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Showing posts from October, 2018
You've paid off your mortgage!  Now what?
Paid off your mortgage?  Woo-hoo! Break out the champagne and celebrate the freedom you must now feel! But once the dizzy excitement has passed, what will you do next?

Discharge or not?
The first question is should you discharge your mortgage? You might be able to keep the loan facility open, with a zero balance, and retain the option to redraw on the loan account if you wish. This can be a handy way of meeting unforeseen expenses in the future, or opening up investment opportunities.

If you decide to close your loan account check first if there are any costs involved. For example, you may lose an associated credit card. Or you may be up for substantial break fees if you’ve paid off a fixed rate mortgage early.

One of the traditional delights of closing out a mortgage has been receiving your title deed. However, with many states moving to digital land titles settlement processes this will become an increasingly rare pleasure. If you do happen t…

How is Tax Collected from Your Super Fund?

Feeling short changed?

If you hold an Industry super fund, it is likely it is being taxed at fund level.  This basically means that all members share the tax deductions equally regardless of their investment.
Each time your employer pays into your super fund, contributions tax of 15% is deducted and withheld by the fund.  This is then paid to the tax office at a later date.  Until then it is retained by the fund - it doesn’t sit in your account and earn anything. 
Your fund may have access to some deductions which can reduce the 15% down.  Quite often any money the fund saves is retained by the fund.  Either way, the process is not transparent.
The Flip Side: Retail Funds.
The funds recommended by Hindsight Wealth are retail funds and are taxed at member level.  This means that any deductions are applied to your account rather than shared across all members.  
Even more importantly is the way in which the tax is collected.  Now this is critical! When your employer pays into your fund, the …

In a Relationship?

All personal relationships have their ups and downs and we work hard at our relationships to bring out the best in ourselves and others. How is your relationship with your super? Have you taken the time to get to know your super balance and how it tracks? How do you feel about your super? Does it make you feel happy or challenged when you think about fees, your balance and how your super fund communicates with you? Just like any relationship in life, we need to pay attention, be in the moment, understand what works and what doesn't and have good two way communication so everyone feels valued and understood. A review of your relationship with your superannuation and insurances is always a good idea.   Perhaps you are getting married or are in a relationship? Starting a life together is an exciting time. Where are you going to live?  Do you plan on travelling?  How about a family or the kids education?  These are just a few of the things that couples and families plan for.  For the most p…

Does Superannuation Get Taxed?

Many of you may have noticed on your post June 2018 superannuation statement that an amount has been deducted for tax.  Many people believe that they pay no tax in their super. Unfortunately, this isn’t true. Each year your employer pays 9.5% of your salary into your nominated super fund in order to meet their Superannuation Guarantee obligations. For every dollar that your employer pays into your fund, 15% of it is taken as contributions tax. It’s worse if you earn over $300k per year when the tax paid jumps up to 30%. If you’re a savvy investor, you’ll have your super invested in funds that earn income throughout the year. Be it interest, rent, dividends etc. These earnings don’t escape tax. They are in fact also taxed at 15%. Of course these tax rates are well below most people’s personal tax rates. So having your money in super does mean you’re paying a lower rate. The trade - off for this is that you can’t access your money until you reach preservation age. What does all this mean? No…

The importance of the index approach for your Super.

In other posts I have hit on the importance of getting the most out of your superannuation fund returns. So how do you do it? There’s absolutely no shortage of managed funds, investment vehicles and investment styles available to superannuation investors in Australia. The choice can be quite overwhelming. For me it’s all about risk V's return.  You can chase speculative investments in the hope you can increase your returns. You may get lucky even if only in the short term. Reality is, speculating is not investing. It’s gambling with your capital and your future.  On the flipside, you can be completely risk adverse and invest all your superannuation in a cash account. Sure, it will always be there, but it won’t go up.  The spending power of your money will be eroded by inflation. There is also a huge opportunity cost of missing out on gains that can be safely achieved elsewhere.   So, we look at investment styles. Do we invest in active investment where you rely on the expertise of a br…