Posts Categorised: Uncategorised

Economic Snapshot – FY20 in review

2019/20 was the most dramatic year for financial markets since the GFC. The first half of the year was dominated by concerns of global recession as slower growth in China spilled over into the rest of the world. Central banks cut cash rates even further, which encouraged equity markets to rally into December. The ongoing popularity of tech stocks helped underpin the rally. However, equity market valuations closed 2019 in expensive territory. The emergence of Covid-19 in the New Year turned everything on its head. Lockdowns around the world crushed economic activity and drove equity markets down sharply. Massive central bank stimulus saw cash rates fall to new record lows and vast amounts of liquidity poured into financial markets. On top of this governments announced trillions of dollars of stimulus. Combined with the central bank moves this sparked an equity rally that ran through to the end of June, once...

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Tax deductions for working from home

Key takeway points The ATO has introduced the shortcut method for calculating work from home expenses. You can claim 80 cents per hour. Applies from apply from 1 March 2020 to 30 June 2020 (maybe extended). Working from home expenses In the past, working from home may have felt like a fantasy for many people. But now, it is the norm for many parts of the workforce and will stay that way, in some form or another, for quite a while. Now that the novelty of the new situation is wearing off, people are realising there are cost for this arrangement.  There were costs to set up their new home “office” (e.g. desk, chair, computer, monitor) and ongoing costs (e.g. electricity for equipment and air conditioning, phone and internet). You have always been able to claim expenses for working from home, but the existing ATO methods were somewhat...

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Do Less. Do Better. Know Why.

Cal Newport has long written about the intersection of digital technology and culture, with a focus on doing deep work (which is he refers to as the “ability to concentrate without distraction on a demanding task”), digital minimalism (which should “radically reduce the time you spend online, focusing on a small number of activities chosen because they support things you deeply value”) and Attention Capital Theory (related to the brain’s ability to create new value through sustained attention). The following is taken from a recent article of his. My philosophy for achieving this goal can be reduced to three simple rules: Do fewer things. To “do less” is to slow down. Focus on one activity at a time. Do less total activities. Be willing to pass through occasional interludes of full non-productivity. Do them better. To “do better” is to...

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When can you access your superannuation?

In order to access your superannuation you need to satisfy a condition of release. Once a condition of release is met, your superannuation is classed as having unrestricted non-preserved benefits. Conditions of Release The three main events that are considered conditions of release are when you: reach your preservation age and retire reach your preservation age and choose to begin a transition to retirement income stream while you are still working are 65 years old, even if you have not retired. There are some other special circumstances when you are can also access your superannuation. Please contact us if you wish to find out about these. Preservation Age This is the age at which you can access your super if you are retired or wish to start a transition to retirement income stream.  Your preservation age is based on your date of birth as follows. Please note that...

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Changes to deeming rates on 1 May 2020

New Deeming Rates from 1 May 2020 The Government has announced that the deeming rates drop on 1 May 2020 as follows: Lower tier rate drops from 1% to 0.25% Higher tier rate drops from 3% to 2.25% How income is deemed Deeming is a set of rules used to work out the income created from your financial assets. It assumes these assets earn a set rate of income, no matter what they really earn. Financial assets include such things savings accounts and term deposits, managed investments, listed shares and securities, some income streams (superannuation) and some gifts you make. Centrelink includes your deemed income as income under the income test.  Deeming is not related to the asset test. Working out your deemed income If you are single, the first $51,800 of your financial assets are deemed to earn 0.25%, with anything about this level being deemed to...

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Reduced minimum pension payments for FY20 and FY21

The government has announced it is reducing the minimum pension payment requirement for account based pensions by 50% in both FY20 and FY21. All account based pension holders are eligible for this. The minimum pension that you are required to draw is based upon the the balance at the start of year financial year (1 July 2019 for FY20) and your age. For anyone who has been drawing the minimum on a regular basis since 1 July 2019, they would have already met the new reduced minimum and therefore could choose to receive no further payments until after 30 June 2020. For anyone who has not drawn anything yet, they can choose to receive the new reduced minimum instead of the original pension amount that would have applied. If you would like to discuss how this change might impact you, please call me on 0411 575 664.

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Financial Claims Scheme (AKA Government deposit guarantee)

The Financial Claims Scheme (FCS) is an Australian Government scheme that provides protection to deposits in banks, building societies and credit unions in the unlikely event that one of these financial institutions fails.  Under the FCS, a ‘failed’ institution is one that is insolvent – that is, the institution can no longer pay its debts when they become due and payable. The FCS can only come into effect if it is activated by the Australian Government when an institution fails. Once activated, the FCS will be administered by the Australian Prudential Regulation Authority (APRA). The objectives of the FCS are to: protect depositors of banks, building societies and credit unions incorporated in Australia, and policyholders of general insurers from potential loss due to the failure of these institutions provide depositors with prompt access to their deposits that are protected under the FCS support the stability of the Australian financial system. Under the FCS, deposits...

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Economic Snapshot – March 2020

March was the most turbulent month for global financial markets since the onset of the GFC. Evidence of Covid-19 spreading into Europe triggered a sharp fall in equities and other risk assets, combined with a liquidity squeeze as demand for US$ cash rocketed. Volatility rose across many asset classes, with equities moving up and down by 10% a day. The A$/US$ fell nearly US$0.10 to around US$0.56 as it was sold to provide US$ in exchange. These conditions continued until around the middle of the month when central banks stepped in to cut interest rates sharply and implemented programs to supply trillions of dollars of liquidity to global markets and banking systems. However, equity markets did not really take heart until a few days later when governments around the world, including Australia and especially the US, announced fiscal packages amounting to trillions of dollars in total. After a bounce in...

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Thoughts on a crazy week

It has been a crazy couple of weeks for us all. And it may have only just started. Looking back through the eyes of an adviser, an investor and a member of society, here are some broad observations. None are particularly original and they are in no set order: Berkshire Hathaway (Warren Buffett) has $128bn in cash. 50% of this is from royalties on Warren’s and Charlie’s quotes, and the quoting rate is still increasing exponentially! The Spider-man pointing at Spider-man image seems to be everywhere in my feeds. Monday the 23rd might might have been the bottom for the ASX. On that day, the BetaShares GEAR product had fallen 66% from its high 4 weeks earlier. I know someone who bought it this week. I also know they didn’t tell me the bottom had been formed, which I’m disappointed about. No Christmas card for them. Another sign this...

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Two Things Can Be True At Once

Originating as a musical term, counterpoint refers to the technique of combining two or more melodic lines in such a way that they establish a harmonic relationship while retaining their linear individuality or when two or more tunes that are played together to sound like one tune. In a similar way, two things can be true at once, even if they feel mutually exclusive. The following is taken from another great article by Morgan Housel. To read Morgan’s article in full please click here. We might be overreacting in some ways and underreacting in others. Good and bad news can coexist. It’s OK to be terrified about the short run and optimistic about the long run. It’s OK to be both confident about your decisions and humble about how little we know. It’s OK to want to stay informed while also wanting to tune everything out. It’s OK to have...

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