Wealth Intelligence

  • May 28
    Sound wealth management requires diversification of both structures and investments

    Key points:

    • Superannuation is extremely tax effective but its complex rules are constantly changing

    • A sound financial strategy for those still some way from retirement requires diversification by investing in both superannuation and non-superannuation structures

    The wrong investment structure(s) can mean too much tax is paid on investment income and gains, or the inability to access funds when required. Read More
  • May 6
    Gearing strategies funded by margin loans have changed over recent years. To ensure ongoing tax efficiencies and effective risk management it is critical that they be reviewed. And there may be better alternatives.

    The current combination of low interest rates, high (franked) dividend yields and, in some cases, lower loan-to-value ratios, means margin loan share portfolios may hold greater risk, be positively geared and no longer be tax effective in a high taxed entity. Read More
  • Nov 19
    Most companies in the wealth management industry have business models unsuited to serving their customers.

    Consider the Australian wealth management industry. The size and growth of which has attracted participants from related industries. Each trying to adapt an existing business model to their wealth management customers. Read More
  • May 6
    ‘Nothing is certain in life, except death and taxes’. the task is to ensure that death doesn’t mean tax.

    Last year the government released regulations confirming the continuing tax-free status of a superannuation fund in pension phase following the member’s death.

    However, there is a second layer of tax that applies to superannuation death benefits received by non-tax dependent beneficiaries (such as independent adult children).

    If you are at least age 60 all superannuation withdrawals made by you are tax-free and if you die, your benefits can be paid to a tax dependent, such as your spouse, tax-free.
    Read More
  • May 6
    How commissions will once again line the pockets of the bad and the ugly.

    It is with some sadness that I return to the thorny matter of commissions in the financial services industry.

    The sadness is because I had thought that this corrupt practice had been ended.

    But for reasons that are, at the best, spurious and, at the least, unduly influenced, the current government wishes to re-allow commissions.

    I hope that by the time that this note is read, the position will be changed. But this is one outcome about which I am not optimistic. Read More
  • Nov 19
    ... the ‘disappearance of growth’

    With such low interest rates as currently exist, investors have understandably turned their attention to finding alternative sources of income to supplement their much reduced term deposit and interest income.

    To the extent that investors have been keen to move into higher yielding equities, the companies themselves have been keen to oblige and have themselves turned on the dividend taps to red hot.

    Consider this ... Read More
  • Nov 19
    The risks of just one egg-filled basket

    One of the great attractions of SMSFs is that they allow the trustees/ members great investment freedom.

    However, often this freedom leads to poor investment decisions.

    There has recently been considerable media coverage about SMSFs borrowing to invest in property. The concern is the effect on property prices, especially apartments and how this might keep owner-occupiers out of the market.

    ASIC is also expressing its concerns, especially about the inducements being offered to investors.

    Both miss the key investment risk.

    What’s happening? Read More
  • May 6
    The property spruikers cry, “they’re not making any more land.” Or, “you can’t go wrong with bricks and mortar.”

    Investing in residential property has always been attractive to some investors. The emotional comfort of being able to see their investment overwhelms a clinical analysis of the net long-term investment return that residential property provides.

    First Hand irregularly analyses residential property investment, listing all of the costs (rates, land tax, maintenance, agent’s rental commission, agent’s selling commission, other selling expenses, etc) and the revenue (rental income). The net rental income yield tends to fall in the range of 2.5%-3.5% p.a. Read More
  • Jun 7
    This year’s Federal Budget contained two disappointing changes to concessional (pre-tax or tax deductible) superannuation contributions.

    However, the other benefits of super still make it the most favourable investment vehicle.

    But to maximise the benefits of super, you now need to take even more advice than before (which is included as part of First Samuel’s integrated service offering).

    Two major changes ... Read More
  • Mar 14
    One significant trend that stemmed directly from the GFC was a move by investors (particularly committee driven ones) towards “index” investing*.

    Is this daft investing?

    Index (or “passive”) investing is simply when you buy a bit of everything in the market proportional to each company’s size (the spaghetti-gun approach: throw a packet of spaghetti against the wall and hope some of it sticks).

    On the other hand, “active” investing is when you only buy what you choose from the market (only use the longest, moistest spaghetti to improve your odds). Read More