Proposed Negative Gearing Changes

Proposed negative gearing changes – what does it mean for you

Australia’s house prices have fallen for 13 consecutive months, with average Australian capital city prices now down 4% from their peak.

For an outsider looking in, reports of ‘doom and gloom’ headlines may make the idea of investing in property not so attractive at this time.  With the threats of Labor looking to abolish negative gearing for investors should they win the federal election along with the banking royal commission causing banks to become paranoid with their lending……you can’t be blamed for thinking it’s not a great path to take at this time.

The experts are somewhat divided!

Helen Collier-Kogtevs from Real Wealth Australia explains the current conditions are ripe for property investors.

“We’ve got a stable government, we’ve got high immigration coming in, we’ve got low interest rates; these are all good signs for investors to be investing,” Ms Collier-Kogtevs said.

She said these signals are getting crossed through what she calls “quite a negative media” and property investors are being scared as a result, which calls a self-fulfilling prophecy; as more investors are scared by negative reporting, the market declines further.

Looking to the next 18 months to two years, Ms Collier-Kogtevs predicted the market will keep consistently quiet for the most part, with some outliers possibly experiencing declines up to 50 per cent.

After this period is when she expects property investors to strike.

Professor Bob Deutsch, the Tax Institute's senior tax counsel, rejects the notion that introducing Labor's negative gearing changes is a major threat, particularly in a weakening property market.

"Obviously when interest rates are higher you get more negative gearing," Professor Deutsch explained.

He argued that many investors have already been driven out of the market by the banks' tighter lending practices, and that now is a better time to introduce the change.

Given much of this hangs on who gets elected, many of your investing decisions, regardless should be discussed with your planner.  Understanding the bigger picture and your personal circumstances will determine if you should invest in the property market now or in years to come.

Why Afterpay is the killer for millennials!

Young people are loving what Afterpay is allowing them to purchase.  The oldies are staring down shaking their heads about the dangers of getting hooked on this new addictive debt sucking financial hole.

Is it really that bad?  Here are some facts that might help you decide.

Recently, ASIC busted the doors open in an attempt to clear the air and review the phenomenon that is “buy now pay later”. It can also be seen as the millennials version of “layby”.

This is what ASIC found……..

·      Majority of Afterpay customers are millennials.

·      One in six are in financial strife … getting overdrawn, delaying bills, or borrowing more.

·      The number of transactions has risen from 50,000 a month in April 2016 to 1.9 million in June 2018, with the collective tab now at a whopping $900 million plus.

I’m sure you understand that there is nothing revolutionary about this Afterpay process. BUT, what does this actually mean for you?

Well, in our humble opinion, the actual terms of Afterpay are not all that bad as long as you pay off the instalments on time. In which case you won’t be charged any interest, so your financial life won’t be in ruins.

However, it’s kind of like a gateway to addiction.  The millennials are relying on the bank’s money rather than banking on themselves.

The big takeaway here is that Afterpay claim the average purchase is $150.  That’s it!  We don’t like to judge but if you need instalments to cover a $150 purchase, you need to check the overall picture before you end up in that deep financial hole.

Millennials, take note, you’re never going to win if you don’t learn to stand on your own two feet and pay your own way.

And that’s why the ‘buy now, pay later’ phenomenon … will only lead to higher ticket items that you really can’t afford.

Financial Tips for the Season of Giving – Pass the ham!

As the year begins its close, traditions start to appear. You get out that fancy silverware, get the house looking festive and have the carols playing in the background.  We all have family traditions, reminding us of who we are with a story behind each detail.  Maybe it’s Grandma’s table centre piece or a traditional secret family recipe, everything is intentional, or at least it seems. 

This is a great time to take stock of what we have, who we are and most importantly, where and who we want to be.  Our financial lives usually have an important role when reflecting. 

Whilst you are reflecting, take some of these ideas into consideration so your finances reflect gratitude and growth each year.

Make a list and check it twice

It can be so easy to be drawn into that shiny object syndrome.  You know, everything looks great and you just need it or know someone who will……

Have a list and check it twice, then stick to it!  Set yourself a budget on what you want to spend for each person on your list and the food supplies you need.

Be cluey about Christmas credit

It’s estimated that $51 billion will be spent over the Christmas period. If you don't have the cash to pay for your Christmas goodies up-front, the credit card can be very tempting.  It’s a very convenient way to make Christmas for your loved ones merry but you may find yourself saddled with Christmas debt long after Santa’s visit.

Keep a running total

Keep a close check on your spending – maybe by compiling the running total on your mobile phone. Remember to keep checking in.

Plan the New Year

Santa may be able to get it all done in one night, but you can’t.  Now that Christmas is out of the way, you might like to sit down and plan out the year with a little support from our planning team.

Christmas may have snuck up on you this year but with good financial planning, you can whip those finances into shape, allowing you to continually enjoy celebrations all year round.

Feel free to reach out to our team, admin@trendfinancial.com.au.

Financial Fitness

Do you participate in those fitness challenges? Maybe you want to lose weight or increase

muscle or simply tone up. Whatever the case, the challenge is there to help you identify the

goal and then help you work through it. Some even ask you to take a photo and then again

down the track so you can see the progress you have made.

Money challenges can be used in the same way so you can achieve short or long term

financial goals. Money challenges can also be measured too, maybe you want to save for a

holiday, a new car or start working on gifting yourself the ability to retire early.

Just like a fitness challenge, you control how much you exercise, what type of exercise you

do, what you eat and the big one – tracking your daily activity and diet so you remain

accountable.

Each factor can be altered to your fitness level and goal.

Yes, you guessed it, the same principals can be applied to your financial fitness.

Follow these steps to help you become financially fit!

• Establish a clear financial goal and write it down.

• Work out where your money is going, yep this is a budget plan. When you write it all

down you can easily see where all your money is going and what you can cut down

on.

• Manage your financial health risks. Life can throw us curve balls, when you least

expect it so ask yourself a series of “What if” questions ie. What if something was to

happen to me, will my life insurance be enough for my family to keep living

comfortably.

• No time like the present! Start saving now, compounding interest is your BFF!

• Eliminate your debts, just like those love handles you want to shed. Create an

emergency fund, after that chew away at that debt. Best be earning interest than

paying it!

• Ask for help, just like when you are training you may need an accountability partner.

They need to have similar values and understand your goals so they can help keep

you on track.

• Work with financial advisors who can plan out a personalised game plan for you.

Find someone you can trust and feel comfortable with. Much like we try and hide

that muffin top, we need to be able to bare all with our financial planners, no use

hiding anything.

Both of these challenges can be difficult and have many things in common. I ask, which do

you find harder? I challenge you to becoming financial fit for 2019!

If you are looking for an accountability partner, get in touch today!

Superannuation Rules 2017

New superannuation rules took effect from the 1st July 2017 and will have a substantial effect on your superannuation and retirement plans for 2017/2018 and future years.

Please see the following list of changes to superannuation below:

• Annual concessional contributions cap reduced to $25,000

• Expansion of tax-deductible super contributions to all Australians

• Annual non-concessional contributions cap reduced to $100,000

• Increase income threshold for spouses superannuation contributions tax offset to $37,000 (and $40,000)

• Low-Income superannuation tax offset replaces LISC

• Introduction of a $1.6 million transfer balance cap

• Removal of tax exemption for transition-to-retirement pensions (TRIPS)

• Preservation age now at least 57 years

• Age Pension increases to at least 65.5 years

• SMSF trustees face bigger penalties from 2017/2018 year

• Introduction of First Home Super Saver Scheme

• Removal of option to treat a pension payment as a lump sum payment, for tax purposes

• Removal of anti-detriment provisions

• Extension of tax exemption for other types of retirement products

• Non-super change: Delivery of personal income tax cuts

• Proposed Introduction of non-financial superannuation changes

For further information and to see if any of these changes may have affected you, contact us today for a consultation with our experienced advisers.