
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
Email: integrityone@iplan.com.au
Telephone : 03 9723 0522
Your Complete Financial Solution
Investing successfully and improving your investment portfolio can be as much about minimising mistakes as trying to pick the ‘next big thing’. It’s all about taking a calm and considered approach and not blindly following trends or hot tips.
Let’s delve into some of the most prevalent investment mistakes and look at the principles that underpin a robust and successful portfolio.
Every so often there are industries or shares that are all over the media and you may begin to worry that you are missing out on something. Jumping on every trend is like trying to catch a wave; you might ride it for a bit, but you’re bound to wipe out sooner or later. That’s because the hot tips and ‘buy now’ rumours often don’t pass the fundamentals of investing test.
The key is to keep a cool head and remember that the real winners are often the ones playing the long game.
What would you like your investment portfolio to achieve? Understanding your motivations and goals will help you to choose investments that work best for you.
If you want to build wealth for a comfortable retirement, say 20 to 30 years down the track, you can afford to invest in riskier investments to play the long-term game. If you have already retired and plan to rely on income from your portfolio, then your focus will be on investments that provide consistent dividends and less on capital growth.
Timing the market involves buying and selling shares based on expected price movements but at best, you can only ever make an educated guess and then get lucky. At worst, you will fail.
As the world-renowned investor Peter Lynch wrote in his book Learn to Earn: “Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves”.i
This is one of the classic concepts of investing but it’s worth repeating because, unless you are regularly reviewing your portfolio, you may be breaking the rule.
Diversifying your portfolio allows you to spread the risk when one particular share or market is performing badly.
Diversification can include different countries (such as adding international shares to your portfolio), other financial instruments (bonds, currency, real estate investment trusts, exchange traded funds), and industry sectors (ensuring a spread across various sectors such as healthcare, retail, energy, information technology).
While diversification is key, how do you achieve it? The answer is by setting an asset allocation plan in place and reviewing it regularly.
How much exposure do you want to diversify into defensive and growth assets? Within them, how much should be invested in the underlying asset classes such as domestic shares, international shares, property, cash, fixed interest and alternatives.
The financial markets are volatile and that often leads investors to make decisions that in hindsight seem irrational. During the COVID-19 pandemic, on 23 March 2020 the ASX 200 was 35 % below its 20 February 2020 peak. By May 2021, the ASX 200 crossed the 20 February 2020 peak. Many investors may have made an emotional decision to sell out during the falling market in March 2020 but then would have missed the some of the uplift in the following months in.
Seeking out quality and trustworthy financial advice can help to minimise investment mistakes. Give us a call if you would like to discuss options for growing your portfolio.
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
Email: integrityone@iplan.com.au
Telephone : 03 9723 0522
When getting ready to buy property, there are many things to keep track of as settlement approaches. An important consideration is what you will need in terms of insurance – admittedly not the most exciting part of buying a new home, but one which can save you money and stress in the future.
While not a legal requirement, insurance is often required by lenders, and they may want to see your policy before either the exchange of contracts or ahead of the settlement.
As the lender has a stake in the property during the life of the loan, they will want to know should the property be damaged or destroyed, if any large insurance claims are made, and if your insurance lapses.
There are various forms of insurance relating to your property, these include:
Home and contents insurance, is often what buyers think of when it comes to getting insurance.
There are two main types of home insurance: sum-insured cover (which means the insurer will pay for repairs or a rebuild up to an estimated amount you specify in your policy) and total replacement cover (which means you will be covered for your home to be repaired or rebuilt as it was without you having to set a specific sum-insured limit).
Total replacement cover is more expensive and not all lenders offer it, so keep that in mind. As for contents insurance, you tend to be covered for the replacement value of your belongings.
According to statistics from Finder in January 2023, 60% of survey respondents have some form of home insurance policy. An interesting finding was that only 43% of respondents with home insurance said that they fully understood their home insurance policy. While 48% said they partially understood it, 8% didn’t understand the benefits and inclusion of their policy.
It’s important to know what you are covered for, such as which type of event. Home and contents insurance don’t cover everything, so check the exclusions – these might be a house left unoccupied that is then damaged, doing renovations, any existing damage and damage caused by pets.
You can usually request additional insurance, for example, covering high value items such as expensive jewelry or fixing that hole in the wall, so it’s worth checking what is included in your policy and whether it’s worth paying extra.
As mentioned above, some lenders will ask to see proof of insurance before any contracts are exchanged. In some instances, the lender will ask that your insurance be effective from the date you sign the contract or before the loan becomes conditional.
Depending on which state or territory you live in, you may be responsible for damage to the property as soon as contracts are exchanged. Here is a list on each area’s requirements:
Please feel free to contact us if you have any questions about this or any other mortgage related matter – we are here to help.
If one of your goals is to buy your own home, then 2024 might just be your lucky year. It will see the launch of the Federal Government’s exciting new Help To Buy scheme.
Over the next four years, this initiative aims to help up to 40,000 low- and middle-income Australians finally buy a place they can call home. Here’s how it’s going to work.
The Help To Buy scheme is a shared equity scheme between home buyers and the Federal Government. It allows the Government to contribute to buying your home, so your initial and ongoing costs are significantly reduced.
The Government will contribute up to 40% of the price for a new home and up to 30% for an existing home. Your upfront costs are further reduced because you only need a minimum 2% deposit, with no lenders mortgage insurance payable, and you will only make repayments on your share of the mortgage. It’s all geared to get you buying a home sooner rather than later and making your ongoing repayments more manageable.
What’s more, the government will not charge any fees or interest on their investment. It’s like an interest-free loan that you only pay back if you sell. Plus, you can start buying back the government’s share after the two years.
To be eligible, you must be an Australian citizen, at least 18 years of age, and with an annual income of not more than $90,000 for individuals, or $120,000 for couples.
Applicants don’t need to be first-home buyers, which is different to existing schemes. However, you must live in the home you buy, and you can’t own any other land or property in Australia or overseas while in the scheme.
Even though the required minimum deposit is just 2%, you must still be able to finance your share of the loan. This includes proving you can pay for all up-front mortgage costs like stamp duty and legal and lender’s fees. You will also be responsible for ongoing costs associated with the property such as maintenance, rates, strata, and utility bills.
All this is in line with the normal checks on a borrower’s suitability that your mortgage lender will carry out. And with our long list of lenders, we can make sure you are paired with one that suits your circumstances and is approved for government schemes.
Help to Buy will only be available once the state you live in has passed legislation supporting the scheme. But don’t worry, all Australian states and territories have agreed to pass legislation in early this year.
10,000 places every year will be allocated per capita across the states and territories, with approval given on a first come, first served basis. This effectively means there are caps on the number of approvals in any given area, which makes it very important to get your application in as early as possible.
Currently, the maximum eligible home price varies from state to state, and between capital cities and regions, and are expected to be in line with the similar schemes such as the First Home Guarantee. For example, the property price cap for Hobart is $600,000 with $450,000 for the rest of Tasmania. In Sydney and regional NSW cities, it’s $950,000 and $750,000 across the rest of the state.i
Say the government takes out a 30% share ($300,000) in your $900,000 home. If you sell, you’ll have to repay the $300,000 plus 30% of any capital gain the property has made. How any property improvement costs will be factored into this calculation will become clear once the state legislation is passed.
Since you can’t apply until the Help To Buy scheme is approved by the State Government, we’ll keep you up to date with what’s happening as more information becomes available.
In the meantime, we can work with you to discuss your eligibility for this upcoming scheme and existing initiatives, and can help you start the process to prepare to buy in the future.
Stay up to date with what’s happened in markets and the Australian economy over the past month.
Cooling inflation and a strong economy with relatively low unemployment has sent investors back to Australian shares towards the end of January.
The lower than anticipated inflation figures fuelled optimism at the end of the month, for the possibility of earlier cuts in domestic interest rates.
Click here for our February update video.
Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
Email: integrityone@iplan.com.au
Telephone : 03 9723 0522
Prime Minister Anthony Albanese has announced proposed changes to address ongoing cost of living pressures with all 13.6 million Australian taxpayers receiving a tax cut from 1 July 2024, compared to the tax they paid in 2023-24.i
Now is the time to assess what it means to your hip pocket and what implications it may have for end of financial year planning as a result of the new rules, due from 1 July 2024.
The Federal Government has recently announced changes to the third stage of a series of tax reforms introduced by the previous Coalition government almost six years ago which were designed to deliver tax cuts to most, simplify the tax system and protect middle income earners from tax bracket creep.
The new rules will see the current lowest tax rate reduced from 19 % to 16% and the 32.5% marginal tax rate reduced to 30% for individuals earning between $45,001 and $135,000.
The current 37% marginal tax rate will be retained for those earning between $135,001 and $190,000, while the existing 45% rate will now apply to income earners with taxable incomes exceeding $190,000.
In addition, the low-income threshold for Medicare levy purposes will be increased for the current financial year (2023-24).
A single taxpayer with a taxable income of $190,000 paid $59,967 tax in 2023-24. Under the revised rules, they will now pay $55,438 tax, a tax cut of $4,529. While still a reduction in tax paid, this compares with the $7,575 tax cut received if the original Stage 3 tax cuts had proceeded.
On the other hand, low-income earners will receive a bigger tax cut under the revised rules.
A single taxpayer with a taxable income of $40,000 who paid $4,367 in tax in 2023‑24, would have received no benefit from the original Stage 3 tax plan, but will now receive a tax cut of $654 under the revised rules.
For high-income earners, the key take-away from the government’s new changes to the tax rules is you will now receive a lower amount of after-tax income than you may have been expecting from 1 July 2024.
This reduction makes it sensible to revisit any investment strategies you had planned to take advantage from your larger tax cut to ensure they still stack up.
For example, the smaller tax cut for some may impact the effectiveness of property investment.
Investment strategies such as negative gearing into property or shares, however, may become more attractive. Particularly for investors close to the new tax thresholds and looking for opportunities to avoid moving onto a higher tax rate.
Investors considering repairs or maintenance for an existing investment property should revisit when these activities are undertaken. Depending on your circumstances, this expenditure may be more suitable in the current financial year given the difference in tax rates starting 1 July 2024.
Selling an asset liable for CGT also needs to be reviewed to determine the most appropriate financial year for the best tax outcome.
Other investment strategies that may need to be revisited include those involving making contributions into your super account.
If you are considering bringing forward tax-deductible personal super contributions, making carry-forward concessional contributions, or salary sacrificing additional amounts before 30 June, you should seek advice to ensure the timing of your strategy still makes sense.
If you would like help with reviewing your investment strategies or superannuation contributions in light of the new rules, contact us today.
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
Email: integrityone@iplan.com.au
Telephone : 03 9723 0522
It’s challenging buying property. It’s tough scraping together a deposit, it’s not easy dragging yourself to one open-for-inspection after another (especially if you’ve been doing it for a while!), and it can be soul-destroying being pipped at the post when you have set your sights on a particular property.
Then there is getting the finance arranged – faced with a bewildering array of options and a load of paperwork to complete, the process is yet another part of home buying that can be hard yakka.
Let’s look at the ways we can lighten your load when it comes to the finance side of things, so you can focus on the search for your dream home – and the purchase.
Many people put the cart before the horse when they start looking at property. It’s easy to get excited and start looking around as soon as you’ve decided to bite the bullet and buy, but unless the numbers have been crunched and you know how much you can borrow, you might be wasting your time.
That’s where a broker comes in handy as we can review your situation and let you know how much you are likely to be able to borrow. We’ll take the time to get to know you and your situation. Our depth of experience means we can assist even in complex circumstances. For example, you may not have a steady income or be running your own business, you may have an unusual employment situation, a poor credit history or other issues that might make applying for a loan more difficult.
Then once we’ve crunched the numbers, we can start looking at your finance options.
When it comes to loans, there is a myriad of products to choose from, which can add up to one big headache unless you have someone to help guide you in the right direction.
We can do all the legwork for you, to compare the different loans available. We have access to more deals and lending products than if you went to a single bank or provider, and we will outline the pros and cons of different loan options and work with you to determine the right finance option that suits your circumstances.
We can then help you obtain a prequalification so you have a clear picture of your borrowing power and can commence negotiations with confidence.
We are also experts in this area so we are up to date with all the government support currently available to home buyers and can help you make sense of all the schemes out there and decide if you are eligible and if so, which would be the best schemes to assist you.
The paperwork for a loan application can be complex and there is a danger of your application being rejected if you get anything wrong. That’s a situation you want to avoid, as every rejected loan or credit application puts a black mark on your credit history which can make it even harder to get a loan in future.
We can work with you to address any issues with the paperwork before you get to the application stage to maximise the chance of your application being successful.
It can be good to have an expert on your side through the process. We have relationships with all the lenders we work with and can get involved to negotiate on your behalf or do what we can to ensure an application is processed promptly.
We’ll be with you through the entire process and celebrate with you on the other side. We are here for you at any point even after you’ve purchased, should you wish to review your loan or the terms of your loan, or look at refinancing.
Please feel free to contact us to talk about any aspect of your finance requirements – we are here to help.
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Integrity One Planning Services Pty Ltd (ABN 59 125 846 933) is a Corporate Representative (315000) of Integrity Financial Planners Pty Ltd (AFSL No. 225051).