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Five money tasks to start the new year

Sun, 01 Feb 2026 20:30:00 GMT

Getting on top of your finances is one of the most common new year’s resolutions. But sticking to them can be hard.

If you want to get your finances unstuck, here’s five money tasks you can tick off during your summer down time, that will help set you up for success this year.

Australians owe around $33 billion on credit cards with $18 billion of that money accruing interest. At an average credit card interest rate of 18%, it’s an expensive habit.

If you pay your credit card off every month then the interest rate doesn’t matter (because you’re not being charged interest). But if you carry a debt from month to month, it’s worth comparing credit cards and choosing one that works best for you.

Also check these tips on credit card balance transfers . And try the credit card calculator to see how quickly you could pay off your debt.

Use this credit card calculator

It’s a great idea to review your private health insurance periodically as your life changes, to make sure it covers the things you’re most likely to need.

With more than 30 insurers offering multiples of products though, it’s a daunting task.

Fortunately you can compare all private health insurers and policies on the Australian Government’s PrivateHealth.gov.au website. That way, you can make a shortlist of options that could be right for you.

Here are some tips on what to look for.

Home loans can be a set and forget product – but there can be an interest rate difference of more than 2% in variable home loan rates on the market. That could make a big difference to the cost.

Here are some tips on switching home loans . And use this mortgage calculator to compare different rates and see how much you might be able to save.

Use the mortgage calculator

There’s almost $19 billion in lost and ATO-held super, waiting for rightful owners to find it. If some of that belongs to you then it’s better off in your super account, building for your retirement!

Find out more about lost super and do a lost super search on the ATO website.

Writing down goals apparently makes them more likely to happen. So having a written budget can be a good way to help you save this year.

Here are plenty of tips for saving money (from checking your utilities bills to choosing a new phone plan). And the Budget planner makes it easy work out where your money is going – and what you can afford.

Use this budget planner

If 2026 hasn’t started with your best foot forward, there’s help available, so don’t hesitate to ask.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/media-centre/five-money-tasks-to-start-the-new-year
Important note: 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. Past performance is not a reliable guide to future returns.
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.

Check your credit card’s working for you

Give your health insurance a health check

Review your mortgage

Find your super

Do a written budget

Don’t hesitate to ask for help

Protecting what matters most

Sun, 01 Feb 2026 20:20:00 GMT

We plan for holidays, home renovations, and retirement but we’re less likely to plan for the unexpected. Life insurance is one quiet but powerful way to protect the people you love from financial stress if something happens to you.

Whether you’re raising a family, supporting a partner, or building a business, life insurance helps ensure that your legacy includes stability rather than uncertainty. It can be a powerful tool for your family’s financial resilience.

Life insurance is designed to provide a lump sum payment to your nominated beneficiaries when you die or, in some cases, are diagnosed with a terminal illness. The payout can help ensure that your loved ones aren’t left scrambling to cover costs such as mortgage repayments or rent, outstanding debts, funeral costs and living expenses during an already emotional time.

It can be particularly helpful if:

you have dependents who rely on your income
you’re the primary breadwinner or contribute significantly to household finances
you have joint debts with a partner
you want to leave a legacy or charitable gift
you’re a business owner

Even if you’re young and healthy, life insurance can be affordable and locking in a policy early may mean lower premiums over time.

There’s no one-size-fits-all answer, but a good starting point is to ask yourself: “If I were gone tomorrow, what financial gaps would my family face?”

Here’s a simple framework to help you estimate your coverage needs:

Start by listing the major expenses your loved ones would need to cover:

Mortgage or rent: how much is left to pay?
Living costs: groceries, utilities, transport, childcare
Children’s education: school fees, uniforms, university costs
Debts: credit cards, car loans, personal loans
Funeral and legal costs: can be around $10,000–$20,000 ⁱ

Add these up to get a baseline figure.

How long your family would need financial support. Multiply your annual income by the number of years you’d want to replace it, for example, five to 10 years.

If you earn $100,000 and want to provide seven years of income, that’s $700,000.

Do you have savings, superannuation, or investments that could help cover costs? Subtract these from your total needs to avoid over-insuring.

Costs rise over time, and your children’s needs will evolve. It’s wise to build in a buffer of say, 10-20 per cent to future-proof your coverage.

Your life changes, and so should your insurance. Marriage, children, mortgages and career shifts can all affect how much cover you need. We can help with a regular review to ensure your policy stays aligned with your goals.

There are a few key types of cover to be aware of:

Term life insurance pays a lump sum if you die or are diagnosed with a terminal illness.
TPD (Total and Permanent Disability) covers you if you’re permanently unable to work due to illness or injury.
Trauma insurance pays a lump sum if you’re diagnosed with a serious illness like cancer or stroke.
Income protection replaces a portion of your income if you’re temporarily unable to work.

For many Australians, life insurance is already tucked away inside their superannuation fund. Most super funds automatically include a basic level of life cover and TPD insurance, and some also offer income protection. ⁱⁱ

Premiums are typically lower than retail policies and are deducted from your super balance. In many cases, you won’t need to complete a health check to get default cover, and the premiums may be more tax-effective depending on your circumstances.

While insurance in super is convenient, it’s not always comprehensive and it’s not guaranteed to suit your needs in the long term.

If you’re relying on insurance through super, it’s a good idea to review your fund’s policy and consider whether it’s enough especially if your circumstances have changed.

If you’re unsure where to start, we’re here to guide you through the options, crunch the numbers, and make sure your policy reflects your values and responsibilities

i The Cost Of A Funeral In Australia | Finder

ii Insurance through super – Moneysmart.gov.au

How much life insurance do you need?

1. Calculate your financial obligations

2. Consider your income

3. Factor existing assets

4. Account for inflation and future needs

5. Review regularly

Different types of life insurance

Life insurance in super

Prepare for an SMSF shake-up in 2026

Sun, 01 Feb 2026 20:10:00 GMT

Self-managed superannuation fund (SMSF) trustees always have a lot on their to-do lists but the first few months of 2026 are likely to be busier than usual.

Topping the list is preparing for the introduction of Payday Super and the Better Targeted Superannuation Concessions on 1 July 2026.

Payday Super is a change to when you make your employees’ Superannuation Guarantee (SG) payment. From 1 July 2026, the SG must be paid to an employee’s super fund on payday and be received by the fund within seven business days. If you are taking on new employees or paying to a new super fund, these funds must be received within 20 business days. ⁱ

Employers are considered to have made a contribution when the fund receives it, not when they pay it, so SMSFs need to have the necessary systems set up and in place from 1 July.

The ATO has warned SMSF trustees that Payday Super should not be ignored.

If you are a business owner and pay contributions for yourself or your employees into an SMSF, the fund will be receiving more contributions and there will be increased administration requirements to deal with payment timing and record keeping.

The strict timing rules also come with tougher penalties and any delay may incur a Super Guarantee Charge, which is not tax deductible.

SMSFs also need to be prepared for closure of the ATO’s Small Business Superannuation Clearing House (SBSCH) from 1 July 2026. ⁱⁱ

Employers currently using the SBSCH should take immediate action to find an alternative. You could check your accounting software and payroll packages, which may already include super functions, or look at the options offered by commercial clearing houses or other software providers.

Failing to prepare for the SBSCH closure means you may risk a fine.

Payday Super’s 1 July start date will also usher in changes to contributions messaging within the SuperStream system, the electronic standardised format employers must use to make super contributions. ⁱⁱⁱ

Changes include clearer error messaging and are designed to reduce employee contributions being rejected by the receiving super fund.

SMSF trustees need to ensure their internal systems are updated and ready to cope with the SuperStream changes, as timely and correct contribution payments are a key goal of the new rules.

According to ATO deputy commissioner Emma Rosenzweig , one of the most common SMSF errors in this area is where the Electronic Service Address (ESA) was never activated with the provider or is no longer active.

This error means the employer receives a SuperStream error message but does not receive the matching refunded super contribution.

The ATO is encouraging employers not to wait until 1 July to start making Payday Super contributions to help improve the transition.

SMSFs should also ensure they are able to receive contributions via the New Payments Platform (NPP), as employers who currently use direct debit are being encouraged to move to faster payment methods such as EFT and NPP.

With contributions flowing in more regularly – rather than quarterly – it may also be timely to reassess your SMSF’s investment strategy and portfolio allocation to ensure it remains suitable for the shift in contribution flows.

Another thing to be mindful of is from 1 July 2026, SMSFs will need to be prepared for the commencement of the government’s much delayed Better Targeted Superannuation Concessions. ^iv

These new rules are intended to reduce tax concessions for individuals with a Total Super Balance (TSB) above $3 million.

Under the new rules, people with higher super account balances will face a higher 30 per cent concessional tax rate on the proportion of earnings corresponding to their TSB between $3 million and $10 million.

With a higher TBC in place for 2025-26, SMSFs should consider the implications of the new tax regime prior to making any pre-30 June contributions and potentially breaching the indexed thresholds in future financial years.

If you need help preparing your SMSF for the upcoming changes, contact our office today.

i Spotlight on… Payday Super | Australian Taxation Office

ii The Small Business Superannuation Clearing House is closing | Australian Taxation Office

iii SuperStream for employers | Australian Taxation Office

iv Better targeted superannuation concessions | Australian Taxation Office

Who’s affected?

New clearing house partners

SuperStream updates

Prepare for earlier contributions

High balance tax changes

Life cover

Sun, 25 Jan 2026 20:40:00 GMT

A sudden death can place financial stress on those who depend on you. If this happens, life cover can help them pay the bills and other living expenses.

Life cover is also called ‘term life insurance’ or ‘death cover’. It pays a lump sum amount of money when you die. The money goes to the people you nominate as beneficiaries on the policy. If you haven’t named a beneficiary, the super trustee or your estate decides where the money goes.

Life cover may also come with terminal illness cover. This pays a lump sum if you’re diagnosed with a terminal illness with a limited life expectancy.

Important: Accidental death insurance is different from life cover. It will only pay out if you die from an accident. It will not provide cover if you die from an illness, disease or suicide. This type of cover often has a lot of exclusions.

To understand what’s covered under a policy and the exclusions, read the product disclosure statement (PDS).

If you have a partner or dependents, life insurance can help repay debt and cover living costs if you die.

If you don’t have a partner, or people who depend on you financially, you may not need life cover. But consider getting trauma insurance , income protection insurance or total and permanent disability (TPD) insurance in case you get sick or injured.

To decide how much life cover to get, consider how much money you or your family would:

need — to pay the mortgage, credit cards and any other debts, child care, school fees and ongoing living expenses
receive — from super, savings, the sale of any investments, your paid leave balance, and support from your extended family

The difference between these is the amount of cover you should get.

If you need help deciding if you need life cover, and how much, speak to us.

Check if you already hold life insurance through super . Most super funds offer default life cover that’s cheaper than buying it directly. You can increase your level of cover through your super fund if you need to.

You can also buy life cover from:

a financial adviser
an insurance broker
an insurance company

Life cover can be bought on its own or packaged with trauma, TPD or income protection insurance. If it’s packaged, your life cover may be reduced by any amount paid on other claims in the package. Check the PDS or ask your insurer.

You can generally choose to pay for life cover with either:

variable age-stepped premiums (previously known as ‘stepped premiums’) — are based on your age and recalculated at each policy renewal. Generally, this means that the cost of your cover will increase as you get older because there is a higher chance of making a claim as you age.
variable premiums (previously known as ‘level premiums’)— charge a higher premium at the start of the policy, but changes to the cost aren’t based on your age, so increases generally happen more slowly over time.

Your choice of variable age-stepped or variable premiums has an impact on how much your premiums will cost now and in the future.

Regardless of which way you choose to pay for your cover, premiums are not guaranteed and may change annually. Speak to your insurer or read the PDS for more information.

Once you know how much life cover you need, shop around and compare:

benefits and policy features
exclusions
waiting periods before you can claim
limits on cover
the cost of the premiums — now and in the future

A cheaper policy may have more exclusions, or it may become more expensive in the future. You can find information about the policy on the insurer’s website or in the product disclosure statement (PDS).

An insurer will ask you questions when you apply for or change your insurance. These questions may be about your:

age
job
medical history
family history, such as a history of disease
lifestyle (for example, if you’re a smoker)
high-risk sports or hobbies (such as skydiving)

If an insurer doesn’t ask for your medical history, it may mean that the policy has more exclusions or narrower policy definitions.

The information you provide will help the insurer to decide:

if they should insure you
how much your premiums will be
terms and conditions for your policy

It is important that you answer the questions honestly. Providing misleading or incomplete answers could lead an insurer to cancel or vary your cover, or decline a claim you make.

If someone close to you dies and you need to make a claim, or if you need to make a terminal illness claim, see how to make a life insurance claim .

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/how-life-insurance-works/life-cover
Important note: 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. Past performance is not a reliable guide to future returns.
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.

What is life cover

Decide if you need life cover

How much life cover you might need

How to buy life cover

Life cover premiums

Compare life cover

What you need to tell your insurer

Making a life cover claim

Your money, your priorities

Sun, 25 Jan 2026 20:30:00 GMT

Investing may be all about the numbers – growth, returns and risk – to build a secure future but increasingly investors are interested in an even more meaningful approach.

Four out of five respondents to a 2024 survey wanted their investments to have a positive impact in the world. ⁱ

The survey, by the Responsible Investment Association Australasia (RIAA), found 79 per cent of investors would be more likely to invest in funds or products that have been independently verified as responsible or ethical. Animal cruelty was a top concern for 66 per cent, followed by human rights abuses – 60 per cent, gambling – 56 per cent, companies that don’t paid their fair share of tax – 55 per cent, as well as tobacco, weapons and firearms all at 55 per cent. ⁱⁱ

This growing interest in responsible investment saw assets under management in Australian funds rise 24 per cent to more than $1.6 trillion in 2024. ⁱⁱⁱ

Meanwhile, a 2025 survey of 3,500 high net worth Australian investors found that sustainable investing is gaining traction as long as appropriate returns, clear risk and return profiles, and transparent performance reporting are in place. ^iv

Aligning your investments with your values isn’t about changing the way you invest, it’s about adding an extra layer of meaning to the process and shaping your portfolio to reflect what’s important to you.

For some, that might mean supporting companies that innovate responsibly or treat employees well. For others, it could mean avoiding industries that don’t align with their principles. There’s no single ‘right’ approach because your values are unique to you.

And here’s the reassuring part: investing with your values doesn’t mean sacrificing returns. Many businesses that operate with strong governance and long-term strategies have shown to perform competitively over time. So, you can pursue financial growth while feeling confident that your money is working in ways that matter to you.

In fact, the RIAA noted in 2024 a ten-year return on RIAA-certified products of 13.9 per cent, compared with 9.19 per cent for the rest of the market (Australian share funds). ^v

Of course, fundamental investment rules apply. Diversification is one of the keys to successful values-based investing. But it’s not about limiting your choices, it’s about finding the right mix of investments that meet both your financial and personal criteria.

A well-constructed portfolio can include companies across different sectors that align with your principles while still delivering strong performance. This approach ensures you’re not only investing with purpose but also managing risk effectively.

Turning this idea into reality can be complex. Investor’s priorities are different and the investment universe is vast. That’s where a financial adviser adds value.

A good adviser doesn’t just manage numbers. They listen and take the time to understand what matters most to you, whether that’s supporting certain industries, avoiding others or balancing ethical considerations with performance goals.

From there, they help design a strategy that reflects your values without losing sight of your financial objectives.

Advisers also provide clarity. With so many investment options available, it’s easy to feel overwhelmed. We can help you navigate choices, evaluate trade-offs, and ensure your portfolio remains diversified and resilient. We can also monitor your investments regularly, making adjustments as markets change and your priorities evolve.

So, if you’ve ever wondered whether your investments reflect your values, you can begin exploring the possibilities.

Start by asking yourself about the principles that are most important to you; the industry sectors you would like to support or steer clear of and how you would define success.

Then, give us a call. We can help you to align your portfolio with your values while keeping your long-term goals on track.

i, ii From Values to Riches 2024: Charting consumer demand for responsible investing in Australia – Consumer Research

iii, v Record $1.6 trillion committed to responsible investing, but greenwashing remains a major concern – Media Release

iv New EY survey: Australian investors more likely to stick with their adviser, though shifting expectations are reshaping the wealth management landscape | EY – Australia

Adding value

Taking the first step

Men earn nearly $10,000 more than women in bonuses and overtime pay, fuelling the gender pay gap: new data

Sun, 25 Jan 2026 20:30:00 GMT

Men are earning on average A$9,753 more than women each year in the form of performance bonuses, allowances and overtime pay.

That’s according to the latest gender pay gap data released on Thursday by the Workplace Gender Equality Agency. It covers more than 8,000 private companies for 2024–25, employing more than 5.4 million workers across Australia.

The overall gender pay gap fell to 21.1%, compared to 21.8% in 2023–24. But the gap in discretionary pay makes up a big chunk of the total gender pay gap of $28,356.

The gender gap in discretionary remuneration – payments made on top of a worker’s base salary and excluding mandatory superannuation – balloons in particular industries.

In the rental, hiring and real estate industry, these additional payments average $34,618 annually for men and $14,154 for women. That’s a gap of $20,464.

In financial and insurance services, the gender gap in additional payments comes to $20,383. In electricity, gas, water and waste services, it’s $16,644.

Top five industries with the largest gender gap in discretionary payments

Chart: The ConversationSource: WGEA (2025) Australia’s Gender Equality Scorecard 2024-25

Studies have found that when gender gaps have successfully narrowed, it’s generally the base salary component that has improved. The gap in discretionary payments is more stubborn.

Partly these gender differentials in discretionary payments are due to men working overtime hours, which are paid at a higher hourly rate.

But this gender pattern in overtime reflects rigid gender roles. While men work longer hours , women are shouldering the bulk of unpaid domestic labour and care in the home.

These patterns arise from employers’ expectations in many jobs that employees will be available 24/7 to work very long hours (such as in finance) or non-standard hours like weekends (such as in construction).

It’s what Nobel Prize-winning economist Claudia Goldin calls “greedy jobs”.

Longer hours are rewarded through bonuses and higher hourly pay rates. What’s the logical thing, financially, for households to do? For one partner to work the extra hours and leverage overtime rates, while the other takes the lion’s share of domestic work and care.

Greedy jobs cause couples to split their roles. And gender stereotypes get further entrenched.

This brings us to another of the Workplace Gender Equality Agency’s latest findings on a policy that can undo these entrenched gender patterns: fathers’ usage of paid parental leave.

The agency measures the share of total paid parental leave that is been taken by men, with the remaining share being taken by women.

The share of all parental leave being taken by men grew to 20% in 2024-25, a rise of three percentage points from the year before.

These numbers need to be looked at alongside the gender composition of the workforce. Men’s 20% share of paid parental leave is still a minority considering men make up half of the workforce.

In male-dominated industries, we would expect men’s share of paid parental leave to be higher because men make up the majority of workers.

While mining is the industry with the largest share of paid parental leave being taken by men (53%), it’s still well below men’s 77% share of the industry.

Industries with the largest and smallest men’s usage of paid parental leave

Chart: The ConversationSource: WGEA (2025) Australia’s Gender Equality Scorecard 2024-25

The Workplace Gender Equality Agency notes that men’s uptake of paid parental leave jumped notably in the past year in the construction sector, up 12 percentage points to 39%. But that’s still well below men’s 79% share of that industry’s total workforce.

Among the industries with the biggest gaps between men’s share of the workforce and share of parental leave, men in transport, postal and warehousing take 24% of paid parental leave, despite making up 73% of the workforce.

Men working in wholesale trade take just 19% of paid parental leave, even though they make up 62% of the workforce.

There’s also scope for more employers to offer paid parental leave above government-funded minimum entitlements. Availability is lowest in public administration and safety, and accommodation and food services, where only around one in three private sector employers offer company-funded parental leave.

Often, this type of benefit is used by companies as an attraction and retention tool. Industries with high rates of staff mobility, and less competition for workers, tend to see less payoff in these types of policies.

But often overlooked in debates about paid parental leave are the benefits to men , too.

There’s still much progress to make in shifting workforce culture to make it “the norm” that all parents have the opportunity to participate in caregiving.

By measuring and tracking Australian employers’ gender equality performance and policy actions, the agency’s annual scorecard helps employers and employees realise these benefits.

Source: https://theconversation.com/men-earn-nearly-10-000-more-than-women-in-bonuses-and-overtime-pay-fuelling-the-gender-pay-gap-new-data-270366

Where gaps in bonus and overtime are widest

Blame ‘greedy jobs’

Parental leave is growing among men

Going beyond the minimum requirements

How to spot a scam website

Sun, 25 Jan 2026 20:20:00 GMT

Recently, there was an alert about the ASIC Moneysmart website being impersonated. It’s part of a growing – and increasingly sophisticated – trend of scammers targeting reputable, high traffic websites.

These days, websites can be very easily set up and look quite professional without much effort, thanks to templates.

So, whether you’re visiting the website of your bank, insurer, or a government agency, how can you be sure you’re in the right place? Here are some top tips.

Does the URL match the content: Take the time to check a website’s URL. Many scammers take advantage of people not checking by showing content from known and trusted brands.

Be wary of shortened links: If you receive a shortened link (like bit.ly), only click on it if you’re already confident that the website is genuine.

Be wary of redirects: if a page ‘refreshes’ multiple times before it loads, with different content or a different URL, this may be because of multiple redirects – a warning sign of a scam website.

Search for the website: If the website is from a major brand or is showing a news article from a well-known news source, search for the name or title in a search engine. Compare and check that it brings up the same URL.

The URL (web address) of the webpage you’re on will be in the browser bar at the top of your webpage.

You can also check the URL of any links on a webpage simply by hovering your mouse over the link.

You can check for alerts in a few ways:

Check the Investor alert list – Moneysmart.gov.au to see if ASIC has warned about the website or the entity operating the website.

Search for the URL or business name and the word ‘scam’ to see if consumers have warned others about losing money to a website online.

Check for international regulator warnings via International Securities & Commodities Alerts Network (I-SCAN) .

Scam websites are often online for a short period of time before they get shut down or move on to a new website.

You can check how old a website is by searching for ‘WHOIS search’ and conducting a free search. The ‘Registered On’ date is the date that a website was registered – anything newer that 6 months is a red flag.

Unusual language: If a website uses an odd turn of phrase, try searching online for it. If many websites turn up which use the same wording, be cautious as they may be scam websites that were set up by the same person.

Check for spelling and grammar errors: Scam websites often have poor language quality or awkward phrasing. Read it carefully to see if it makes sense.

Being encouraged to invest? Here’s what to check before trusting a business with your money, and how to spot the signs of a scam.

Check for a physical address, phone number and email. Legitimate businesses provide real contact details, and any license or registration details, clearly.

Be on alert for these red flags:

Unusual contact channels: A website only offers communication via anonymous web forms, chat bots and social media accounts like WhatsApp, Signal or Telegram instead of providing a physical address and telephone number.

Vague address information: They list a large office building or coworking space as the office address without providing details like a floor number. They may provide a telephone number with a country code that doesn’t match the country of the physical address that has been provided.

Stock image staff photos: They use AI generated or stock photos for members of its staff. It is easy to check where an image comes from with a free reverse image search offered by a number of well-known search engines.

No licensing information for financial services : If the business is offering investments or other financial services, they should display license and registration details clearly. Speak to us before you consider investing.

Unusual digital footprint: A business may claim to work with a large client base or funds, but they have a limited web or social media presence.

Negative or overly positive reviews: There are negative reviews about the business online. Also be cautious if the reviews are overly positive or all sound similar – they may be fake. You could also check comments on their social media accounts.

Here are other signs you may be looking at a scam website:

A significant number of ads : a website may have more ads than content, or you are seeing a lot of pop-ups.

Broken links : If there is only one page, or links do not work, this may be a red flag. This can include broken links to their social media.

Unusual payment methods: If the business is asking for investments or payments using cryptocurrency, international funds transfer, or other unusual methods such as gift cards.

Multiple company websites: A search reveals more than one URL for this company – this might mean that one of them is an impersonation.

Always be cautious of scammers impersonating legitimate businesses, especially if you are looking to invest your money. Look for signs of imposter bond scams and other investment scams .

Act fast if you suspect a scam

Report a scam

Scamwatch , run by the National Anti-Scam Centre (NASC), collates information about all scam types. They use this information to warn and protect the public. Scamwatch also sends information to other agencies, including ASIC and ReportCyber, to help stop scammers. Report all scams, including investment scams, to Scamwatch.

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/online-safety/how-to-spot-a-scam-website
Important note: 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. Past performance is not a reliable guide to future returns.
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.

Check the website address (URL) carefully

How to check a URL

Research the website

Check how old the website is

Look closely at the website content

Check the business information

Other warning signs of scam websites

Report all scams to Scamwatch

Search for scam alerts and warnings

Investing in rare earths requires patience and perspective

Sun, 25 Jan 2026 20:20:00 GMT

Few investment sectors combine geopolitical intrigue, technological innovation and long-term growth potential quite like rare earth elements (REEs).

For Australians, the recent deal with the United States to supply rare earths to seed US$8.5 billion worth of new projects, has thrust the sector into the spotlight. ⁱ

Rare earth elements are a group of 17 metallic elements that, despite the name, are not particularly rare but are difficult and costly to refine. Their unique properties are essential in the powerful magnets that drive electronic devices such as headphones, speakers and computers, wind turbine generators, electric vehicles and medical technology such as magnetic resonance imaging (MRI). ⁱⁱ

Almost half of the world’s known reserves of rare earths are in China. It’s estimated 44 million metric tonnes dwarf our 5.7 million and the 1.9 million in the United States. Brazil has about 21 million metric tonnes. ⁱⁱⁱ

Reserves are one thing but production and processing is what makes the difference for investors.

China is leading the field by a wide margin. It extracted and processed some 270,000 tonnes in 2024. The US was next with 45,000 tonnes, followed by Myanmar (31,000) and Australia, Nigeria and Thailand, each on 13,000 tonnes. ^iv

The deal recently signed in Washington – the US-Australia Framework for Securing Supply of Critical Minerals and Rare Earths – commits both countries to investing at least US$1 billion each over the next six months to accelerate mining, processing and supply chain development for critical minerals.

Two of the projects were announced by Prime Minister Albanese after his recent meeting with US President Trump.

One project, the Alcoa-Sojitz Gallium Recovery project in Western Australia, will provide up to 10 per cent of total global supply of gallium, essential for defence and semiconductor manufacturing.

The second, the Arafura Nolans project in the Northern Territory, aims to supply 5 per cent of global rare earth demand by 2029. ^v

A recently announced third project, Astron Corporation’s Donald Rare Earth and Mineral Sands project in western Victoria, is expected to become the fourth-largest rare earth mine in the world outside China. ^vi

The landmark Australia-US deal is a response to China’s dominance in the rare earths market and Beijing’s recent export restrictions on rare earths, which have left many nervous about vulnerabilities in the supply chains for defence and high-tech industries.

For some investors, rare earths may be seen as a long-term opportunity given a prediction by the International Energy Agency that demand could double by 2040. ^vii

There are several ways to invest including:

Directly in ASX-listed companies such as Lynas Rare Earths (LYC), Arafura Rare Earths (ARU) or Iluka Resources (ILO)
Through exchange traded funds (ETFs) or managed funds that offer exposure to rare earths miners and processors
In private equity and venture capital. For high-net-worth investors, early stage mining and processing ventures may offer high risk, high reward potential

Of course, there are risks worth considering including geopolitical volatility, growing environmental concerns over the high water and energy demands, and China’s ability to flood the market or further restrict exports, which could cause price volatility.

In any case, patience will be required. Mines can take as long as seven years to become operational. ^viii

The bottom line for investors is while rare earths are a sector still maturing, they are critical to a range of industries and expected to increase in value over the next decade. However, their share prices are sensitive to global headlines, politics and policy changes, so volatility is to be expected – particularly in the current environment.

As always, there is a lot to consider when weighing up investment opportunities and we are here to discuss any aspect of your investment strategy.

i Historic critical minerals framework| Prime Minister of Australia

ii What Are Rare Earth Minerals Used For? | The Institute for Environmental Research and Education

iii, iv Mapping rare earth supplies | ABC News

v Historic critical minerals framework| Prime Minister of Australia

vi Donald rare earth mine given major project status | ABC News

vii Outlook for key minerals | IEA

vii Many details remain buried in Australia-US rare earths deal | Crikey

What are rare earths?

Production and processing

Australia’s strategic position

Investment opportunities and risks

Your retirement. Your way. Your adventure.

Sun, 25 Jan 2026 20:20:00 GMT

Retirement has often been seen as a time to slow down and enjoy the simple pleasures of daily life. And for many, that’s the dream. But retirement is no longer defined by one image or one path. In fact, it can be something much more expansive. Today, retirement is increasingly viewed as a time of freedom, possibility, and reinvention.

Retirement isn’t about stepping back. It’s about stepping into a new chapter where you decide what comes next.

Even if you are not yet there, and retirement is still a way off, it’s never too soon to think about who you want to be, what gives you joy, and start to gravitate towards living your dreams.

Of course, you can live your dreams at any stage of your life but the exciting part about retirement is that you are no longer bound by the expectations that shaped your earlier years. You don’t have to earn a living anymore, so what you do with your time can be driven purely by passion, curiosity, or purpose.

For much of our lives, we learn to conform. We wear the suits, follow the rules, meet the deadlines, and often suppress our wilder ideas or untapped creativity to fit the roles expected of us, whether as professionals, parents, providers, or partners.

But something shifts later in life. With age often comes clarity, and a new kind of confidence. Retirement can be the moment when we stop asking what others think we should do and instead, begin to ask what our hearts are calling us to do.

This is your opportunity to push boundaries, shed old labels, and express your true self without apology. It is a time to honour your inner voice, whether that means embracing bold adventure, creating, starting over, or simply doing what feels meaningful to you.

Retirement can be the perfect time to try something unexpected or bold. Consider these inspiring examples:

After being let go by Lancôme at age 45 for being “too old,” Rossellini redefined what aging looks like. She went back to school in her 50s to study animal behaviour, wrote books, bought a working farm, and later, in a full-circle moment, was rehired by the same brand that once let her go. Now in her 70s, she continues to model, act, write, and farm, all on her own terms.

At 64, Nyad swam from Cuba to Florida, a journey of 110 miles through open ocean, after four earlier attempts. It was a dream she had carried her whole life, and she proved that persistence and passion don’t expire with age.

Harriette ran her first marathon in her 70s and, at 92, became the oldest woman ever to complete one. Her story is a celebration of physical endurance and mental strength at any age.

Well into his 80s, the Oscar-winning actor continues to create. He acts in major films, paints, composes music, and shares his work with younger generations online. He shows that creativity and passion do not have a use-by date.

Mother Teresa received the Nobel Peace Prize at age 69 for her work with “Missionaries of Charity,” a world-wide organization that helped the sick, the poor, the dying and left an incredible legacy of benevolence that continues today.

This chapter of life gives you the rare opportunity to redefine yourself, or finally be yourself, in ways that may not have been possible earlier in life.

Whether your dream is to travel the world, volunteer overseas, write a novel, take up painting, or pursue a long-held interest that never fit into your working life, now is your chance.

And it doesn’t have to follow tradition. Retirement can be adventurous, creative, active, or entrepreneurial. It can be spent on a cruise ship, in a mountain village, running marathons, making movies. And you don’t have to set the world on fire – if what makes you happy is watching your roses bloom then go for it! The point is, this part of your life, is yours to shape.

Retirement is a time to live fully and follow your own path to what brings you joy.

What will your next chapter be?

Let go of conformity, embrace freedom

Unconventional can be unforgettable

Isabella Rossellini

Diana Nyad

Harriette Thompson

Anthony Hopkins

Mother Teresa

Finding your joy

How to access aged care assistance at home

Sun, 25 Jan 2026 20:10:00 GMT

Ageing comes with wisdom, experience and a lifetime of stories, but it can also bring new challenges. Tasks that once felt effortless may now require support, and while many people assume the only option is moving into residential care, that isn’t the case.

You can often receive the help you need while continuing to live safely and comfortably at home.

This guide explains how to get started.

My Aged Care is the Australian Government’s entry point to aged care services. It’s designed to help older people find trustworthy support – whether that’s a bit of assistance around the house or more complex care – while staying in their own home for as long as possible.

Through My Aged Care, you can:

learn about different aged care programs
check your eligibility
access government funding
be connected with services that match your needs

Even if you’re able to pay for services privately or have strong family support, My Aged Care is still the best place to start. It outlines what support is available and helps you navigate the system.

You can register yourself or a loved one on the My Aged Care website, or call 1800 200 422 if you prefer to speak with someone. The team can also assist in person through Aged Care Specialist Officers.

During registration, you’ll provide basic personal and health information. This builds your profile and helps My Aged Care suggest suitable services. Although information listed on the site is reliable, the Department of Health and Aged Care still recommends verifying any provider you’re considering.

If you need financial assistance, you can also apply for funding. After you apply, your details will be sent to a local assessment team.

An assessor will visit your home (or your loved one’s home) to understand your day-to-day needs and determine what support would improve your safety, independence and wellbeing.

Based on this visit, the assessor may:

confirm your eligibility for government-funded services
recommend specific types of support
create a support plan outlining the type and level of help you require

This plan becomes the foundation for choosing your care options.

Aged care in Australia is diverse. Some services are delivered in residential aged care homes, while many others can be provided in your own home. In home care can include personal care, domestic assistance, nursing, respite, transport, home maintenance and more.

Understanding what you need – and what’s available – is important, especially if you want to continue living at home.

The new Support at Home program is designed to bring together existing in-home care programs into one streamlined system. It aims to make it easier for older Australians to access the right help at the right time, with services tailored to individual needs and goals. Support at Home offers a wide range of care types, from basic assistance to more complex support, delivered directly to your home based on your assessed needs.

Your assessor will help outline what level and type of support is suitable for your situation.

Most older Australians prefer to stay in their own homes for as long as possible. My Aged Care helps make this achievable by connecting you with the services you need to live safely and independently.

However, if your care needs become too great to manage at home, residential aged care may eventually be recommended. Whatever path you choose, the decision remains yours – or, if necessary, made with your appointed decision-maker under the Aged Care Act 2024, which strengthens the rights of older people.

Understanding your options is the first step in planning for safe, comfortable ageing. My Aged Care offers a clear pathway to find, compare and access support services, whether for yourself or a loved one.

If you’re ready to explore your options, visit the My Aged Care website to begin the process and take control of your care at home.

Source:
This article was originally published on https://www.agedcareguide.com.au/talking-aged-care/how-to-access-aged-care-assistance-at-home . Reproduced with permission of DPS Publishing.
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.

Getting aged care support through My Aged Care

How to get started

What happens during an assessment?

Choosing the right services

Support at Home

In-home care vs residential aged care

2025 Year in review: It was a soft landing for Australia

Sun, 18 Jan 2026 22:10:00 GMT

Many investors breathed a sigh of relief at having survived (and even thrived) the turbulent economic and political events of 2025.

Super funds posted strong double-digit returns for the 2024-2025 financial year. Australia recorded modest economic growth, while inflation cooled a little throughout the year – albeit with a slight uptick at year’s end – and house prices surged before hitting the brakes in December. Share markets reported respectable gains locally and some surging profits globally.

Markets and economies around the world have danced to the tune of the Trump Administration’s second term in office and reacted to wars and unrest in the Middle East and Ukraine.

The US President’s often surprising policy twists and turns, particularly a punishing new tariff regime, saw markets falter and exporters of goods and services to the US plunged into uncertainty.

The Australian dollar reflected the choppy conditions, hitting lows just under 0.60 US cents in April before recovering slightly by year ‑end at just under 0.67 US cents, this was buoyed by our strong iron ore exports and the growing demand for lithium, copper and rare earths. ⁱ

The artificial intelligence revolution was another feature of the year, driving US share markets ever higher with some fearing the bubble is overdue to burst.

Inflation’s stubborn resistance to the Reserve Bank’s measures to bring it down could lead to further interest rate rises in 2026.

The Consumer Price Index in January recorded an annual rate of 3.4 per cent, down 0.4 per cent on the previous month. The RBA’s flexible inflation target aims to keep the cost of living increases between two and three per cent.

The cash rate began 2025 at 4.35 per cent but after three cuts during the year, it was down to 3.6 per cent in December. The RBA is due to meet in February to consider its next move.

In the US, the Federal Reserve also cut rates three times, putting the interest rate to a range of 3.5 – 3.75 per cent.

The Australian economy grew 2.1 per cent in the year to September in a massive improvement on the previous year’s growth of 0.8 per cent.

After two uneven years, home values surged again in 2025 by 8.6 per cent, adding about $71,500 to the national median. ⁱⁱ

It’s the strongest calendar year performance since the remarkable 24.5 per cent increase in 2021.

However, values softened in December, recording the smallest monthly increase in five months.

Darwin delivered the best performance with an 18.9 per cent gain in values during the year while Melbourne took the wooden spoon with a 4.8 per cent increase. ⁱⁱⁱ

Global equity markets proved that they could thrive, even in a higher-interest rate environment, and the AI revolution moved from the hype phase of the previous year to serious players in 2025.

While ‘The Magnificent Seven’ tech stocks have long ruled the S&P 500, in 2025 just two outperformed the index with a gain of 64.8 per cent for Alphabet and 38.9 per cent for Nvidia. ^iv

It was a slower pace for Australian markets with the S&P/ASX 200 delivering a solid total return of 6.8 per cent. While the big banks faced some pressure on margins as interest rates peaked, the materials sector was supported by the global energy transition. Dividend yields remained attractive, continuing Australia’s tradition of providing reliable income for retirees and SMSFs.

Precious metals drove commodity values in the past year with investors looking for security amid interest rate movements and geopolitical tensions.

Silver was up by an astonishing 182 per cent during the year, but a sell-off in December saw the price finish the year with a 147 per cent gain. ^v

Meanwhile, gold’s safe haven status during times of uncertainty saw it jump by 65 per cent during the year.

It seems likely the issues that dominated the financial markets in 2025 will continue to shape performance and returns this year.

Global politics and war are likely to move commodity prices and equity markets while the contrariness of US foreign policy will both spook and buoy investors.

In Australia, all eyes will be on the RBA, with high levels of speculation as to where interest rates will be heading in 2026.

i Australian Dollar | Trading Economics

ii Home Value Index: Softer landing after strong 2025

iii Home Value Index: Softer landing after strong 2025

iv Which Magnificent 7 Stock Had the Best Year in 2025? | Investing.com

The big picture

Economy

Property

Share markets

Commodities

Looking ahead

Preparing for an inheritance

Sun, 18 Jan 2026 20:33:00 GMT

If the ballpark numbers are at least remotely close, the amount of assets set to be transferred from one generation to the next in Australia over the coming decades will amount to trillions of dollars.

According to estimates within a 2021 Productivity Commission report , Australians aged 60 and over will transfer $3.5 trillion or an average of about $175 billion per year in wealth in the next two decades. A 2024 report by JBWere Australia had an even higher estimate of $5.4 trillion for likely wealth transfers in Australia over the next 20 years.

The largest part of this great wealth transfer will be between members of the “Baby Boomer” generation (people born just after the end of World War II through to 1964) and their children and other heirs.

It will include family homes, investment properties, superannuation money, direct shares and a wide range of other financial and non-financial assets.

The value of inheritances is not only likely to grow dramatically as wealth levels increase but it will be an increasingly important source of future income and assets for younger generations.

Vanguard’s 2025 How Australia Retires research found that 21% of working-age Australians and 8% of retirees expect to use an inheritance as a source of their retirement income.

Furthermore, 13% of working-age Australians and retirees said the family home would become an inheritance for their beneficiaries or children and they planned to keep it within the family when they died.

The conversation around inheritances interweaves with Australian government research that many Australians are not exhausting their superannuation savings before they die.

The 2023 Intergenerational Report found that most retirees draw down at the legislated minimum drawdown rates.

“This results in many retirees leaving a significant proportion of their balance unspent, for example, a single retiree drawing down at the minimum rates would be expected to still have a quarter of their retirement assets at death,” the report noted.

Treasury estimates in the 2020 Retirement Income Review included projections from Treasury that outstanding superannuation death benefits could increase to just under $130 billion in 2059, assuming there’s no change in how retirees draw down their superannuation balances.

Australians collectively had around $17.7 trillion in household wealth at 30 June 2025 according to Australian Bureau of Statistics data , including property and other investments, cash deposits, and superannuation.

Meanwhile, the 2025 UBS Global Wealth Report showed we ranked second in the world for median wealth per adult at US$268,424, and fifth for average wealth per adult at US$516,640.

There’s potentially a lot of household money to go around, and a lot to be inherited.

But inheritance planning, unlike succession planning within a business, is an area that’s rarely discussed at the family level.

Most families regard subjects such as death and the future division of wealth as unpleasant, and potentially sensitive when multiple heirs are involved.

But there’s a lot to be said for having open discussions within your family about the intended treatment of assets and future inheritances.

Creating a valid will, and specifically documenting how you want your assets to be managed and divided after your death, should be a key step in the inheritance planning process.

Residential real estate and superannuation, which combined make up more than three quarters of total household assets, are the largest components of most inheritances.

Ensuring that any superannuation you have left over at the time of your death is distributed according to your wishes requires you to complete a binding death benefit nomination form provided by your super fund.

It’s important to be aware of any potential tax implications. For example, while superannuation distributed to a surviving spouse or dependent children is generally tax free, non-dependents (including adult children) may be required to pay tax on amounts they receive.

Those inheriting assets such as property and financial securities may also face tax issues.

Estate planning can be complex. Consulting a licensed financial adviser to help you and your intended beneficiaries map out an inheritance framework that also identifies issues such as potential tax liabilities is a prudent step.

Source: Vanguard November 2025

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Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966).
The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”).
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.
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© 2025 Vanguard Investments Australia Ltd. All rights reserved.

What role will an inheritance play in your long-term wealth strategy?

Show me the money

A touchy subject

Seek professional advice

Getting the age pension (and your Seniors Card)

Fri, 07 Nov 2025 06:09:54 GMT

You’re nearly there. After a lifetime of toil – of digging, building, thinking, manufacturing, planting, helping and nurturing – it’s time for you to enjoy your Golden Years. If you’re an Australian resident, you’re entitled to an age pension and a Seniors Card. Here’s what you need to do next.

Age Pension Eligibility

To claim the age pension you must meet certain criteria.

Age requirements

With a couple of exceptions—see the Centrelink page for more—you must be 65.
From July 1, 2019, the qualifying age for the pension increased to 66. It’ll then go up by six months every two years until it reaches 67 on July 1, 2023.

Income test

You can earn up to $174 a fortnight (or $308 as a couple) without any reduction to your payment.
If you earn more than this, your pension will be reduced by 50c for each extra dollar you earn.
Again, there are variations and exceptions to this such as the income test for Transitional Rate pensioners. Check Centrelink for more details.

Assets test

Your assets—your business, your super investments, your cars and boats and caravans etc.—can affect your eligibility for the pension. Note your principal home is excluded.
This is pretty detailed stuff—it’s best you work through Centrelink’s exhaustive list .

Residency requirements

You must meet the following residency requirements.

You must be an Australian resident when you lodge your claim and be physically present in the country when you do so.
You also need to have been an Australian resident for 10 years straight, or for a number of periods that exceed 10 years (with one of these being five years or more).
There are some exceptions, for example if you are a refugee or former refugee. Centrelink has the details.

Australia also has reciprocal pension agreements with 29 other countries which might help you if you haven’t met all the requirements above.

Claiming the Pension

Centrelink’s website has all the information you need. It’s straightforward and well-organised. You can:

submit your claim online
call Centrelink on 13 23 00 (Monday to Friday, 8:00am to 5:00pm AEST/AEDT) for a claim pack
pick up one up from your nearest service centre.

You can submit your claim up to 13 weeks before you are eligible for the pension.

Seniors card

You may also be eligible for a Seniors card.

Each state and territory has its own scheme—and each offers its own mix of transport concessions and discounts. There are various reciprocal arrangements in place so you can use your card when you’re interstate.

To be eligible, you must be a resident of a state or territory, be 60 years or over, and not work more than a set number of hours per week in paid work.

Commonwealth Seniors Health Card

Once you reach age pension age, you qualify for a Commonwealth Seniors Health Card. This offers discounts on prescription medicines and other services including bulk billed GP appointments, out-of-hospital medical expenses, and concessional rail travel on epic Great Southern Rail services (eg. The Indian Pacific, The Ghan and The Overland).

The card is subject to an income test. You must have an annual adjusted taxable income of less than:

$54,929 for singles
$87,884 for combined couples
$109,858 for combined couples separated due to ill health, or when one partner is in prison.

This limit’s increased by $639.60 for each dependent child you might care for.

For more info check out the Commonwealth Seniors Health Card page on Centrelink’s website.

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/work/plan-retirement/age-pension

National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.

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.

Hedge funds

Fri, 07 Nov 2025 04:45:43 GMT

Hedge funds use investment strategies that are more complex than other managed funds. Many aim for positive or less volatile returns, in both rising and falling markets.

A hedge fund is a complex investment and risks vary. Read the product disclosure statement and consider getting financial advice before you invest.

How hedge funds work

Hedge funds (‘absolute return’ funds) use pooled funds to invest in alternative assets or strategies. This may include the use of derivatives, alternative investments or leverage in domestic and international markets.

Hedge fund returns may depend less on traditional assets, like shares and bonds. This can make it a good way to diversify a portfolio.

A hedge fund may aim to deliver positive or less volatile returns, in both rising and falling markets. It could try to outperform a benchmark, such as a market index or interest rate. Or achieve a benchmark return with less volatility.

Hedge fund features

There are different types of hedge funds. The features and risks of each depend on:

fund strategy
what assets it invests in
where assets are
investment tools used
fund manager’s knowledge and skill

See the fund’s product disclosure statement (PDS).

Investment tools

Common investment tools include:

Leverage — When a fund increases its exposure to certain assets or strategies, usually through borrowing. Leverage can increase returns, and increase losses.
Derivatives — Securities whose value depends on an underlying asset such as a share, commodity or index. Used to manage risk. And gain or reduce exposure to assets, markets or events. Enables an investor to buy or sell an asset in the future, based on an agreed price.
Short selling — An investor borrows a security from another party (a broker), then sells it on the market. The investor aims to buy an identical security at a lower price and return it to the lender. And hopes to profit from the difference between buy and sell prices.
Alternative investments — Investing in assets such as high yield bonds, synthetic assets, derivatives, unlisted shares or other hedge funds.
Active management — The fund manager decides what to invest in, and how much. The manager’s expertise is crucial to the fund’s success.

Fund of hedge funds

A ‘fund of hedge funds’ is a fund that invests in other hedge funds. It may invest all or some money in other hedge funds.

When a fund invests in another hedge fund, the underlying fund is usually not open to retail investors. The underlying fund may be offshore, with less monitoring.

A fund of hedge funds may have extra risks. For example, it may invest in multiple hedge funds, across assets and markets. This can make it harder to know where the fund invests your money, and what the risks are. You may also have to pay more fees.

Pros and cons of hedge funds

To decide if investing in hedge funds is right for you, consider the following:

Pros

Targeted strategies — A fund may target less volatile returns, so it loses less in a down market. This may be at the expense of gains in a rising market. Or mean a risk of greater losses. So consider your appetite for risk when choosing a fund.
Asset diversification — Can expose you to a broader range of asset classes and markets. This can help diversify your portfolio. And reduce exposure to downturns in some asset classes or markets.

Cons

Leverage risk — A fund may have an exposure greater than 100% of the assets invested. So, if markets move against the fund’s position, it could lose a lot. Derivatives and short selling both involve leverage risk.
Liquidity risk — Investing in assets not traded on an open market makes them harder to sell or value. If an asset devalues, it may be hard to sell fast if you want to get your money back. A fund of hedge funds may not be able to exit the underlying funds quickly. This makes it harder to redeem your money at short notice.
Concentration risk — Concentrating assets in a single market means a greater risk of losses, if that market underperforms.
Complex structure risk — May be hard to work out how the fund invests your money. And the risks you are taking on.
Counterparty risk — Derivatives could be purchased ‘over the counter’ by agreement with another party. That party may fail to honour the agreement.

What to check before you invest in a hedge fund

Head the product disclosure statement

Hedge funds vary in risk and complexity. The fund manager will give you a PDS before you invest. This sets out the features, benefits, costs and risks of the fund. Make sure you understand the investment before you go ahead.

Check your understanding of the fund

Use these questions to check your understanding of the fund:

Strategy — What are the investment goals? How will the fund achieve these goals?
Investment manager — Who manages the fund? Does the manager have relevant skills and experience?
Local or international — Does the fund invest in Australian or overseas assets? If overseas, have foreign currency risks been hedged?
Past performance — Past performance is not a reliable indicator of future performance. But it can give you an idea of how the fund has performed, in rising and falling markets. Look at medium to long-term performance (over 5 to 10 years).
Third party service providers — Does the fund uses third party service providers? If so, are they licensed in Australia? Or elsewhere, where financial regulations may be less strict?
Fees — How are fees charged? Does this offer an incentive for the fund manager to take extra risks? Does charging of a performance fee depend on the fund outperforming a benchmark? If so, is the benchmark appropriate? Will returns, after fees, justify any additional risks taken?
Structure — How are the investments structured? As a test, how easily could you explain this to someone else?
Redemptions — How quickly can you redeem your investment from the fund? Is there a minimum time your money must stay in the fund? Is there a minimum redemption amount? When you redeem, do you have to pay an exit fee?

Get advice if you need it

Talk to us if you need help deciding if this investment is right for you.

Source:

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/managed-funds-and-etfs/hedge-funds

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.

Boost your super savings

Tue, 28 Oct 2025 23:43:16 GMT

What’s your super strategy?

Creating a strong super strategy is crucial to setting yourself up for success later in life. Starting now and making small changes to how you approach your super savings can make all the difference to ensuring you have a secure and comfortable retirement.

A proactive and well-planned super strategy helps you maximise your contributions, take advantage of tax benefits and make informed investment choices. Take a look over these useful strategies to help you build a bigger super balance.

Consider consolidating your super funds

If you’ve moved jobs or done casual work over the years, you may have money in several super funds. You can easily check for lost super through the Australian Taxation Office (ATO). If you do find you have multiple funds, consolidating your super into one account can have a number of benefits. You can:

Save money on fees

Avoiding multiple sets of fees on different accounts can significantly reduce the overall cost of managing your super and increase the balance you have available when you reach preservation age. Some funds also offer lower fees for large balances.

Simplify administration

Keeping track of your super balance, contributions and investment performance is a lot easier when you’re focussed on one account. It also reduces the risk of losing track of your super savings.

Increase your investment options

Some super funds offer better or more diverse investment opportunities, which can give you flexibility and control. You can also monitor the investment performance of different super funds to ensure you’re choosing the best option for your future.

There are a few things to think about before you consolidate your super:

Explore the benefits, features and any fees on multiple super accounts to choose the option that suits your financial goals.

Be aware of any impacts on your tax, as well as exit or termination fees when you close extra super accounts. This includes if you intend to claim any tax deductions for personal super contributions .

Don’t forget your insurance. Make sure your chosen super account will provide the coverage you need when you consolidate your accounts. This includes the type and amount of coverage, the policy terms and any coverage of existing medical conditions.

Make personal contributions

By making a personal super contribution and claiming the amount as a tax deduction, you may be able to pay less tax and invest more in super. To understand what tax rates might be applicable, visit the Australian Taxation Office website .

There are a few things to think about when you’re making personal super contributions:

To claim your super contribution as a tax deduction, you need to go through the right channels, including submitting a ‘ Notice of Intent ’ form before you complete your tax return.

Be aware of any annual contribution limits set by the government.

Make sure you balance your contributions with your day-to-day budget, as there are only limited ways you can access contributed funds before you reach preservation age.

Salary sacrificing

You might also be able to reduce your tax and boost your super balance through salary sacrifice . This is an agreement with your employer to contribute a certain amount of your pre-tax salary or potential bonus into your super. The MoneySmart super optimiser calculator can give you an idea of how salary sacrificing can impact your super and take home pay.

Contributing to your super through salary sacrifice can have several benefits, including:

Potential tax concessions

Contributions made through salary sacrifice tend to be taxed at a lower rate, compared to your marginal tax rate. This means you can save on taxes and increase your super balance.

Boosted total super

By diverting a portion of your pre-tax income into your super, you can significantly increase your super savings over time and ensure you have a healthy balance when you’re ready to retire.

Compound interest

The earlier you start salary sacrificing, the more you can benefit from compound interest. Essentially the interest you earn on your super contributions will also earn interest, contributing to a healthy super balance.

Reduction in income tax

Salary sacrificing reduces your taxable income, which can be particularly beneficial if you’re on the edge of a tax bracket. This can mean that you reduce your total income tax at the same time as you contribute to your super balance.

Top up your spouse’s super

Is your spouse working part-time, earning a low income or currently not working (but not retired)? Making a ‘ spouse super contribution ’ can be a strategic way to both boost your partner’s retirement savings and benefit from some tax offsets.

Some key considerations when making a spouse super contribution include:

Eligibility

As with most things super, there are relevant eligibility criteria to consider when planning a spouse super contribution.

Tax benefits

You could be eligible for a tax offset, reducing your taxable income while increasing savings for both you and your partner.

Seek professional advice

Tax and super systems are complex, change regularly, and everyone’s financial situation is different. We can help you stay up to date with the latest rules and regulations and personalise advice to your specific circumstances, goals and needs. We can also help you to maximise the benefits of your tax and super to boost your retirement savings into the future.

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/manage-money/budget-saving/boost-super
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2025 National Australia Bank Limited (“”NAB””). All rights reserved.

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.

Caring for older Australians

Tue, 28 Oct 2025 00:16:46 GMT

Information and resources to help you care for an older Australian.

Caring for the elderly or aged means caring for someone who is either:

older than 65
older than 50 for Aboriginal or Torres Strait Islander people.

It may be your parent, grandparent, extended family member or loved one.

You have access to the same services and payments as other carers . You may need to take time off work for caring responsibilities. You’ll need to make sure you also care for yourself.

When you care for an older Australian

Any help and support you offer, including physical and personal care, and emotional and social support, makes you a carer. The support could be unpaid or paid.

You may be able to get different payments, depending on the level of care you’re giving. These payments include:

Carer Payment , an income support payment if you give constant care to someone who has a disability, has a severe medical condition, or is an adult who is frail aged
Carer Allowance , a fortnightly supplement if you give additional daily care to someone who has a disability, has a medical condition, or is frail aged
Carer Supplement , an annual payment that helps cover costs when caring for someone with a disability or medical condition. You’ll get Carer Supplement if you’re getting Carer Payment or Carer Allowance for a period that includes 1 July.

There are challenges to caring for someone. A key element of caring is good communication between you and the person you’re caring for. This includes having tough conversations with the person you care for about the type and level of care they need.

Levels of care

It’s good to discuss care needs early on. This means you and the person you care for can adjust the support needed over time. There’s help for the person you care for to remain independent and in their own home.

Help in the home

Services you can get can vary depending on need. This may include help with shopping or cooking, or help with accommodation and care services. Services Australia can help with some costs if you need help living at home or you’re entering an aged care home. There’s a lot to consider when you think about aged care .

On the My Aged Care website you can:

read more about help at home
use the Assessment Eligibility Checker to check if you qualify.

Services Australia have Aged Care Specialist Officers (ACSOs) who can provide you with financial information about aged care services. They can also help you understand the services and support available to you.

Source: Services Australia

Australia’s economy shows best result in two years as consumer spending picks up

Tue, 28 Oct 2025 00:04:58 GMT

The Australian economy picked up strength in the June quarter as consumers opened their wallets, boosted by interest rate cuts earlier in the year.

New figures from the Australian Bureau of Statistics showed gross domestic product (GDP) grew by 0.6% in the June quarter and 1.8% over the year — the strongest outcome in two years and above market and economists’ expectations.

Treasurer Jim Chalmers said the report showed “a welcome and substantial pick-up in growth”. The increase followed growth of just 0.3% in the March quarter, which was heavily impacted by extreme weather events .

According to the Bureau, household spending provided the main lift, and government spending to a lesser extent. The overall result suggests the economy is starting to turn a corner after a run of weaker quarters.

Households are regaining confidence

Household consumption rose 0.9% — the strongest increase since December 2022 — contributing 0.4 percentage points to growth. Discretionary spending drove the gains, with recreation, transport and hospitality boosted by the Easter and ANZAC Day holidays, overseas travel, and strong event attendance. The rise suggests households are regaining confidence, helped by recent cash rate cuts.

Government spending added a further 0.2 percentage points, with increased spending on Medicare and pharmaceutical benefits, and defence.

Exports also helped: education and tourism services were strong, while iron ore and liquefied natural gas shipments to major Asian markets remained solid. Exports rose 1.7% and imports were up 1.4% in the quarter.

However, public investment in infrastructure such as roads and rail dropped 3.9% as large projects neared completion in several states, weighing on growth.

Interest rate cuts are flowing through

Looking ahead, the economy is starting to build some momentum. Household spending is lifting, helped by the Reserve Bank’s rate cuts . Lower repayments are giving families a little more breathing room, and this is flowing through to extra spending on travel, recreation and hospitality.

While many households remain cautious, the fact discretionary spending is picking up shows confidence is returning . It also suggests past interest rate cuts are starting to work their way through the economy, softening the squeeze from high rents and living costs.

Economic growth per person, known as per-capita GDP, has been soft in recent quarters but edged up 0.2% in the June quarter.

Chalmers said the outcome was “very encouraging, as some comparable economies such as Germany and Canada went backwards in the quarter”.

Markets expect the Reserve Bank to cut interest rates again , with at least one more cut possible later this year if the economy does not strengthen much further and inflation stays under control.

Running down savings

Perhaps the most telling number in the economic release is the household saving rate, which fell from 5.2% in March to 4.2% in June. This was because spending jumped 1.5%, while disposable income rose only 0.6%.

Although wages were stronger, income growth slowed as insurance payouts and social benefits eased after the cyclone-related spike earlier in the year.

Households had to dip into savings to keep spending — a sign they are feeling resilient enough to spend rather than hold back.

The global backdrop

Global conditions remain difficult and pose clear risks for Australia’s outlook. China’s slowdown , driven by a weak property sector and soft domestic demand, continues to weigh on Australia’s export outlook, while trade tensions add further uncertainty.

The United States has stayed relatively resilient , but Europe remains stuck in stagnation. For a small, open economy like Australia’s, these headwinds highlight the need for caution, as global demand and financial conditions will heavily influence growth prospects.

What it all means

Overall, the picture looks brighter than in recent quarters.

Families are still under pressure, yet the rise in spending suggests confidence is returning and lower interest rates are starting to help. For policymakers, the challenge is to keep the recovery moving without reigniting inflation. With exports and government demand steady, and households showing signs of life, there is now more reason to be hopeful about the months ahead.

Source: The Conversation

Find lost super

Tue, 21 Oct 2025 11:32:02 GMT

If you’ve ever had a job in Australia, even short-term, your employer probably paid money into a super fund for you.

This money is yours – even if you’ve moved, changed names, stopped using your old phone or email, or never signed up for an account.

To find out how much you have you can:

search on your myGov account, which can be linked to the Australian Taxation Office (ATO)
call the ATO automated super search line on 13 28 65
call and speak to someone at the ATO on 13 10 20

There’s more than $17 billion in lost and unclaimed super in Australia. People have found thousands of dollars they didn’t know they had.

Aboriginal and Torres Strait Islander peoples can call the ATO’s dedicated Indigenous helpline on 13 10 30.

ATO staff can help you find your super, get a tax file number, and lodge a tax return.

What is super

Super is money set aside for your retirement while you’re working.

If you’re eligible, your employer will put some of your pay into a super fund, who invests the money for you.

You can access your super when you turn 60 and retire from work or when you turn 65 even if you keep working. You might be able to access some of it earlier if you get sick or find yourself in trouble.

Even if you don’t remember opening a super account, you might still have money in super, so it’s worth checking.

You don’t need to pay anyone to help you find your super. You can do it for free through the Australian Taxation Office, or through your current super fund.

How to check if you have super

You can check if you have super online, by phone, by mail or in person.

Online

Visit the ATO at myGov and log in.

myGov will show what super accounts you have and how much is in them.

If you see a super account listed, you have super.

By phone

If you know your tax file number, call the ATO’s lost super search line on 13 28 65. They can check if you have super.

If you don’t know your tax file number, call the ATO on 13 10 20.

Aboriginal and Torres Strait Islander peoples can call the ATO’s Indigenous helpline on 13 10 30.

By mail

Download a form to search for lost and unclaimed super from the ATO’s website. Print, fill out and post to the address on the form.

In person

Services Australia has service centres, mobile service centres, agents, and access points across Australia. They can help you contact the ATO, use the phone, and access a computer and printer.

Find your nearest Services Australia location .

Service centres, mobile service centres and agents have staff to help you. Access points are self-service.

What to do when you find super

The ATO will tell you if you have super and who’s holding it – either the ATO or a super fund.
If the ATO is holding it, they will explain how to claim it.

If a super fund is holding it, the ATO will give you the fund’s contact details.

Either way, you will need to prove who you are before you get the money.

What you need to prove it’s your super

To get access to your super, you’ll need to show who you are. This protects your money from someone else claiming it.

You can use identification (ID) like a driver’s licence, Medicare card or proof of age card.

If you don’t have ID, or if your ID doesn’t match the details on your super, you can still prove who you are.

Superannuation funds can have different ID requirements. So, once you know where your super is, give that fund a call and find out what types of ID they’ll accept.

Examples could be letters from government agencies, membership cards or community ID, or even a statement from a trusted person who knows you, like a health worker, teacher, Elder or community leader.

If you find it difficult to deal with the super fund, call the ATO, visit Services Australia , or contact a financial counsellor .

Keep track of your super

When you have found your super, it’s worth making sure you don’t lose it again. Make sure the contact details your super fund has for you are all up to date.

Other things you can do to help you keep track of your super are:

Consider putting all your super into one account – find out more about consolidating super funds .
Checking the super statement your fund will send you each year.
Using your fund’s website, and downloading their app.

We are here to assist you if you have any questions about your superannuation.

Source: Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/how-super-works/find-lost-super

Important note: 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. Past performance is not a reliable guide to future returns. 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.

Keeping your cool when the markets heat up

Tue, 21 Oct 2025 11:26:56 GMT

Investing isn’t just a numbers game. It’s an activity that stirs various emotions from hope and optimism to fear and anxiety.

Whether the ASX is surging or stumbling, emotional responses to market movements can shape outcomes just as much as economic fundamentals. Understanding those responses is crucial to building resilience, especially in unpredictable times.

These patterns underscore the importance of long-term perspective, especially in a market shaped by both global sentiment and uniquely local factors.

How emotions enter the equation

We like to think our financial decisions are rational, but the truth is more complex. Investors aren’t robots crunching numbers in isolation. We are influenced by news cycles, cultural values and personal stories from friends, family and colleagues.

When markets rise, euphoria and FOMO can drive hasty buying decisions. During downturns, anxiety and regret can push investors to sell at a loss, despite having sound long-term strategies.

This pattern has played out across decades, from the dot-com bubble to the COVID recovery. And remember that emotional investing isn’t just a beginner’s problem. Even seasoned investors can be swept up by sentiment if safeguards aren’t in place.

Psychologists have long observed how financial stress activates similar responses to physical threats, triggering fight-or-flight instincts rather than thoughtful analysis. That’s why even well-informed investors may react defensively when facing market instability.

The good, the bad and the balancing act

Emotional investing isn’t all risk. In the right conditions, it reflects conviction, clarity and purpose. For example, values like patience and belief in the future can help investors stay committed during market dips.

Life changes such as home ownership, welcoming a child or retirement can bring useful emotional clarity to financial decisions. And ethical investing often stems from emotions such as care and connection to community.

When used with discipline, emotions can reinforce sound decisions rather than undermine them. Investors who use emotional clarity to establish long-term goals tend to feel more confident, even when short-term volatility strikes.

That said, emotions can also derail strategy. Panic selling during downturns, overconfidence after gains and herd mentality all pose risks.

The 2022 market correction saw many Australians pull out of super investments prematurely, missing the rebound that followed. These reactions stem not just from fear but also from a desire to act, even when patience may be more effective.

Learning from behavioural finance

Behavioural finance gives us tools to interpret emotional reactions. Biases like loss aversion, recency bias and anchoring affect decision-making in subtle but powerful ways.

These include:

Loss aversion – People often feel the sting of losses more intensely than the joy of equivalent gains, which can lead to overly cautious or reactive choices.
Recency bias – Recent events weigh heavily on perceptions, leading investors to expect trends will continue simply because they’ve just occurred.
Anchoring – Fixating on a past portfolio value or arbitrary benchmark can skew rational assessment.

Recognising these tendencies helps investors avoid knee-jerk decisions and design portfolios that stay aligned with goals over time. It’s not about eliminating emotion; it’s about becoming aware of how it operates and mitigating its effects through smart responses.

After all, markets are always shifting. Emotions will always emerge. The goal isn’t to shut them out, but to understand them and develop structures to keep emotions from steering the ship. When investors learn to pause, reflect and act with intent, they not only improve outcomes but feel more confident in their journey.

If you’d like to explore strategies to build emotional resilience in your portfolio, or tools to help remove bias from investment decisions, please give us a call.

As Trump abandons the rulebook on trade, does free trade have a future elsewhere?

Tue, 21 Oct 2025 11:22:31 GMT

The global trading system that promoted free trade and underpinned global prosperity for 80 years now stands at a crossroads.

Recent trade policy developments have introduced unprecedented levels of uncertainty – not least, the upheaval caused by United States President Donald Trump’s sweeping tariff regime.

This is presenting some fundamental changes to the way nations interact economically and politically.

The free trade ideal

Free trade envisions movement of goods and services across borders with minimal restrictions. That’s in contrast to protectionist policies such as tariffs or import quotas .

However, free trade has never existed in pure form. The rules-based global trading system emerged from the ashes of the second world war . It was designed to progressively reduce trade barriers while letting countries maintain national sovereignty.

This system began with the 1947 General Agreement on Tariffs and Trade , which was signed by 23 countries in Geneva, Switzerland.

Through successive rounds of negotiation, this treaty achieved substantial reductions in tariffs on merchandise goods. It ultimately laid the groundwork for the establishment of the World Trade Organization in 1995.

‘Plumbing of the trading system’

The World Trade Organization introduced binding mechanisms to settle trade disputes between countries. It also expanded coverage of rules-based trade to services, intellectual property and investment measures.

Colloquially known as “the plumbing of the trading system”, this framework enabled global trade to expand dramatically.

Merchandise exports grew from US$10.2 trillion (A$15.6 trillion) in 2005 to more than US$25 trillion (A$38.3 trillion) in 2022.

Yet despite decades of liberalisation, truly free trade remains elusive. Protectionism has persisted, not only through traditional tariffs but also non-tariff measures such as technical standards. Increasingly, national security restrictions have also played a role.

Trump’s new trade doctrine

Economist Richard Baldwin has argued the current trade disruption stems from the Trump administration’s “grievance doctrine”.

This doctrine doesn’t view trade as an exchange between countries with mutual benefits. Rather, it sees it as as a zero-sum competition, what Trump describes as other nations “ripping off” the United States.

Trade deficits – where the total value of a country’s imports exceeds the value of its exports – aren’t regarded as economic outcomes of the trade system. Instead, they’re seen as theft.

Likewise, the doctrine sees international agreements as instruments of disadvantage rather than mutual benefit.

The US retreats from leadership

Trump has cast himself as a figure resetting a system he says is rigged against the US.

Once, the US provided defence, economic and political security, stable currency arrangements, and predictable market access. Now, it increasingly acts as an economic bully seeking absolute advantage.

This shift – from “ global insurer to extractor of profit ” – has created uncertainty that extends far beyond its relationships with individual countries.

Trump’s policies have explicitly challenged core principles of the World Trade Organization.

Examples include his ignoring the principle of “ most-favoured nation ”, where countries can’t make different rules for different trading partners, and “tariff bindings” – which limit global tariff rates.

Some trade policy analysts have even suggested the US might withdraw from the World Trade Organization . Doing so would complete its formal rejection of the global trading rules-based order.

China’s challenge and the US response

China’s emergence as the world’s manufacturing superpower has fundamentally altered global trade dynamics. China is on track to produce 45% of global industrial output by 2030.

China’s manufacturing surpluses are approaching US$1 trillion annually (A$1.5 trillion), aided by big subsidies and market protections.

For the Trump administration, this represents a fundamental clash between US market-capitalism and China’s state-capitalism.

How ‘middle powers’ are responding

Many countries maintain significant relationships with both China and the US. This creates pressure to choose sides in an increasingly polarised environment.

Australia exemplifies these tensions. It maintains defence and security ties with the US, notably through the AUKUS agreement. But Australia has also built significant economic relationships with China, despite recent disputes . China remains Australia’s largest two-way trading partner.

This fragmentation, however, creates opportunities for cooperation between “middle powers”. European and Asian countries are increasingly exploring partnerships , bypassing traditional US-led frameworks.

However, these alternatives cannot fully replicate the scale and advantages of the US-led system.

Alternatives won’t fix the system

At a summit this week, China, Russia, India and other non-Western members of the Shanghai Cooperation Organization voiced their support for the multilateral trading system. A joint statement reaffirmed World Trade Organization principles while criticising unilateral trade measures.

This represents an attempt to claim global leadership while the US pursues its own policies with individual countries.

The larger “BRICS+” bloc is a grouping of countries that includes Brazil, Russia, India, China, South Africa and Indonesia. This group has frequently voiced its opposition to Western-dominated institutions and called for alternative governance structures.

However, BRICS+ lacks the institutional depth to function as a genuine alternative to the World Trade Organization-centred trading system. It lacks enforceable trade rules, systematic monitoring mechanisms, or conflict resolution procedures.

Where is the trading system headed?

The global trading system has been instrumental in lifting more than a billion people out of extreme poverty since 1990 . But the old system of US-led multilateralism has ended. What replaces it remains unclear.

One possible outcome is that we see a gradual weakening of global institutions like the World Trade Organization, while regional arrangements become more important. This would preserve elements of rules-based trade while accommodating competition between great powers.

“ Coalitions of like-minded nations ” could set high policy standards in specific areas, while remaining open to other countries willing to meet those standards.

These coalitions could focus on freer trade, regulatory harmonisation, or security restrictions depending on their interests. That could help maintain the plumbing in a global trade system.

Source: The Conversation

New SMSF? Here’s what you need to do by 31 October

Tue, 14 Oct 2025 16:08:00 GMT

If you’re lodging your self-managed super fund annual return for the first time learn about your lodgment obligations.

If you have a new self-managed super fund (SMSF) you must lodge your SMSF annual return (SAR) by 31 October 2025.

Contact us as soon as possible if you need help preparing your SMSF annual return. This allows time to include you in our lodgment program, giving you until 28 February 2026 to lodge your first return.

However, some funds may still need to lodge by 31 October 2025, even with a tax agent so check your registration letter for details.

If your new fund had no assets in the first year it was registered you must either lodge a return not necessary form or cancel your SMSF registration if you no longer intend to operate the fund.

Remember each year, you must:

prepare your fund’s accounts including valuing your funds’ assets
appoint an approved SMSF auditor at least 45 days before your lodgment due date
ensure the auditor has time to assess compliance and issue an independent report
address any issues identified by the auditor
lodge your annual return and pay any outstanding tax and the supervisory levy .

For new SMSFs, the supervisory levy is $518, covering both the setup year and the following financial year.

Stay compliant—act early and seek professional support if needed.

Learn more by visiting Your obligations as an SMSF trustee or Help and support for SMSFs.

You can also try these online education modules , which are interactive and enable you to build your knowledge.

Source: ato.gov.au July 2025
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/self-managed-super-funds-smsf/smsf-newsroom/new-smsf-heres-what-you-need-to-do-by-31-october

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.

Private vs government-funded elderly care: what’s best for your loved one?

Tue, 14 Oct 2025 16:08:00 GMT

Older Australians can access both government-funded and private aged care services, each with different costs, eligibility rules and flexibility. Understanding the differences between these options can help you or your loved ones make informed choices about the right support at home or in care.

Elderly care is currently one of the most invested programmes by the Australian government. Over 1.3 million Australians are estimated to be currently receiving aged care services with a significant increase over the years. Given this growing population of elders, there is a focus on providing them with the right and deserved care.

The government through various programmes like the Commonwealth Home Support Programme (CHSP) , Home Care Packages , and the soon-to-be-launched Support at Home program have been committed to providing quality elderly care services to all citizens who are 65 and above (50 and above for Aboriginals). However, there is always a limit to every government-funded programme like eligibility and the long list of applicants.

But you or your loved ones don’t necessarily have to wait for the government-funded programme. You can go for private aged care services. With private aged care services, you don’t need to meet certain requirements as outlined by the government. We will try to explain everything you need to know about choosing between the two elderly care options so you can make informed choices.

Understanding the two elderly care options

Every Australian aged 65 and above is entitled to aged care services. This service can be government-funded or private. Both care types are good and offer a wide range of services. But in case you are divided about which to choose for a better support with respect to your needs, we will help you. First, you have to understand how both care types work.

Government-funded elderly care

Government-funded aged care referees to services that the government offers to older adults to help them live better, especially at home. These are provided under different programs such as Home Care Packages (HCP), Commonwealth Home Support Programme (CHSP), and the Support at Home Program which will be launched soon.

The government offers support and funding to participants of these programmes. With the provided support, elders can live comfortably and independently at home. The funding helps you to take care of your day-to-day needs and other financial needs you might have.

To access these programmes, you are required to meet certain eligibility requirements and pass an assessment by My Aged Care , the official providers of government-funded aged care services in Australia. The eligibility requirements include:

You must be 65 years and above or at least 50 for Aboriginal and Torres Strait Islander people
Require assistance at home
Have physical or cognitive impairments
Homeless or at risk of becoming homeless

If you’re 65 and above or you have a loved one within the age bracket, you should check to see if you’re eligible for government-funded aged care services.

Government-funded aged care programmes offer a wide range of services, each tailored to the receiver’s basic needs and satisfaction. Depending on your needs, the services provided include:

Help at home

Here, your needs will be taken care of by trained caregivers in your home. You have nothing to worry about if you find it difficult to go through your day because you can’t perform tasks such as:

Cooking
Cleaning
Laundry
Bathing
Moving around
Using the bathroom

All these and more will be taken care of by caregivers who are trained to provide you with personalised services to meet your needs. Health professionals are also included in case you have health issues that may require a routine check-up and monitoring.

Short term care

If you need help after being discharged from the hospital or just had surgery, short-term care is your best choice. You will be provided adequate support to help you get the much-needed rest for quick recovery. You will receive help with:

Meal preparation
Home arrangement
Mobility
Bathroom assistance
Medication monitoring
Monitoring for fall risks
Taking a walk when necessary
Physiotherapy is applicable, etc.

Aged care homes

For those who can’t live independently, you have the option of moving into a retirement home. You will receive adequate care and support at a subsidised rate as set by the government.

Private elderly care services

Private elderly care services are very much like the government-funded ones. The only difference is in the funding. While the government provides funding and subsidies in the government-funded elderly care, individuals have to pay out of their pockets for private aged care services. Private aged care is provided by individuals or corporate agencies for a price, according to your needs.

In private elderly care, there are no eligibility criteria or assessments. You can hire a professional caregiver to help you in any way you deem fit. In light of this, private care is your go-to option if you happen not to be eligible for government-funded aged care services even though you need the help.

Services under private care include

Private home care services for those who wish to remain at home while maintaining independence and dignity
Retirement community services if you wish to be a part of one and be taken care of by trained caregivers
Private nursing home services for those who wish to go into a nursing home.

Basically, private aged care provides the same services as the government-funded one. The only difference is that you have to pay for the services you receive. So if you wish to switch from a government-funded care package to a private one or add it to your government-funded care package, rest assured that you will receive as much care as you’ve been receiving all along.

Differences between private and government-funded elderly care services

Different people have different opinions about which elderly care service is better. To answer the question, certain factors will have to be examined and only after then can you choose which you believe is better, according to your needs. To start off, let’s talk about the cost as it’s usually the crux of the matter for many people.

Cost comparison and affordability

When it comes to affordability, government-funded aged care services take the lead. Under government-funded aged care services, you receive monthly funding which can be used for a number of needs like:

Personal care
Meal preparation
Laundry and house cleaning
Health care needs
Home modifications
Transport support
Assistance with social life
Assistive technology
Respite care

All these services and more will be provided through the funding. The funding doesn’t exactly cover everything but you get to pay less through subsidies and set contribution caps. This way, you receive all the services you need in exchange for a small amount of contribution. Unless you require extra services not covered by the funding, you are good to go with handling the cost.

On the other hand, private aged care services come at a relatively high cost. You have to undertake payment for all the services you receive. Service charge may be calculated hourly or daily, depending on your agreement with the provider or private caregiver. Without government regulation, different providers offer their services at a wide range of prices.

Realistically, government-funded aged care is the way to go if you are not financially buoyant. Without enough pension funds or support from well-to-do family members, you will find it difficult to pay for private aged care services.

Quality of care and service delivery

Quality of care can be seen from different perspectives. When it comes to deciding which aged care services provide better quality care, we can analyse it from three perspectives: training, availability and flexibility.

Training

When it comes to training, government-funded elderly care can be said to be ahead. This is because government-approved providers ensure adequate screening and training before hiring a support worker . In addition, workers are bound to discharge their duties with diligence as misconduct can lead to punishment.

This is not to say that private aged care providers do not screen or train their workers but without government supervision, one cannot be sure of the hiring standard in place. Private support workers may or may not have the needed experience to perform their duties diligently.

Availability

Due to the large number of participants in the government-funded programmes, the private aged care providers are relatively more available. Providing you with the right care when you need it is important, hence a good reason to consider private aged care services.

Flexibility

Private aged care services offer more flexibility than the government-funded ones. While the government is trying hard to ensure that services are tailored to every participant’s needs, there are still obstacles that must be overcome. Private care services are available at your disposal as long as you can pay, unlike the government-funded ones which limit the services provided to only the basic needs of the participant.

Personalisation and control

Personalisation is an important aspect of elderly care. Due to individual differences and differences in needs, no two individuals have exactly the same needs, hence a need to tailor services provided accordingly. In this aspect, the private aged care providers tend to offer better personalisation than their government-funded counterparts.

In private aged care, the care receiver as well as their family can decide the kind of services they want and how they want them. Whereas in the government-funded care, services provided are mostly according to assessment which may or may not cover all the major needs of the participants.

However, efforts have been in motion to ensure a more flexible service option for government-funded aged care services. With the rolling out of the Support at Home program by November 1, care receivers will have more control over the kind of services they receive and how effectively their needs can be taken care of. This is a much-needed improvement which will give the government-funded elderly care programme a more efficient structure.

Combining both for better outcomes

Man’s needs are insatiable. According to Petyr Baelish, a character in the popular TV show, Game of Thrones, “It doesn’t matter what we want, once we get it, we want something else.” As a care receiver, your support needs evolve over time and somehow, the things you needed the most in the past may become the least of your needs as time goes by.

With these evolving needs comes the extra support and care you would require. As a government-funded elderly care receiver, these services may go beyond the scope of your support package. In such a situation, you might consider adding private care services to augment the situation.

This hybrid elderly care service offers more benefits than the individual services alone. You get to enjoy more flexibility and support of any kind without limits. A case study will help you understand this better.

Mr Smith is a participant in the government-funded elderly care programme. However, he has cancer. But he won’t stay in the hospital or nursing home, rather he has chosen to be at home. The government-provided elder care services manage his day-to-day requirements, ensuring his comfort at home.

However, he needs more than just that. He needs someone to monitor his condition and take emergency measures to keep him stable. This would require having a health professional around. So he hires a private nurse who comes in to ensure he’s adhering to his medication and taking his vitals to ascertain any development.

Mr Smith pays extra for the private nursing care but it’s worth it. His family and loved ones will rest assured that he’s in safe hands. That is the beauty of a synergy between private and government-funded elderly care services.

How to decide what’s best for your loved one

Knowing the pros and cons of both private and government-funded elderly care services may not be enough. Yes, you know what each service type offers but how do you know it’s the right one for your loved one? To solve this puzzle, here are some important questions to ask yourself:

How urgent is your loved one’s need?

If your loved one needs urgent assistance, you should consider private care. The reason is that the application process and long wait list associated with government-funded elderly care may endanger your loved one’s life. When it comes to quick service delivery, go for private care as they are always ready to offer their services without ado.

On the other hand, if your or your loved one’s needs are not immediate, then wait for government-funded aged care services. You can start early by getting all the information you need about eligibility criteria, support options and related fees from My Aged Care. Equipped with the right information, you can fast-track your enrollment into the programme.

For example, you can start now to learn everything you need to know about the soon-to-be launched Support at Home program to be a part of the first recipients of the numerous benefits of the programme.

What is your loved one’s current health status?

If your loved one has health issues in addition to being old, you may consider getting them private aged care. Private care workers are more readily available to assist your loved ones with health-related support of any kind. However, if you find out that your loved one’s needs are within the provisions of the government-funded elderly care services, then you can go with it.

For support involving help with cognitive and/or mobility needs as well as chronic health conditions, you should probably get private aged care services. Here you can hire the right professional (s) to handle your loved one’s case, ensuring they are alright at all times.

What’s your financial Situation?

As explained earlier, private care is expensive compared to government-funded elderly care services. There are no subsidies to help reduce costs so you have to pay in full for all your services. Also remember that as your needs keep evolving, so does the cost of providing for them increase.

Getting government-funded elderly care should be fundamental in this case. So you start off with your immediate needs which the government-funded services can take care of, then you could go for a hybrid support when these needs go beyond your support plan provisions.

What’s your availability?

You may want to still be involved in the care of your loved one such that you go for respite care where a caregiver comes in from time to time to take care of your loved one while you’re at work, on holiday, or just getting some rest. In this case, government-funded care is okay. Not much needs to be done. The caregiver can come in from time to time to check on your loved one while you stay with them and make sure they are safe and comfortable.

If you still can’t decide which support type you should go for, consider speaking to a support provider. They will provide you with a clearer understanding of the available support options for both and how effective they can be in providing for your needs.

Conclusion

Private and government-funded elderly care services share many similarities in services provided but differ in how these services are delivered and the costs of accessing them. While private aged care services may be expensive due to a lack of government funding, they offer a better value for your money. Government-funded elderly care services on the other hand come at a subsidised rate, allowing you to save money for other needs. Understanding that each of the two care options has its own pros and cons and that your decision to choose either of them should depend on your needs would go a long way in helping you make the right choice

Source: This article was originally published on https://www.agedcareguide.com.au/talking-aged-care/private-vs-government-funded-elderly-care-whats-best-for-your-loved-one . Reproduced with permission of Care & Co Media.

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.

How ‘investment procrastination’ could be hurting your wealth

Tue, 14 Oct 2025 16:08:00 GMT

Putting off investing could cost you more than you think

Many people delay investing because they feel they don’t know enough, are afraid of making mistakes or believe they need a large sum to begin.

This ‘investment procrastination’ — which can be a result of uncertainty, fear or hesitation — can limit their ability to build long-term wealth.

The truth is you don’t need to be an expert to start investing. You just need to take the first step.

Don’t wait for the perfect time to start

Long-term investment returns come down to two key factors: the rate of return and the time invested.

Vanguard’s Digital Index Chart shows how various asset classes have performed over the last 50 years.

If someone invested $10,000 into the Australian share market 30 years ago, it could be worth $143,786 in 2025,

despite multiple market swings along the way. ¹ If that same $10,000 was kept in cash, it would be worth $33,677 in 2025. ²

We can also examine what would have happened if that same person waited five or 10 years to start investing in the share market.

If they waited five years to invest the $10,000 in Australian shares — starting in 2000 rather than 1995 — the value of the investment in 2025 would fall to $73,694. ³

If they waited 10 years and instead invested the $10,000 in Australian shares in June 2005, the value of the investment in 2025 would be $46,952. ⁴

These examples show that starting to invest earlier can lead to much improved results.

While these past performance examples can offer valuable insights, it is important to note they are provided for illustrative purposes only. They’re based on specific factors and aren’t meant to predict how any financial product might perform in the future.

So, while they can help paint a picture, they shouldn’t be taken as a forecast or relied on as a guarantee of what’s to come.

Confidence grows with experience

One of the biggest misconceptions about investing is that you need to feel confident before you begin.

In reality, confidence is something that grows with experience. Many successful investors didn’t begin their journey with deep knowledge or certainty. They started small, made mistakes, learned from them, and gradually built both skill and confidence over time.

Consider the example of Warren Buffett, perhaps the world’s most famous investor, who made his first investment at age 11 .

One approach that can help is to adopt a “growth mindset”: the belief that a person’s abilities and understanding (in this case as they relate to investing) can be developed through effort, learning and persistence.

This can help shift the focus from “getting it right” to “getting started.” Importantly, learning by doing can be an effective way to build confidence.

The earlier investors begin, even with small amounts, the more time they have to learn and develop their investment skills and understanding.

Important notes:

Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

1 Source: Vanguard Digital Index Chart . Investment of $10,000 into Australian shares on 1 July 1995 would have been worth $143,786 on 30 June 2025. Based on S&P/ASX All Ordinaries Total Return Index performance, assuming no acquisition costs, fees or taxes, with all distributions reinvested.

2 Source: Vanguard Digital Index Chart . Investment of $10,000 into cash on 1 July 1995 would have been worth $33,677 on 30 June 2025. Based on the Bloomberg AusBond Bank Bill Index.

3 Source: Vanguard Digital Index Chart . Investment of $10,000 into Australian shares on 1 July 2000 would have been worth $73,694 on 30 June 2025. Based on S&P/ASX All Ordinaries Total Return Index performance, assuming no acquisition costs, fees or taxes, with all distributions reinvested.

4 Source: Vanguard Digital Index Chart . Investment of $10,000 into Australian shares on 1 July 2005 would have been worth $46,952 on 30 June 2025. Based on S&P/ASX All Ordinaries Total Return Index performance, assuming no acquisition costs, fees or taxes, with all distributions reinvested.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

How an ageing population permanently changed the Australian economy

Fri, 10 Oct 2025 01:05:16 GMT

Key points:

The Intergenerational Report 2023 released by Treasury gave Australians insight into the national economy from 2023 until 2062 – 2063
The care and support sector and its workforce were projected to double over the next 40 years
The paid workforce participation rate was expected to dip from 66.6 percent to 63.8 percent, due to the population continuing to age

Source:
This article was originally published on https://www.agedcareguide.com.au/talking-aged-care/how-an-ageing-population-permanently-changed-the-australian-economy . Reproduced with permission of DPS Publishing.

The national economy is expected to feel the effects of Australia’s ageing population by the year 2063, according to a newly published Report by the Federal Treasury.

The number of Australians aged 65 and over will more than double by 2063
The number of people aged 85 and over will more than triple
The number of centenarians is expected to increase six-fold

Although the average life expectancy age is projected to increase in Australia, the rate of increase will grow at a slower rate than in previous years. Life expectancies at birth were 81.3 years for men and 85.2 years for women in the 2022 – 23 period and are expected to be 87.0 years for men and 89.5 years for women by 2062 – 63. Modern medicine and technology will see men live 24.7 years longer after turning 65 and women are tipped to live for a further 26.2 years after making it to 65.

Additionally, the 2020 to 2021 period saw the lowest population growth rate in Australia, breaking a 100-year record, with 0.1 percent growth due to the COVID-19 pandemic.

The Intergeneration Report reflected the increasing demand for aged care and support as a result of an older population, living longer with reduced national paid employment participation.

Council on the Ageing Australia, the peak advocacy group for older Australians, expressed that the Government needed to include people from every generation in planning for the future. Patricia Sparrow, chief executive officer of COTA Australia, said “[…] we have to value and harness the wisdom and experience” that comes from living older, healthier lives.

“There are legitimate discussions to be had around housing, health and other issues but we won’t get a better deal for all Australians by excluding older people from the economy and the community,” Ms Sparrow said.

“This presents us with a policy design challenge to ensure we harness older people to support the growth and improvements of our nation.

“Older Australians are a resource with valuable expertise and expertise that can and should be shared. Without harnessing that we’re robbing every generation.”

The Report predicted the care sector would account for approximately 15 percent of the nation’s gross domestic product, commonly referred to as GDP, by 2062 – ‘63 — an increase of seven percent from the eight percent GDP in 2023.

The Report noted that future increases to productivity, especially in the services sector, would be crucial to strong economic growth over the coming years. Something which Ms Sparrow said is possible through rethinking the role of older people in the workforce.

“Older people can and do continue to contribute to the economy. However, ageism keeps older people who want to work out of our workforce. Addressing ageism will assist older Australians [to] make the meaningful contribution they want to.”

Visit the Federal Treasury Intergenerational Report 2023 report in full online and let us know your thoughts on the economic impact of ageing. Will you be working in 2062 – 2063? If so, the editorial team at Talking Aged Care will continue to be your source of news for the next forty years.

Estate planning

Tue, 07 Oct 2025 16:07:00 GMT

How to develop an estate planning strategy to deal with your assets in the event of your death.

Estate planning involves developing a strategy to deal with your assets after you die – the legal instruments and structures, such as a will, you put in place to transfer your assets in the event of death.

Tax is a major consideration in estate planning, and strong governance relating to the tax aspects of estate administration can help manage the risks.

Ensure you or your staff have sufficient knowledge and skills to meet your responsibilities. Be prepared to seek assistance from external advisers on more complex tax issues.

Developing an effective strategy

Estate planning may be considered as part of your overall succession plan for your business. You may need to seek specialist advice on the most appropriate estate planning strategy.

Have a process in place to periodically review your strategy in conjunction with your advisers, including your legal, tax, superannuation and financial advisers.

Beware of schemes that claim to have estate planning purposes but are merely tax avoidance arrangements. An effective tax governance framework includes processes for evaluating various arrangements and the tax risks involved.

Preparing a valid will

If someone dies without a valid will, this is called ‘dying intestate’, and their assets are distributed according to the inheritance laws of the states and territories of Australia. In this case there is a risk that the undocumented intentions of the deceased person in relation to their estate may not be fully acted on.

Depending on the marginal tax rates of different beneficiaries, intestacy could potentially lead to an overall imbalance in the distribution of an estate due to higher rates of tax payable by some beneficiaries.

Planning ahead can avoid this result. When preparing a will, the will maker and their advisers can assess opportunities to manage the tax implications for beneficiaries.

Administering a deceased estate

As executor of a deceased estate, you need to understand your tax obligations, including:

notifying us that you’ve been appointed as executor
lodging a final return, and any outstanding prior-year returns, for the deceased person
lodging any trust tax returns for the deceased estate
providing beneficiaries with the information they need to include distributions in their own returns and, in certain cases, paying tax on their behalf
paying tax on the income of the deceased estate.

Testamentary trusts

A testamentary trust is a trust established under a valid will, but it’s not the same trust as the deceased estate. A testamentary trust functions in a similar way to a discretionary family trust, with certain provisions of the will operating like a trust deed.

Like any trust, a trustee of a well-governed testamentary trust will:

properly understand the tax profile of potential beneficiaries in the light of intended tax outcomes
lodge a tax return for every financial year that it is in existence
maintain proper trust account records (such as trustee resolutions, detailed financial statements and reconciliations), especially where a trustee is streaming capital gains or franked dividends
fully document capital gains tax events, cost bases, and rollovers and other concessions claimed.

Depending on who is appointed as the trustee and appointor of the testamentary trust, there may need to be a high level of co-operation between family members to ensure that necessary tax, financial and other information is shared for the trust to operate effectively.

A well governed testamentary trust will ensure that tax outcomes are achieved and, more importantly, complex family or legal disputes can be prevented.

Capital gains tax

Special capital gains tax (CGT) rules apply to the transfer of any CGT assets from a deceased estate. You should seek specialist advice in relation to the CGT implications of passing on or disposing of the assets of a deceased estate.

Keep complete records of CGT assets. These will be needed by the executor and any beneficiary who receives a CGT asset from the estate.

Superannuation and death benefits

Ensure you understand the tax issues around estate planning and superannuation.

For example, the tax impact of distributions made under a binding death nomination is usually one of the major considerations in estate planning.

Assets held by a person in their superannuation fund are not automatically included in their estate. In the absence of a binding death benefit nomination, the trustee has the discretion to pay the benefits of the deceased to any of their superannuation dependents instead of the estate (rather than according to the will, which only deals with the estate assets), and of deferring tax consequences. Where a nomination is in place, the benefits will be paid to the nominated beneficiaries.

It’s good practice to regularly review the need for any nominations to ensure your superannuation benefits will be passed on to your nominated beneficiaries, and that the nominations are valid and effective. Seek advice on the tax implications.

Example: Reviewing your strategy as circumstances change

As part of your estate planning strategy, you make a binding death nomination to provide for your under-age children who would receive the benefit tax free. You get advice to ensure that the nomination is valid and effective.

You provide for your older children, who would be taxed on receipt of superannuation death benefits, in your will.

After some years, when all of your children are older, you review your strategy and make a new nomination that better suits your family’s tax situation.

Because your personal circumstances change from time to time, it’s important that you regularly review the estate planning and income tax consequences when it comes to the distribution of your superannuation assets to your beneficiaries. Areas that warrant attention include:

the distinction between a ‘superannuation dependent’ and a ‘tax dependent’
interaction with testamentary trusts
effecting the reversion of a pension to spouse
realising fund assets for payment to beneficiaries

Feel free to contact us if you have any questions.

Source: ato.gov.au
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/newsroom/smallbusiness/ . 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.

Is big tech about to stumble?

Tue, 07 Oct 2025 16:07:00 GMT

It’s easy to get sucked into the lure of the biggest companies – they’re the most powerful; they’re unstoppable. But history suggests that’s not how these things work.

The companies many investors have relied on for their returns in the last few years are the Magnificent 7 (Mag 7). Today, what kind of shape are they in? Do they justify the faith that investors have placed in them? And crucially, is it too late to buy them as investments?

Just how big and important are the Mag 7 for investors?

In a nutshell, the Mag 7 are massive. Whenever we’re talking about the Mag 7, we feel a need to triple check the numbers because they seem implausible. If you look across the world stage – the global market – these seven stocks represent a fifth of the market by value. So, if you buy a global tracker fund, you might think you’re investing across the world and can gain exposure to over a thousand stocks, but in fact, a fifth of that portfolio will be in just seven stocks.

In Chart 1, you can see the performance of the S&P 500 over the past 10 years alongside the performance of the 10 biggest companies from within this index, of which, the Mag 7 make up a significant part of.

Chart 1: America’s biggest companies have outstripped smaller players

 Price performance (rebased to 100)

Source: S&P Global, 05 August 2025.

Had you invested $100 in that main market back in 2015, you would have $300 now. Not bad. But had you invested in just the top 10, you would have had $600, largely driven by the mega-caps.

It hasn’t been steady growth for these stocks either, there have been periods in the last 10 years with bursts of outperformance by the Top 10 stocks. For example, many stocks took a performance hit during Covid, but thanks to their resilience to withstand the impacts of the pandemic, the Top 10 continued to soar. We saw this too around November 2022 when ChatGPT first launched. The artificial intelligence (AI) boom really helped to propel stocks like Nvidia, which up until that point, was largely unknown.

What about the near future for the Mag 7?

We’re just coming out of the half-year results season for many of the Mag 7 names. It’s an important time for investors in terms of overall sentiment. In the past, we’ve seen instances of companies having watershed moments when their earnings are announced but it seems from what we’ve seen, particularly with Nvidia, that the market is relieved to see it can deliver on its potential.

Generally, other than Tesla, we’ve seen double-digit profit growth and double-digit revenue growth.

Chart 2: Where next for company profits?

 Earnings per share (EPS) for each calendar year ($USD)

Source: FactSet, 08 August 2025. Figures from 2025 are consensus estimates.

EPS indicates how a company is performing and the money it’s making. So, in short, we can see the Mag 7 are performing well and the trend indicates they are getting more profitable as the years go on. There’s some noise around a stock like Tesla which has had a bit of a dip, but as Chart 2 shows, the direction for the stock indicates an upwards trajectory based on earnings forecast.

Of course, it’s impossible to know for sure what the future for the big tech industry will hold. There is still uncertainty around the possibility of AI and what that could look like heading into the future. But in the short term, forecasts like this which are based on earnings suggest that they will continue to grow their earnings in the near future.

It’s important to remember that the Mag 7 are classified as growth companies, which means they are particularly susceptible to certain economic factors. In 2022, these companies experienced a significant downturn, more so than the broader market, primarily due to rising inflation and interest rates. These factors erode the value of their future earnings, and because so much of those future earnings are factored into their current stock prices, it creates an outsized impact. This is a vulnerability inherent to growth companies. As we approach September, there is considerable interest in the direction of US interest rates. Currently, there is widespread confidence that rates will be cut, reducing borrowing costs, which would be beneficial for business. However, if these cuts do not materialise, the market may not respond favourably, potentially impacting these growth companies adversely.

Breaking up one big happy family?

The Mag 7 is not a homogeneous group. They’re all in the business of technology but at the end of the day, Nvidia is making AI chips, Apple is making phones, and Tesla is making cars.

It’s the element of their technological innovation, how advanced they are, how big they are, their ability to buy up rivals that makes them part of one group, making it very difficult for anyone to compete with them.

However, this does get tested from time to time on individual members of the group. Take the ‘problem child’ this year, Tesla. Shares haven’t performed well largely due to demand issues and there’s been a lot of competition coming in from China. It’s also quite an interesting point for the company because it seems to be trying to transition out of being just a car maker into more of a tech giant. With this uncertain phase brings bumpiness. Could Telsa fall out of the Mag 7 family?

There’s another company out there which no one really is talking about yet, Broadcom. Broadcom creates chips which must exist for AI to happen. Nvidia designs chips largely that are almost a bit off the shelf that lots of companies can use whereas Broadcom is more specialist. The company is creating things for bespoke solutions that companies need specifically, but not all companies will need.

Think about the FAANGs which you may recall included a lot of the Mag 7 names but famously, Netflix, which has now fallen out of the group due to its size. It just goes to show that nothing is written in stone to say that one company will continue to be the biggest in the world. It’s what is the biggest right now. It’s easy to think that these companies are unstoppable. But history suggests it won’t always be the same.

Eyes on valuations

Chart 3: The Mag 7 stocks are a pricey bunch

Source: FactSet, 07 August 2025

When considering valuations, we often use the price-to-earnings (P/E) ratio for comparison purposes. However, the P/E ratio doesn’t provide significant insight on its own; it’s most useful when comparing it to other companies or the market as a whole.

As you can see in Chart 3, Tesla has a huge valuation of 140 times its earnings where the other six stocks tend to sit in a range between about 25-35 times their earnings. The S&P 500 currently has a valuation of approximately 22 times earnings, which suggests that the Mag 7 stocks are somewhat expensive. The S&P 500 figure is somewhat distorted by the presence of the Mag 7, which skews the overall valuation.

If we were to focus solely on smaller companies, the gap between these segments would be more pronounced. For instance, Nvidia is valued at around 35 times earnings, which is quite high. Although earnings are being realised, this valuation appears lofty. This raises an element of risk when investing in the Mag 7 as these companies must continue to deliver strong earnings to justify such high valuations.

What’s next for the Mag 7?

People are always cautious about any bumps in the road. Things like higher inflation and higher interest have always posed a threat to the Mag 7.

More recently, AI is in the forefront of the conversation. We often expect companies to invest heavily into AI to boost productivity, but what if the economic data starts looking a bit dodgy? Who really knows how that might shake up their spending plans. It’s tricky to predict how that will impact the big names relying on AI.

Reflecting on past events, such as the dot-com bubble in 2000, can offer perspective. During that time, there was immense enthusiasm about the internet’s potential, which was ultimately justified as it transformed our lives. However, the anticipated quick returns did not materialise, leading to short-term setbacks in the market. Some companies expected to thrive ended up struggling, highlighting the uncertainty of predicting which businesses will succeed over time.

We know the Mag 7 have captivated investors with their impressive power and perceived invincibility, but history reminds us that such dominance is not guaranteed.

Source: Reproduced with permission of Fidelity Australia. This article was originally published at https://www.fidelity.com.au/insights/investment-articles/is-big-tech-about-to-stumble/
This document has been prepared without taking into account your objectives, financial situation or needs. You should consider these matters before acting on the information. You should also consider the relevant Product Disclosure Statements (“PDS”) for any Fidelity Australia product mentioned in this document before making any decision about whether to acquire the product. The PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading it from our website at www.fidelity.com.au. This document may include general commentary on market activity, sector trends or other broad-based economic or political conditions that should not be taken as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be taken as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. This document is intended as general information only. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity Australia’s managed investment schemes is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. Reference to ($) are in Australian dollars unless stated otherwise. © 2023. FIL Responsible Entity (Australia) Limited.
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. 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.

Thinking about retirement

Tue, 07 Oct 2025 16:07:00 GMT

We can help you plan for retirement and meet financial challenges when you’re retired.

You may be at a point in your life where you’re thinking about retiring. This could mean you’re reducing your work hours or stopping work completely.

There are many things to consider about life in retirement. Some of these things could include:

where you want to live when you retire
if you want to travel overseas or around Australia
if you want to keep your car
if you’d like to join a social group
if you’d like to do volunteer work
if you’d like to start your own business.

Where to live when you retire

Where you want to live when you retire depends on things like:

whether you own your home
the costs of any major housing renovations or maintenance
your health
your connection to family and the community.

Travel when you retire

If you’re planning to travel when you retire, you might want to think about:

where you want to travel
how often you want to travel
how long you want to travel for
the costs involved.

For some people, retirement means less travel. If you have a car but will be driving less, you may want to consider whether you’ll keep your car. Some things to think about include the:

costs of running your car
ease and cost of public transport in your area
community transport services in your area.

Start your own business

You may decide to start your own business. There are many things to consider:

what’s involved in starting and running a business
whether you have a valid business idea
whether you have the necessary skills
whether self-employment is right for you.

There are programs to help people start and run successful small businesses.

Plan for your retirement

Good planning can increase your financial security in retirement.

Once you’ve worked out how you want to live, consider setting up a suitable financial strategy. Ideally, your strategy should provide things like:

regular income to meet your regular expenses
access to long-term capital growth
a cash reserve to cover emergencies
a balance between risk and return.

We can help you create a strategy that is unique to you and will help you reach your goals.

Source: Services Australia

How behavioural biases could be hurting your investment returns

Tue, 30 Sep 2025 17:02:00 GMT

Two mental traps that could be affecting your investing

Even the most experienced investors can fall prey to subtle psychological traps.

These behavioural biases often operate under the surface, influencing decisions in ways that can undermine long-term investment success.

Here are two of the most common behavioural biases that may be affecting your investment results – and strategies for overcoming them.

Loss aversion: Why we feel losses more strongly than gains

Loss aversion is the tendency to feel the pain of losses more intensely than the pleasure of equivalent gains.

Psychologists Daniel Kahneman and Amos Tversky, the pioneers of prospect theory, found that a loss of $100 hurts roughly twice as much as the pleasure we get from gaining $100.

Loss aversion can lead investors to make sub-optimal decisions, such as:

Panic selling when markets perform poorly.
Being more willing to sell assets that have increased in value to lock in gains, while holding onto those that have decreased, a tendency known as the disposition effect.
Preferring lower-risk, lower-return investments like cash over shares, which, while volatile, may tend to perform better over the long-term.

For example, during a severe market event, it can be tempting to move to cash to avoid further losses. But it’s often not a wise move.

Research found that investors who moved their portfolios solely into cash for one year after a severe market event had an 87% probability of underperforming a 60/40 portfolio of U.S. equities and bonds, with an average underperformance of 13.3%. ¹

Recency bias: Extrapolating recent trends into the future

Recency bias leads investors to give more weight to recent events and less to historical patterns when making judgments and decisions.

For example, research shows that, when asked about their expectations for future market returns, investors are more bullish when markets have performed well over the last year, and more bearish when they haven’t

Recency bias can lead to behaviours such as:

Chasing performance by buying into “hot” sectors or funds.
Abandoning investment strategies or selling assets that have underperformed recently.
Overreacting to short-term headlines or market moves.

For example, US investors were extremely optimistic about technology companies in the late 90s before the dot com bubble burst in early 2000, causing widespread losses.

What can investors do about it?

Behavioural biases like loss aversion and recency bias affect all investors. But having a sensible, evidence-based investment strategy can help.

Four principles of investing offer a framework for managing these biases and staying on track:

Set your goals: Having a clear investment plan acts as a guide during uncertain times. It helps investors stay grounded and avoid impulsive decisions that may be influenced by bias.
Stay well balanced: Building a balanced portfolio with a range of different assets can help reduce the impact of any single market event. That’s because the best-performing asset type one year can sometimes be the worst-performer in the next.
Maintain perspective: Staying focused on long-term goals can help investors avoid overreactions to short-term news.
Minimise your costs: You can’t control what the market does, but choosing lower cost investments means you keep more of your returns.

By recognising these behavioural pitfalls and having strategies to manage them, investors can be better positioned for long-term success.

1. Source: Vanguard total return calculations, as of 31 December, 2024. Equities in the 60% equity/40% fixed income portfolio are represented by the Russell 3000 Index and fixed income is represented by the Bloomberg U.S. Aggregate Bond Index. Cash is represented by the FTSE 3-Month Treasury Bill index. Monthly data are from January 1980 through December 2024. Equity losses of more than 10% over three months trigger the move from a 60/40 portfolio to all cash in the illustration.

Source: This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.

Important Legal Notice – Offer not to persons outside Australia
The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws.
© 2025 Vanguard Investments Australia Ltd. All rights reserved.

Plan for your retirement

Tue, 30 Sep 2025 17:02:00 GMT

Planning to retire means considering the steps and decisions needed to get you to where you want to be. Think ahead to the kind of life you want to live and how you will support yourself when you’re no longer working.

Work out how much you need to retire

How much you need to retire depends on how you want to live.

You might plan to keep things simple, or have plans to spend money on travel, family or hobbies.

Both approaches can provide a fulfilling retirement. The key is to match your plans to your savings so you have enough to cover your lifestyle.

Visit work out how much you need to retire or speak to us.
Use the budget planner to get an idea of how much you really need to live.
Use the retirement planner to understand your income.

Make a retirement plan

Once you know what you need, the next step is to work out how and when you’ll retire.

That means deciding when to stop working, what income sources you can access and how you will budget for day-to-day living.

Your plan can be as simple or detailed as you need.

Work out your financial position
Speak to us for help.

Understand what happens to your super when you retire

Super is designed to support you in retirement, but it does not get paid out automatically.

You decide when and how to access your super. Depending on your age and circumstances, you may have different decisions to make.

You may choose to leave your super where it is for now, use it to set up a regular income, or withdraw a lump sum. Or you may choose any combination of those options.

What happens to your super when you retire can be complex, so speak to us today if you’re nearing retirement and unsure which option would suit your circumstances.

Source: Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/plan-for-your-retirement
Important note: 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. Past performance is not a reliable guide to future returns.
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.

How $1,000 plus regular contributions turned into $823,000 through compounding

Tue, 23 Sep 2025 17:05:00 GMT

A simple ongoing investment strategy can deliver substantial returns over time

Imagine planting a tree that not only grows fruit but also grows more branches, which grow even more fruit.

That’s compound interest in motion, which is sometimes referred to as the “eighth wonder of the world”. It’s the financial phenomenon where your money earns interest, and then that interest earns interest too.

The longer you leave your money invested, the more it can multiply, thanks to the snowball effect of reinvesting your earnings.

A simple strategy that pays long-term dividends

Whether you’re saving for retirement, a home, or just building wealth, compound interest is your quiet, powerful ally. Start early, stay consistent, and let time do the heavy lifting.

For example, assuming a 9.3% average annual return with all income distributions reinvested, an initial investment of $1,000 in the S&P/ASX All Ordinaries Total Return Index on 1 July 1995-implemented through a broad index-tracking fund-would have appreciated to $14,379 by 30 June 2025.*

That’s not bad. A sizeable 1,340% return, in fact, by doing nothing other than reinvesting all income distributions back into the same investment to harness the power of compounding.

But an investor could have achieved returns many multiples higher by adding regular amounts of “financial fertiliser” to their money tree over the same time period.

It’s how a $1,000 initial investment could have grown to over $823,000 by 30 June 2025.

Adding $100 per month

Just by adding $100 per month, an initial investment of $1,000 on 1 July 1995 would have compounded to more than $176,000 by 30 June 2025. That’s based on the performance of the S&P/ASX All Ordinaries Total Return Index, the addition of regular investments, and the reinvestment of all distributions.

Put another way, by making a total of $36,000 in additional investments over 30 years, a $1,000 initial investment combined with compounding growth would have returned close to $162,000 more than the $14,379 balance from making no additional investments.

The returns numbers assume no investment management fees, indirect trading costs, or capital gains taxes were incurred along the way.

Adding $200 per month

By adding $200 per month, an initial $1,000 investment, once again based on the performance of the S&P/ASX All Ordinaries Total Return Index, would have grown to around $338,000.

That’s a $73,000 total investment (the initial $1,000 plus $72,000 in additional investments) over 30 years to achieve an investment worth around $323,000 more than the $14,379 balance if no additional investments had been made.

Adding $500 per month

However, a regular investments strategy of $500 per month over 30 years ($180,000 in total) would have seen the initial $1,000 investment grow to $823,114 by 30 June 2025 – more than $808,000 higher than the $14,379 balance if no additional investments had been made.

Here’s how the investment balance numbers would have looked at different points in time, based on the actual performance of the S&P/ASX All Ordinaries Total Return Index, from 1 July 1995 to 30 June 2025.

The benefits from regular investments

Source: Vanguard. Returns based on S&P/ASX All Ordinaries Total Return Index. Assumes the reinvestment of income distributions and does not take into consideration investment management fees, indirect costs, buy/sell spreads, or taxes.

It’s only when you compare the numbers in the table side by side that the full picture becomes much clearer.

An initial contribution amount combined with a regular investment savings strategy and the reinvestment of income distributions over time can deliver much higher long-term compound returns.

How regular contributions stacked up

In the examples used above, there would have already been a significant returns gap after just five years (by 2000) between investors who had not made regular investments versus others that had.

That gap would have kept widening over time. After 10 years investors who had followed a $100 per month regular investments strategy would have had a balance more than eight times greater than someone who had not made additional investments but had just reinvested their income distributions. By 2025 the balance differential would have widened to over 12 times.

On regular investments of $200 per month, the balance gap would have been more than 23 times by 2025, and based on regular investments of $500 per month it would have been close to 60 times.

Of course, the returns numbers would have been significantly higher based on a higher initial investment amount.

A $10,000 initial investment in July 1995 combined with $500 per month additional investments would have compounded to more than $950,000 by 30 June 2025.

Staying the course

The 30-year period between mid-1995 and mid-2025 has included nine Australian prime ministers and six U.S. presidents.

It has also included the Asian currency crisis in 1997, the dot.com crash in 2000, the Global Financial Crisis from 2007 into 2009, and the COVID-19 market crash in 2020.

To harness the full benefits of compounding over time, it’s important to have a disciplined, non-emotional approach to investing, irrespective of short-term events and volatility.

Making regular investments, and taking advantage of compounding returns, can really add up over the longer term.

They’re a powerful combination in helping you to focus on achieving your investment goals, ideally through an

appropriately diversified portfolio, to give you the best chance of investment success.

Any investment is subject to investment and other known and unknown risks, including possible delays in repayment and loss of income and principal invested.

* The examples of an investment of $1,000 into S&P/ASX All Ordinaries Total Return Index on 1 July 1995 and the corresponding outcomes as of 30 June 2025 expressed in this article are based on the past performance of the S&P/ASX All Ordinaries Total Return Index. They assume the $1,000 is fully invested (and remains fully invested). The calculations assume no acquisition costs, fees or taxes, with all distributions reinvested. All results are displayed in nominal dollars i.e. inflation has not been taken into account. An actual investment would be subject to acquisition costs, fees and taxes.

Important Information

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor and Vanguard ETFs and managed funds. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966).

We have not taken your objectives, financial situation or needs into account when preparing this article so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.

This article was prepared in good faith and we accept no liability for any errors or omissions.

From budgeting to bliss: managing money matters in your relationship

Tue, 23 Sep 2025 17:05:00 GMT

Money sure can stir up a lot of emotions in relationships. From arguments over who spent too much on takeout to disagreements about saving for a house, finances can be a major stressor for couples. So, let’s dive into why money can be a relationship minefield and how you can navigate those financial trenches with ease.

Here’s a hint: it’s not just about the money, but about what money represents to you both.

How common are money issues?

You’re not alone if you find money a hot topic in your relationship. Research shows that financial disagreements are more common than you might think. A recent survey showed nearly a third of couples frequently argue about finances. ⁱ Additionally it was revealed that one in four people hide financial information from their partner. ⁱⁱ

These statistics highlight that financial disputes are not only prevalent but also impactful. But don’t worry—there are plenty of ways to turn these potential powder kegs into opportunities for deeper understanding and cooperation.

More than money

When thinking about money as a point of conflict, it’s important to remember that conflict comes from our big emotions about what money represents to us: security, power, control, status, acceptance.

We all have different attitudes to money that come from our past experiences. While one person may see money as the freedom to do what they want, their partner may prefer to save every penny because they value the security that comes with having savings.

Tips for financial harmony

It’s important when it comes to resolving money issues to dig a little deeper and figure out the underlying issues and consider the strong emotions behind money issues. Here are some tips to manage money matters with grace and cooperation:

Keep the lines of communication open

Given how everyone’s relationship with money is quite different, it’s unlikely you’ll always be on the same page when it comes to your finances, and that’s where open and honest communication comes in.

Think of financial discussions as regular tune-ups for your relationship. It’s not just about big financial decisions; it’s about checking in with each other’s financial goals, concerns, and spending habits. Set aside time for regular financial chats, whether it’s a monthly budget meeting or a quick conversation over coffee. Keeping the lines of communication open can help catch small issues before they become big problems.

Sharing financial goals and respecting individual aspirations

Having common financial goals can be like having a shared GPS for your money. Whether you’re saving for a dream vacation, a new home, or a renovation, setting mutual goals provides direction and motivation. Create a plan that includes both short-term and long-term objectives, this way, both partners feel invested in the financial journey.

While working towards shared goals is important, it’s also essential to respect each other’s individual financial aspirations. This might mean each partner having some freedom to manage their personal finances and make individual financial decisions.

Budget is not a dirty word

Budgets might sound boring, but they’re actually a fantastic way to manage your money and work together to achieve your financial goals. Sit down together and create a budget that covers all your expenses, savings, and fun money. Tools like budgeting apps can help you track your spending and stay on target. Remember, a budget should be a flexible guide, not a strict rulebook and make sure both partners have a say in how the budget is structured.

Be transparent about finances

Transparency is key to building trust. Share information about your income, debts, and financial goals with each other. If you’re planning a big purchase or making a financial decision, discuss it openly. Remember, financial transparency is about more than just sharing numbers; it’s about understanding each other’s financial mindset and values.

Money may be a common source of stress in relationships, but with the right strategies it’s possible to turn financial challenges into opportunities for growth and collaboration. Remember, it’s not about avoiding money issues but about managing them in a way that acknowledges the strong emotions often associated with your finances and strengthens your relationship. So, take a deep breath, and tackle those money matters together—you’ve got this!

i Fighting with the family: A third of Aussies arguing with loved ones over money | Compare The Market

ii Financial fibbers: 1 in 4 Australians lie about money | finder.com.au

How to stay scam safe

Tue, 23 Sep 2025 17:05:00 GMT

Take a sec to check

Scammers aim to take advantage of weak security and plan on you being distracted with everyday life.

To keep yourself safe:

Stop – Don’t share your personal information such as your myGov sign in details, Tax File Number (TFN), or bank account details, with anyone unless you trust the person and they genuinely require your details.
Check – Take a sec to check. Ask yourself could the message or call be fake? Is it really the ATO contacting you?
Protect – Act quickly if something feels wrong or you’ve noticed suspicious activity on your ATO accounts.

Always be aware of what information you share. If a scammer gets your personal information they can use it to access your bank account, sign in to your myGov account, or steal money and commit fraud in your name.

If an interaction doesn’t feel right, don’t engage. You should either:

go to Verify or report a scam
check our latest Scam alerts
or phone the ATO on 1800 008 540 to check.

If you are the victim of a data breach and your personal information has been accessed, go to Data breach guidance for individuals .

Your personal information

To commit identity crime or fraud, scammers only need some of your personal information. This may include:

full name
date of birth
current address
myGov and ATO online login details
TFN
passwords
bank account numbers
credit card details
driver’s licence details
passport details.

They can use this information in a variety of ways, such as to commit refund fraud in your name, access your myGov account to steal your tax refund, steal your superannuation or sell your identity to organised crime groups on the dark web or via other means.

If you suspect your personal information, such as your TFN, has been stolen, misused or compromised, phone the ATO as soon as possible on 1800 467 033 between 8:00 am and 6:00 pm Monday to Friday. They will investigate and can place extra protection on your ATO account.

Consequences of identity theft

If your identity is stolen the consequences can extend far beyond immediate financial loss (such as your super being cleaned out or refund fraud committed in your name) and lead to significant personal and professional challenges. Such as:

impact to your credit rating, making it difficult to be approved for a loan or credit card
making it difficult for you to prove who you are and get new identity documents
damage to your reputation, potential for access to your social media accounts and spreading misinformation in your name
it can also take victims of identity theft years to recover their identity and undo any damage

The emotional toll is also significant. Victims of identity theft often experience stress, anxiety and a sense of vulnerability knowing that someone else is capable of exploiting their personal information at any moment.

Protect yourself

Here are some top tips to keep your personal information safe:

Don’t give out your personal information to anyone unless you trust the person and they genuinely require your details.
We never send unsolicited emails or SMS with QR codes or links to an online portal. Scammers often use these methods to steal your personal information or plant malware on your devices. If you receive a notification asking you do this, it is a scam.
Always access online services by directly typing the URL into a browser, not by clicking on a link.
Protect your TFN – only give your TFN to organisations or people who have a legitimate need for it, such as your tax agent, current employer or bank. It’s important to verify that the person you’re giving your TFN to is who they say they are.
Never share your passwords. Consider using passphrases instead of passwords, a password manager can help you generate or store passphrases. You should also consider updating them regularly.
Enable multifactor authentication. If scammers obtain your password, it will be significantly harder for them to access your account.
Keep your devices up to date. Scammers can use viruses, malware and programs to access or steal your personal information on your devices including phones, computers and tablets.
Use your Digital ID (such as myID), set to the strongest level you can achieve, to access ATO online services through myGov.

To learn more about myID visit How to set up myID .

For top cyber security tips, visit Top cyber security tips for individuals . You can also set up Voice authentication to help protect your tax account and reduce the chance of scammers accessing it.

More information on securing your devices is available from the Australian Cyber Security Centre .

How the ATO keeps your information safe

They take the security and privacy of your personal information very seriously and have steps in place to make sure your data and online transactions are secure and safe.

They keep your personal information safe by:

confirming your details when you contact them
having a range of systems and controls in place to make sure your data and transactions are secure
logging access to your personal information (to help the ATO identify any unusual behaviour).

To help you stay safe online, they:

won’t ask you for your TFN or bank details via return email, SMS, or on social media
won’t give your personal information to anyone without your consent, unless the law permits
won’t communicate with you on behalf of another government agency or ask another government agency to represent them.

How they communicate with you

They may use SMS or email to ask you to contact them, but they will never send an unsolicited message with a link asking you to return personal information or log in to their online services.

The ATO has a Facebook, Instagram, X and LinkedIn account, but will never use these platforms to ask you to provide personal information, documentation or ask you to make payments.

Source: ato.gov.au May 2025
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/newsroom/smallbusiness/ .

What are the SMSF investment restrictions?

Tue, 16 Sep 2025 17:04:00 GMT

About SMSF investment restrictions

SMSFs are complex, here we have outlined some of the restrictions to help you before you make any decisions on self-managed super fund (SMSF) investment. You must ensure you understand any restrictions on SMSF investments to avoid any penalties.

There are some exceptions, however, generally your SMSF must not:

lend or provide financial assistance to members or related parties
acquire assets from members or related parties
use collectables and personal use assets in a way that provides a present-day benefit
allow trust distributions owing to the SMSF to remain unpaid
breach the in-house asset rules
borrow money .

No one associated with your SMSF should get a present-day benefit from its investments.

If you don’t comply with the investment restrictions, the ATO may take a range of actions, including:

imposing penalties
making the fund non-complying
disqualifying you as a trustee
prosecution of trustees.

Who are related parties?

A related party of your SMSF includes:

all members of your fund
associates of fund members, which include
the relatives of each member
the business partners of each member
any spouse or child of those business partners
any company or trust the member or their associates control or influence
standard employer-sponsors (employers who contribute to your SMSF for the benefit of a member under an arrangement between the employer and a trustee of your fund)
associates of standard employer-sponsors, which include
business partners and companies or trusts the employer controls (either alone or with their other associates)
companies and trusts that control the employer
relatives of an employer sponsor.

A relative is any of the following:

a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the member or their spouse
a spouse of the member and any individual specified above.

Loans and financial assistance

Your SMSF can’t provide loans, or direct or indirect financial assistance, to a member or a member’s relative. For example, you can’t use your SMSF as guarantor for a loan for a member or a member’s relative.

Loans must:

be in the best interests of the members
comply with the SMSF’s investment strategy
be conducted on a commercial arm’s length basis.

If you run a business through your SMSF, you also can’t overpay a member or relative of a member for their services. If you employ a member or a relative of a member, their salary or wage must not be higher than the standard salary for that type of role.

Acquiring assets

Your SMSF can’t acquire an asset from a related party unless the price reflects the market value and is:

a listed security (for example, shares, units or bonds listed on an approved stock exchange)
business real property
an asset specifically excluded from being an in-house asset.

You must also ensure the market value of your fund’s in-house assets doesn’t exceed 5% of the total market value of your fund’s assets.

Crypto assets and private company shares are not listed securities and can’t be acquired from a related party.

If an asset is not acquired or sold at arm’s length, all or part of any income from the transaction may be non-arm’s length income and taxed at the highest marginal rate.

To help you comply with the requirements, use the valuation guidelines for self-managed super funds .

Collectables and personal use assets

Where your fund invests in collectables and personal use assets, this must be for genuine retirement purposes, not to provide any present-day benefit.

Assets such as artwork, boats, jewellery, vintage cars and wine are described as collectables and personal use assets.

Natural diamonds (including pink diamonds), when held in loose form, are not considered collectable or personal use assets . As such, they do not have specific storage and insurance requirements. However, for these types of assets it is recommended trustees:

hold adequate insurance
consider storage arrangements.

‘Diamonds held in loose form’ means they cannot be mounted, integrated into or used as an item for adornment or other purposes which would be inconsistent with the holding of the diamond in loose form for investment purposes.

Collectables and personal use assets can’t be:

used by or leased to a related party (if leased to an unrelated party it must be at arm’s length)
stored or displayed in the private residence of a related party (this includes all parts of the land the residence is situated on and all buildings on that land, such as garages or sheds)
displayed in any other premises owned by a related party (they can be stored there provided they’re not visible to clients and employees).

You must keep a written record of the reason for deciding where to store the assets.

Collectables and personal use assets must be insured. You should consider the availability and cost of insurance before investing in them. Items must be insured within 7 days of the fund acquiring them and the fund must be listed as the owner and beneficiary of the policy.

These assets can be sold to related parties provided the sale is at market value as determined by a qualified, independent valuer.

Unpaid trust distributions

If your SMSF is entitled to a distribution from a related trust but you allow it to remain unpaid, you may contravene the:

in-house asset rules
arm’s length rule
sole purpose test.

In-house assets

You are restricted from having in-house assets that comprise more than 5% of the market value of the SMSF’s total assets.

An in-house asset is any of the following:

a loan to a related party of your fund
an investment in a related party of your fund
an asset of your fund that is leased to a related party, such as business equipment or machinery.

Any lease must be made on an arm’s length basis and reflect the market value.

If at the end of the financial year your SMSF’s in-house assets exceed 5%, you must prepare a written plan to reduce in-house assets to 5% or below. This plan must be prepared before the end of the following financial year. Trustees must also ensure the plan is carried out.

There are some exceptions to in-house assets, including:

business real property that is leased between your fund and a related party of your fund
some investments in related non-geared trusts or companies.

The in-house asset rules for assets owned before 11 August 1999 were defined differently. If your SMSF owns assets that were acquired before this date, you should review your fund’s investments to ensure you are complying with the current rules.

Decrease in asset values due to COVID-19

Some SMSFs may have experienced a decrease in asset values due to the economic impact of COVID-19. If this resulted in a breach of the in-house asset rules as at 30 June 2020, or the in-house assets being more than 5% of the total assets, the fund was required to prepare and implement a rectification plan by 30 June 2021.

Business real property

Business real property generally means land and buildings used wholly and exclusively in a business. It’s an exception to the in-house asset and related party acquisition rules.

If business real property contains a dwelling for private or domestic purposes such as a farm, it can still meet the requirements of being used wholly and exclusively in a business if:

any dwelling used for private or domestic purposes is in an area of land no more than 2 hectares, and
the main use of the whole property is not for domestic or private purposes.

Running a business in an SMSF

If running a business through an SMSF, it must be:

allowed under the trust deed
operated for the sole purpose of providing retirement benefits for fund members.

The rules governing SMSFs prohibit or limit some activities available to other businesses, such as entering into credit arrangements or having overdrafts.

You should get professional advice before running a business through your SMSF.

It is important to ensure the sole purpose test is not breached. Issues that attract our attention include those where:

the trustee employs a family member (we look at things like the stated rationale for employing the family member and the salary or wages paid)
the ‘business’ is an activity commonly performed as a hobby or pastime
the business run by the fund has links to associated trading entities
there are indications the fund’s business assets are available for the private use and benefit of the trustee or related parties.

Source: ato.gov.au April 2025
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/self-managed-super-funds-smsf/smsf-investing/restrictions-on-smsf-investments/what-are-the-smsf-investment-restrictions.
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.

New Trump tariffs: early modelling shows most economies lose – the US more than many

Tue, 16 Sep 2025 17:04:00 GMT

The global rollercoaster ride of United States trade tariffs has now entered its latest phase.

President Donald Trump’s April 2 “Liberation Day” announcement placed reciprocal tariffs on all countries. A week later, amid financial market turmoil, these tariffs were paused and replaced by a 10% baseline tariff on most goods.

On July 31, however, the Trump Administration reinstated and expanded the reciprocal tariff policy . Most of these updated tariffs are scheduled to take effect on August 7.

To evaluate the impact of these latest tariffs, we also need to take into account recently negotiated free trade agreements (such as the US-European Union deal), the 50% tariffs imposed on steel and aluminium imports, and tariff exemptions for imports of smartphones, computers and other electronics.

For selected countries, the reciprocal tariffs announced on April 2 and the revised values of these tariffs are shown in the table below. The revised additional tariffs are highest for Brazil (50%) and Switzerland (39%), and lowest for Australia and the United Kingdom (10%).

Original and revised reciprocal tariffs (%)

Source: Niven Winchester

For most countries, the revised tariffs are lower than the original ones. But Brazil, Switzerland and New Zealand are subject to higher tariffs than those announced in April.

In addition to the tariffs displayed above, Canadian and Mexican goods not registered as compliant with the US-Mexico-Canada Agreement are subject to tariffs of 35% and 25% respectively.

Economic impacts

The economic impacts of the revised tariffs are examined using a global model of goods and services markets, covering production, trade and consumption.

A similar model was used to assess the impacts of the original reciprocal tariffs and the outcome of a US-China trade war .

GDP impacts of the tariffs are displayed in the table below. The impacts of the additional tariffs are evaluated relative to trade measures in place before Trump’s second term. Retaliatory tariffs are not considered in the analysis.

GDP changes due to additional US tariffs

Source: Niven Winchester

An economic own goal

The tariffs reduce US annual GDP by 0.36%. This equates to US$108.2 billion or $861 per household per year (all amounts in this article are in US dollars).

The change in US GDP is an aggregate of impacts involving several factors.

The tariffs will compel foreign producers to lower their prices. But these price decreases only partially offset the cost of the tariffs, so US consumers pay higher prices.

Businesses also pay more for parts and materials. Ultimately, these higher prices hurt the US economy.

The tariffs decrease US merchandise imports by $486.7 billion. But as they drive up the cost of US supply chains and shift more workers and resources into industries that compete with imports, away from other parts of the economy, they also decrease US merchandise exports by $451.1 billion.

Global impacts

For most other countries, the additional tariffs reduce GDP. Switzerland’s GDP decreases by 0.47%, equivalent to $1,215 per household per year. Proportional GDP decreases are also relatively large for Thailand (0.44%) and Taiwan (0.38%).

In dollar terms, GDP decreases are relatively large for China ($66.9 billion) and the European Union ($26.6 billion).

Australia and the United Kingdom gain from the tariffs ($0.1 billion and $0.07 billion respectively), primarily due to the relatively low tariffs levied on these countries.

Despite facing relatively low additional tariffs, New Zealand’s GDP decreases by 0.15% ($204 per household) as many of its agricultural exports compete with Australian commodities, which are subject to an even lower tariff.

Although the revised reciprocal tariffs are, on average, lower than those announced on April 2, they are still a substantial shock to the global trading system.

Financial markets have been buoyant since Trump paused reciprocal tariffs on April 9, partly on the hope that the tariffs would never be imposed. US tariffs of at least 10% to 15% now appear to be the new norm.

As US warehouses run down inventories and stockpiles, there could be a rocky road ahead.

Source: https://theconversation.com/new-trump-tariffs-early-modelling-shows-most-economies-lose-the-us-more-than-many-262491

Preparing for another savings pinch

Tue, 16 Sep 2025 17:04:00 GMT

The bad news for savers relying on income returns is set to continue

Australia’s underlying level of inflation is continuing to fall, and which paved the way for another official interest rate cut when the Reserve Bank of Australia (RBA) board met earlier in the month.

It was welcome news for borrowers, but not for most savers – especially the millions of Australians with money tied up in savings accounts who are heavily dependent on regular account interest payments.

When borrowing interest rates are reduced, account savings interest rates typically fall in tandem.

In fact, many financial institutions who had been pre-empting another rate cut and had already quietly started to reduce their account savings rates.

According to rates comparison website Canstar, only a handful of banks are now offering savings rates above 5%. And, in the majority of cases, receiving those rates are conditional on meeting minimum monthly deposit amounts or transaction numbers.

Just like the rates on savings accounts, term deposit rates have also been declining steadily over time, since well before the RBA lowered its official interest rate by 0.25% to 4.10% in February this year – its first rate cut since November 2020.

In fact, RBA retail deposits and investment rates data shows term deposit rates across a range of durations have been steadily declining since July 2024.

For example, the average 12-month term deposit rate for a $10,000 amount has been progressively reduced nine times since July 2024, from a peak of 4.50% to an average rate of 3.70% at June 30, 2025.

The average three-year term deposit rate for a $10,000 amount has been progressively reduced six times over the same period, from a peak of 3.95% in July 2024 to 3.05% at June 30, 2025.

The chart below tracks the average 12-month term deposit rate for $10,000 amounts between January 1995 and July 2025, highlighting the rise in account interest rates from their historical low point in early 2022 to their peak, and then their gradual decline since the middle of 2024.

Going down: Average term deposit rates have slipped

 Banks’ Term Deposit Rates ($10,000) – 1 Year (Jan 2015 to Jun 2015)

Source: Reserve Bank of Australia.

Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.

Implications for savers and retirees

Many Australians, especially retirees, rely on the interest earned on their savings to cover their living expenses, and any reduction in interest rates can mean a substantial decrease in their income.

This has been the reality for many people over the course of the last year, and further cuts are on the near-term horizon.

The decline in savings rates also has broader implications for the economy.

When savers earn less interest on their deposits, they have less money to spend, which can lead to a decrease in consumer spending. This, in turn, can slow economic growth, as consumer spending is a key driver of economic activity.

Additionally, lower savings rates can discourage people from saving, which can have long-term implications for financial stability.

Turning savers into investors

New research released has estimated that the implementation of certain retail investment reforms in Australia could potentially unlock at least $185 billion in excess cash savings and help more Australians achieve greater financial security.

These reforms include facilitating access to affordable financial advice, introducing tax incentives to boost investment outside of superannuation, improving financial literacy levels, and increasing fee transparency and competition.

For retail investors, the decline in term deposit rates and savings rates presents a challenge. With returns on traditional savings accounts and term deposits declining, some investors may need to look for alternative investment options to generate income.

While there are other income-generating options available, such as dividend-paying stocks and bonds that typically offer higher interest rates than savings accounts and term deposits, it is important for investors to carefully consider the risks and rewards of these investments before making any decisions.

In the meantime, the income road ahead for many people needing to generate income from their savings may become increasingly challenging as interest rates continue to fall.

Source: href=”https://www.vanguard.com.au/personal/learn/smart-investing/investing-strategy/preparing-for-another-savings-pinch”>Vanguard August 2025
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

Retirement villages and occupancy arrangements

Tue, 16 Sep 2025 17:04:00 GMT

What is a retirement village

There are so many options when it comes to moving into a retirement village. Here we explain what some of them are along with the contractual arrangements you may have for each accommodation.

A retirement village is accommodation:

intended for people who are 55 years or older
that may be independent living units , serviced apartments , care facilities or a combination of these
providing services and communal facilities to residents
operated by government, commercial businesses or as a charitable retirement village by a charitable body.

Retirement villages don’t include residential care as defined in aged care legislation or commercial residential property.

Types of occupancy arrangements

Retirement village contracts aren’t the same as ordinary residential property contracts. A retirement village contract is normally terminated on the death of a resident or when the resident leaves the village, for example, to go to an aged care facility.

Retirement villages offer several different contractual arrangements to residents. The most common types of contracts are:

Long-term leases or licences

A long-term lease in a retirement village will typically be a lease or licence to live in a retirement village for a period of more than 49 years.

The lease doesn’t amount to ownership of the unit or part of the property but is registered on the title deeds of the retirement village.

The contracts are commonly known as lease premium arrangements.

Entry

Commonly in a leasehold situation, an incoming resident pays an entry contribution close to the market value of the dwelling. In return they’re given:

a long-term lease on that unit
the right to use the communal facilities in the retirement village.

Upkeep

The residents pay for the upkeep of the communal facilities. This may occur on a continuing basis through a regular fee or levy. The communal facilities remain your property as the operator of the retirement village.

Termination

Depending on the contractual agreements, on termination of the lease the outgoing resident or beneficiaries may be entitled to a lease termination payment. This might be higher than the entry contribution due to capital growth (if there is any entitlement to capital growth or appreciation). Deferred management, refurbishment and other fees (commonly referred to as exit fees) are charged either on the incoming or outgoing price of the dwelling.

Periodic leases

Another form of lease is the prepaid or periodic rental lease, where a resident pays a period of rent in advance.

Entry

Residents with this kind of lease pay a fortnightly or monthly instalment that includes rent and a service fee. The rent is usually calculated in line with government pensions and rent assistance payments. Entry may be subject to a means test for the incoming resident.

Termination

If the lease is terminated before the stipulated years are up, the resident may get a refund for the time remaining.

Strata title schemes

Entry

Residents with strata title to their units are owners and have a separate certificate of title. They may either:

share as tenants-in-common in the ownership of the communal facilities, or
be granted rights to the use of communal facilities.

Upkeep

The residents may pay for the upkeep of the communal facilities, on a continuing basis, through a regular fee or levy.

Termination

When the resident leaves the retirement village, the tax consequences depend on the resident’s personal circumstances.

Purple titles (tenancy in common)

Entry

Each resident purchases an equal undivided share or ‘purple title’ in the retirement village. This means every co-owner would have an equal interest in every unit in the village. A resident would then be granted an exclusive use of one of the units in the village. In this way, each resident can occupy a residence to the exclusion of the other co-owners of the village. They don’t own the unit, but they do own a share in the whole property.

Upkeep

The residents may pay for the upkeep of the communal facilities, on a continuing basis through a regular fee or levy.

Termination

When the resident leaves the retirement village, the tax consequences depend on the resident’s personal circumstances.

To find out more about these types of accommodations, contact us for more information.

Source: ato.gov.au February 2025
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/newsroom/smallbusiness/ .
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.

Know your new limits under the age pension tests

Tue, 09 Sep 2025 17:17:00 GMT

Understand the latest indexed changes to the pension income and assets tests

Receiving the full government Age Pension, or even a partial pension payment, can provide eligible retirees with a significant amount of income over time that can supplement income earned from other assets.

Millions of Australians are eligible to receive Age Pension payments every fortnight once they turn 67.

But there are strict limits on how much individuals and couples can earn, and on the value of assets that can be held, which the government uses to determine eligibility.

While there were no changes to the fortnightly Age Pension payment rates themselves on 1 July, the start of the 2025-26 financial year saw some indexed increases to both the income and assets test limits used by the government to determine eligibility for the pension.

For example, individuals can now earn to $218 per fortnight (a $6 increase) and couples up to $380 per fortnight (an $8 increase) and still receive the full Age Pension.

Assets test limits have also increased for individuals and couples by between $7,500 and $17,500, depending on home ownership status.

For example, individual homeowners can now have up to $321,500 in assets in addition to the value of their home (an increase of $7,500) and still receive the full Age Pension. For couples who are homeowners, the total amount is now $481,500 (an increase of $11,500).

The asset test limits are higher for non-homeowners.

It’s important to know the Age Pension test limits. The following tables, sourced from the Department of Social Services , provide a detailed breakdown of the latest income test and assets test changes.

The income test

Individuals and couples can earn up to a set amount of income every fortnight in addition to the Age Pension to receive the maximum pension payment.

The pension amount received will then be reduced for every dollar of income earned above the maximum payment limit and will totally cut out at the government’s disqualifying income limit.

What the income test limits are for a full pension

Single person

Couple living together or apart due to ill health.

Different rates apply for partners getting a payment other than a pension.

What the cut-off points are

If your income in a fortnight goes over the cut-off point, the government will pay $0 for that fortnight.

Your cut-off point may be higher if you receive Rent Assistance or Work Bonus, or may be lower if you don’t live in Australia.

The assets test

The government also applies the assets test (based on property or possessions owned in full, in part, and assets that an individual or couple have a financial interest in) to determine whether individuals and couples can quality for full or part pension payments.

What the assets test limits are for a full pension

When your assets are more than the limit for your situation, your pension will reduce.

If you’re a member of a couple, the limit is for both you and your partner’s assets combined, not each of you.

What the limits are for a part pension

From 1 July 2025, part pensions cancel when your assets are over the cut off point for your situation.

If you’re a member of a couple, the limit is for both your and your partner’s assets combined, not each of you.

Conclusion

The Age Pension provides a fortnightly government payment that acts as a financial safety net. Even a part pension can help cover essential living costs like groceries, utilities, and healthcare, reducing the pressure on your superannuation or personal savings.

Many retirees draw income from superannuation, investments, or part-time work. The Age Pension can supplement these sources, helping to smooth out fluctuations in investment returns or market downturns.

The Age Pension is indexed and paid for life, offering protection against outliving your savings. This is especially valuable as people live longer and may need income support well into their 80s or 90s.

Combining the Age Pension with other income streams allows for greater flexibility in managing your finances.

You can draw less from your super during market downturns or use the pension to cover fixed costs, preserving your capital for discretionary spending or emergencies.

Source: Vanguard July 2025
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

Why rebalance a multi-asset portfolio?

Tue, 09 Sep 2025 17:17:00 GMT

Maintaining diversification, managing risk, and enhancing long-term returns

Multi-asset portfolios are designed to provide diversification by spreading investments across various asset classes to reduce risk.

Over time, however, some asset classes may become overweighted (or underweighted), potentially reducing a portfolio’s overall diversification.

For example, if equities perform exceptionally well, a portfolio that was initially well-diversified could become heavily concentrated in stocks, increasing the portfolio’s exposure to the volatility of the stock market.

Rebalancing helps restore the intended diversification. It enables investors to rebalance their portfolio across different asset classes, thus ensuring they are not overly exposed to any single asset class.

A diversified portfolio is typically less volatile than one that is concentrated in just a few assets or sectors, which is crucial for long-term growth and risk reduction.

Moreover, maintaining a diversified portfolio helps investors capture returns from different sources. For instance, bonds may perform well during periods of economic uncertainty, while stocks might thrive in a growing economy.

By keeping allocations balanced across asset classes, investors are better positioned to benefit from shifts in the economic landscape.

The benefits of rebalancing range from risk management to enhancing portfolio performance and make it a critical component of a successful investment strategy.

Below we outline the key advantages of rebalancing a multi-asset portfolio and why it should be part of every investor’s toolkit.

1. Maintaining desired risk profile

A core goal of rebalancing is maintaining a portfolio that aligns with your risk tolerance.

Asset classes such as equities and bonds behave differently in varying economic conditions. Over time, some assets may outperform while others underperform, leading to a drift in the portfolio’s overall risk profile.

For example, in a portfolio that aims for a 60/40 split between stocks and bonds, a significant bull market could cause stocks to outperform, pushing the allocation to 70% stocks and 30% bonds. This is illustrated in Figure 1, where we find that over the last 25 years, a 60/40 portfolio which is not rebalanced would have seen its equity allocation drift between 40% to 70%.

Figure 1. Equity allocation drift in a 60/40 portfolio with no rebalancing

Source: Vanguard. Notes: Returns are from 1/10/2000 to 30/6/2025 for a portfolio with a 60% allocation to equities and 40% to fixed income. A home bias of 40% is applied to both equities and fixed income. The benchmarks used were: S&P.ASX Total Return 300 for Australian equities, MSCI World ex Aus Net Total Return AUD Index for global equities, Bloomberg AusBond Composite 0+ Year Index for Australian fixed income and Bloomberg Global Aggregate Total Return Index Value Hedged AUD for global fixed income.

This could increase the portfolio’s overall risk exposure, as stocks are typically more volatile than bonds. Rebalancing ensures that the portfolio returns to its original risk level, reducing the chance of an unwanted exposure to excessive risk.

By periodically adjusting asset weights, investors ensure their portfolio remains consistent with their risk tolerance, whether it’s conservative, moderate, or aggressive. This can be particularly crucial in times of market volatility, as it helps protect the investor from unnecessary downturns.

2. Locking in Gains – Selling High/Buying Low

An innate feature of rebalancing is its ability to lock in gains by selling over performing assets and buying into underperforming assets at lower price.

For example, if the market experiences a downturn and bonds outperform stocks, an investor who rebalances will be buying more stocks while they are cheaper, setting up the portfolio for better returns in the future when the equity markets recover. Conversely, during a bull market, rebalancing will help the investor lock in profits from equities and buy more bonds, balancing the risk for the next phase of the market cycle.

Rebalancing thus supports the buy low, sell high investment principle. By systematically selling appreciated assets and buying those that have not performed as well, investors are often able to purchase assets at relatively lower prices, improving the long-term potential of their portfolio.

3. Enhancing Long-Term Returns

Rebalancing contributes to long-term performance by adhering to the investment strategy set at the outset. Over time, the market cycle will cause different asset classes to perform at varying rates, but a disciplined rebalancing approach ensures that the portfolio stays aligned with the investor’s strategic goals.

Over the long term, rebalancing at regular intervals (e.g., daily, quarterly or annually) allows investors to consistently benefit from the buy low/sell high feature, and this will generally lead to better risk adjusted returns. Figure 2 shows that the total wealth accumulation for a 60/40 portfolio is higher for the rebalanced portfolio (368%) versus a portfolio that is not rebalanced (337%), and this is achieved with a better risk adjusted return with a daily rebalanced portfolio achieving a Return/Volume ratio of 0.90 vers us 0.85 for a portfolio with no rebalancing (see Table 1).

Figure 2. Weal th accumulation for a 60/40 portfolio with and without rebalancing

Table 1: Long term performance of a 60/40 portfolio

Source: Vanguard

4. Investment Discipline and Strategy Adherence

Investing is often fraught with emotional decision-making, especially during periods of market volatility. Many investors succumb to the temptation to chase hot trends or panic during a market downturn, which can lead to suboptimal decisions.

Rebalancing offers an element of discipline to the investment process. It forces investors to adhere to their original asset allocation plan, preventing rash decisions based on fear or greed. In essence, rebalancing provides a structured approach to maintaining a long-term perspective, enabling investors to focus on their goals rather than reacting impulsively to short-term market fluctuations.

Make no mistake, keeping investment portfolios aligned to specific asset weightings is a difficult and ongoing exercise. It’s actually a balancing act, because there are usually trading costs involved in buying and selling assets as well as potential capital gains tax consequences.

At the same time, market fluctuations may result in a rebalanced portfolio underperforming over the shorter term if the stronger-performing assets that have been sold continue to rally.

By contrast, there’s a key difference between how a portfolio manager can readily rebalance a diversified portfolio versus the average retail investor.

That is, rather than having to sell assets to keep a portfolio aligned, portfolio managers use cash inflows to buy underweight assets whenever they can to keep a portfolio within its target asset tolerance levels. This minimises turnover and reduces the need to realise capital gains in the fund.

Conclusion

Rebalancing is an essential part of managing a multi-asset portfolio effectively. By maintaining the desired risk profile, locking in gains, enhancing diversification, improving long-term returns, and promoting investment discipline, rebalancing can significantly improve the success of an investment strategy.

While the markets will always fluctuate, rebalancing allows investors to navigate these fluctuations with confidence and structure. It ensures that an investment portfolio remains on track, is aligned with the investor’s objectives, and is adaptable to shifting market conditions.

Source: This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart In

vesting

Multiple super accounts can erode your retirement savings

Tue, 02 Sep 2025 17:00:00 GMT

Millions of Australians hold multiple super accounts — and it could be costing them

Vanguard’s late founder, John C. Bogle, was known for championing the importance of reducing investment costs. It’s a principle that’s especially important for long-term investments like superannuation.

For Australians, a common scenario is having multiple superannuation accounts, which can lead to duplicate administration fees and, in some cases, insurance premiums. Data shows that it’s a problem that could be quietly eroding the retirement savings of millions of Australians.

How many Australians have multiple super accounts?

According to the Australian Taxation Office (ATO), around 4 million Australians held two or more superannuation accounts as of 30 June 2024.

That works out to 22% of the population of people with super.

There are some legitimate reasons to have multiple accounts — for example, some accounts may have valuable insurance policies that are unavailable elsewhere. But, the more accounts you have, the more you are likely to be paying in fees and costs.

As ASIC MoneySmart points out, consolidating your super can save you money, reduce paperwork and help you track your balance more easily.

How multiple accounts can affect your retirement savings

To illustrate the long-term cost of maintaining multiple superannuation accounts, we used ASIC’s MoneySmart Superannuation Calculator to compare two scenarios. Both assume a 30-year-old earning $90,000 annually with a starting super balance of $50,000, retiring at age 67.1

In the first scenario, the individual pays an administration fee of $74 and insurance premiums of $214 annually, which are the default amounts used by the calculator. We simulated the effect of a second super account by doubling these costs in an alternative scenario: annual administration fees rise to $148 and insurance premiums to $428. Over the working life, this seemingly small difference results in a nearly $15,000 impact on balances at retirement ($655,850 vs. $670,633).2

This example highlights how maintaining multiple superannuation accounts — and the resulting duplication in fees and insurance premiums — can impact retirement savings over time.

What to do before consolidating your superannuation

Before you consider consolidating your super, there are a few important things to check first.

Check your insurance cover

You should check if you have insurance through your super fund before switching, because you might not be able to get the same cover from another fund and you may be able to transfer this insurance to your new super fund. You should be particularly careful if you have a pre-existing medical condition.

If you’re unsure of your needs or need help, you can get independent advice from us.

Under Australian law, superannuation funds must cancel insurance on accounts that have been inactive (meaning no contributions or rollovers) for 16 consecutive months, unless the member opts to retain the cover.

Check your type of super fund

Some Australians, particularly those who worked in the public service, have “defined benefit” super funds. These funds can have very favourable terms, and they may not be possible to rejoin. It’s important to make sure you’ll be better off before you choose to leave.

Check your employer’s superannuation policy

It’s important to check with your employer around their policies with superannuation. Some employers may pay more to certain funds or subsidise administration fees or insurance premiums on your behalf, which means you could lose out on additional contributions, or lower fees or premiums, by switching.

Check which investments options are available

Finally, before consolidating your super to a single fund, it’s important to check the investment options that will be available and consider if they are appropriate for you.

You can find information about a fund’s investment options in the product disclosure statement (PDS), which should be available on the fund’s website. ASIC’s MoneySmart also has some information that can help you understand and navigate different super investment op tions.

What to consider when comparing su per funds

When comparing super funds, it’s important to consider a range of factors including investment options available, historical performance (particularly over the medium to long term) and fees.

Even a small increase in fees of just 0.5% can significantly impact your retirement savings. For a typical full-time worker, this could mean a reduction of around 12% of their final balance, potentially costing them as much as $100,000.

You can find information about how to compare super funds on the ASIC MoneySmart website or seek help from us.

How to consolidate your super accounts

Thanks to recent changes to superannuation policies, it’s now relatively easy to switch or consolidate your super accounts.

To start, log in to the ATO’s online portal through MyGov. Using the Super menu option, choose “fund details” to see all your super accounts and balances.

To transfer your super, choose “manage” from the Super menu, then “transfer super”. Then, you need to:

Select the fund you want to transfer from and close.
Select the fund you want your money transferred to.
Confirm your selection and submit request.

Finally, make sure to update your super fund details with your employer to ensure you continue to receive contributions.

1. Source: ASIC MoneySmart Superannuation Calculator . The calculations are based on certain assumptions and exclusions, which are listed on the MoneySmart calculator website .
2. Source: ASIC Moneysmart Superannuation Calculator . Both scenarios use the default investment option setting, which assumes a pre-tax annual return of 7.5%, a 7% tax on earnings, and investment fees of 0.85% per annum. Results are presented in today’s dollars, adjusted for inflation. The calculator applies an annual inflation rate of 2.5% to reflect rising living costs, plus an additional 1.2% to account for improvements in community living standards.
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

Trump’s tariffs have finally kicked in, so what happens next?

Tue, 02 Sep 2025 17:00:00 GMT

Donald Trump’s new international trade tariffs have landed . Some are lower than others, some deals have been done, but overall they are the highest they have been in 100 years.

They are also unprecedented in the era of the rules-based trade system that has been in place since 1945.

So what happens next? That’s a tricky question to answer given that the US president has already pressed the pause button on this economic policy before.

But assuming that doesn’t happen again straight away, we can make some confident predictions about the consequences.

First off, the immediate economic effect will be felt by American consumers. JP Morgan, the biggest bank in the US, estimates that 60% of the cost of Trump’s tariffs will be passed directly on to his fellow citizens.

And that’s just the start. Most goods bought in the US, whether they’re electrical items, cars, medical devices, processed foods or makeup sets, are made up of dozens of components, sourced from multiple countries. A finished product may therefore be “tariffed” several times before it reaches the shelf, adding to the final price rise.

Medium-sized businesses are likely to feel the most pain . They have neither the global reach to reorganise their supply chains quickly nor the deep margins to absorb new costs. That means higher prices for the goods they produce.

As a result of all of this, things will get more expensive and consumer spending will fall. It’s too early to quantify the drop, but survey data shows that households are already cutting back.

Businesses will also cut or delay investment in new plants, staff and product lines, as more of their revenue goes on covering higher import taxes.

These effects will be inflationary, pushing prices up. They will also be “recessionary” – in other words, they could cause a recession by cooling demand and investment.

Trump card

The political irony here is striking. Trump’s election victory was fuelled in part by voter frustration over high inflation early in Joe Biden’s presidency.

By the time of the election in November 2024, inflation had eased – but the perception that Biden was linked to higher prices (often discussed with reference to the price of eggs in the grocery store) lingered.

Now Trump’s policy choices look set to drive up prices again, while also risking a significant economic downturn.

A US recession would have global consequences. Mexico, China, Canada, Germany and Japan – the countries which export the most goods to the US – are particularly exposed. Together with the US, these economies account for roughly half of global GDP. If US economic activity slows, and its key suppliers follow, that would be enough to trigger a global contraction.

There’s also the risk of renewed supply chain delays. Faced with uncertainty about demand, companies will slow or stop new orders.

Then, when consumers start buying again, the components needed may not be in stock, delaying production and pushing up costs further. These disruptions tend to cascade through multiple sectors, meaning the impact will be widely felt around the globe.

So how long can this tariff regime hold? In April, Trump’s so-called “liberation day” tariffs were rolled back within days under pressure from American businesses that were suddenly paying more for vital imports.

Since then, very few countries have signed deals with the US, and the ones that have secured broad agreements rather than binding treaties. That means the political backlash from businesses and consumers could once again force the administration to retreat.

For now, the US is testing how far it can push this experiment in protectionism. But the risks are clear: higher prices at home, slower global growth, and a political gamble that may prove costly.

Source: https://theconversation.com/trumps-tariffs-have-finally-kicked-in-so-what-happens-next-262843

Trusts are back in the ATO spotlight

Tue, 02 Sep 2025 17:00:00 GMT

With more than 947,000 trusts operating across Australia, it’s no surprise the ATO continues to keep a close eye on how these structures are managed. Trusts remain central to many wealth and succession plans, but their complexity means they also attract compliance scrutiny.

Closer attention to how trust structures are now being used is part of the ATO’s focus on ensuring taxpayers pay the required tax and do not inappropriately use structures to reduce their tax liabilities.

What’s attracting attention

The ATO’s latest data analysis has pinpointed a few emerging behaviours it’s concerned about:

Overclaiming tax deductions: Some trusts are reducing their net income by claiming deductions that don’t stack up – often without the documentation to support GST refunds.
Loss trafficking: This refers to the creation and use of artificial losses to offset income, giving the appearance of reduced profitability.
Misuse of tax-exempt vehicles: Ancillary funds and other exempt structures are sometimes used to access concessions or private benefits where there’s no real entitlement.

If these practices sound familiar, it might be time to get back on track.

Family trust elections missteps

Family trust elections (FTEs) and interposed entity elections (IEEs) are meant to define clear tax relationships. But when recordkeeping falls short or elections aren’t properly understood, issues arise – particularly with Family Trust Distribution Tax (FTDT).ii

Trustees are also being encouraged to check the FTEs and any IEEs the group has in place and to clearly identify members of the family group.

Trustees should ensure they understand the tax implications of making these elections and how they affect distributions and tax responsibilities for both the trust and its beneficiaries. In fact, the ATO is seeing instances where individual beneficiaries are incorrectly returning amounts on which FTDT has been paid.

Trusts in succession planning

Using a trust to transfer wealth is common in succession planning – but it needs to be done correctly.

Trouble often arises when capital gains tax events are overlooked, the tax consequences of transactions are misunderstood and Division 7A issues are ignored when loans, payments or debt forgiveness are involved.iii

These oversights can lead to unexpected tax bills at a time when stability and clarity matter the most.

Amendments to a trust deed (such as changes to the trustee, adding or removing beneficiaries, or amending the vesting date) can also create tax risks for trustees.

The same applies if the trust has a family trust election in place but makes distributions outside the family group.

Trusts with an IEE in place to include the interposed entity in its family group may also find the ATO asking questions.

Don’t forget the franking account

Another area of focus right now is discrepancies in trust franking account balances and situations where a trustee fails to apply the franking credit integrity rules when making or receiving franked distributions.

Trustees need to ensure they are complying with the 45-day holding rule if they wish to avoid scrutiny. This rule requires shares to be held ‘at risk’ for a continuous period of at least 45 days (90 days for preference shares) during the qualification period.

It is also important to check you have family trust elections in place if you wish to access franking credits for the trust’s share holdings.

If your trust touches any of these areas – from family elections to succession plans – now is a good time to review your setup. Good governance and clear records don’t just help you comply with ATO rules; they protect your beneficiaries, your finances, and your legacy.

The ATO has a checklist that is designed to help avoid basic trust errors if you don’t fully understand your obligations or take reasonable care to get things right.

The checklist states you should:

Understand how income is defined for the trust estate.
Identify the trust’s beneficiaries.
Understand resolutions and present entitlement.
Identify any family trust elections (FTE) or interposed entity elections (IEE).
Maintain clear and accurate records.

Want help reviewing your trust structure or clearing up a few grey areas? Get in touch with our office today.

i Trust statistics | Australian Taxation Office

ii Areas of focus 2024–25 | Australian Taxation Office

iii Areas of focus 2024–25 | Australian Taxation Office

Property investment – Tips and tricks for getting into the property market

Tue, 26 Aug 2025 17:14:00 GMT

Pros of investing in property

Income – you earn rental income from the property when tenanted
Less volatility – property income and property value can be less volatile than other investments such as shares or bonds etc
Capital growth – if your property increases in value, you will benefit from a capital gain when you sell
Tax advantages – you can offset most property expenses against rental income, including interest on any loan used to buy the property
Physical asset – you are investing in something you can see and touch.

Cons of investing in property

Cost – rental income may not cover your mortgage repayments and other expenses
Tax – you will need to declare your rental income in your income tax and you may have to pay capital gains tax on sale of the property if you sell for more than you paid
Interest rates – a rise in interest rates on your variable loan will mean extra loan repayments which may impact your net income from the rental property
Vacancy – if your property is vacant for some reason, you will need to cover the costs including mortgage repayments which will impact your disposable income
Value loss – if the property value decreases below what you paid you could end up with a shortfall and owing more than the property is worth
High entry and exit costs – expenses such as stamp duty, legal fees and other fees can impact entry and exit.

Costs of investing in property

There are costs involved in investing in real estate, these include but are not limited to:

mortgage costs including interest payments, establishment fee and associated fees and charges
stamp duty and conveyancing fees
legal costs
search fees
pest and building reports
taxes.

Costs of owning an investment property

There are ongoing costs with an investment property, they may include:

council rates
water rates
body corporate or strata fees
land tax
building insurance
landlord insurance
property management fees (if you are using a real estate agent)
repairs and maintenance costs

What to consider when buying an investment property?

The decision to buy an investment property should be a decision that is made with your head and not your heart. Take a long-term view and the fundamental key is to make the property attractive to renters. Once you have a property in mind, compare the income you expect to your outgoing expenses. If there is a shortfall, you will need to consider whether you can cover the expenses long-term. You will also need to factor in whether you could cover all expenses in the short-term if you have no tenant for some time.

TIP NO.1

There may be tax benefits to investing in property as you may be able to claim property management costs, maintenance costs and other borrowing expenses as a tax deduction from your taxable income on your tax return. You should obtain advice from your accountant or tax adviser before doing so.

TIP NO.2

Investing in real estate is all about capital growth. Choosing a property that is more likely to increase in value is the most important decision you will make, so buying at the right price is critical. You should talk with a real estate agent and a conveyancer before committing to any purchase.

Where to buy

Location is key and look for liveable properties
Research capital growth areas to gain insights into what the median sale price for the suburb is and whether it has increased over time
Buy in a high rental demand area with high rental yield
Look for areas that have good infrastructure eg; close to schools, shops transport, hospitals etc
Find out about proposed planning changes in the suburb that may affect future property prices eg; proposed motorway, airport, zoning

What to buy

Your budget will determine whether you can invest in a house, duplex, unit etc
Consider properties with appealing features such as an additional second bathroom, a home office/study, attic/storage space and garage
Consider maintenance costs based on property type, age and features.

Can I live in an investment property?

We cannot give you personal tax advice as it will depend on your particular circumstances. Seek professional advice on tax consequences of changing the status of your property from an investment property to your principal place of residence.

What is rentvesting?

Rentvesting is an investment strategy for would-be home buyers who can’t afford their dream home yet. It’s where you rent a property to live in that’s right for you and your lifestyle, while you own an investment property that’s right for your budget.

Instead of buying an expensive dream home, you purchase a more modest property in a suburb where prices are more affordable. The property you buy can then be rented out to help cover your own rental payments and later sold for a capital gain. This strategy lets you have the lifestyle you want now, while at the same time building a property portfolio for the future.

Before you choose to buy a property or rentvest, make sure you can afford to rent and have a mortgage. Just because an investment property is cheaper than your dream home doesn’t necessarily mean that you can afford it, and just because renting feels like throwing away money doesn’t automatically mean you should mortgage yourself.

Buy in a high rental demand area with high rental yield

Be realistic about your investment goals. Do not underestimate ongoing costs

What is stayvesting?

Stayvesting is a relatively new term for those who are wanting to buy an investment property, perhaps whilst still living at home with a parent, parents or relatives.

It is important to have an idea of your budget and you will need to consider your income and expenses and what deposit is currently saved. If you are living at home rent-free, most lenders will factor in a nominal amount of rent in your application. This means that when they are calculating your income and expenses, they will add a nominal rental expense (regardless of whether you pay rent or not).

Buying an investment property can be a sound financial decision, however, it is not without its risks. Remember to work with us as we can help you navigate the process and help you make the best purchase possible and evaluate all your options to ensure that the investment you make is the best one for you.

Source: It’s my home magazine

This publication has been produced by Helia Group Limited (’Helia’). This publication may include content which is owned by third parties (’third party content owners’) and that has been provided to Helia for publication. Opinions expressed in this publication are of the writer or contributor and do not necessarily reflect the view of Helia or its affiliates. This publication covers a variety of topics including property, insurance and other financial products and services. Although some of the information involves tax, stamp duty, legal, accounting, financial or similar issues, Helia, its affiliates and the third-party content owners (as to their materials only) (‘we’) are not in the business of offering such advice and nothing in this publication constitutes a personal recommendation or advice. You must consult with your own professional advisers to examine the legal, tax, accounting or investment aspects of any information presented in this publication and how they may affect your particular situation.
The information also does not contain all of the applicable terms, conditions, limitations or exclusions of the products or services described. We expressly disclaim all responsibility and liability for any action or inaction by you in reliance or partial reliance on any material, information, opinion or advice in this publication or referred to in this publication. The information is current as at the date of publication but may change without notice. We are under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. We do not take any responsibility for any reliance on the information contained in this publication or for its reliability, accuracy or completeness. Nothing in this publication is an offer by or on behalf of Helia or its affiliates to sell, or solicit an offer to buy, any security or financial product.
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How to get a good credit score

Tue, 26 Aug 2025 17:14:00 GMT

What is a good credit score?

Your credit score, also known as your credit rating, is a number that represents your creditworthiness. This shows the credit card or loan provider what your history of credit use is and if you’re able to manage your debt(s) effectively.

A credit score is calculated and reported by various credit reporting bodies like Equifax , illion , or Experian Australia .

So, what are the ratings of credit scores and what is considered good? Different reporting bodies have varied ranges, so it’s best to look on their website to get a better understanding.

How is your credit score calculated?

Your credit score is calculated based on the information within your credit report. The report looks for patterns in your credit history and considers the amount of money you’ve borrowed, length of credit, amount owing, the number of credit applications made, and if repayments were made on time. The report will also look at your history of bankruptcy. Based on that information, it calculates the risk of providing you with a new line of credit or loan.

Best ways to improve credit score

Here are some top tips for improving your credit score and creditworthiness.

Check your credit score on your credit report to see where you stand

You can get a copy of your credit report and check your credit score using one of the many credit reporting bodies. You’re entitled to a free copy every 12 months, so it’s a good idea to get your credit report yearly to make sure it’s correct.

Sometimes people notice errors in their credit report. This may be due to a mistake by credit providers or the credit reporting agency or could indicate identity theft. If there’s a mistake on your report, the government’s MoneySmart website offers help on reporting errors.

Pay bills and rent on time

It’s important to pay bills like your phone, electricity and rent on time. This could be before or when they’re due. Missing due dates can happen to anyone, but if it becomes a habit, it can impact your credit score.

Missed payments may lead to a referral to a debt collector or to a default being recorded on your credit report.

If you’re worried about forgetting or missing a due date, most service providers can set up a direct debit to pay your bill or a set amount on time. Other ways to keep on top of your bills include using BPAY® , creating regular payments, or setting up buy now pay later services.

Pay loans and credit cards on time

Regularly paying off at least the minimum amount on credit cards, personal and home loans is a great way to show you’re in control of your debt.

Some products let you pay off more than your scheduled repayments. If you’re able to pay more on an eligible product, this helps reduce monthly interest charges and helps improve your creditworthiness. Remember, you can avoid credit card interest charges by paying off the full amount by the due date.

If you’re struggling to meet minimum repayments on your credit card or loan, reach out to your bank for support.

If money’s tight, it can be hard to keep on top of regular bills and repayments. Money Smart can help you understand your options and get on top of debt.

Limit your credit applications

Each new credit application is added to your file and temporarily lowers your score. Multiple credit applications within a short time can be seen as a risk and impact your creditworthiness. It’s also important to consider the kind of credit you’re applying for. Doing your own research and talking to lenders to understand what the best product may be for your financial circumstance before you apply is also a good idea.

Build up your savings

If you have money regularly coming in, maintaining a savings buffer – like an emergency fund – will give you reassurance that you’ll still be able to pay bills on time if something unexpected happens.

This is also a great way to demonstrate you’re a good credit risk when applying for a credit card, personal loan or home loan.

Everyone has a different approach when it comes to saving money.

What to do during hard times

If you’re going through a difficult time financially, it’s important to try and keep on top of expenses as best you can. Missing loan or credit card repayments may impact your credit score, so the best way to avoid this is to take action early on. By setting up a financial hardship arrangement with your existing lenders and banks, you can ensure your credit score remains healthy, so when things are better for you and your finances, you can pick up where you left off.

Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/manage-money/money-basics/improve-creditworthiness
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2025 National Australia Bank Limited (“NAB”). All rights reserved.
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.

Your future just got a super boost – are you ready?

Tue, 26 Aug 2025 17:14:00 GMT

With the new financial year comes a fresh wave of superannuation changes that could make a real difference to your retirement savings.

Let’s unpack what’s changing – and how to make the most of it.

The SG rate hits 12%

One obvious lift to retirement incomes is the increase in the Super Guarantee (SG) rate from 11.5 per cent to 12 per cent. That means more going into your super account.

Your employer must now pay 12 per cent of your ordinary time earnings into your chosen super account. So, it’s a good idea to check your first payslips for the new financial year to make sure the changed rate is applied.

If you have a salary sacrifice arrangement, note that the SG calculation applies to your total salary, as if the arrangement was not in place.

For a quick update on what the change will look like for your super balance, check the MoneySmart calculator .

More for retirement phase

Beyond your regular contributions, the amount of super that can be transferred into the retirement phase – known as the general transfer balance cap (TBC) – has increased from $1.9 million to $2 million from 1 July 2025. ⁱ

If you exceed the cap, you’ll need to transfer the excess back to your accumulation account or withdraw it as a lump sum – plus, you may pay tax on the earnings.

If you’ve already started a retirement income stream, you’ll have a personal TBC – your own individual limit, which may be less than the general TBC. Your personal cap is based on the general cap at that time you started, adjusted for how much you’ve used and any indexation you’re entitled to. ⁱⁱ

For example, if you started a pension with $2 million on 1 July 2025, you’ve used your entire cap. The cap doesn’t limit the amount you can hold in super. If you have more than the cap available, the remainder can be left in your super fund’s accumulation account.

You can check your cap in ATO online services , which records all the debits and credits that make up your balance.

Special rules apply for defined benefit income streams.

More qualify for after-tax contributions

The change in the general TBC to $2 million may also allow you to increase non-concessional (after-tax) contributions using the bring-forward rule. While the $120,000 annual limit on non-concessional contributions hasn’t changed, eligibility for using the bring-forward rule now applies to those with a total superannuation balance below the general TBC of up to $2 million.

The rule allows you to bring forward the equivalent of one or two years of your annual non-concessional contributions cap ($120,000), allowing you to make contributions two or three times more than the annual cap.

No change to contribution caps

While more investors may now be eligible to access the bring-forward rule, the caps on both concessional (before tax) and non-concessional contributions haven’t changed.

The tax paid on contributions depends on whether you’re paying from before-tax or after-tax incomes, you exceed the contribution caps, or you’re a high income earner. ⁱⁱⁱ

The concessional contributions cap is $30,000 and if you have unused cap amounts from previous years, you may be able to carry them forward to increase your contribution in later years. You can make up to $120,000 in non-concessional contributions each financial year and you may be eligible for the bring-forward rule allowing up to $360,000 in one contribution.

Not sure how the rules affect you? Talk to us today about how to stay ahead and make the most of your retirement savings plan.

Awaiting the new $3m tax

The proposed new tax on earnings above $3 million in super accounts, known as the Division 296 tax, has not yet been ratified by Parliament. Nonetheless, it is expected to be applied from 1 July 2025.

The new tax doubles the tax rate from 15 per cent to 30 per cent for earnings on balances that exceed $3 million.

An earnings loss in a financial year, can be carried forward to reduce the tax liability in future years.

i Transfer balance cap | ATO

ii Calculating your personal transfer balance cap | ATO

iii Concessional and non-concessional contributions | ATO

Credit repair

Tue, 19 Aug 2025 17:05:00 GMT

If you have a poor credit score or an error in your credit report, it may affect loans or credit you apply for. You have a right to get errors fixed for free, and you can arrange this yourself.

What you can get fixed (for free)

Here are some of the typical errors in credit reports. You can get these fixed for free.

Errors by the credit reporting agency

The credit reporting agency may have reported your information wrongly. For example:

your name, date of birth or address needs updating
a debt is listed twice
the amount of a debt is wrong

To fix this kind of error, contact the credit reporting agency. They may be able to fix it straight away or help you get it changed.

Errors by the credit provider

A credit provider may have reported information wrongly. For example, they:

incorrectly listed that a payment of $150 or more was overdue by 60 days or more
did not notify you about an unpaid debt
listed a default (an overdue debt) while you were in dispute about it
didn’t show that they had agreed to put a payment plan in place or change the contract terms
created an account by mistake or as a result of identity theft

To fix this kind of error:

Contact the credit provider and ask them to get the incorrect listing removed.
If the credit provider agrees it’s wrong, they’ll ask the credit reporting agency to remove it from your credit report.

If you can’t reach an agreement, contact the Australian Financial Complaints Authority (AFCA) to make a complaint and get free, independent dispute resolution.

If you’re struggling to get something fixed, you can contact a free financial counsellor for help.

What you can’t change or remove

You can’t change or remove any information on your credit report that is correct — even if it’s negative information.

For example:

All payments you’ve made during the last two years — on credit cards, loans or bills, whether you paid on time or not.
Payments of $150 or more that are overdue by 60 days or more — these stay on your report for five years, even after you’ve paid them off.
All applications for credit cards, store cards, home loans, personal loans and business loans — these stay on your report for five years.

For a full list, see what’s in your credit report .

Check before you use a credit repair company

You may see ads from credit repair companies offering to fix errors on your credit report about credit products (like credit cards).

Before you go ahead, check the credit repair company is licensed on ASIC’s website. Choose ‘Credit Licensee’ or ‘Credit Representative’ in the drop-down menu when you search.

Only deal with a licensed credit repair company.

You don’t need to pay a credit repair company to clean up errors in your credit report. They may charge you high fees for things you can do by yourself for free. Paying a credit repair company may not improve your credit score.

How to improve your credit score

If your credit score is low, there are steps you can take to help improve it. You can:

lower your credit card limit
limit how many applications you make for credit
pay your rent or mortgage on time
pay your utility bills on time
pay your credit card on time each month — either pay in full or pay more than the minimum repayment

As you do these things, your credit score will start to improve. So you’ll be more likely to be approved next time you apply for a loan or credit.

Smart tip: If you’re struggling to pay bills and are getting into more debt, talk to us. We can take you through the options and help you make a plan.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/managing-debt/credit-repair
Important note: 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. Past performance is not a reliable guide to future returns.
Important

Can share market investors predict the future?

Tue, 19 Aug 2025 17:05:00 GMT

Volatility indexes are a barometer for where share markets may be heading

It should come as no surprise that there isn’t an accurate way to foretell what share markets will do from one day to the next.

Yet, while there is no share market crystal ball as such, there are dozens of market indexes globally that are designed to measure expected volatility for different asset classes, regions, or securities including individual shares.

These volatility indexes – some of which are tradeable on different share markets via specialist exchange traded fund (ETF) products – are forward-looking barometers that can be used as a way of gauging investors’ sentiment about the future.

Below are some of the share market volatility tracking indexes, including Australia’s own volatility index, that many traders and investors follow.

The U.S. fear index

Arguably the most widely known measure of investors’ volatility expectations is the VIX – the Chicago Board Options Exchange’s CBOE Volatility Index – which is often referred to as the U.S. markets’ “fear index”.

The VIX is a real-time tradeable index that tracks the magnitude of price changes on options contracts covering the United States’ S&P 500 Index which are due to expire within the next 30 days. Large price swings in expiring options contracts, either up or down, indicate expectations of greater volatility in the S&P 500 Index.

If the VIX is at 20, it means the market expects annualised volatility of 20% over the next 30 days.

A higher VIX reading is indicative that investors expect increased market uncertainty, while a lower reading indicates expectations of lower U.S. market volatility.

The VIX surged to an intraday high of 60.13 on 7 April on the back of a largely unanticipated downside risk—the broad U.S. tariff announcements of 2 April. This marked the highest reading for the index since the onset of the COVID pandemic in March 2020, when it spiked to 82.69, although this level was still below the all-time intraday high of 89.53 recorded during the Global Financial Crisis in October 2008.

How the VIX has moved over the last year

Sources: Australian Bureau of Statistics, Bloomberg Finance L.P., Melbourne Institute of Applied Economic & Social Research, MSCI Inc., Standard & Poor’s, WM Reuters. Notes: 1. Per annum total returns to 30 April 2025. 2. S&P 500 Total Return Index (in AUD). 3. S&P/ASX All Ordinaries Total Return Index. 4. MSCI World ex-Australia Net Total Return Index AUD Index. 5. S&P/ASX 200 A-REIT Total Return Index. 6. Bloomberg AusBond Composite 0+ Yr Index. 7. Bloomberg AusBond Bank Bill Index. 8. Interest rate is the Reserve Bank of Australia’s Official Cash Rate. All figures are in Australian dollars. All marks are the exclusive property of their respective owners.

Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.

All investments are subject to risk, including the possible loss of the money you invest. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account.

While returns across asset classes have varied considerably, investors who have held their investment course over the long term have managed to achieve capital growth and income returns thanks to the combination of markets growth and investment compounding.

Markets volatility can be distracting and unsettling for some.

But successful investing revolves around having a well-planned and diversified strategy that’s aligned to your specific goals, and the discipline and resolve to stay the course, even during volatile investment periods.

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966).
The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”).
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.
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© 2025 Vanguard Investments Australia Ltd. All rights reserved.

Note: S&P 500 Skew Index 17 June 2024 to 17 June 2025.

Source: Chicago Board Options Exchange.

Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.

Does tracking market volatility matter?

Indexes that measure projected volatility are useful to a point. They can’t accurately predict future market movements, but they can be used a barometer because they indicate market trading sentiment.

For long-term investors, however, short-term sentiment around volatility and near-term returns should be largely irrelevant.

Historical markets data shows that while volatility can impact returns over the short term, short-term volatility generally has had little impact on long-term returns.

That’s clearly illustrated in the Vanguard Index Chart below, which covers the period between 1 May 2015 and 30 April 2025 and shows how a starting balance of $10,000 would have changed in value after being invested into different asset classes.

This period of time includes the 2020 COVID market crash and the more recent market volatility.

The numbers in the chart represent total investment returns. That is, they assume all investment income earned from an investment fund over time was reinvested back into units in the same fund. The returns numbers also exclude any acquisition costs, fees and taxes.

Taking a long-term view

Note: S&P/ASX 200 VIX 17 June 2024 to 17 June 2025.

Source: Australian Securities Exchange.

Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.

The Skew Index

The CBOE Skew Index is a volatility indicator that also tracks options trading on the Chicago Board Options Exchange and is used as a pointer to so-called “Black Swan” events — difficult to predict situations that have the potential to trigger a market correction.

When there’s more buying of downside protection options, the Skew Index indicates that traders are covering off their positions against a potential market downturn.

A high Skew Index suggests that traders are seeing increased risk of a major market downturn. At current levels the Skew Index is trading at a level that suggests traders expect moderately low volatility over the shorter term when compared with earlier in the year and the latter part of 2024.

The Skew reflects the positions traders are taking

Note: CBOE Volatility Index 17 June 2024 to 17 June 2025.

Source: Chicago Board Options Exchange.

Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.

Australia’s volatility index

The key market sentiment indicator for the Australian share market is the S&P/ASX 200 VIX (A-VIX).

It uses a similar calculation methodology to the VIX, tracking the price volatility of options covering the S&P/ASX 200 that will expire over the next 30 days.

Relatively higher levels of the A-VIX imply a market expectation of large changes in the S&P/ASX 200, while a relatively lower A-VIX value implies a market expectation of little change. As a result, the A-VIX will often move inversely to the equity market.

The A-VIX has followed a very similar path to the U.S. VIX over time, including in early April when the Australian share market also experienced volatility as a result of uncertainty around U.S. trade tariffs.

The A-VIX has largely mirrored the U.S. VIX

Tax and super

Tue, 12 Aug 2025 17:06:00 GMT

How much tax you pay on your super contributions and withdrawals depends on:

your total super amount
your age
the type of contribution or withdrawal you make

If you inherit someone’s super after they die, the person’s super fund pays you a super death benefit. You may have to pay tax on some of this benefit.

Because everyone’s situation is different, it’s always best to get advice about tax matters. Contact the Australian Taxation Office (ATO) or a financial adviser .

How super contributions are taxed

Money paid into your super account by your employer is taxed at 15%. So are salary-sacrificed contributions, also known as concessional contributions.

There are some exceptions to this rule:

If you earn $37,000 or less, the tax is paid back into your super account through the low-income super tax offset (LISTO) .
If your income and super contributions combined are more than $250,000, you pay Division 293 tax, an extra 15%.

If you make contributions from your after-tax income – known as non-concessional contributions – you don’t pay any contributions tax.

See the ATO website for more information about how much tax you’ll pay on super contributions .

Smart tip: To avoid paying extra tax on your super, make sure you give your super fund your Tax File Number.

How super investment earnings are taxed

Earnings on investments within your super fund are taxed at 15%. This includes interest and dividends, less any tax deductions or credits.

See super investment options to find out more.

How super withdrawals are taxed

The amount of tax you pay depends on whether you withdraw your super as:

a super income stream, or
a lump sum

Everyone’s financial situation is unique, especially when it comes to tax. Make an informed decision. We recommend you get financial advice before you decide to withdraw your super.

Super income stream

A super income stream is when you withdraw your money as small regular payments over a long period of time.

If you’re aged 60 or over, this income is usually tax-free.

If you’re under 60, you may pay tax on your super income stream.

See retirement income and tax .

Lump sum withdrawals

If you’re aged 60 or over and withdraw a lump sum:

You don’t pay any tax when you withdraw from a taxed super fund.
You may pay tax if you withdraw from an untaxed super fund, such as a public sector fund.

If you’re under age 60 and withdraw a lump sum:

You don’t pay tax if you withdraw up to the ‘low rate cap’, currently $260,000.
If you withdraw an amount above the low rate cap, you pay 17% tax (including the Medicare levy) or your marginal tax rate, whichever is lower.

If you have not yet reached your preservation age:

You pay 22% (including the Medicare levy) or your marginal tax rate, whichever is lower.

See the super lump sum tax table on the ATO website for more detailed information.

When someone dies

When someone dies, their super is usually paid to their beneficiary. This is called a super death benefit.

If you’re a beneficiary, the amount of tax you pay on a death benefit depends on:

the tax-free and taxable components of the super
whether you’re a dependent for tax purposes
whether you take the benefit as an income stream or a lump sum

See super death benefits on the ATO website for more information.

Source:

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/how-super-works/tax-and-super

Important

Assessment and eligibility for aged care services

Tue, 12 Aug 2025 17:06:00 GMT

Key points:

My Aged Care will be your first point of contact if you are in looking to access Government funded aged care services
A RAS or ACAT/S assessment can determine what services will best suit your needs
If you are found eligible for government-funded services, you will then be able to start looking for aged care providers

UPDATE — from December 9, 2024, the Single Assessment System replaced the Regional Assessment Service, independent Australian National Aged Care Classification assessors and ACAT/ACAS specialists. Every approved assessor will be able to deliver an assessment for each level of support, whether in-home or for residential care. More information can be found on the Aged Care Guide website.

The first thing you need to do is register with My Aged Care . This is the agency that looks after all government-funded aged care programs.

When you first call the My Aged Care Contact Centre, on 1800 200 422, an operator will register you and ask you a number of questions about your personal circumstances and care needs.

These questions will be quite basic and shouldn’t take too long. All you will need is your Medicare card when you call as this information is stored with your other details on the My Aged Care database.

Examples of the questions you will be asked are:

Are you currently receiving aged care services?
Are you getting support from a carer or family member?
Can you prepare your own meals and do housework?
Do you need assistance taking a shower or bath and do you need help getting dressed?
Are there any health concerns or did you have a recent fall?
Do you feel lonely or isolated?
Are there any safety risks in the home?

The aim of this screening is to figure out what needs and support you require and whether you are eligible for a further assessment in person.

Additionally, the information you provide during this quick process will be recorded on your application, so you don’t have to stress about remembering the information you provided during your eligibility check.

If you are worried about doing the eligibility check by yourself, you are allowed to have a family member, friend or carer with you for support while applying online or on the phone.

You can also nominate someone to apply on your behalf. In this case, you will need to appoint your family member, friend or carer as your representative on My Aged Care.

If you are successful in your application, the contact centre operator will refer you for either a RAS or ACAT/S home support assessment.

If the operator determines that you are eligible for basic home support through the Commonwealth Home Support Programme (CHSP) you will be assessed by a Regional Assessment Service (RAS) .

Otherwise, if the operator believes you require higher care support, a member of an Aged Care Assessment Team/Service (ACAT/S) will visit you at home to assess you for a Home Care Package (HCP) that will meet your needs.

When you first contact My Aged Care, the contact centre operator will assign you an aged care client number and will open a central client record. This record will eventually contain your information about your assessed needs and government-funded care services you have been found eligible for.

What will a face to face assessment be like?

Your in-person assessment will be a lot more comprehensive than your over the phone eligibility check.

Be open and transparent about your wishes and what you believe will be of assistance around the home.

Your ACAT/S assessor may recommend things you haven’t even thought of, which will be of benefit around the home.

If you require higher level care than what a Home Care Package can offer, they may assess you as needing entry into an aged care home .

Checklist for a face to face assessment

To prepare for your face to face assessment, make sure to have:

Medicare card and a form of identification, for instance, Department of Veterans’ Affairs (DVA) card, driver’s license, passport, or healthcare card
Notes or referrals from your doctor
Ask a support person to be present for the assessment if you want
Prepared questions and information about aged care that you wish to discuss with the assessor so you have a better understanding about services
Contact details for your doctor and any other health professionals you see regularly
Information on support you receive from others or from the community
Have a translator or Auslan interpreter pre-organised if you require it

What to expect

You may need to fill out an Application for Care Form which will be provided by the assessor.

You can expect a conversation with the assessor asking you about your needs or any health problems.

They will ask you about any support you receive, your current lifestyle, any health concerns or chronic illnesses, how you deal with day to day tasks at home, if you struggling with any cognitive issues or memory loss, whether you have problems at home or with personal safety, any activities you engage in with family or in the community, and they will ask if they can chat with your doctor.

If you have a family member, friend or carer with you, the assessor may ask you for permission to talk to them about any support they believe you might benefit from.

What next?

If you are eligible for CHSP service, you should be told during your face-to-face assessment.

However, if you are eligible for a Home Care Package, any short-term care options or nursing homes, there will be a period of time where your assessor reviews the information you provided and determines what option best suits you.

They will provide a recommendation to a “decision maker,” who will then make the final decision on your case.

You will receive a letter within two weeks of your assessment to let you know if you have been found eligible for aged care services.

Source:
This article was originally published on https://www.agedcareguide.com.au/information/assessing-your-needs. Reproduced with permission of DPS Publishing.
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.

Track your spending

Tue, 12 Aug 2025 17:06:00 GMT

Tracking your spending is a way to take control of your money. Knowing where your money goes can help you spend less and save more.

1. Track your spending and expenses

First, get a clear view of where your money is going day to day.

Choose how long to track

One week for daily spending

Start small by recording your spending every day for at least a week. This way you can see all the money going out.

Fortnightly or monthly for recurring expenses

If you have some weeks or months with more expenses, commit to a ‘financial fortnight’ or ‘money month’. Tracking over a longer period gives you a more realistic picture.

Record what you spend

Get transaction statements

When you use a card or phone app to make a purchase, every transaction is recorded. Access these transactions through your online banking or hard-copy statements.

Use a phone app

An app is an easy way to track your spending at the time you spend. You can also set spending limits and reminders, and see your expenses at a glance.

Write it down

Record the amount, item (or store name) and date. Do this for both cash and card purchases as you spend. Or keep receipts and do your tracking at the end of the day.

Do it every day

Don’t worry about changing your spending habits straight away. Just record day by day.

To stay motivated, try tracking your spending with a partner or friend.

2. Look at your spending habits

At the end of your tracking period, look at your recorded transactions to see where your money is going.

It may surprise you how much small things can add up. You could also discover hidden costs. For example, account fees, subscriptions you don’t use anymore, or mistaken transactions .

You often find that, just by being more aware of your spending, you can start to spend less.

If you want to spend more mindfully, try taking a moment before you buy something. Ask yourself: Do I need this right now? Can I get it cheaper somewhere else? This helps you be in control of your spending choices.

3. Change your spending habits

Now you know where your money goes, making small changes can make a big difference. You don’t have to do everything at once — pick one spending habit to start with.

Separate needs from wants

Look at all your transactions and highlight what are ‘needs’ — essential items you need to live.

The ones left over are ‘wants’. These are the things you could cut back on or live without for a while, to save money. Is there anything you would like to change?

Find a quick win

Cancel anything you don’t need, like a subscription or membership you’re no longer using. Or try cutting back on one small, frequent expense, like takeaway food.

See simple ways to save money for more ideas.

Start a savings habit

With the money from your quick win, start saving for the things that matter most.

Set up a savings account or an emergency fund .

Set limits and reminders

Knowing how much you spend on wants, try setting a realistic limit for the next week or month. This can help you avoid overspending.

Set calendar reminders for when regular expenses are due. Then put aside money to cover these payments.

Do a budget

Now you know where your money is going day to day, take it a step further and do a budget. This helps you prioritise where you want your money to go.

Having a budget lets you see how you’re going month to month, and year to year. So it is easier to stay on top of expenses and save for the things you enjoy.

For a step-by-step guide, see how to do a budget .

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/budgeting/track-your-spending
Important note: 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. Past performance is not a reliable guide to future returns.
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.

How to plan and stick to your renovation budget

Tue, 05 Aug 2025 17:08:00 GMT

Define your renovation goals

Renovations can be an exciting time to re-shape the look and feel of your home, however before you start getting into the details, it’s important take a step back and clarify ‘why’ you’re renovating. For instance:

Do you need more space?

Is your kitchen too dated?

Are you looking to boost your home’s resale value?

Being clear about what you’re trying to achieve is a great first step to help you focus on your renovation costs. Once you know what you’re aiming for, start with a list of must-haves and nice-to-haves so you can prioritise what is essential and what is an optional extra.

Be clear about your budget

Once you know what you’re looking to achieve, the next step is figuring out what you can afford. Take a good look at your finances and decide how much you’re comfortable spending without draining your savings. To help you plan, you can also use renovation and building calculators online to help you get a rough estimate of costs. If you think you’ll need to take on some debt, you have options like using equity, personal loans for renovation or construction loans. A personal loan borrowing calculator can offer some estimates on how much you can borrow. If you need support deciding, it’s best to get advice from a financial advisor.

Use your home’s equity

If you’re looking finance a large-scale renovation without dipping too deeply into your savings, tapping into your home’s equity can be an option. Home equity is essentially the difference between what your home is worth and what you still owe on your mortgage. You can borrow against the equity by topping up your existing home loan. Your lender will do a valuation of your property to determine equity available and how much you can borrow, while keeping your loan-to-value ratio (LVR) within acceptable limits.

It’s important to be cautious that borrowing against your home’s equity means you’re taking on more debt, which in turn can carry more risk. That’s why it’s important to only borrow what you can repay and make sure your renovations boost your home’s value.

Get multiple quotes from your tradespeople

If you’re doing a big renovation or extension, you need plans and designs that you can get proper quotes on. Start by getting quotes from multiple builders or tradespeople as it’s a great way to make sure you’re getting the best deal you can. You’ll be surprised how much these quotes vary. Also consider the contractor’s experience, how well they communicate as well as reviews and recommendations from friends and family.

Break down the costs

Review the costs of labour, materials, and any permits you’ll need and don’t forget to include taxes and fees in your calculations.

The build costs will depend on a number of things, such as:

The materials you want to use
The tradespeople you employ
The quality of work, finishes and fittings
The size of the job
The location of your site.

It’s always helpful to assume a project will cost more than expected. A 10-20% buffer in your budget will make sure you are ready if any emergencies or surprises that appear, like hidden water damage or delays.

Remember: A budget that feels tight now will save you from financial stress later. Consider the maximum amount you’re willing to spend and work backwards to fit everything into that number.

Monitor your spending and adjust accordingly

When the renovation begins, it’s important to keep tracking costs against your budget and make sure you stay on track or are able to adjust if things take an unexpected turn. You might need to put off one part of the renovation or opt for less expensive alternatives to certain materials. Always pay contractors in stages as this will give you more control and ensure the work gets done right.

Think about long-term value

When you’re budgeting, think about the long-term impact of your renovation and focus on projects that improve your home’s functionality, energy efficiency or resale potential. If you can, include some basic energy-saving ideas in your renovation like:

LED lights
rainwater tanks
quality insulation
solar panels.

Think of your renovation as an investment that doesn’t just help you today, but for all the years to come.

Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/home-property/renovate/costs
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2022 National Australia Bank Limited (“NAB”). All rights reserved.
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.

Striking a balance in the new financial year

Tue, 05 Aug 2025 17:08:00 GMT

By doing a few calculations you can easily see if your portfolio is still on track.

If you’re someone who likes a good balance in your investing life, now may be a good time to do some calculations.

It’s not something you must do, but doing so may give you some extra peace of mind if your investment strategy involves having a specific percentage of your capital invested in certain asset types.

As asset values tend to rise and fall on an ongoing basis, your investment allocations may have moved out of alignment with your intended percentage exposures. This is sometimes referred to as portfolio drift.

And if your portfolio values have drifted significantly, you may be inclined to make some adjustments to rebalance your portfolio based on your preferred asset exposures.

Tracking portfolio drift

How often you choose to track your portfolio allocations is entirely up to you, although the start of a new financial year can be a useful trigger point.

That’s because it’s typically a time when you may be beginning to review your investment statements from the previous financial year ahead of lodging your next income tax return.

The easiest way to calculate movements in your asset allocations over the previous financial year is by taking snapshots at both the start and the end of the period.

If the structure of your investment portfolio has moved significantly out of alignment over time, you may decide to rebalance it so your allocations are recalibrated to align with your intended strategy.

If you need to, you can sell assets in your portfolio and then use the proceeds to top up your allocation to other assets that have fallen in value or experienced a lower rate of growth.

Or you can simply invest additional amounts into assets that have fallen in value while retaining your dollar exposure to the other assets in your portfolio.

Another option is to invest in diversified (or multi-asset) managed funds or exchange traded funds (ETFs) which have set percentage weightings to different asset types.

Professional portfolio managers rebalance these funds whenever their set investment allocation moves out of alignment, based on set tolerance levels.

Multi-asset funds are essentially ready-made portfolios which, depending on the investment strategy of the relevant fund, enable you to select higher or lower exposures to shares, bonds and other asset types.

But there’s a key difference between how professional portfolio managers can readily rebalance a portfolio versus the average do-it-yourself investor.

Generally, rather than having to sell assets to keep a portfolio aligned with its target asset allocations, a portfolio manager will use cash inflows to buy additional assets.

This reduces turnover of assets in the fund’s portfolio and greatly reduces the need to realise capital gains (or losses).

By contrast, DIY investors choosing to sell some assets in order to top up others will typically trigger a capital gains tax event. They generally don’t have the benefit of daily cash flows into their portfolio to top up ‘underweight’ asset types.

Staying balanced

Whether you leave it to the experts or do it yourself, from an investment strategy perspective there are clear benefits in avoiding portfolio drift as much as possible.

Rebalancing your asset mix keeps you aligned with your chosen investment strategy, based around your risk tolerance.

Ignoring portfolio drift can be detrimental over time. As well as drifting off your chosen investment course, you could also find yourself being exposed to unintended investment risks, for example by having higher or lower exposures to shares or bonds than you intended.

Important information and general advice warning

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer and the Operator of Vanguard Personal Investor and the issuer of the Vanguard® Australian ETFs. We have not taken your objectives, financial situation or needs into account when preparing the above article so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for any relevant Vanguard product, before making any investment decision. Before you make any financial decision regarding Vanguard investment products, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained at vanguard.com.au free of charge and include a description of who the financial product is appropriate for. You should refer to the relevant TMD before making any investment decisions. You can access our IDPS Guide, PDSs Prospectus and TMD at vanguard.com.au or by calling 1300 655 101. Vanguard ETFs will only be issued to Authorised Participants. That is, persons who have entered into an Authorised Participant Agreement with Vanguard (“Eligible Investors”). Retail investors can transact in Vanguard ETFs through Vanguard Personal Investor, a stockbroker or financial adviser on the secondary market. Retail investors can only use the Prospectus or PDS for informational purposes. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This article was prepared in good faith and we accept no liability for any errors or omissions.

5 steps towards a financially fit retirement

Tue, 05 Aug 2025 17:08:00 GMT

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.

i ASFA Retirement Standard, December 2024 – The ASFA Retirement Standard – ASFA

ii Super withdrawal options | Australian Taxation Office

iii When you can access your super early | Australian Taxation Office

iv Payments from super, April 2025 – Payments from super | Australian Taxation Office

Government payments and allowances

Tue, 29 Jul 2025 17:14:00 GMT

When to declare taxable and tax-free government payments, pensions and allowances in your tax return.

What are government payments, pensions and allowances?

Australian Government payments, pensions and allowances are income amounts that you receive from a government agency. Commonly these payments are from Services Australia or the Department of Veteran’s affairs (DVA).

Depending on the payment type you receive, these payments might be either:

taxable – meaning you pay tax on the amounts and must declare the income in your tax return
tax-free – meaning you don’t pay tax on the amounts, but you may need to declare them in your tax return so we can work out your eligibility for tax offsets and other benefits.

If you are unsure of the type of payment you receive, contact the government agency to check.

If you lodge your tax return online the ATO pre-fill most of these payments, pensions and allowances in your tax return. You will need to check the pre-fill information and manually include any amounts that have not pre-filled in your tax return.

For instructions on how to complete government payments, pensions and allowances in your tax return, see Lodgment options for preparing your tax return .

Taxable pensions, payments and allowances

You must include taxable Australian Government pensions, payments and allowances in your tax return.

Taxable government payments, pensions and allowances include:

age pension
carer payment
Austudy payment
Commonwealth Prac Payment (CPP) – available from 1 July 2025
JobSeeker payment
Youth allowance
veteran payment
invalidity service pension, if you are age-pension age or over
disability support pension, if you are age-pension age or over
income support supplement
parenting payment (partnered)
disaster recovery allowance.

This is not an exhaustive list, for a full list of Australian Government payments, pensions and allowances, see:

Australian Government allowances and payments

Tax-free government pensions or benefits

Some Australian Government payments are tax-free but you still need to declare them in your tax return. The ATO use this information to work out if you are eligible for tax offsets and any government benefits or concessions.

Tax-free Australian Government pensions or benefits include:

carer payment where either:
both the carer and the care receiver are under age-pension age
the carer is under age-pension age and any of the care receivers has died.
disability support pension paid by Centrelink, if you are under age-pension age
invalidity service pension, if the veteran is under age-pension age
partner service pension where either
the partner and the veteran are under the age-pension age and the veteran is receiving an invalidity service pension
the partner is under age-pension age, the veteran has died and was receiving an invalidity service pension at the time of death.

Lump sum bereavement payments you receive are exempt only up to the tax-free amount.

This is not an exhaustive list, for a full list of tax-free Australian Government pensions and benefits, see Tax-free government pensions or benefits .

Government payments and stimulus during difficult times

During difficult times such as natural disasters, the federal, state or territory governments may provide support payments or grants.

If you received a payment because you were impacted by a disaster, find out if the payment is taxable and whether to include it in your tax return in Government disaster recovery payments .

Source: ato.gov.au June 2025
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/income-you-must-declare/government-payments-and-allowances.
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.

Portfolios for the risk we may not be imagining

Tue, 29 Jul 2025 17:14:00 GMT

Investors have faced a wild ride in 2025. The excitement may not be over.

Equity and fixed income markets took less than a month to recover after U.S. tariff announcements in early April sent them reeling, giving investors a valuable opportunity to reexamine their relationship with risk.

A healthy relationship with risk starts with understanding that downturns aren’t always as shallow and recoveries not always as swift as we’ve seen over the last 15 years or so. Three essential principles for dealing with risk can improve outcomes even if the ride gets wilder.

Principle 1: Be humble in the face of unknowable risk

The late financial historian Peter Bernstein once observed that certain risks are inherently unknowable ahead of time. These risks tend to be the most disruptive, having the potential to befall investors without warning. For example, a key factor in the 2008 global financial crisis that became clear only with the benefit of hindsight was the amount of systemic risk that had built up via credit derivatives. The degree to which risk-taking on credit—mortgage and corporate—was concentrated within the system was not well understood until the crisis deepened. This uncertainty drove the panic that set in at the height of the crisis.

“Equity market drawdowns can run longer and deeper than we’ve become accustomed to. It’s that potentially changing landscape that investors may want to prepare for.” —Kevin Khang, Vanguard Senior International Economist

In a similar vein, what alarmed the market about the recent tariff announcements was not that new tariff policies were being pursued. Rather, it was the magnitude and scope of these policies, and the pace at which they unfolded, that had been largely unknowable and exacerbated the volatility.

Truly disruptive risk is often unknowable ahead of time. Humility regarding this truth can help investors maintain a healthy perception of risk. Accepting that unknowable risks periodically roil markets can foster a flexible and measured response when tail risks—or extreme market developments—emerge, mitigating the impact of unforeseen events and preventing panic-driven decisions.

Principle 2: Have a robust asset allocation

Because the future is uncertain, and some risks are unknowable, it makes sense to find a robust solution—one that provides results that are good enough across a range of circumstances, rather than optimal under some scenarios but highly undesirable under others. More than being balanced by some combination of stocks, bonds, and cash and diversified within each asset class, a robust portfolio is one the investor can maintain, especially in extreme market conditions.1

Rigorous capital market return projections that consider the extremes are also critical to robustness. That’s because poor long-term results are a greater risk than short-term volatility for long-term investors. In practice, a robust approach to portfolio construction considers a diverse range of return environments over the investor’s investment horizon and achieves an allocation that would be suitable across these environments.

A new book by Joe Davis, Vanguard global chief economist, provides an example of such an approach for investors with seven- to 10-year horizons. Placing the odds of the economic environment fundamentally changing over the next decade at above 80%, this approach weighs two starkly different return environments. The resulting portfolio is robust for both: 1) an optimistic environment in which AI-driven productivity drives high economic growth and market valuations; and 2) a pessimistic environment where increasing structural deficits put upward pressure on inflation and yields, while pulling down equity valuations.

Principle 3: Be optimistic but prepared for downturns

Balanced investors must thoughtfully manage downside risk. Sticking with an allocation during significant drawdowns requires realistic expectations about one’s tolerance for pain. In today’s market, this means having realistic expectations about potential drawdowns and not relying on overly optimistic return expectations based on recent performance.

Mild stock-price corrections of recent years could give way to deeper, longer-lasting declines

Notes: Each dot represents the average duration and magnitude of all drawdowns greater than 10% observed during the respective period. Periods are decades, with two exceptions: The 1920s start on December 31, 1927, and 2010–2024 captures the 15-year period starting on January 4, 2010, and ending on December 31, 2024. Durations reflect the number of trading days from market peaks through troughs; in calendar terms, they would be longer. Percentages reflect price-only declines in the level of the Standard & Poor’s 500 Index (or the S&P 90 Index prior to April 1957); they ignore dividend payments. Dots for the 1930s and 1940s are not shown because the recovery from the last drawdown of the 1920s took over two decades to reach the level of the prior peak, which was established on the eve of the stock market crash of 1929. Past performance is not a guarantee of future results. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. Sources: Vanguard calculations, based on index returns from Bloomberg.

As the figure shows, the last 15 years have been favourable for U.S. equities, with shallow and short-lived drawdowns. Some investors may be tempted to look back over this period—which they consider to be “long”—and surmise that such relative market tranquility is here to stay. The quick snapback from the sharp declines after the broad U.S. tariff announcements on April 2 may only reinforce such a stance. But as we can see from previous decades, equity market drawdowns can run longer and deeper than we’ve become accustomed to recently. Looking forward, it’s that potentially changing landscape that investors may want to prepare for.

Feeling our way toward sources of future risk – and potentially recalibrating expectations

The confluence of forces that led to subdued downsides in the last 15 years may be evolving, creating a more challenging risk backdrop:

A renewed focus on fiscal responsibility may imply a reduced scope for fiscal stimulus in future economic downturns.
Adverse supply-side developments and the potential for stagflation might limit efforts by central banks to mitigate market volatility.
The prospect of a rearranged global trading ecosystem has a wide range of significant long-term implications that could create sources of disruption—many of which are unknowable.

For some investors, prudent risk management might mean recalibrating expectations to include deeper and longer-lasting drawdowns that are more in line with previous historical periods. Even if this recalibration doesn’t change one’s asset allocation dramatically, it may increase the odds of the investor maintaining their allocation during downturns.

If you have any questions regarding market fluctuations, contact us today.

Notes:

All investing is subject to risk, including the possible loss of the money you invest. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Diversification does not ensure a profit or protect against a loss.

Investments in bonds are subject to interest rate, credit, and inflation risk.

Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments.

Investments in stocks and bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets.

This article contains certain ‘forward looking’ statements. Forward looking statements, opinions and estimates provided in this article are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements including projections, indications or guidance on future earnings or financial position and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. There can be no assurance that actual outcomes will not differ materially from these statements. To the full extent permitted by law, Vanguard Investments Australia Ltd (ABN 72 072 881 086 AFSL 227263) and its directors, officers, employees, advisers, agents and intermediaries disclaim any obligation or undertaking to release any updates or revisions to the information to reflect any change in expectations or assumptions.

1 Some investors may wonder what’s wrong with adjusting their allocations on the fly, based on changed perceptions of risk. In some cases, the answer may be “nothing.” But such cases are likely limited to instances where market volatility has convinced the investor or their advisor that they previously over- or underestimated their risk tolerance—and that a new target mix of assets would be better for the long haul. Otherwise, Vanguard research suggests that an annual rebalancing strategy is optimal for investors who do not harvest losses for tax purposes or seek to track a benchmark. For more information, see Yu Zhang et al., Rational Rebalancing: An Analytical Approach to Multiasset Portfolio Rebalancing Decisions and Insights, Vanguard, 2022; available at corporate.vanguard.com/content/dam/corp/research/pdf/rational_rebalancing_analytical_approach_to_multiasset_portfolio_rebalancing.pdf.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

Do you know who gets your super when you die?

Tue, 22 Jul 2025 17:00:00 GMT

Do you have a plan for who will receive your super if something happens to you?

For many Australians, superannuation is their greatest asset outside the family home.

But do you have a plan for who will receive your super if something happens to you?

The laws around super death benefits are complex, with strict rules about who can receive these benefits. So, it’s crucial to plan ahead.

One approach that can help provide certainty is making a binding death benefit nomination, but even then, there are some important things to consider.

What happens to your superannuation when you die?

Upon your death, your super and any life insurance held in your fund must be paid out to a beneficiary, according to super law and your fund’s trust deed.

Importantly, the rules for who receives superannuation are different from other assets, like property and shares held outside of superannuation, and superannuation does not automatically form part of your estate. Even if you have written instructions in your will about your wishes, the rules about beneficiaries in super law take precedence.

That’s why choosing a beneficiary is such an important decision.

Who can you nominate as your beneficiary?

The trustee of your super fund can usually only pay a death benefit to one of your “dependants”, as defined by super law.

This includes:

Your spouse – both married and de facto partners (unmarried but living together as a couple).
Your children – including adopted children, stepchildren, children of your spouse or other legally recognised children.
Your ‘interdependents’ – someone you live with in a close personal relationship, where one or both of you provide financial, domestic and personal care support to the other.
Your legal personal representative – the executor of your will or administrator of your estate. They are not considered a dependant but can still be nominated as a beneficiary.

The dependency rules are complex and very important in the context of administrating death benefits, and there are also tax implications .

That’s why it’s a good idea to seek advice from us or estates lawyer about your personal circumstances.

What happens if you don’t nominate a beneficiary?

If you don’t nominate a beneficiary with your super fund, the fund’s trustee will decide who receives your death benefit based on superannuation laws and the fund’s trust deed.

This could result in your super being given to someone you might not have intended.

In these situations, the trustee will first try to pay the benefit to your dependants and/or a legal personal representative. If you have neither, the trustee will pay the death benefit to another person they determine.

How binding death benefit nominations can help

To avoid unintended consequences, you can lodge a binding death benefit nomination with your super fund.

A binding nomination is legally ‘binding’ on the super fund’s trustee. As long as your nomination is valid at the date of your death, the trustee will generally be bound to follow your instructions.

Binding nominations usually expire after three years. But some super funds offer non-lapsing binding nominations which don’t expire (but which you can still change or revoke if you want to at any time).

You can also make a binding death benefit nomination if you have a self-managed super fund (SMSF), providing it’s allowed in the trust deed.

What to know about non-binding death benefit nominations

Many funds also allow members to record non-binding nominations.

If you have a non-binding nomination, the trustee will take your preferences into account when deciding how to distribute your benefit in accordance with superannuation law.

However, it doesn’t guarantee that your death benefit will be paid exactly according to your wishes.

For example, the trustee may change the proportions or may include other dependants not named in your nomination.

Why it’s important to regularly review your super beneficiaries

If you have a binding death benefit nomination, it’s important to regularly review it to ensure it reflects your current wishes and circumstances.

A good rule of thumb is to check your nomination of beneficiaries whenever your personal circumstances change.

For example, if you get married, register a relationship, get divorced, have children, change an interdependency relationship, start a new interdependency relationship, or if one of your nominated beneficiaries dies.

Death benefit nominations are a complex topic, so it’s a good idea to seek professional advice.

For more information, including how to make a binding death benefit nomination, give us a call.

Source: Vanguard

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

Forging new bonds – how bonds work

Tue, 22 Jul 2025 17:00:00 GMT

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.

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.

If you would like to learn more about your options for investing in bonds, please give us a call.

i Fitch Affirms Australia at ‘AAA’; Outlook Stable

Career moves to help you get ahead financially

Tue, 15 Jul 2025 17:02:00 GMT

If you are trying to get ahead financially, whether you are coming up with a deposit for your first home, focussed on paying down a mortgage, or working towards any other financial goals, budgeting and being able to save is critical, but as well as minimising your spending, a great way to get ahead is to maximise your income.

Your career is the engine room of wealth creation and a little focus on developing your career in a way that opens up your earning potential can reap dividends!

Invest in yourself

One of the best ways to increase your earning capacity is by continually developing your skills. Think of it as building your career toolbox. The more tools you have, the more valuable you become. Whether it’s mastering a new software, learning a new language, or gaining technical expertise, continuous learning makes your skillset more attractive in the job market.

If you’re in a specific industry, research the skills that are in high demand as small investments in education or training now, can lead to bigger pay checks down the line.

Focus on high-growth industries

Some industries pay more than others and knowing where to look can make a significant difference in your earning potential. For example, tech, healthcare and engineering are all fields with high earning potential due to the specialised skills and demand for professionals in those sectors.

If you’re not already in a high-growth field, it might be worth considering whether a career pivot could increase your earning potential. This doesn’t mean you need to make a dramatic shift—just exploring how your skills could transfer into more lucrative industries could help you increase your income.

Negotiate your salary with confidence

Negotiation might feel intimidating, especially if you’re just starting out, but it’s one of the most powerful tools you have to increase your earning potential. According to data by Salary.com only 37 per cent of us typically negotiate our salary and 18 per cent of people have never brought it up. ⁱ

Before an interview or performance review, take some time to research the typical salary range for your role in your location. Websites like Glassdoor, Payscale, and LinkedIn Salary Insights can give you a good idea of what others in similar positions are earning. If your offer or current salary is below the median range, don’t be afraid to ask for more. A polite and professional salary negotiation can lead to a significant income boost.

Even if you’re already employed, don’t hesitate to initiate a conversation about salary increases, especially if you’ve taken on new responsibilities or contributed to key projects. A small raise today can add up over time.

Network, Network, Network!

You’ve probably heard it before, but networking really is one of the best ways to advance in your career. Building relationships with people in your industry can help you learn about job openings, promotions, and other opportunities that can increase your income. Networking can also give you access to mentors who can offer valuable advice and help you navigate the career ladder more efficiently.

Attend industry events, join professional groups or online communities, and don’t be afraid to reach out to people on LinkedIn. Building these connections not only helps you learn and grow professionally, but it could also open doors to higher-paying job offers that you might not have come across otherwise.

Seek out opportunities

When you’re just starting out, it’s easy to get caught up in the day-to-day tasks of your job and forget that there may be opportunities for growth right in front of you. Always be proactive in seeking advancement within your current company first. Ask to be involved in new projects, show initiative, and express your interest in moving up the ladder.

Finally, remember that increasing your earning potential is a journey. Success won’t happen overnight, and there will be moments when it feels like progress is slow. But with consistency, a growth mindset, and a proactive approach, you’ll watch your earning capacity grow—and your progress toward your financial goals. You’ve got this!

i Most People Don’t Negotiate Due to Fear & Lack of Skills | Salary.com

Records for rental properties and holiday homes

Tue, 15 Jul 2025 17:02:00 GMT

How long to keep rental records

You need to keep records for 5 years. Depending on your situation, that is 5 years from the date:

you lodge your tax return
of your last claim for the decline in value of an asset
it is certain that no capital gains tax event can occur after you acquire, sell or otherwise dispose of property
you resolve any disputes you have with the ATO.

You will need these records to work out how much:

rental income you need to declare
you can claim as a deduction for your expenses
capital gain or loss you make when you dispose of your rental property.

In some circumstances, you may need to provide these records as proof that you were the one to incur the expense.

Format of your rental records

Rental records must be in English or be readily translatable into English.

You can keep your records in either paper or digital format. If you make copies, they must be a true and clear copy of the original.

The ATO recommends you keep a back-up of all your digital records.

You can use the myDeductions tool in the ATO app to keep track of your records digitally. When you are ready to complete your tax return, you can:

email your data to yourself or to us, your tax agent
upload your data to pre-fill your tax return.

Types of rental records to keep

You should keep a record of the following for your rental property or holiday home:

Rental income

Records of the payments you receive, such as:

a statement from your property or managing agent
a rent book or bank statements that shows the rental payments going into your account
documents that show a record of any bond money you retain in place of rent.

For more information on rental income, see Rental income you must declare .

Rental expenses

Records for expenses you incur, such as:

bank statements showing the interest charged on money you borrowed for the rental property
loan documents
land tax assessments
documents or receipts that show amounts you pay for
advertising (including efforts to rent out the property)
bank charges
council rates
gardening
property agent fees
repairs or maintenance
documents showing details of expenses related to
the decline in value of depreciating assets
any capital work expenses, such as structural improvements
before and after photos for any capital works
travel expense documents, if you are eligible to claim travel and car expenses such as
travel diary or similar that shows nature of the activities, dates, places, times and duration of your activities and travel (you must have this if you travel away from home for 6 nights or more)
receipts for flights, fuel, accommodation, meals and other expenses while travelling
receipts for items you use for repairs and maintenance that you bought when you travel to, or stayed near, the rental property.

When you buy a rental property

Records when you buy (invest) in rental property, such as:

contract of purchase
conveyancing documents
loan documents
costs to buy the property
borrowing expenses.

While you own a rental property

Records for while you own a rental property, such as:

documents that show periods of personal use by you or your friends
document that show periods the property is used as your main residence
loan documents if you refinance your property
documents, receipts and before and after photos for capital improvements
tenant leases
documents for rental expenses .

When you sell your rental property

Records for when you sell or otherwise dispose of your rental property, such as:

contract of sale
conveyancing documents
sale of property fees
calculation of capital gain or loss.

Records for multiple properties

Keep separate records for each property, if you have:

more than one property (including a block of apartments or similar)
a duplex
property that has been sub-divided.

This will ensure that you declare the correct rental income and claim the correct rental expenses for each property. It will also ensure that if you later sell or otherwise dispose of one or part of a property, you will have records to work out your capital gain or loss.

Speak to us if you have any questions.

Source: ato.gov.au June 2024
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/investments-and-assets/property-and-land/residential-rental-properties/records-for-rental-properties-and-holiday-homes.
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.

Are your adult children ready for the wealth transfer?

Tue, 15 Jul 2025 17:02:00 GMT

The inheritance wave is building but most people are unprepared for the ride

Transfers of accumulated wealth from one generation to the next are part and parcel of everyday life.

But the next 20 to 30 years will see the biggest intergenerational wealth handover in history.

According to estimates made by the Productivity Commission in a 2021 report, around $3.5 trillion of assets is likely to be transferred in Australia by 2050.

It will include family homes, investment properties, superannuation money, direct shares and a wide range of other financial and non-financial assets.

The value of inheritances is not only likely to grow dramatically as wealth levels increase but it will be an increasingly important source of income and assets for younger generations.

Great expectations

Research found that around one in two Australians have received or expect to inherit money or property, either from their parents or others.

The conversation around inheritances interweaves with Australian government research that many Australians are not exhausting their superannuation savings before they die.

The 2023 Intergenerational Report found that most retirees draw down at the legislated minimum drawdown rates.

Additionally, the 2020 Retirement Income Review included projections from Treasury that outstanding superannuation death benefits could increase from around $17 billion in 2019 to just under $130 billion in 2059, assuming there’s no change in how retirees draw down their superannuation balances.

A touchy subject

Inheritance planning, unlike succession planning within a business, is an area that’s rarely discussed at the family level.

Most families regard subjects such as death and the future division of wealth as unpleasant, and potentially sensitive when multiple heirs are involved.

But there’s a lot to be said for having open discussions within your family about the intended treatment of assets and future inheritances.

Creating a valid will, and specifically documenting how you want your assets to be managed and divided after your death, should be a key step in the inheritance planning process.

Residential real estate and superannuation, which combined make up more than three quarters of total household assets, are the largest components of most inheritances.

Ensuring that any superannuation you have left over at the time of your death is distributed according to your wishes requires you to complete a binding death benefit nomination provided by your super fund.

Seek professional advice

That comes down to how much of your super is made up from pre-tax and after-tax contributions.

Capital gains tax does not apply if someone inherits direct shares or other financial securities, but tax may apply if they later dispose of them.

Any unapplied capital losses that could be used to offset capital gains tax cannot be transferred to beneficiaries.

CoreData research published recently has found that more than half of inheritors do not have an ongoing advice relationship to manage their incoming wealth.

“There is significant opportunity for advisers to connect with a younger cohort of inheritors. It’s a win-win situation: those who can support a smooth and meaningful wealth transition will not only build strong client relationships but also help shape lasting financial legacies,” CoreData found.

Estate planning can be complex. Consulting with us can help you and your intended beneficiaries map out an inheritance framework that also identifies issues such as potential tax liabilities is a prudent step.

Source: Vanguard
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.
Important Legal Notice – Offer not to persons outside Australia
The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws.
© 2025 Vanguard Investments Australia Ltd. All rights reserved.

Insurance payouts after a disaster

Tue, 08 Jul 2025 17:03:00 GMT

When to include insurance payouts from disaster events in your tax retu rn for businesses, or assets that produce income.

When recovering from disaster events, check if you need to report and pay tax on insurance payouts:

damaged or destroyed personal items or assets are not taxed
businesses or income-producing assets may be taxed.

The following examples show when insurance payments are taxable and need to be included in your tax return.

Your family home

Any insurance payout you receive for your family home (main residence) is not taxable. You don’t include these payments as income in your tax return.

Example 1: damaged main residence

Sarah’s main residence is damaged by flooding. She receives an insurance payout to pay for repairs. Her insurance payout is not taxable as it relates exclusively to a private asset.

Example 2: destroyed main residence and home business

Adrian’s home is destroyed in a cyclone and he receives an insurance payout. He had been operating a small catering business from his home.

As part of his home was used to produce income and he had claimed deductions relating to that use, Adrian’s insurance payout amount will be used in working out any capital gain or loss on the property. He includes the net capital gain in his tax return.

Your personal property

Insurance payouts for personal assets are not taxable. For example, insurance payouts for damaged or destroyed household items, furniture, electrical goods, boats, and private cars are not taxed.

There are special rules for:

personal assets that cost you more than $10,000
collectables that cost more than $500 such as paintings, jewellery, antiques, or coins.

These rules will only apply if the insurance payout exceeds the original cost of the asset.

Example 1: personal vehicle destroyed by fire

Nick’s car is destroyed by fire. He receives an insurance payout of $6,500 for the destroyed vehicle. His car was a personal asset and was not used for work purposes. He does not have to include the payout amount in his tax return.

Cars are exempt from CGT so there are no capital gains tax consequences.

Example 2: TV damaged in hail storm

Hilary’s television is damaged in a hail storm. The insurance payout she receives does not need to be included in her tax return. The TV was a personal asset that is not taxable.

Example 3: leisure boat destroyed in bushfire

Dean’s $3,000 boat is destroyed in a bushfire. Dean did not use his boat for any income producing purpose. He does not need to include his insurance payout on his tax return

Example 4: collectable artwork destroyed in bushfire

Julian has a Sidney Nolan painting worth $750 which is destroyed in a bushfire. The painting is a collectable.

Julian will include his insurance payout amount when he works out his capital gain or loss at the end of the income year.

Example 5: bicycle worth over $10,000 destroyed in cyclone

Tim’s bicycle is destroyed in a cyclone. He receives an insurance payout of $15,000.

As his bicycle was worth more than $10,000, the payout will have tax consequences. He needs to subtract the cost base of the bicycle from his insurance payout and include any net capital gain or loss in his tax return.

Rental properties and home businesses

An insurance payout for a property used to produce income will have tax consequences. For example, if you used part of your home to run a home business or you rented out a room.

The insurance payout amount will be relevant when you work out if you have a capital gain or capital loss to include in your tax return. If you are a small business operator, you may be entitled to small business capital gains tax (CGT) concessions.

If your asset is destroyed you can roll over the CGT liability. See involuntary disposal of a CGT asset .

Business operator insurance payouts

Trading stock

You must include the amount you receive from an insurance payout for damaged or destroyed trading stock in your tax return.

Example: trading stock

Farm Supplies Co loses several tractors in a natural disaster. The business has insurance and has deducted the premiums as a business expense each year.

They include the insurance payout they receive in the business’s assessable income. If the trading stock balance at the end of year is lower than it was at the start of the year, the business has an allowable deduction for that difference.

GST

Provided that you correctly informed your insurer of your GST status when you took out your insurance, you do not have to pay GST on your insurance payout. You may be entitled to claim GST credits for any purchase that you make with the insurance payout.

Premises

An insurance payout for damaged or destroyed business premises will have tax consequences.

You will need to work out if you have a capital gain or capital loss to include in your tax return. If you are a small business operator, you may be entitled to small business capital gains tax (CGT) concessions.

Depreciating assets

If you receive an insurance payout for damage or destruction of a depreciating asset that you used to produce income, such as a car or office equipment, it will have tax consequences.

You need to compare the amount of the insurance payout with its book value at the time it was destroyed (its ‘adjustable value’). If the payout is more than the book value, the excess is included in your assessable income. If the payout is less than the book value, you can claim a deduction for the difference.

Apportioning assets for personal use and producing income

If you used the asset for personal use and for producing income, the amounts need to be apportioned.

Example: cabinet used solely to produce assessable income

Bridget’s work filing cabinet is destroyed by fire. She receives an insurance payout of $1,300 for the destroyed cabinet. Its adjustable value at this time is $1,200.

As Bridget receives $100 more than the book value of the cabinet, she includes that $100 in her assessable income.

Work cars

If you used your car for income producing purposes, you will need to compare the insurance payout amount with the book value of the car at the time it was destroyed (a balancing adjustment).

If you claimed your car expenses using the logbook method, your balancing adjustment amount needs to be reduced by the percentage that you used the car for personal use.

If you only used the cents per kilometre method since you began using the car, no balancing adjustment arises, as this method takes the decline in value into account in the calculation.

Example: work car

Louise buys a car and for the next 2 income years she uses the logbook method to work out her deductions for car expenses. The car is destroyed during the second income year and Louise receives an insurance payout of $24,000. At the time the car is destroyed, its adjustable value is $18,000.

As Louise receives $6,000 more than the book value of the car, she must include an amount in her assessable income. Her logbook shows that she uses the car 40% of the time for work, so she must include 40% of the difference between the insurance payout and the adjustable value of the car.

Louise includes $2,400 in her assessable income.

Concessions for businesses

In some circumstances you can buy a replacement asset and offset the balancing adjustment amount against it.

Low-value pool items

If a destroyed asset that was used solely to produce assessable income was in a low-value pool, you reduce the closing pool balance by the amount of the insurance payout you receive.

If an asset was used partly to produce assessable income and was in a low-value pool, you:

multiply the insurance payout you receive for it by the percentage that it was used to produce assessable income
subtract the result of this from the closing pool balance.

Speak to us if you need help.

Source: ato.gov.au April 2025
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/financial-difficulties-and-disasters/support-in-difficult-times/natural-disaster-support/recovery-following-natural-disasters/insurance-payouts-after-a-disaster.
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.

Volunteering in retirement: finding purpose, structure, and joy

Tue, 08 Jul 2025 17:03:00 GMT

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.

i https://www.apia.com.au/apia-good-life/community-relationships/value-of-volunteering.html

ii https://pmc.ncbi.nlm.nih.gov/articles/PMC7375895/

Two ways to invest your mortgage rate cut

Tue, 08 Jul 2025 17:02:00 GMT

Why investing extra money from a rate cut can be a better long-term option.

Millions of Australians holding variable rate mortgages are about to receive a monthly household cash infusion, thanks to the Reserve Bank’s 0.25% cash rate cut on 20 May.

Based on an outstanding mortgage balance of $600,000 with 25 years remaining on the loan term, a 0.25% rate cut from 6% to 5.75% will reduce monthly repayments by $91 per month.

Combined with the Reserve Bank’s 0.25% rate cut in February, and using the same loan numbers as above, those with a $600,000 mortgage now have $183 per month more in their pocket than at the start of the year.

The decision on how to invest a mortgage interest rate cut will really depend on your personal circumstances and financial goals, your attitude to risk and potential cash needs, the amount of debt outstanding you have, and the overall cost of servicing it (interest charges and fees).

Weighing up your options

With extra cash in hand, you may be wondering if it’s smarter to use it to make higher monthly repayments than necessary to pay down your mortgage sooner? Or does it make better sense to invest some or all of that extra money somewhere else, such as in growth assets such as shares?

Reducing the amount owing on your loan will reduce monthly repayments, and could potentially reduce the total interest charges on your outstanding balance and the overall term of your loan.

On the other hand, investing additional funds into other areas could potentially offset the overall interest costs of your loan over time if the net returns from those investments end up being higher.

Here are some calculations to map out some possible financial scenarios based on mortgage interest rates and historical share market returns.

Making higher payments

Here’s how the numbers stack up on a $600,000 mortgage for someone choosing to keep their monthly repayments unchanged at the same amount they were back in February when mortgage rates were 0.50% higher.

Assuming a 6.25% mortgage rate back then, the monthly repayments on a 25-year loan were $3,958 (assuming no fees). The total interest that would have been payable over the term was $587,412.

By choosing to keep monthly repayments at $3,958 (instead of dropping them down to the $3,775 due on a lower 5.75% loan rate) the total interest that would be payable over the term of the loan would reduce to $473,084 and the loan term would decrease from 25 years to 22 years and eight months.

Over the term of the loan, that would equate to a total interest saving of $114,328.

Investing into growth assets

So, how does that number compare with an investment strategy?

As a comparison, they’ve used the historical 8.2% average annual return from the Australian share market over the last 25 years, between the start of April 2000 and 30 April 2025, to see how a $183 investment per month (the amount of monthly mortgage savings on a $600,000 loan at an interest rate of 5.75%) would have added over time.

The 8.2% per annum total return from the Australian share market is based on the performance of the S&P/ASX All Ordinaries Total Return Index and assumes all investment income earned over time was reinvested. The return number excludes any acquisition costs, fees and taxes.

An initial investment sum of $183, followed by monthly investments of $183, would have compounded to $181,214 over 25 years. This would have been made up from a combination of capital growth and reinvested income distributions.

The total compound growth from the Australian share market is $66,886 higher (on a 25-year historical basis) than the total interest savings ($114,328) achieved from using an extra $183 per month to make higher mortgage repayments.

Investing in an index is not possible, but such a broad share market strategy could be achieved by making regular investments into an Australian index tracking exchange traded fund such as the Vanguard Australian Shares Index ETF (VAS), which invests in the top 300 stocks on the ASX.

The bottom line

Australians are big users of mortgage offset accounts – transaction accounts linked to their home loan where the balance is used to reduce the interest charged by offsetting it against the loan principal. According to the Australian Prudential Regulation Authority, there is currently more than $300 billion in cash parked in mortgage offset accounts.

Over a long period of time, such as a 25-year home loan, mortgage holders could potentially do better financially by turning their accrued savings into investments.

Past performance is never an indicator of future performance. Share market returns are inherently volatile.

It’s also important to note that capital gains on investments are generally taxable once they are realised, so it is prudent to consider your personal financial and tax circumstances.

But it should also be noted that mortgage interest rates are also subject to change over time, with multiple rate rises and falls likely to occur over the average term of a loan.

These changes will ultimately impact monthly repayments and interest charges, either positively or negatively, over time.

Notes:

Mortgage calculations conducted using ASIC’s Moneysmart mortgage calculator. Mortgage calculator – Moneysmart.gov.au

Investment calculations conducted using the Vanguard Digital Index Chart calculator set between 1 April 2000 and 30 April 2025. Vanguard Index Volatility Charts

Compound interest calculations conducted using ASIC’s Moneysmart compound interest calculator. Compound interest calculator – Moneysmart.gov.au

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

Transitioning into retirement: What you should know

Thu, 03 Jul 2025 01:52:01 GMT

If you’re close to retirement, chances are you’ve already spent time thinking about how to tap into your superannuation when you retire.

Broadly speaking, you have a few options when you retire, as long as you’ve reached the minimum ‘preservation age’ when you’re allowed to access your super.

If you were born after 1 July 1964, your super access age is 60.

You can check out your personal preservation age on the Australian Tax Office website.

Deciding on your retirement funding options comes down to what makes the most sense for you.

Leaving your super alone

There’s actually no legislation that says you must start drawing out your super savings when you retire.

In fact, if you don’t need your super to fund your living expenses, you can simply leave it where it is.

You can keep investing your super, and even add money into your account if you pick up some work income, and make concessional contributions up to the annual limit (which are taxed at 15%), or personal non-concessional contributions up to the annual limit using after-tax money.

You can make voluntary contributions into your super up until age 75 (excluding a home downsizer contribution), while employer contributions can be contributed at any time, regardless of age.

By not starting a pension you’re not forced by the government to start withdrawing regular payments.

The government also allows people aged 55 and over to to add up to $300,000 into their super account if they sell their principal place of residence, subject to a range of conditions.

Keep in mind that if you do leave your money in a super accumulation account, all investment earnings will continue to be taxed at the 15% rate.

But that rate is still likely to be lower than what you would pay if you decided to withdraw your super and invest it into another asset, such as an investment property, where the rental income would be taxed at your full marginal tax rate.

Leaving all your money in super after you’ve retired means you can’t withdraw money as a regular pension income stream. To do that you generally need to roll at least some of it over into an account-based pension.

However most super funds will let you withdraw lumps sums whenever you like if you’ve met all release conditions and have the money transferred into your bank account. A minimum amount of $6,000 generally must be left in your account.

You should also be mindful that if you leave money in your super account or account-based pension and die that there may be tax consequences for non-dependant beneficiaries (see below).

Starting a pension stream

On the other hand, if you want to use all of your super to have a regular income stream once you retire, you’ll need to roll it over into a pension account.

You’ll need to contact your super fund manager to do this or, in the case of a self-managed super fund, ensure the trust deed allows for the payment of a pension income stream.

Your basic options are to either roll your super over into a pension product offered by your current super fund or to transfer it over to another pension product provider.

Most account-based pension products enable monthly, quarterly, half-yearly or annual payments, which will continue until your account balance runs out.

Be aware that once you start up a pension you’re required to withdraw a set percentage of your account balance every financial year, which increases as you age.

The minimum pension account withdrawal amounts are shown on the ATO’s website .

There are a range of advantages from setting up a pension income stream versus keeping your super money in accumulation mode.

Most importantly, if you’re aged over 60 and retired, your pension payments are tax-free and so are any investment earnings generated inside your pension account.

You can use your own pension income stream to supplement the government Age Pension if you’re eligible to receive it. And you’re also able to withdraw lump sums from your pension account at any time.

Upon your death, non-dependents who receive money left in a pension account will need to pay tax on the taxable component. The amount of tax payable may be reduced by tax offsets.

Doing both

If you’re wanting total financial flexibility in retirement, you could consider leaving part of your money in super, rolling over some of it into an account-based pension, and also withdrawing lump sums whenever you need to.

There are a range of benefits from adopting a combination of your options, although there may also be potential tax consequences for both you and your beneficiaries.

Managing the combination of a super accumulation account, an account-based pension, an Age Pension entitlement (if eligible), potential investment earnings outside of super, and irregular lump sum payments, can be highly complex.

Using the services of a licensed financial adviser is a worthwhile consideration as you weigh up all of your retirement options.

Source: Vanguard May 2024

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

GENERAL ADVICE WARNING

The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”).
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.

Important Legal Notice – Offer not to persons outside Australia

The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws.
© 2024 Vanguard Investments Australia Ltd. All rights reserved.

Protecting your superannuation after death

Tue, 01 Jul 2025 17:16:00 GMT

You work hard to build your superannuation. It’s an income source in retirement, there to help fund the life you and your family want to live when you stop working.

You need to tell your super fund who should receive your super and any life insurance when you die. Without it, your fund may decide who gets your money – and that might not match what you would’ve wanted or could delay it being paid to the people you want it to go to.

Having a valid binding beneficiary makes it easier and faster for your loved ones to receive your super when you die.

What is a nomination?

To choose who will receive your super (and any life insurance), you must nominate a beneficiary. There are different types of nominations available, allowing you to choose one or more beneficiaries.

The four types of nominations are:

lapsing nominations (binding) : The super fund, in the event of your death, must pay your super benefit to your nominated beneficiary, unless it would be unlawful to do so. This expires after a maximum period of 3 years.
reversionary nominations (binding) : The person who will receive the balance of your superannuation income stream after you die. This could be your spouse, child or other dependant.
non-lapsing nominations (binding) : A nomination that is binding with the consent of the super fund under the terms of the trust deed and does not expire after a period of time.
non-binding nominations : Guides your super fund trustee on who should get your super if you die. The trustee is not bound to follow these instructions.

The importance of a binding nomination

Having a binding nomination will help your beneficiaries receive your super faster after your death, than having a non-binding nomination or no nomination at all.

Without a binding nomination, your super fund will decide who receives your money based on what is fair in the circumstances. If there are many people who may be eligible for your super (e.g. in blended families), this process can take a long time.

While non-binding nominations are often easier to make, they only provide guidance to the super fund about your wishes and the fund does not have follow them. This means they may make a different decision from what you want.

Who can be a beneficiary?

The person who receives your super after you pass away is often called a beneficiary. Many super funds allow members to choose their beneficiary, but there are rules about who is eligible. People super funds are allowed to pay your super to include:

your current spouse or partner
your children (of any age)
someone who is in an interdependent relationship with you
anybody financially dependent on you when you die
your estate or legal personal representative.

How to nominate a beneficiary

To nominate a beneficiary:

Check with your fund to find out if they allow members to make a nomination.
Find out what types of nominations the fund allows and what the differences are. Decide what type is best for your circumstances.
Make sure that the people you’re nominating are eligible to be paid your super. If you want your super to be paid to someone who is not eligible, you should speak to a lawyer.
If you plan to nominate your estate or legal personal representative, make sure your will is up to date.
Read the instructions on the form carefully and make sure you complete the form correctly, including any required signatures. Mistakes can make your nomination not valid.
Regularly review your nomination and update it if your circumstances change to ensure the right people receive your money. Lapsing nominations will automatically expire after a period of time (e.g. 3 years). Setting a calendar reminder can be helpful.

Case Study

Adina makes a lapsing nomination

Adina is 53 years old, and lives with her husband, Sunil, and their two adult children, Mark and Margot. Adina and Sunil both work full time, and Adina has about $300,000 in super, plus $100,000 of life insurance.

After discussing it with Sunil, Adina has decided that in the case of her death, she would prefer her super and insurance to go to her husband, who can provide for their children as needed.

To ensure this, Adina visited her super fund’s website and found out that she can either make a lapsing nomination or a non-binding nomination.

If she makes a lapsing nomination to her husband Sunil, her super fund will pay her benefit to Sunil because it’s binding.
If she makes a non-binding nomination to Sunil, her super fund might pay Sunil or split her super between her husband and her children, Mark and Margot, because they were financially dependent on her.

Adina decides to make a lapsing nomination, reviewing the form carefully and making sure she follows all of the instructions for witnessing her signature. And, knowing that the nomination will lapse in three years, Adina puts a reminder in her calendar to review and renew her nomination a month before the expiration date.

Speak to us today if you have any questions about nominating beneficiaries.

Source:: MoneySmart
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/media-centre/news-protecting-your-superannuation-after-death
Important note: 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. Past performance is not a reliable guide to future returns.
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.

Why it’s never too early to start teaching your children about money

Tue, 01 Jul 2025 17:16:00 GMT

Here’s how you can help your children build financial literacy

Australia is one of the wealthiest countries in the world, yet many Australians struggle with financial literacy.

Vanguard’s 2024 How Australia Retires report found that only one-third of Australians were very confident or extremely confident in making financial decisions.

While most Australians (56%) were very confident or extremely confident in their understanding of saving and deposit accounts, far fewer felt the same about other investment products.

Only 20% of Australians were very confident or extremely confident in their understanding of shares, 16% in managed funds, 13% in exchange-traded funds (ETFs), and 10% in bonds.

Even more concerning is that less than one-third of Australians are very confident or extremely confident in their understanding of superannuation products.

Research by ASIC has shown that families play a critical role in establishing and supporting financial attitudes and behaviours.

If you’re a parent, here’s how you can help your children build financial capability throughout their lives.

It’s never too early to start teaching children about money

Most families leave financial discussions until later in a child’s life. But young children are learning about money by observing and participating in everyday activities like trips to the supermarket.

According to ASIC’s Young People and Money report , there is emerging evidence that children as young as five have an emotional response to spending and saving money.

“Very often money is an area that gets glossed over for young children; young children are assumed not to have agency or real input,” said Sue Dockett, an emeritus professor at Charles Sturt University who contributed to the report.

Truth is that children are living these experiences, and we shouldn’t assume children don’t have the ability to understand or comprehend some of what’s going on.

Why it’s important to talk to your children about money

You don’t need to be an expert to teach your kids.

By involving them in conversations about money and encouraging them to make decisions about the trade-offs between saving, spending and investing, you can make the topic part of everyday life.

Here are some tips for talking to your kids about money:

Explain where money comes from: Describe how you earn the money you spend. Explain that you get a certain amount of money each time you get paid. Say how you use that money to cover the essentials, like food, clothes and housing.
Talk about needs and wants: Talk about how you prioritise what you spend your money on. Encourage your kids to think about needs and wants before spending money.
Track spending: Show your kids how to track their spending to see where their money is going.

How you can teach your child about investing

One simple way to teach your children about investing is to open a Vanguard Personal Investor Kids account .

You can start investing regularly today with as little as $25 per fortnight, month or quarter, to help grow your child’s wealth for the long term. As the parent or guardian, you have full control and responsibility for the Kids Account.

Personal Investor Kids provides access to Vanguard’s four ready-made diversified managed fund portfolios – the Vanguard High Growth Index Fund (Kangaroo), Vanguard Growth Index Fund (Emu), Vanguard Balanced Index Fund (Wombat) and Vanguard Conservative Index Fund (Koala).

How to involve your children in decisions about money

Giving children some responsibility for small financial decisions is a great way for them to learn.

It can also be an opportunity to teach them important lessons about the value of money and the benefits of saving.

Here are some ideas for activities that you could do with your child to help them build financial capability:

Involve them in purchasing decisions: Work together to research online or shop around to find the best deal for something they want.
Do a family budget: This can help your children understand the value of money and making trade-offs.
Demonstrate the benefits of giving: You could encourage your children to choose a charity to regularly donate to and explain the benefits of helping others.
Pay pocket money for jobs: You could choose to pay for certain tasks, like mowing the lawn or washing cars. It’s a good way to teach children about the link between work and money.
Help them save for a goal: Use a piggy bank or savings account to help your children see their money grow as they save for a goal.

ASIC’s Young People and Money Survey found that young people have a strong desire to learn about topics like investing, managing money and filing a tax return.

The more learning experiences you can provide for them, the better prepared they will be when it comes time to manage their finances on their own.

Source: Vanguard April 2025
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.
© 2025 Vanguard Investments Australia Ltd. All rights reserved.
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.

Getting EOFY ready as a property investor

Tue, 01 Jul 2025 17:16:00 GMT

In the lead up to the end of the financial year (EOFY), it’s a great opportunity for property investors to pause, prepare their records, and make sure they’re making the most of what they can claim. Tax time might not be the most exciting part of investing, but a little preparation now can make a big difference.

Here’s what to keep in mind as 30 June approaches.

What you can and cannot claim

Property investment comes with a range of expenses, and there are some that can be tax deductible. These generally fall into two broad categories: things you can claim right away, and things you can claim over time.

Immediate deductions often include things like interest on your investment loan, council rates, property management fees, advertising for tenants, and basic repairs or maintenance work. If you’ve paid insurance premiums for landlord, those can typically be claimed too.

Then there’s depreciation—this applies to the wear and tear on both the building itself (if it was built after July 1985) and certain items within the property, like appliances, carpets, or blinds. If you haven’t already, getting a depreciation schedule from a qualified quantity surveyor can be a smart move.

Keep in mind: rules around what you can and can’t claim have changed in recent years. So, if you bought your property after May 2017, it’s worth double-checking the latest rules with your accountant before you make any claims.

Timing can make a difference

As EOFY approaches, it’s worth thinking about the timing of your expenses. For example, if you’ve got maintenance work coming up, insurance premiums or interest payments due, bringing them forward into this financial year could help reduce your taxable income.

Some investors also look at prepaying interest on their investment loans, depending on what their lender allows.

Capital gains tax considerations

If you’ve sold an investment property during the year, you’ll also want to be across how Capital Gains Tax (CGT) applies. The timing of the sale, how long you’ve owned the property, and whether it was your primary residence at any point, all play into how much CGT you may pay.

Consider any available exemptions or discounts, such as the 50 per cent discount for assets held longer than 12 months.

Keeping your records in order and avoiding errors

EOFY is also the time to make sure all your records are in order—receipts, loan statements, rental income summaries, and anything related to expenses. Staying organised means fewer headaches at tax time.

According to the Tax Office, results from property data matching found a number of common errors. This included the reporting of net rent instead of gross rental income that results in the same expenses being claimed a second time. Properties are being omitted from returns and properties owned by multiple stakeholders are only having one of the stakeholders reporting the property.

Capital works or depreciating assets are also being commonly claimed as repairs and maintenance. For example, if you are renovating a bathroom, there are rules around what can and cannot be considered ‘a repair’, so you need to understand and distinguish each deduction in order to correctly lodge your tax return.

The big picture

EOFY can also be a good time to take a step back and review how your property (or portfolio) is performing overall. Are you charging rent in line with the market? Are your expenses creeping up? Are you getting the most from your current loan structure?

Review the structure of your property investments. Holding properties in tax-effective structures such as trusts or self-managed superannuation funds (SMSFs) can provide tax advantages, but you’ll need to get expert advice.

Expert advice goes a long way

While it’s tempting to go it alone, property and tax can get complicated—especially with ongoing changes to legislation and what the ATO considers fair game. So, make sure you are getting the right advice to ensure you are claiming everything you’re entitled to and staying compliant with the latest regulations.

Getting on top of your property tax planning in the lead up to 30 June doesn’t just help you at tax time—it sets you up for stronger returns in the year ahead. With a bit of preparation (and a trusted advisor in your corner), you can finish the financial year feeling confident and in control.

How to financially ease into retirement

Tue, 24 Jun 2025 17:00:00 GMT

Deciding when to retire is a big decision and even more difficult if you are concerned about your retirement income.

The average age of Australia’s 4.2 million retirees is 56.9 years but many people leave it a little later to finish work with most intending to retire at just over 65 years. ⁱ

If you’re not quite ready to retire, a ‘transition to retirement’ (TTR) strategy might work for you. It allows you to ease into retirement by:

supplementing your income if you reduce your work hours, or
boosting your super and save on tax while you keep working full time

The strategy allows you to access your super without having to fully retire and it is available to anyone 60 years or over who is still working.

Working less for similar income

The strategy involves moving part of your super balance into a special super fund account that provides an income stream. From this account you can withdraw funds of up to 10 per cent of your balance each year.

As you will still be earning an income and making concessional (before-tax) contributions to your super, this approach allows you to maintain income during the transition to full retirement while still increasing your super balance, as long as the contributions continue.

Note that, generally speaking, you can’t take your super benefits as a lump sum cash payment while you’re still working, you must take super benefits as regular payments. Although, there are some exceptions for special circumstances.

Take the example of Alisha. ⁱⁱ Alisha has just turned 60 and currently earns $50,000 a year before tax. She decides to ease into retirement by reducing her work to three days a week.

This means her income will drop to $30,000. Alisha transfers $155,000 of her super to a transition to retirement pension and withdraws $9,000 each year, tax-free. This replaces some of her lost pay.

Income received from your super fund under a TTR strategy is tax-free but note that it may affect any government benefits received by your or your partner.

Also, check on any life insurance cover you have under with your super fund in case a TTR strategy reduces or stops it.

Give your super a boost

For those planning to continue working full-time beyond age 60, a TTR strategy can be used to increase your income or to give your super a boost.

To make it work, you could consider increasing salary sacrifice contributions into your super then using a TTR income stream out of your super fund to replace the cash you’re missing from salary sacrificing.

In another example, Kyle is 60 and earns $100,000 a year. He intends to keep working full-time for at least another five years. Kyle transfers $200,000 from his super to an account-based pension so he can start a TTR strategy then salary sacrifices into his super.

This will reduce his income tax, but also his take-home pay. So, he tops up his income by withdrawing up to 10 per cent of his TTR pension balance each year. ⁱⁱⁱ

A TTR strategy tends to work better for those with a larger super balance, a higher marginal income tax rate and those who have not reached the cap on concessional contributions.

Nonetheless, it can still be useful for those with lower super balances and on lower incomes, but the benefits may not be as great.

Some things to think about

TTR won’t suit everyone. For example, be aware that you cannot withdraw more than 10 per cent of your super balance each year.

Also, if you start withdrawing your super early, you will have less money when you retire.

The rules for a TTR strategy can be complex, particularly if your employment situation changes or you have other complicated financial arrangements and investments. So, it’s important to seek professional advice to make sure it works for you and that you are making the most of its benefits.

If you would like to discuss your retirement income options, give us a call.

i Retirement and Retirement Intentions, Australia, 2022-23 financial year | Australian Bureau of Statistics

ii, iii Transition to retirement – Moneysmart.gov.au

What are family trusts?

Tue, 24 Jun 2025 17:00:00 GMT

Many of us associate trust funds with their depictions in popular culture – tools used by the mega-rich to distribute enormous family incomes among “trust-fund babies”.

Recently, they even went viral as the centrepiece of a TikTok audio by user @girl_on_couch, who was famously “looking for a man in finance. With a trust fund. 6’5. Blue eyes.”

But trusts – which allow assets to be managed by one party for the benefit of others – are more widespread than many people realise.

And they’re not just for the super wealthy. In 2020-21, more than a tenth of all Australians who lodged a tax return reported trust income.

Among the most common types of trust in Australia are family trusts, which are often designed to hold family assets or manage a family business. But their popularity has seen them regularly in the sights of the government and the tax office.

So what exactly are family trusts, and why are they so controversial?

First, what’s a trust?

A trust is a legal arrangement where a person nominated as a “trustee” manages assets for the benefit of another person or particular group of people. It isn’t a separate legal entity, but rather a kind of legal relationship.

A trust imposes what’s called an “equitable obligation” on its trustee to hold and manage trust assets according to specific conditions. These are set out in a “trust deed” for the explicit benefit of others, known as the trust’s “beneficiaries”.

The trustee acts as the legally appointed administrator of trust assets. But the beneficiaries still have what’s called “equitable interest” under the arrangement – certain rights to benefit from those assets.

Trustees can be individuals or companies. And many trusts include an “appointor” who has ultimate control. This appointor can appoint or remove the trustee at any time, and in many cases must consent to any changes in the trust deed.

What’s a family trust, and why do people use them?

In Australia, a family trust is a type of “discretionary trust”. Unlike a “fixed trust”, this means the trustee can make decisions about how assets and income are allocated among beneficiaries.

Family trusts are typically set up by a family member for the benefit of the family as a whole. A family trust deed can nominate multiple beneficiaries. These could include not only parents, children, grandchildren and other family members, but also other trusts and even companies.

Family trusts are often used to take advantage of their tax implications. This is because between years, trustees can vary the distribution of income among beneficiaries.

Any undistributed income left in the trust is taxed at the top marginal tax rate of 45%. But if distributed to beneficiaries with lower personal marginal tax rates, it is instead taxed at those rates, which can lower the total tax paid.

This explanation oversimplifies the picture, and there are a range of important caveats.

For example, if a beneficiary is non-resident of Australia for tax purposes, the trustee will be liable to pay tax on their behalf. And distributing trust income to beneficiaries aged under 18 can attract penalty taxes at the top marginal rate.

Why are they controversial?

Family trusts have attracted scrutiny from regulators and the public for a range of reasons – perhaps chief among them, this broad ability to lower taxation by splitting income.

The private nature of many trusts means there is often minimal public reporting, so it can be difficult to determine who in society is benefiting from trust income, and how. There are also concerns that they can be structured inappropriately to hide income.

Trusts can also help safeguard a family’s wealth by shielding a family’s assets from the liabilities of individual members. The beneficiaries of a discretionary trust generally have no legal entitlement to its assets.

This means that if the beneficiary goes bankrupt or gets divorced, the trust’s assets may often be protected from any claims.

In 2019, the Australian Taxation Office (ATO) released the findings of an independent review into trusts and the tax system. Some key areas of concern include:

income tax shuffles (individuals exploiting differences in income definitions between trust law and tax law to dodge higher marginal tax rates)
using convoluted structures like circular trusts (two trusts that are beneficiaries of each other) to obscure trust income and who the ultimate beneficiaries are, and
trusts failing to lodge tax returns.

The use of trusts as a business structure in Australia may yet require further review.

This should not only seek to examine the legislation underpinning trusts, but also improve education for accountants to better understand trust and tax law.

Talk to us if you have any questions regarding family trusts.

Source: https://theconversation.com/what-are-family-trusts-232601

Markets are choppy. What should you do with your super if you are near retirement?

Tue, 17 Jun 2025 17:06:00 GMT

For Australians approaching retirement, recent market volatility may feel like more than just a bump in the road.

Unlike younger investors, who have time on their side, retirees don’t have the luxury of waiting out downturns. A sharp dip just before, or as you begin drawing down your superannuation, can leave lasting damage.

It’s not just about watching your super balance dip.

The real danger comes if you need to start withdrawing funds during a slump. Doing so can lock in losses and make it harder for your remaining savings to recover. The timing of poor market returns is known in finance circles as “ sequencing risk ”. And it can shorten the life of your retirement savings.

What’s going on in markets?

So far in 2025, global shares as measured by the MSCI World Index have fallen 4.6%. Concerns over stubborn inflation and trade tensions that will hurt growth are keeping investors on edge.

If your superannuation is in a “balanced” option, with diversified investments in stocks, bonds, private markets and cash, your balance will have fallen by less than this amount.

Zoom out and the story looks better. Over the past year, total returns for the MSCI index remain strong, up 6.5%.

It’s a reminder that downturns are often followed by rebounds. We saw this during the COVID crash in 2020, when markets plummeted, only to recover more than 50% over the following year.

Still, for those nearing retirement, the timing of these dips matters more than the averages. Uncertainty makes planning all the more crucial.

Is your super still in high gear?

Many Australians don’t know exactly how their super is invested. Most people are in default “balanced” or “lifecycle” options, which automatically shift from high-growth assets like shares to safer investments like bonds and cash as retirement approaches.

This design helps cushion your balance from big market hits as you near retirement. But if you’ve chosen a high-growth option or haven’t reviewed your investment settings in years, you could still be heavily exposed to volatility.

In that case, now’s the time to consider your options:

delay retirement by a year or two to give your portfolio time to recover
move to part-time work instead of retiring fully, reducing how much super you need to draw down
review your budget. You can’t control the markets, but you can control your spending plans.

Don’t panic – reacting emotionally can cost you

When markets fall, it’s natural to feel the urge to switch your portfolio mix from stocks into cash. But this can turn temporary losses into permanent ones.

Instead, consider more measured steps. Transition-to-retirement strategies let you draw a partial income while keeping most of your super invested.

Annuities – which offer guaranteed income for life or a fixed term – are another option. Newer products also address longevity risk, which is the risk of outliving your savings.

What does a 5% drop really mean?

Let’s say you’re 65 and have a super balance of A$200,000 (for men, that’s roughly the median ; for women, it’s lower due to factors like lower lifetime earnings and career breaks).

A 5% fall translates to a $10,000 loss. That might not seem huge, but if you were planning to draw down 5% of your balance annually – about $10,000 a year – that loss could effectively wipe out an entire year’s retirement income.

It doesn’t stop there. If left invested, that $10,000 could have continued to grow. Over a 20-year retirement, and assuming a 5% annual return, that $10,000 could have grown to over $26,000.

For retirees with smaller super balances or higher withdrawal rates, the impact of a market dip can be even more significant.

Many experts now expect long-term returns to be more modest than in recent decades. Ageing populations , climate change and shifting global dynamics are likely to weigh on growth.

This makes it even more important to avoid switching entirely into cash, which can erode your savings through inflation over what could be a 20- or 30-year retirement.

A smarter path to retirement

The best approach is to gradually shift your investments in the years leading up to retirement – not all at once in response to a market dip. Lifecycle options do this automatically, but if you’re managing your super yourself, it’s worth getting advice.

Your super fund’s website likely offers tools and calculators to help. ASIC’s MoneySmart retirement planner is another great resource. And don’t underestimate the value of calling your fund to ask:

How is my super invested?
Does this match my age and risk tolerance?
What are my options if I want to make changes?

The bottom line

Retiring in a volatile market isn’t easy, but panic isn’t a plan. By understanding your investment mix, taking advantage of flexible retirement strategies, and seeking advice when needed, you can navigate uncertainty more confidently.

Planning for retirement isn’t about avoiding all risk – it’s about managing it. With the right tools and mindset, you can stay on course, even when markets wobble.

Source: https://theconversation.com/markets-are-choppy-what-should-you-do-with-your-super-if-you-are-near-retirement-255017

Your 30 June superannuation checklist

Tue, 17 Jun 2025 17:06:00 GMT

With the end of the current financial year fast approaching, time is running out if you’re planning to boost your superannuation balance before 30 June.

Even depositing a small amount of extra money into your super account before 30 June this year could make a big difference to your overall retirement balance over the longer term, thanks to compounding investment returns.

Below are five ways you could be able to add more into your super fund account before 30 June, subject to various conditions.

Concessional (before-tax) contributions

You’re able to have up to $30,000 in concessional (pre-tax) contributions deposited into your super account each financial year, which include compulsory Superannuation Guarantee payments made by your employer and any personal contributions you choose to make.

Concessional contributions are taxed at 15%, instead of your marginal tax rate.

If you’re currently below the annual limit you could take the opportunity to add personal contributions into your super account before 30 June. This can be done either from your pre-tax salary via an existing salary-sacrifice arrangement through your employer, or by using after-tax money to deposit funds directly into your account.

If you deposit after-tax money into your fund, you may be able to claim a tax deduction in your next tax return given that concessional contributions are taxed at 15%.

However, to claim a deduction, you must complete an Australian Tax Office (ATO) form advising your super fund. You must also receive an acknowledgement from your super fund. And both these things will need to happen before you lodge your next tax return.

Keep in mind that this is usually a busy time of the year for super funds, so there could be processing delays. Many super funds have a June cut-off date for processing personal super contributions, which can be one to two weeks before the end of the financial year.

Be aware that if you exceed the total annual limit of $30,000 at 30 June the ATO may require you to pay additional tax.

To avoid exceeding the annual limit it’s important to add up your employer contributions during the financial year plus any extra contributions you’ve already made, and then calculate the concessional contributions balance that’s left.

Carry forward (catch-up) concessional contributions

You may have another option available that will enable you to get more concessional contributions into your super account before 30 June.

That depends on your superannuation balance and whether you’ve used up your maximum concessional contributions amount this financial year (that is, you’ve already contributed $30,000).

Individuals with a total superannuation balance below $500,000 as at 30 June of the previous financial year can carry forward and apply their unused concessional contributions for up to five financial years.

For example, if $15,000 in employer and personal concessional contributions were made into your super account in 2019-20, you may be able to take advantage of your unused $10,000 gap from that financial year (the maximum concessional contributions limit was $25,000 in 2019-20) and roll it over into this financial year’s contributions.

This $10,000 would be in addition to the maximum $30,000 in allowable concessional contributions that can be made this financial year (allowing you to contribute up to $40,000 in this example).

For many Australians the unused portion of concessional contributions available from previous financial years may add up to tens of thousands of dollars.

You can view and manage your concessional contributions and carry-forward concessional contributions by accessing the ATO’s online services by logging in to your myGov website account.

Non-concessional (after-tax) contributions

Non-concessional contributions are after-tax personal contributions you may be able to make into your super fund, which can’t be claimed as a tax deduction.

They’re separate from your annual concessional contributions and are subject to their own annual limits.

The main advantage of making non-concessional contributions is to accumulate more of your money inside the super system.

Earnings from any investments inside your super account before age 60 are taxed at 15%. After age 60, if you have stopped work and access your super as a pension income stream, your investment earnings and the payments you receive are tax free.

Typically, non-concessional contributions are made using the proceeds from larger asset sales. But there’s no minimum non-concessional contribution amount.

The non-concessional contributions maximum limit is currently $120,000 each financial year. However, under what’s known as the “three-year bring-forward rule”, you may be able to make a $360,000 non-concessional contribution in one financial year.

You’re then unable to make further non-concessional contributions for the next three financial years.

If you have more than $360,000 to contribute in total, you could make use of the current annual $120,000 limit before 30 June this financial year. Then, from 1 July, you could use the three-year bring-forward limit to contribute up to another $360,000.

Speak to us if you need to, as there are circumstances where the “bring-forward” rule does not apply.

Home downsizer contributions

Although this option isn’t strictly tied to the financial year end, you may be able to contribute up to $300,000 into your super fund using proceeds from selling your principal place of residence if you’re aged 55 or older. Couples can contribute up to $300,000 into their super each.

A downsizer contribution forms part of the tax-free component in your super fund. It can be made in addition to non-concessional super contributions and doesn’t count towards the annual contributions cap.

Ultimately, however, any downsizer contribution you make will count towards your transfer balance cap when you eventually move your super into pension phase.

There are a range of conditions around downsizer contributions, and it’s prudent to check these on the ATO website or speak to us.

You or your spouse must have owned your home for 10 years or more prior to the sale, with your ownership calculated from the date of settlement when you bought your home.

There’s also a strict definition of what constitutes a home. It must be in Australia and can’t be a caravan, houseboat, or a mobile home.

You’re unable to use the downsizer scheme to deposit funds from the sale of an investment property. These can only be done through a non-concessional (after-tax) super contribution.

A downsizer super contribution must be made within 90 days after you receive the proceeds of your home sale. The ATO will allow for a longer period due to circumstances beyond your control.

It’s prudent to check all the conditions and your eligibility on the ATO website or seek tailored advice from us.

Spouse contributions

The ATO allows couples to split their annual employer concessional contributions, as well as additional salary sacrifice and personal super contributions.

There are two ways of contributing to your spouse’s super:

You may be able to 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.
You can make a super contribution directly to your spouse’s super, treated as their non-concessional contribution, which may entitle you to a tax offset.

Any splitting of contributions must be done after the end of the financial year in which the super contributions were made.

Super splitting can be done at any age, but a spouse must be either less than age 60, or between age 60 and 65 years and not retired.

Couples wanting to split their super contributions first need to check whether their super fund allows it.

The full guidelines around contributions splitting, including eligibility and the application form that needs to be completed, are available on the ATO’s website .

Consider an adviser

Super and retirement planning is a complex area.

Take care to understand the contributions types and limits carefully as there are significant tax penalties for exceeding the applicable contributions caps.

There are also aged-based limits on contributing into super.

If you’re unsure about your super options before June 30 and need some advice, consider consulting us.

Source: Vanguard May 2025
Reroduced 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.
© 2025 Vanguard Investments Australia Ltd. All rights reserved.
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.

ASX zombies make a strong case for investment diversification

Tue, 10 Jun 2025 17:02:00 GMT

Here’s what a zombie company is and why they can be a detractor to your returns

Australian Securities Exchange (ASX) data shows more than three dozen companies have been delisted from the Australian share market so far this year.

The majority of those delistings have been voluntary, at a company’s request. But the remainder have been delisted by the ASX due to listing rule breaches including their non-lodgement of documents and failure to pay their annual listing fees.

It’s highly likely many of the latter companies were ASX zombies in disguise.

What are zombie companies?

In simple terms, zombie companies could be classified as the living dead.

They generally exhibit signs of being under financial distress for an extended period, but they are not yet insolvent or unable to trade.

Investors should avoid them, but zombie companies can be really hard to spot.

However, there are often a number of tell-tale signs that can be found by looking in their financial accounts.

For example, their market value is more than likely to be below the value of their net tangible assets. In addition, their cash flow is likely to be either negative or only just servicing their debt repayments.

Beyond their balance sheets, another tell-tale sign is their share price. Zombie companies typically experience a high degree of share price volatility, with their market value likely to have fallen sharply over time.

Are there many zombies on the ASX? Research released recently by financial services firm KPMG found that the number of zombie companies it had identified on the ASX had risen by 30% between March and the end of October last year.

This took the combined market value of those identified zombie companies on the ASX to over $3 billion.

KPMG found that mining companies (59) made up almost half of all the zombies on the ASX, largely driven by the sharp falls in nickel and lithium prices.

Technology and telco companies had the second-largest number of zombies (16), making up 13% of the ASX’s zombies, while the consumer and retail sector was third, with seven zombies making up 6%.

The importance of diversification

Diversification – spreading investments across different asset classes and regions – is one of the fundamental principles for investing success.

The increase in zombie companies on the ASX highlights the benefits of having good investment diversification, especially when it comes to owning shares.

One of the simplest ways to achieve that is through the use of broad market index funds, such as exchange traded funds (ETFs), which typically have shareholdings in hundreds and sometimes thousands of listed companies.

There are multiple benefits in using index funds, but most notably it’s for their diversification, because they invest in all or a representative basket of the securities that are included in an index.

Having exposure to many different companies helps to reduce share market risk because portfolios are less exposed to the ups and downs of a smaller number of individual companies, some of which may experience financial difficulties at some point in time.

With a broad range of assets in a portfolio, returns from better performing assets can help compensate for those not performing well.

Thinking about an SMSF? Here’s what you need to know

Tue, 10 Jun 2025 17:01:00 GMT

Some investors find it satisfying to take a do-it-yourself approach to retirement savi ngs – taking on the responsibility for the growth of their retirement savings in a self-managed superannuation fund (SMSF).

While you have total control over how your retirement funds are invested within the confines of the laws, many factors need to be considered first.

Before taking the plunge, weigh up the risks and rewards by understanding the various super and tax laws, check out the costs involved as well as the level of administration required and start considering your investment strategy.

What you need to know

Setting up an SMSF can be a complex and time-consuming process and there are quite a few regulations and rules that you need to be familiar with before setting up an SMSF. Therefore, seeking professional advice can be beneficial to get your SMSF off on the right foot so it qualifies for the tax concessions available through the super system. We can assist to ensure your SMSF is set up correctly in the first instance to ensure you are eligible for the tax concessions and it is easier to administer throughout the year.

The advantages of an SMSF

A SMSF offers several advantages, particularly for individuals who want more control over their retirement savings and investments. Some of the key pros of having an SMSF include:

Investment control

SMSF members have complete control over their investments, you decide where to invest and when assets are disposed. You could also incorporate in property as part of your portfolio.

Estate planning

SMSF members can set up binding death benefit nominations to specify how their superannuation will be distributed after they pass away.

Asset protection

SMSFs can protect members from bankruptcy and litigation, and their superannuation benefits are usually protected from creditors.

Diversification

An SMSF has greater access to investment options and a diversified SMSF portfolio could reduce risk and improve returns over time. Speaking to your accountant or financial adviser can help to ensure you are well-diversified.

Tax advantages

SMSFs have one of the lowest tax rates in Australia. Other tax credits can help to further reduce the tax rate.

Lower costs

Running your own SMSF can have lower ongoing costs, especially for larger funds.

Lump sum payments

SMSF can pay benefits as a lump sum, a pension or a combination if the payment is under the laws and the trust deed.

The disadvantages of an SMSF

While there are several benefits to having an SMSF, there are also some drawbacks and challenges. Here are some of the main things to consider:

Responsibility and learning

Trustees must understand and comply with legal and financial requirements.

Cost

SMSFs can be expensive to set up and maintain, especially for SMSFs with smaller balances.

Time and effort

Running an SMSF requires a significant amount of time, effort, and expertise. Engaging with your accountant or financial adviser for assistance and ongoing support can help to ease the burden.

Risk

SMSFs are not guaranteed by the government, and investment returns are not guaranteed. If you lose money, you won’t have access to the government compensation scheme.

Is an SMSF right for you?

Setting up an SMSF is worth the time for those who want greater control over their retirement savings, however before you start, you need to consider whether you are comfortable taking on the responsibility of making investment decisions and if you will have the time to manage the ongoing administration tasks associated with it.

Get professional help

Establishing and running an SMSF is not something you can do easily without professional assistance. Many of the legal and regulatory requirements are complex and must be adhered to ensure the fund is compliant. These requirements are also regularly updated or changed so you’ll need to keep an eye on any new obligations.

Many trustees need help with the day-to-day running of the fund and to meet its ongoing reporting and administrative obligations.

If you are considering setting up an SMSF, give us a call. We can help you decide whether an SMSF is right for you and assist you with the set-up and administration of the fund if you decide to proceed.

The aged care Star Ratings are changing – here’s why

Tue, 10 Jun 2025 17:01:00 GMT

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 Australian Government Department of Health and Aged Care unveiled the Design Changes for Star Ratings for Residential Aged Care – Consultation Findings Summary Report .

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.

Returning to work after having a baby

Tue, 03 Jun 2025 17:01:00 GMT

Balancing financial and work commitments with caring for children is possible with a little planning.

Set clear expectations at work

Before you return to work, talk to your employer. Discuss how you’ll manage your new family responsibilities and work commitments.

Ask for flexible work arrangements

If you’ve been with the same employer for at least 12 months, ask about flexible work arrangements. These could include working part-time instead of full-time or job sharing. You could ask to change your start or finish times, or work from home.

For information about returning to work from parental leave , see the Fair Work Ombudsman website.

For information about your rights when returning to work from leave , see the Human Rights Commission website.

Taking time off when your child is sick

You can get sick leave and carer’s leave – also known as personal leave. It lets you take time off to help deal with personal illness, caring responsibilities and family emergencies.

All employees, including casual employees, are entitled to two days of unpaid carer’s leave.

Full-time and part-time employees can only get unpaid carer’s leave if they don’t have any paid sick or carer’s leave left.

For more information, see sick and carer’s leave on the Fair Work Ombudsman website.

Get help if you have problems returning to work

You can get free legal advice about work-related issues from community legal centres. There are also Legal Aid agencies and other types of legal services in each state and territory.

If you live in Queensland, South Australia or the Northern Territory, you can contact a Working Women’s Centre . These centres provide free and confidential help with work-related issues for women.

Weigh up child care costs

You’ll need to weigh up the costs of child care against how much you and your partner are earning. Also factor in any government assistance you’re eligible for.

Choosing child care depends on how much care you need and your budget. You may have family or friends who can help. Or you may have to pay for full-day child care or a nanny.

If you have a child at school, you’ll need to consider how you’ll manage school pick-ups and drop-offs. You could share this with other parents or family members. Or you could pay for before-school care or after-school care, or both.

For information on child care options , see the Raising Children Network website.

Get help from the government

The government has subsidies that can help cover the cost of child care. See assistance with child care fees on the Services Australia website.

They also have a range of payments and services to help with your child’s education and health care.

Budget for child-related costs

When you return to work and have an idea of your new income, do a budget. Include the extra expenses of having a child to get a realistic picture.

Plan for the future

Now you have a family, you’ll need to think about how you’re going to financially manage each major life stage ahead.

Save for education and expenses

It’s never too soon to start putting aside money for education and other expenses involved in raising children.

Check your super

Taking time out from work to care for children affects your income. This, in turn, affects the amount of super you’re accumulating.

It’s worth looking into your super fund to see if you’re on track for retirement. If not, you might need to make more super contributions .

Also, check if your super fund has insurance options that suit your needs. For example, life insurance and income protection insurance .

Source:: MoneySmart
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/work-and-tax/returning-to-work-after-having-a-baby
Important note: 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. Past performance is not a reliable guide to future returns.
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.

Why it’s important to stay the course during market volatility – in three charts

Tue, 03 Jun 2025 17:00:00 GMT

Staying the course is sage advice for long-term investors anxious about market volatility — and for good reason

By looking at how markets have performed over time, we can put current events into context and appreciate the benefits of a long-term and well diversified investing strategy.

The following three charts highlight the importance of staying invested and focusing on the long-term when markets are volatile.

Don’t let turbulence distract you: Keep your focus on the longer term

Volatility and index prices for the MSCI World Price Index (December 31, 1982, through December 31, 2024)

Short-term volatility has forever been part of investing. Extreme and extended cases of volatility have frequently coincided with market pullbacks.

But investors clearly would do well to focus on the long term as global equity returns as measured by the MSCI World Price Index would suggest.

This chart shows that, despite periods of high volatility that have coincided with market pullbacks, equity markets have climbed over the long term.

From December 31, 1982, through December 31, 2024, global equities faced several periods of extreme intraday volatility, most notably after the stock market crash of 1987, the global financial crisis in 2008, and the start of the COVID-19 pandemic in early 2020.

However, despite sharp market pullbacks that coincided with these periods of intraday volatility, global equities have produced strong results over the long term.

Downturns aren’t rare events: Investors will endure many of them during their lifetime

Global stock prices (January 1, 1980, through December 31, 2024)

Bear markets and corrections are inevitable for investors. Maintaining a long-term focus is the best way to navigate these challenging periods.

From January 1, 1980, through December 31, 2024, the average length of a bull market in global equities has been nearly four times that of a bear market.

It’s worth noting that although the downturns that began in August 1987 (related to Black Monday) and February 2020 (related to the start of the COVID-19 pandemic) don’t meet a widely accepted definition of a bear market because they lasted less than two months, we are counting them as bear markets and including them in our analysis because of their historic nature and the magnitudes of their declines.

Longer holding periods reduce the chances of a negative return

Historical probability of negative return for various holding periods

The longer you stay invested, the less the historical likelihood that you’ll earn a negative return.

Over a 10-year holding period, investors holding a portfolio of 60% US stocks and 40% high-grade US bonds haven’t had a negative nominal return (not accounting for inflation) and have had significantly less likelihood for negative real returns (accounting for inflation) compared with shorter holding periods. As always, past performance is no guarantee of future returns.

Many investors think of cash and equivalents like US Treasury bills as safer than equities.

But when adjusted for inflation, US Treasury bills have been more likely than stocks to have negative returns.

Focus on what you can control

We believe investors should focus on the things they can control.

That means setting clear investment goals, ensuring your investments are low-cost and diversified (both geographically and across asset classes), and staying focused on the long term.

Super and planning for retirement

Tue, 27 May 2025 17:06:00 GMT

Check your super

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:

Super and pension age calculator to work out when you can access your super and the age pension
Budget planner to work out your living costs
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.

For more information, see Accessing your super to retire .

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.

You can discuss your options:

by using the Financial Information Service – Services Australia
with your super fund
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.

For more information, see Tax on super benefits .

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.

4 steps to change a negative money mindset

Tue, 27 May 2025 17:05:00 GMT

Your relationship with money is deeply rooted in your past, often shaped during your formative years by early experiences and the attitudes you observed from your primary caregivers. These influences, absorbed primarily during the imprint period, frequently become ingrained as your personal truth, consciously or unconsciously impacting how you handle finances as an adult.

Limiting beliefs about money, if left unchecked, can continue to influence your financial decisions, causing stress and holding you back from financial growth and empowerment. By uncovering these ingrained beliefs and reframing your approach, you can begin to reshape your relationship with money.

3 limiting money mindsets that may be holding you back

Scarcity mentality

The belief that there is never enough. This often leads to fear-based decisions, such as hoarding money or being overly frugal to avoid financial insecurity. This mindset is tied to limiting beliefs such as ‘money doesn’t grow on trees’ or ‘you have to work hard to earn money’. The scarcity mindset mirrors emotional patterns where you might feel unworthy of abundance and continuously fear not having enough, both financially and emotionally.

Money is harmful

Some people associate wealth with greed or corruption, subconsciously blocking opportunities to accumulate wealth because of negative connotations. This mindset is rooted in beliefs like ‘money is the root of all evil’ or ‘having money makes me a bad person’. These limiting thoughts may cause you to subconsciously reject financial growth, sabotaging your ability to build wealth.

Passive financial approach

This belief involves avoiding financial management or feeling that handling finances is someone else’s responsibility. It is often tied to the idea of ‘burying your head in the sand’ and can stem from a lack of financial education, fear of making mistakes, or financial control by another person. Like low self-worth, avoiding financial decisions can be driven by feelings of inadequacy or fear of failure.

Each of these mindsets can limit your ability to build and sustain financial wellbeing. However, by creating awareness around them, you can begin to shift towards a more positive and empowered financial mindset.

Use the following prompts to dive deeper into your relationship with money and begin identifying limiting beliefs that may be affecting you:

Step 1 – Explore Money Beliefs Inherited from Primary Caregivers

What beliefs about money did you learn from your mum, dad or primary caregivers? Reflect on the conversations you overheard about money. Were they positive or filled with stress and fear? This can provide insight into the beliefs you absorbed as a child.
How did your caregivers earn, save and spend money? Think about their habits around money. Did they save diligently or spend freely? How did they handle debt? These habits often pass down from one generation to the next.
Did your caregivers fight or calmly discuss finances? Reflect on the emotional environment surrounding money in your home. Was it a source of tension, or did your caregivers discuss it openly and without conflict?

How did your caregivers talk about wealthy people? What attitudes did they express about people with wealth? Did they celebrate their success or criticise them for being greedy or unwholesome? This can shape how you feel about your own potential to accumulate wealth.

Step 2 – Reflect on Your Financial Situation Growing Up

Was there enough money growing up, or was it a struggle? Consider how your childhood experiences with money affected you. Did scarcity in your home make you anxious about spending, or did wealth make you complacent about managing your finances?
What historical era did you grow up in? Where are you in your family’s birth order (e.g., eldest, youngest)? Reflect on how economic conditions during your childhood or your family dynamics may have influenced your views on money.
How did your family lifestyle affect your early view of success? Reflect on how your family’s financial status shaped your perceptions of success and happiness. Did it create pressure, or did it provide a sense of comfort?

Step 3 – Consider the Impact of Your Money Beliefs Today

How do the beliefs you inherited affect your relationship with money today? Trace the connection between your childhood experiences and your current financial habits. For example, if your parents were overly frugal, do you now feel guilty about spending on yourself?
What limiting beliefs do you notice in your financial decisions today? Explore how your beliefs may hold you back, like avoiding financial risks or feeling anxious when spending. Do you associate spending money with guilt or fear? Are there any positive money habits you’ve inherited? Not all inherited money beliefs are limiting. Reflect on positive financial habits or mindsets you’ve adopted that have served you well.

Step 4 – Reframing Your Money Beliefs

Which beliefs no longer serve your financial wellbeing? Consider how your current money beliefs are serving you. Are these beliefs still true for you? Reflect on which ones feel outdated, unhelpful, or no longer aligned with your reality, and which ones support your growth.
How can you start shifting your mindset to create healthier financial habits? Write down any new beliefs you’d like to adopt about money. For example, ‘I am worthy of financial abundance,’ or ‘I manage my money with confidence and clarity.’

By using these prompts to explore and reflect on your financial history, you’re taking a crucial step towards building a healthier, more empowering relationship with money. Becoming aware of the money beliefs you’ve inherited allows you to reshape them and move forward with greater financial empowerment. For example, if you have a scarcity mindset, you might feel there is never enough money, no matter how much you actually have. As you address and reframe these beliefs, you’ll regain control over your financial future and lay the foundation for lasting wealth and a bundance.

Source: Fl ying Solo April 2025
This article by Emma Lagerlow is reproduced with the permission of Flying Solo – Australia’s micro business community. Find out more and join over 100K others https://www.flyingsolo.com.au/join.
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. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee 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) ac www.flyingsolo.com.au

3.5 million Australians experienced fraud last year. This could be avoided through 6 simple steps

Tue, 20 May 2025 17:05:00 GMT

About 14% of Australians experienced personal fraud last year. Of these, 2.1 million experienced credit card fraud, 675,300 were caught in a scam, 255,000 had their identities stolen and 433,000 were impersonated online.

According to the Australian Bureau of Statistics latest Personal Fraud Survey, between July 2023 and June 2024, Australians lost A$2.1 billion through credit card fraud.

This was up almost 9% from the previous year. Even after reimbursements, the loss was still $477 million.

These figures do not include financial loss through identity theft, or phishing , romance , computer support and dodgy financial advice scams.

Why the increase?

Research shows the more frequently we use technology, the more likely we are to be scammed. Monica Whitty from the Cyber Security Centre , University of Warwick, found victims of cyber-frauds were more likely to score high on impulsivity measures like ‘urgency’ and engage in more frequent online routine activities that place them at great risk of becoming scammed.

We communicate via email, we shop online, use dating apps and allow technicians to remotely access our computers. Meanwhile, amazing “get rich quick” opportunities are apparently being liked by our friends on our socials almost every day.

But too many of us do not stop and think , “is this legitimate?” It is no wonder we see personal fraud and scams increase every year.

While the Australian Bureau of Statistics figures suggest older Australians (aged 45 and over) are more exposed to card fraud, research has found demographics are not a significant predictor of fraud victimisation.

Taking risks

Being too trusting , drives complacency, which produces gullibility. Think about an online dating sites. The site uses a multi-factor authenticator , it requires you to authenticate your photo, password protect your profile and read the scam warnings.

A site’s apparent legitimacy increases your trust. Research has found if you perceive a platform to be legitimate you could be exposed to romance fraud. Fraudsters may be operating within a site, even if it is legitimate.

Another strong predictor of exposure to online fraud is self-control . Self-control theory predicts individuals with low self-control tend to pursue their own self-interest without considering the negative consequences.

Simply, if the investment scheme looks “too good”, they will mostly likely click on the link and get scammed.

Giving away too much

Some individuals are prone to self-disclosing personal information online – and scammers love personal information. Self-disclosure is defined as the amount of information a person decides to make common knowledge.

Sometimes, we disclose, even when we don’t intend to. A common phishing technique on social media is status updates that read, “Your porn star name is your first pet’s name and the first street you lived on.”

They’re interesting, funny and bring on a healthy dose of nostalgia, but the answers to those questions that you tap in for all to see are also most likely to be your security questions on your bank accounts.

The most common scams in 2023-2024:

Buying or selling scams (1.4% or 308,200)
Information request or phishing scams (0.7% or 148,800)

What is the government doing to protect me?

The Australian government recently passed legislation which targets scams. It places increased responsibilities on banking and finance, telecommunications and digital platforms organisations to protect customers.

Suspicious numbers can now be accompanied a warning of “ potential fraud ” on your smartphone screen. Banks are also informing customers about the latest scams . Some banking transactions can verify the identity of the payment recipient, to ensure the details you have match the actual account holder.

While these will not stop all scams, they are a step towards reducing the number of victims and the amount of money lost to fraudulent approaches.

Six steps to protect yourself

There are some small but powerful steps we can all take to reduce the likelihood of financial harm.

1. Passwords: it is important to have strong, unique passwords across your accounts. Using a password manager can help with this.

2. Multi-factor authentication: many platforms will allow you to add extra layers of security to your account by using one-time passwords, authenticator apps, or tokens.

3. Review privacy settings: be aware of the different settings on your accounts and ensure you are in control of what information you provide and what can be accessed by others.

4. Be vigilant: know what you see and hear may not be real. The person or company you are communicating with may not be authentic. It is okay to be sceptical and take time to do your own checks.

5. Money transfers: never send money you are not willing to lose. Too often, people will send money before realising it is a scam. Never feel rushed or forced into any financial decision. It is OK to say no.

6. Credit monitoring: if you know or suspect you have been scammed, you can enact a credit ban , meaning no one can access your details or take further action in your name. This can be a good short-term solution.

And if you are scammed …

Anyone can report money lost in a scam to ReportCyber , the Australian online police reporting portal for cyber incidents. If you have received scam texts or emails, you can report these to Scamwatch , to assist with education and awareness activities.

Source: The Conversation April 2025

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.

Big changes ahead for Aged Care

Tue, 20 May 2025 17:05:00 GMT

The number of Australians aged over 65 is expected to more than double in the next 40 years while the number of people aged over 85 is predicted to triple in that time.i

Aged care funding and services have seen major changes in the years since the 2021 report of the Royal Commission into Aged Care Quality and Safety, and this year is no exception.

1 July 2025 marks the start of a host of new programs and improvements for the aged care sector. Several announcements have already been made this year, covering wage rises for aged care workers and nurses, and an increase in government funding for residential aged care accommodation.

In one of the most significant changes, the new Aged Care Act begins on 1 July. The Act aims to ensure the viability and quality of aged care.

A report by the Aged Care Taskforce last year calculated the residential aged care sector will need $56 billion by 2050 to upgrade facilities and build more rooms.

Current funding arrangements aren’t working. In the 2022-2023 financial year, almost half of all accommodation providers made a loss.

Some $300 million in federal grants will be delivered to accommodation providers this year to help with capital works upgrades.

And to improve the viability of the facilities the government is introducing other measures including larger means-tested contributions from new entrants and a higher maximum room price that is indexed over time.

Aged Care Minister Anika Wells says half of new residents will not contribute more under the new consumer contributions.

“For every $1 an older Australian contributes to their residential aged care, the government will contribute an average of $3.30,” says Wells.

Support at Home

The Aged Care Act also aims to support more people who want to stay in their own homes as they age. The federal government is investing $4.3 billion in a new Support at Home program, which replaces the Home Care Packages and the Short-Term Restorative Care programs.ii

There’ll be more 300,000 places available over the next 10 years and a shorter waiting period for Support at Home, and there’s a goal to simplify and improve the assessment process, making it easier to access different services as needs change.iii

Similar to the Home Care Package, Support at Home will provide:

clinical care, such as nursing and occupational therapy
help with maintaining independence including showering, dressing and taking medications
support for everyday living tasks such as cleaning, gardening, shopping and meal preparation.

The government will pay 100 per cent of clinical care costs while Support at Home recipients will make a contribution towards independence and everyday living costs. The contribution amount will be calculated using the Age Pension means test and it depends on the level of support needed and the combination of income and assets. The highest classification with the most funding will receive a package of services worth $78,000 per year. There’ll also be funding for assistive technology and home modifications and end of life care.

A new cap on contributions will also apply. No one will pay more than $130,000 in their lifetime – whatever their means or length of care at home or in residential accommodation.

Refunding deposits

The new Aged Care Act also requires aged care accommodation providers to refund residents’ lump sum deposits within 14 days if they move to another facility or pass away. Interest must be paid on the lump sum until the amount is repaid. As before, some deductions are permitted provided they were included in the original agreement.

No disadvantage

For those already receiving home care packages or in aged care accommodation, the government says a ‘no-worse-off’ principle will provide certainty that they won’t have to pay more under the new laws.

Whether it is you or a loved one who is considering moving into aged care, it can be an emotional time. With these new changes being implemented, you may have a few questions. Please give us a call if you’d like to hear more about the changes or if we can help to assess your next step or plan ahead.

i Once in a generation aged care reforms | Health Portfolio Ministers | Australian Government Department of Health and Aged Care

ii Support at Home program | Australian Government Department of Health and Aged Care

iii About the Single Assessment System for aged care | Australian Government Department of Health and Aged Care

Turbocharge your super before 30 June

Tue, 20 May 2025 17:05:00 GMT

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.

Carry forward (catch-up) concessional 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 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 you super within 90 days of receiving the proceeds of the sale of your home.

Spouse contributions

There are two 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.

i Transferring or consolidating your super | Australian Taxation Office

ii Salary sacrificing super | Australian Taxation Office

iii Concessional contributions cap | Australian Taxation Office

iv Non-concessional contributions cap | Australian Taxation Office

Wills and powers of attorney

Tue, 13 May 2025 17:08:00 GMT

A good estate plan will help make sure your wishes are carried out when you die. It can also help if you become unable to make your own decisions.

Estate plans

An estate plan records what you want done with your assets after your death. It can include documents such as:

your will
a testamentary trust (as part of your will)
superannuation binding nominations

It also covers how you want to be cared for — medically and financially — if you can no longer make your own decisions. This part of your estate plan may be in documents such as:

any powers of attorney
a power of guardianship (giving someone the right to choose where you live and to make decisions about your medical care)
an advance healthcare directive (your needs, values and preferences for your future care)

The documents you choose will depend on your situation and what you’re comfortable to trust others with. Get legal advice if you’re not sure.

You must be over 18 and mentally competent when you draw up your estate plan.

Your will

A will is a legal document stating what you want to happen to your assets when you die. It is part (but not all) of your estate plan.

Everyone over the age of 18 should have a will.

Your will can cover things like:

how you want your assets shared
who will look after your children if they’re still young
any trusts you want to set up
how much money you’d like to give to charities
plans for your funeral

Smart Tip: It’s important to have an up to date will. If you die without one, the law decides who will get your assets — and this may not be who you wanted.

Making your will

You can get your will written by a solicitor (for a fee) or by a Public Trustee.

A Public Trustee may not charge if you:

are a pensioner or aged over 60, or
nominate them to carry out the instructions in your will (that is, to be your executor)

The rules vary, so visit the Public Trustee office website for your state.

Here are some low-cost alternatives to Public Trustees:

Community wills days: The Salvation Army offers low-cost simple will preparation, provided by local solicitors as a community service. To join the waiting list for the next event in your state, see community wills days on the Salvos website.
Will kits: CHOICE has a helpful article about will kits, DIY will kit review . They look at the pros and cons of four will kits, free or low-cost. They also give tips on drafting your will, and when to consider getting more legal advice.

If you use an online will kit, get it checked by a solicitor or Public Trustee. They can make sure it’s been done properly. If your will isn’t done properly, it will be invalid.

Make sure you put your will in a safe place and tell someone close to you where it is.

Updating your will

It’s important to update your will as your situation changes — for example, if you:

get married
divorce or separate
have children or grandchildren
have a significant financial change
lose your spouse (or someone else who is named in your will) through death

Super and your will

A binding nomination directs who your super fund trustee gives your super benefit to when you die. If you don’t nominate someone, the super fund trustee will decide who your money goes to.

Family trusts and your will

If you have a family trust, it continues after your death. The trust determines who gets your assets, even if your will says something different.

Testamentary trusts

A testamentary trust is a trust that is written in your will. It takes effect when you die, and it’s administered by a trustee, who you usually name in your will.

The trustee looks after your assets until your beneficiaries can get them. This is set out in your will, and is either when:

a child reaches a certain age, or
a beneficiary achieves a specific goal (for example, they get married or earn a particular qualification)

You may want to consider setting up a trust if your beneficiaries:

are minors (under 18), or
have diminished mental capacity, or
may not use their inheritance well

Another reason to consider a trust is to avoid family assets being:

split as part of a divorce settlement, or
part of bankruptcy proceedings

Powers of attorney

A power of attorney is a document where you give someone else the legal right to look after your affairs for you. It’s important to nominate someone that is trustworthy, financially responsible, and likely to be around when you need them.

Each state and territory have different rules for setting up a power of attorney .

There are different types of powers of attorney:

General power of attorney

This allows someone to make financial and legal decisions for you. It’s usually for a specified time — for example, if you’re overseas and can’t manage your affairs at home.

If you become unable to make decisions yourself, a general power of attorney becomes invalid.

Enduring power of attorney

An enduring power of attorney (or EPA) allows someone to make financial and legal decisions for you. If you become unable to make decisions yourself, an enduring power of attorney will still be valid.

Medical power of attorney

This allows someone to make medical decisions for you if you ever become unable to do so yourself. It doesn’t allow them to make other kinds of decisions.

Legal and financial housekeeping

It will help your family and your executor if you list all the documents you have and where they’re kept.

As well as the documents talked about above, other key documents to keep handy are:

birth certificate
marriage certificate
life insurance
medical insurance
Medicare card
pensioner concession card
house deeds
home and contents insurance
deeds and insurance policies for any other real estate you own
bank account details
superannuation papers
investment documents (securities, share certificates, bonds)
prepaid funeral plans

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/living-in-retirement/wills-and-powers-of-attorney
Important note: 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. Past performance is not a reliable guide to future returns.
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.

Keep track of your investments

Tue, 13 May 2025 17:08:00 GMT

Review your investments regularly to make sure you’re on track to reach your financial goals and you’r e comfortable with the investment risks.

Find out how to review your investments’ performance and what to do if you’re not getting the returns you expect.

Monitor your investments regularly

How often you review your investments will depend on:

your financial goals
how long you’re planning to invest

When to sell your investments

It’s important to not panic when the price of an investment falls. Before you sell an investment, take the time to review it. Check if it can still help you to reach your financial goals and if you’re comfortable with the risks involved. If you are, it may be better to hold on until the price rises again.

Defensive versus growth assets

Defensive assets include savings accounts, term deposit and fixed-interest investments like bonds. When you receive a statement, check income (for example, interest) is being paid and the value of your capital hasn’t changed too much.

Growth assets include property, shares and managed funds. They are more volatile and it’s best to review them once or twice a year. For example, for shares, around the time semi-annual and annual reports are released. Over-tracking may lead to over-trading. This can result in selling when markets fall and not sticking to your investing plan and investing time frame.

Make sure your investments are diversified, and leave them to ride out the downs.

Review your investing plan

It’s important to review your investment plan once a year. Check your investments are still in line with your financial goals, risk tolerance and investing time frame.

Ways to monitor your investments

You’ll need to monitor different investments in different ways.

Key ways to monitor your shares:

Set up a ‘watch list’ for the shares you own. You can do this through the Australian Securities Exchange (ASX) or your online broker platform. This will help you track share prices, dividends and price sensitive announcements
Review semi-annual and annual reports. These tell you about the company’s performance, important changes, and expectations for the coming year.

Or you can speak to us if you have any questions.

Managed funds

To monitor your managed funds:

Read your fund’s annual statement. This shows how your fund performed, fees and any distributions.
Check the fund’s performance through its website. They publish unit prices, online fund updates and financial statements.
Track the fund’s returns through websites such as Morningstar and InvestSmart. You can also compare a fund’s performance against its benchmark and similar managed funds.

Property

To monitor an investment property’s performance:

Use real estate websites to review the prices of similar properties that have sold.
Monitor monthly housing price updates published by CoreLogic and the Australian Bureau of Statistics .
Monitor auction clearance rates online or in newspapers. These tell you the percentage of properties sold at auction and show the strength of the property market.

If you invest in a real estate investment trust (REIT), monitor it the same way you monitor shares.

Investment performance warning signs

It’s difficult to tell if an investment will perform poorly. But there are warning signs that you can look out for.

Financial and accounting problems

Watch for mistakes, delays and media controversy over financial accounts. Genuine errors happen, but repeated accounting issues can be a sign of more serious problems.

Management problems

Frequent changes of a company’s board, directors and management can be a warning sign. Another sign can be directors and managers selling their shares in the company.

Company announcements will show changes in a company’s management and director holdings. You can find these on the ASX, the company’s website or through your online broker platform.

Published statements

The Australian Securities and Investment Commission (ASIC) and the ASX can ask issuers of investment products to publish statements clarifying or correcting information given to investors. These public statements can be a sign of issues within the company or their reports, so read them ca refully.

Keep an eye on ASIC media releases .

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/how-to-invest/keep-track-of-your-investments
Important note: 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. Past performance is not a reliable guide to future returns.
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.

When markets are volatile, it pays to stay invested

Tue, 06 May 2025 17:02:00 GMT

Periods of high volatility have forever been part of investing. But even seasoned investors might feel tempted to retreat to “safe” assets like cash during these times.

While this approach may help you sleep better at night, it’s unlikely to be good for your financial well-being.

Here’s why focusing on the long-term is crucial during periods of high volatility for shares and other investments.

The pitfalls of market timing

When markets are falling and news headlines are bleak, it might seem like a good idea to sell and wait for conditions to improve.

In reality, it’s not that easy.

Research has shown the best and worst trading days tend to occur within days of each other, often during periods of heightened market uncertainty and distress.

Ten of the 20 best trading days as measured by the MSCI World Price Index, a leading global stock market index, from January 1, 1980, through December 31, 2024, occurred during years of negative total returns.

Meanwhile, 11 of the 20 worst trading days occurred in years with positive total returns.

It goes to show how difficult it is to successfully time the market.

Trying to time the market is futile: The best and worst trading days happen close together

When investors try to “wait out” a downturn, they run the risk of missing out on strong performance, which can seriously hamper their long-term results.

Why staying the course matters

Since 1972, there have been 13 bear markets — declines of 20% or more — in global equities.

While that might sound scary, it’s important to put this in context. On average, bear markets have lasted a much shorter time than bull markets, where stocks appreciate.

From January 1, 1980, through December 31, 2024, the average length of a bull market in global equities has been nearly four times that of a bear market.

Over that period, Vanguard’s research shows average total returns for bull markets in global equities were 96% over an average of 1,018 days.

Meanwhile, the average total returns for bear markets were -30% over an average length of 282 days.

Bear markets are challenging, but bull markets have been longer and stronger

That’s one reason for sticking to a well-thought-out investment plan: losses from a bear market have typically given way to longer and stronger gains.

The risks of moving to cash

One problem with moving to cash during a panic or downturn is that you also have to pick the right time to get back into the market.

On top of that, selling assets that have appreciated in value to raise cash can have significant tax consequences. For example, you may be liable to pay capital gains tax on any profits.

The research looked at how US investors would fare if they moved a portfolio of 60% US equities (as represented by the Russell 3000 index) and 40% US fixed income (as represented by the Bloomberg US Aggregate Bond Index) to cash (as represented by the FTSE 3-Month Treasury Bill Index).

Researchers found that investors have a 74% probability of underperforming the market with an average underperformance of 4.1% when they have moved their portfolios solely into cash for three months after a severe market event.

Moving to cash in a panic rarely pays off

Portfolio underperformance was worse for those who converted their balanced portfolios to cash and held it for longer periods of time.

Converting the portfolio to cash led to a 71% probability of underperformance over a six-month period with an average underperformance of 7.4%.

When investors converted their 60/40 portfolio to cash and held it for 12 months, they had an 87% probability of underperforming with an average underperformance of 13.3%.

Put simply, US investors who converted their 60/40 portfolios to cash in times of market stress underperformed the market most of the time.

It’s further evidence of the importance of remaining invested in a balanced, diversified portfolio and not overreacting to the latest market and economic headlines.

Reach out to us if you have any questions regarding the recent market fluctuations and how they impact your investment portfolio.

Source: Vanguard March 2025
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.
© 2022 Vanguard Investments Australia Ltd. All rights reserved.
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.

How Home Care Packages can help reduce entries to hospital

Tue, 06 May 2025 17:02:00 GMT

Hospital admissions can be distressing for individuals and costly for healthcare systems. Many of these admissions, particularly for older adults and those with chronic conditions, can be prevented through adequate support at home. Home Care Packages (HCPs) play a vital role in reducing hospital entries by providing tailored care that promotes health, safety and independence. We’ve listed seven ways that HCPs cut hospital admissions out of the picture.

1. Preventing health deterioration

One of the main reasons people are admitted to hospitals is the worsening of chronic conditions such as diabetes, heart disease or respiratory illnesses. Home Care Packages offer regular monitoring by trained caregivers, ensuring that symptoms are managed effectively. Timely intervention , such as medication management, dietary guidance and physiotherapy, can prevent minor health issues from escalating into emergencies.

2. Reducing falls and injuries

Falls are a leading cause of hospital admissions among older adults. Home Care Packages include modifications like handrails, non-slip flooring, and personal alarms that improve home safety. Additionally, caregivers can assist with mobility, reducing the likelihood of falls and related injuries. Visit My Aged Care to learn more about changes to your home.

3. Medication management

Medication errors, such as missed doses or incorrect usage, often lead to hospital admissions. Home care providers ensure that clients take their medication as prescribed, preventing adverse reactions and complications that could otherwise require hospitalisation.

4. Managing post-hospital recovery

After a hospital discharge, individuals may need extra support to fully recover. Home Care Packages can be paused to allow you to receive transition care . This can facilitate a smoother support journey by providing wound care, rehabilitation exercises and personal assistance, reducing the risk of readmission due to complications.

5. Mental health and social well-being

Isolation and loneliness contribute to poor mental health, which can exacerbate physical conditions and increase hospital visits. Home Care Packages often include companionship services and community engagement through the Aged Care Volunteer Visitors Scheme , helping individuals stay socially connected and mentally stimulated, ultimately promoting overall well-being.

6. Access to allied health services

HCPs can include services like physiotherapy, occupational therapy and dietetics, all of which contribute to maintaining good health. Regular check-ins from healthcare professionals help detect early signs of deterioration and address them proactively.

7. Emergency prevention and early intervention

Caregivers are trained to recognise early warning signs of health decline. If an issue arises, they can arrange for a doctor’s visit or seek medical advice before the condition becomes severe enough to require hospitalisation.

Home Care Packages are an essential strategy in reducing preventable hospital admissions. By providing personalised care, promoting safety, ensuring medication compliance and offering emotional support, HCPs help people remain in their homes longer while maintaining their health and independence.

Investing in home care services not only improves the quality of life for people but also alleviates pressure on hospital systems, making it a win-win solution for both patients and healthcare providers.

If you’re looking for a Home Care Package provider, check out the Aged Care Guide directory and input your location to find high-quality care near you. To find the right kind of service delivery, you can click on the filter button to narrow down the available providers.

Source: Aged Care Guide
Reproduced with permission of DPS Publishing. This article was originally published on https://www.agedcareguide.com.au/talking-aged-care/how-home-care-packages-can-help-reduce-entries-to-hospital. Reproduced with permission of DPS Publishing.
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.

The trouble with having too much cash

Tue, 29 Apr 2025 17:18:00 GMT

Investors with large cash holdings should keep an eye on falling deposit rates.

Most of us have heard the saying, cash is king.

It relates to the liquidity advantages of having an amount of cash readily available to cover off things such as everyday living costs, potential emergency expenses, or on an investment level to take advantage of asset buying opportunities.

Monthly data released in February by the Australian Prudential Regulation Authority shows authorised deposit taking institutions (mainly banks) had close to $1.6 trillion in household deposits on their books at the end of January 2025.

A large component of this cash stockpile is owned by Australia’s contingent of self-directed superannuation investors.

Separate data released by the Australian Taxation Office in February shows self managed super funds (SMSFs) were collectively holding over $161 billion in cash and term deposits at the end of last year.

This equated to around 16% of the just over $1 trillion in total assets being managed by SMSF trustees on 31 December 2024.

SMSFs remain attracted to cash

Cash and term deposits have long been one of the biggest investments for SMSFs, second only to listed Australian shares (which at 31 December 2024 accounted for $277.6 billion in investments and 27.3% of total SMSF assets).

That can partly be explained by the fact that 35% of current SMSF members are fully retired and are likely to be progressively drawing on their cash reserves through account-based pensions. A further 9% are partially retired, according to the ATO’s 2022-23 annual statistics .

But SMSF trustees and other investors may want to take heed of recent cuts to savings interest rates.

Holding large amounts of cash over time, especially during a falling rates environment, can come at the cost of long-term underperformance and failure to achieve long-term financial goals.

As the Reserve Bank of Australia (RBA) announced a 0.25% cut to its cash rate in February, many mortgage lenders were quick to declare they would pass on the full rate reduction – some immediately, others within weeks.

Yet, just as variable mortgage rates are being cut, so are the rates being paid by financial institutions on cash being held in their savings and term deposit accounts.

In fact, many account rates have already been reduced. Dozens of banks and other financial institutions began cutting their deposit rates in February, some of them weeks before the RBA’s rate cut announcement.

Financial comparison site Canstar notes that 20 banks had reduced term deposit rates ahead of the RBA’s cash rate decision, with cuts of up to 0.95 percentage points. Others have followed since.

Term deposit rates have trending downwards since mid-2023. Canstar’s database shows the highest 1-year term deposit rate was 5.45% until July 2023 and the highest 2-year rate was 5.35% until December 2023.

Since then average term deposit rates have dropped below 5%, with promoted rates out to two years currently between 3.90% and 4.60%.

Balancing risk with return

Holding cash can provide a sense of security to investors because of its low volatility (together with the Federal Government’s Financial Claims Scheme guarantee for deposits up to $250,000 in the event a financial institution fails).

However, it’s also important to consider that holding large amounts of cash over time, especially during a falling rates environment, can come at the cost of long-term underperformance and failure to achieve long-term financial goals.

Consider that the average annual return in Australia from cash over the 30 years to 30 June 2024 was just 4.2%, which compared with 5.6% from Australian bonds, 7.8% from Australian listed property, 9.1% from Australian shares, and 11.1% from U.S. shares.

Risk tolerance relates to how much market risk you are willing to take on, based on your personal needs.

Risk and return are a trade-off. Therefore, in many cases, including cash not only moves a portfolio toward the more conservative end of the risk spectrum, it also moves it toward the lower end of the expected return spectrum.

Time horizon is the length of time you aim to keep your money invested. The shorter that period is, the less likely you are to benefit from holding riskier assets like bonds and shares.

That’s because, over the long term, the returns of those riskier assets tend to be higher than those for cash, on average.

However, this comes with the drawback of those assets being more volatile, which can mean potentially negative returns over the shorter term.

Funding level is how close to fully funded an investment goal is. If you are close to fully funding your investment goal you may be comfortable with some allocation to cash.

On the other hand, if you are far from reaching your investment goal you may be willing to allocate more to riskier assets for potentially higher returns to improve your chances of success, especially if you have a longer time horizon.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

Three ways to check your super is working for you

Tue, 29 Apr 2025 17:18:00 GMT

Small changes in performance or fees can make a big difference in retirement.

How often do you check in with your super? For younger Australians, the answer is likely to be “not very often”.

Research by ASIC’s Moneysmart found that three in 10 millennials (aged 29 to 44) check their super fund’s performance less than once a year or not at all.

There’s a simple reason why it’s a good idea to check in more regularly: small changes in performance or fees can make a big difference in retirement.

The Productivity Commission estimates that paying an additional 0.5 percentage points in annual fees (for example 1.5% rather than 1%) could cost a typical full-time worker around 12% of their balance by the time they reach retirement. That works out to be about $100,000.

Here are three ways to check your hard-earned super is working hard for you.

Step 1: Check your super fund’s fees

Unfortunately, super fees can be confusing. Super funds can charge administration fees, investment fees, performance fees, insurance premiums and other charges.

A good place to start is your annual super statement, which includes details about your fund’s fees and investment performance. Often, you can access a digital copy via your super fund’s website or online portal.

You can use these numbers to compare your fund to others on the market, but it’s important to make like-for-like comparisons.

Importantly, fees should be considered in the context of your fund’s performance and investment profile. For instance, if you are invested in a balanced option, compare your fees to those of balanced options from other funds.

Super funds should have information about fees and performance on their websites and in product disclosure statements.

You can also use the ATO’s YourSuper comparison tool to compare funds. However, keep in mind the tool only compares basic superannuation products (known as MySuper).

There are also commercial websites that will allow you to compare funds, but keep in mind these services may not include all available options.

Finally, it’s important to consider fees and performance over a reasonable time frame. ASIC’s Moneysmart suggests five years at a minimum.

Step 2: Check how your super is invested

Besides fees, it’s also important to ensure that your super fund is investing in a mix of assets that is appropriate for your situation.

Historically, most Australians have had their super invested in balanced funds by default, which typically hold around 50–70% in growth assets (like shares and property) and 30–50% in defensive assets (like bonds and cash).

If you are early in your career, and have decades until retirement, you might be willing to take on additional risk by investing in a more aggressive growth option, which could offer higher returns over the long-term.

Meanwhile, if you are closer to retirement, you might prefer to take a more conservative approach to minimise the risk of losses in the event of a market downturn.

Most super funds have information about the target asset allocations of each of their investment options available on their website.

When considering different investment options, ASIC’s Moneysmart suggests considering:

Your age;
How comfortable you are with investment risk; and
How long before you will be able to access your funds.

Step 3: Check for lost super and consolidate accounts

If you have multiple super accounts, you could be paying multiple sets of fees and insurance premiums, which could significantly impact your balance by the time you retire.

Thankfully, it’s now easy to consolidate super funds through the ATO’s online service in myGov.

Once you have logged in to the ATO’s service, select ‘Super’ from the top menu. Then, you should see a list of super accounts. If you have multiple accounts, you can submit a transfer request directly through myGov.

The ATO also has an automated super search phone line, which you can use by calling 13 28 65.

As of 30 June, 2024, the ATO held just under $17.8 billion of lost super from over 7.1 million accounts.

Some of that money could belong to you, your friends and your family, so it’s worth spending the few minutes it takes to check.

By being more engaged with super, you can make sure it’s working as hard as it should.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

How to improve your finances and home loan chances

Wed, 23 Apr 2025 07:06:21 GMT

Nailing your home loan application depends on four factors — your income, expenditure, assets, and debts. But lenders also want to see evidence of a savings and (good) credit history. Here’s what you can do to improve these.

1. Start saving. Make a plan.

The BT Australian Financial Health Index found that a third of us pretty much live week to week, payday to payday.

It also found that 35% have a sound savings plan, with the remaining third falling into the ‘Could Do Better’ category. To have a good chance of getting a loan, you’ll want to be in the 35% who’ve sorted their savings.

But even if you get a substantial deposit together, lenders will still want proof you’re a regular saver.

Why? Because a sound savings record gives them confidence you’ll meet your home loan repayments on time.

If you’re savings have been a bit up and down, the good news is that banks look favourably on a record that might be just six months hard saving. So set up a designated ‘House’ account and get started today.

2. Sort out a budget

Having a budget—and sticking to it faithfully—is further proof to a lender that you’re financially responsible. A good ‘risk’.

Let’s look briefly at three basic principles to start with.

Your budget should be realistic

It can’t be too harsh or you won’t stick to it. You need to take into account all your spending—all those little treats (as well as the necessities) that are easily forgotten.

Car repairs and maintenance, for instance, can be overlooked if you’ve had a good run over the past year or two.

Your budget should be ‘disciplined’

Just because it’s not the Budget from Hell, doesn’t mean you can enter ‘Shoes. $500 a month’ into your ‘Regular Expenses’ section.

You’re working towards a long-term goal and that requires discipline and some sacrifice.

Your budget should be flexible

This doesn’t contradict the previous point. But you need a bit of wriggle room in your budget for when things don’t go to plan.

If you have a setback, you can’t afford to let everything slide. It’s a great idea to keep tabs on spending.

3. Reduce your debts

Obviously, if you’ve got a hefty overdraft and loads of credit card debt, you’re not in a good spot.

To up your chances, you need to get your debt down. This might mean considering a debt consolidation loan so you only have one repayment to make each month.

Balance transfers, if used wisely, can also help reduce the amount of interest you’re paying.

Keep in mind that banks also take into account the credit limits on your cards, even if you’re not in debt at all. They’re interested in your total potential ‘risk’ exposure. So you might want to reduce your credit limits, or cut the number of cards you have.

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at hhttps://www.nab.com.au/personal/life-moments/manage-money/budget-saving/improve-finances

Estate planning: making it easier on family

Tue, 22 Apr 2025 17:05:00 GMT

Get professional legal and financial advice

The right professional advice can take the guesswork out of deciding how to distribute your assets, and help you make crucial decisions about who will have your medical and financial power of attorney.

You may consider finding a legal professional who specialises in wills and estates. You also have the option of consulting someone who can give you financial advice as well; we can help you. If you need advice on accounting or tax-related matters, an accountant can help.

Make a will

According to ASIC, around half of all Australians die without a will. If this happens to you, your family may have to apply to the Courts for the authority to administer your estate, sometimes called Letters of Administration .

You’ve worked hard to build assets, so you’ll want them distributed to those who matter most. Sorting out your estate and making a will now helps to ensure that your wishes are followed when you’re gone. It also reduces the risk of family conflict.

While you can write your will yourself, it is recommended that you get legal advice, as it can get complicated.

Choose your executor

Think carefully about who you choose to be the executor of your will. When making your decision, it helps if:

you’re close to the person and can trust them
you’ve chosen two people to cover yourself if one person isn’t available.

You can find more information on the role of an executor from the Public Trustee relevant to your state .

Make sure family and friends are cared for

If you have people who depend on you financially and will continue needing your support, you may want to get both legal and financial advice about whether a trust would be helpful. Whether a trust is a practical option may depend in part on the size of your estate.

There are different types of trusts. If you support someone who is living with a disability, you may want to consider (and get advice about) special disability trusts. You can get some initial information about special disability trusts from the Department of Human Services .

Trusts are complex, so it’s important to seek advice on the pros and cons.

Take out life insurance

Consider taking out life insurance to help your loved ones financially. This could include things such as using the insurance funds to reduce or pay out a home loan.

There are many important decisions to make when creating your Will and we are here to assist with any questions you may have.

Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/family/prepare-finances
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2025 National Australia Bank Limited (“NAB”). All rights reserved.
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.

Navigating turbulent times in the share market

Tue, 22 Apr 2025 17:05:00 GMT

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

i Warren Buffett: The Truth About Stock Investing

ii Bloomberg Billionaires Index – Warren Buffett

iii, v, vi Vanguard Index Chart | Vanguard Australi a Personal Investor

iv The Latest Median Property Pr ices in Australian Cities

Home is where the super is for many Australians

Tue, 22 Apr 2025 17:05:00 GMT

More Australians are upsizing their super by downsizing their home.

Home ownership is still the great Australian dream for many people.

But, for a growing number of older Australians, it is also about selling the home eventually so they can use some of the proceeds to top up their superannuation balance and help make their retirement plans a reality.

That’s borne out by recent Australian Tax Office (ATO) data showing almost 13,000 individuals collectively added around $3.38 billion into their super in the 2023-24 financial year by taking advantage of the federal “downsizer measure”.

The downsizer measure allows eligible individuals aged 55 and over to contribute up to $300,000 from the proceeds of the sale (or part sale) of their principal place of residence into their super fund. Couples can each contribute $300,000.

The ATO, which administers the measure, has an extensive list of eligibility criteria (and exclusions) on its website . They include a requirement that a home must have been owned for 10 years or more prior to selling, with ownership calculated from the date of settlement when it was purchased.

A downsizer contribution is a personal-post-tax super contribution but doesn’t count towards your non-concessional contribution cap. It will be reflected in your total superannuation balance when it is next calculated (on 30 June). Downsizer contributions cannot be greater than the proceeds from the sale or part sale of a home.

A key advantage of making a downsizer contribution is that once some of the freed-up cash from a home sale is in super, any income earned on that money after the age of 60 is tax-free in pension phase.

Since the measure was rolled out in the 2018-19 financial year, the ATO’s data shows that around 78,600 Australians had used the proceeds of home sales by the end of 2023-24 to contribute a total of $19.88 billion into super funds.

The fear of running out of money in retirement remains a key issue for many Australians.

Moving from home to retirement

The ATO’s 2023-24 data breaks down the use of the downsizer measure by age bands, and it’s evident that the number of people “selling for super” started to accelerate after the age of 60.

While downsizer contributions can be made from 55 onwards, the numbers are much lower in the 55 to 59 age band.

The peak age band in the last financial year was between 65 and 69, with 2,800 individuals downsizing to contribute just under $740 million into their super.

The next-biggest age band was from 70 to 74, with a further 2,600 individuals contributing $657.3 million.

2023-24 downsizer numbers by age

Source: Australian Taxation Office

Note: Individual contributor numbers are rounded to the nearest 100, or the nearest 5 for individuals aged 95 and older. Contribution values are rounded to the nearest $100,000.

Where downsizers are downsizing

The ATO data also breaks down the location of downsizer measure users, and it’s not surprising that the numbers are higher in the more populous states.

NSW, Victoria and Queensland make up the top three regions for downsizer contributions by percentage of individuals, although the average super contribution sizes across states and territories have been relatively similar at around $250,000 per individual.

NSW accounted for 4,300 downsizer contributions in 2023-24, and a total contributions value of $1.17 billion.

Victoria was second, with 3,100 contributions and a total contributions value of $807 million, while Queensland accounted for 2,900 contributions and a total contributions value of $737.7 million.

2023-24 downsizer location demographics

Source: Australian Taxation Office

Note: The total number of individuals is rounded to the nearest 100, or the nearest 5 for the Northern Territory. Contribution values are rounded to the nearest $100,000.

Opening the door for retirees

The fear of running out of money in retirement remains a key issue for many Australians.

How Australia Retires research shows just how real, and prevalent, that fear is among many Australians who are still working, or who have already retired.

Australia’s downsizer measure has effectively opened the door for many Australians to strengthen their super balance (either before retiring or after retirement).

People considering making a home downsizer contribution into super – especially those already receiving a partial or full government Age Pension – should do proper due diligence.

It’s important to seek out professional financial advice, especially with respect to social security means testing. If you have any questions, feel free to reach out to us.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

Types of super funds

Tue, 15 Apr 2025 17:01:00 GMT

When you start a job, you can usually choose a super fund or let your employer choose for you.

Understanding the basics can help you work out what kind of account to get and whether it’s right for you.

If you want to choose your own — or change your account — there are plenty of options.

MySuper or choice super

In Australia, your super can be paid into a MySuper or choice super account. Check with your super fund if you’re not sure what type of account you have or you can speak to us.

MySuper

Most super funds offer a simple, low-fee option, called a MySuper product. This is the default product your fund will use for you unless you choose a different option.

MySuper accounts generally have either a ‘single diversified’ or a ‘lifecycle’ investment option.

Even if you’ve already chosen a super investment option within your existing fund, you can choose to move to a MySuper option.

Choice super

Super funds also offer a range of ways to invest your money in super, including pre-mixed investment options in assets such as shares and property.

These investment options are called ‘choice’ super products. You actively make a choice about where your super is invested, rather than going with the default MySuper option.

Accumulation or defined benefit funds

There are two kinds of super funds: accumulation funds and defined benefit funds. Most super funds are accumulation funds.

Accumulation funds

In an accumulation fund, your money grows or ‘accumulates’ over time.

The value of your super depends on:

the money that you and your employers put in (known as super contributions), and
the investment return generated by the fund after fees and costs.

Defined benefit funds

In a defined benefit fund, your retirement benefit is determined by a formula instead of being based on investment return.

Most defined benefit funds are corporate or public sector funds. Many are now closed to new members.

Typically, your benefit is calculated using:

the money put in by you and your employer
your average salary over the last few years before you retire
the number of years you worked for your employer

If you’re thinking about leaving a defined benefit fund, get professional advice – speak to us. Some funds are very generous, so make sure you’ll be better off. If you leave, you can’t rejoin.

It is important to speak to us before making a decision to ensure the super fund you choose is right for you.

Super fund categories

Most super funds fall into one of the following categories: retail, industry, public sector or corporate.

Retail super funds

Retail funds are usually run by banks or investment companies. Anyone can join.

Main features:

They often have a wide range of investment options.
Most vary in cost, but many offer a low-cost or MySuper alternative.

Industry super funds

Anyone can join the bigger industry funds. Smaller funds may only be open to people working in a certain industry, for example, health.

Main features:

Most industry funds are accumulation funds. A few older industry funds still have defined benefit members.
They generally vary in cost, and most offer MySuper products.

Public sector super funds

Public sector funds are for government employees.

Main features:

They usually have a modest range of investment choices.
Newer members are usually in an accumulation fund. Many long-term members have defined benefits.
They generally have low fees and some offer MySuper products.
Profits are put back into the fund.

Corporate super funds

A corporate fund is arranged by an employer for their employees.

Some large companies operate a corporate fund under a board of trustees who they appoint. Other corporate funds are operated by a retail or industry fund, but are only available to that company’s employees.

Main features:

Those managed by a bigger fund may offer a wider range of investment options.
Some older corporate funds have defined benefit members, but most others are accumulation funds.
They are generally low to medium cost funds for large employers, but may be high cost for small employers.
Corporate funds run by the employer or an industry fund will usually return all profits to members. Those run by retail funds will keep some profits.

Self-managed super funds

To weigh up the pros and cons of managing your own super fund, see self-managed super funds or speak to us.

Building your nest egg for retirement is a long term strategy and should be given careful consideration. We are here to help you understand which super fund is best for your long term retirement goals.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/how-super-works/types-of-super-funds
Important note: 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. Past performance is not a reliable guide to future returns.
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.

Achieving home-buying harmony

Tue, 15 Apr 2025 17:01:00 GMT

Buying a home is one of the most exciting milestones in life, but when you’re a couple working together to save for that all-important deposit, it can really put the relationship under pressure.

It’s rare for couples to see eye to eye on every financial detail. You will most likely have different spending habits, levels of income, and priorities, and that’s perfectly normal. But if you’re not careful, those differences can lead to stress and conflict. And let’s face it—nothing kills romance faster than arguments about money, so here are some things to consider to keep things harmonious.

Getting on the same page

One of the biggest sources of tension when buying a home together is not having clear, mutual goals. So, before diving into the savings process, have an open conversation about why you are doing this and jointly agree on your goals in terms of the property you both envision, your timeframe to buy – and your budget.

Setting goals together ensures you’re both working toward the same dream and provides a powerful incentive to stay on track.

Acknowledge and respect differences in income

Most couples don’t earn the same amount, and this can create a sense of imbalance when saving for a home deposit, especially if one partner is contributing a larger portion of the savings. The key here is to approach it with understanding and respect.

If one of you earns significantly more than the other, have a frank discussion about how to approach saving. While it might feel fair to equally split the deposit, that’s not always realistic and you may wish to consider contributing based on a percentage of your income.

The goal is to make sure that both partners feel they are contributing fairly, even if the contributions aren’t equal in dollar terms. Keep the conversation open and revisit it regularly to ensure both partners are comfortable with the arrangements. Now you can create a budget.

Set a budget that works for both of you

Budgeting is a critical part of the saving process, and while it can be challenging, it doesn’t have to cause tension if you approach it as a team. The first step is to sit down and create a budget that works for both of you.

Understand where your money is currently going. Review your regular expenses (like bills and groceries), and discretionary spending (like entertainment or dining out) and work out how much you can realistically save each month towards your home deposit. If it’s tight, consider cutting back on non-essential spending, but make sure both of you are comfortable with the level of sacrifice required.

Be flexible and ready to adjust

Life doesn’t always go to plan, and sometimes unexpected events or changes in circumstances can impact your ability to save. If something comes up—a job loss, a health issue, or an unexpected bill—don’t panic.

Having an emergency fund or backup plan can also help ease the pressure. Discuss ways to handle any changes. Stay flexible and be willing to adjust your plan as needed.

Celebrate your progress

Saving for a home deposit is a long-term goal, and it’s common to feel as though it’s taking forever. But every little milestone counts, and taking time to celebrate those wins, no matter how small, can help keep momentum going. Whether it’s reaching your first $5,000 in savings or sticking to the budget for a whole month, acknowledging your progress is important.

Celebrating together also reminds you why you’re working so hard in the first place—so you can have a place to call your own. It doesn’t have to be an expensive celebration; a simple picnic in the park or catching a movie can mark the occasion.

Keep communication open

One of the most significant things you can do to avoid conflict is to communicate regularly and openly. It’s easy to build up frustration and talking about issues sooner rather than later can avoid them growing into a source of conflict.

Money is often an emotional subject, so keep the tone of these discussions calm and supportive, remembering you’re both in this together.

At the end of the day, your relationship is the foundation—your home is just the physical space you’ll share. So, keep the laughter, love, and affection flowing as you navigate this journey together.

Independent living in retirement communities

Tue, 15 Apr 2025 17:01:00 GMT

Key points:

There are many benefits to moving into independent living
You have many different types of retirement villages to choose from
Retirement villages provide a range of lifestyle and village facilities
Many people look at retirement villages as a way to downsize

Benefits of independent living

For people with an active lifestyle this type of independent accommodation offers the freedom of living in their own unit or apartment, within the safety and security of a retirement community.

Independent living is buying or renting a home within a housing development inhabited by a senior community of like minded people, who want to remain in a home of their own rather than entering a residential aged care facility.

You don’t have to be retired to move into independent living, but you do have to be at least 55 years old.

Retirement villages – which type is right for you?

Options for independent living come in many shapes and sizes, from large communities with hundreds of villas to boutique sized villages with only a handful of units or retirement apartments in a ‘vertical village’.

The most common type of independent living is retirement villages. There are two types of retirement villages in Australia which you can either buy a house in or rent in.

Resident-funded villages are owned and operated by the private sector or a not-for-profit organisation to produce a profit or surplus and are funded through the payments or residents.

Donor-funded villages are usually owned and operated by not-for-profit organisations and entry is generally restricted to those who need it most.

There are also two types of retirement properties – villas and Independent Living Units (ILUs). These properties generally range from one bedroom to four and vary from high or medium-rise complexes to semi-detached buildings.

Each of these housing developments comes with not only an independent home for you to live in, but also a range of services and facilities you can access if you choose.

The benefits of a home in an independent living community relate to your ability to remain living in a full house, apartment or unit and keep your independence, but live in a safer environment than a regular house in the broader community.

Homes in retirement living complexes are usually better designed to support your mobility, with flat or ramped access, large doorways, grab rails in the bathroom and safe bench heights in the kitchen.

This safety is compounded by the security of living in the tight-knit community, which can be a gated community with onsite security and 24/ emergency call alarms to give you more peace of mind.

Retirement lifestyle and village facilities

Your lifestyle in retirement is an important part of the village which you might choose to live in, and the community’s services and facilities could be the kind of offerings you are looking for which are not as accessible in your current home.

Services in a village may include:

Garden maintenance
Home maintenance
Visiting professionals such as physiotherapists, podiatrists, or other allied health workers
Additional assistance with personal care, meals, laundry, and housework

The kinds of facilities which retirement villages may offer you access to include:

Swimming pool
Lawn bowls greens
Tennis courts
Golf course
Social or common areas, such as barbecue areas
Library or community centre
Entertainment rooms with billiards or table tennis
Rooms for hire for large family gatherings or celebratory events
Caravan or boat parking
Hairdresser
Beauty salon

There are no restrictions on coming and going from your village, in fact visiting local shops, cafes, restaurants and services is often encouraged by the close proximity of villages to important locations.

Many independent living options also give you the opportunity to continue to entertain friends and family, so you can still have a social lifestyle with people outside your retirement community as well.

Independent living options are ideal if you want to downsize and spend less time looking after your property, so that you can spend more time doing social activities or hobbies and just enjoying life.

Downsizing

Downsizing into a retirement village can also give you more time and ability to travel, as your home is more easily looked after while you are away.

The other reason which people downsize into a retirement village is to prepare them for the next stage of their aged care journey, which could be in supported living or residential aged care. Moving into independent living can be a good way to transition into receiving higher levels of care so that the change is not so daunting. And in some retirement villages you have the option to ‘age in place’ which means that you will be able to access additional care and support as you need, without having to move to an aged care home.

To find a retirement village near you search on the Aged Care Guide online directory . Searches can be viewed in lists or in a map format to help you visualise where the villages are located.

Or you can read more on our ‘ Introduction to retirement villages ‘ article.

Moving into a retirement village often takes some big financial decisions and planning for what your future costs may be. It’s important to get independent advice about the decision.

For expert advice on how to arrange your finances to access independent living options, call a financial advisor on 1300 863 216 .

Source:
This article was originally published on https://www.agedcareguide.com.au/information/independent-living-in-retirement-communities . Reproduced with permission of DPS Publishing.
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.

Planning for retirement

Tue, 08 Apr 2025 17:06:00 GMT

Questions to start your retirement planning

Here are a few questions to get your retirement planning underway. Thinking about these might lead you to more questions, but that’s the fun part of the journey.

How much money will you need for your retirement plan?
How long will you likely spend in retirement?
Where will the money come from?
Where will you live when you’re retired?

How much money will you need to retire?

The backbone of an effective financial plan is determining your cash flow based on the type of lifestyle you’d like to live, so your first step would be to do an honest budget.

If you already have a personal or household budget, try updating the information to reflect your predicted spending in retirement. While your work costs will be reduced or even eliminated, you’ll spend more in other areas, for example, investing, medical costs, travel and maybe some ‘adventuring’. If you commit to that plan, the rest of the plan takes care of itself.

You might also like to look into what your entitlements are with an Age Pension or other government subsidies, as these can be a good supplement to help you during retirement.

Budget Planner

This budget calculator is a great way to track your spending. With just a few basic habit tweaks, you’ll find that living within your new budget is achievable. It could be as simple as deciding to put your future first, so that every time you get paid, you’ll invest more or use some that money to reduce your debt – and whatever is left over is your spending money.

Using online resources like MoneySmart you can utilise their range of calculators to help you plan for your retirement goals.

Keep in mind your plan needs to be a long-term one. It’s likely that your spending and your needs will be different in the later years of your retirement to what they are at the start. Your plan will need to evolve and be adaptable.

Where will your money come from?

Age Pension

Once you reach the qualifying age, you may become eligible for a fortnightly Age Pension (subject to asset and income tests). You can find out more from the Department of Human Services .

Superannuation

You could start accessing some of your super as soon as you hit your preservation age . You’ll have to withdraw a minimum amount each year from your super pension account, depending on your age. Unless you have met a full condition of release , you may be limited to how much you can withdraw from your pension each year, and whether or not you can access lump sums.

Regardless of whether you have a self-managed super fund or not, speaking to us about your retirement planning will be beneficial.

Investments

Ideally, soon-to-retire Australians have a diverse range of investments besides their super scheme and the family home. You can never do enough research. Have a look at ASIC’s Moneysmart website , where they provide a summary of retirement, social security benefits and super, among other things.

Where will you live in retirement?

Going further into retirement most likely means your lifestyle will change. But it also offers an opportunity to shift lifestyles to one that better suits that stage of your life. Here are a few common housing choices retirees make.

Downsizing your home

While many Australians have wealth tied up in their family home and some down-size to buy a smaller home to release equity in their home, what you do depends on your own personal circumstances. There are many things to consider before you can do this, including tax implications, Centrelink entitlements and eligibility. It’s important to discuss this with a financial adviser to ensure this is the right strategy for you.

Home sharing

It’s a concept that is becoming increasingly popular, particularly for those who may have lost a spouse. Living with a flatmate means sharing the costs of living such as utilities and rent. It can also be a form of income if you own your home.

Over 55’s or retirement living

This can be a great way to retain your independence, while also becoming part of a community style of living.

Aged care

When things really slowed down and you could use a few extra sets of hands to help you with the day-to-day tasks, aged care can help.

Caravans and RVs

Buying a caravan or RVs are another option for senior living. Whether that’s becoming a resident in an RV park with small lots and community space or travelling across Australia by caravan.

Ultimately, the sooner you start planning, the sooner you’ll be on the way to enjoying the retirement you deserve.

To start your planning your journey to retirement, contact us today.

Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/work/plan-retirement/planning
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2025 National Australia Bank Limited (“NAB”). All rights reserved.
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.

How political events affect the markets

Tue, 08 Apr 2025 17:06:00 GMT

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 an d 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.

i Post-Brexit global equity loss of over $2 trillion worst ever -S&P

ii London Stock Exchange suffers biggest exodus since financial crisis

iii Policy Instability and the Risk-Return Trade-Off | St. Louis Fed

iv Why Financial Markets Are Sensitive to Political Uncertainty

v How Presidential Elections Affect the Stock Market | U.S. Bank

vi 2024 presidential election: U.S. equities surged, then retreated, after Trump’s victory

vii They’ve Been Waiting Years to Go Public. They’re Still Waiting. – The New York Times

viii Statement by the Reserve Bank Board: Monetary Policy Decision | Media Releases | RBA

Identity theft

Tue, 08 Apr 2025 17:06:00 GMT

If your personal information falls into the wrong hands, it can be used to steal your identity.

If you think your identity has been stolen, report it to your bank and change your passwords. You can also contact IDCARE for specialised support.

If identity documents with your Centrelink Customer Reference Number, Medicare or myGov details have been compromised, contact Services Australia Scams and Identity Theft help desk on 1800 941 126, Monday to Friday, 8am to 5pm AEST.

Reports of stolen shares due to identity theft is on the rise. ASIC is warning investors to be on high alert as fraudsters impersonating individuals are transferring or selling their shares without them knowing.

Read the investor alert .

Signs of identity theft

If your identity has been stolen, you may not realise for some time. These are some signs to look out for:

Unusual bills or charges that you don’t recognise appear on your bank statement.
Mail that you’re expecting doesn’t arrive.
You get calls or texts about products and services you’ve never used.
Strange emails appear in your inbox.
A sudden increase in suspicious phone calls, texts or messages through social platforms.

Act fast if your identity is stolen

What to do if you think your identity has been stolen.

Contact your bank

Contact your bank so they can block the account. This will stop a scammer from accessing your money. You may also need to cancel any credit or debit cards linked to your accounts.

Contact IDCARE

IDCARE is Australia and New Zealand’s national identity and cyber support service. They can help you make a plan (for free) to limit the damage of identity theft. Call 1800 595 160 or visit the IDCARE website .

Change your passwords

If someone has stolen your identity, they may know your passwords. Change your passwords straight away. Think about all of your online accounts, including social media and other bank accounts.

Report the fraud

If you think your personal information has been used, you can report it to the police via ReportCyber .

Report it to the relevant websites

If you think someone has hacked into your online accounts, report it to the relevant websites.

Alert family and friends

If someone has taken over your social media accounts or your email address, alert your family and friends. Tell them to block the account.

Report it to Scamwatch

Scamwatch , run by the National Anti-Scam Centre (NASC), collects data about scams in Australia. Your report helps Scamwatch raise awareness about how to recognise, avoid and report scams. NASC also shares intelligence and works with government, law enforcement and the private sector to disrupt and prevent scams.

Report a scam to Scamwatch .

Protect yourself from identify fraud

Simple steps you can take to avoid identity theft.

Use strong passwords

Make sure your passwords are long and contain a mix of numbers, symbols, capital letters and lowercase letters. Strong passwords make it harder for people to hack into your accounts.

The Australian Cyber Security Centre (ACSC) has some useful tips on creating a strong password or passphrase .

Shred your documents

Letters from your bank, super fund and employer can all contain personal details scammers can use to steal your identity. Shred these kinds of letters before you throw them out.

Use public computers with caution

If you use a public computer, for example, at a library, make sure you clear your internet history and log out of your accounts.

Be careful on social media

Be aware of what you post on social media, particularly if your profile is public. Scammers can find out where you live, work and visit through your posts.

Use security software on your computer

Use virus protection software to help stop hackers from accessing your information. This software can help protect you if you click on a suspicious link or visit a fake website.

Monitor your bank transactions

Check your bank statements and online accounts regularly for unusual transactions. If you spot something unusual, check it with your bank and find out if you need to act.

Request a copy of your credit report

Check your credit report for any unusual or incorrect debts, loans or credit applications. If you suspect fraud, you can request a temporary ban . Find out how to get a free copy of your credit report .

Secure your mail

Put a lock on your street mailbox so that people can’t steal your mail.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/online-safety/identity-theft
Important note: 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. Past performance is not a reliable guide to future returns.
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.

The generation redefining aging

Tue, 01 Apr 2025 16:00:00 GMT

As we advance into the 21st century, the concept of aging is undergoing a transformation, largely thanks to a new generation of “oldies” who don’t feel old – and are reframing what it means to be getting on in years.

Traditionally, aging has been associated with decline, frailty, and a sense of irrelevance. However, today’s generation is challenging societal norms and expectations while embracing a more vibrant and empowered perspective on life in later years.

A generational shift

Never a generation to just accept the way things are, Baby Boomers and even Gen X, laid the groundwork for what it means to live authentically. This is the generation that redefined adolescence, invented pop culture, challenged inequality, and protested when they saw things they wanted to change.

So, it’s no surprise that as they age, they’re also redefining what growing older looks like. The mantra “60 is the new 40” isn’t just a catchy phrase; it’s a way of life for many in this generation. They’re proving that age is merely a number and that it’s perfectly acceptable to keep living life to the fullest – no matter the decade.

Age is just a number – who’s counting?

Gone are the days when turning 60 felt like a one-way ticket to the rocking chair. Today, many who have had a few milestone birthdays are living life with the enthusiasm of a kid at an amusement park, and it’s reflected in improved longevity and better health outcomes.

Science says we all have a chronological age (the actual years on the clock) and a cognitive age (how old you feel). It’s been found that those who have a younger cognitive age have improved health, higher life satisfaction, greater activity levels, and more positive attitudes toward ageing than those who have an older cognitive age – regardless of their chronological ages. ⁱ

Another study conducted an experiment with a group of elderly men – taking them back to where they lived in their youth and treating them as the young person they were back then. Compared to the control group, those who mentally went ‘back in time’ showed improved posture, dexterity and physical appearance. Even their vision improved. ⁱⁱ

Embracing longevity and vitality

It’s not just about your mindset though. One of the most significant shifts in how we view aging is the increased focus on health and well-being along with the average life expectancy. As a society, our overall health is improving with the average life expectancy, which for males is 81.1 years and for females is 85.1 years. ⁱⁱⁱ

Nowadays, staying healthy is not just about dodging the doctor; it’s about thriving! With an abundance of information on nutrition and fitness, today’s older adults are more informed than ever. Many are embracing a proactive approach to aging, with lifestyle tweaks, focusing on mental health, mindfulness, and physical fitness.

Lifelong learning and personal growth

Education is another area where the perception of aging is evolving. Gone are the days when education was seen as a one-and-done deal. Today, many individuals see learning as a lifelong journey and the availability of online courses, workshops, and community programs has made it easier for people to pursue new interests and skills at any age.

This focus on lifelong learning not only enriches individual lives but also has broader benefits. Older adults are increasingly pursuing new careers, starting businesses, or volunteering in their communities. They are leveraging their experiences to make meaningful contributions, proving that age does not limit one’s potential for achievement.

Challenging stereotypes and embracing authenticity

Despite these positive changes, ageism remains a significant societal issue. Stereotypes about aging can limit opportunities for older adults and perpetuate harmful narratives. However, today’s generation is actively working to combat ageism and promote a more inclusive view.

One of the most exciting parts of this shift is the emphasis on individuality. Whether it’s starting a new trend, or speaking out about causes we care about, it’s about showing the world that aging doesn’t mean fading into the background. Instead, it’s about standing out and living well.

None of us can hold back the years but this redefined perspective on aging encourages us to view our later years as a time for growth, exploration, and fulfillment. As society evolves, it’s crucial to support and amplify this message, ensuring that aging is embraced as a vital and dynamic part of life and fostering a culture that values every stage of life.

Forget the rocking chairs; the golden oldies are here to live boldly, laugh heartily, and inspire others along the way.

i Marketing to Seniors: Age Really is a State of Mind |SMU

ii What if Age Is Nothing but a Mind-Set? | NY Times

iii Life expectancy, 2021 – 2023 | Australian Bureau of Statistics

Granny flats: tax traps and tips

Tue, 01 Apr 2025 16:00:00 GMT

With more older Australians looking to downsize and younger generations looking to get a foot on the property ladder, building a granny flat or a second dwelling in your backyard has become a more affordable solution.

In 2023, CoreLogic analysis of residential properties in Sydney, Melbourne and Brisbane found more than 655,000 sites suitable for constructing a granny flat. ⁱ

It has become such a popular option that there are now a host of businesses providing modular buildings as an alternative to designing and building your own.

Before taking the leap, make sure you have checked out local council regulations, restrictions and permit costs. Rules vary from council to council and usually include restrictions on the size and location.

Tax implications

It’s also important to know there are potential tax consequences – particularly capital gains tax (CGT).

While, for some, a granny flat may be considered a secondary dwelling on a property, to be eligible for a CGT exemption, there needs to be a written agreement giving someone the right to occupy a property for life. ⁱⁱ

The agreement can be entered into with any party – including family and friends – and will be exempt from CGT, provided the person with the ‘granny flat interest’ has reached pension age, or requires assistance with their day-to-day activities because of a disability.

Granny flat or investment property?

There are important differences between a granny flat arrangement and building a secondary dwelling on your property as an investment or renting out a room in your home.

A second home on a property that is used for short or long-term rental purposes is considered a commercial arrangement and the rent you receive is assessable income, on which you pay income tax on at your marginal tax rate.

Like most income-producing activities, you are entitled to claim the normal expense deductions against the rental income.

Granny flat arrangements, on the other hand, must not be a commercial arrangement.

Capital gains

Capital gain can be an issue that needs to be considered when setting up a granny flat arrangement. If you don’t follow the rules, you may find yourself with an unexpected tax bill when you eventually sell your home.

Usually, a granny flat arrangement is exempt from CGT provided it is not commercial in nature.

This means if the person living in the granny flat is required to make payments (such as rent) at a market rate, CGT will apply. If the individual only contributes to ongoing household costs (such as electricity and water) however, the ATO is unlikely to consider it a commercial arrangement.

To qualify for the CGT exemption, the property owner must be an individual, one or more individuals must have an eligible granny flat interest in the property, and both parties must have entered into a written and binding granny flat arrangement.

The CGT exemption only applies to creating, changing or terminating a granny flat arrangement.

Other CGT events unrelated to a granny flat arrangement, or outside the arrangement, are subject to normal CGT rules and may be liable for CGT. For example, the sale of a property previously used in a now terminated granny flat arrangement is still subject to the normal CGT rules.

Tips for a successful arrangement

While adding another dwelling to your property may increase the value of your home, it’s essential to get all the parties together to consider possible future scenarios before the written agreement is signed to avoid any potential problems further down the track.

The agreement should cover everyone involved in the arrangement, the circumstances in which the agreement can be varied or terminated and what happens if this situation arises.

It’s also sensible to discuss how any problems or financial conflicts will be resolved and to seek professional legal advice before signing.

We can help explain the tax rules if you’re interested in setting up a granny flat arrangement, so call our office today.

i Untapped granny flat potential in largest capitals could boost housing supply | CoreLogic Australia

ii Granny flat arrangements and CGT | Australian Taxation Office

You may be owed money. Here’s how to check

Tue, 01 Apr 2025 16:00:00 GMT

Holidays and gift giving can leave you a little short of cash so it might be cheering to learn that billions of dollars is being held by various government agencies just waiting to be claimed by the rightful owners.

The biggest pot is lost superannuation. The Australian Taxation Office (ATO) is holding more than $17.8 billion worth of super for fund members who have become uncontactable. ⁱ

Next, there is more than $2.3 billion in money from bank accounts and life insurance policies that has not been claimed for more than seven years. These funds are administered by the Australian Securities & Investments Commission (ASIC). ⁱⁱ

Meanwhile, there is more than $241 million in unclaimed Medicare benefits held by Services Australia. In this case, the patients haven’t provided current bank details to Medicare. ⁱⁱⁱ

Finally, all state and territory governments are holding unclaimed money from many different sources including deceased estates, share dividends, salaries and wages, cheques, trust money, overpayments and proceeds of sales.

It is important to know that searching the various government databases is free. It may take some time and involve a search for old paperwork to prove you once held an account, but anyone can achieve it. Beware of businesses that search the databases and then get in touch to offer their services for a fee.

Are you missing super?

It can be easy to lose track of super if you have changed jobs several times and your employers have paid your compulsory super into different funds.

You can end up with a number of super accounts with small amounts in each. The ATO says almost four million people have more than one account. ^iv

The ATO has come up with a “ super health check ” to help you search for any lost accounts and to update your contact details. You can access this tool here.

The health check also allows you to make sure your employer contributions are being made as expected. The ATO has ramped up its audits and reviews of employers to check that compulsory super is being paid to employees.

It says that, while more than 92 per cent of super entitlements are paid without ATO intervention, in the past year alone it has tracked down $932 million of super owed but unpaid to 797,000 employees. ^v

Employers need to pay super in full, on time, and to the right fund, each quarter by the 28th day of October, January, April and July, the ATO says.

How to find money in old accounts

Tracking down long forgotten bank accounts, shares, investments and life insurance policies is possible with ASIC’s simple unclaimed money tool .

Enter your name in the search and keep trying with variations including initials and last name, first and last name and all names.

If you find a record that appears familiar you can lodge a claim using proof that connects you to the account mentioned. ASIC says you can expect a response within 60 days.

Don’t forget to check state and territory governments’ websites for unclaimed money from a host of other sources. Sometimes funds can be found in unexpected places. For example, missing share dividends may be lodged with an agency in the state in which the company is based. You can see a list of the agencies’ websites here.

Finding your Medicare benefits

If you are not receiving the Medicare benefits you’re entitled to, it is likely that your bank account details are either not lodged with Medicare or they are incorrect.

You’ll need to set up a myGov account then link your Medicare account. From there you can check that your details are correct.

It may take a bit of time to find your information and track down proof of old accounts, but it could pay off with an unexpected windfall.

i Total lost (fund-held) and ATO-held super | Australian Taxation Office

ii Unclaimed money | ASIC

iii Check now: Aussies owed $241 million in unpaid Medicare benefits. | Department of Social Services Ministers

iv Trend towards single accounts | Australian Taxation Office

v Super action sees over $900 million super returned | Australian Taxation Office

Selling your investment property? Watch out for tax

Tue, 25 Mar 2025 16:09:00 GMT

If you are considering disposing of a property, it’s important to understand the implications so that there are no surprises when your tax bill arrives.

As with most investment assets, when you dispose of an investment property generally you are liable for capital gains tax. Capital gains tax (CGT) is levied when you make a profit on selling and is part of your income tax, rather than a separate tax. ⁱ

When you dispose of an investment asset, your capital gains and losses must be reported in your tax return. The capital gain or loss is the difference between what it cost you to obtain and improve the property (the cost base) and the amount you receive when you dispose of it. ⁱⁱ

The CGT event is triggered when you enter into the sales contract, not when you settle on the property.

Capital gains must be included in your tax return for the income year the property is sold, while capital losses can be carried forward and used in future years. ⁱⁱⁱ

Under the 6-year rule, you may be entitled to a part or full main residence exemption if you lived in the investment property before renting it out. This rule allows you to continue treating a property as your main residence for up to six years if you use it to produce income. ^iv

Other taxes to check before selling

In most situations, you are not required to add goods and services tax (GST) to the sale price when selling an investment property.

GST does, however, need to be applied to the sale of newly built and redeveloped properties. This may apply even if you are not a business. ^v

In some states (such as NSW ), land tax is levied on investment properties over a certain value, so it’s important to ensure you pay any land tax bills prior to selling.

How CGT works

When it comes to CGT, you pay tax on your net capital gains, which is your total capital gains less any capital losses less any discount you are entitled to on your gains. ^vi

An important factor in the CGT calculation is when you purchased the investment property and how long you have held it.

If you sell within the first year of ownership, 100 per cent of your capital gain will be subject to CGT. If you sell after 12 months only 50 per cent is subject to CGT. For example, if you sell your property two months after purchase and make a capital gain of $10,000, the entire $10,000 is subject to CGT, but if it’s sold after the first year, only $5,000 is subject to CGT.

Property acquired before 20 September 1985 is exempt from CGT as this was the introduction date for CGT.

Calculating your capital gain or loss

Correctly calculating your capital gain or loss requires you to identify all the legitimate expenses contributing to your property’s cost base.

This usually includes items such as the price paid for the property, costs of transfer, stamp duty and selling costs (such as advertising, accounting and agent’s fees).

You can also include the cost of owning the CGT asset (such as rates, land taxes and insurance premiums), but you are not permitted to include amounts already claimed as a deduction (such as depreciation and capital works).

If you acquired your property before 21 September 1999, you can index its cost base for inflation to reduce your capital gain. ^vii

For more information about the tax implications of selling your investment property, call our office today.

i What is capital gains tax? | Australian Taxation Office (ato.gov.au)

ii Cost base of assets | Australian Taxation Office (ato.gov.au)

iii CGT when selling your rental property | Australian Taxation Office (ato.gov.au)

iv Treating former home as main residence | Australian Taxation Office (ato.gov.au)

v GST and property | Australian Taxation Office (ato.gov.au)

vi Calculating your CGT | Australian Taxation Office (ato.gov.au)

vii Indexing the cost base | Australian Taxation Office (ato.gov.au)

Retiring with debt? Experts explain downsizing, using super for your mortgage, and pension eligibility

Tue, 25 Mar 2025 16:09:00 GMT

About 36% of homeowners still have a mortgage when they retire, up from 23% a decade ago.

This increase in mortgage debt is due to soaring property prices, changes in retirement ages and easy access to drawdown equity loans (where you use your home as security to get a loan, which can be used to fund travel, medical costs and other expenses).

So, what are the options for homeowners who carry debt into retirement?

Option 1: keeping the home and the debt

If you keep the family home in retirement, you get to own a property and can still receive the age pension .

For example: Jackie has a home worth A$2 million with a $200,000 mortgage. She also has $800,000 in superannuation. She is 67 but is not eligible for the age pension because her assessable assets – her super – is above the $695,500 cut off.

If Jackie takes $200,000 from her super and repays the outstanding mortgage debt, she will save on interest and principal repayments for the next ten years. She will also reduce her assessable assets by $200,000. This makes her eligible for a part pension.

So while Jackie has less super, she gets to receive a pension and gets all the subsidies associated with being a pensioner.

Option 2: downsizing to clear the debt

Downsizing can extinguish any remaining debt, and can free up money for holidays, restaurants and the good life in retirement. It also enables a move to a more age-friendly home or apartment.

And the government does provide a superannuation incentive via the downsizing contribution .

This allows homeowners over 55 who have lived in their home for more than ten years to make a one-off contribution of $300,000 (singles) and $600,000 (couples) to their super, using money from the sale of their home.

But when a person reaches pension age, currently 67, any money in super will be included in the government’s assessment of your financial assets and income. It could mean you don’t qualify for a pension or pensioner subsidies.

Of the approximately 2.6 million who receive a part or full the age pension, only 78,000 people have taken up this initiative. That begs the question if this option really does create a true financial downsizing incentive.

Think again of Jackie, the woman with the $2 million home and the $200,000 in mortgage debt. Say she decides to sell her home and move to a smaller house close to family and friends. This will incur about $40,000 in selling and marketing fees, and stamp duty of around $62,000 on her new $1.4 million apartment.

Downsizing leaves her with $1.1 million in financial assets (after transaction costs), which means that Jackie is not eligible for the pension.

While she’ll be able to fund a comfortable lifestyle, this decision to downsize may not be as attractive as keeping the house.

The decision to sell and move has cost her an extra $100,000 in transaction costs and her pension.

So, people need to think carefully about downsizing. It can allow people to move closer to children, grandchildren, and the services they need – but these must be balanced against the financial implications.

What about renters?

Paying market rent while on a fixed income can be very hard, so renting is a challenge for retirees.

According to the 2021 census , women aged 55-64 and those over 65 are among the fastest-growing groups experiencing homelessness.

The good news is many profit and not-for-profit retirement communities provide rental models and discounted entry contributions to residents with limited means (but there are often waiting lists).

Retirement village residents may also be eligible for rent assistance depending on their circumstances.

Rent assistance is an extra $5,751 per year in social security benefits and provides extra financial support to eligible age pension recipients .

Retirement communities provide vulnerable older Australians a unique opportunity to move into a community under a leasehold or licence agreement. More than 260,000 senior Australians live in about 2,500 retirement communities across the country.

While a retirement village may not be the first option for many retirees, they can provide affordable accommodation.

Making the best choice

Navigating housing decisions as you approach retirement means balancing financial, emotional, and lifestyle considerations.

Homeowners retiring with a mortgage face a choice: keep their home or downsize to alleviate debt.

Keeping the home and accessing super to pay the outstanding debt improves cash flow and allows you to keep your biggest asset.

Downsizing helps eliminate debt and boosts the super balance, but comes with extra transaction costs (and you may end up with less pension, or none at all).

Seeking professional financial advice is crucial, and ensure they are a registered financial advisor .

Source: https://theconversation.com/retiring-with-debt-experts-explain-downsizing-using-super-for-your-

mortgage-and-pension-eligibility-240679

Crypto assets

Mon, 24 Mar 2025 16:09:00 GMT

Crypto-assets (crypto) include assets described as coins, tokens or sometimes cryptocurrencies. They digitally represent your ownership of a valuable thing or rights to something. They may or may not be backed by physical assets.

Crypto is a high-risk investment. The value of crypto is very volatile, often fluctuating by huge amounts within a short period.

You must be prepared to lose what you invest with crypto-assets and be wary of scammers.

How crypto works

What is crypto

Crypto-assets (crypto) describe an asset class that includes cryptocurrency, crypto or digital tokens and ‘coins’. It does not exist physically as coins or notes, but as digital tokens stored in a digital “wallet”. These digital tokens rely on cryptography and technology such as blockchain for security and other features.

The Reserve Bank of Australia’s website explains how crypto and blockchain technology (including mining) works .

Crypto can be used for payments, to execute automated contracts, and run programs. Anyone can create a crypto-asset , and there are estimated to be millions in circulation.

Why crypto is so volatile

The price of crypto can fluctuate at extreme levels often based solely on market speculation. Factors that can influence the price of crypto include:

media focus
public announcements
individuals with large amounts of a crypto-asset who promote or influence it through social media

So if you buy crypto-assets, be prepared to lose everything that you put in.

How crypto is used

Crypto assets were first created as a digital alternative to money, but they are not a currency in the normal sense. Some businesses accept crypto as payment for goods and services. Some ‘ATMs’ let you withdraw it as physical money.

Crypto is not legal tender in Australia and is not widely accepted as payment. Most people don’t use it for everyday transactions. It is not the sort of investment to use to build your savings.

Once you invest in crypto there may be no regulatory restrictions on how your funds are used and quite often, where they go. In some cases, your funds may be used for other investments, such as loans. This may jeopardise your investment.

Buying and storing crypto

You can buy or sell crypto on a trading platform using money. Or buy or sell it directly.

Crypto is kept in a unique digital or software wallet (hot) or hardware (cold) wallet. Each wallet has private keys (unique codes) that authorise transactions on the blockchain network.

A hardware wallet stores these private keys on a secure device not connected to the internet. This can protect the wallet from hackers.

A software wallet is held by an individual or by a crypto trading platform on your behalf. This can simplify buying, selling and storing crypto.

Types of crypto-assets

Each crypto-asset has different features. Most were not created to be investments.

There are no universally defined categories of crypto-assets. Some common types are listed below, but this does not cover them all. New cryptos are created all the time, but many aren’t well structured and don’t last.

Native tokens

What are they

These are the assets that make the specific blockchain work. They are designed to act as a medium of exchange within the crypto ecosystem, with transfers enabled on blockchains. These can have no intrinsic value and are only worth what people are willing to pay for them, but they derive their value from the demand for the use of the blockchain.

Examples include: BTC, ETH, Litecoin

Stablecoins

What are they

A ‘Stablecoin’ is a marketing term for crypto that aims to maintain a stable value relative to a specified asset, or basket of assets.

Many aim to track the value of a government issued currency (for example, the AUD or USD). Some track other assets such as gold, equities, bonds or other crypto.

Stablecoins try to stabilise their market value by:

being physically backed 1-for-1 by an external asset, such as government-issued currency, gold or securities
being physically backed by a variety of assets where the value of these assets is intended to be greater than the value of the Stablecoin on issue
using algorithms to control the available demand and supply of the asset, such as minting additional assets or adjusting an interest rate for holding the asset

Examples include: Tether, USDC, DAI

Non-Fungible Tokens (NFTs)

What are they

NFTs are tokens which record ownership of an object using blockchains. Each NFT is unique (hence they are not ‘fungible’). However, owning an NFT may not give you exclusive rights to the underlying asset.

Examples include: Board Apes, game tokens

DeFi tokens

What are they

These are tokens created through participating in decentralised finance (DeFi) protocols. Each token will have unique features based on the DeFi protocol that it relates to.

Other token types

What are they

There are a broad range of terms for other types of tokens. Some types include:

utility tokens — allow you to undertake certain activities, or perform an action, in a crypto project, such as being exchanged for a service
governance tokens — these allow you to participate in the running of a crypto project
community (or membership) tokens — ownership gives you access to the community

Why investing in crypto is high-risk

Many crypto providers are not currently licensed

Many crypto-asset providers are not licensed at this point in time. This means you may not be protected if the platform fails or is hacked

If a crypto-asset fails, you will most likely lose all the money you put in. In most countries, crypto is not legal tender. You’re only protected to the extent that crypto fits within existing laws.

The value depends largely on popular opinion

Investing in crypto-assets is highly speculative. The market value can fluctuate a lot over short periods of time. It is affected by things like media hype and investor opinion.

The price of unbacked crypto may depend on:

its popularity at a given time (influenced by factors like the number of people using it)
how easy it is to trade or use
the perceived value of the asset
its underlying blockchain technology

Your money could be stolen

Be aware that a hacker can potentially steal the contents of your digital wallet.

Crypto systems allow users to stay relatively anonymous and there is no central data bank. So if a hacker steals your crypto, you have little hope of getting it back.

Using a wallet held offline, a ‘hardware wallet’ or ‘cold storage’, may offer more protection.

Technical complexity

Crypto-assets can be hard to understand.

There is usually no product disclosure statement or prospectus that explains clearly how the crypto works. Developers may issue a ‘whitepaper’ to describe it, but these can vary in format and information.

A crypto-asset’s code may not be available to review. Or it may be written in obscure computing language. The underlying code of the crypto may also change over time.

To access a crypto network, you may need special software and need to know how transaction fees operate. Unfamiliar users run the risk of:

sending a transaction to an incorrect address
over-paying on transaction fees called ‘gas’ (sometimes by thousands of dollars)
not paying enough for a transaction fee (and so losing the fee and transaction)

Crypto scams are common

Scammers use crypto because transactions are not easy to recover and have limited oversight. Money can quickly be sent overseas and is very hard to trace.

Read more about crypto scams and what to watch out for.

Case Study

Rhett is scammed $97,000 by a fake endorsement

Rhett saw an article on a news website about ‘The biggest deal in Shark Tank history, that can make YOU rich in just 7 days! (Seriously)’

The news article was really an advertisement. It took Rhett to a website that included endorsements from Shark Tank judges for Bitcoin trading software. The endorsements were fake.

Rhett was interested in trading bitcoin, so he provided his contact details. Soon, an Account Manager named Max began calling Rhett. Max called often, pressuring Rhett to open a trading account and make a deposit. By depositing between $40,000 and $50,000 upfront, Max promised Rhett he could earn at least $15,000 per month.

Max promised Rhett that the money he deposited would be safe because he would have total control of the account. “It’s more or less moving your money in your left pocket from your right pocket,” Max said. Max promised Rhett that he could withdraw his money whenever he wanted to.

Max eventually convinced Rhett to open an account and deposit $40,000. Rhett started trading bitcoin, but things didn’t go to plan, and Rhett started losing money. Max encouraged Rhett to deposit more money and promised Rhett that he would be able to withdraw the money he needed in a week.

Rhett deposited more money in the hope he could recoup his losses. Rhett ended up depositing and losing a total of $97,000.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/investment-warnings/crypto-assets
Important note: 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. Past performance is not a reliable guide to future returns.
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.

Four timeless principles for investing success

Wed, 19 Mar 2025 17:29:25 GMT

Investing success can mean different things to different people. Being clear on what success means for you is key to mapping out your plan.

Although investing can seem perplexing and complex, success is largely within your control.

Having a tailored investment strategy can go a long way to reducing the stress and noise associated with investment decisions.

Vanguard has four guiding principles designed to help investors focus on what’s important to them and give them the best chance for investment success.

1. Create clear, appropriate investment goals

There is no one-size-fits-all plan for reaching financial objectives. Goals are unique to your situation, preferences, and aspirations.

Identifying and prioritising your financial intentions allows you to focus on what matters most, in an order that works for you. It also helps you decide where you’re willing to compromise.

Once you set and prioritise your goals you can figure out how much—and for how long—you’ll need to save.

The value any portfolio achieves over time is the sum of two elements: savings (the amount you put into your portfolio) and investment returns. Much of the discussion about investment success tends to focus on investment returns, but both elements are crucial in reaching a goal.

Time is a key factor here. For short time horizons, savings—which is within your control—is the driving force in achieving an investment goal. As the time horizon increases, investment returns increase in importance.

Savings and investment returns both contribute to the achievement of any investment goal

Over any given goal horizon, an investment balance is the sum of savings (the amount you put into your investment portfolio) plus the investment returns on the total amount invested.

Notes: The calculation for the contribution of savings and investment returns is as follows: Assuming a 4% real return (after inflation), we calculate how much an investor needs to invest annually to achieve a given investment goal for different time horizons, varying from 0 years (now) to 40 years. Savings represent the amount invested (the principal). Contributions are assumed to be the same every year relative to the year investing begins.

Source: Vanguard

2. Keep a balanced and diversified mix of investments

Shares can be risky, but so is avoiding them. While they can be more volatile in the short run, historically they’ve outperformed cash-equivalent assets in the long run.

Investors can reduce overall portfolio volatility while also safeguarding against unnecessarily large losses by spreading their investments across shares and bonds and among sectors and countries.

An appropriate asset allocation takes into account your risk tolerance—how much volatility you can tolerate in your portfolio—and risk capacity—your ability to withstand a loss in your portfolio (a reflection of your time horizon and cash flow needs).

Factoring in your time horizon and your tolerance for risk can lead to a tailored portfolio that’s suitable to personalised situations.

3. Minimise costs

Market movements and financial returns are hard to predict, but costs are often controllable. The two broad types of costs that you can minimise are (1) taxes and (2) investment costs, which include expense ratios, transaction costs, and sales charges.

Together, these costs cut into investment returns, sometimes significantly. To reduce these expenditures, and help improve returns, you can:

Seek out lower-cost funds. The higher the investment costs, the higher the odds of market underperformance. Lower-cost investment funds have historically outperformed higher-cost investment funds.
Implement tax-advantaged and tax-efficient investment strategies, where available . These strategies could include contributing more concessional contributions into your superannuation, which are taxed at 15%, minimising transaction activity to avoid triggering capital gains tax liabilities, and having a strategic plan for tax-efficient asset location

4. Maintain perspective and long-term discipline

Discipline in investing is the ability to adhere, over time, to an investment plan. It’s natural to want to react to market volatility, but acting on that emotion can lead to an impulsive decision, like panic selling during an unstable market.

Taking a long-term perspective can help you maintain discipline and avoid a potentially harmful emotional move.

Reacting to market volatility can jeopardise returns

What if investors shifted to cash at the bottom of the COVID downturn and stayed there until the market recovered?

Notes: Stocks are represented by the MSCI All Country World Index; bonds are represented by the Bloomberg Global Aggregate Bond Index (USD Hedged). Cash is represented by the Bloomberg U.S. Treasury 1–3 Month U.S. Treasury Bill Index. Returns are in nominal terms.

Sources: Vanguard calculations, using data from Morningstar, Inc.

Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

Staying the course can help increase your chance of success, but so can other actions, like making regular contributions to your portfolio, and increasing them over time.

Other actions that can increase the likelihood of reaching an investment goal including having a consistent plan to rebalance your portfolio, a disciplined spending strategy, and a regularly scheduled date to monitor and review your goals.

Vanguard’s four principles can help you focus on the aspects within you control so you can build tailored plans to help you achieve long-term investing success.

Source: Vanguard January 2024

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™

Important information and general advice warning

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer and the Operator of Vanguard Personal Investor. We have not taken your objectives, financial situation or needs into account when preparing this article so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for any financial product we make available before making any investment decision. Before you make any financial decision regarding Vanguard products, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained at vanguard.com.au free of charge and include a description of who the financial product is appropriate for. You should refer to the TMD before making any investment decisions. You can access our IDPS Guide, PDSs, Prospectus and TMDs at vanguard.com.au or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This article was prepared in good faith and we accept no liability for any errors or omissions.

Getting divorced or separating

Tue, 18 Mar 2025 16:02:00 GMT

The end of a relationship is never easy, but there are steps you can take to help things run more smoothly.

If you’re in crisis or struggling to make ends meet, see urgent help with money . You can get help with food, housing and bills, as well as emotional support.

First steps when you separate

A good first step is to try to agree on practical matters, even if it’s just for the short term. Together, decide:

who will stay in the house and where the other person will live
if you need to change the way you’re paying bills, debts, rent or mortgage
what to do with any joint bank accounts
if you have children, where they’ll live and how they’ll be financially supported

Use the divorce and separation financial checklist

The checklist covers the key steps to take when your relationship breaks down.

Organise your bills and paperwork

When you share your life with someone, you also share your finances. To understand what you own together, start by gathering and sorting all your documents.

This includes personal and financial documents such as your marriage certificate and bank account statements.

This will also help later down the track when you’re working out how to deal with any property and other assets.

Update your accounts

Once you’ve gathered all your shared financial documents, start separating your money. This may also help to avoid any extra debt.

Open a bank account in your name only and have your pay or Centrelink benefits paid into this account. Think about closing joint accounts or credit cards , and updating bills and insurance policies.

Divide your property and assets

Dividing your property and assets when you’re separating can be complicated. Work together to agree to who gets what. This can save you the time, money and effort needed to go through the court system.

Do a financial stocktake

List and value your assets. Include your home, car, furniture, super, investments and joint debts.

Use the net worth calculator

Create a list of all of your assets and liabilities. This will help you understand your current financial position.

Get legal advice

A family lawyer can help you with the separation process. They can help you make a legal settlement so that you don’t have to go to court.

You may also be able to get free legal advice . This can help you with decisions about your assets, debts, children and housing.

If you leave, you don’t lose your right to a share of the house or other property. Victoria Legal Aid has information on your legal rights for dividing property in Australia.

Decide how to care for your children

If you have children together, you’ll need to agree on their care and who pays for what.

Services Australia has information on financial assistance available to parents, including:

Family Relationships Online also has information about the services available for separated families .

Manage your new financial situation

The next step is to work out how to manage your new financial situation.

Do a budget

Your income and expenses are likely to change when your relationship ends. To get a clear picture of where your money comes from and where it goes, do a budget.

Use our budget planner

Keep track of your income and expenses to make sure you have everything covered.

Get some help with your finances

If you’re struggling to manage your financial situation, a financial counsellor can help. They can help you to review your budget and debts and to find ways to improve your situation.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/family-and-relationships/getting-divorced-or-separating
Important note: 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. Past performance is not a reliable guide to future returns.
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.

Turn your financial goals into an investment plan

Tue, 18 Mar 2025 00:54:18 GMT

A well-thought-out investment plan can help you thrive financially as well as protect you from falling into some common behavioural investment traps. But how do you create an investment plan? And where do you start?

Start with financial goals.

Studies show that people are more successful when they set goals for themselves. Whether it be funding your retirement lifestyle, paying education expenses or a must-do holiday, setting specific goals can keep you on track.

You can translate these goals into an investment plan with 4 questions.

1. How much do I need?

You’ll want to have an amount to work toward, so do some research to figure out what your goal will cost. Try and set realistic expectations based on both your current financial situation and future plans.

2. When do I need it?

Most savings goals will have some flexibility, but it’s still a good idea to have a target date in mind. This will hold you accountable—and give you the motivation to stay on track.

For example, your goal could be saving up for a first-home deposit in five years or saving for a comfortable retirement over the next 30 years. This allows you to figure out what percentage return you need to generate annually in order to reach those goals– a definite reality check.

Your goals coupled with the dollar amount you wish to achieve and when you would like to achieve it by can be a powerful motivator for spending and investing discipline.

3. What will it take to meet my deadline?

It’s easy to estimate how much you’ll need to put away to reach your goal by your target date. Just take the total amount you want to save and divide it by the number of months (or weeks, or years—however often you plan to contribute money) between now and your deadline.

Along with understanding your goals, you should also understand what resources you currently have and what constraints there may be:

Your monthly income and your expenses.
How much can you contribute on a regular or periodic basis? While it might seem straightforward, setting a budget and sticking to it is fundamental.
Your attitude to risk.
Everyone has a different approach to investment risk but knowing how much market fluctuations you can withstand means you can choose investments that align with your risk appetite.

Other constraints can include costs of investing, exposure to taxes, liquidity needs and ethical values..

4. How should I invest my money?

Investing can help you achieve your financial goals more quickly. However, the investments you choose should be tailored to your specific situation.

There are numerous investment options, each with its own level of risk and potential return. Understanding these options and how they complement each other can empower you to make well-informed decisions about where to allocate your funds.

Asset allocation refers to the way in which a portfolio is divided between asset classes or investment type, such as growth assets like shares and defensive assets like cash or bonds. This strategy is crucial for determining your portfolio’s long-term performance and can help mitigate volatility.

You can either build your own portfolio of investments or opt for an all-in-one ready-made, diversified portfolio that aligns with your individual risk tolerance.

Finally, decide on monitoring frequency

Periodically monitoring and evaluating a portfolio relative to savings targets, return expectations and long-term objective is an important part of investing. But be careful of over-monitoring and adjusting asset allocations based on short-term market movements.

Your portfolio value will fluctuate daily; it will go up and down by the hour. By deciding at the outset how often you will check your portfolio and rebalance, you can more easily avoid unnecessary stress or the temptation to time the market and day trade.

One of Vanguard’s key principles for investment success is to adopt a long-term view and to stay the course. This means maintaining perspective and sticking to your investment plan, even in periods of market uncertainty.

To help you stay on track, consider exploring Vanguard’s range of Diversified ETFs , which are expertly designed and ready-made to give you access to thousands of Australian and international shares and fixed interest securities through a single ETF investment.

Important Information

Any investment is subject to investment and other known and unknown risks, some of which are beyond the control of Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) , including possible delays in repayment and loss of income and principal invested. Please see the risks section of the PDS for the relevant VIA product for further details. No Vanguard company, nor their directors or officers give any guarantee as to the performance or rate of return of any Vanguard product, amount or timing of distributions, capital growth or taxation consequences of investing in the relevant product.

Succession planning – More than an exit strategy

Tue, 11 Mar 2025 16:00:00 GMT

Although the day may be a long way off, when it comes to exiting your business, the golden rule is to start planning early.

With a detailed succession plan in place, you are the one who gets to decide how – and when – you leave your business.

You also need to ensure the viability of the business does not rely on your profile or name. By planning ahead, you’re able to slowly remove your strong links with the business so that it can function successfully without you.

Current employees and customers need to be locked into the business even if you are no longer going to be involved, otherwise buyers may be reluctant to purchase.

More than an exit strategy

A good succession plan is more than a simple departure blueprint. It should be part of your current business plan and considered when you initially structure your operation. ⁱ

Regularly updating your plan and obtaining a current business valuation helps ensure you are always prepared in the event you need to exit earlier than anticipated.

If you intend to transfer ownership of the business to a family member or employee, your succession planning needs to include decisions such as whether you intend to retain an interest in the business, or ownership of any business-related property.

A strategy for funding your successor’s purchase of the business should also be developed.

Prepare for the unexpected

Unplanned succession events (such as poor health or sudden death), also need to be considered to ensure the business can continue operating with minimal disruption.

One approach that may suit some is to establish a buy-sell agreement in which a partner agrees to sell their interest if specified trigger events (usually death or total and permanent disability) occur, with the other partners agreeing to purchase the interest. These agreements usually outline how the value of the interest will be determined and how it will be transferred, and the payment funded. ⁱⁱ

Buy-sell agreements are generally funded from the proceeds of insurance policies covering each partner, enabling easy repayment of the outgoing partner’s interest in the business.

Take your time

Although internal succession to a family member or employee can be an attractive exit option, transfer of ownership in this fashion usually requires a lengthy timeframe.

Internal succession generally involves a gradual sell down of equity to the new owner and a staged step-down by the original owner from the business.

These arrangements mean you need to ensure your successor has the right skills and capabilities to take over and continue running the business successfully. They may also require you to remain onboard for several years.

Alternatively, you may want an external sale transaction covering the whole business or its assets.

In this case there is usually a faster transition, but the purchaser may still want you to remain with the business for six to 12 months to facilitate a smooth transition.

Preparing for change

Whichever process you select, you will need to invest quite a bit of time before going to market to ensure your business presents as an attractive opportunity to potential purchasers.

Significant issues such as ensuring the current business structure is appropriate need to be addressed. For example, a business held in a family trust will require restructuring prior to any sale. ⁱⁱⁱ

Detailed and accurate information about the business and both its financial and market position need to be compiled. Most potential buyers expect to see financial statements covering at least three financial years.

Prospective purchasers will also expect your employees to be on appropriate employment contracts to ensure they stay on after the sale.

Get good advice

Key to ensuring a smooth exit from your business is getting professional advice early in the process.

We can assist you with preparing your business operations and records and help ensure you are prepared to answer questions or information requests. Issues such as the best tax structure, tax implications of buy-sell agreements and advice on how to take advantage of CGT tax concessions can be reviewed. ^iv We can also provide advice about appropriate pricing for your business, as valuation formulas vary between industries.

If you would like help with developing a succession plan for your business, contact our office today.

i Develop your succession plan | business.gov.au

ii Sale of a going concern | Australian Taxation Office (ato.gov.au)

iii Small business restructure roll-over | Australian Taxation Office (ato.gov.au)

iv Small business CGT concessions | Australian Taxation Office (ato.gov.au)

Investment scams

Tue, 11 Mar 2025 16:00:00 GMT

Be suspicious of anyone offering you easy money. Scammers are skilled at convincing you that the investment is real, the returns are high and the risks are low. There’s always a catch.

If you think you’ve been targeted by scammers, act quickly. For steps to take and where to report a scam, see what to do if you’ve been scammed .

How investment scams work

There are many ways investment scams may appear. Three main examples are:

The investment offer is completely fake.
The scammer is pretending to offer a legitimate investment, but keeps any money given to them.
The scammer says they work for a well-known company that is offering a legitimate investment – but they’re lying.

In any case, the money you ‘invest’ goes straight into the scammer’s bank account and not towards any real investment. It is extremely hard to recover your money if it goes to a scammer based overseas.

Anyone can be scammed, and every scam is different. Scams are often hard to spot and can feel legitimate in the moment. Scammers can use professional-looking websites, advertisements and apps, and impersonate legitimate companies.

Important

Scammers are using deepfake technology to create fake celebrity videos promoting Quantum AI.

Quantum AI is a fake online investment program. It claims to use artificial intelligence (AI) technology and quantum computing to generate high returns for investors. Fake trading results are displayed on a website manipulated by scammers.

If you see a celebrity spruiking an investment, search online to see if the person has posted warnings about being impersonated.

Spot the signs of a deepfake video:

The person speaks with unusual pauses, odd pitches or different accents.
Mouth movements aren’t in time with their speech.
Facial expressions and movements don’t match the speaking tone.
The video is low resolution.

Do not click on any links promoting Quantum AI, or similar scams such as Immediate Edge and Quantum Trade Wave. Learn more about this scam .

How scammers contact you

Scammers can come from anywhere. The most common approaches are:

Unexpected contact – they may contact you by phone, social media, email or text message. They might pretend to be someone you know, such as your bank, financial adviser, fund manager, or even a friend. They’ll offer guaranteed or unrealistic high returns on an investment.
Fake investment trading – they use real investment trading platforms to set up fake accounts. Then they will help you trade via an account manager or offer to trade on your behalf. Once you deposit your money it’s gone for good.
Fake investment comparison websites – scammers will get you to enter your personal information into their fake website, then contact you to sell their scam investment.
Websites with fake ASIC endorsements – slick websites with fake investing information and performance figures. They may claim to be endorsed or approved by ASIC, and may show the ASIC logo.
Dating apps – using romance to form a relationship with you, then offering you an ‘investment opportunity’. (This is also known as ‘romance baiting’.)
Paid advertising – scammers often pay big money for advertisements, to appear high in online search results. They also advertise through social media. Advertising a scam is illegal.
Fake news articles – scammers will promote fake articles on social media or news websites, linking to their scam websites.
Deepfake celebrity endorsement videos – scammers use a deepfake celebrity video to promote fake investments.

What scammers may offer you

A scammer may tell you they’re offering:

guaranteed, quick and easy investment returns and sometimes tax-free benefits
investments in shares, cryptocurrency, mortgage, real estate or virtual investments, all with ‘high returns’
a (fake) trading platform to trade foreign currency , gold, options or futures
commissions for building their client base and getting others to invest
an opportunity with no risk or low risk, because you will:
be able to sell anytime
get a refund for non-performance
have insured or ‘guaranteed’ transactions
be able to swap one investment for another
inside information on initial public offerings or discounts for early bird investors, often falsely impersonating real companies to pitch their offer

How scammers convince you

Scammers will look at the latest market and investment trends for opportunities. They often use well-known company names, platforms, and terms (such as ‘crypto’) to lure investors in and appear credible.

This may include fake :

crypto (virtual currency) investments
trading companies, getting you to invest with them through real apps and trading platforms
offers of inside information on public company floats, often naming ones that have been hyped in the media or on social media
offers to get your money back from a sharemarket fall or previous scam
references to well-known Australian companies or regulators, often using the Australian Coat of Arms or Government logos
offers to keep your money safe in well-known Australian banks

Important

Beware of scammers offering investments or asking for payment using crypto. A legitimate financial services firm is unlikely to ask you for payment in crypto. Crypto-assets (for example, cryptocurrency) are largely unregulated in Australia and are high-risk, volatile investments.

Payments made using crypto are very difficult to trace and recover. To find out more, see cryptocurrencies .

Other tactics used by investment scammers

Operate from overseas

Investing in overseas companies or through brokers based outside Australia can be risky. If you invest and something goes wrong, you may not have access to important consumer rights and protections under Australian laws.

Convincing you not to pull out of the investment

They may try to swap your current investment for another one, convincing you the value will increase, or threaten you with legal action or fees.

A common tactic is to ask for ‘insurance’ or ‘taxes’ before funds invested can be released. This is just another method to extract more money from you.

‘Pump and dump’ scams

Scammers use social media and online forums to create fake news and excitement in listed stocks to increase (or ‘pump’) the share price.

Then they sell (or ‘dump’) their shares and take a profit, leaving the share price to fall. Any other investors are left with low value shares and will lose money. This may be market manipulation which is illegal.

Protect yourself from investment scams

Investment scams can look very convincing. It may be hard to tell if they’re genuine investments or not.

Always use a licensed Australian financial services provider when you invest. Check they are listed on AFCA’s financial firm directory .

Before you invest your money, check basic facts about what you are investing in and who with. Follow the tips on check before you invest .

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/financial-scams/investment-scams
Important note: 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. Past performance is not a reliable guide to future returns.
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.

How $10,000 performed across eight asset classes in 2024

Tue, 04 Mar 2025 16:05:00 GMT

Another year of varied returns demonstrates the importance of diversification.

Global share markets surged into record territory during 2024, delivering double-digit returns to many investors.

Indeed, investors using broad-based exchange traded funds (ETFs) to cover the largest companies on U.S. and international share markets would have ended the year with significant gains.

By contrast, total gains from the Australian share market were more subdued. However, they were still above 10% for the year and well ahead of the returns from many other asset classes.

The table below draws on data from the Vanguard Digital Index Chart to show what a $10,000 investment into eight major asset classes at the start of 2024 would have grown to by the end of 2024.

Source: Vanguard.
Note: Returns data measured from 1 January 2024 to 31 December 2024.

Past performance is not a reliable indicator of future performance.

The projections above indicate how much could have been accumulated if it were possible to invest directly into the relevant indices. They assume the $10,000 is fully invested (and remains fully invested) in the relevant index for the asset class and that all income is reinvested. They do not make any allowance for fees, costs or taxes. All results are displayed in nominal dollars, i.e. inflation has not been taken into account.

An actual investment would be subject to acquisition costs, fees and taxes.

The figures are based on assumptions and are general illustrations only.

A diversified portfolio allows you to adapt to changing market conditions and economic environments.

What’s obvious from the data is that there was a massive gap between the return from the best-performing asset class (U.S. shares) and the worst-performing (international bonds).

Yet, as is so often the case, last year’s best-performing asset class may not be the best performer in the following year. And that highlights the importance of being diversified across multiple asset classes as a key strategy for building a robust and resilient investment portfolio.

Seven key benefits of diversification

1. Risk reduction

One of the primary advantages of diversification is the reduction of risk. By spreading your investments across different asset classes, you minimise the impact of a single asset’s poor performance. For example, while U.S. shares saw a solid return of 38.8%, international bonds only returned 1.8%. If you had invested all your money in international bonds, your returns would have been much lower. Diversification ensures that even if one asset class underperforms, stronger performers can help lift your overall investment return.

2. Stability and consistency

Diversification helps to smooth out the volatility of the market. By investing in a mix of asset classes, you may achieve more stable and consistent returns over time. This is particularly important for long-term financial goals, such as retirement. For instance, while U.S. shares and international shares provided high returns, Australian listed property and Australian shares also contributed positively to the portfolio, offering a more balanced approach.

3. Opportunities for growth

Different asset classes can perform well at different times. By diversifying, you could increase your chances of capturing growth opportunities and ensures you are not missing out on potential gains from asset classes you have avoided.

4. Inflation protection

Some asset classes, such as real estate, can act as hedges against inflation. When the cost of living rises, these assets often increase in value, helping to preserve your purchasing power. Australian listed property, which can be seen as a proxy for real estate, provided a solid return of 18.5% in 2024.

5. Flexibility and adaptability

A diversified portfolio allows you to adapt to changing market conditions and economic environments. You can adjust your asset allocation based on your risk tolerance and financial goals, ensuring that your investments remain aligned with your needs. For example, if you are nearing retirement, you might shift more of your portfolio into bonds and cash to reduce volatility risk.

6. Enhanced return potential

While diversification doesn’t guarantee higher returns, it can potentially enhance your overall return by taking advantage of the strengths of different asset classes. In 2024, a diversified portfolio that included U.S. shares, international shares, and Australian listed property would have seen significant growth, outperforming a portfolio concentrated in a single asset class.

7. Emotional comfort

Knowing that your investments are spread across various asset classes can help you avoid the stress and anxiety that come with putting all your eggs in one basket, making it easier to stick to your long-term investment strategy. For instance, the more consistent returns from cash and Australian bonds may provide a sense of security when more volatile assets such as shares experience volatility.

Conclusion

The data from 2024 clearly demonstrates the power of diversification.

By spreading your investments across different asset classes, you can reduce risk, achieve more stable returns over the long term, and potentially increase your chances of capturing growth opportunities.

Whether you are a seasoned investor or just starting out, diversification is a strategy that can help you build a resilient and balanced portfolio, ultimately contributing to your financial success and peace of mind.

Important information

Diversification is no guarantee of investment success or loss avoidance. A diversified portfolio could produce negative returns if markets fall. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your portfolio. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income

Five financial steps for the new year

Tue, 25 Feb 2025 16:04:00 GMT

The start of 2025 is a good opportunity to take decisive financial steps.

The new year can often be a trigger point for many people to review their financial plans and strategies for the year ahead and beyond.

It makes sense, although the start of the calendar year is actually the halfway point of the current financial year.

So, in terms of financial strategies, there’s now less than six months left to implement any that relate specifically to the 2024-25 tax year.

That creates some degree of urgency, but there’s still a good amount of time left to focus on shorter-term strategies as well as longer-range ones that can potentially be maximised by taking advantage of opportunities available before the end of the current financial year.

1. Review your goals

Setting goals is a key part of the financial planning process, but they can change over time.

So the first step now is to take a look at your goals and make sure they still stack up. Do they still make sense, and are they realistic and achievable?

Spending some time now to reassess your short and long-term goals, and make adjustments to them if required, will ensure you remain on the right financial track.

2. Check your budget and spending

The second step is to recheck your budget and spending, because doing so will help you to fully understand your ability to achieve your financial goals.

If you don’t use a budgeting method, consider starting one that tracks both your income and expenses in detail on an ongoing basis.

Identifying where you could reduce expenses will allow you to calculate how much money you may be able redirect into savings and investments, including into your superannuation.

Part of this process should also include opportunities to reduce outstanding debts, prioritising high-interest debts such as credit cards, and taking advantage of loan products that provide debt payments relief such as mortgage offset accounts.

3. Examine your investments portfolio

One of the key principles of investing is having an investment strategy that’s aligned to your goals and one that’s well diversified across different types of assets to help spread risk.

Yet, because assets perform differently over time, either increasing or decreasing in value depending on market conditions, it’s important to keep an active eye on your investments portfolio to ensure it remains aligned to your risk profile.

For example, if you have a heavy investment exposure to shares, the strong gains on global share markets in 2024 may have increased the overall amount of money you now have invested in shares.

If having a large amount invested in shares is not aligned to your investment strategy, it may be prudent to consider rebalancing the assets in your portfolio so the total dollar values in each asset class you’re invested in reflect your preferred percentage weightings.

4. Consider your superannuation options

Given we’re already over six months into this financial year it’s worth evaluating whether you’re making the most of all your superannuation options.

On 1 July last year the annual limit on concessional contributions, which are only taxed at 15%, was lifted from $27,500 to $30,000. Separately, the annual limit on non-concessional (after-tax) contributions was lifted from $110,000 to $120,000.

Options could include starting a salary sacrifice plan, or increasing an existing one, taking advantage of unused concessional contributions, and using the proceeds from non-superannuation asset sales.

5. Prepare your estate

Estate planning is a vital component of good financial planning, however, it’s often put on the back burner or completely overlooked.

Among other things, estate planning should involve having a legally valid will that specifically documents how you want your assets to be managed and divided between your nominated beneficiaries after your death.

Dying without a will (intestate) can result in your assets not being distributed to your surviving family members in the way you would have preferred.

Residential real estate and superannuation, which combined, make up more than three quarters of total household assets, and are the largest components of most financial legacies.

Estate planning can be complex. Consulting us to help you and your intended beneficiaries map out an inheritance framework that also identifies issues such as potential tax liabilities is a prudent step.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing GENERAL ADVICE WARNING Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966). The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”). We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions. Important Legal Notice – Offer not to persons outside Australia The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws. © 2024 Vanguard Investments Australia Ltd. All rights reserved.

The benefits of automating your personal finances

Tue, 25 Feb 2025 16:04:00 GMT

In today’s fast-paced world, where every minute counts, managing personal finances can feel like another tedious task. However, thanks to the rise of personal finance automation, managing these tasks, can now be handled with minimal effort on your part.

Whether you’re a professional, a business owner or someone who is busy and looking to streamline your personal financial life, it makes sense to automate.

Save time

One of the biggest advantages of automating your finances is the time it saves you. Instead of manually paying bills, tracking spending, or worrying about due dates, automation takes care of these tasks for you.

Prevent late payments and penalties – and mistakes!

One of the most common pitfalls of personal finance management is missing the due date of your bill payments. Whether it’s your rent, mortgage, or utility bills, setting up automatic payments ensures that deadlines are always met, and penalties or late fees are avoided.

Managing your finances manually can often lead to mistakes, whether it’s miscalculating a bill, forgetting to budget for a specific expense, or accidentally double paying an invoice. Automation helps eliminate human errors, ensuring that all your financial tasks are completed accurately.

Keep your finances on track

Automated tools can also track your spending habits, categorise your expenses, and provide insights into your financial behaviour. This can be particularly helpful for budgeting, allowing you to see where your money is going and make informed decisions about your spending habits and saving.

Getting started

The good news is that personal finance automation doesn’t have to be complicated. Here are a few simple tips to help you get started:

Automate your bill payments

Start by setting up automatic payments for your regular bills; such as utilities, rent or mortgage and credit cards. Most service providers offer online payment portals where you can link your bank account, debit, or credit card and set up recurring payments. You can schedule them to occur on specific dates each month, ensuring that everything is paid on time.

You can also use apps like GetReminded to receive reminders when contracts are set to expire such as utility bills and insurance and some even enable comparisons with providers, making it easier to shop around.

Make it easier to get ahead

Budgeting apps like Mint, YNAB, or PocketGuard can enable you to create a spending plan. These apps automatically sync with your bank and credit card accounts, categorising your spending and tracking your progress against your financial goals. Once your budget is set, automate your savings by scheduling regular transfers to a savings account or investment portfolio.

Apps like Qapital or Digit can help you set up automated savings that round up your purchases or take a small percentage of your income and save it for you. Even saving just $20 a week automatically can add up over time, and you probably won’t even miss the money!

Set up alerts and track your progress

Most of the major banks also have apps that can be used for a variety of financial services. Use your banking app or personal finance tool to set up alerts for when your balance hits a certain threshold or when you exceed your budget for a specific financial category. This will keep you informed and allow you to adjust as needed. Additionally, tracking your progress over time will give you a clear sense of achievement and motivate you to stick to your financial goals.

Prepare for tax time

Of course, we are always about being as organised as possible for tax time and finance automation can be your friend when it comes to having to substantiate any tax claims.

The ATO app myDeductions can help you keep your tax records organised. It allows you capture information on the go, making tax time easier. The myDeductions app can record work-related expenses for your car travel, uniform, self-education, bank interest, and dividends. You can also email your records to us!

Personal finance automation is one of the easiest ways to simplify your financial life and give you more time to focus on what matters most to you. Start small, and before you know it, you’ll have a financial system that works for you, not the other way around.

Salary packaging

Tue, 25 Feb 2025 16:04:00 GMT

Salary packaging is when you and your employer ‘package’ your salary into income and benefits. It’s also known as salary sacrifice.

How salary packaging works

Salary packaging is when you arrange to receive less income after tax, in return for your employer paying for benefits out of your pre-tax salary. The benefits could be things like a car or a phone.

For example, you might package a salary of $100,000 so that you receive:

$85,000 as income
$15,000 car as a benefit

This reduces your taxable income to $85,000. You can benefit as you may pay less income tax.

You need to arrange your salary package before you get paid. You can’t package your salary after you’ve earned it.

Salary packaging is usually more effective for people on middle to high incomes. You may want to get professional t

ax advice to work out if salary packaging is right for you.

What you can salary package

You can ‘salary package’ benefits you would normally pay for with your after-tax income, such as computers, cars, child care or super. But it depends on what your employer offers.

Most employers will offer salary sacrifice for super to all employees, but may restrict who can package other benefits.

Benefits fall into three categories: fringe benefits, exempt benefits and super.

Fringe benefits

Fringe benefits can include:

salary sacrifice for a car
health insurance
loans (usually for a car)
school fees
childcare fees
other personal expenses

Your employer pays fringe benefit tax (FBT) on these benefits. See fringe benefits tax on the ATO website for more information.

Exempt benefits

Exempt benefits include:

portable electronic devices
computer software
protective clothing
tools of the trade

Your employer will not have to pay fringe benefits tax on these.

Super

Putting some of your pre-tax income into super has benefits for you and your employer. Your super fund will tax these contributions at 15% — the same as your employer’s contributions.

For most people this will be lower than their marginal tax rate. Speak to us for more information on how this can benefit you.

Not-for-profit organisations have an FBT exemption. This means they provide fringe benefits for their employees without having to pay tax on those benefits.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/work-and-tax/salary-packaging
Imp o rtant note: 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. Past performance is not a reliable guide to future returns.
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.

The steps to aged care

Tue, 18 Feb 2025 16:00:00 GMT

Key points:

Find services in your area that fit your needs or to learn more about the aged care journey
The first step in getting Government funded aged care services is to register with My Aged Care
Before you can access any sort of aged care services you need to be assessed

You may be wondering where to start first?

Here are five simple steps that will help you get from A to B in your aged care journey.

1. Understand the sector and see what is out there

Accessing aged care can be complicated and confusing if you have not accessed aged care before or don’t know where to start.

It can be a good idea to get your head around how the aged care system works and what you will receive in aged care.

You can utilise the information available on the Aged Care Guide to help understand the aged care sector and what life may be like in a nursing home.

You can also start looking at your aged care options, including what nursing homes are available in your area that may suit your needs.

2. Contact My Aged Care

When it comes to accessing Government subsidised aged care, your first move should be to contact My Aged Care . This Government portal is the starting point for everything aged care and the only way you can access Government funded services.

You can call the contact centre on 1800 200 422 to speak with an operator or fill out an online form on the My Aged Care website.

When you contact My Aged Care, you will be asked basic questions about your health, current care needs, and other relevant information. This will help to determine what to do next, which is to organise an aged care assessment.

My Aged Care will create a client record of your initial application so they have all the relevant information about you on file. You can view or track your client record through your My Aged Care online account.

Your account will have all of your interactions with My Aged Care, your contact details, as well as your new Aged Care ID number. You will need this ID number every time you talk with My Aged Care.

3. Have an aged care assessment

Once you have registered with My Aged Care, an Aged Care Assessment Team/Service (ACAT/S) will contact you and organise an aged care assessment. They will assess your care needs, health or lifestyle concerns, and health and safety issues you are facing at home.

A representative from the ACAT/S will contact you directly to organise an assessment time at a location where you feel most comfortable, like your home.

The assessment’s are generally face-to-face, and depending on your State or Territory, may be undertaken via a phone or video call.

ACAT/S representatives who will be undertaking your assessment are professionals in the medical, nursing or allied health sector.

They will ask you a lot of questions about your life, the house, issues you have difficulty with, and more. This is also a great time to ask any questions you have about care or services you would receive in an aged care home.

4. Receive approval for care

Once you have had your assessment, it may take a couple weeks until you hear back about whether you have received approval for Government subsidised aged care.

You will receive a letter from the Government letting you know if you are eligible for aged care services, including the decision for your approval and what services you can access.

This letter is important to hold on to because it contains a referral code which you need to give your provider. It will provide them with information about your needs and details of your support plan.

5. Start looking for a provider

The last step in the process is to start looking for a residential aged care provider that meets your needs, specifications and personal wishes.

You can search for service providers in your area that meet your requirements.

If you aren’t comfortable finding or choosing a provider by yourself, then there are experts who can help you find a nursing home that suits your needs and preferences. A placement consultant has knowledge of local aged care facilities and can make the process of entering aged care smoother.

Once you have chosen a provider, you will need to contact them to be placed on their waiting list for a bed vacancy. During this time, it can be good to discuss fees and services with your new provider, so you are prepared once a place is offered to you.

Since you can never know when a bed will become vacant at a nursing home, it can be a good idea to continue looking at other suitable aged care homes. You are also able to be on multiple waiting lists for a bed vacancy.

Once a bed becomes vacant, the facility will offer you a place.

Aged Care is very complex and can have impacts on your finances and government subsidies, so feel free to reach out to us if you have any questions.

Source:
This article was originally published on https://www.agedcareguide.com.au/information/the-steps-to-aged-care . Reproduced with permission of DPS Publishing.
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.

General and personal financial advice

Tue, 18 Feb 2025 16:00:00 GMT

General or personal advice can help you reach your financial goals. General advice does not consider your personal circumstances and is general in nature. Personal advice is more specific and is tailored to your personal situation.

The advice you receive could cover any of these financial products or areas:

investing
superannuation
retirement planning
estate planning
risk management
insurance

Personal and most general advice providers must hold an Australian Financial Services (AFS) licence.

The difference between general and personal advice

General advice

General advice is a recommendation or opinion about a financial product that is not tailored to your personal circumstances. This advice won’t consider your personal circumstances, such as your:

income
expenses
assets
liabilities
goals
risk tolerance

General advice may help you to identify and narrow down your options. But it won’t tell you how to make the best financial decision for your personal situation.

General advice is different to factual information . This information can give you useful facts about a financial product. Examples of factual information may include descriptions of:

the basic features of a superannuation account
the fees and interest rates on a new term deposit

Factual information is usually free and available from places like websites, banks and seminars. A licence isn’t needed to provide factual information.

Personal advice

Personal advice is a recommendation or opinion tailored to your personal circumstances. It is more specific than general advice and takes into account your financial situation and goals. Personal advice providers must act in your best interest.

Personal advice can include:

Simple, single-issue advice — Help with one financial issue. For example, how much to contribute to your super, or what to do if you inherit shares
Comprehensive financial advice — Help to develop a financial plan to reach your financial goals. This covers things like savings, investments, insurance, superannuation and retirement planning.
Ongoing advice — Regular monitoring and review of your financial plan and personal circumstances.

When general advice might be appropriate

You may want general advice if you:

want to compare or confirm your understanding of different financial products. For example, the difference between a managed fund and an ETF
are researching and learning about different financial topics
don’t want to spend money on tailored advice

You may be receiving general advice if you:

were not asked questions about your financial situation, needs and objectives
are dealing with someone who will not recommend a specific product for you. They will speak generally about it rather than tailoring it to you

When providing general advice, the advice provider must give you a warning. The provider will:

tell you the advice you’re about to receive is general, meaning it doesn’t take into account your own objectives, financial situation or needs
prompt you to consider if the advice is appropriate for you before acting on it
in some cases, provide you with a Product Disclosure Statement if the advice is about a financial product

When personal advice might be appropriate

You may want personal advice if:

Your situation is complex and you need help to work it all out
You’re going through a significant life event. For example, buying a house, getting married, transitioning to retirement, redundancy, death of a spouse, or illness
You inherited a large sum of money
You want to outsource your financial affairs
You need specific advice on a topic area and have specific requirements. For example, you want income protection insurance but have health issues
You want to ensure you’re on track to meet your financial goals
You need help managing someone else’s money. For example, you’re appointed Power of Attorney for someone, or you’re an executor for a deceased estate.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/financial-advice/general-and-personal-financial-advice
Important note: 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. Past performance is not a reliable guide to future returns.
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.

How to overcome your investment fears

Tue, 11 Feb 2025 16:19:00 GMT

You’re ready to start investing, but there’s a few things holding you back.

Firstly, while you have a bit of money set aside, you don’t have a lot and you’re thinking it’s probably not enough to start off with.

You also don’t know a lot about financial markets and different types of investments. With so many investment choices out there, which is the best way to go?

Then there’s that underlying fear of losing your money if you do invest. After all, share markets are notorious for their volatility.

These are all legitimate concerns that can be barriers to investing for some people.

So, let’s address them one by one.

Do I need a lot of money to invest?

Many people think they need a lot of money to start investing.

But, contrary to those beliefs, you don’t need thousands of dollars to begin. Far from it.

You can start investing with just $500 and then invest smaller amounts over time to increase your existing investment holdings.

Many people set up an automated regular investing plan using their accumulated savings so they keep adding to their holdings and take advantage of compounding investment returns over the long term.

An advantage of investing this way is that, rather than trying to pick a good time to invest, buying at different times allows you to average out your total cost of investing.

Having a spread of different assets will help reduce risk and minimise any losses.

I’m not sure where I should invest?

Lack of investment knowledge can also be entry barrier for some people.

That’s understandable. With such a wide range of investment options out there, it can be hard to know where to start. But a good first step is to understand what it takes to be a successful investor.

Successful investing revolves around four key principles:

The need to set investment goals and create an investment strategy to achieve them.
Having a broad spread of investments across different types of assets to reduce your risk.
Controlling what you spend on investments by targeting low-cost products that will increase your share of returns.
Being disciplined and patient so you do achieve your long-term investment goals.

Following these principles will help you to narrow down your investment choices.

Having a broad understanding of investment assets and product types is prudent.

Where to invest generally comes down to goals, your preferences, and your tolerance for risk.

To make the decision process easier, many investors are choosing low-cost diversified products that offer a mix of income and growth potential within a single fund.

These types of ready-made portfolios are professionally managed and invest in multiple asset classes, including shares, bonds, property, and cash.

If you’re unsure what is the best strategy for you, it may be worthwhile consulting us to help guide you towards investments that are most appropriate for you.

Will I lose my money?

Another barrier to entry for many people is the fear of making a poor investment.

This is sometimes referred to as loss aversion – the fear of losing some or all of your money.

Investment loss is a valid concern because all investments carry an element of risk.

That was very evident in 2020 when financial markets tumbled heavily because of the rapid spread of COVID-19. Investors who panicked and sold their investments at that time would have recorded substantial losses.

Yet, less than six months later, financial markets had not only recovered but some share markets were close to reaching record highs.

Investors who stayed the course through the market volatility were much better off than people who sold.

In fact, if you look at the performance of financial markets over the longer term, one of the things that really stands out is that investment returns across a range of different asset classes have been very strong.

The Vanguard Index Chart illustrates how sticking to a disciplined investment plan, with diversification across a range of asset classes, will invariably override short-term market volatility and deliver long-term returns.

It’s always important to do good research before choosing any investments, and having a spread of different assets will help reduce risk and minimise any losses.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

GENERAL ADVICE WARNING
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966).
The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”).
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.
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© 2024 Vanguard Investments Australia Ltd. All rights reserved.

Visualise it and make it happen in 2025!

Tue, 11 Feb 2025 16:19:00 GMT

As we move into a brand-new year, many people set their resolutions, and if buying your dream home is what you have set your sights on, with the right strategies and the right mindset you can turn that dream into reality.

Big goals like home ownership call for more than just having the right strategies in place (hello budgeting and getting your financial ducks in a row!) – they also call for the right mental attitude. Even the best strategies can fall by the wayside if your head is not in the right space.

One way to get motivated and stay true to your goal is to imagine your desired outcome as if it’s already happening. This technique is widely used by athletes, performers, and individuals in various fields to enhance their performance and reach their objectives.

The link between ‘seeing’ success and experiencing success

Harvard physiologist Edmund Jacobson was the first person to discover the link between visualising success and making it happen. Jacobson found that if you imagine yourself lifting an object, you trigger corresponding electrical activity in the muscles involved in the action. So even just by simply thinking about lifting a weight, the muscles that are responsible are activated. ⁱ

His studies have since been replicated to find correlations between mental rehearsal and success. Everything from shooting that hole in one on the golf course to being the winning bidder for your dream home, can be enhanced through the process of visualisation.

The benefits in visualising the ideal home

Visualisation works because it engages both the conscious and subconscious mind. When you visualise the home you want to buy – right down to the view from the windows as you walk in the door and your furniture in the lounge room – your brain begins to recognise it as a reality, which can increase your motivation and determination, as you put in place the financial systems to help you get a deposit together.

Visualisation can also help you to focus on the specific attributes you want in your new house and the lifestyle you aspire to have and can be useful to sort out the ‘nice to haves’ from the essentials.

Ready to get started?

Set clear goals

As a starting point it’s important to establish clear, specific goals for your home purchase. Ask yourself:

What type of home do I want? (e.g., single-family, condo, townhouse)
In which neighbourhood or city do I want to live?
What is my budget?
What are my must-haves? (e.g., number of bedrooms, outdoor space, proximity to schools)

Writing these goals down will give you a tangible reference point and help you stay focused.

Create a vision board

A vision board is a powerful tool in the visualisation process and can be a source of great inspiration when your motivation is waning. Gather material that represents your dream home and the lifestyle you wish to achieve. You can use physical materials like magazines and a poster board, create a digital version using platforms like Pinterest or simply pop a brochure on the fridge of a property that represents the ideal for you. However you create your visual inspiration it will serve to keep that vision of the home that’s out there for you firmly in your mind.

Take action

Visualisation is a powerful tool, but it must be combined with action to yield results. Use the clarity gained through your visualisation practice to develop a concrete action plan. This could include:

Assessing your finances
Determining your budget and how much you’ll need for a deposit
Getting pre-approved for a mortgage
Researching neighbourhoods and attending open houses

Set achievable milestones, and regularly check your progress. Celebrate small victories along the way, as they can provide motivation to keep you moving forward.

Stay open to possibilities

While visualisation helps you focus on your specific goals, it’s also important to remain open to new opportunities. The housing market can be unpredictable, and you may encounter options that you hadn’t considered. Trust your instincts and be willing to adapt your vision if necessary.

Remember, visualisation is not about dreaming; it’s about transforming your goals into reality and with the right mindset you’ll be on the right track to achieve your home purchase goals.

i Task-Specificity of Muscular Responses During Motor Imagery – PubMed Central

Having a baby

Tue, 11 Feb 2025 16:19:00 GMT

Becoming a parent is an exciting and life-changing step. Be well-prepared for the costs and budget for them.

Cost of having a baby

Having a baby costs money. It’s possible to plan and save for most of these costs, but some can be unexpected. The earlier you start, the better.

Pregnancy and birth costs

During your pregnancy and for the birth itself, costs may include:

doctor and hospital bills
ultrasounds and other medical tests
birthing (antenatal) classes
maternity clothes
private health insurance

If you go public

You may decide to use the public health system during your pregnancy. Medicare covers:

routine ultrasounds
blood tests
care from midwives and obstetricians
shared care from bulk-billing doctors

You can also register to get a higher Medicare benefit for out-of-hospital costs. See Medicare Safety Nets on the Services Australia website.

If you give birth in a public hospital as a public patient, Medicare covers:

your hospital stay
care from midwives and/or obstetricians
some medical expenses, such as routine ultrasounds

If you go private

You can choose private insurance to help pay for costs during pregnancy and during the birth. There’s usually a waiting period of up to 12 months before you’ll be eligible for cover.

You can generally choose your obstetrician. You may get a choice of a private hospital or a private room in a public hospital.

However, there are out-of-pocket costs, for example, visits to your obstetrician. Every policy is different, so talk to your insurance company or check your policy.

For more information, see the Commonwealth Ombudsman’s pregnancy and healthcare fact sheet .

After your baby arrives

When your baby is born, you’ll need:

baby clothes and nappies
bottles and formula or a breast pump
a cot, with a mattress, sheets and blankets
other equipment, such as a change table, pram and car seat

The cost of these items adds up, but there are ways to save:

Find out what you really need (and will use) by talking to other parents.
Buy secondhand or via online marketplaces.
Sell items as your baby grows out of them.
Rent or borrow big-ticket items like prams or car seats.

The Raising Children website has helpful information about preparing for your baby .

Childcare costs

When it’s time to return to work or study, or if you need a break, you can get child care. Start planning for this well in advance. Places for babies under 12 months can be limited so you may have to go on a waiting list.

You’ll also need to weigh up the cost of child care against how much you’re earning.

The type of child care that works for you will depend on how much you need and your budget. For example, you may have family or friends who can help, or you may have to pay for full-day child care or a nanny.

The Raising Children website has information on childcare options and government assistance for child care .

Changes to your income

Decisions about if or when you and/or your partner return to work can affect your income, childcare costs, and even your super.

Getting paid leave

Find out what your employer offers as paid maternity and paternity leave. Also, check if you can use your annual or long-service leave.

The Fair Work Ombudsman has information on parental leave .

Getting government benefits

Depending on your income and assets, you could be eligible for government benefits:

You may also be eligible for one or more of the following:

Parenting Payment
Rent Assistance
a Health Care Card

See Services Australia for information about payments for your family or phone 13 61 50.

Do a baby budget

Once you’ve got an idea of baby costs and what your income will be, you can do a budget.

Use this budget planner so you know what to expect and how much to save

Put in your income and expenses, including baby costs, to get a budget that you can stick to.

Preparing for the future

Saving – Think about regularly putting away some money for education and future expenses for raising your child.

Super – If you or your partner change working arrangements, see how it affects your super. Check:

whether you can contribute super to each other’s funds
what insurance benefits you have through your super fund

Wills – Update your will to include any guardian of your child.

We can assist you with each of the above.

Have a money conversation with your partner

Talk with your partner about the best way to manage your household and financial situation. Talk through:

managing your everyday spending and saving
looking at financial goals and priorities
putting off buying big items
paying off some debt before the baby arrives

Case Study

Janet budgets for her baby

Janet and her partner are expecting their first child. After talking about how to organise their lives once the baby arrives, they’ve agreed that Janet will take nine months off work after the birth. After that, she’ll return to work three days a week.

Janet has 12 weeks of maternity leave. She is entitled to paid parental leave for 18 weeks from Services Australia, and she’s also taking some annual leave. Their household income will be lower, alongside the new expense of child care after Janet returns to work.

Janet used the budget planner to plan how they’ll manage their money when the baby arrives.

The couple decides to sell their second car and to pay off their credit card before the baby arrives, to reduce some of their regular outgoings.

If you are planning on having a baby and need to understand how this will affect your future finances, speak to us today.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/family-and-relationships/having-a-baby
Important note: 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. Past performance is not a reliable guide to future returns.
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.

Investment income

Tue, 04 Feb 2025 16:04:00 GMT

When to declare investment income

You must declare income you earn from investments and assets in your tax return. Investment income may include amounts from interest, dividends, rental income, managed investment trust credits, crypto assets and capital gains.

You need to declare investment income whether you receive payments directly or through a distribution for a partnership (such as a share club) or trust.

Income from jointly held assets

If you hold assets jointly with another person, it is assumed that income of the asset is divided equally. That is, unless you can show that you hold the asset in unequal proportions.

Interest income

If you’re an Australian resident and you receive interest, you must declare it as income. Interest income includes:

interest you earn from financial institution accounts and term deposits
interest you earn from any other source including penalty interest you receive on an investment
interest you earn from children’s savings accounts , if you

open or operate an account for a child and the funds in the account belong to you
spent or use the funds in the account

interest the ATO pays or credits to you – for example, interest on early payments, interest on overpayments and delayed refunds
life insurance bonuses (you may be entitled to a tax offset equal to 30% of any bonus amounts you include in your income)
interest from foreign sources (you can claim a foreign income tax offset for any tax paid on this income).

You must also declare interest the ATO has imposed if it is remitted or recouped and you have claimed (or can claim) a deduction for the interest. You declare these amounts as other income in your tax return.

Term deposits

You must declare interest income in the year it is credited or received. For term deposits this usually means you should declare interest in the year the investment matures.

If you elect to rollover your investment or if the financial institution automatically reinvests the term deposit at maturity, you will need to declare the interest earned as at the rollover or reinvestment date. This is the amount you would have received if the investment was not rolled over or reinvested.

Similarly, you may choose to have the interest from a term deposit, held for more than 12 months, credited to a different account periodically throughout the life of the investment. In this case, the interest is assessable at the dates of payment (which is before the date of maturity). You are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct.

Dividends

Dividend payments can be money or other property, including shares. If you receive bonus shares instead of money, the company issuing the shares should give you a statement that shows if the bonus shares are a dividend.

Dividend income may come from a:

listed investment company
public trading trust
corporate unit trust
corporate limited partnership (in the form of a distribution

Some dividends have imputation or franking credits attached.

If you receive franking credits on your dividends, you must declare in your tax return both your:

franked amount
franking credit.

If a company pays or credits you with dividends that have been franked, you’ll generally claim a franking tax offset.

When you sell or dispose of your shares, you need to declare capital gains or losses .

Rental property income

You must declare the full (gross) amount of any rent and rent-related payments that you receive . This includes amounts you receive from overseas properties.

If you receive goods and services instead of rent, you must work out and declare the monetary value.

Payments that relate to your rental property include:

rent

report the gross amount of rent paid by the tenant, not the amount you receive from your managing agent after deducting fees
report rent in the income year the tenant pays it, this may be before your managing agent pays it to you

rental bond, money you retain or keep – for example, because

a tenant defaults on the rent
of damage to your rental property requiring repairs

an insurance payout to compensate you for lost rent
a letting or booking fee
a reimbursement or recoupment for deductible expenditure, such as an amount from a tenant to cover the cost of repairing damage to your rental property. Include the whole amount you receive from the tenant in your income and you can claim a deduction for the cost of the repairs
rent you receive through the sharing economy
(renting out a room or a whole house or unit on a short-term basis, through a website or app).

When you sell or dispose of your rental property, you need to declare capital gains or losses .

Co-ownership

Only include your share of rental income and expenses in your tax return, if you:

own a rental property jointly or in common with another person
have an interest in a partnership that carries on a rental property business.

Managed investment trusts

You must show any income or credits you receive from any trust investment product in your tax return. This includes income or credits from a:

cash management trust
money market trust
mortgage trust
unit trust
managed fund – such as a property trust, share trust, equity trust, growth trust, imputation trust or balanced trust.

When you sell or dispose of your managed investment trust units, you need to declare capital gains or losses .

Crypto asset income

You must declare the rewards you receive from staking crypto assets . These are often in the form of additional tokens from holding the original tokens. You need to work out the money value of the additional tokens and convert the amounts into Australian dollars at the time you receive them. Report them at ‘other income’ in your tax return.

Some crypto projects ‘airdrop’ new tokens to existing token holders as a way of increasing the supply of tokens. The money value of established tokens you receive by airdrop is income at the time you receive them. You need to convert these amounts into Australian dollars and declare them as other income .

When you sell or dispose of a crypto asset, a CGT event happens. At this time, you may make either a capital gain or capital loss that you need to declare in your tax return. If you make a capital gain, you may pay tax on it.

Capital gains

You must declare any capital gains you make when you sell or dispose of capital assets, such as investment property, shares or crypto assets. Generally, your capital gain is the difference between:

your asset’s cost base (what you paid for it)
your capital proceeds (the amount you receive for it).

You can also make a capital gain if a managed fund or other unit trust distributes a capital gain to you.

We treat capital gains as part of your total income.

Report capital gains and capital losses in your tax return. You can offset any allowable capital losses against your capital gains to work out your net capital gain or loss. You pay tax on a net capital gain. If you have a net capital loss, you can retain the loss to offset capital gains in future years.

Helping the kids without derailing your retirement plans

Tue, 04 Feb 2025 16:04:00 GMT

As parents, the instinct to support our children never truly fades, even when they become adults but when you are looking at giving them a financial helping hand there is a bit to consider.

It’s important to ensure any support you provide is not at the expense of your financial future. It can also be tricky knowing what form your support should take, in order to maximise the benefits for your kids.

In today’s financial landscape, many young people are struggling to get ahead in the face of skyrocketing housing prices and rising living costs and it’s increasingly common for parents to provide some form of financial assistance. In fact, more than half of parents with a child older than 18 provide financial support. ⁱ

So, if you are giving your adult kids a monetary helping hand, or considering it, you are in good company.

The challenge for most people is the balance between helping your kids get a head start in life and making sure you have enough for a secure financial future.

It’s important to have clear visibility of your own financial situation, of how much you’ll need to fund the retirement you aspire to, and how much you can comfortably spare. If your financial future is secure, you’ll be in a better position to help your children when they need it most, so ensure that any contribution you make to your kids’ financial wellbeing is not at the expense of your superannuation and other retirement savings.

When we think of support we often think of the ‘bank of mum and dad’ helping with a home purchase and that is quite common, with 40 per cent of new home buyers getting a hand from their parents. ⁱⁱ

If you’re considering this route, you have several options:

Gift funds: If you have the means, you can gift your child a portion of the deposit, however, be mindful of any tax implications.

Going guarantor: Another popular option is to act as a guarantor on your child’s home loan. This means that you’ll use the equity in your own home to guarantee the loan, which can help your child secure better borrowing terms. It’s a significant commitment, so be sure to discuss the potential risks and implications thoroughly.

Co-ownership: In some cases, parents and children can purchase a property together, sharing the financial responsibilities. This arrangement can be beneficial, but it’s crucial to have a clear agreement in place outlining each party’s responsibilities and financial contributions.

There are lot of other ways you can help your kids with a range of expenses. Nearly 40 per cent of parents pay for their adult children’s groceries and around the same proportion allow their adult children to live at home rent-free, while around a third pay their adult children’s bills. One in five fork out for their kid’s car-related costs like registration fees and petrol and 20 per cent pay for their kids to take off on holidays. ⁱⁱⁱ

Financial assistance isn’t the only way to support your children. Often, your time and knowledge can be just as valuable. Encourage them to develop good financial habits, such as budgeting, saving, and investing. You might even consider involving them in family discussions about money management, which can empower them to make informed financial decisions.

Regular, honest conversations about finances can strengthen your relationship with your children. Discuss their financial goals and challenges openly and encourage them to share their aspirations. These dialogues will allow you to gauge how best to support them and sometimes, just being there to listen can make a world of difference.

Setting clear boundaries is also crucial when offering financial support. Discuss how much you can provide, whether it’s a one-off gift, a monthly allowance, or a loan. By being transparent about your limits, you can prevent misunderstandings and help your children set realistic expectations and become financially independent.

Navigating the complexities of financial support can be challenging, especially when balancing your own needs with those of your children. We can provide assistance and advice tailored to your unique situation and help you create a sustainable plan that allows you to assist your children without compromising your retirement goals.

i Finder Bank of Mum and Dad Report | Finder
ii https://www.apimagazine.com.au/news/tag/deposit
iii Bank of Mum and Dad slightly less generous than before COVID-19 crisis, survey shows | Domain

The post Helping the kids without derailing your retirement plans appeared first on Midcoast Financial Planning Group .

Support in a challenging environment

Achieving balance

Ways of providing support

Other ways of providing financial support

Non-financial support

Communication is critical

Bouncing back from holiday spending

Tue, 04 Feb 2025 16:04:00 GMT

Ah, the holiday season: a time for festive gatherings, endless cheer, and, let’s face it, a bit of financial chaos if you found yourself swept up in the whirlwind of gift-giving, travel, and all those delicious holiday treats. Now the holidays are behind us, you might be feeling the aftershocks in your bank account—a classic holiday spending hangover. But don’t worry! Now is a good time to get your finances back on track.

Face the music

First things first: it’s time to take a good, hard look at your spending. Grab those bank statements, credit card bills, and receipts you’ve been shoving into a drawer since December. Don’t worry, we’re not judging!

Start by categorising your expenses. How much did you spend on gifts? Food? Travel? Once you have a clear picture, total it all up. This might feel a bit overwhelming, but facing the music and understanding where your money is going is the first step. You’ll thank yourself later!

If you racked up credit card debt over the holidays, it’s essential to include a repayment plan in your budget. Aim to pay off more than just the minimum to avoid high interest.

Create a budget

Now that you know where your money went, create a budget to help you get back on track. Think of your budget as a roadmap—it’ll guide you toward your financial goals.

List your income: Start with your monthly income. Include your pay, any side hustles, or other sources of cash flow.
Outline your expenses: Break your expenses into two categories: essentials (rent and groceries) and discretionary spending (dining out and entertainment).
Allocate funds: Based on your previous spending, assign funds to each category. Prioritise your essentials first and then see how much you can allocate to the fun stuff.

Cut back (without losing your mind)

With a budget in hand, it’s time to identify areas where you can cut back without feeling deprived. Here are some ideas:

Dine in more: Eating out can really add up. Try cooking at home more often, and experiment with new recipes.
Pause subscriptions: Take a look at your streaming services and subscriptions. Do you really need all of them? Consider pausing or cancelling a few until your finances are back in order.
Seek free fun: Check out local events, parks, and community activities. There are usually plenty of free or low-cost options for fun, like movie nights, art fairs, or outdoor concerts.

Practice mindful spending

As you work to recover from your holiday hangover, adopting mindful spending habits can set you up for long-term success. Before making any purchase, ask yourself:

Do I need this? Differentiate between wants and needs.
Will this bring me joy? Think about whether the item will truly enhance your life.
Can I find it cheaper? Always check for sales or consider second-hand options.

Mindful spending encourages you to be intentional with your money, making each purchase feel more worthwhile.

Set the goal posts for the year to come

Now that you’re in recovery mode, it’s a great time to think about what you want to achieve financially over the upcoming year. Whether it’s saving up for a home deposit, paying down an existing loan or saving up for something big – a wedding, a new arrival or that overseas trip.

Celebrate your wins

Lastly, don’t forget to celebrate your progress along the way. Whether you pay off a small debt, stick to your budget for a month, or save a little extra, give yourself a pat on the back.

Treat yourself to something small that doesn’t break the bank—like a night out with friends or a cosy movie night at home. Acknowledging your achievements, no matter how small, can keep you motivated and positive about your financial journey.

Recovering from a holiday spending hangover can feel overwhelming, but it’s entirely manageable. Embrace this chance to cultivate healthy money habits that will serve you well into the new year and beyond. Remember, it’s all about progress, not perfection. You’ve got this!

Dollar cost averaging: can it work for you?

Tue, 28 Jan 2025 16:11:00 GMT

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 and some jarring notes in response to global events.

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.

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 Australia, $10,000 invested in the ASX/S&P 200 during the 20 years to October 2024 would have increased to $60,777. ii But, if you had missed the 10 best days during that time, your total investment would be just $36,014.

Dollar cost averaging

One way of removing the emotion and guesswork is to consider investing at regular intervals over time, ignoring any market signals, in a strategy known as ‘dollar cost averaging’.

The strategy 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, 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.

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 dollar cost averaging argue that there’s a better return because 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.

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.iii

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.

i A ustralia Stock Market Index | Trading Economics

ii Timing the market | Fidelity Australia

iii Lump-sum investing versus cost averaging: Which is better? | Vanguard

The Age Pension and your retirement plans

Tue, 28 Jan 2025 16:11:00 GMT

Most people intend to retire between ages 65 and 66, according to the latest data and, surprisingly, despite growing superannuation balances, the Age Pension is the main source of income for many retirees.i

The intended retirement age has increased significantly in the last two decades, from just over 62 years on average in 2004.

Australian Bureau of Statistics (ABS) figures show that, in 2022-23, a government pension or allowance was still the main source of personal retirement income. This was followed by super, an annuity or private pension.

More than 60 per cent of those aged over 65 years were receiving the Pension in 2021ii

Am I eligible?

It is important to remember that, while you may not meet the eligibility requirements today, you may qualify later in life.

In 2021, only 44 per cent of people aged 65-69 received either full or part Age Pensions but this increased to 81 per cent for those aged 80 to 84 years.iii

Veterans who have served in the Australian Defence Force may be eligible for pensions or benefits from the Department of Veterans Affairs.iv

You are generally eligible for the Age Pension if you:

are over 67 years (depending on when you were born)
are an Australian resident and have lived in Australia for at least 10 years
can meet an income and assets test

What are the income and assets tests?

The Age Pension means tests considers your income and the value of any assets you own. If the value of your income and assets exceed certain limits, your payment will be reduced.

Income includes money from a job (including salary packaging), other pensions or annuities, earnings from investments and any earnings outside of Australia.v

Assets are items of value you or your partner own or have an interest in such as investment properties and artworks; caravans, cars, and boats; shares; and business assets. While your family home isn’t included in the assets test, your pension may be affected if you sell it.vi

Can I still work?

Singles can earn up to $212 per fortnight without their pension being affected. For every dollar over that amount, their pension will be reduced by 50 cents. Couples can earn up to $372 per fortnight and for every dollar over that amount, 25 cents in the dollar will be deducted from their pension payment.vii

If your income in a fortnight goes over a certain amount, you will not receive a pension payment. This cut-off amount is $2500.80 for a single person and a combined $3,833.40 for a couple. There are other higher cut-off allowances for those affected by ill-health.

The Work Bonus may help you earn more from working without reducing your pension. You don’t need to apply for it, the Bonus will be automatically applied to your eligible income – you just need to declare your income.viii

What does the Age Pension pay?

There are different rates of pension for singles and couples.

The current maximum basic rate for a single person is $1047.10 per fortnight. A couple would receive 1,578.60 per fortnight. With extra supplements, those on a full Pension could receive a fortnightly total of $1,144.40 for singles and $1,725.20 for couples.ix

Get in touch if you’d some help to work out your eligibility for the Age Pension and other government entitlements.

i Retirement and Retirement Intentions, Australia, 2022-23 financial year | Australian Bureau of Statistics (abs.gov.au)

ii, iii Age Pension guide | SuperGuide

iv Eligibility for benefits and payments | Department of Veterans’ Affairs (dva.gov.au)

v Income – Age Pension | Services Australia

vi Asset types – Age Pension | Services Australia

vii Income test for Age Pension – Age Pension | Services Australia

viii Who can get the Work Bonus – Work Bonus | Services Australia

ix How much Age Pension you can get – Age Pension | Services Australia

Why you need an emergency fund

Tue, 28 Jan 2025 16:11:00 GMT

What is an emergency fund?

An emergency fund is a financial safety net, offering you instant access to money when you need to cover the cost of unplanned expenses, like losing a job, unexpected travel or a medical emergency. This involves putting funds aside periodically so you can dip into this cash reserve without needing to resort to high-interest loans or credit cards and get into debt or financial hardship. But how much should you have in emergency savings? There are no hard and fast rules, and you should consider your circumstances. The general guide is to save two to three months’ worth of living expenses. But, if you’re thinking long term, like time off work to care for family, it’s worth considering emergency savings of up to six months.

How to build an emergency fund

Your emergency fund needs to be separate from your everyday spending to ensure it’s available when you need it. Here are a few ways to create and maintain one.

Set a savings goal

To set a savings goal, work out what your living expenses are each month and then multiply that by the number of months you want your emergency fund to cover. When working out your living expenses, make sure to include:

rent or home loan repayments
groceries
transport costs, like petrol or public transport fares
loan and credit card repayments
bills like electricity, gas, internet and phone.

A budget planner can help you create a monthly budget. If you’re not sure exactly where your money’s going each month, you can track your spending by using a budget app.

Open an account and start saving

Your emergency fund should be for emergencies only. Ideally, you want it to be separate from your other accounts, so you’re not tempted to dip into it.

Consider opening a separate savings account just for your emergency fund. Look for an account with a good interest rate so you can earn a bit extra each month on your savings. This is part of a wider strategy on bucketing your money that can help you save for different goals and needs.

Automate your savings

Now that you’ve set up an account, it’s time to start making regular deposits. Consider setting up a regular deposit so money is automatically transferred to your savings account every time you get paid.

Maximise your offset account

If you have a home loan, consider using an offset account as your emergency fund. That way the money in your emergency savings will also lower the amount of interest you pay on your home loan, while still allowing you to access the money quickly if you need it.

Continuously contribute to your emergency fund

Whenever you find yourself with some extra cash, like a tax refund, consider using it to boost your emergency savings.

Use your emergency fund for emergencies only

Remember, your emergency fund should only be used in an actual emergency. It might be worth setting some rules for yourself around what counts as an emergency to you.

If you think you’ll be tempted to use it for non-emergencies, consider making the money a little harder to access. One option is to hide your emergency fund from view in online banking. This way you won’t see the balance when you log in and you’ll be less tempted to spend the money.

Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/manage-money/budget-saving/emergency-fund
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2024 National Australia Bank Limited (“NAB”). All rights reserved.
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.

Interest, dividend and other investment income deductions

Tue, 21 Jan 2025 16:00:00 GMT

Deductions you can claim for the costs of earning interest, share dividends, or income from other investments.

Interest income expenses

You can claim a deduction for account-keeping fees you incur on an account held for investment purposes, such as bank accounts or income bonds . You will find these fees on your statements.

If you have a joint account, you can only claim your share of the fees, charges or taxes on the account. For example, if you hold an equal share in an account with your spouse, you can only claim half of any allowable account-keeping fees.

You can’t claim a deduction for interest you incur on a personal tax debt. For example, you can’t claim the interest on a loan you take to pay your personal tax debt.

Investment seminars

If you attend an investment seminar about an existing investment, you may be entitled to claim a deduction for the portion of your expenses that relate to earning investment income.

You can’t claim a deduction to attend a seminar about something you’re considering investing in, even if you subsequently invest in it.

Dividend and share income expenses

There are certain deductions you can claim relating to your dividend and share income expenses, and some you can’t claim.

What you can claim

You can claim a deduction for costs you incur to invest in shares , including:

limited financial advice fees , for example, ongoing management fees or advice about changes in your investment mix
the portion of your costs that are for managing your investments, for example
some travel expenses, such as to attend the annual general meeting of a company you hold shares in
the cost of specialist investment journals and subscriptions
borrowing costs and interest
the cost of internet access
the decline in value of your computer
50% of the listed investment company (LIC) capital gain amount – if you were an Australian resident when a listed investment company paid you a dividend, and the dividend included a LIC capital gain amount.

What you can’t claim

When you invest in shares, you can’t claim:

financial advice fees about your future income earning structure or where there is no connection with income earning activities
some interest expenses where you borrow money under a capital protected borrowing arrangement to buy shares, units in unit trusts and stapled securities. The interest is treated as the cost of the capital protection feature
brokerage fees and other transaction costs (but you can include these costs to work out your capital gains tax when you sell the shares).

Interest you pay on borrowed money

If you borrow money to buy shares or related investments from which you earn dividends or other assessable income, you can claim a deduction for the interest you pay.

Only interest expenses you incur for an income-producing purpose are deductible.

If you use the money you borrow for both private and income-producing purposes, you must apportion the interest between each purpose.

You can’t claim a deduction if you receive an exempt dividend or other exempt income.

Rental and holiday home expenses

If you own a rental property, including a holiday home, see rental expenses you can claim in the Rental property guide .

Forestry managed investment scheme deduction

If you make payments to a forestry managed investment scheme (FMIS) , you may be able to claim a deduction for these payments if you both:

currently hold a forestry interest in an FMIS, or held a forestry interest in an FMIS during the income year
have paid an amount to a forestry manager of an FMIS under a formal agreement.

You can only claim a deduction if the forestry manager has advised you that the FMIS satisfies the 70% direct forestry expenditure rule in Division 394 of the Income Tax Assessment Act 1997.

Source: ato.gov.au November 2024
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/investments-insurance-and-super/interest-dividend-and-other-investment-income-deductions
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.

Keeping records for property

Tue, 21 Jan 2025 16:00:00 GMT

Which records to keep for your property so you can work out CGT when you sell it.

Property records you should keep

For your property, you should keep records of:

your acquisition of the property and related expenses, such as

purchase contract
stamp duty
legal fees
settlement statement
survey and valuation fees

your disposal of the property and related expenses, such as

the sale contract
sale settlement statement
legal fees
sales commission

your costs of owning the property, including

interest
rates
land taxes
insurance premiums
the cost of repairs

capital expenditure on improvements, such as

extensions or additions.

The records for buying, owning and selling the property need to be kept for at least 5 years after you dispose of the property.

If you acquired your property before 20 September 1985, it is exempt from capital gains tax (CGT). You do not need to keep records for CGT purposes unless you later add a capital improvement.

However, you still need to keep records of any property income, such as rent, for income tax purposes.

Main residence

Your main residence – home is generally exempt from CGT. However, you should keep all records in case circumstances change and it is no longer exempt from CGT.

For example, if you start renting out part of your home, you will need records.

Using your main residence to produce income

If you rent out part of your home or run a business from home , it may be subject to CGT.

Keep records of:

expenses during the time you produced income
the proportion of the property used to produce income.

If you first use your home to produce income after 20 August 1996, you need a record of your home’s market value at the time you first used it to produce income.

It is best to get a market valuation of your home at the time. However, you can arrange a valuation later if necessary.

Inherited dwellings

If you inherit a dwelling that was the main residence of the person who left it to you, any capital gain when you later dispose of it may be exempt from CGT. The exemption depends on a number of things, such as when you inherit the property and how long you own it before disposing of it.

Until you are sure of the circumstances, you should keep records of:

relevant costs incurred by you, the previous owner and the trustee or executor
the market value of the dwelling at the time the deceased died.

If the executor or trustee has a record of a market valuation, get a copy of the valuation report.

Records held by former spouse

If a property transfers to you because of a relationship breakdown , get copies of the property records that show:

how and when your former spouse acquired the property
the property’s cost base when they transferred it to you.

If the property was your former spouse’s main residence, get copies of records that show:

the extent to which they used it to produce income during their ownership period
the number of days it was their main residence during their ownership period.

You’ll need these records to show how much of your spouse’s ownership period is eligible for the main residence exemption.

If you do not have these records, you may be liable for CGT for periods when the property would have qualified for the exemption.

Source: ato.gov.au June 2024

More volatile and constrained – the macro investment outlook for 2025

Wed, 15 Jan 2025 16:09:00 GMT

Key points

– 2024 was another strong year for investors with shares up strongly on the back of better than feared growth & profits and global central banks cutting rates. Volatility was low and balanced growth super funds returned around 11%.

– 2025 is likely to see positive returns but after the strong gains of the last two years, its likely to be more volatile and constrained, particularly as Trump returns with populist policies. A 15% plus correction is likely along the way.

– We expect the RBA to cut the cash rate to 3.6% with the first cut looking like it could be in February, the ASX to return around 7% and balanced super funds to return around 6%. Australian residential property prices are likely to soften further ahead of support from rate cuts.

– The key things to watch are: interest rates; recession risk; a likely trade war; China; and the Australian consumer.

Introduction

2024 saw another year of strong investment returns on the back of falling inflation, global rate cuts and growth and profits better than expected. US shares were particularly boosted by AI related enthusiasm and optimism that President elect Trump will boost the US economy with tax cuts and de-regulation. This saw average balanced growth superannuation funds return around 11% as shares and bonds had positive returns. Over the last five years, they returned 6.7% pa, which exceeded inflation.

Balanced growth superannuation fund returns

Source: Mercer Investment Consulting, Morningstar, Chant West, AMP

Here is a simple dot point summary of key insights & views on the outlook.

Five key themes from 2024

Stronger than feared growth and profits. This was despite “high” interest rates, China worries and weak conditions in Europe.
Global divergence. US growth was strong, Europe and Japan soft.
Further disinflation. Inflation in major countries, including Australia, has fallen from peaks of 8 to 11% in 2022 to around 2 to 3%.
Falling interest rates. The RBA lagged but should start early this year.
Geopolitical threats failed to dent investment markets.

Five lessons for investors from 2024

Monetary policy still works in controlling inflation, particularly if central bank credibility is high – the lags may be long and variable, and some are hit harder than others but there is nothing new here.
Population growth and public spending matter a lot. Growth in both remained strong in Australia offsetting high rates in avoiding recession.
Inflation matters more to voters than unemployment – as everyone is hit by the former but not the latter. This was evident in incumbent governments globally losing power in 2024.
Timing markets is hard – it was easy to be gloomy with a long worry list but timing markets on the back of the worries was hard.
Geopolitics is hard to predict and can be less impactful than feared, with the Middle East war not (yet) causing a surge in oil prices, despite lots of fear that it would.

Seven big worries for 2025 – expect more volatility

Shares are expensive, with the key US share market trading on a 26 times forward PE and offering no earnings yield pick up over bonds. Australia is not so bad at 20 times but it’s not cheap either.

Equity risk premium over bonds

Source: Bloomberg, AMP

Uncertainty remains around how much the Fed, the RBA and some other central banks will cut rates as core inflation is still not at target.
Bond yields could continue to rise on the back of Trump’s tax cut and tariff policies, placing more pressure on shares.
The risk of recession remains, particularly in the US if rising bond yields prevent a recovery in manufacturing and housing and in Australia if the RBA leaves rates too high for too long.
A global trade war in response to Trump’s threatened tariffs could add to this risk particularly in Europe and Asia.
Risks for the Chinese economy are high and could be amplified as Trump ramps up tariffs & if Chinese policy stimulus remains modest.
Geopolitical risk is high: “maximum pressure” from Trump to resolve the war in Ukraine and Iran’s nuclear aims could see the Ukraine and Middle East wars getting worse before they get better threatening higher oil prices; tensions with China could escalate; political uncertainty is high in Europe with issues in France and Germany; but the Australian election is unlikely to lead to a radical change in policy.

These considerations point to a high risk of a significant share market correction at some point this year, particularly as Trump starts to ramp up tariffs as we saw in 2018.

Five reasons for optimism

Inflation is likely to continue to trend down as labour markets are continuing to ease, demand growth is still slowing and commodity prices remain well down from their 2022 high.
Central banks are likely to keep cutting rates. This is likely to range from the Fed likely cutting to 3.75-4% to the ECB which is likely to cut to 1.5%. This is likely to include the RBA where quarterly trimmed mean inflation is likely to have dropped to around 0.5-0.6%qoq in the December quarter (2.4% annualised or less), likely enabling it to start cutting in February. The recent fall in the $A being less severe on a trade weighted basis is unlikely to add much to inflation and so is unlikely to stop the RBA cutting, unless it falls a lot further.
Global growth is likely to slow but only to just below 3%, with some strengthening in the second half helped by rate cuts. Australian growth is likely to edge up to 1.8% helped by rising real wages, tax cuts and rate cuts and this should see profit growth return.
If recession does occur it’s likely to be mild as most countries have not seen a spending boom that needs to be unwound and traditionally makes recessions deep. And the Chinese government is likely to continue to do just enough to keep growth around the 5% level.
Finally, while Trump’s policies on tariffs, will create a lot of uncertainty and disruption which could trigger a correction, his first term as President tells us he ultimately wants to see US shares up. He was also elected on a mandate to get the cost of living down for Americans, not push it up. This could ultimately mean more of a focus on tax and efficiency policies (which would be positive for shares) as opposed to tariffs. Similarly, bond market vigilantes and the 38 fiscally conservative House Republicans who voted against Trump’s debt ceiling extension will limit how much he can raise the budget deficit.

Key views on markets for 2025

After the double digit returns of 2023 & 2024, global and Australian shares are expected to return a far more constrained 7% in the year ahead. Stretched valuations, the ongoing risk of recession, the likelihood of a global trade war and ongoing geopolitical issues will likely make for a volatile ride with a 15% plus correction somewhere along the way highly likely. But central banks still cutting rates with the RBA joining in, prospects for stronger growth later in the year supporting profits, and Trump’s policies ultimately supporting US shares, should still mean okay investment returns.
Bonds are likely to provide returns around running yield or a bit more, as inflation slows to target, and central banks cut rates.
Unlisted commercial property returns are likely to start to improve in 2025 as office prices have already had sharp falls in response to the lagged impact of high bond yields and working from home.
Australian home prices are likely to see further near-term softness as high interest rates constrain demand. Lower rates should help from mid-year, and we see average home prices rising around 3% in 2025.
Cash and bank deposits are expected to provide returns of around 4%, but they are likely to slow in the second half as the cash rate falls.
The $A is vulnerable to more downside against the $US with a risk it falls below $US0.60 as the RBA cuts by more than the Fed, US tariffs support the $US and iron ore prices remain soft. Its more a strong $US story though than a weak $A story and so its fallen by much less on a trade weighted basis (down 5% since end 2023 versus down 10% against the $US) resulting in less of threat to inflation.

Six things to watch

Interest rates – if underlying inflation fails to continue falling as we expect, central banks will be more hawkish than we are allowing for.
Recession – a mild recession should be manageable, but a deep recession will mean significant downside in shares. So far global business conditions PMIs are consistent with okay growth.
A trade war – Trump’s tariff policies risk igniting a global trade war which would be bad for global growth. Alternatively, if it’s a case of Trump “escalating to cut deals and then de-escalating” it may not be so bad, albeit after a rough patch along the way.
The Chinese economy – China’s property sector is continuing to struggle, and more measures are needed to support consumers.
Geopolitics – the big risk is an Israeli strike on Iran’s nuclear capability.
The Australian consumer – consumer spending remains weak and could weaken further without interest rate cuts.

Five things the Australian election should be about

The last few years have seen a slump in living standards in Australia. Stagnant productivity has been a major driver and the election ideally should be about ways to reverse this. Key policies we need to see are:

Tax reform to reduce the reliance on income tax and nuisance taxes.
A cap on public spending to free resources for the private sector.
Product and labour market deregulation to boost flexibility.
More incentives to invest.
Competition reforms to reduce market concentration.

Nine things investors should always remember

Make the most of compound interest to grow wealth. Saving regularly in growth assets can grow wealth significantly over long periods. Using the “rule of 72”, it will take 16 years to double an asset’s value if it returns 4.5% pa (ie, 72/4.5) but only 9 yrs if the asset returns 8% pa.
Don’t get thrown off by the cycle. Falls in asset markets can throw investors off a well-considered strategy, destroying potential wealth.
Invest for the long-term. Given the difficulty in timing market moves, for most it’s best to get a long-term plan that suits your wealth, age and risk tolerance and stick to it.
Diversify. Don’t put all your eggs in one basket.
Turn down the noise. We are increasingly hit by irrelevant, low quality & conflicting information which boosts uncertainty. The key is to avoid the click bait, turn down the noise and stick to a long-term strategy
Buy low, sell high. The cheaper you buy an asset, the higher its prospective return will likely be and vice versa.
Avoid the crowd at extremes. Don’t get sucked into euphoria or doom and gloom around an asset.
Focus on investments you understand offering sustainable cash flow. If it looks dodgy, hard to understand or has to be justified by odd valuations or lots of debt, then stay away. There is no free lunch!
Seek advice. Investing can get complicated.

Dr Shane Oliver – Head of Investment Strategy and Chief Economist, AMP

Important note: While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.

Three simple steps for financial wellness

Tue, 14 Jan 2025 16:04:00 GMT

If money’s too tight to mention, here’s some small steps that can make a big difference in achieving your financial goals.

How would you rate your level of financial wellness?

Do you think you’re in a good position to meet your immediate and near-term financial obligations? What about your long-term goals?

They’re tough questions, asked in a particularly tough financial environment.

The sharp rise in general living expenses over recent times spurred central banks to raise interest rates in a bid to quell consumer demand. Many households are under increased financial pressure.

Yet, in assessing your level of financial wellness, it’s important to look beyond short-term events.

Sure, they definitely feed into the overall equation. Household budgets are likely to be stretched until economic conditions “normalise”.

But also consider whether your financial wellness is on track in terms of your future, longer-term financial goals. This includes your regular investing strategy, both inside and outside of superannuation.

Just doing simple things, like having a household budgeting system, can make an enormous difference.

This three-step framework for financial wellness may help you to identify strategies to improve your financial wellness in order to meet your shorter-term financial obligations, and to keep you on track in terms of your longer-term goals.

Step 1: Take control of your finances

Taking control of your finances largely comes down to understanding everything about your finances – the amount of money you receive in regular and ad hoc income, the amount you need to spend on general living expenses, the money being put towards specific goals (such as a house or car), and what’s left over (your savings).

Consider implementing a budgeting strategy, if you don’t already have one, to track all your expenses and identify where potential savings could be made so you can build momentum towards achieving your short-term and long-term objectives.

Reductions in certain expenses could be used towards paying off high-interest debts, such as outstanding credit card balances, and ensuring you can pay the minimum payments on all debts.

Step 2: Prepare for the unexpected

Having better control over your money will invariably put you in a stronger position to build wealth over time.

Protecting your wealth as it grows is important, and that means preparing for the unexpected.

Households can benefit from setting aside emergency savings to cover modest, unexpected expenses for when an inevitable or unlikely event occurs.

Think of events such as unexpectedly losing your job or a sudden drop in the income you generate from your business activities, and unforeseen spending shocks that can eat into your accumulated savings.

Emergency savings can ensure you have some cushions in place to help reduce the potential impacts of such events on your household budget, financial plans, and goals.

Insurance cover is also an important component of financial wellness and protecting against unexpected or unwanted financial losses. Common types of policies include health, life, disability, trauma, and income protection cover.

Given insurance premiums can be high, striking a balance between risks, costs, and coverages is prudent.

Step 3. Make progress toward your goals

To achieve your long-term financial goals, it makes sense to remove any impediments that will stand in the way of attaining them.

Step 3 of the financial wellness framework focuses on strategies such as paying off longer-term debts, such as your home mortgage. Paying higher-interest debt first will save on interest.

Depending on your life stage and investment trade-offs, you can choose to either pay down lower-interest debt, using money previously allocated to investing, or to rely on your budget and one-time windfalls to accelerate the paydown strategy.

However, having cash on hand may also be important for your peace of mind. Directing more money toward paying debt forgoes liquidity in the short term, so evaluate whether you need cash in the short term.

Also, consider using accounts paying higher interest to save for shorter-term goals, such as buying or paying off a house, vehicles, funding a holiday, or in order to retire early (before you’re able to start accessing your superannuation).

Conclusion

Attaining a high level of financial wellness comes down to a range of strategies, but first and foremost it’s about taking control of your personal finances.

Just doing simple things, like having a household budgeting system, can make an enormous difference in helping you to understand how your money is being allocated, and where you can potentially save on costs.

Having a financial buffer, or war chest, is also important to cater for unexpected events such as a major unforeseen expense, or if you suddenly lose regular income.

Think about having investments that are liquid enough to access if you need extra cash, which can include money you have invested in exchange traded funds or managed funds.

Lastly, always stay focused on your long-term goals and use a range of strategies to achieve them, such as reducing your debts over time.

Taking direct action with your finances will greatly improve your chances of achieving investment success over the long term.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

GENERAL ADVICE WARNING
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966).
The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”).
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.
Important Legal Notice – Offer not to persons outside Australia
The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws.
© 2024 Vanguard Investments Australia Ltd. All rights reserved.

It’s super hump month. Make the most of it

Tue, 14 Jan 2025 16:04:00 GMT

Six ways to get more money into your superannuation fund.

The start of the 2024-25 financial year on 1 July saw some significant changes come through designed to help working Australians get more money into their superannuation.

Fundamentally they involved increases to the statutory amounts individuals can contribute into their super every financial year.

The annual limit on concessional contributions, which are only taxed at 15%, was lifted from $27,500 to $30,000. Separately, the annual limit on non-concessional (after-tax) contributions was lifted from $110,000 to $120,000.

Now that we’re six months into this financial year it’s worth evaluating whether you’re making the most of the changes that came into effect. A few basic adjustments to your current super contributions strategy could not only result in income tax savings but also lead to a higher super account balance.

You could call December super hump month because we’re halfway through the financial year. That means the opportunities to get more into your super this financial year are shrinking.

So, what can you potentially do to get more into your super? Here’s six options.

Option 1

Start a salary sacrifice plan with your employer to direct some of your pre-tax salary into your super account. To set one up, arrange with your employer for them to pay either a set dollar amount or fixed percentage amount of your pre-tax salary into your super account every payday. As super contributions are only taxed at a 15% rate this will likely mean you pay less tax on your total income. Even small regular extra contribution amounts can add up to significant amounts as your retirement savings compound over time. Keep in mind that any salary sacrifice contributions you make are added to the regular compulsory Superannuation Guarantee payments made by your employer. As noted, the annual limit for all concessional contributions is now $30,000 and there are tax penalties for exceeding this limit.

Option 2

An alternative to an employer salary sacrifice arrangement is to use after-tax money to deposit funds directly into your account. In doing so, you may be able to claim a tax deduction in your next tax return given that concessional contributions are taxed at 15%. However, to claim a deduction, you must complete an Australian Tax Office (ATO) form advising your super fund. You must also receive an acknowledgement from your super fund. Both these things will need to happen before you lodge your 2024-25 tax return. The same rules apply as for salary sacrifice arrangements. That is, the annual limit for all concessional contributions is $30,000 and tax penalties apply for exceeding this limit.

You may have another option available that will enable you to get more concessional contributions into your super account before 30 June. You may be allowed to carry over any unused concessional contributions from the previous five financial years. The qualifications are that you must have made concessional contributions in the financial year that exceed the $30,000 annual concessional contributions limit and your total super balance was below $500,000 as at June 30 of the last financial year. You can view and manage your concessional contributions and carry-forward concessional contributions by accessing the ATO’s online services by logging into your myGov website account.

Option 3

Option 4

If you’re expecting to come into some extra money before the end of this financial year, perhaps from the sale of a property or other assets, another option is to keep some of the proceeds aside and direct them into your super as an after-tax contribution. This may suit people closer to retirement age who may want to get more money into their super. After age 60, if you have stopped work and access your super as a pension income stream, your investment earnings and the payments you receive are tax free. A tax deduction can’t be claimed on non-concessional contributions. As noted, the non-concessional contributions limit in a single financial year is $120,000. However, under what’s known as the “three-year bring-forward rule”, you may be able to make a $360,000 non-concessional contribution in one financial year. You’re then unable to make further non-concessional contributions for the next three financial years.

Option 5

While strictly speaking this option isn’t tied to the financial year, you may be able to contribute up to $300,000 into your super fund using proceeds from selling your principal place of residence if you’re aged 55 or older. Couples can contribute up to $300,000 into their super each. Downsizer contributions form part of the tax-free component in your super fund. It can be made in addition to non-concessional super contributions and doesn’t count towards the annual contributions limit. There are a range of conditions around downsizer contributions, and it’s prudent to check these on the ATO website . Also consider seeking tailored advice from a licensed financial adviser.

Option 6

The ATO also allows couples to split up to 85% of their concessional contributions each financial year. Super splitting can be done at any age, but a spouse must be either less than 60 years old (which is known as the preservation age) or aged between 60 and 65 years, and not retired. Couples wanting to split their super contributions first need to check whether their super fund allows it. The full guidelines around contributions splitting, including eligibility and the application form that needs to be completed, are available on the ATO website .

Consider an adviser

Super and retirement planning is a complex area.

Take care to understand the contributions types and limits carefully as there are significant tax penalties for exceeding the applicable contributions caps.

There are also aged-based limits on contributing into super.

If you’re unsure about your super options and need some advice, speak to us today.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

Important Legal Notice – Offer not to persons outside Australi
aThe PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws
.© 2024 Vanguard Investments Australia Ltd. All rights reserved

Releasing the value in your home

Tue, 14 Jan 2025 16:04:00 GMT

Rising property prices have led many people to look for ways to unlock the increased equity in their homes so they enjoy a comfortable lifestyle in their golden years.

For most of us, our homes represent the biggest or most significant portion of our wealth. But it’s an asset that can’t necessarily be realised quickly. It might take some time to sell your home and, in any case, you still need somewhere to live. And, if you’re selling in a rising market, you’re also buying in a rising market.

There are a number of ways to access the equity in your home, although be mindful of the consequences for your particular circumstances. With such a big decision and the complex financial products available, it’s best to get independent financial advice, we can help clarify how you might be affected now and in the future.

Reverse mortgages are more popular than ever, allowing you to borrow money using the equity in your home as security.

Following the introduction of tougher regulatory requirements, today, reverse mortgages are provided by a number of small bank and non-bank lenders.

The highest amount you can borrow, using your home as security, varies according to your age. At age 60, it’s likely you will be able to borrow around 20 per cent of the value of your home. This amount usually increases as you get older so by 65, you may be able to borrow about 20-25 per cent. ⁱ

The advantage of a reverse mortgage is that, while you’re living in your home, you don’t make any repayments on the loan. The loan, including interest and fees, is repaid when you move out or sell your home. Interest charged on the loan is usually higher than for standard mortgages. Currently, rates average just over 8 per cent to just under 10 per cent. ⁱⁱ

The Australian Securities and Investments Commission MoneySmart website provides a reverse mortgage calculator to help you decide if it’s the right course of action for you.

The Federal Government’s Home Equity Access Scheme is a popular alternative to private reverse mortgages products, with the scheme growing by about 60 per cent a year. ⁱⁱⁱ

The Scheme provides loans to eligible older people, secured against your home. You can choose to receive a lump sum or a fortnightly tax-free payment. ^iv

The loan and any costs must be repaid to the government but you can make repayments or stop them at any time. If you sell the property you can repay the loan on settlement or transfer the loan to another property.

If there’s an outstanding loan after your death, the government will seek repayment from your estate.

The current interest rate is 3.95 per cent.

Slightly different to a reverse mortgage, home reversion is another way of accessing the equity in your home while still living in the property.

You don’t pay interest because it’s not a loan but there are transaction fees. The provider pays you a discounted amount for the percentage of the property you sell based on today’s value. Then, when the property is sold, the provider receives the same percentage of the sale price, meaning that the more your home increases in value, the more the provider receives.

Another way of taking advantage of the equity in your home is to sell it and buy a smaller one. Downsizing could allow you to clear the mortgage and invest or spend anything left over.

Those aged 55 or older can contribute up to $300,000 (for each spouse) from the sale into your superannuation fund. It’s considered a non-concessional contribution, but it doesn’t count towards the contribution cap. ^v

You could also consider converting your home to a dual occupancy or, if you’re on a large block, subdividing.

Get in touch with us for a review of the options available to you, so you can look forward to enjoying your golden years with confidence.

i Reverse mortgage and home equity release – Moneysmart.gov.au
ii Compare reverse mortgage interest rates in July 2024 – Finder
iii 2022-23 Annual Report – Australian Government Department of Social Services
iv Home Equity Access Scheme – Services Australia
v Downsizer super contributions – Australian Taxation Office

Reverse mortgages

A Government scheme

Home reversion

Other options

Preparing your kids for financial success

Tue, 07 Jan 2025 16:05:00 GMT

Here’s some easy money management skills for children of different ages.

Teaching good financial habits, such as saving and budgeting, is one of the best ways to prepare children to have a secure financial future.

It’s never too early or late to start talking about money with your children — start as soon as you are comfortable to and make learning as relevant to their age and life stage as possible.

Below are some strategies that parents can use with their children when they’re at different ages.

Younger children (under age 11)

A great way to begin to teach younger children about money is to explain its value and its function in the world. Kids often focus on rewards-based systems, where they earn a reward for good behaviour or academic achievement. Use this time to teach them how to earn money as a reward and divide it into three categories: spend, save, and give. For example, spending may be related to buying a fun treat or toy, saving could be taught as a way to buy something they really want in the future, and giving is how you help those in need.

Activity: “Money jars”

Set up three separate containers for “bank accounts” and label them Spending, Saving, and Giving.
Each week, offer opportunities to earn money by using real-life experiences, such as listening well, completing homework early, or doing simple chores.
At the end of the week, count how much money they’ve earned in each category.

Tip: Sometimes when sharing the concept of saving with your child, it can be helpful to explain you’re “paying yourself for something fun in the future” and relating it back to an age-appropriate concept they can understand. You can make tweaks to this activity along the way. For example, if your child puts extra money into their Saving jar, you could provide a few additional dollars to help them understand compounding interest—how saving money can help them earn more over time. If they receive money as a gift for a holiday or celebration, bring out the money jars for a refresher. Repetition and reinforcement become important in learning any discipline, especially money management skills.

Preteens and young adults

Parents often associate the tweens and teens as the years their kids desire more independence and more options. In this case, tying money management and financial literacy to something relevant in their lives can help keep them engaged. For example, many young people are interested in gaming, so try to relate investing to playing a game. Before they start the investing game, provide them with an overview of the concepts of shares, bonds, and cash, and how they operate differently, like different players in a game. The different players in the game all act together to form an investment strategy. Depending on a child’s age, engagement, and appetite for these discussions, consider introducing the concept of building model portfolios. Review model portfolios that show different asset allocations, and then have each family member choose a portfolio. Once a family member chooses a portfolio, discuss what stood out to them about the portfolio. This will help reinforce the importance of asset allocation and diversification.

Activity: Investment simulators

Google the phrase investment simulators; many are available online.
These simulators allow you to invest in different securities and monitor their performance over time.
Have frequent conversations with your child about their portfolio’s performance. How would they feel if those were real funds in the market they “lost” or “gained”? This can help reinforce the concept of risk and reward in investing.

University graduates and beyond

At this stage, they may be ready to digest more advanced topics. Discuss the importance of goals-based investing by asking them to think about the next big purchase they want to make—are they saving for a car, a down payment for a home, or even setting aside money for future retirement? Ask: What is their time frame for that investment? When do they want to reach that goal? This helps teach the importance of time horizon as it relates to investing; the longer a person has to save and invest, the greater the likelihood for success in reaching their goals. Depending on their current situation, they may also have student loans to pay back. Budgeting may become a critical topic at this time, and sitting down with them to create that budget can be helpful. This is another important component of financial literacy and money management, and attaching it to an important life stage can make it all the more relevant.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

GENERAL ADVICE WARNING
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966).
The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”).
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.
Important Legal Notice – Offer not to persons outside Australia
The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws.
© 2024 Vanguard Investments Australia Ltd. All rights reserved.

Measuring up the price of shares

Tue, 07 Jan 2025 16:05:00 GMT

Analysts have many financial measures to value companies. Here’s a brief overview.

Share market investment analysts thrive on numbers.

So, when you read reports about markets or specific companies being “overvalued” or “undervalued”, you can generally assume there’s been a fair bit of analytical number crunching going on behind the scenes.

But how do investment analysts reach their conclusions? Is there a magic formula available that you can use to work out if you’re paying over the top, or getting a bargain?

The answer to that question probably lies somewhere between yes and no, depending on a whole range of different factors.

How analysts value companies

A golden rule of investing is to always do your homework before parting with any money.

If you’re looking to invest in individual companies, part of your due diligence may involve reading research reports written by investment analysts.

Typically, among other things, investment analysts will provide a detailed overview of a company’s current operations, past business performance, and its future earnings and growth outlook.

Based on their findings, they’re likely to produce a recommendation such as “buy”, “hold”, or “sell”.

To reach a conclusion on what they consider to be the “fair value” for a company’s shares, investment analysts have a large toolkit of quantitative measures at their disposal.

Here’s some of the common ones:

The P/E ratio

Commonly referred to as P/E, the price-to-earnings ratio is determined by dividing a company’s current share price by its latest earnings per share.

Earnings per share, or EPS, is calculated by dividing a company’s most recent net profit by the number of shares it has on issue to investors.

In essence, the P/E ratio shows what investors are willing to pay now (the current share price) for a company based on its past earnings.

A high P/E could signal that a company’s share price is high relative to its earnings, while a low P/E could mean the opposite.

Sometimes a high P/E reflects that the market is willing to pay more for the company due to the expectation of above average future growth. To take this into account, some analysts look at forward looking metrics such as the PEG ratio.

The PEG ratio

The PEG, or price/earnings to growth ratio, takes the P/E ratio to a new level.

Instead of just focusing on EPS (which is the past performance measure used for the P/E ratio), the PEG adds the expected future earnings growth rate into the measurement equation.

It’s calculated by dividing the company’s P/E ratio by its future growth rate.

A lower PEG suggests a company is undervalued relative to its future growth compared to a higher PEG.

Return on equity

Return on equity, or ROE, is calculated by dividing a company’s net income by its net assets (total assets minus total liabilities).

ROE is one way of determining how well a company may be performing. A higher ROE suggests a company is better at using shareholder equity to generate profits.

Free cash flow

Free cash flow is essentially the cash left over after a company has paid its operating and capital expenses.

If a company has a high free cash flow, it shows that the company is generating excess cash. This can either be deployed back into the business for further expansion of used to pay shareholder dividends.

Investment analysts often factor in free cash flow as part of their future growth analysis.

Having broad diversification across many companies is a proven strategy to reduce share portfolio risk.

The benefits of diversification

Investment analysts have many financial measures at their fingertips, but it’s quite common for a group of analysts to use exactly the same measures and reach different conclusions.

Why? Because, beyond quantitative measures, there’s also a large degree of subjective judgement when it comes to deciding on a company’s investment recommendation.

That’s why you often see companies have a range of share price forecasts from different investment analysts.

You do have an alternative route though, which avoids having to do your own number crunching or having to decipher specific analyst recommendations.

That route is all about diversification.

Instead of focusing on just a few listed companies recommended by analysts, why not cast your investment net over hundreds, or even thousands, of companies using a managed fund or exchange traded fund (ETF)?

A broad-based index fund will typically invest in many companies, usually proportionately based on their market capitalisation, with its largest holdings being in the biggest listed companies.

As an investor, that means you’re essentially buying into all the companies that tick the boxes that investment analysts are looking for.

Rather trying to find one listed company or a few companies that may deliver a great investment return over time, he advocated investing much more broadly across the wider universe of listed companies using index funds.

Having broad diversification across many companies is a proven strategy to reduce share portfolio risk and has consistently delivered strong investment returns over the long term.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

Term deposits

Fri, 20 Dec 2024 16:01:00 GMT

Term deposits let you invest for a set amount of time and get a fixed interest rate. They can be useful when saving for bigger items like a car or investing when you want to be certain about the interest you’ll earn.

If you want to save but might need quick access to your money, a savings account could be better.

How term deposits work

Term deposits are a way to invest your money with an authorised deposit-taking institution (ADI) and earn a fixed rate of interest.

Your money is locked away for the time that you choose (the term), usually between one month and five years. You need a minimum amount to open a term deposit, for example, $5,000.

Advantages of term deposits

Higher interest rates

Term deposits offer a higher interest rate than most transaction and saving accounts. Generally, the more money you put in, or the longer you invest, the higher the interest rate.

Protected by the Australian Government Financial Claims Scheme

The financial claims scheme (FCS) protects deposits made with Australian banks, building societies and credit unions. This guarantees to pay you up to $250,000 to replace deposits in the unlikely event your bank, credit union or building society fails. The safety net only applies to authorised deposit taking institutions regulated by APRA.

No set-up fees

Most term deposits have no set-up or account fees. But if you need your money before the term ends, you generally have to give 31 days’ notice and pay a penalty fee. Check the terms and conditions.

Linked account

Some providers may pay your interest into a linked transaction account . Check if there are any account fees or ask if they can pay the interest into an account you already have.

Disadvantages of term deposits

Early withdrawal penalties

To earn interest on your term deposit, your money is locked away for a chosen period of time. If you need your money before the term ends, you may have to pay a penalty fee. You may only receive a proportion of the interest earnt, or none at all.

Be wary of term deposit scams

Scammers are offering fake investments advertised to be ‘like a term deposit’ that claims to be a ‘new breed of investment’. Look out for:

Offers claiming to ‘beat inflation’.
Interest rates that are higher than other alternatives.
Guaranteed high returns.
Someone contacting you ‘out of the blue’ with an offer to invest.

Choosing a term deposit

Compare the features of term deposits

Always shop around for the highest interest rate and best features before you choose a term deposit. Be sure to compare products across different financial institutions. It’s important to check:

Interest rate

what the interest rate is
when interest is paid — monthly, annually or at maturity

Time frame

how long you can invest for
how interest rates change with different investment time frames

how much you need to open a term deposit
how the interest rate changes the more you invest

Amount invested

if there are any set-up or account fees
how big the penalty fee is if you need your money early

Fees

Using comparison websites

Comparison websites can be useful, but they are businesses and may make money through promoted links. They may not cover all your options.

Scammers can steal your personal details by creating fake comparison websites for term deposits and other financial products. Comparison websites must be authorised and licensed to provide financial product advice for any product discussed on their website. Check the comparison website has a Financial Services Guide.

How to check it’s a term deposit

Term deposits can only be issued by a bank, credit union or building society listed by APRA as an authorised deposit taking institution (ADI). If the ADI is not on APRA’s list , then it’s not a term deposit and it will not be covered by the financial claims scheme.

Some legitimate managed funds can have investment products with the look and feel of a term deposit, but these are much higher risk. Check with the ADI to make sure it’s a term deposit.

What to do when your term deposit matures

Term deposits are not a ‘set and forget’ investment. When your term deposit matures, your provider will contact you. They’ll tell you how much interest you’ve earned and what your options are.

If you do nothing, your term deposit may roll over into a new term deposit. There may be a fee to get your money out of the new term deposit. It could also have a lower interest rate than before.

Review your term deposit a month before it matures. Compare it with other products to make sure you’re getting the best deal.
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/saving/term-deposits
Important note: 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. Past performance is not a reliable guide to future returns.
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.

Retirement income

Fri, 20 Dec 2024 16:01:00 GMT

Retirement means different things to everyone. It may be a definite point in time when you stop work, and begin a new phase of life.

Or it may be a gradual process where you vary working hours as your priorities shift. You might decide to leave employment and return to part-time work later.

How much money you’ll need to retire

Most people can now expect to live well into their 80s. This means if you stop working in your mid-60s, you’ll need retirement income for 20 years or more.

Making a retirement plan can help you manage your finances, and cope better as your life and priorities change.

Talk about your retirement priorities with a partner, colleague or friend.

Get professional advice, if you need it. Your super fund, a licensed financial adviser or a Services Australia Financial Information Service (FIS) officer can help you.

Where your retirement income can come from

Find out when and how to access your super, then explore your retirement income options.

Your main options are:

an account-based pension
an annuity
a lump sum, or
a combination of these.

Or you could consider a transition to retirement strategy. Speak to us if you need more information about how this strategy works and if it might be suitable for you.

Check if you’re eligible for the Age Pension, government benefits or seniors concessions. See how tax on retirement income works and contact us for help if you need it.

Weigh up the pros and cons if you’re considering downsizing your home, or a reverse mortgage or home equity release product.
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/retirement-income
Important note: 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. Past performance is not a reliable guide to future returns.
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.

Harnessing your professional brand in a world of AI

Fri, 20 Dec 2024 16:01:00 GMT

Artificial Intelligence (AI) technology is becoming more prevalent in our society and although there are many early adopters of AI, there is still a very high percentage of people who have reservations about how this type of technology can or could enhance our lives, not only in the workplace but in our everyday lives as well.

What does AI mean for you and your career?

There are so many advantages and benefits when it comes to using artificial intelligence, it drives innovation and creates efficiencies in our everyday lives. Data suggests that incorporating AI into the workplace and making it work for you can have positive impacts. The study found that 59% who were able to harness and leverage AI in the workplace had increased job satisfaction.i

While AI has been used to improve productivity and create efficiencies for businesses for quite some time – think AI chatbot ChatGPT, there is still a strong perception that AI is going to take over every aspect of our jobs and we will all be at risk of being unemployed.

Take the virtual customer service assistant for example, they are so mainstream now (think online banking), that most of us forget what it was like talking directly to a human customer service assistant. However, what might be forgotten is while these chatbots assist with our routine and frequently asked questions, the customer service team is freed up to answer and assist with the more complex enquiries, providing the end client with better service.

When massive technological changes like this occur, it generally frees up people to be able to take on more complex roles. It’s important to note, that we still have a long way to go before it gets to the point where technology will completely replace humans in the workplace.

AI has been around for decades

We’ve actually been using AI for longer than you think. Predictive text on your phone, Google search, and things like Alexi and Siri have been around for many years. So, we’ve been some form of using artificial intelligence for quite some time.

While AI is still ‘relatively’ in its infancy, now is the perfect time to discover what implications AI may have on your career, and how you can start incorporating it into your life and workplace to futureproof yourself both personally and professionally.

Find out if your employer offers any training courses that could help to develop your skills and while the training may not pertain directly to your role, you should consider whether it may improve your other roles in the future.

In the workplace, look for ways you can automate routine tasks to free up more time that allows you to focus on other activities that could be adding more value.

Developing your personal brand

Building and developing your personal brand in a way that differentiates you from others can set you apart from the crowd. Having a strong personal brand can help boost your chances of success if you’re looking for new job opportunities.

Relationships and connectivity are still some of the most important areas in the workplace and will become increasingly more so as AI is not unable to emulate this aspect of our work lives, so focussing on developing your skills in areas like creativity, critical thinking, and emotional intelligence will assist in building your personal brand and future proofing your career.

LinkedIn is the perfect example of how social media can be used to help develop your personal brand on a professional level. This channel provides networking opportunities you wouldn’t ordinarily have in the workplace, allowing you to connect and collaborate with others to learn and develop even further.

Another option is to invest in courses outside of work. If you think aspects of your job could eventually be replaced by AI, do your homework and find ways to upskill or reskill in other areas.

Harnessing AI opportunities

AI is a powerful tool and with the constant development and advancement of this technology, understanding its full potential in the workplace should be embraced more broadly. As we’ve seen with the small steps being taken to create driverless cars, artificial intelligence can only make our lives easier.

The lowdown on negative gearing

Fri, 20 Dec 2024 16:01:00 GMT

Recently, negative gearing has been making waves in the news and with rental affordability becoming a serious issue in Australia, various political parties have weighed in.

While some argue that it’s a vital tool for encouraging investment in housing and fixing the housing crisis, others believe it fuels property price increases, contributing to housing affordability issues and making home ownership increasingly difficult for first-time buyers.

However, there are concerns that any reforms to this widely used tax concession might reduce the supply of homes for renters by making housing investment less attractive.

And while there are certainly arguments for and against tinkering with this tax law, a further consideration that is contributing to debate, is the increase in gearing claims over the last few years.

Some $8.7 billion in negative gearing claims were made in the 2020/21 financial year, according to the latest Treasury analysis, and this is anticipated to soar due to the change from record low interest rates to a climate of higher rates in record time. i

Despite increases in rents, rental payments are still lagging behind loan repayments on properties that may have been bought at recent high prices, so the number of investment property owners who are negatively geared has increased. ii

To understand what all this means, it’s helpful to look at what negative gearing is and how it works.

What is negative gearing?

Negative gearing is an investment and tax minimisation strategy, primarily associated with property, where the costs of owning an investment property exceed the income it generates. This might sound like a strange way to invest, but it can be quite beneficial when you know how to play the game.

In simple terms, if you’re losing money on your property each year, that loss can be used to reduce your overall taxable income. For example, if you’re paying more in mortgage repayments, maintenance, and other expenses than you’re earning in rent, you can declare that loss on your tax return. This can lead to a smaller tax bill, which is appealing for many investors.

How does it work?

Let’s break it down with a quick example. Imagine you’ve bought an investment property for $600,000. Your annual expenses, which may include mortgage repayments, repairs, insurance, and property management fees, total around $40,000. If you’re only earning $30,000 from rent, you’re facing a loss of $10,000.

By declaring that $10,000 loss on your tax return, you can reduce your overall taxable income. If your regular job pays you, say, $80,000 a year, you can effectively lower this amount by $10,000, which means you’ll pay less tax overall.

The potential upside

So, why would anyone want to invest in a property that’s losing money even if it means you get a bit of a tax break? The key here is capital growth. While you may be negatively geared in the short term, many investors bank on the property appreciating over time.

Let’s say over time that property you bought for $600,000 rises in value to $800,000. When you eventually sell it, you could make a tidy profit, far exceeding the losses you incurred along the way. Historically, property in Australia has appreciated in value over the long term, making it a popular investment choice.

Risks and challenges

While there are some certain benefits associated with negative gearing, investing in property isn’t without its challenges.

Property investment requires a substantial initial outlay, not to mention the ongoing costs such as maintenance, rates, and insurance. Investors considering this type of arrangement need to have the financial stability to fund the shortfall out of pocket until the property becomes positively geared (meaning your investment property rental return is higher than your repayments and other costs) or is sold.

Plus, the property market can be unpredictable. Prices can fluctuate based on a multitude of factors, including economic conditions, interest rates, and even local demand.

It’s worth noting that some proposed changes could affect the way negative gearing works, so staying informed is crucial for existing or potential property investors.

If investing in property is something you are interested in exploring, we are here to help you qualify for an investment loan that’s competitive.

CGT when selling your rental property

Fri, 20 Dec 2024 16:01:00 GMT

How capital gains or losses apply

When you sell or dispose of a rental property you may make a capital gain or loss.

A capital gain or loss is the difference between what it cost you to obtain and improve the property (the cost base) and the amount you receive when you dispose of it.

If you make a:

net capital gain in an income year, you’ll generally be liable for capital gains tax (CGT)
net capital loss, you can carry it forward and deduct it from your capital gains in later years.

Use this calculator or steps to calculate your CGT .

You may be entitled to a part of full main residence exemption if you lived in the property before renting it out (see Treating your former home as main residence ).

You will be entitled to a part main residence exemption if you rented out part of your home .

For a summary fact sheet with common scenarios about CGT and eligibility for the main residence exemption that you can download as a PDF, see Capital gains tax and the main residence exemption .

If you are a co-owner of the property, you’ll make a capital gain or loss in accordance with your ownership interest in the property.

The application of a capital gain or loss depends on when you acquired the property:

If you acquired the property before 20 September 1985 then it will only apply to certain capital improvements made after that date.
If you acquired the property after 20 September 1985, then it will apply to the entire property.

For a summary fact sheet with common scenarios about the CGT on sale of property that you can download as a PDF, see Capital gains tax on the sale of property .

Working out your costs

The cost base and reduced cost base of a property include the amount you paid for it together with some incidental costs associated with acquiring, holding and disposing of it (such as legal fees, stamp duty and real estate agent’s commissions).

It does not include amounts that you have claimed or could claim as a tax deduction.

When you sell your rental property, the time of the event (the time at which you make a capital gain or loss) is when you enter into the contract, not when you settle.

Example: capital gains on the sale of a co-owned rental property

Karl and Louisa bought a residential rental property in November 2016 for a purchase price of $750,000.

They incur costs of purchase, including stamp duty and legal fees, of $30,000.

After purchase they improved the property by constructing a fence for $6,000.

Over the 7 years of ownership of the property, they claimed $5,000 in decline in value deductions and $35,000 in capital works deductions. (If they had purchased the property after 9 May 2017 then there would be no deductions for the decline in value of any second-hand depreciating assets.)

In June 2023, they entered into a contract to sell the property, and in November 2023 it was sold for $900,000. Their costs of sale, including legal fees, were $10,000.

A + B + C + D − E – F = Cost base

Where:

A is the purchase price
B is the costs of the purchase
C is the cost of property improvements
D is the costs of sale
E is the capital works deductions
F is the total amount of decline in value deductions claimed over the period of ownership of the rental property

$750,000 + $30,000 + $6,000 + $10,000 − $35,000 − $5,000 = $756,000

The capital gains outcomes are:

Proceeds = $900,000

Proceeds − Cost base = Capital gain outcome

$900,000 − $756,000 = $144,000

As the property has been owned for more than a year, the discount capital gain rules reduce the capital gain to $72,000.

Karl and Louisa owned the property jointly. This means that they each have a capital gain of $36,000 which they will need to put in their tax return for the year in which the contract to sell the property was made, being the 2023–24 year.

End of example

Capital expenses

Expenses you incur when purchasing, acquiring, selling, or disposing of your rental property are capital expenses. You may be able to include capital expenses when calculating the ‘cost base’ of your property. This can help you reduce the amount of CGT you pay when you sell your property.

Capital expenses include:

conveyancing costs paid to a conveyancer or solicitor
title search fees
valuation fees (when it is a private valuation conducted by your solicitor)
stamp duty on the transfer of the property.

Example: capital expenses

Stephen recently purchased a rental property that needed repairs before the tenants moved in. He paid tradespeople to:

repaint dirty walls
replace broken hardwired light fittings
repair doors on 2 bedrooms.

The house was also treated for damage by white ants.

Because Stephen incurred these expenses to make the property suitable for rent (not while he was using the property to generate rental income), these expenses are capital expenses and are added to the cost base of the property.

End of example

GST on rental properties

Generally, the sale of existing residential premises is input taxed. This means:

you cannot claim GST credits on any costs associated with buying or selling
GST does not apply to the rental payments you receive.

However, if you build new residential premises for sale, you may:

be liable for GST on the sale ( at settlement )
need to register for GST depending on your turnover.

If you do need to register for GST, you may also be entitled to GST credits on construction and sale costs, even if the premises have been rented for a period before being sold.

For more information, see GST and residential property .

Foreign resident capital gains withholding

Foreign resident capital gains withholding (FRCGW) applies when selling your rental property where the contract price is $750,000 or more.

The FRCGW tax rate is 12.5%.

A clearance certificate application form should be completed and lodged by Australian resident sellers who don’t wish to have amounts withheld by purchasers.

For more information on FRCGW, see Capital gains withholding: Impacts on foreign and Australian residents.

Source: ato.gov.au June 2024

Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/cgt-when-selling-your-rental-property
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.

The cost of refinancing your home loan

Fri, 20 Dec 2024 16:01:00 GMT

Consider the expenses involved in refinancing

If you’re debating whether to refinance your home loan, you need to think about whether the benefits of switching home loans will outweigh the costs involved.

There are a number of expenses to consider, including charges and fees from your current lender (and from your new lender if you’re switching banks). You’ll also need to consider what interest rates you’ll be paying over the long term.

The major costs of closing your home loan

Break costs

The bank may charge you a break cost if you exit a fixed home loan early. A break cost covers any potential losses your lender might incur because of you leaving your home loan early.

Discharge settlement fee

You might be charged a discharge settlement fee, otherwise known as a loan exit or termination fee, for closing your home loan.

Lenders may charge this fee to cover the cost of administration when you exit a loan. It can apply to both variable rate and fixed rate home loans.

Main upfront costs

Loan establishment fee

When you refinance, you may need to pay an application fee to cover the administration cost of setting up the new loan.

Property valuation fee

You may be required to get a property valuation in order to determine your equity. This cost can vary and some lenders may include the valuation in your application fee. Some lenders may cover the cost of the valuation themselves.

Settlement fee

If there are legal costs in settling a new home loan with the lender, you may need to pay a settlement fee.

Mortgage registration fee

Each time you refinance your home loan to a new lender, your new mortgage will need to be registered against your property title with your applicable State or Territory government, which will charge you a mortgage registration fee. The mortgage registration is usually requested by your new lender and the mortgage registration fee will vary depending on what State or Territory the property is located in.

Ongoing costs

Keep an eye out for ongoing costs like regular monthly fees or early repayment fees. This may be a critical factor to ensure that refinancing your home loan is worthwhile for you.

Other considerations

Switching your interest rate type

When you refinance, it’s a good opportunity to weigh up the pros and cons of fixed vs variable interest rates.

Introductory rates

It’s important to be aware that introductory interest rates on variable rate home loans will revert to the standard variable rate after the introductory period ends. Make sure you’re aware of what those rates are and what they mean for your repayments and interest charges over the life of the loan.

Lenders Mortgage Insurance

Lenders Mortgage Insurance (LMI) generally applies to home loans where the loan to value ratio (LVR) is more than 80 per cent.

If you paid Lenders Mortgage Insurance to your lender when applying for your existing loan, and your LVR is still higher than 80 per cent, you might need to pay LMI again when you refinance.

Consider keeping your current repayment amount

Refinancing to a lower interest rate can be a good opportunity to make the most of lower regular minimum repayments. But it also gives you the option to maintain the same repayment amount as your previous loan and reduce your debt faster.

Fixing your rate

Keep in mind that if you switch to a fixed interest rate home loan, there may be limits to what you can repay over the fixed interest rate term before you incur break costs – so make sure you factor that figure into any extra repayments you make.

Changes to your loan term

If you are considering extending your loan term when you refinance, your repayments may reduce, but the total amount you’ll end up paying to repay the loan will increase.

Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/home-property/pay-off-home-loan/cost-refinance-home-loan
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2024 National Australia Bank Limited (“NAB”). All rights reserved.
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.

Why many of us need a super savings nudge

Tue, 17 Dec 2024 16:16:00 GMT

Making extra contributions into super can go a long way. Here’s some easy steps.

Each year, October 31 is designated as World Savings Day.

In fact, this year actually marked the 100th anniversary of the official launch of World Savings Day at the 1924 International Savings Bank Congress held in Milan, Italy.

It was a great idea then, and still is. The simple purpose is to highlight the importance of having a savings strategy, to put some extra money aside into a bank account or some investments.

In the Australian context, World Savings Day is a timely nudge to make extra contributions into your superannuation account (if you can) on top of the compulsory payments made by your employer.

A recent Moneysmart roundtable found many Australians are not knowledgeable when it comes to maximising their superannuation.

The superannuation knowledge gap

Employers are required under law to pay superannuation to their employees based on the current compulsory Superannuation Guarantee payment rate of 11.5% of a worker’s salary.

Superannuation contributions, up to the concessional contributions limit of $30,000 per person each financial year, are taxed at 15%. If an employer’s superannuation contributions fall short of the $30,000 limit, then individuals can make up any shortfall and their contributions will only be taxed at 15%.

Sounds fairly straightforward. Yet, Vanguard’s 2024 How Australia Retires research – which was based on a survey of 1,800 Australians – found that 36% of respondents were unsure if superannuation is taxed at a lower rate than other investments. A further 9% responded that it wasn’t.

And, while 76% of respondents did know they could contribute extra into their superannuation, the remaining 24% either didn’t know or responded that they couldn’t.

A recent Australian Securities and Investment Commission Moneysmart roundtable focused on millennials (people born between 1981 and 1996) and their finances also found that nearly half (48%) of those surveyed admitted they were not knowledgeable about maximising their super.

40% of Millennials don’t know what they pay in superannuation fees.
41% of Millennials don’t know or are unsure if superannuation is taxed at a lower rate than other investments.
37% of Millennials have no clear plan for retirement.
Over half of Millennials do not know or are unsure of the minimum age for super access.

“Despite being the first generation to enter the workforce with compulsory superannuation from day one of their working lives, millennials are less engaged with their super compared to previous generations,” ASIC noted in a media release following the roundtable.

That many Australians have a patchy understanding of the retirement system is concerning. But it’s not surprising given the intricate rules that frame how much individuals can contribute to super at the concessionally taxed (15%) rate (which can include carry-forward contributions from previous financial years).

Another alarming finding from Vanguard’s retirement research was that almost half of working-age Australians (49%) have not made any personal (additional) contributions to their super, and more than a quarter (27%) have no plans to make future personal contributions as part of their retirement plan.

Additional super contributions made, working-age Australians

Plans for making future contributions, working-age Australians

Note: respondents can report plans to make both regular and one-off contributions

Positively, however, more than half of working-age Australians are open to making additional contributions in the future, with 37% willing to make regular contributions and 24% willing to make irregular or one-off contributions.

Ways to add extra into your superannuation

Concessional (before tax contributions)

This can be done either from your pre-tax salary via a salary-sacrifice arrangement through your employer, or by using after-tax money to deposit funds directly into your account.

If you deposit after-tax money into your fund, you may be able to claim a tax deduction in your next tax return given that concessional contributions are taxed at 15%.

Non-concessional (after-tax) contributions

Non-concessional contributions are after-tax personal contributions you may be able to make into your super fund, which can’t be claimed as a tax deduction.

They’re separate from your annual concessional contributions and are subject to their own annual limits.

The main advantage of making non-concessional contributions is to accumulate more of your money inside the super system.

Spouse contributions

The Australian Tax Office allows couples to split up to 85% of their annual employer concessional contributions, as well as additional salary sacrifice and personal super contributions.

But any splitting of contributions must be done after the end of the financial year in which the super contributions were made.

Super splitting can be done at any age, but a spouse must be either less than their applicable preservation age (the age at which they can access their super) or between their preservation age and 65 years, and not retired.

Couples wanting to split their super contributions first need to check whether their super fund allows it.

Consider an adviser

Super and retirement planning is a complex area.

Take care to understand the contributions types and limits carefully as there are significant tax penalties for exceeding the applicable contributions caps.

There are also aged-based limits on contributing into super.

If you’re unsure about your super options and need some advice, consider consulting a licensed financial adviser.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

GENERAL ADVICE WARNING
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966).
The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”).
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.
Important Legal Notice – Offer not to persons outside Australia
The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws.
© 2024 Vanguard Investments Australia Ltd. All rights reserved.

The interest rate cuts happening behind the scenes

Tue, 17 Dec 2024 16:16:00 GMT

Interest rates are officially on hold, but unofficially they’re not.

Don’t expect an official rate cut anytime soon.

That was the latest message from the Reserve Bank of Australia (RBA) as it kept its policy cash rate on hold at 4.35% and ruled out any near-term prospect of an official rate reduction.

There’s even a question mark over whether rates may need to go even higher.

“We’re watching the data closely and we’re not ruling anything in or out,” said the RBA’s Governor, Michele Bullock.

So, where does this leave borrowers and savers? On the surface, the RBA’s rate freeze would seem to leave most borrowers out in the cold. Loan repayment rates will remain elevated for now.

For savers, who prefer higher interest rates, the latest rates hold would appear to give additional comfort that income payments from savings will be staying higher for longer.

Yet, on a retail level, a different rates scenario is already playing out in anticipation of one or more RBA cash rate drops during 2025.

In fact, there’s been a flurry of rates activity over recent months. In addition to reducing their rates on fixed term home loans, many Australian financial institutions have also been reducing the income rates they are paying to savings account holders.

So, it’s probably a good time to start watching the retail interest rate moves in both areas as they may present opportunities for borrowers and savers, especially when a RBA rate cut does eventuate.

By shopping around, or negotiating with their existing lender, borrowers may be able to secure lower loan interest rates, even in the current environment.

Refinancing debt

Lending indicators data released by the Australian Bureau of Statistics shows around $16.4 billion of debt was “externally refinanced” during the month of September.

This relates to existing loans that were refinanced during the month with another lender, and the level of activity indicates that borrowers are still shopping around for better mortgage deals.

The prospect of one or more rates cuts in 2025 is likely to accelerate mortgage debt refinancing activity as lenders move their rates lower in order to retain their existing loans customers and attract new ones.

Variable mortgage interest rates have been largely static over the last year but can be expected to start falling gradually once the RBA begins reducing the cash rate.

Lower rates may also present opportunities to refinance other forms of debts, including personal loans. However, borrowers need to be mindful of potential early loan repayment penalties and should review their loan documentation.

Hunting for yield

The flipside to lower loan interest rates is lower savings account rates.

In that sense, as financial institutions move to reduce their savings rates, it may be worthwhile considering alternatives offering higher income return rates.

This could include accounts with higher saving rates offered by the either same institution or others.

Another alternative could be fixed interest investments such as bonds, which can be readily accessed through managed bond funds such as exchange traded funds (ETFs).

Bonds are a type of investment security that enable investors to lend their money to a bond issuer for a set term in return for regular income payments based on a fixed or floating interest rate.

Bond issuers are typically governments, large organisations and companies, which often choose to borrow large amounts of money for different purposes from a pool of investors via the global bond market.

When the term of a bond issue expires the issuer is expected to repay investors their principal investment amount in full.

Increasing cash flow

By shopping around, or negotiating with their existing lender, borrowers may be able to secure lower loan interest rates, even in the current environment.

Reduced loan repayments add up to increased income, which can either be used to pay down debts more quickly or redeployed into other areas such as superannuation or other investments.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

GENERAL ADVICE WARNING
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966).
The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”).
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.
Important Legal Notice – Offer not to persons outside Australia
The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws.
© 2024 Vanguard Investments Australia Ltd. All rights reserved.

Online shopping

Tue, 10 Dec 2024 16:02:00 GMT

Online shopping can be a convenient way to buy the things you want. Get the most out of internet shopping by staying safe online.

How to protect yourself online

Not sure if you should trust a website with your personal information? Here are some things to look out for.

Check the website

Before you enter personal or payment details online, do some checks. If you haven’t heard of the business, read independent reviews that aren’t on the seller’s website.

Keep your details safe

Password-protect all your devices and make sure they have the latest updates installed.

For tips on creating a strong password, see the Australian Cyber Security Centre (ACSC) .

If you’re using a public Wi-Fi network, don’t send or receive sensitive information — for example, don’t log in to your online banking or use your credit or debit card.

Only use an official company app from the Apple Store or Google Play store.

Use secure payments

Avoid saving payment information to an online shopping account.

Pay for your items using PayPal, PayID, PayTo or a credit card. These are more secure ways to pay and offer another level of protection if something goes wrong.

Never use direct bank deposits, money transfers, or digital currencies like Bitcoin. It’s rare to recover money sent this way.

Check your bank statements

If you shop online, check your credit or debit card and bank statements regularly. Make sure you’ve been charged the right amount.

If you see something you don’t recognise, this could be a sign that a scammer has your personal details.

What to look out for when you shop online

Follow these steps when you shop online.

Find out if the seller is overseas

If the seller is not in Australia, you may not have the same consumer rights. You might also find it hard to contact them for a repair, replacement or refund. For more information, see the ACCC website .

An overseas seller might also charge you an international transaction fee. Also make sure to check if you will be charged an international transaction fee by your credit or debit card provider.

Avoid being charged two fees: check if your credit or debit card provider charges a fee for overseas transactions.

Record your online purchases

Keep a record of your online purchases, including photos and descriptions of the items. In particular:

Make sure you receive an email confirming your purchase before closing your browser.
Write down your receipt or reference number.
Check that you’ve been charged the right amount.

Know your rights as a buyer

Read the terms and conditions carefully, including:

the returns policy
postage or delivery fees
any packaging or handling charges
local currency costs, including currency conversion fees if the purchase is from overseas
any international transaction fees
any import duty or taxes

Take care with buy now pay later

Buy now pay later service, like Afterpay, Humm or zipPay, let you pay for something in instalments. You might pay every fortnight, instead of paying the full amount upfront.

You don’t pay interest on the purchase. Instead you’re charged fees. It’s easy to overspend or lose track of how much you owe. So make sure you can afford the repayments.

What to do if something goes wrong

Sometimes, even when you’re careful, things can go wrong:

You don’t get what you pay for.
It’s not in good condition.
You’ve been overcharged.

Follow these steps to get a refund or exchange.

1. Know your rights

Visit the ACCC’s page to find out about your rights as a customer.

2. Contact the seller

Check the seller’s website for details on how to contact them or make a complaint. It may have been a mistake — if so, explain the issue to them and suggest how they can fix it.

3. Contact consumer affairs in your state

If you can’t sort things out with the seller, contact the consumer affairs office in your state . They may be able to help you sort things out with the seller. You can also complain to the ACCC about the business.

4. Call your bank

If you used your credit or debit card to shop online but didn’t get what you paid for, contact your bank. They may be able to give you a chargeback.

If you used a PayPal account, follow PayPal’s dispute resolution process .

If you think you’ve been scammed report it to Scamwatch .

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/online-safety/online-shopping

Important note: 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. Past performance is not a reliable guide to future returns.
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.

The end of hybrids. What that means for investors

Tue, 10 Dec 2024 16:02:00 GMT

Why high-quality bonds are a logical alternative to hybrid securities.

Some of the biggest changes on financial markets that are likely to have a profound impact on many retail investors can occur without attracting too much attention.

The Australian Prudential Regulation Authority (APRA), the regulator of banks, superannuation funds and other financial institutions, flagged such a change in September when it effectively sounded the death knell for hybrid securities.

Investors have been using hybrids for decades as a way to access regular floating rate income payments and, in the case of some issues, attached tax franking credits.

The hybrid issuers– of which the vast majority are banks – have been using these instruments to meet APRA’s regulatory Tier 1 (AT1) capital obligations that require them to hold sufficient liquidity to meet any future financial crisis.

But the hybrids landscape is set to change – not immediately, but over the next one to eight years as the 200 or so current active hybrid issues reach their specified call date , when investors’ face value principal investment is expected to be repaid.

Why is this happening? In the wake of several recent offshore bank failures, and after extensive industry consultation, APRA is proposing banks and other hybrid issuers phase them out and instead use cheaper and more reliable forms of capital that would absorb losses more effectively in times of financial stress.

“The proposed changes draw on the lessons of last year’s global banking turmoil where several US and European banks either failed or needed to be resolved in short succession, with a number of governments having to intervene to minimise the risk of contagion and financial system instability,” APRA noted in a statement issued in September.

APRA now wants hybrid issuers to move to other forms of capital instruments such as subordinated bonds, which are designated as Tier 2 capital. It’s important to note that subordinated bonds are unsecured and rank below more senior forms of debt securities such as senior and senior secured bonds.

Investors in hybrid securities face conversion risk as well as the risk issuers can choose to indefinitely defer making interest payments.

The risks in hybrids

Australia’s banking system is indubitably strong. We haven’t had a major banking crisis for over 30 years, since the respective collapses of the State Bank of Victoria and the State Bank of South Australia in the early 1990s, along with some smaller financial institutions.

“The purpose of AT1 is to stabilise a bank so that it can continue to operate as a going concern during a period of stress, and support resolution with the capital that is needed to prevent a disorderly failure,” APRA stated.

“Unfortunately, international experience has shown that AT1 does not fulfil this function in a crisis situation due to the complexity of using it, the potential for legal challenges and the risk of causing contagion. These risks are heightened in the Australian context due to the unusually high proportion of AT1 held by retail investors.”

Hybrids, particularly those issued by banks, have long been considered as “safe” income products by investors. Yet, that would be to overlook the higher-risk equity characteristics of hybrid issues given that investors’ capital can be converted into an issuer’s shares.

That leads to conversion risk, because hybrid investors take on the risk that share price volatility near the date of the conversion into equity could significantly impact the value of the hybrid security. Most hybrids are structured to allow the regulator to force a conversion to shares at its discretion, irrespective of the initial prescribed call date.

If the issuer’s share price has fallen at the conversion date since the time of the initial investment, investors will in effect take a capital loss. Hybrids typically behave more like shares in a scenario where the issuer, or broader market, is financially stressed. In addition, hybrid securities have often produced negative monthly returns during past Australian equity market downturns.

Another factor with hybrids is deferral risk, whereby issuers can choose to indefinitely defer making interest payments. Most issues usually include wording to the effect that the issuer has no obligation to make up any missed payments.

Floating interest payments are directly impacted by general interest rate levels. If rates rise, interest payments rise; if rates fall, interest payments fall. A significant fall in interest rates would substantially diminish the returns for investors in hybrid securities.

It’s worth keeping this in mind in the context of likely cuts to interest rates.

Investors also should be aware of liquidity risk. For some hybrid security holders who wish to sell, a lack of market liquidity means they may find it difficult to locate a buyer willing to pay a high enough price, or in a stressed market scenario may not be able to redeem their capital.

Looking to bonds

Hybrid securities, because of their equity-like characteristics, are different to high-quality bonds issued by governments, large organisations, and many companies.

Bonds generally provide more capital stability for medium to long-term investors than shares, which don’t offer an agreed schedule of dividend payments or the full principal repayment at the end of a given term.

The important role of bonds and bond exchange traded funds (ETFs) in dampening equity market volatility should not be underestimated.

Well diversified bond funds holding high-quality, investment grade fixed interest securities are a lower-risk option and perform the important role of adding ballast to portfolios to counterbalance potential financial shocks in equity markets.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing

GENERAL ADVICE WARNING
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966).
The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”).
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions.
Important Legal Notice – Offer not to persons outside Australia
The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws.
© 2024 Vanguard Investments Australia Ltd. All rights reserved.

Super vs property: what works for retirement income?

Tue, 10 Dec 2024 16:02:00 GMT

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

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.

The global 60/40 portfolio: Steady as it goes

Tue, 03 Dec 2024 16:01:00 GMT

The post The global 60/40 portfolio: Steady as it goes appeared first on Midcoast Financial Planning Group .

Is a retirement village right for you?

Tue, 03 Dec 2024 16:01:00 GMT

The retirement living sector is growing rapidly in Australia as the population ages and demand increases for a spot in a retirement village.

For many people, the idea of having someone on site to help with property and garden maintenance is enough for them to make what can be a major change later in life. For others it is about the ready-made community and the easy access to social activities and a network of friends. And, as developers seek to entice younger and younger residents, they are dialling up the luxury and add-ons.

The type of accommodation varies widely between villages from apartments, villas and houses. Some retirement villages have a resort-style feel with a range of onsite amenities on offer including swimming pools, fitness centres, cinemas and cafes and there are often different dining and cleaning options available for residents.

Research released last year by the Property Council of Australia shows that retirement village residents are 41 per cent happier; 19 per cent less likely to require hospitalisation after only nine months; 15 per cent more physically active; five times more socially active; twice as likely to catch up with family or friends and have reduced levels of depression and loneliness.i

One important factor that sets retirement villages apart from residential aged care facilities is that retirement village living is considered independent living, generally without medical or personal care available through the village itself.

Different laws

Some residential retirement complexes include both independent living homes and aged care facilities. This set up can make the transition to aged care, if needed, less stressful especially if one member of a couple needs greater care.

However, the two operations are regulated quite separately under different laws and there are no guarantees that you can move smoothly from one to another when you want to.

Unlike assisted living or residential aged care, retirement villages are not regulated by the Federal Government but are governed under state and territory retirement villages acts. As such, the rules can vary between jurisdictions and villages.

Considering the costs

Buying into a retirement village can be a significant expense, making it important to understand the legal implications and ensure you carry out a thorough check to see if it is affordable.

In most cases you don’t own the village residence. A common arrangement is for a lease or loan type arrangement, where residents buy the right to occupy a home within the village for a specific period.

The level of fees and how they are set is a private commercial arrangement and not governed by any laws. The costs could be roughly what would be incurred if you owned your home. As well as an upfront price, there could be ongoing maintenance fees and deferred management fees, which reduce the amount you receive when you leave the village.

Knowing your rights and obligations, as well as the initial costs and ongoing fees and expenses are key considerations to a successful transition.

Financial and legal advice is highly recommended to ensure clear understanding of the purchase arrangements and contracts. Their level of complexity is not to be underestimated.

Extra services and support

It is most people’s aim to remain living independently in their own home for as long as possible.

For people living in retirement villages, this could mean accessing government subsidised home care services – for example, through the existing Home Care Packages Program. Depending on a person’s health, these services could include cleaning and domestic assistance as well as personal care, such as assistance with showering or the delivery of pre-cooked meals.

Following the introduction of recent reforms, a new Aged Care Act aims to increase the subsidies for services and equipment to assist people staying at home.

A new Support at Home Program will replace the Home Care Packages Program from 1 July 2025. The Commonwealth Home Support Program will transition after 1 July 2027.

The reforms also include significant changes to the funding arrangements for residential aged care.

For both home care and residential aged care, the focus will be increasing the quality of services and the rights of individuals, while at the same time looking for greater contributions from people accessing the services.

Retirement villages are largely lifestyle considerations, but you also need to consider your current and future care needs to ensure that the village you choose will remain suitable for at least the medium term.

i Seniors’ housing focus required as population ages | Property Council Australia

The biggest assets growth areas for SMSFs

Tue, 03 Dec 2024 16:01:00 GMT

The post The biggest assets growth areas for SMSFs appeared first on Midcoast Financial Planning Group .

Estate planning gives you a final say

Tue, 26 Nov 2024 16:00:00 GMT

Planning for what happens when you pass away or become incapacitated is an important way of protecting those you care about, saving them from dealing with a financial and administrative mess when they’re grieving.

Your Will gives you a say in how you want your possessions and investments to be distributed. But, importantly, it should also include enduring powers of attorney and guardianship as well as an advance healthcare directive in case you are unable to handle your own affairs towards the end of your life.

At the heart of your estate planning is a valid and up-to-date Will that has been signed by two witnesses. Just one witness may mean your Will is invalid.

You must nominate an executor who carries out your wishes. This can be a family member, a friend, a solicitor or the state trustee or guardian.

Keep in mind that an executor’s role can be a laborious one particularly if the Will is contested, so that might affect who you choose.

Around 50 per cent of Wills are now contested in Australia and some three-quarters of contested Wills result in a settlement. ⁱ

The role of the executor also includes locating the Will, organising the funeral, providing death notifications to relevant parties and applying for probate.

Intestate issues

Writing a Will can be a difficult task for many. It is estimated that around 60 per cent of Australians do not have a valid Will. ⁱⁱ

While that’s understandable – it’s very easy to put off thinking about your own demise, and some don’t believe they have enough assets to warrant writing a Will – not having one can very problematic.

If you don’t have a valid Will, then you are deemed to have died intestate, and the proceeds of your life will be distributed according to a statutory order which varies slightly between states.

The standard distribution format for the proceeds of an estate is firstly to the surviving spouse. If, however, you have children from an earlier marriage, then the proceeds may be split with the children.

Is probate necessary?

Assuming there is a valid Will in place, then in certain circumstances probate needs to be granted by the Supreme Court. Probate rules differ from state to state although, generally, if there are assets solely in the name of the deceased that amount to more than $50,000, then probate is often necessary.

Probate is a court order that confirms the Will is valid and that the executors mentioned in the Will have the right to administer the estate.

When it comes to the family home, if it’s owned as ‘joint tenants’ between spouses then on death your share automatically transfers to your surviving spouse. It does not form part of the estate.

However, if the house is only in your name or owned as ‘tenants in common’, then probate will probably need to be granted. This is a process which generally takes about four weeks.

Unless you have specific reasons for choosing tenants in common for ownership, it may be worth investigating a switch to joint tenants to avoid any issues with probate.

You will also definitely need probate if there is a refund on an accommodation bond from an aged care facility.

Rights of beneficiaries

Bear in mind that beneficiaries of Wills have certain rights. These include the right to be informed of the Will when they are a beneficiary. They can also expect to hear about any potential delays.

You are also entitled to contest or challenge the Will and to know if other parties have contested the Will.

If you want to have a final say in how your estate is dealt with, then give us a call.

i Success rate of contesting a will | Will & Estate Lawyers

ii If you don’t, who will? 12 million Australians have no estate plans | Finder

Upsizing, downsizing and rightsizing: Finding the best fit

Tue, 26 Nov 2024 16:00:00 GMT

We’ve all heard about downsizing and upsizing, but what about rightsizing? ‘Rightsizing’ is used for when you find the right fit for you. In property terms, this means a property that best suits your circumstances and lifestyle.

What is rightsizing?

While upsizing and downsizing are largely focussed on the size and financial commitment of the purchase, rightsizing is instead about finding the right property for your circumstances. This may be a similar house in a different suburb, a more updated property, or moving from a double storey to single storey house.

Unlike downsizing, which has you choosing a smaller property, or conversely upsizing which is where you buy a larger property, rightsizing is open to interpretation for your needs.

Perhaps your kids no longer need that separate playroom but desire more outdoor space, or you want the same number of rooms but a smaller footprint, so you opt for an apartment over a house.

How to know if it’s time to rightsize

Knowing if and when it is time to rightsize should be fairly straightforward and may already be obvious.

Does your current property feel like it is the right fit? Perhaps the layout no longer suits, too far away from work or family, or the property may be becoming too hard to maintain. This may have always been the case and now is the time to make the change, or your situation has changed.

Being aware of what is happening in the property market and keeping an eye on trends will help you know when it’s a good time to sell and buy. A reputable real estate agent can help you navigate this. Attending auctions and viewing other properties can also help you decide if there is a better fit within reach and motivate you to rightsize.

Conversely, it can also serve to show that you are happy with your home, with some alternations, whether that be renovations, restyling or decluttering. You might realise that the room you no longer use could still be handy but fit for another purpose, for instance.

How to purchase the perfect rightsized home

To find the right fit for you, it’s important to get clear on what it is you are after. Think about things such as the location, the size, the layout, and the lifestyle that comes with the property and reflect on your immediate and near future needs.

Future needs are important, because a major purchase such as property is unlikely to be done regularly! So, while you are rightsizing for the now, it’s smart to think about what is probable for the years to come. Perhaps you are managing a health condition that could make it difficult to clean or move around a multi storey home, or your kids are grown up and soon will move out.

Just as with downsizing, be realistic if you do find a smaller property – you may need to get rid of things as they’re unlikely to all fit in a tighter layout, especially if storage is at a premium.

As well as knowing your non-negotiables and ‘good to haves’, you need to understand your purchasing power. Finding the ‘right’ home may require additional investment, so have a clear understanding of your current properties value, your budget and ability to service a loan moving forward is critical.

You may also be eligible for grants or offers (buyer incentives) should you be interested in a new build, so do your research to see what you can save – this can also help you decide as to whether now is the right time to make this change.

Rightsizing will require careful consideration and assistance from a broker to see if this is the right move for you to make at this current time. To find out how you can finance the new purchase and obtain pre-approval, please don’t hesitate to get in touch.

Choosing a credit card

Tue, 26 Nov 2024 16:00:00 GMT

If you’re struggling to pay your bills, a new credit card may not be the best move. See managing debt for other options.

How to get the best credit card for you

Thinking about how you will use your credit card will help you compare the options and get the best card for you.

Work out how much you can pay off each month

Knowing this will help you choose the best-value credit card.

If you can pay the full balance each month

Consider a credit card with more interest-free days. This means you won’t pay interest as long as you pay the balance within a set number of days (for example, 55 days). These cards may have a higher interest rate and an annual fee, but that could be worth it.

If you can’t pay the full balance each month

Look for a no-frills card with a low or no-interest rate and a low annual or flat monthly fee.

Use our credit card calculator

Work out how much you would need to pay each month.

Set a credit limit you can afford

When you apply for a credit card, your bank or credit provider will offer you a credit limit. This is the maximum amount they’ll lend you, and it is based on your ability to pay it back within three years.

If you’re worried about overspending, you don’t have to take the full amount offered. Think about your spending habits and how much you can comfortably afford to pay back.

Weigh up the pros and cons of card options

Store cards

Store cards can be an expensive way to shop. You can only use them in that store, and they may have higher interest rates. Check if the benefits are worth the higher rate.

If a store offers an interest-free deal , check when the deal ends. Also check the interest rate on new purchases (called the ‘purchase rate’), as it may be higher than for other credit cards.

Rewards programs

Credit card reward programs sound good — you get something back simply by spending on your card. For example, you could earn points you can use to buy movie tickets or flights.

But cards with rewards programs often have higher interest rates and extra fees. They could cost you more than you get back. Check if the benefits you get are worth the higher cost.

Extras like travel insurance

Some credit cards come with ‘complimentary’ extras like travel insurance for overseas trips. Be aware that extras are usually not free. The cost may be covered by higher interest or fees.

Other cards offer ‘cash back’ (credit on your account) or discounts on goods or services. Weigh up if what you will get back is worth you paying more in interest or fees.

Smart tip : Consider the pros and cons of transferring your credit card balance to make sure it’s the right move for you.

Compare credit cards

Compare credit cards from different companies to find the one that suits your needs.

Comparison websites can be useful, but they are businesses and may make money through promoted links. They may not cover all your options. See what to keep in mind when using comparison websites .

Compare credit card rates and fees

Honeymoon (or introductory) interest rate	The interest rate offered for a limited period of time at the start of a new credit card
Purchase (interest) rate	The interest rate on things you buy (purchases) after the honeymoon period ends
Interest-free days	The number of days you won’t get charged interest on purchases
Annual or monthly fee	Fee you will pay every year or every month
Rewards program fee	Fee for using the rewards program
Other fees	Late repayment fees Cash advance fees (for cash taken out) Fees if you go over your credit limit Fees for using your credit card to shop or travel overseas

Case Study

Georgia calculates the cost of her reward

Georgia is thinking about joining a credit card rewards program. She’ll earn one reward point for every dollar she spends. She can redeem points for flights, gift cards, movie tickets and other goods.

She works out how much she has to spend to earn rewards. The rewards program costs $30 a year to join and she would have to spend $5,700 to get a $25 gift card.

Georgia decides not to go ahead. It would take a long time to earn points, and she’d end up paying more than the rewards are worth.

Source:

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/credit-cards/choosing-a-credit-card

Important

From clutter to cash

Tue, 19 Nov 2024 16:01:00 GMT

Have you ever looked around your place and wondered how much cash is sitting in those old clothes you never wear, gadgets you never use or other items just gathering dust?

Turns out, you might be sitting on a small fortune without even realising it. In fact, according to a report by online sales portal eBay, Australian households reportedly have up to around $7,000 worth of unused or unwanted items just lying around—talk about hidden treasure! ⁱ

Uncovering hidden cash: what you didn’t know you had

Let’s break it down: that vintage record player you rarely use, the designer jeans you bought but never quite fit into, or even that collection of Pokémon cards from your childhood—all of these could potentially fetch a pretty penny if sold to the right buyer.

One person’s clutter can be another’s prized possession. That quirky vase you’ve been eyeing suspiciously for years might be a valuable piece of art to someone else. The thrill of discovering that something you considered junk is actually worth something substantial is like a mini treasure hunt in your own home!

The key is knowing what’s hot in the market. Take a quick peek online to check out what’s collectible or in demand right now. Or go for a wander around a bricks and mortar antique or retro store or a second-hand clothing store to get ideas on what’s popular.

eBay even has a handy list of the most popular searches on their website where you can get inspiration and check out things people are looking for online.

Tips for successful selling

Selling unwanted items can be a breeze but there are some things you can do to maximise your chances of successful sales. Here are a few handy tips:

Research, research, research : Knowledge is power. Take some time to research similar items online to gauge their market value. Facebook Marketplace, eBay, and specialised collector forums are gold mines of information.
Clean and presentable : No one wants to buy something covered in dust. Clean your items thoroughly and present them nicely in photos. Good pictures can make all the difference in attracting buyers.
Price it right : Don’t get greedy! Set a fair price that reflects the item’s condition and market demand. Sometimes a quick sale at a slightly lower price is better than waiting forever for the perfect buyer.
Be honest : Describe your items accurately. If there’s a scratch on that antique mirror or a missing button on that vintage jacket, own up to it. Honesty builds trust and helps avoid disputes later on.

The online selling rollercoaster: pitfalls to avoid

Now, let’s talk about the less glamorous side of selling online—yes, there is one. While the internet can be a fantastic marketplace, it’s not without its quirks. Here are some things you need to beware of:

Scammers and timewasters : Unfortunately, they exist. Be cautious of buyers who make unrealistic offers or seem overly eager without legitimate questions.
Shipping nightmares : Packing and shipping fragile or large items can be a headache. Invest in proper packaging materials and always opt for tracked shipping to avoid lost parcels and headaches.
Fee frenzy : Many online platforms charge fees or take a cut from your sales. Factor these into your pricing strategy to ensure you’re not left short-changed.
Patience is a virtue : Sales can take time. Don’t be discouraged if your items don’t fly off the digital shelves immediately. Persistence pays off!

If the idea of selling online is a little intimidating, you could also try having a stall at a local second-hand market or setting up shop for the day and having a garage sale.

Selling your unwanted belongings isn’t just about decluttering your space – although that’s a major win in itself! It’s about unlocking hidden value and turning your unused stuff into cold, hard cash. Whether you’re saving up for that home deposit, padding your emergency fund, or just wanting a little more cash to splash, every sale gets you one step closer to your financial goals.

So, what are you waiting for? Who knows – that old comic book collection could be your ticket to a much healthier bank balance. Happy selling!

i How much extra stuff have households accumulated through the pandemic? – Savings.com.au

Super contributions

Tue, 19 Nov 2024 16:01:00 GMT

If you’re employed, your employer should be paying a percentage of your earnings into your super account.

It’s worth checking to make sure you’re being paid the right amount.

If you can afford it, making extra contributions is a great way to boost your retirement savings. And it can reduce your tax. If you’re on a low income, you may be eligible for extra contributions from the government.

Check you’re getting the right amount of super

In most cases, you’re eligible to receive super from your employer. Even if you have a casual job, your employer must pay you super.

If you’re under 18, you’re eligible to receive super if you work more than 30 hours in a week, regardless of how much you earn.

How much super your employer must pay

Your employer must pay at least 11.5% of your ‘ordinary time earnings’ into your super account.

This minimum payment is called the super guarantee.

Ordinary time earnings are what you earn for your ordinary hours of work. See the ATO for a list of payments that are ordinary time earnings .

Use our employer contributions calculator

Work out how much super your employer should be paying into your super account.

Check how much super you’re getting

To see how much super your employer is paying you, check your:

payslip
myGov account
super account — online or by calling your fund

Employers only have to transfer super into your super account once a quarter (every three months). Some choose to pay more often. Ask your employer how often they pay yours.

If your employer is not paying your super

If you’re not getting the right amount, talk to your employer.

If your employer isn’t paying your super, report them to the ATO.

See unpaid super from your employer on the ATO website.

Grow your super with extra contributions

You can grow your super by making extra payments yourself. Even small amounts add up over time, and voluntary contributions can reduce the amount of tax you pay.

If you’re on a low income, you may be eligible for extra contributions from the government.

Pre-tax super contributions: salary sacrifice

You can ask your employer to pay part of your pre-tax pay into your super account. This is known as a salary sacrifice or salary packaging .

The payments, called concessional contributions, are taxed at 15%. For most people, this will be lower than their marginal tax rate. You benefit because you pay less tax while you boost your retirement savings.

Generally, making extra concessional contributions is tax effective if you earn more than $45,000 per year.

There’s a limit to how much extra you can contribute. The combined total of your employer and salary sacrificed contributions must not be more than $30,000 per financial year.

You can carry forward any unused concessional contributions . Unused amounts are available for a maximum of five years.

Make after-tax super contributions

You can also make contributions to your super from your after-tax pay.

These payments are called non-concessional contributions because you have already paid tax on the money. You can make up to $120,000 in non-concessional contributions each financial year.

You may be able to get a tax deduction for non-concessional contributions. See the ATO website for more information about claiming deductions for personal super contributions .

Before you can claim a deduction for your after-tax super contributions, you must notify your super fund using the claim form from the ATO .

Use our super contributions optimiser

Grow your super with extra contributions. Work out whether to make extra contributions before or after tax, or a mix of both.

Low income super tax offset

If you earn $37,000 or less, you may be eligible for a low income superannuation tax offset (LISTO) of up to $500 per year.

You don’t need to do anything. The ATO will work out your eligibility and pay the money into your super account.

See low income super tax offset on the ATO website.

Government co-contributions

If you’re a low to middle-income earner and make after-tax super contributions, you may be eligible for a matching contribution from the government, called a co-contribution. The government will work out how much you are entitled to when you lodge your tax return. If you’re eligible, the government will pay the co-contribution directly to your fund. See super co-contribution on the ATO website.

Downsize your home and put money into super

If you’ve owned your home for more than 10 years and you sell it, you may be able to contribute up to $300,000 per person, or $600,000 per couple, from the sale to your super.

You must be age 55 or older and meet the eligibility requirements. See downsizer super contributions on the ATO website .

Spouse contribut ions

You can split your employer super contributions with your spouse. Contact your fund or see contributions splitting on the ATO website for more information.

If your spouse earns a low or no income, you may be able to claim a tax offset if you contribute to their super fund. See tax offset for super contributions on behalf of your spouse on the ATO website.

Case Study

Cara boosts her super by salary sacrificing

Cara earns $90,000 before tax, excluding her employer’s super contribution. If she decides to redirect $15,267 of her pay into salary sacrifice super contributions, she will save $2,977 in tax, with the extra money going into her super fund.

Assumptions: The figures used in this table are estimates only and are based on 2022—23 income tax rates. They include the low and middle income tax offset and a Medicare levy of 2%. Employer super contributions remain the same after salary sacrifice.

In this scenario, Cara’s take home pay will drop by $10,000. Cara will save $2,977 in tax on income and super, and have an extra $12,977 in her super.

Source:

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/grow-your-super/super-contributions

Important

A rear-vision roadmap to greater retirement heights

Tue, 19 Nov 2024 16:01:00 GMT

Future investment returns are unknown, but past returns are a gui de for retirement.

If you’re a member of a superannuation fund, for all intents and purposes you’re a long-term investor.

After all, most of us will be receiving regular compulsory Superannuation Guarantee contributions from an employer for at least 40 years, assuming we start work in our early 20s and retire sometime in our mid-60s.

And that money will invariably be pooled with other people’s money by your super fund and invested, most likely into a range of investment asset classes. There’s a strong chance those asset classes will include Australian and international shares, listed property securities, Australian bonds, and cash.

So, you may find it interesting to see a long-term perspective of how those particular asset classes have performed for investors generally – including super fund members – over time.

That’s where the annual Vanguard Index Chart comes in, as it provides a clear perspective on the investment performance of major asset classes over the last 30 years.

Think of it as a rear-vision roadmap to retirement for someone who started receiving compulsory super contributions three decades ago. No one ever knows what’s ahead of us in terms of future investment returns, however the Vanguard Index Chart does show what they have done over time.

The latest chart shows how a range of different asset classes performed over the 30 years from 1 July 1994 to 30 June 2024 based on an initial $10,000 investment.

Click here to view the latest Vanguard Index Chart.

The dollar figures are calculated on the basis that all of the distributions over that time frame, including interest and dividends, had been reinvested back into the same assets to maximise the effect of compounding returns. The numbers exclude any investment fees or taxes.

Asset classes perform differently from year to year, but the historical data going back for decades shows that despite short-term price dips, asset classes have delivered solid growth over the long term.

Staying the course, and not being distracted by short-term market noise, is just as important in your pension phase as it is at any other time.

The importance of diversification

Investing across a range of asset classes helps to smooth out poorer returns from some asset classes from year to year.

There have only been a handful of occasions when the same asset class has been the best-performer in consecutive years. As such, chasing the last year’s returns is usually a futile exercise.

Asset allocation is often a complex exercise for investors, because it can be difficult to know how much to invest into different asset classes at different stages of life, including in retirement.

That mostly comes down to one’s investment risk profile (personal appetite for lower or higher-risk investments).

This is where superannuation lifecycle products that have been designed to smoothly adjust asset allocations according to an investor’s age are providing a seamless solution.

This provides members age-appropriate asset allocation adjustments and the peace of mind of automatic de-risking of their portfolio leading up to and during retirement.

For example, Vanguard Super’s lifecycle option adjusts 36 times over the course of a member’s life and harnesses the Vanguard Group’s extensive experience in lifecycle fund management and low-cost index investing.

Lifecycle members aged 47 and under are invested in a diversified portfolio with a higher allocation to growth assets. From age 48, the Lifecycle investment undergoes a series of annual changes reducing the allocation to growth assets, while increasing the allocation to defensive assets.

From age 82 onwards, the asset allocation is designed to have a greater emphasis on reduced risk to shield retirement savings from the impacts of volatility.

A long-term savings journey

Building up savings for retirement via super, and even outside of super through other investments, is typically a long-term process.

And the preparation journey doesn’t necessarily end at the point of retirement either. Because the process of investing generally needs to continue during retirement to ensure your accrued investments can keep compounding over time to support your lifestyle when you’re no longer receiving a salary.

Retiring from work shouldn’t equate to retiring from managing your investment portfolio.

Taking an active role in your investments, to ensure you have the best chance of protecting and growing your capital over time, is just as important in retirement as it is before you stop working.

Staying the course

An advantage of investing via your super fund is that your money is essentially locked away until you reach a condition of release, usually your retirement. During your super accumulation years you are more or less locked into staying the course.

Yet staying the course, and not being distracted by short-term market noise, is just as important in your pension phase as it is at any other time. What happens in the financial markets day to day typically has minimal impact over the longer term.

As such, it’s always important to focus on the things you can control in retirement.

This includes reviewing your spending regularly and making sure you’re invested in products that have low management costs. After all, the lower your investment costs the more money you get to keep.

And finally, stay diversified. Diversification will offset the risks of being too exposed to one asset class.

The best approach to help protect your retirement nest egg is to apportion your funds across different asset classes, such as shares, bonds, property, and cash.

Important Information

Weighing up the Age Pension and the assets test

Tue, 12 Nov 2024 16:06:00 GMT

Why having less super isn’t necessarily a financial sweet spot for retirees.

Millions of Australians aged 67 and over have just received an Age Pension boost as a result of the Department of Social Services lifting its fortnightly payment rates.

The full Age Pension rate for singles has increased by $28.10 per fortnight to $1,144.40 ($29,754.40 per annum), and by $42.40 per fortnight to $1,725.20 for couples ($44,855.20 per annum). These figures include pension supplements to help with energy, phone, internet and medicine costs.

Age Pension rates are typically indexed twice a year (on 20 March and 20 September) to reflect changes in the cost of living and wages.

Coinciding with the latest changes to the Age Pension payment rates were indexed changes to the assets test thresholds for qualifying for either full or part pension payments.

The amounts in table 1 below are the maximum values of assets outside of a home (which is exempted from inclusion) that singles and couples can now hold before their Age Pension payments start to reduce under the Government’s taper rate. Payments are reduced by $3 per fortnight for every $1,000 of assets above the amounts in the table.

Table 1: Assets limits for receiving the full Age Pension

Source : Department of Social Services. As at 20 September 2024.

The amounts in table 2 are the asset cut-off points for receiving reduced Age Pension payments. That is, people aged 67 and over with assets above the maximum amounts shown are not entitled to receive any Age Pension payments. Those with assets below these levels will likely be entitled to some Age Pension, subject to also passing the income test .

Table 2: Assets limits for receiving a part Age Pension

Combining financial assets with the Age Pension

The term “sweet spot” is sometimes used to describe the situation where singles and couples are able to receive the full Age Pension, because they fall below the assets test limits, and also generate and withdraw additional tax-free income from financial assets through an account-based pension.

The term sweet spot implies that, by combining their personal income with the Age Pension, under the right circumstances people below the asset test minimums can actually earn more than people who are above the assets test limits.

There are some tax considerations. The Age Pension is considered a taxable payment from Centrelink. However, age pensioners can benefit from the Tax Free Threshold and also the Seniors and Pensioners Tax Offset (SAPTO), meaning that they will not pay tax if their total income is below $31,888 for each member of a couple or $35,812 for a single.

Separately, amounts drawn from an account-based pension (using accumulated super and earnings) are tax free.

As shown in table 1, under the new assets test limits, a single retiree owning a home can hold up to $314,000 in assets and still receive $1,144.40 per fortnight of Age Pension.

Similarly, a retired couple owning a home can hold up to $470,000 and still receive $1,725.20 per fortnight from the Age Pension. The assets test limits are higher for non-homeowners.

But keep in mind that assessable assets, as defined under the assets test, include home contents, personal effects, cars and other vehicles, real estate (excluding one’s home) as well as financial assets such as superannuation, savings, and annuities.

Personal asset values can be substantial, which effectively translates into having a lower level of investable financial assets (for example, superannuation) than the minimum assets test thresholds.

Testing the assets test

The question is whether it’s more financially prudent to be below the assets test limits on a financial assets basis, or above them? Put another way, does having less add up to more income when the Age Pension is included?

The issue here is that the answer will ultimately depend on the amount of financial assets being held and how they are invested.

As noted, under the Government’s taper rate, every $1,000 held by singles and couples above the respective assets test limits in table 1 reduces their Age Pension payments by $3 per fortnight ($78 per annum net). So, to make up for that lost ground, individuals and couples need to generate a net 7.8% return on every $1,000 that they are above the assets test thresholds.

Singles or couples above the upper ends of the assets test thresholds in table 2 would need to generate $29,754.40 or $44,855.20 per annum net respectively from their financial assets to make up for not being entitled to receive any Age Pension.

In the 2023-24 financial year Australian listed property achieved a total return 24.6%, followed closely by U.S. shares (24.1%); International shares hedged (21.5%); International shares (19.9%); Australian shares (12.5%); Cash (4.4%); International listed property (3.9%); Australian bonds (3.7%); and International bonds hedged (1.9%).

Using the broad Australian share market as an example, a $695,501 investment at the start of the 2023-24 financial year (just above the maximum assets test limit for a single to receive some Age Pension) would have generated a gross return of 12.5% and grown by $86,937.62 by 30 June 2023.

A couple with $1,045,501 (just above the maximum assets test limit) with the same investment would have seen the value of their financial assets grow by $130,687.62.

But that’s just one year of total returns, from one asset class. The 2024 Vanguard Index Chart shows the average total annualised returns over the last 30 years from six different asset classes.

Source : Department of Social Services. As at 20 September 2024.

Does having less add up to more income when the Age Pension is included? The answer will ultimately depend on the amount of financial assets being held and how they are invested.

Source : Vanguard. As at 30 June 2024.

*Average total returns a re from 1 July 1994 to 30 June 2024. Total returns assume all investment income earned was reinvested and exclude any acquisition costs, fees, and taxes.

It’s important to keep in mind that asset class returns are not consistent and vary considerably from year to year. The best-performing asset classes in one year can become the worst-performing in the next. In some years asset classes can record negative returns.

Another consideration is that the top four asset classes above incorporate higher-risk growth securities, which can be more volatile over shorter time periods and may not suit retirees with a lower tolerance for risk.

In that context, investing amounts that are above the asset test thresholds into historically low-returning asset classes (such as cash) may not necessarily result in higher returns than people who have lower amounts of financial assets who are also entitled to receive the Age Pension.

The bottom line

The primary objective of superannuation is to build up savings that can be used to fund one’s intended lifestyle in retirement. The Age Pension is designed to support the basic living standards of retirees.

Longevity risk – the risk of outliving savings – is a key concern for retirees in deciding how to draw down their superannuation during retirement.

“Most people rely on the Government for protection against longevity risk through the Age Pension, which provides a safety net for retirees who outlive their savings,” according to the Intergenerational Report 2023.

Preparing well ahead for life in retirement is key. A good starting point for many Australians should be to seek out professional financial advice, especially in the context of retirement spending and understanding how the Age Pension may play an important role.

General advice warning

Vanguard is the product iss uer and the Operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270 is the trustee of Vanguard Super (ABN 27 923 449 966) and the issuer of Vanguard Super products. We have not taken your objectives, financial situation or needs into account when preparing this report so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs and the disclosure documents of any relevant Vanguard financial product before making any investment decision. Before you make any financial decision regarding a Vanguard financial product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained at vanguard.com.au free of charge and include a description of who the financial product is appropriate for. You should refer to the TMD of a Vanguard financial product before making any investment decisions. You can access our IDPS Guide, Product Disclosure Statements, Prospectus and TMD at vanguard.com. au or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This report was prepared in good faith and we accept no liability for any errors or omissions.

Are you an impulsive spender?

Tue, 12 Nov 2024 16:06:00 GMT

Characteristics of impulsive spenders

A ‘money mindset’ is a way of thinking about personal finance. Your money mindset can change over time, and it may help explain your spending and savings habits. Understanding this can help you build habits and strategies to better manage your money.

If the following applies to you, you might be an impulsive spender:

You find it hard to control yourself when you want to buy something, often dipping into money meant for bills or savings.
It’s hard to save because you enjoy spending money so much.
If you won $1,000, you’d spend it on something fun.
If you needed $2,000 for emergency car repairs, you’d have to borrow money or use a credit card. This would cause you mild financial stress.
You often feel guilt or regret about your spending habits.

Read about other money mindsets .

About impulsive spenders

Impulsive spenders enjoy the immediate gratification of spending money, and have difficulty saving for bigger goals. They may find themselves dipping into money meant for savings, or even important bills, to pay for entertainment and luxuries.

They’re unlikely to have long-term financial goals. Their impulsive spending is often driven by a desire to reward themselves, enjoy a special experience or relieve boredom. They often use buy now pay later services.

When impulse shoppers receive a financial windfall, like a tax return or bonus, they tend to spend it on leisure or debt repayments rather than saving it. They often feel guilt or regret when they think about the consequences of their spending.

Control your spending

If you identify as an impulsive spender, you need strategies to help you resist the urge to dip into your savings each time you want to buy something.

Think about ways you can make your money harder to get to. For example:

Hide your savings account in internet banking so you can’t see the balance when you log in.
Open a savings account at a different bank.

Use our handy budget planner calculator to determine how much you can spend and save. Impulsive spenders avoid tracking their expenses because they don’t want to face the reality of their spending. However, this is a good way to see exactly where you’re overspending so you can start cutting back. You can use the spending tool in internet banking to track your spending. You can also read our useful guide to budgeting .

When you see a bargain, don’t buy it straight away. Give yourself a few days to think it over first and consider if you really need it. This is especially important right after payday, when you feel cashed up and are more likely to overspend.

If you have a weakness for online shopping, make sure the retailer has a simple returns policy. That way if you regret a purchase, you can send it back.

Make sure you avoid going over your credit card limit . If you’re paying off multiple debts, look into debt consolidation to help you get on top of your repayments.

Set savings goals

Once your spending is under control, it’s time to start building your savings. There are many ways you can do this:

Put your savings in a term deposit to make them harder to access. The longer you resist withdrawing money from the term deposit, the more interest you’ll earn.
Set up a savings goal in the NAB app so you can watch your progress. Choose something you’d like to achieve in the next six months, like a holiday, car or new clothes, and start putting money towards it. Impulse spenders often become goal-driven savers when they focus on a particular savings goal.
Learn how to bucket your money . Set up different accounts for different purposes, and transfer some money from every paycheck to each account. That way you can spend guilt free, knowing you already have money set aside for expenses like bills, food and tr avel.

Start a conversation abo ut money

Our research suggests that many people don’t sit down regularly to discuss finances. It’s a good idea to set aside time each month to talk about your financial situation. Use our handy guide to help you start a conversation about money .

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/manage-money/money-basics/impulsive-spender

Important: