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1st street Blog

Does it pay to plan ahead when you travel? - 04/12/2018

You may be keen to go wherever the wind takes you, or you might be a plan-to-the-hour type of traveller. There are benefits to both styles.

Travellers often fall into two categories—the planned and the unplanned—and more than likely, you already know which of the two camps you belong to, or if you sit somewhere in between.

Whatever your preference, we look at some of the pros and cons of both approaches, which may provide some food for thought before you embark on your next journey.

Why it’s great not having a schedule

Travelling without a set timetable is often something that’s associated with youth. For example, as a young backpacker, you probably have less commitments and more time to explore.

As people get older, uncharted travel may seem a little less realistic. Although, with many Australians likely to spend 20 years or more in retirement, life after work could be a great time to have a little less structure when it comes to your next trip.

Here are some of the benefits of travelling with fewer plans.

  • You’ve got access to last-minute deals
  • There’s an element of surprise
  • You have more time to explore

When planning can have its benefits

It might be more your style to have every day, every meal and every event mapped out in advance, or it might just be a necessity to accommodate things like limited time, limited money, work, kids, or all of the above!

So, how does it pay to plan ahead?

  • You time it right
  • You make savings
  • Transport is available
  • Events are sorted

Things you should do either way

Of course all travel requires a minimum amount of planning—you’ve got to buy a ticket if you’re going overseas right? With that in mind, always consider the following before you travel:

  • Paperwork – check your paperwork is sorted, including that your visas and passport are valid. Keep in mind, some countries may refuse you entry if you have less than six months’ validity on your passport, beyond the period of your intended stay.i
  • Insurance – if something happens before you head off, or you lose something, are injured or sick along the way, you’ll be glad to have the right travel insurance organised before you go. With nearly one in four Aussie travellers experiencing a loss on their most recent overseas trip (that’d be covered by most travel insurance policies) it may provide peace of mind.ii
  • Money – knowing you have enough money for the trip and that it’s accessible is also worthwhile, as well as ensuring you have a little extra set aside in case of an emergency.
  • Your health – make sure you get the necessary vaccinations for where you’re going. Remember, some countries (in places such as Africa, South America, and Asia) also require proof of vaccination against some diseases as a condition of entry.iii
  • Your safety – take note of what’s happening around the world on the government’s Smart Traveller website. And, ensure you’re across the customs and laws of the places that you intend on visiting.

What else you may want to consider

There are pros and cons to different planning approaches, but ultimately it’ll come down to what suits you, your circumstances and commitments, and what you feel most comfortable with.

The main thing to ensure is you’re covered if things take an unexpected turn, and that regardless of your timetable (or lack thereof), that you have fun along the way. After all, that’s what holidays are all about!

i Australian Passport Office – Passport validity and foreign visas paragraph 2

ii Survey of Australians’ Travel Insurance Behaviour 2016 page 9

iii Smart Traveller – Health Checks and Vaccinations 8, 12

Here’s how to lead a happier life - 04/12/2018

From our beaches and outdoor lifestyle to our democracy and cultural diversity, there a lot to feel happy about in Australia.

However, living a happy life doesn’t always come easy. Concerns about money, relationships and the future can often stand in the way of living the life you want. The good news is there are ways to take charge of your happiness.

Measuring happiness

It may sound simple – but what is happiness? How do we quantify happiness?

The World Happiness Report, published by the United Nations Sustainable Development Solutions Network, uses six key variables to determine a country’s happiness levels:

1. Income

2. Healthy life expectancy

3. Social support
(having someone to count on in times of trouble)

4. Generosity

5. Freedom

6. Trust
(measured by the absence of corruption in business and government).

Countries that rank highly in these six areas tend to have ‘happier’ populations, with individual’s reporting higher life satisfaction.i

Australia ranked highly in the World Happiness Report 2017, coming in equal ninth place with Sweden.i Norway was first, followed by Denmark, Iceland, Switzerland, Finland and the Netherlands.

Canada and New Zealand were just ahead of Australia, in seventh and eighth place, respectively. The US fell to 14th in 2016 (from third in 2007) due to reduced social support and increased corruption.i

So, as a country we’re doing well – but what about happiness on a personal level?

Achieving happiness each day doesn’t need to be an elusive goal. By building a sense of purpose, strong personal relationships and financial control, you could be well on your way to maximising your happiness.

A sense of purpose

Off the south coast of Japan lies Okinawa, an archipelago that boasts some of the longest living people in the world.ii Along with various other lifestyle factors, their pursuit of other goals lead to a sense of wellbeing and give more meaning to life.

Okinawans have a strong sense of purpose – what they call their ‘ikigai’.ii An ikigai is what drives you to get out of bed every day, your reason for being. It could be sharing your knowledge and skills with others, looking after your family, cooking delicious food, playing a sport or musical instrument, or advocating for others.

Finding an ikigai, whatever it might be, and trying to live it each day could increase your happiness.iii Ask yourself, what is my passion? How do I find meaning in life? When do I feel most at peace or energised?

Strong personal relationships

Enjoying close relationships with caring, supportive people is a key ingredient of wellbeing.iv Having someone by your side to share your thoughts, dreams and fears with, and who makes you feel loved and valued, can help you overcome the obstacles life throws your way. But where to start?

Think about who you reach out to – or have reached out to in the past – to connect and share with. Keep in touch with these people, and put in the effort to rekindle any relationships you’ve been too busy for lately.

Join a group or club. From book clubs to sports teams, bushwalking groups to community advocacy organisations, joining a team that shares your passions is a great way to form a deep connection with someone – and even live your ikigai at the same time!

Financial control

Financial stress affects nearly one in three people in Australia, according to new research from Core Data, commissioned by Australian start-up Financial Mindfulness.v

Importantly, Core Data’s research showed that experiences of financial stress was not confined to low-income households but felt more widely across different salary brackets.vThese experiences of financial stress could include being unable to pay bills on time, afford a meal with friends or holiday, or raise sufficient funds in time for something important, among others.vi

So, perhaps minimising financial stress isn’t only about how much money you have – but how well you manage it.

While the idea of reviewing your finances and setting up a budget may provoke feelings of gloom, it could be an effective way to reduce your financial stress and increase your happiness.

If you need further assistance, we are here to offer guidance to help you to achieve your financial and life goals.

Reach out

Remember, it’s not possible to be happy all the time. Many other factors play a huge role in our happiness. If things are getting you down, support is available. Contact beyondblue or call Lifeline on 13 11 14.

By finding your purpose in life, forming strong connections with others and achieving a sense of control over your finances, you can hopefully take charge of creating and maintaining your own happiness. And remember, you’re already off to a good start simply by living in Australia.

i United Nations Sustainable Development Solutions Network (2017), World Happiness Report 2017

ii National Geographic, Blue Zones, Okinawa, Japan

iii World Economic Forum, 9 Lessons from the world’s Blue Zones on living a long, healthy life

iv Australian Psychological Society (2016), APS Compass for Life Wellbeing Survey

v Financial Mindfulness, Personal financial stress devastating Australian lives

vi Australian Bureau of Statistics, 6560.0 Household Expenditure Survey, Australia: Summary of Results, 2015-2016

7 Money personalities you may identify with or want to avoid.. - 04/12/2018

Are you the friend that shouts more than what you can afford, or the one that’s happy with a handout because no one knows struggle street like you do?

When it comes to money and people’s behaviour, you may have a few labels or preferred ways of describing those nearest and dearest to you – and surprise surprise, they may do for you too.

I mean, how many times have you heard someone say so-and-so is stingy, or a show pony, or was born with a silver spoon in their mouth, or on the flip side, too generous for their own good?

If it’s something you’ve been thinking about, we’ve listed some common money personalities that may shed some light on where change, or consistency, may be of benefit to you.

Which personality type are you?

1. The scrooge

Generosity is not your strong suit and whether or not there’s a reason for it, you don’t like giving and you don’t like spending, unless maybe it’s on someone else’s credit card.

You might be under the assumption you’re doing it tougher than everyone else (whether that’s true or not) and may tend to favour people in your life who are financially beneficial to you, even if you’re a financial burden on them.

2. The gambler

You spend more than what you can afford and then spend the rest of the time trying to make ends meet. Whether it’s on the races, high-risk investments, designer labels or anything that drains you of cash, you tend to operate under a cloud of secrecy.

These behaviours can often be damaging to you and those around you due to a lack of financial security. If you do need assistance, the Gambling Helpline is available on 1800 858 858.

3. The show pony

You buy only the best clothes, phones, accessories and even things you’ll never use as a status symbol. You host parties on your credit card and generally prioritise possessions over all else.

You’re more than likely racking up some debt in order to keep up with the Joneses, while you probably know a lot of scrooges who are more than happy to take whatever it is you’re willing to give.

4. The spoiled

You’re happy to sit back and relax as you’ve got your parents, a partner or an income coming from somewhere that ensures you’re able to live the lifestyle you’ve become accustomed to.

The situation however is probably stunting your ambition to do things for yourself, which may create issues down the track should no one be there to do it for you.

5. The enabler

You’re probably quite sensible when it comes to spending. You may even have quite a lot of cash stashed away which you’ve cautiously saved over the years. Your downfall however is associating with those who are often spoiled or scrooges – those who function on the back of your hard work.

You give them money and you even loan them money that you know they’ll never pay back. They resist being money smart because they know you’ll always have their back. And, despite the fact you may think you’re helping, you’re more than likely hindering their ability to help themselves.

6. The mentor

You’re often seen as the sensible one and your success generally comes down to hard work and not necessarily the biggest pay cheque.

You’ve always had a budget in place to ensure you live within your means. You pay your bills on time. You save for the future. You compare your providers every 12 months. And, you’ve even got a little left over to put toward the fun stuff.

7. The free spirit

You probably identify with a number of money personalities to a degree. Some days you’re a scrooge because you have to be, sometimes you’re a show pony when you’ve got cash to blow, and sometimes you lend money to people you shouldn’t.

You know you have the potential to be a mentor but you’re a bit of a procrastinator and not a massive fan of hard work. However, you’ve often wondered what financial success you could have if you did spend an afternoon sorting out your finances and mapping out things to do on your bucket list.

Need a hand with your money matters?

Knowing which personality or personalities you resonate with when it comes to money could help you to make better decisions around the way you spend and save, and potentially work with others.

How can I own my home sooner - 06/11/2018

It doesn’t have to be the stuff of dreams. There are several 1st Street approved strategies that could help you pay off your home loan sooner. And it doesn’t necessarily mean sacrificing the things you love doing today. 

The first step towards paying off your home sooner is to understand your loan—how much you owe, how much you are paying and what other financial commitments you have. 

Once you know where you stand you can start getting smarter with your loan. 

Consolidate your financial commitments

Over time, it’s easy to build up small loans here and there. Individually, they may not seem like a lot but it could mean you’re paying higher interest rates and lots of extra fees, which could keep you in debt longer and really impact your lifestyle today. 

By bundling all your financial commitments into one loan you can get a clearer picture of what you owe and potentially save money too. 

Make fortnightly repayments

If you can afford it (and you’re not doing it already), consider changing your home loan repayments from monthly to fortnightly. This can make a really big difference to your loan.

Of course, by changing your repayment frequency you may need to be more mindful when it comes to managing your money. 

One way of doing this is to align your pay dates and repayment cycle. Even though it may take time to adjust, you could keep thousands of dollars in your pocket that you would have otherwise paid in interest. 

Use an offset account

An offset account is a simple tool that can potentially help you save thousands over the lifetime of your home loan. 

Own your home sooner and still enjoy the things you love

If owning your home sooner and maintaining your lifestyle are both important priorities to you, consider speaking to your financial planner today. 

Based on your goals, and personal situation, we will be able to create a personalised plan that’s right for you. 

With expert advice from 1st Street Financial, you’ll be on track to owning your home sooner while still enjoying the things you love today. 

3 Powerful Money Lessons To Teach your Kids - 04/10/2018

The best way to learn is by doing – and doing as young as possible.

That’s the philosophy behind the Spriggy app, which gives kids aged 8 to 17 a Visa debit card and an attached account that their parents can transfer pocket money into, and supervise in real time. (Even lock it if they need to.)

The kids move money onto their cards if they want to buy stuff; they can set up savings accounts and specific goals – giving a practical grounding in how to make responsible spending decisions, kickstarting life-long, positive money habits.

The guys behind Spriggy – Mario Hasanakis and Alex Badran, had both worked in banking and saw first-hand how much money banks were making out of the poor financial choices of their customers. So they set out to change financial literacy in Australia, from early childhood up.

Mini success stories

Since Spriggy launched in 2016 they’ve seen kids who’ve gone from losing cash in the bottom of their bag to now investing in equities with their parents, because they want to learn how stock markets work.

Some kids start up their own small businesses; and some are even saving for a house deposit. (Yes, saving for a house is the 13th most popular goal amongst their tens of thousands of young clients; buying an iPhone is the number one most popular goal and a Playstation4 is number two.)

Here are Mario’s picks for the three most powerful concepts to teach your kids

  1. Delayed gratification

Mario believes this is the most important behaviour demonstrated by people who go on to lead successful and happy financial lives. Learning to delay gratification and to resist online purchases especially, will be vital in the era of digital currency.

The simplest way to learn delayed gratification is by setting savings goals: kids learn to give up what they want now for what they really want in the future. An example might be: stop buying snacks on the way home from school so you can buy a game or music or concert tickets later on.

Spriggy also teaches kids about the value of saving into a place where your money is not immediately available; the app offers specific savings goals buckets that you can’t touch until you’ve completed your goal.

  1. Compound interest

Einstein once called compound interest the 8th wonder of the world; today with interest rates so low, kids don’t have the patience to wait for a 1.5% return, but if parents want to encourage kids to save up, especially for a “virtuous” goal, they could try paying bonuses. Mario says some parents might contribute dollar for dollar or give them a high interest rate, so kids can see how their savings contributions are compounded over time.

  1. The power of earning

Mario says that earning through pocket money is the best way for parents to communicate their values around money.

Households differ. Sometimes kids get paid a dollar value per chore – you work hard, you get money. In other homes, kids have to do chores as part of living in the house and they get pocket money which is just part of being a child, and the two aren’t linked.

It’s about 50/50 he says, and neither is right or wrong but it’s a real opportunity for parents to instill the values that they want their kids to have as they grow up. Most families would like to instill the value of hard work in their kids Mario says, by showing that if they’re creative and they’re disciplined, and they try hard they can get many more of the things they want in life and be more fulfilled along the way.

Article reference www.realsimplemoney.com.au – Susan Burchill 21 June 2018

Bridging loans – How to Get a New Property without Waiting for the Old One to Sell - 03/07/2018

It’s best to sell one property before buying a next, right?  Not necessarily.

What if you find your dream property before your finances can handle the purchase outright? Well, you have two choices.  The first is to wait until you can get the funds together and hope that no one else takes it off the market.  The second option is to contact a 1st Street for a bridging loan.

Bridging loans, or relocation home loans, will let you buy your ideal property before you have sold the existing one.  When there is a financial gap between sale and purchase, a bridging home loan can help to close this gap.  They can also supplement finances for building your new home before moving out of the current one.

For a bridging loan, lenders will take the security of both the original and new property and lend against them until the sale can be made.  Most lenders will offer a six month period to sell the home. If you choose to build a new home, most lenders will extend this period to twelve months.  During the gap period, the repayments may be interest-only, depending on the lender, and the rates are generally comparable to or slightly above the standard rate.

In essence, bridging loans allow you to tap the equity of your current home to get a quick injection of cash to help buying or building.  Some lenders will allow you to capitalize on this loan, meaning that you will not have to make loan payments during the bridge period.  You will own both properties at once until the purchase and sale are completed.

Once the sale has been made, the money is applied to the bridging loan.  The remainder then becomes an end loan, or a basic home loan for the new property.  If the interest rate was higher than standard variable, these rates will often drop to the standard variable upon completion of the sale.  If you have chosen to capitalize the bridging loan, then the new home loan may be slightly higher.

Though bridging loans are slightly more expensive than traditional mortgages, they are still quite affordable.  They also allow a buyer to take advantage of openings in the market; however, there are a few risks involved.  If the sale falls apart, then the purchaser may be saddled with two mortgages at once. Also, you will want to make sure that your lender will approve you for a bridging loan before going ahead with the purchase.  Most bridging loans will require a strong credit profile, or force you to recourse to private lenders with higher interest rates.  It’s best to consult a 1stStreet home loan specialist to develop a plan that takes all financial factors into consideration.

Before meeting with your 1stStreet mortgage broker, consider how long you will need the funds and whether or not you will be able to make repayments during the bridging process.  Have you acquired an unconditional contract for the sale property?  Is the bridging loan for an investment property or for a home? The more our home loan specialist knows about your financial situation, the better able they will be to assess how much you can borrow and which bridging loan will suit your circumstances best.

When it’s time for you to consider a new purchase, feel free to contact us.  At 1stStreet, we’re dedicated to helping you find the loan that’s right for you.

Are you entitled to a tax deduction on personal super contributions? - 14/06/2018

This financial year is the first time that employees can claim a tax deduction for their personal super contributions.

Personal super contributions made during the 2017-18 financial year can now be claimed as a tax deduction by most Australian workers.

This follows changes made by the government which came into effect on 1 July 2017.

Previously, only the self-employed, unemployed, retirees, or those who earned less than 10% of their income as an employee, could claim a tax deduction for a personal super contribution.

How tax deductible personal super contributions work

Personal super contributions are made using after-tax dollars, such as when you transfer funds from your bank account into your super. This money could come from savings, an inheritance, or from the proceeds of the sale of an asset, for example.

From 1 July 2017, the “less than 10% rule” was abolished. As a result of this change, if you make a personal super contribution, you can now claim a personal tax deduction for the amount of the contribution in your tax return. This will result in a reduction in your taxable income and, therefore, in your personal income tax liability for the relevant year.

Because personal contributions to your super fund (which you claim a tax deduction for) will only be taxed at 15%, this produces broadly the same tax benefit offered by salary sacrificing from before-tax dollars into your super.

This change is of particular benefit to you if your employer doesn’t offer you the option to salary sacrifice, or if you receive a windfall (such as a bonus), or a one-off capital gain (such as through the sale of an investment), that you’d otherwise pay tax on at your full marginal rate.

The Association of Superannuation Funds of Australia (ASFA) estimates that the rule change means an additional 850,000 people will be able to claim a tax deduction for personal contributions made to their superi.

But while there can be a tax benefit to making a personal tax-deductible contribution to your super, it’s worth remembering that you’re then generally not able to access the money you put into your super until your retirement.

What do I need to do to benefit?

In order to benefit from the change, there are some steps you need to take – in order – so it’s worth considering your position ahead of the end of the financial year. If you’d like to benefit from a tax deduction on a personal super contribution, in the following order, you’ll need to:

    1. Make a personal contribution to your super. The amount you choose to contribute is up to you, however, you need to bear in mind your contribution caps (for more on this, see below).
    1. Lodge a notice of intent to claim or vary a deduction for personal super contributions formii with your super fund, which your super fund will acknowledge, in writing.
  1. Following the end of the financial year and using the written acknowledgement from your super fund, which will confirm both your intention to claim a tax deduction and the amount you can claim, prepare and lodge your tax return.

What else do I need to know?

There are a few extra considerations to keep in mind. These include:

    • This incentive is available to anyone who is eligible to contribute to their super – although those aged 65 and over need to meet the work test to make a personal super contribution, and those under 18 can only claim a deduction for a personal super contribution if they also earned income as an employee or a business operator during the year.
    • If you’re claiming a tax deduction for a personal super contribution, the contribution will count towards your before-tax (concessional) contributions cap of $25,000. The super guarantee contributions your employer makes on your behalf, and any salary sacrifice contributions you may have made, also count towards this cap.
    • To ensure your ability to claim a tax deduction is not affected, you shouldn’t make any withdrawals or start drawing a pension from your super before your ‘notice of intention’ form has been lodged with your super fund.
    • Personal super contributions that you claim a tax deduction for will not be eligible for a super co-contribution.
  • If you earn more than $250,000 your concessional super contributions will be taxed at 30% (as opposed to 15%).

Speak to us to determine whether claiming a tax deduction on personal super contributions is the best strategy for your circumstances.

i ASFA, New super rules to benefit more than four million Australians, 2017, paragraph 7.

ii https://www.ato.gov.au/uploadedFiles/Content/SPR/downloads/n71121-11-2014_js33406_w.pdf

© AMP Life Limited. First published April 2018

More Sydney Suburbs open up for Middle-Income Earners - 06/06/2018

For several years, Sydney has been one of the strongest property markets in the country.  Each year has seen increases in median property prices across all Sydney suburbs.  This has changed in the last year, with interest from both local and foreign investors dropping to levels lower than anything seen in the last decade.

This means that those looking to sell in the Sydney area may have some challenges ahead.  However, it is a blessing for first-time home buyers and anyone looking to upgrade their home.  High interest rates and property prices have locked middle-income earners in Sydney out of a number of suburbs, but in the current climate, a number of suburbs have recently become more affordable.

Part of the good news is that Sydney’s economy is performing well despite the reversal in trending property prices.  Average national wages have increased by almost 3% over the last year, while Sydney home prices dropped by 3.5%.  In essence, property in Sydney has now become a buyer’s market.  Buyers can get a much better deal in properties due to lowered competition, while sellers are forced to lower expectations – and prices – in order to get ahead of the trend.  Demand has fallen in a number of areas including Bankstown, Holroyd, Canterbury, Mortlake, and Homebush.  Banks are now cutting cash rates significantly for first-time home buyers.  Altogether, this means that this is one of the best times in over a decade to buy a home in Sydney.

One of the most dramatic results in this drop in property values is that several suburbs that were previously inaccessible for middle-income earners have now become affordable.  The median price for units in Burwood Heights, Rydalmere, Dundas, Telopea, Pennant Hills, and Asquith have all dropped below $700,000.  The same goes for units in Annandale, Jannali, Lilyfield, and Condell Park.  Investors in these areas, seeing the current market trend, are dropping prices and rushing to sell, giving buyers bargaining power.  This means that units in 39% of Sydney suburbs are now affordable for those earning an average income, compared to 35% in 2017.

As of yet, this trend applies primarily to apartments, as the affordability of homes has remained the same.  In both 2017 and this year, 15% of homes across Sydney suburbs are affordable for those earning the average income.  However, lowered interest rates and competition are still being seen across the board.  This means that buyers will have more negotiating power and will be able to get better deals than some prospective first-time buyers have seen within their lifetime.

While this trend in pricing is expected to continue, Sydney home loans won’t remain low forever.  Lowered interest rates might soon be restricted and the Financial Services Royal Commission is likely to place stricter conditions upon lending in the near future.  What this means for those looking to buy is that the time is now.  Get your foot in the door, and you can lock in an amazing deal.

At 1st Street, we are dedicated to helping you find the right home loan for you.  We have offices in several states across Australia, and we have the knowledge and relationships to ensure you find the loan that fits your needs.  If you’d like to speak with a home loan specialist about home loans, upgrading, or first-time home buying, feel free to contact us.

How to make money by turning unwanted goods into cash$$ - 03/06/2018

Whether it’s not-quite-right gifts you have received or the results of an annual clean out, your trash might be someone else’s treasure.

A survey by online marketplace Gumtree found that Australians received more than 21 million unwanted gifts for Christmas in 2017 with an average value of $68 eachi.

If that sounds familiar, you might be among – or might want to consider joining – more than 3 million Australians who plan to sell an unwanted gift, and move forward with fewer belongings and a bit of extra spending moneyi.

Why sell secondhand?

Aside from unwanted gifts, a bout of decluttering or a good clean out can also unearth saleable items you’ve been holding onto.

Or perhaps you’re feeling weighed down by material possessions and simply want to live with less.

Whatever the reason, the good news is that in 2017, secondhand sellers in Australia collectively earned $36.2 billionii.

And there are plenty of buyers, with 86% of Australians saying they prefer buying secondhand over brand new, with the main reasons being that they can save money, find something unique and reduce waste by recycling useful itemsii.

With the high cost of housing, electricity bills skyrocketing and wages stagnant, cost of living pressures are another reason it makes sense to find a way to put a few more dollars in your pocket.

Where to sell secondhand

Of the 9.1 million Australians who sold something secondhand in 2017, 7.5 million did so onlineii.

Consider mass market websites like eBay, Gumtree or the Trading Post, search for local buy, swap and sell groups on Facebook or specialty sites relevant to the product you’re selling.

If online isn’t your thing, you could always hold a garage sale, or book a stall at a local market or fete.

Tips for selling secondhand

Wherever you choose to sell your goods, there are a few tips you should remember to improve your chances of a successful sale.

  • Do your research so you can set a realistic asking price.
  • Provide a detailed – and honest – description of the item you’re selling, including good quality photos. The more information you give the less chance there is for misunderstandings, which could bring the sale undone.
  • Ensure you respond to potential buyer’s questions quickly and update the description if necessary to actively manage the sale.
  • Allow potential buyers to view the item, especially if it’s expensive.
  • Be prepared to negotiate.

Happy selling!

i Gumtree, Unwanted Gifts Survey, 2017.

ii Gumtree, Secondhand Economy Report, 2017.

© AMP Life Limited. First published January 2018

Now is the time for tax planning - 03/06/2018

With not much time remaining to the end of the financial year, now is the time to start some serious tax planning.

Getting ready for tax time should go well beyond bundling receipts into a shoe box for your accountant. The run up to 30 June is a critical time for investors to take a good look at their investment portfolio.

Your goals and needs may have shifted over the year, and your portfolio needs to keep up with the right blend of assets to meet your goals. Even if nothing has changed on the personal front, investment markets don’t sit still for long.

Property investors in Sydney and Melbourne for instance, have enjoyed tremendous value gains over the past few years but this may mean the weighting of your portfolio is dramatically skewed towards bricks and mortar.

If that sounds like you, bear in mind rental yields on property are sitting at just 3.7% across our state capitals, and a significant chunk of your wealth could be tied up in low-yielding assets.

Consider new legislation

The need to review your portfolio ahead of 30 June isn’t just about market performance. It can also involve taking advantage of, or responding to, new legislation.

We’ve heard lots of speculation recently about Labor’s plan to scrap cash refunds for excess franking credits on Australian shares.

So far, this policy has been amended to include a so-called Pensioner Guarantee that will exempt full and part-time pensioners including those who are recipients of a self-managed superannuation fund.

Nonetheless, jumping the gun and altering your portfolio based on what may – or may not – happen further down the track is a gamble, and on this particular score it could be worth taking a wait and see approach.

In the meantime, plenty has happened in other areas that could directly impact your portfolio.

As a guide, since 1 July 2017 property investors can no longer claim the cost of travel to inspect a rental property. This could be a significant downside for investors who own an interstate property – especially if part of the appeal was a tax break on an annual trip to check out the property.

Also, from 1 July 2018, those aged 65 and over may be able to contribute up to $300,000 from the sale of their main residencei to super without the money counting towards contribution caps.

Each member of a couple can take advantage of the $300,000 limit, potentially adding $600,000 to their combined nest egg. It could be an option worth considering if you’re thinking about downsizing.

Get your portfolio in shape for a new financial year

Fine-tuning your portfolio ahead of 30 June can mean paying costs, and capital gains taxii may apply to any profit you make on the sale of an investment. The upside is hitting the new financial year with a portfolio that’s in tune with your goals and lifestyle.

Set a date to speak with us to review your portfolio before the end of the financial year. It can be a valuable step to ensure your money continues to work hard for you.

– by Paul Clitheroe AM
Paul Clitheroe AM, co-founder and Executive Director of ipac securities limited, Chairman of the Australian Government Financial Literacy Board and Chief Commentator for Money magazine.

https://www.amp.com.au/news/2018/march/new-rules-to-benefit-those-downsizing-for-retirement

ii https://www.amp.com.au/news/2016/may/what-is-capital-gains-tax

© AMP Life Limited. First published April 2018

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