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Wednesday, 29 May 2019

FASEA Exam for financial planners

The new, mandatory examination for Financial Planners in Australia has finally kicked off - bookings for the June session of examinations opened earlier this month and close at 5pm on Friday 31st May. I decided to enrol in the exam (I'm booked in for Sunday 23rd June), as I *should* know all the required material already, having recently completed the DFP and done financial planning and ethics subjects at uni in the past six months. There will also be some preparation materials available via Kaplan (which my AFSL provides in order for their authorised reps to complete the annual CPD requirement), which will give me a chance to revise thoroughly. The exam is being run by ACER (UNSW) and costs $594 - hopefully I pass the exam on the first attempt, as although you can resit the exam it will cost another $540+GST (ie $594) each time!

Although the exam will be held every three months this year and every two months during 2019, I've seen mention that you will only be able to register for an exam if you haven't sat for one within the past three months - and since registrations close a couple of weeks before the exam session commences, this would mean that if you fail the June exam you couldn't register for the next session in Sep 2018. And during 2019 you would only be able to resit after four months, not two.

In any event, existing (registered) financial planners have to pass the exam before 1 Jan 2021, or they will then have to pass the 'new planner' registration requirements - which would include doing 12 months of supervised professional experience!

The exam 'pass' mark is 'credit level' (ie. 65%), but as the exam (70 Qs to do in 3 hr 15 mins, after 15 mins 'reading time') consists mostly of multiple choice questions I'm hoping it isn't too hard compared to a typical university exam. It probably will be a bit of a shock to existing planners that have been in the industry for many years and don't have any tertiary qualifications. The exam is also 'open book' in terms of having the relevant statutory materials available (presumably on the dedicated computers that the exams are being run on during 2018-19.

Anyhow, as soon as I finished off my uni exam on 11th June I'll get stuck into revising for the FASEA exam. Then I'll have to get cracking on finishing off the ADFP I've also enrolled in (but haven't yet started).

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Lagging my 'stretch' benchmark

One 'benchmark' that I use for evaluating how well I am doing at increasing my net worth is the cut-off amount for the annual 'rich list' of the 200 wealthiest Australians - I compare my NW to 1% of the cut-off figure. The latest 'rich list' will come out this Friday, but they have already announced that the cut-off amount for being included in the list has increased to A$472m this year. So my 'benchmark' aspirational figure is A$4.72m for the end of 2018 (the list takes several months to compile, so I compare the annual figure to my previous year-end NW estimate).

Unfortunately my NW has lagged this benchmark during 2018. I'm guessing this is mostly due to:

1. A large fraction of my NW is tied up in our home, so the deflation of the Sydney (and Australian) residential real estate bubble has had a major negative impact on my net worth

2. Although the exact make up of the 'rich list' won't be known until Friday, looking at some of the names that have dropped out of the 'top 200' suggest that many traditionally rich families, while doing OK during 2018, were surpassed by the rapidly rising fortunes of several people involved in the Australia 'tech' industry. The founders of Atlassian are one example.

I don't expect 2019-2020 will be particularly good for my NW either, as I will be spending quite a bit of my cashflow on my uni studies and the running costs of my new financial planning business. Hopefully by the time I finish off my masters degree at the end of 2020 (or early 2021) my business income will at least be sufficient to cover running costs (even if I'm not still not drawing any 'salary' from the business). In 2021 the business will either be running profitably, or I'll shut it down. And in 2021 if I enrol in a PhD in financial planning the uni fees may be covered by RTP (research training program) funding.

If my business does start to generate profits from 2021 onwards, I may start to make some progress relative to the 'rich 200' benchmark.



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Sunday, 26 May 2019

2018 was a bad year for billionaires

According to the Wealth-X Billionaire census the number of billionaires world-wide declined by 5.4% to 2,604 during 2018, and their total wealth also declined by 7% to $8.6 trillion last year.

The Pacific region, which includes Australia, did worse than average, with the number of billionaires declining by 6.3% (to 30) and their wealth declining by a massive 14% (to $64 billion) during 2018.

Overall, billionaires account for only 1% of all Ultra-High Net Worth (UHNW) individuals (defined as those with $30 million in net worth). However, they accounted for 28% of UHNW total wealth.

One interesting aspect of this is that 'wealth distribution' is actually a lot more 'equitable' amongst UHNW individuals than, for example, wealth distribution globally (where the top 1% of global population have at least 50% of the total wealth). Of course, this is largely due to the fact that no UHNW have a negative net worth, whereas the global population includes many people with negative net wealth (are in debt), or zero net wealth.

Australia is under-performing in terms of how many billionaires we have - our GDP ranks 13th, but we are not in the top 15 countries in terms of number of billionaires. This may of course reflect the much cherished belief that Australia is a more 'egalitarian' society than many other countries.

While not many people will feel much sympathy for billionaires having a tough 2018, it will have some adverse 'trickle down' effects - after all, the most popular hobby amongst billionaires is philanthropy, with over 50% known to be actively involved in philanthropic giving - often via educational grants, scholarships are so on. A recent example was Robert Smith paying off all student loans for the class of 2019 graduating from his Alma Mater (as is often the case when rich people engage in charitable giving, this immediately resulted in some criticism - the Washington Post wrote a piece questioning whether this act of charity was fair on those students (or their parents) that had saved and paid for their education without going into debt). Another recent example was the immediate, large donations of several French billionaires towards the restoration of Notre Dame cathedral after the recent fire. This, too, was promptly criticised - some on the basis that it was an example of Western privilege (i.e. it was easy to raise donations to restore a Western cultural icon, yet little had been raised to restore the damage done to Palmyra done by ISIS), and others simply objected on the basis that the generous donations provided another example that billionaires have more money than they need, or 'deserve'.

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Saturday, 25 May 2019

How 'fair' was Labor's policy to increase redistribution by raising taxes on the 'top end'?

One of the things I found most irritating about Labor's election campaigning was their constant assertion that raising taxes to spend on more 'redistribution' to reduce inequality was 'fair', and that the coalition policy to provide some income tax relief to those on above average wages was terribly unfair. I suppose it all depends on how you define 'fair'.

According to Labor, greens and other 'progressive' parties, any inequality of incomes or assets in 'unfair' and the role of government policy is to play Robin Hood - taking from 'the rich' and giving to 'the poor'. The confuse to goal of equal opportunity with that of equal outcomes.

We already have a progressive tax system, which ensures that those that can 'afford' to pay for the country's essential services does so, and also ensures that social welfare is provided to those in need. Does it need to be even more progressive? I doubt that many people realise how progressive it already is. I came across an interesting 'fact check' that was done back in 2015 when Hockey (then treasurer) made a statement that 50% of all tax was paid by the top 10% of the working population. The fact check confirmed this. But what I find even more interesting is that a phenomenal 98% of all income tax is paid by the top 50% of the working ie. those earning more than an average wage!

Whether or not it is 'fair' that 98% of the funding (in terms of income tax) to run the country is provided by only half the population (ie. the other half are basically free-loaders), I can't see how increasing that tax burden even more in order to hand out additional 'support' to the bottom half is 'fair'.

In any case, fairness (or unfairness) of redistribution is in the eye of the beholder. Those voters who will end up paying more taxes and not receive any direct benefits will tend to vote against such policies, and those who won't foot the bill, but will receive substantial benefits, tend to think it is a great idea (and self-evidently 'fair'). It is also the reason why younger voters (who often pay little or no tax) tend to vote more to the 'left' and older voters (in peak earning/taxpaying years or retired after a lifetime of paying taxes) tend to vote more 'left'.

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Thursday, 23 May 2019

Shorted Tesla in my CFD account

I decided to short Tesla again yesterday (not sure if the trade was executed, as I placed it while the markets were closed, so it depends what happens with the US market overnight). Last time I did so Tesla was up around $300/share, but rebounded after a dip, so I closed out. I should have kept my short position, as since then it has been in a remorseless downtrend. If my order gets executed, I'm hoping that Tesla won't make a miraculous turnaround - at the moment they seem to be counting on cost-cutting and a sudden increase in market share to stem their negative cashflow crisis before it runs out (they apparently have about 10 months worth of cash, after the recent $2B injection).

If things don't turn around, one Telsa-watching commentator has predicted the share price could drop to $10 (why not say $0?). I don't expect it to do that (unless Tesla looks like going broke and ends up being acquired by one of the 'real' car companies), but I'm hoping that it hasn't reached bottom yet. We'll see how things turn out.

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Wednesday, 22 May 2019

RBA governor tries his hand at blame-shifting

Apparently the RBA governor has 'gone political' and given a post-election speech suggesting that the government ought to look at other ways to lower unemployment (such as increased infrastructure spending or industrial reforms to boost employment growth), rather than rely on the RBA cutting interest rates:
https://www.smh.com.au/politics/federal/how-good-is-that-rba-decides-it-s-time-for-some-real-policies-20190521-p51pmv.html

However, there seems to be an opinion that recent low unemployment levels may (after a lag of around a year) lead to higher inflation:
https://www.businessinsider.com.au/kangaroo-curve-australia-unemployment-rate-inflation-nairu-2018-11

So I'm not sure that lowering unemployment should be a priority for the RBA or government, given that unemployment is getting pretty close to the rate that occurs naturally from a certain proportion of people always being in transition from one job to another.

Given recent moves by the RBA to put their previous inflation target band on the back burner (having failed to keep underlying inflation within the target) and instead focus on lowering unemployment, it seems that this might be a bit of self-interested bias by the RBA. Having found achieving their inflation target 'too hard', they've decided to shift the focus to unemployment rates, and then wash their hands of that too, but saying that there isn't much scope to cut rates any further, so its now the government's responsibility to do something.

Given the supposed sanctity of the RBA being independent in terms of setting interest rates free from government interference, it seems a bit inappropriate for the RBA governor to now be offering the newly re-elected government 'helpful' advice on where their budget priorities and IR policies should head.

There are of course aspects of unemployment that still need to be addressed: underemployment (those in one of more casual or part-time jobs that would really like to be working full-time in a permanent position), regional unemployment, youth unemployment, indigenous unemployment, age discrimination in employment and so forth. But focusing on getting the 'headline' rate of unemployment below 5.x does not seem to be valid 'top priority'. Especially if that could lead to a break-out in inflation.

This shift in RBA focus from inflation targets to the unemployment suggests the 'recency effect' is at work - tending to give excessive weight to the latest information. Having now 'beaten' inflation to such an extent that it is often below the lower limit of the RBA's own 'target band', the RBA might be assuming that (high) inflation can't reoccur. An over-emphasis on getting unemployment rates even lower may risk inflation taking off again. It could also happen at just the wrong time - when the US-China trade war could potentially reverse the decades long trend in cheap Chinese products 'exporting' deflation to the developed countries.

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Saturday, 18 May 2019

Things are looking up

Tony Abbott lost his seat of Warringah. He's a nice bloke (I've met him), but his view are very out-dated, so it's probably going to be a good thing for the Liberal party when he's gone. Zali won the seat - so it will be interesting if she actually backs the coalition (assuming it forms government), or is actually a lot more 'left' than she claimed during campaigning (she had strong support from GetUp!, but was constantly pointing out there were no 'formal links'). We'll see.

Overall it looks like the coalition might be able to form government - either with a slim majority, or as a minority government with some of the independents - if it's a minority government I'll win a few bucks I wagered on Betfair, if they win outright I'll win more (the odds of a coalition win were 5:1 when I placed the bet).

I also got notified that GoDaddy technical help was fixed up my business website (took about four days), which is good. They also created a backup ;) They suggest that I change from a windows hosting plan to a Linux hosting plan, as Wordpress apparently will be more robust running on a Linux server (and my website should also load faster). I'll check with GoDaddy support on Monday to see if I can just switch over my existing 'deluxe' hosting plan from Windows to Linux hosting, and get everything moved across without too much fiddling.

All in all, not a bad night.

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Hi ho, Hi ho, it's off to vote I go

DS1 is working for the AEC today, manning a polling station in a nearby electorate. It's a good opportunity for a uni student to earn some money (apparently it's close to a thousand dollars for one, very long, day of work). He'll even get a superannuation contribution ;)

The electorate we live in in is a 'safe' Liberal seat (it was won with a 15.7% margin at the last Federal election) so how I vote really won't matter very much. It will be much more interesting in the neighbouring electorate when Tony Abbott (the ex-PM) is standing for re-election in a traditionally 'safe' seat, but is facing a strong independent candidate (Zali Steggall) who is being given a lot of support by a grab-bag collection of 'anyone but Tony' groups such as GetUp! (Labor activist group), 'Vote Tony Out' (the ultimate in negative campaigning as far as I can tell they really don't care which party forms government, as long as Tony Abbott doesn't get re-elected), and the usual Labor, Green candidates (who don't stand a chance of getting elected, but their preference flow to Zali will boost her chances, as long as she comes second on the first preference count). Polls funded by GetUp! suggest he is trailing Zali 46:54 (but I can guess how 'push' polling funded by GetUp! is! - I'm amazed how much coverage these sort of biased polls get in the national press - e.g. the front page of the SMH), but more independent polsters have it around 50:50 (still a very close thing for a formerly 'safe' seat, which shows how unpopular Tony is with some 'swinging' voters).

In any case I'll be voting Liberal in my electorate. I don't think the Libs have particularly enticing policies (in fact I'm not sure they have any new policies this time around), but the Labor policies appear to involve an even larger amount of 'tax and spend' than usual (I think the fact that Labor has been consistently ahead in the opinion polls since the last Federal election has them thinking they can get a 'transformative' platform endorsed by the voters, simply because the electorate has had enough of the coalition and wants to 'give the other side a go'). A lot of the policy (e.g. climate change action) is not fully costed, and other policies (eg. subsidising child-care worker salaries) have not been costed in the 'long term', so, like the NDIS scheme and NBN, are likely to be massively expensive after the first decade, and almost impossible to wind back the cost.

I probably won't be too adversely affected by Labor's tax grab if they get elected, as it is mostly targeted at those in the very top tax bracket, or who make use of discretionary trusts, have very high super balances (tens of millions!) etc., but I suspect that what might happen if Labor wins is that they will get their spending promises enacted (after all, who doesn't want to spend more on schools, hospitals or the needy?) but then fail to raise the revenue required to pay for it all. A lot of their tax changes will have serious trouble getting through the Senate (where minor parties and independents have the 'balance of power'), so we could end up with four years of Labor budgets promising to be 'balanced' but which end up blowing out the deficit (even more) -- that seems to be the usual pattern when Labor gets into office.

We'll see what happens this time around...

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Tuesday, 14 May 2019

The cost of a DIY website

Having no paying clients (yet), and considerable running costs (AFSL monthly fees & mandatory CRM/SOA software subscription of around $1,400 per month), I've been trying to setup my financial planning business on a shoe-string budget (especially as I also have to pay the fees for my postgrad uni courses in financial planning - which work out to be around $1,100 per month). This has meant cutting costs by having a 'home office' (yet to be organised) and also by choosing to spend the time constructing my own Wordpress business website, rather than paying a 'professional' website designer to do so.

The obvious down-side of this approach is that I've spent a lot of time over the past 4-5 months fiddling around with Wordpress to get my website done, and while the resulting website looks OK it has pathetic page load speeds (even after using an image optimizer plugin to reduce total image filesizes by about 75%). The less obvious problem with the DIY approach was that when the website blew up during a routine upgrade of Wordpress (casusing a server error '500'), I was left floundering when the recommended fixes for such an error didn't get things working. (In case you think I don't know what I'm doing, you're probably right, but since I have a Grad Dip in IT I should be able to fix a common problem arising from a standard housekeeping task in Wordpress!)

This has left me with a) a website not working since Saturday evening, b) several hours spent trying to 'fix' the problem by renaming htaccess file, plugins folder etc. with no result, c) about half an hour spent of the phone with GoDaddy's 'free' help service (its only free in the sense that since I'm already paying for GoDaddy products, they don't charge extra for doing some basic trouble-shooting if the products stop working) with no progress, and c) finally having to pay another fee to get some 'Premium support' to get my Wordpress site back up and running (hopefully). The minimum cost to get the WP issue fixed is A$65 (for one 'credit'), but I decided to pay a bit extra ($111.06) to purchase three 'credits' - the first one will hopefully get my website back up, and I can then use the second credit to try to improve/optimize my website performance. I'll keep the third 'credit' in reserve in case something goes wrong when I try installing and using a backup/restore plugin like 'BackWPup'.

The initial service ticket should now take 'up to' 72 hours to get done, so I'll have ended up with my website offline for almost a week by the time it gets resolved. Fortunately, with no clients (nor even prospects making enquiries) as yet, I don't think it will make much difference whether or not my website was 'up' this week. All I've had to do is temporarily deactivate my Google Ads until my website is available again.

The positives out of all this are that I've learned more than I really wanted to about how Wordpress works (or doesn't work), and I've still ended up 'only' spending about $200 all up (including the maintenance fee) to get my business website registered, hosted, and setup. Getting it done by a 'professional' website designer would have probably cost several thousand dollars for the sort of website I've ended up with, and then any future changes would have meant paying additional fees.

Overall I'm not very impressed by the robustness of Wordpress - having it fail during a routine version upgrade, and not to be able to simply revert (automatically) to the previous, working version seems very primitive. Rather than have backup/restore plugins available as extra, this feature should be built in to the basic Wordpress installation.

And I'm also not very impressed by GoDaddy help - while the cost of 'premium' technical service is quite reasonable when you need it (assuming it actually gets my problem solved - fingers crossed). You shouldn't need to pay for something as basic as reverting to the previous, working setup when something goes wrong - that is, I don't see why a basic backup/restore feature isn't included when you are paying for 'deluxe' hosting.

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Sunday, 12 May 2019

Why does Wordpress suck so bad?

Yesterday morning I had my business website running smoothly, all the pages finally done and approved, my Google Ads setup and sending traffic to the site, and even all the plugins (traffic, appointment booking etc) all behaving. Then I decided to risk doing the recommended 'Wordpress update' and it all went belly-up.

I'd had a similar problem several months ago when I just had my basic website structure in place, so I wasn't too fussed when I had to delete all the files in my domain folder and start from scratch. But this time, having spent months getting my website more-or-less finished, I was very wary of doing the upgrade - why fix what isn't broken?

However, since it is generally 'recommended' that you keep wordpress and plugins up-to-date (to fix known bugs etc.) I decided to 'give it ago'. Unfortunately, the update failed and left my website displaying a 'server error 500' message. I then spent a couple of hours going through the recommended 'fixed' of a) renaming the htaccess file, and then (after that didn't work) renaming the plugins folder. (which didn't work either). Short of paying GoDaddy support to try and fix up my Wordpress installation, I'm left with trying to use the 'Manage Applications' tool to upgrade WP to 5.1.1 (which didn't do anything). Then revert it back to 5.0.3 (I'm still waiting to see if that get my site working again).

What amazes me is that Wordpress is such a widely used product for websites, yet the automatic update process can fail so easily and leave the website in a corrupted state (it's happened to me twice for two different updates within a couple of months). Surely as a popular, modern content management tool Wordpress should be able to gracefully revert to the current/previous working state if an update fails?

If/when I get my website working again I'll have to look seriously into using both and FTP app and a wordpress backup/restore plugin to (hopefully) make the process of reverting to an earlier (working) version of my website less painful. I had hoped that the first time the Wordpress update process left my website unusable was an isolated instance, but it seems that this is quite likely to happen every time I do a routine update of Wordpress ;(

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Saturday, 11 May 2019

Uber provides another lesson in the dangers of investing in IPOs

For some strange reason many people like to invest in IPOs. For some it may be the promise of buying shares 'without brokerage' (as if a few dollar brokerage is really going to make much difference in the long run. And on the downside, any 'mum and dad' investor that buys shares via an IPO because they don't have a brokerage account, will end up having to set one up anyway, when they eventually want to sell the shares - unless they go through the complication of finding a willing buying and doing an off-market transfer). I suspect that the real reason most people buy shares via an IPO is the forlorn hope that they will get in on the 'ground floor' of the next Microsoft, Apple, Amazon or CSL - and make their fortune.

The reality is that most IPO are NOT the 'ground floor' - that was during the pre-IPO phase when the owners of the private company got injections of capital in exchange for parcels of ownership while the company was still privately held. By the time the IPO comes around, the pricing is usually aimed at getting the maximum possible funding from 'the public' and transferring that wealth to those that either a) started up the company, or b) invested in the company before it 'went public'.
There are exceptions to this of course - where a company has 'gone public' and then gone on to bigger and better things, making those that bought shares in the IPO a small fortune. But the odds are against you:

  • More than 60 percent of more than 7,000 IPOs from 1975 to 2011 had negative absolute returns after five years in the secondary market, according to a UBS analysis using data from University of Florida professor Jay Ritter. [1]
  • Uber is a recent example: It opened trading at $US42 a share on Friday - or nearly 7 per cent below its IPO price of $US45. And its shares closed at $US41.57, costing IPO investors a 7.6% loss in one day - and that's before taking into account the brokerage cost if they want to offload the shares.
Now, Uber may end up being a wonderfully profitable company, rather than just a loss-making disruptor, but if you are an investor rather than a speculator, its not the place to make serious investments.

Investing in IPOs can be fun, but should be approached as the gamble they are - never 'invest' more than you can afford to lose, don't chase losing 'bets', and be willing to 'walk away' if it doesn't go the way you expected, rather than 'holding on' and hoping it might 'come good' in the long run.

I've dabbled in IPO shares for fun, and even put some money into a pre-IPO 'startup' company (GEN) that seemed likely to cash in on the internet boom back in the late 90s (but then went broke before listing), but I've always been aware that these were highly speculative gambles and made token investments that I could afford to loose without too much angst.

References:

[1]: https://www.cnbc.com/2019/04/03/dont-be-fooled-by-the-unicorn-hype-this-year-most-ipos-lose-money-for-investors-after-5-years.html


[2]: https://www.smh.com.au/business/markets/tough-week-to-go-public-uber-flops-on-its-wall-street-debut-20190511-p51m9o.html


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Thursday, 2 May 2019

2019 may be the last chance to invest tax effectively using negative gearing and the current CGT discount rate

I currently have a relatively modest amount of margin loan debt used to purchase a portfolio of growth assets (some direct investments in managed funds and shares, and some ETF investments in index funds), as I was forced to reduce my gearing during 2008 in order to avoid margin calls, and have taken a more conservative approach ever since.

This will probably change during 2019, as if Labor wins the Federal election (which seems highly probable at the moment) they intend to make massive changes to both the CGT concessional tax rates and the ability to use margin loans and negative gearing to reduce overall taxable income. According to their current policy website:

  • Limit negative gearing to new housing from 1 January 2020. All investments made prior to this date will not be affected by the changes and will be fully grandfathered.
  • Halve the capital gains tax discount for all assets purchased after 1 January 2020. This will reduce the capital gains tax discount from assets held longer than 12 months from 50 per cent to 25 per cent. All investments made prior to the 1 January 2020 will be fully grandfathered.
One positive feature for investors is that investments made during 2019 will still enjoy the current CGT and negative gearing rules going forward. So I'm in the process of transferring $50,000 of my available credit in my St George Portfolio Loan (a home equity loan) into my Commsec Margin Loan account, and I will then purchase $100,000 of growth assets (probably MVW and QUAL ETFs). The dividends from those investments should be less than then interest paid, which under the current negative gearing rules will reduce my taxable income from wage salary etc. When I sell the investments any capital gain will be discounted by 50% before being taxed at whatever marginal tax rate applies to me at the time. If Labor does win the election I'll think about doing the same again before the end of 2019.  While my taxable income will be reduced this year and next by tax deductions for my FP business and self-education costs, in a few years time (all going well) being able to reduce my taxable income may be more important.

A rough calculation shows that investing after the removal of negative gearing would cost me around $3,500 per year more in tax. And that investing next year rather than this year would mean any future capital gain on the investment would be effectively taxed at 75% of my marginal tax rate, rather than the current 50%. (Although this could be managed by only selling a small portion each year after I've retired and receiving a tax-free pension income from my SMSF, so that the CG was subject to nil or low marginal tax rates, in which case the CGT discount rate would not matter).

If nothing else, investing using my margin loan facility after 1 Jan 2020 would make my tax calculations a lot more cumbersome - I would have to keep track of what amount of the loan had been used to purchase investments prior to 1 Jan 2020, and how much afterwards. This could then be used to calculate the proportion of interest paid during the year that could be deducted against other income (eg. salary income) and how much interest was not deductible against other income, but only offset against dividend income. Additional complexities will be introduced if several investments are made after 1 Jan 2020, so the ratio of pre- and post- borrowed/invested funds changed during the financial year. Not to mention if tranches of pre_2020 investments are also sold at different times, and if interest rates have changed during the year

From a financial planning POV, the changes will make Investment Bonds a more attractive option for high income (highly taxed) individuals that are willing to invest for the long term. An investment bond pays tax on earnings at the company tax rate (30%), but benefits from any franking credits (so the effective tax rate is lower). And if held for 10 years or more, there is no tax payable on the gain made when the bond is sold.

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Wednesday, 1 May 2019

Net Worth: April 2019

The continued strength in the Australian and International share markets during the past month resulted in improved superannuation and  geared share portfolio valuations as at the end of April. Our house price valuation is unchanged as the suburb average sales data for our area had not been updated this month, but as the Sydney Index data from CoreLogic only showed a small fall in average sales prices for homes during April this should not have much impact on the total NW estimate. Overall my NW increased by $47,874 (or 2.11%) during April, not quite reaching a new 'peak NW' value.

I'm currently planning on remaining in my current job (unless I get retrenched - which is always a possibility in the modern workplace) while I get my Financial Planning business up and running, and try to achieve profitability while running it part-time in the evenings and weekends for the next 2-3 years (while finishing of the Master of Financial Planning degree and then possibly the CFP certification and start on a PhD in Financial Planning). Depending on how things look in 3-4 years time, I might either keep running the FP business part-time while keeping my full-time salaried job (until I reach 65 or so), or else see if I can reduce my salaried job to 4 days/week and increase the amount of time devoted to my own 'business'. I might also need to switch to 4 days/week if I commence PhD research part-time after completing the Master of FP degree, as I had found it quite difficult to spend enough time on my astrophysics research degree while also working full-time (one of the reasons I ended up 'dropping out' of my Master/PhD enrolment).

If the FP business is going well I'll probably think about 'retiring' from my salaried job when I around 65 and then continue to run my FP business for a while. How long I do that for will depend on a) if I still want to work (at least part-time) until 70+, b) if the business is profitable (and how profitable), and, most importantly, c) if I'm still healthy enough. One of my great-great-Aunts lived past 100, my father's parents both lived until almost 95, and my parents are both reasonably fit and active as they approach 90, so I have a realistic expectation of being able to continue working past 65. I do need to loose quite a lot of weight and do more exercise though! If the FP business is a going concern, I can probably sell it for around 2-2.5x annual revenues when/if I decide to retire. That might provide an extra 'nest egg' for my retirement, if I can get the business up and running ;)
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