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Five money matters for FY 2019/20 by Tharaka Leeniyagoda

The start of a new financial year brings important changes to address and new opportunities to explore. Here are our top five money matters to consider for 2019/20. 

Insurance in super 

New laws that took effect on 1 July 2019 could impact insurance held in super. From this date, super funds are required to cancel insurance cover held in ‘inactive’ super accounts, unless the member has let the fund know they’d like to keep their insurance. Alternatively, the member can make a contribution or roll an amount from another super fund into their account. An inactive super account is generally an account that hasn’t received a contribution or rollover for over 16 months. Members impacted by this change who want to retain the insurance, should consider acting before the cover is cancelled. 

Catch-up super contributions 

Super fund members who made concessional contributions of less than the annual cap of $25,000 in 2018/19, may be able to contribute more than the cap amount in 2019/20 and beyond. Making ‘catch-up’ concessional contributions could appeal to people who have broken work patterns, can’t afford to contribute in a particular year or receive a windfall. Concessional contributions include all employer contributions (super guarantee and salary sacrifice), personal contributions claimed as a tax deduction and certain other amounts1.  

Super work test exemption 

Recent retirees with lower super balances now have more time to make additional super contributions. From 1 July 2019, people aged 65 to 74 with a ‘total super balance’ below $300,0002 no longer need to meet the ‘work test’ in the 12 months after they retire. If eligible for this once in a lifetime exemption, additional voluntary super contributions can be made without having to work at least 40 hours in 30 consecutive days during the financial year.  

Work Bonus extension 

Some significant changes have recently been made to the Work Bonus that could benefit people who are eligible for the Age or Service Pension and are still working. Since 1 July 2019, the maximum income that can be earned from employment without impacting benefits increased from $250 to $300 per fortnight. The Work Bonus is also now available to people who are self-employed. 

Deeming rate changes 

The ‘deeming rates’ used to assess income from certain investments for various social security benefits reduced on 1 July. Some people may now receive higher payments (such as the Age Pension, Disability Support Pension or Carer Payment) if their entitlement is determined by the income test. Lower deeming rates could also help some people to qualify for other income tested benefits, such as the Commonwealth Seniors Health Card or Low Income Health Care Card. 

Need help? 

We can help assess whether any of these opportunities suit your needs and situation and make suitable adjustments to your financial plans. 

Important information and disclaimer 

This article has been prepared by Tharaka Leeniyagoda of Income Solutions an authorised representative of GWM Adviser Services Limited, ABN 96 002 071 749, AFSL 230692. Any advice provided is of a general nature only.  It does not take into account your objectives, financial situation or needs. Please seek personal advice before making a decision about a financial product. Information in this article is current as at 28 August 2019.  While care has been taken in the preparation of this article, no liability is accepted by the Tharaka Leeniyagoda, Income Solutions, GWM Adviser Services Limited or its related entities, agents or employees for any loss arising from reliance on this article. Any tax information provided in this article is intended as a guide only.  It is not intended to be a substitute for specialised tax advice.  We recommend that you consult with a registered tax agent. 

Leverage by Marcus Larcombe

Last month’s article, I shifted the focus towards investments that have always worked. But when we talk about investments, we should also talk about leverage. Now leverage or debt can be both good and bad. It can create order or chaos. I believe debt gets a bad name, but I want to go beyond our common, practical sense of leverage. To expand on what leverage actually means.

The definition of leverage, in a financial context, is to borrow money, hoping that the profits made will be greater than the interest owed (Investopedia 2019). But what about leverage in a real-world sense? Leverage, as defined by the Cambridge Dictionary (2019), is the power to influence people and get the results you want. Now that we have the definitions down pat, let’s discuss both the good and the bad of financial and real-world leverage.

The good of financial leverage is you can borrow money that you don’t have, to purchase an asset. Now, the typical example of this is buying your family home. Let’s say the home is worth $500,000. You should be paying a 20% deposit to avoid paying lenders mortgage insurance, but that’s another article. So, you have $100,000 deposit and you borrow the remaining $400,000 to technically own the home. But really the bank owns the home and you are paying them back via a home loan. If you weren’t allowed to borrow money, many people would not be living in what they believe to be their own home and a lot more families would be renting. But a good way to look at buying your family home, is that it is a forced savings plan. You are required to pay the bank back every month an interest amount on the home loan and then reduce the borrowed amount through principal repayments or they will take the home away from you. So, you are forced to earn money through trading your time (working) to be able to have enough in your bank account to pay down and hopefully off, your home loan.

Now the bad of the financial leverage is borrowing more than you can afford. To put some context into the situation with some numbers, let’s say you have the above loan of $400,000 with an interest rate of 5%. This is a hypothetical as I know interest rates are lower than this at the minute but stay with me. So, the interest amount is $20,000 and you would like to reduce the loan amount (principal) by $10,000 each year. So, $30,000 are your total mortgage repayments over the year or $2,500 per month. Now if you were earning $50,000, you would be in financial stress. Financial stress is defined as “a condition that is the result of financial events that create anxiety, worry, or a sense of scarcity, and is accompanied by a physiological stress response” (Financial Health Institute 2019). In this example, you are paying 60% of your income towards your home loan. That’s stressful and living beyond your means.

The good of real-world leverage is utilising human capital and technology to increase your productivity more than what you could simply working by yourself. As they say, many hands make light work. The more brain and computing power that can be combined, the better. A classic example of this is a group university assignment for me. If I had to do a 4,000-word assignment by myself, it would take me weeks. But dividing that work up between 4 people and only needing to do 1,000 words each can be completed in days. Combine that with the internet and you have yourself a winning match and a good pass mark.

The bad of real-world leverage, however, is relying too much on other people and technology. Continuing with the above example, group assignments could be painful if some of the individuals didn’t pull their weight. It would double the work of someone else, causing additional stress and potential conflict. In regards to technology, we now have a computer in our pocket. We can surf the web anywhere we want to. If we don’t know something, Google certainly does. I’m sure we have all relied on a GPS app like Google maps to get us to a destination, only to find it has taken us the wrong way or a longer way.

In summary, borrow less than you can afford and spend less than you earn (Thornhill 2015, p. 9), and you will be financially wealthy. Live below your means. The less you can live on, the closer you are to making work a choice and having financial independence. If you receive a pay increase, instead of going shopping and buying a new watch or the latest iPhone, save it and invest. Delay your gratification as long as you can. The longer the better, but it takes discipline and a reason why you are saving and investing. Saving for a rainy day is not a good enough purpose to go without and sacrifice now, for enjoyment tomorrow.

References:

Cambridge University Press (2019). Leverage.  Cambridge Dictionary. Retrieved from <https://dictionary.cambridge.org/dictionary/english/leverage>, accessed 17 October, 2019. 

Dotdash (2019). Leverage.  Investopedia. Retrieved from <https://www.investopedia.com/terms/l/leverage.asp>, accessed 17 October 2019.

Financial Health Institute (2019). Financial Health & Stress. Retrieved from <http://www.financialhealthinstitute.com/financial-health-financial-stress-in-human-services/>, accessed 21 October 2019.

Thornhill, P 2015. Motivated Money. 4th edition, Sydney, Australia.

Is Rent Money Really Dead Money? By Steven Nickelson

Those who know me well, have probably, at some stage, had a conversation about the benefits of renting versus owning your own home.

Over the years, I relaxed my previously very strong views. Possibly due in part to the fact Lee and I bought and built a home together (so I certainly appreciate that a man’s home is his Castle), although more likely as a conscious bid not to offend budding homeowners.

A couple of recent events have brought the conversation back to the table. A few of my long-term clients shared this ABC News report from last week with me. I’d encourage you to read it, and even consider reading the more intricate research undertaken by EY.

It got me thinking about my own living situation, as Lee and I sold our home in November 2018 to rent again. Nearly 12 months’ on, let’s dissect the decision:

We sold our home, as per above, which cost us $22,673 per year to occupy (Interest Only on Home Loan plus Outgoings).

If you take the net proceeds ($788,238 after sale costs) and invest in a diversified basket of Dividend producing Australian Industrial companies, below you can see the costs to occupy, minus the Net Dividend Income produced by the portfolio. The cost is $9,681 per annum. When compared with $22,673 per annum to occupy our old home, we are approximately $13,000 per annum better off in cash flow. Further, the estimated value of the Rental Property we occupy is around $1.4M and the house is significantly larger than our old home, better accommodating our growing family (with an extra bedroom, bathroom, living area and a 5th bedroom
we use as kids’ toy room).

If our $13,000 annual cash flow surplus and more spacious and newer living space wasn’t satisfying enough, we also signed a further 12 month lease, without any increase in the weekly rent. You might also be intrigued to know, the more expensive the property, the more compelling the rent versus own comparison will likely be.

So in summary, you may find it is better financially, to rent rather than own, depending on your location.

In order for that to be the case, you absolutely must:
• save (at least) the difference between the rent you are paying and the costs of home ownership
• Invest it in a way that matches your investment time frame (eg. Too much Cash can be
dangerous in the long-term, but using Shares to build short-term wealth is risky too)
• Don’t leverage yourself too heavily, and;
• Here’s the plug, seek professional advice!

The decision to own or rent is not always a financial decision. A lot of the time it’s a lifestyle decision. However, you should keep an open mind and consider both options; you might be surprised at the outcome.

And one last thing, if you chose to rent, I implore you, please don’t think of rent as dead money.

‘Best Doctors’, Better Health!


In Australia, we are very fortunate to have access to well trained quality medical professionals. While there is always room for improvement (as there is across any industry), the few grumbles that you occasionally hear regarding the short comings of Medicare, the PBS or a particular facility or individual are a drop in the ocean when compared against other systems around the globe. Medically, we are quite literally the lucky country. 

Personally, my GP has provided me with fantastic medical support across many decades and life stages. One of the aspects I have always found reassuring is that my GP has never been afraid to outsource, whether that be further testing to investigate a medical issue or a referral to a specialist. If we lived in a perfect world, that might be where this blog would finish. However, despite access to quality medical care, there are occasions when it’s clear a diagnosis and suitable treatment plan is difficult to determine. In such situations, a second opinion can be helpful but knowing who to turn to for that second opinion can be daunting. 

Who will you see? How do you find that person? I have personal experience of this scenario but fortunately for me, I always knew who I was going to turn to for the second opinion. I have access to a service called Best Doctors. Best Doctors is a private company established by Harvard University medical specialists and now operates in 30 countries. Operating since 1989, it uses a global network of over 50,000 leading medical specialists to provide a second opinion. It can be used if you want to be certain a medical diagnosis is correct, if you don’t understand your diagnosis, if you need help deciding upon a suitable treatment plan or if you’re questioning why your symptoms aren’t improving. 

The service isn’t readily accessible in Australia. The two avenues to access the service in Australia are via MLC Insurance and BUPA. I am eligible via both companies but working in the Financial Planning industry I decided to access the service via my MLC Insurance, allowing me to experience what we recommend to our clients first-hand. I am only at the start of this journey but so far so good. I have found the service easy to access, personable and efficient. 

The journey ahead is unknown, for now, however I am very confident that my second opinion will be directed to a suitably qualified medical professional. My GP is also looking forward to the process, as it is a journey we are taking together. I am a believer in insurance – through my working life, I witness the randomness of medical conditions or accidents that can impact a person’s lifestyle and goals. Given the rising cost of living, it is hard to keep the faith and continue to pay for insurance premiums that, let’s face it, you hope you never need to use. 

While I still don’t like having to pay for insurance, it is refreshing to find a valuable “hidden” service available at no additional cost. If you are unsure what features and benefits are available to you via your personal insurance cover, I recommend that you seek the professional opinion of a qualified financial planner. You just never know the impact it might have on both your financial and physical wellbeing. 

Passive vs Active Investing

Hello Income Solutions society,

Last month’s article I shifted the focus towards investments and specifically investing for the long run. I now want to dig a little bit deeper into which investments have always worked. There have been two investments which fit this category of working over the long term. These are property and business (shares). Let’s begin. Before I get into the nitty gritty detail, I want to make a statement about active versus passive investing firstly.

Passive investing is defined as an investment strategy to maximise returns by minimising costs (Investopedia 2019). This is generally seen as the lazy method of investing and we as humans and human nature in general, are lazy. If there is an easier way to do something, we will find it and do it. By contrast, active investing is continuous buying and selling, monitoring performance and trying to garner a suitable return on investment (Investopedia 2019). Whilst trying to maximise returns, costs are also maximised so in this equation, the average return will be met.

Conversely, passive investing will have above average returns as costs are minimised. But more effort equals more return? Not necessarily. Let me explain. I see property, and specifically investing in property to rent out, as an active investment choice. It is a small business operation where you are the CEO. You must choose which property to purchase, what geographic location you buy in, how many rooms, how big of a backyard, what bank you go to, what loan structure you have, what real estate agency you go through and which tenants live in this property. Whoa, that’s a lot of choices and that takes a lot of time.

Then if anything breaks, who do you get in to fix it and at what cost? But in recent decades, with various tax concessions and low interest rates, property prices have boomed. It has the appropriate investment characteristics discussed last week of hopefully increasing capital value and hopefully increasing income, in the form of rent. What the future holds for property investment, I do not know, and no one does. With an increasing population, property prices could continue to increase. However, interest rates could go up, which would increase interest repayments back to the bank. Interest only loans could be phased out and you would have to pay principle and interest. A lot of speculation can occur.

Property investing involves a lot of decisions and more importantly a lot of time and cost. But it is undeniable that property could make you a profitable return. But I prefer being lazy. Investing in business, which is what the share market allows us to do as investors, by buying a small percentage of a business, can be both an active and passive investment approach. Property on the other hand, I believe, can never be a passive investment. It can only ever be an active investment. I somewhat dismissed active investing in the share market with last weeks article, as the amount of information available is so vast, at such a low cost, thanks to the internet, that the share market is generally efficient.

Efficient meaning that the price of a share in a business is relatively equal to what the business itself is intrinsically worth. Whereas pre 1990, information was limited, due to the internet being limited to non-existent on a mass scale, mispricing was rife in the share market and businesses could be purchased at a low cost, which would increase substantially over time. So, with all this information, passive investing is not buying individual stocks and holding for a long period of time as the future is evolving so fast with technology, artificial intelligence and space travel, that we don’t know what businesses will succeed or fail in the future. We can only guesstimate and speculate, which I don’t like doing. By purchasing individual stocks and only having a handful of these, you increase your firm specific risk, which is the risk that the business could go bankrupt and be non-existent.

I will talk about risk next month as I think it is a grossly misunderstood subject. So passive investing, in my mind, is purchasing low cost, globally diversified market index’s, that encapsulate the top 200-500 businesses in the world. This may be managed funds or exchange traded funds (ETF’s), which I will define the differences in later articles, but the point is that you buy and hold the great businesses of this world for the lowest cost possible and DO NOT SELL. Purchase more of these passive investments each month to take advantage of dollar cost averaging but DO NOT SELL.

Rebalance once a year, but DO NOT SELL in a market correction/decline/bear market. BUY MORE. Businesses are available at bargain/sale fire prices. Back up the truck, if you can and load up to fast track your wealth. I can write pages about this subject, as there is so much information about investing, but let’s not forget, the key determinant of wealth is BEHAVIOUR. Spend less than you earn. Borrow less than you can afford. Save and invest the difference in low cost, passive market index, globally diversified funds and you will succeed. If you do this over years and decades and not just weeks or months, you will create real life, long term wealth. Discipline equals freedom. Until next time, send in any questions or requests in. I look forward to hearing from you.

References: Dotdash (2019). Passive Investing. Investopedia. Retrieved from, accessed 22 September, 2019. Dotdash (2019). Active Investing. Investopedia. Retrieved from , accessed 22 September, 2019. JP Morgan (2019). Guide to the Markets. JP Morgan. Retrieved from , accessed 22 September, 2019.

Let’s talk about investing….

Before I begin, I want to give you a little background as to why I am discussing this topic now. I am currently studying equities and investment analysis at Deakin University and listening to a podcast from the oracle of Omaha, Warren Buffett, and his offsider, Charlie Munger. Now at university, what I am being taught about investing is that I should be doing an extremely thorough analysis of a company through extremely robust mathematical, accountancy equations to find out if I should invest in that business or not.

Then, what I am hearing from arguably the greatest investor of all time, Warren Buffett, is that to invest in a business, it should be so damn obvious, you couldn’t pass it up even if you tried. At university, I am being taught that I should be trying to project future cashflows of the business then discount them back to the present value to see their growth potential (whatever that means). Whereas Buffett is saying that I should be looking into a business’ past to understand their present and future position. When he says ‘past’, he means going back to when the company originated and following its story over the years.

Ok, so with the above out of the way, let’s begin. I am a financial planner, not an investment analyst. 20% of my time is clarifying goals with clients, crafting a lifetime plan and funding that plan with an appropriate investment portfolio. The other 80% of my time is helping clients continue to work their lifetime plan, through all the cycles of the economy, politics and markets, to ensure their goals are being met.

None of my time is spent analysing a single company’s cashflow or growth potential to invest in. I repeat, 0% of my time as a financial planner is spent trying to predict which company will outperform the market or trying to time the market’s high or low point. What I spend my time on is in my circle of control and what I don’t spend my time on is outside of my circle of control.

Two key concepts I believe in for investing is regression to the mean and a zero-sum game. Yes, these are fancy university words, but let’s break them down to simplify their meanings. ‘Regression to the mean’ is simply saying you will achieve the market’s average return over the long run.

Remembering that the market is just the collection of the great businesses of this world. Some businesses will do extremely well one year, and others will perform poorly. But if you owned the whole stock market, you would receive the average return. The mean stands for the average or the middle. We will always regress back to this average return as average investors because we don’t have the knowledge of businesses that a Warren Buffett has. This average return from the stock market is absolutely fantastic to generate multigenerational wealth as it has provided an 11.1% return from 1950 to 2018 (JP Morgan, 2019,p. 63).

Some years will be lower than this and others will be higher, but for arguments sake, let’s say the average return of the average investor is 10%, assuming that all their investments are shares. It’s a completely different argument when property and cash are involved in a portfolio, as this could increase that return or reduce it. But that’s for another article.

Lastly, a zero-sum game means for you to win, someone else must lose and vice versa. If you are constantly trying to select companies for outperformance, buying and selling, timing the market, you will win some and lose some in the short run. However again, over the long run, you will receive the average market return… But hang on just a minute….

All this buying and selling is increasing your fees and costs. To buy a small piece of a company costs money (brokerage). To sell a small piece of a company costs money. You may incur capital gains tax issues. You may offset these gains with your previous losses. All this effort and anxiety to receive lower than the average return, due to fees. Is it really all worth it? I haven’t even mentioned the people that sold their shares at the bottom of the 2007-2009 Global Financial Crisis and then tried to buy back in later when the market was recovering. Yes, this is a topic for another article!

The point of all this is to say that investing is counter intuitive and counter cultural. If we want to be good at something, what do we do? We work extremely hard at it and learn all we can to be the best at it. In terms of investing, if you simply buy a passive index investment, whereby passive means all you do is contribute more to the investment each month and rebalance the portfolio once a year and index meaning buying as much of the global stock market as you can, at the lowest possible cost, then you will succeed in generating lifetime wealth for your family.

Rather than researching individual companies and actively trading each week, spend this time earning more money to invest, learning something new, maintaining your health and fitness or pursuing a favourite hobby, as well as spending time with family and friends. Don’t worry about what the markets are doing today, tomorrow or next week. Worry about living a great life and letting the great businesses of this world look after you and your family over the long run (20 to 30 years).

References:
JP Morgan (2019). Guide to the Markets. Retrieved from
https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets, accessed 29.03.2019.

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.

How to ignore media scaremongering

I am always surprised by media reaction to normal movements of the share prices of companies listed on the share market.

In recent days, following a large movement downward of share prices, the media went into overdrive with headlines screaming – “SHARE MARKET CRASH” “SHARE MARKET WIPEOUT” etc, etc, etc…

These headlines often scare people into making poor financial decisions, which is highly unfortunate.

I have made this video (link below) to continue to give clients of Income Solutions the proper knowledge, so you can ignore such scaremongering.

– David Ramsay

Click here to view video

What type of gift giver are you?

Are you aware of your gift giving tendencies? How do you compare to the average Australian? Do you keep track of your gift spending, plan for it, even budget for it? As part of Financial Planning week, the Financial Planning Association commissioned a Gift Giving survey to analyse Australia’s habits with some interesting results.

Australia is a generous nation, spending almost $20 billion on gifts per year. It is no wonder, gift giving is thought to have psychological benefits for the giver including feelings of trust and social connection and lower stress and blood pressure.

Do we realise how much we spend on gifts though? The survey has broken down the average Australian adult spends the following on gifts for loved ones each year:

– $437 for our spouse or partner,

– $361 per child,

– $201 per parent,

– $115 for our pet.

That is a hefty bill each year for a family of four, with four Grandparents and a dog = $2,515!

Another slightly concerning statistic is the proportion of Australians who account for their gift spending in their household budget. I know from my discussions with clients, their recollection of gift spending often comes in well below the averages above, which is represented by the survey indicating 73% of Australians don’t have a budget allocation for the gifts they buy.

So we know gift giving makes us feel good, but poor planning can mean we resort to debt to fund our giving, which brings along the possibility of regret.

A trend for those that do plan their gift giving is to buy multiple gifts of a nonspecific nature, in bulk. Bulk buying has the opportunity to save both time and money when gift giving – 44% of families with young kids employ this strategy.

Another strong trend is collaborating with friends, colleagues or family to buy a gift together, nearly 73% report participating in group gift-giving with younger generations finding this method particularly popular.

Finally, there is an emerging trend for Australians to think about the longevity and legacy of their gifts, also being mindful of the usefulness of a gift in the short term. 81% thinking about how long a gift will last.

Across those surveyed, four distinct gift-giver personalities emerged:

https://fpa.com.au/wp-content/uploads/2019/08/FPA_Gifts-That-Give-Research-Report-2019.pdf

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.

HAVE YOU BEEN PICTURING YOUR PROSPERITY?

Elise Anderson is an Authorised Representative, GWM Adviser Services Limited, Australian Financial Services Licensee

Have you been thinking about what you want to achieve in the next 12 months? The next 1-5 years? The following 5-10 years? What about retirement, what do you want that to look like?

When was the last time you took time out to think about what you want, both now and into the future?

Goal setting is important. You don’t want to miss opportunities along the way if you don’t know what you are looking for.

What is your passion? Life is too short to live without passion. Design the life you want.

Take things step by step. Use the power of your mind to keep you motivated. Visualise your goals. You did this at the Women in Sport Breakfast when you created Your Prosperity Picture. You chose images that meant something to you, with your own personal meaning, and put them on your board. Imagine how you will feel once you have achieved your goals. Does it feel good? Then keep going. Remember that the key to achievement and success is in your head. Believe in yourself! If you do, your actions will follow your thoughts. Put your board in a place where you will be reminded of your goals and what you are working so hard to achieve.

If a goal seems too big or too much work, break it down into smaller pieces. An Ironman Triathlete doesn’t just wake up one day and decide to give one a go. They start training – swimming, bike riding and running. Building their skills in each discipline. They may then build up their distances starting with a Sprint Triathlon, moving on to an Olympic Triathlon, completing a Half-Ironman and then finally their ultimate goal, the Ironman Triathlon. They are also not doing this alone. They have a team of people around them encouraging them and keeping them accountable. It is also important that the smaller wins are celebrated along the way otherwise it will be one big long slog to get to that end goal. Reward yourself. It will enable you to refocus and remind yourself why you are working so hard and what it is that you want to achieve.

Don’t wait until the time is right. This is called procrastination. The time might never be right. In the real world there is no perfect time to start. You have to be able to deal with problems as they arise. The best time to start was yesterday. The second best time is right now.

Your goals will change over time. Just because you have a plan now doesn’t mean it is set and forget. You should review this regularly to ensure that you are on track and your plan can change or evolve as you progress towards achieving your goal. Your goals may have changed significantly and you may want to create a new Prosperity Picture, this is good. You are progressing and working towards your goals and living your passion, designing the life you want.

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.

2019 FEDERAL BUDGET ANALYSIS

Treasurer Josh Frydenberg’s first Budget focuses on reducing the tax burden for the majority of working Australians, greater superannuation flexibility for retirees and a one off energy relief payment for eligible income support recipients.
Note: These changes are proposals only and may or may not be made law.

Personal tax savings 

Immediate tax relief 
Low and middle income earners will receive a tax saving of up to $1,080 per person. This can be claimed in the 2018/19 tax return.
Preservation of tax relief for low and middle income earners 
From 1 July 2022, the 19 per cent tax bracket will increase from $41,000 to $45,000, with an increase in the low income tax offset from $645 to $700.
Reduction in key marginal tax rate 
From 1 July 2024, the current 32.5 per cent marginal tax rate will drop to 30 per cent for income between $45,000 and $200,000.
Minimisation of bracket creep 
The Government estimates that from 1 July 2024, 94 per cent of taxpayers will have a marginal tax rate of no more than 30 per cent.

Greater superannuation flexibility for retirees 

Changes to voluntary super contributions 
Australians aged 65 and 66 will be able to make voluntary super contributions without meeting the Work Test – removing the need for people of this age to work a minimum 40 hours over a 30 day period.
Increasing age limit for spouse contributions 
The age limit for people to receive contributions made by their spouse on their behalf increases from 69 to 74 years.
Extended access to bring-forward arrangements 
People aged 66 and under will now be able to make three years’ worth of non-concessional contributions to their super in a single year, capped at $100,000 a year.

Small to medium business 

Increase in instant asset write-off 
The threshold for the instant asset write-off increases to $30,000 from $20,000. It has also been broadened to include businesses with up to $50 million in turnover, making it available to around 3.4 million Australian businesses.

Pensioners and welfare recipients 

Energy Assistance Payment 
Over 3.9 million eligible Australians will automatically receive a one-off payment of $75 for singles and $125 for couples (combined) to assist with their energy bills. This payment will be exempt from income tax and not counted as income for social security purposes.

Any questions? Please see your Income Solutions Adviser for more information.

Important Information
2019 Federal Budget Analysis 2 April 2019 2019 Federal Budget Analysis | 2 Important information The Federal Budget Analysis prepared by the MLC Technical team, part of GWM Adviser Services Limited. The information contained in this Federal Budget Analysis is current as at 2 April 2019 and is prepared by MLC Technical, part of GWM Adviser Services Limited ABN 96 002 071749, registered office 150-153 Miller Street North Sydney NSW 2060, a member of the National Australia Bank Group of Companies. Any advice in this Federal Budget Analysis is of a general nature only. Before acting on any advice, you should consider whether it is appropriate to your objectives, financial situation and needs. Any tax estimates provided in this publication are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlement that arise, or could arise, under taxation law. We recommend you consult with a registered tax agent. Past performance is not a reliable indicator of future performance. Before acquiring a financial product, you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product. Small to medium business Increase in instant asset write-off The threshold for the instant asset write-off increases to $30,000 from $20,000. It has also been broadened to include businesses with up to $50 million in turnover, making it available to around 3.4 million Australian businesses. Pensioners and welfare recipients Energy Assistance Payment Over 3.9 million eligible Australians will automatically receive a one-off payment of $75 for singles and $125 for couples (combined) to assist with their energy bills. This payment will be exempt from income tax and not counted as income for social security purposes. Any questions? If you have any questions, please speak with your financial adviser or call us on 132 652 between 8 am and 6 pm (AEST), Monday to Friday

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