for one family, may not be right for another.
But once you determine how you want to move forward, you then need to examine the best structures to put in place to make the process as efficient as possible. Some of the key advice you may need is on tax, trusts and land ownership and the intersection of all three.
Tax is particularly important as you want to avoid or at least minimise capital gains tax (CGT).
If you are 55 years of age or more and retiring and have owned your property for at least 15 years, then you may qualify for the small business 15-year CGT exemption on your entire capital gains. Other concessions may apply if you don’t qualify the 15-year exemption.
For couples where the family farm is held in their own name, perhaps you might want to consider a joint tenancy agreement as it leads to automatic transfer of ownership if one dies.
Or you might consider putting the farm into a family trust or perhaps holding it as an asset in your self-managed super fund. There are so many what-ifs to consider when it comes to rural properties. If you want to discuss how to move forward on your estate and succession planning and what will work best for you, then give us a call.
As investors grapple with uncertainty, keeping a cool head has never been more important.
“Time in the market, not timing the market” is a popular investment philosophy that emphasises the importance of staying invested over the long term rather than trying to predict short-term market movements. While markets can be volatile in the short term, historically, they tend to grow over time.
It’s a strategy that helps you avoid getting caught up in short-term market fluctuations or trying to predict where the market is heading.
With the recent market turbulence, from the global effects of US President Donald Trump’s administration to ongoing conflicts in Ukraine and the Middle East, savvy investors look beyond the immediate chaos to focus on strategies that encourage stability and growth over the long-term.
It’s a hallmark of the approach by the world’s most high-profile investor, Warren Buffet, who argues that short-term volatility is just background noise.
“I know what markets are going to do over a long period of time, they’re going to go up,” says Buffet.i
“But in terms of what’s going to happen in a day or a week or a month, or even a year …I’ve never felt it was important,” he says.
Buffet first invested in the sharemarket when he was 11 years old. It was April 1942, just four months after the devastating and deadly attack on Pearl Harbour that caused panic on Wall Street. But he wasn’t fazed by the uncertain times.
Today Buffet is worth an estimated US$147 billion.ii
Long-term growth in Australia
While growth has been higher in the US, investors in Australian shares over the long-term have also fared well. For example, $10,000 invested 30 years ago in a basket of shares that mirrored the All Ordinaries Index would be worth more than $135,000 today (assuming any dividends were reinvested).iii
And it’s not just the All Ords. If that $10,000 investment was instead made in Australian listed property, it would be worth almost $95,000 today or in bonds, it would be worth almost $52,000.
In real estate, the average house price in Australia 30 years ago was under $200,000. Today it is just over $1 milllion.iv
Meanwhile, cash may well be a safe haven and handy for quick access but it is not going to significantly boost wealth. For example, $10,000 invested in cash 30 years ago would be worth just $34,000 today.v
Diversify to manage risk
Diversifying your investment portfolio helps to manage the risks of market fluctuations. When one investment sector or group of sectors is in the doldrums, other markets might be firing therefore reducing the chance that a downturn in one area will wipe out your entire portfolio.
For example, the Australian listed property sector was the best performer in 2024, adding 24.6 per cent for the year. But just two years earlier, it was the worst performer, losing 12.3 per cent.vi
Short-term investments – including government bonds, high interest savings accounts and term deposits – can play an important role in diversifying the risks and gains in an investment portfolio and are great for adding stability and liquidity to a portfolio.
Ongoing investment strategies
Taking a long-term view to accumulating wealth is far from a set-and-forget approach and by staying invested, you give your investments the best chance to grow, avoiding the risks of missing out on key growth periods by trying to time your buy and sell decisions perfectly.
Reviewing your investments regularly helps to keep on top of any emerging economic and political trends that may affect your portfolio. While it’s important to stay informed about market trends, it is equally important not to overreact when there is volatility in the share market.
Emotional investing can lead to poor decisions, so remember the goal is not to avoid market declines but to remain focussed on your overall long-term investment strategy.
Please get in touch with us if you’d like to discuss your investment
Thanks to the decisive victory of US President-elect Donald Trump, we’re now set to hear a whole lot more of his favourite word.
It’s something of a love affair. On the campaign trail in October, he said:
To me, the most beautiful word in the dictionary is tariff.
Previously, he’s matched such rhetoric with real policies. When he was last in office, Trump imposed a range of tariffs.
Now set to return to the White House, he wants tariffs of 10-20% on all imports to the US, and tariffs of 60% or more on those from China.
Most of us understand tariffs are some kind of barrier to trade between countries. But how exactly do they work? Who pays them – and what effects can they have on an economy?
What are tariffs?
An import tariff – sometimes called an import duty – is simply a tax on a good or service that is imported into a country. It’s collected by the government of the country importing the product.
How exactly does that work in practice?
Imagine Australia decided to impose a 10% tariff on all imported washing machines from South Korea.
If an Australian consumer or a business wanted to import a $1,200 washing machine from South Korea, they would have to pay the Australian government $120 when it entered the country.
So, everything else being equal, the final price an Australian consumer would end up paying for this washing machine is $1,320.
If a local industry or another country without the tariff could produce a competing good at a similar price, it would have a cost advantage.
Other trade barriers
Because tariffs make imports more expensive, economists refer to them as a trade barrier. They aren’t the only kind.
One other common non-tariff trade barrier is an import quota – a limit on how much of a particular good can be imported into a country.
Governments can also create other non-tariff barriers to trade.
These include administrative or regulatory requirements, such as customs forms, labelling requirements or safety standards that differ across countries.
What are the effects?
Tariffs can have two main effects.
First, they generate tax revenue for the government. This is a major reason why many countries have historically had tariff systems in place.
Borders and ports are natural places to record and regulate what flows into and out of a country. That makes them easy places to impose and enforce taxes.
Second, tariffs raise the cost of buying things produced in other countries. As such, they discourage this action and encourage alternatives, such as buying from domestic producers.
Protecting domestic workers and industries from foreign competition underlies the economic concept of “protectionism”.
The argument is that by making imports more expensive, tariffs will increase spending on domestically produced goods and services, leading to greater demand for domestic workers, and helping a country’s local industries grow.
Swapping producers isn’t always easy
Tariffs may increase the employment and wages of workers in import-competing industries. However, they can also impose costs, and create higher prices for consumers.
True, foreign producers trying to sell goods under a tariff may reduce their prices to remain competitive as exporters, but this only goes so far. At least some of the cost of any tariff imposed by a country will likely be passed on to consumers.
Simply switching to domestic manufacturers likely means paying more. After all, without tariffs, buyers were choosing foreign producers for a reason.
Because they make selling their products in the country less profitable, tariffs also cause some foreign producers to exit the market altogether, which reduces the variety of products available to consumers. Less foreign competition can also give domestic businesses the ability to charge even higher prices.
Lower productivity and risk of retaliation
At an economy-wide level, trade barriers such as tariffs can reduce overall productivity.
That’s because they encourage industries to shift away from producing things for which a country has a comparative advantage into areas where it is relatively inefficient.
In addition, the tariffs introduced in 2018 and 2019 failed to increase US employment in the sectors they targeted, while the retaliatory tariffs they attracted reduced employment, mainly in agriculture.
Economists’ verdict
Tariffs can generate tax revenue and may increase employment and wages in some import-competing sectors. But they can also raise prices and may reduce employment and wages in exporting sectors.
Do the benefits outweigh the costs? Economists are nearly unanimous – and have been for centuries – that trade barriers have an overall negative effect on an economy.
But free trade does not benefit everyone, and tariffs are clearly enjoying a moment of political popularity. There are interesting times ahead.
When markets fall, it’s natural to want to take action to prevent further losses. Doing so however can do more harm than good. Here’s why timing the market to buy low and sell high is not as easy as it sounds.
If you’re invested in the financial markets and also keeping up with the news, you’re probably wondering if you should do anything to insulate your portfolio from incurring further losses alongside rising interest rates and inflation.
In times like these, reminding investors to “maintain discipline” and “stay the course” – in other words, stay invested and here’s why:
Reacting to the here and now
Most market commentary are about the events of the day, with a focus on the here and now. However, the ‘today’ is not as significant to financial markets as they’re generally forward looking and more concerned about what will happen in the future. Thus, using daily developments to make constant adjustments to your portfolio is unlikely to help you accumulate wealth over the long term as the market will have already priced it in.
Additionally, to successfully time the market, investors need to get all five of these investment factors right including precisely timing exit and re-entry – a near impossible feat for even the most experienced of investors.
Locking in your losses
When markets fall, it’s natural to want to sell riskier assets (i.e. equities) and move to cash or safer assets like government securities. But exiting the share market now means locking in your losses permanently and not giving your portfolio the opportunity to benefit when markets recover. Research found that 80 per cent of investors who panicked and moved to cash during the 2020 sell off would have been better off if they had stayed invested1.
Investing at the peak
While we all want to “buy low and sell high” so our portfolios can outperform the market average, in reality, it is extremely hard to execute perfectly every single time. Analysis of the last 5 decades reveals that even in the worst-case scenarios – where investors bought into the market at its peak, just before a dip – as long as investors stayed invested instead of moving to cash, they still benefited from positive annual returns of almost 11%.
If the recent market volatility is keeping you up at night, take a moment to reflect on whether your emotions are short-term reactions to the current conditions, or something you really need to act on. If you feel like you cannot stomach temporary losses, consider if your asset allocation is right for your overall investment goals and risk appetite.
A well-diversified core portfolio, aligned to your risk appetite will help spread your risk and afford you a margin of safety over the long term. Get this right and you will probably sleep better at night.
Contact us if you would like to discuss this further.
Reproduced with permission of Vanguard Investments Australia Ltd
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.
Important: Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
Turbocharge your super before 30 June
More than half of us set a new financial goal at the beginning of 2025, according to ASIC’s Moneysmart website. While most financial goals include saving money and paying down debts, the months leading up to 30 June provide an opportunity to review your super balance to look at ways to boost your retirement savings.
What you need to consider first
If you have more than one super account, consolidating them to one account may be an option for you. Consolidating your super could save you from paying multiple fees, however, if you have insurance inside your super, you may be at risk of losing it, so contact us before making any changes.i
How to boost your retirement savings
Making additional contributions on top of the super guarantee paid by your employer could make a big difference to your retirement balance thanks to the magic of compounding interest.
There are a few ways to boost your super before 30 June:
Concessional contributions (before tax)
These contributions can be made from either your pre-tax salary via a salary-sacrifice arrangement through your employer or using after-tax money and depositing funds directly into your super account.
Apart from the increase to your super balance, you may pay less tax (depending on your current marginal rate).ii
Check to see what your current year to date contributions are so any additional contributions you may make don’t exceed the concessional (before-tax) contributions cap, which is $30,000 from 1 July 2024.iii
Non-concessional contributions (after tax)
This type of contribution is also known as a personal contribution. It is important not to exceed the cap on contributions, which is set at $120,000 from 1 July 2024.iv
If you exceed the concessional contributions cap (before tax) of $30,000 per annum, any additional contributions made are taxed at your marginal tax rate less a 15 per cent tax offset to account for the contributions tax already paid by your super fund.
Exceeding the non-concessional contributions cap will see a tax of 47 per cent levied on the excess contributions.
If you’ve had a break from work or haven’t reached the maximum contributions cap for the past five years, this type of super contribution could help boost your balance – especially if you’ve received a lump sum of money like a work bonus.
These contributions are unused concessional contributions from the previous five financial years and only available to those whose super accounts are less than $500,000.
There are strict rules around this type of contribution, and they are complex so it’s important to get advice before making a catch-up contribution.
Downsizer contributions
If you are over 55 years, have owned your home for 10 years and are looking to sell, you may be able to make a non-concessional super contribution of as much as $300,000 per person – $600,000 if you are a couple. You must make the contribution to your super within 90 days of receiving the proceeds of the sale of your home.
Spouse contributions
There aretwo ways you can make spouse super contributions, you could:
split contributions you have already made to your own super, by rolling them over to your spouse’s super – known as a contributions-splitting super benefit, or
contribute directly to your spouse’s super, treated as their non-concessional contribution, which may entitle you to a tax offset of $540 per year if they earn less than $40,000 per annum
Again, there are a few restrictions and eligibility requirements for this type of contribution.
Get in touch for more information about your options and for help with a super strategy that could help you achieve a rewarding retirement.
207 Bunda Street, Cairns QLD 4870
