The BIGGEST Purchase of Your Life.

Buying your first Home Saving up a 20% deposit especially for a home in a major Australian city is a BIG ask.  You need to put a plan in place and calculate how many months it will take to achieve your goal, your deposit for your first home.  Research where you want to live and what the average house prices are in that area, and how much a 20% deposit will be. Why do I need a 20% deposit? You need to save a 20% deposit to avoid paying mortgage insurance which can be thousands of dollars, paying out dead money in insurance which could go towards the purchase of your home.  It is worth waiting a little longer to get the 20% deposit together. What can I afford to buy? Where should I buy? Firstly consider the size of the loan you can truly afford.  The repayments should normally be about 25% to 30% of your take home wages.  Ask yourself, can I afford the repayments if kids come along in the next few years?  Do I need to factor in a drop in income and increased cost of having a baby?  Should I be considering a regional property rather than an inner city or metropolitan property? Buying an Investment property to commence a home purchase This is a common mistake young couples make in home purchase.  They purchase an investment property to commence with, the idea that it will go up substantially in value and give them equity in the property for a deposit on their own home.  Generally this strategy does not work it only uses...

Super News for Retirees

Federal Government released draft legislation whereby retirees over 65 would be able to make to their superannuation contributions up to $300,000 within a 90day period of selling their home and providing they were moving into a retirement community, aged care facility or smaller homes not close to schools or away from major employment centres or adult children’s homes. New reforms were being introduced to close current loopholes allowing employees to count employee’s salary sacrifice contributions towards the super guarantee (SGC).  Employees would also be given the right to Opt Out of member group life insurance policies.  One would have to question the wisdom of the changes to group life insurance knowing that most of the Australian population is under insured. You would have to question whether the Government changes deserve the praises of the Financial Services Minister, Kelly O’Dwyer considering the Government cannot leave superannuation alone and many of the changes they have made are detrimental to superannuation savings and will come back to bite them in future years, especially when we are advised that the current average super fund at 65 years of age is $240,000.  This will lead to more reliance on age pensions and Centrelink benefits in the future.  But I guess that’s a problem for a future Government.  It’s a similar situation to the State Governments selling the States Assets to meet budgets. What happens in the future when there are no more changes that can be taken from Super Funds and no more assets left to be...

Federal Government First Home Super Saver Scheme

The Federal Government has now just released a draft legislation announcement of its First Home Super Saver Scheme, which from all indications will be controlled by the Australian Taxation Office (ATO).  They will have the authority to determine who is eligible to withdraw funds from their super fund to contribute towards buying their first home. People wishing to withdraw from their super fund for a contribution towards buying their first home would need to apply to the ATO.  The ATO intern will determine the maximum they can withdraw.  People will need to be over 18 years of age and the property they are intending to purchase needs to be their first property acquisition. The maximum a member can withdraw is $30,000 from a member’s voluntary contributions along with any additional amounts earned by the super fund on that contribution. One would have to question how effective the “First Home Super Scheme” will be knowing how little members are contributing to superannuation and the size of the average...

Know When or If to Retire

Before considering retirement you need to know what your retirement will look like and can you afford to retire, or should you retire.  Know how much you will need in retirement. How many games of bowls or golf games a week are going to long term satisfy you in retirement.  How many times can you travel up North and around Australia. Maybe you should not ever fully retire.  That does not mean you should keep working in your existing job, especially if you are in a trade. Your back and those knees are probably giving out, but a change of scene in a job that is easier on the back and the knees, working one or two days a week, not necessarily every week. Retirees who continue to work part time are happier and often healthier having something to stimulate their mind and not having to be constantly worrying whether their  retirement funds are dwindling away. Once you reach pension age you can draw a tax free pension from your super and still be able to work.  A couple can earn up to $28,973 each and a single can earn up to 32,278 per year. From experience, working with retirees one of the biggest mistakes you can make is to retire and give up working.  Working one or two days a week will do wonders for your health and happiness. You will not have time to be depressed or worry about whether you can afford to change your car or go overseas. It is important that you do not retire with debt or a mortgage.  To achieve this you...

Market Update

Is the Second Longest Bull Market Running Out? The bull market is still going but how long can this bull market keep running? Since March 2009 it is the second longest bull market in 99 months. Markets have risen considerably. Bull markets cannot go on forever and while we are still seeing growth, it’s probably a good time to go a little cautious and expect a correction in the next 12 months. Europe is Starting to Show Some Strong Growth.  To some extent the political worries have quietened down. Europe’s earnings are showing positive signs and earnings growth and revenue estimates are now out pacing the US. The US Market is Still Going Up. The US market is still moving along slowly. Strong earnings growth is helping the market. Tech stocks will probably help the market to keep going up. Asia Earning are positive for the region. However China’s economy is slowing to some degree and GDP growth slowing to...

Market Update

Housing Market The Australian Bureau of Statistics has released dwelling approvals data for the month of May at a national level showing the number of dwelling approvals fell by 5.6% to 16,448.  The decline was due to the unit and apartments dropping by 12.1%, however home approvals actually rose slightly.  There is still the belief that there is a housing shortage especially in the three major cities of Sydney, Melbourne and Brisbane. Capital City dwelling values rose 0.8% over the June quarter but the second quarter of 2017 shows the property market demand is dropping off to some extent.   Investment Market There is a tremendous interest in the development of lithium batteries.  Over the next 5-10 years There is going to be tremendous development in this area.  The very fact that China is gearing up its factories to be a leader in this field of development.  Currently China manufactures 55% of batteries globally. One of the big problems with electric cars is the cost of batteries.  If China is going to be the major player in this market, this could help reduce the cost of batteries.   Volatility in Oil Prices The current volatility in oil prices has been overshadowed by the crisis in the Middle East with Saudi Arabia and the United Arab Emirates breaking off relations with Qatar.  This obviously has an impact on investments in the emerging markets.  The political upheaval in the European markets also has an impact when considering to invest in these markets. Investors are forced to consider the impact of these political upheavals and what effect  they are having on these...