If taking full control over your superannuation and retirement plans is important to you then a self-managed superannuation fund gives you the flexibility to manage your retirement savings the way you want.
Read our insights on the latest news, trends and changes related to SMSF advice.
Lets take a look at the key differences and considerations when deciding whether to have an automatically reversionary nomination, or a binding / non-lapsing death benefit nomination for account based income streams.
Under superannuation legislation, members commencing an account based pension have several options (subject to the fund’s governing rules) for death benefit nominations. The most common are:
Regardless of the type of nomination selected, the SIS death benefit payment standards always apply. Broadly, the SIS death benefit payment standards require:
Any nomination that would otherwise require these rules to be breached is invalid.
The SIS Regulations specifically allow account based pensions that are payable for the life of both a primary and reversionary beneficiary. Members can therefore, commence an account based pension that automatically reverts to a reversionary beneficiary upon the pensioner’s death.
In simple terms, the reversionary pensioner will automatically continue receiving the pension payments in the event of the primary pensioner’s death.
Reversionary pensions have a number of practical advantages over non-reversionary pensions. These include:
A binding death benefit nomination enables the client to specify which SIS dependant(s) they want to receive their super death benefit and (usually) in what proportions. A binding nomination can also be used to direct the death benefit to the Legal Personal Representative (LPR).
A binding death nomination can provide more choice in how to receive the death benefit as a lump sum or, if eligible, a pension, depending on the rules of that fund.
It really depends.
There are several differences and considerations when deciding whether to put in place a reversionary nomination when commencing a new superannuation income stream or simply putting in place a binding or non-lapsing nomination.
When assessing which type of nomination is appropriate, you should consider your specific circumstances, including need for flexibility and other factors such as grandfathering of an account based pension for social security purposes and the ability to amend the type of nomination without having to restart the income stream.
In making a decision the most important thing is to make sure you have thought through the implications and how this fits in with your broader estate planning strategy.
If you’ve got any questions about reversionary pensions and binding death benefit nominations, please book a chat with one of our financial planners.
Treasurer Jim Chalmers delivered the Labor Government’s 2024-2025 Federal Budget and we have summarised what we feel are the key points which impact financial planning strategies.
For our ongoing service package clients, your adviser will be in contact to provide guidance on changes which may impact your strategy.
IMPORTANT: Please remember that these measures are subject to becoming law, so be sure to confirm this before taking any action.
Starting 1 July 2024 Stage 3 tax cuts will deliver savings of $4,529 per annum for those in the highest tax bracket. The average taxpayer will save $1,888 a year.
The Stage 3 tax cuts will make the following changes from 2024/25:
The table below shows the changes to tax brackets. Note, these amounts do not include Medicare levy.
The table below compares the amount of tax payable in 2023/24 to the amount payable under the new tax rates from 2024/25. The last column shows the amount of tax saved.
The Government has increased the Medicare levy low-income thresholds for singles, families, and seniors and pensioners from 1 July 2023 to provide cost-of-living relief. The increase to the thresholds ensures that low-income individuals continue to be exempt from paying the Medicare levy or pay a reduced levy rate.
The family income thresholds will now increase by $4,027 for each dependent child, up from $3,760.
This measure has already been provisioned for by the Government and will apply retrospectively from 1 July 2023.
The Government has announced that it will pay super on the Government funded Paid Parental Leave for babies born or adopted on or after 1 July 2025.
Eligible parents will receive an additional 12% of their Government-funded Paid Parental Leave as a contribution to their superannuation fund.
Starting from July 1, 2026, employers must pay superannuation at the same time they pay salary and wages to employees. Currently, employers are required to pay their employees’ superannuation guarantee contributions on a quarterly basis.
Energy bill relief will be extended to every Australian household, with $300 automatically credited to their electricity bills next financial year. This is not means tested.
HELP/HECS debt will now be indexed either to the Consumer Price Index (CPI) or the Wage Price Index (WPI), whichever is lower, and that change will be backdated to 1 June 2023.
This means that about 3 million Australians with student loans are set to receive an average $1,200 reduction in their HELP, HECS, VET Student Loan, Australian Apprenticeship Support Loan and other student support loan accounts that existed on 1 June last year.
The reduction aims to offset steep increases in student debt last year when student loans were indexed to inflation at the rate of 7.1%, but wage growth remained low. The 2023 indexation rate based on WPI would only have been 3.2 per cent.
The Government has announced a one-year freeze on the maximum Pharmaceutical Benefits Scheme (PBS) patient co-payment for everyone with a Medicare card and a five-year freeze for pensioners and other concession cardholders.
This change means that no pensioner or concession card holder will pay more than $7.70 (plus any applicable manufacturer premiums) for up to five years.
The current freeze on deeming rates, which are used to determine the amount of income a person is deemed to earn from their financial investments, will be extended for another year. This means that the deeming rate will stay at 0.25% for the lower rate and 2.25% for the higher rate.
This will ensure income support recipients, such as age pension recipients, will not see a reduction to their payments due to an increase in the deeming rates over the next year. It also means there will be no negative impact for Commonwealth Seniors Health Card holders and means-tested aged care recipients.
Commonwealth Rent Assistance maximum rates will be increased by 10% from September 2024, with the aim of helping address rental affordability in the housing market.
The Government has announced that from 20 September 2024, it will extend eligibility for the existing higher rate of JobSeeker Payment to single recipients with a partial capacity to work of between zero and 14 hours per week.
The higher JobSeeker Payment rate is currently provided to single recipients with dependent children and those aged 55 and over who have been on payment for nine continuous months or more. This measure extends the higher payment rate to those with a partial capacity to work.
The higher JobSeeker Payment rate is currently $833.20 per fortnight (compared to the standard rate for single recipients without dependant children of $771.50 per fortnight).
From 20 March 2025, the existing 25 hour per week participation limit for Carer Payment recipients will be amended to 100 hours over four weeks. The participation limit will no longer capture study, volunteering activities and travel time and will only apply to employment.
The Government has also announced that Carer Payment recipients who exceed the participation limit or their allowable temporary cessation of care days, will have their payments suspended for up to six months instead of cancelled. Recipients will also be able to use single temporary cessation of care days where they exceed the participation limit, rather than the current seven day minimum.
The Government has now announced a new start date of 1 July 2025 for the new Aged Care Act, however no details have yet been provided as to how fees and charges for aged care residents and home care recipients will work under the new Aged Care Act.
Also, the Government has announced it will provide funding over five years from 2023–24 to deliver a range of key aged care reforms and to continue to implement the recommendations from the Royal Commission into Aged Care Quality and Safety. These measures are proposed to include:
The Government has announced it will extend the $20,000 small business instant asset write-off by a further 12 months until 30 June 2025.
Under these rules, small businesses with aggregated annual turnover of less than $10 million will continue to be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2025. The Government also confirmed the $20,000 asset threshold will continue to apply on a per asset basis, allowing small businesses to instantly write off multiple assets.
Similar to households, the Government announced it will provide direct energy bill relief for small businesses.
The government will provide additional energy bill relief of $325 to eligible small business in 2024-25. Rebates will automatically be applied to electricity bills and will be rolled out in quarterly instalments.
If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2024-25 Federal Budget, please feel free to book a chat with your adviser.
Risk-on investor sentiment continued into December as markets rallied across the major asset classes. Investors gained more confidence that the Fed was done with its rate hiking cycle and that the first of many rate reductions in 2024 could be just months away. The ‘higher for longer’ narrative that had prevailed as recently as October had given way to a more dovish outlook. Inflation data has continued to improve, and central banks are showing increasing signs that price pressures would likely continue to abate in 2024. This resulted in equities moving sharply higher into year-end, with most sectors participating in the gains.
Domestic shares were especially strong, having lagged global markets for much of 2023. Listed property and healthcare stocks staged a thumping recovery during the month, closely followed by materials (including resources) as iron ore climbed above USD 140/t. Small caps also had a strong month, with some investors adding to positions based on attractive relative valuations. Energy was the weakest performing sector, but still finished well in the black. Developed market shares rallied strongly, but the rise of the Australian dollar took the polish off returns for domestic investors. Emerging market equities underperformed their developed market peers as China continued to pose vexing questions around the structural headwinds facing its economy.
Bond markets rallied as risk-free rates moved back to levels last seen in July 2023 on hopes that global central banks would begin to cut rates in the first half of 2024. Credit markets were also strong, but different regions experienced widely varying spread outcomes due to idiosyncratic factors. The US 10-year Treasury reached 3.8% late in the month, while the yield for the domestic 10-year bond moved to as low as 3.9%. As recently as October, these instruments were yielding as much as 5%. By month’s end, money markets were positioning for six interest rate cuts in the US over the next twelve months.
Of note was the resurgence of crypto returns, with Bitcoin adding more than 13% in December in anticipation of the approval of an exchange-traded fund investing directly in the biggest token.
On the economic front, the disinflation narrative gained further momentum during the month. The US headline CPI for November slowed to 3.1% from a year ago. Falling energy prices were the main driver. Excluding volatile food and energy prices, the core CPI was up 4% from a year ago. Both numbers were in line with estimates and had little change from October. Shelter prices, which comprise about one-third of the CPI weighting, were up 6.5% on a 12-month basis, having peaked in early 2023. The December Fed meeting again kept rates on hold, but committee members now expected three rate cuts in 2024. That’s less than what the market had been pricing, but more aggressive than what officials had previously indicated. The committee’s “dot plot” of individual members’ expectations indicates another four cuts in 2025.
In Australia, the September quarter GDP numbers confirmed that a per capita recession was persisting and that the high cost of living was eating into household savings. The Australian economy expanded by 0.2% during the quarter, below market forecasts, as household consumption stalled and net trade detracted from growth. The household savings ratio dropped to 1.1%, the lowest since 2007. Meanwhile, government spending rose more quickly, preventing an overall weaker result. The unemployment rate increased to 3.9% in November 2023, while monthly inflation data pointed to slower price increases late in the year.
Elsewhere, the UK growth rate came in below consensus for October, while the German economy contracted by 0.4% year-on-year in the third quarter of 2023. Finally, in China, retail sales expanded by 10.1% year-on-year in November 2023, but below the market consensus estimate of 12.5%. Meanwhile, property prices in China posted a fifth consecutive month of decline in November, despite Beijing having issued a series of measures to boost demand.
We hope you find the information useful, and if you want to discuss any details further or discuss your personal investment strategy, please book a chat here.
Investors had reasons to rejoice in November as economic data showed that inflation was moderating and interest rates had likely peaked. As inflation rates slowed, the global financial landscape witnessed more moderate economic conditions, particularly in the US, where the labour market is softening. The outlook renewed confidence in the ‘soft landing’ narrative and buoyed equity markets.
Bond markets staged an incredible recovery in November as US long bond yields experienced the largest monthly decline since December 2008. The 10-yr US Treasury yield plummeted to 4.35% from a peak of 5% in October, boosting the US aggregate bond index by almost 5%, for its biggest monthly gain in over 35 years. In Australia, 10-year yields fell by over 50 basis points to help the Ausbond Composite All Maturities index return close to 3%.
The bond market rally pushed yields significantly lower in most regions, which gave a valuation boost to growth stocks and the technology sector. In terms of style, growth outperformed value during the month, and small caps outperformed their large cap peers.
The VIX volatility indicator fell to its lowest levels since before the pandemic, and equities posted their best month in over a year. November traditionally sees the beginning of the strongest six months of the year for US equities as share buybacks increase, while mutual fund tax-loss selling typically ends in October.
The S&P 500 Index is now up more than 20% year-to-date, including dividends. In contrast, the ASX 200 has returned 4.8%, including dividends, and just 0.7% in nominal price terms. On the continent, European indices moved higher despite the subdued economic environment. Japan continued its outperformance in 2023, posting a 5% increase in November.
In emerging markets, the MSCI Emerging Markets Index grew strongly over the month in local currency terms despite China continuing to underperform the broader index.
On the economic front, the disinflation narrative reigned supreme during the month. The US CPI for October was cooler than expected. Annual headline and core inflation dropped to 3.2% and 4%, respectively. The biggest driver of the decline in the headline data was a fall in energy and gasoline prices, along with lower travel and accommodation costs. In the labour market, the US economy added only half as many jobs in October, compared to September’s strong print. The below consensus data provided a much-needed sign that the labour market is slowly cooling.
In Australia, the October unemployment rate increased to 3.7%, driven by stronger workforce participation. Meanwhile, following a four-month pause, the RBA hiked official interest rates by 25 basis points to 4.35% at its November board meeting. This was in line with expectations and saw many economists predict that further hikes were to come. The quarterly Statement on Monetary Policy confirmed that the RBA had raised forecasts for GDP and inflation while deferring forecasts of a jobless rise until next year.
Elsewhere, the UK saw a larger-than-expected fall in inflation as the services sector cooled despite strong wage growth. The November services Purchasing Managers’ Index (PMI) posted a small expansion, surprising some analysts. In Europe, the CPI release for November also showed inflation is slowing, driven by lower energy prices. European manufacturing activity remains poor, mainly due to weak data from Germany and France. However, employment growth was robust over the previous quarter. Finally, macro data out of China exceeded consensus estimates, as retail sales jumped in October. However, new home sales continued to fall, seeing the People’s Bank of China (PBC) once again injecting liquidity into the banking system and further reducing the required reserve ratio.
We hope you find the information useful, and if you want to discuss any details further or discuss your personal investment strategy, please book a chat here.
Investor tensions were further heightened in October as war broke out between Hamas and Israel. Despite the conflict, oil prices declined by around 10% during the month, with most of the damage coming in the final trading week. Meanwhile, European gas prices rose on fears of global supply chain disruptions. Commodity prices were a relatively bright spot in October, particularly where safe-haven gold was concerned.
Impaired sentiment continued to impact major indices, including the infrastructure and REIT sectors. Higher real yields have continued to detract from property and infrastructure returns, with small-cap returns experiencing a similar fate. The weaker Australian dollar (AUD) was again welcomed by domestic investors with foreign asset exposures. Indeed, the depreciation of the AUD over the last decade has strongly benefited unhedged domestic investors, particularly in developed market equities, where the depreciation has been more pronounced. For example, the annualised return for the MSCI ACWI-ex Australia has been boosted by more than three percentage points compared to its performance in local currency terms (11.9% vs 8.8%).
In fixed interest, government bond returns were negative in most developed markets as yields rose to multi-year highs in October. In Australia, heightened concerns around the path of inflation and interest rates saw 10-year government bonds briefly touch 5% later in the month. Japanese government bonds were not spared from the sell-off, as investors questioned the sustainability of the Bank of Japan’s (BoJ) yield curve control policy. During its October meeting, the BoJ redefined the 1% upper limit on yields from a strict boundary to a more flexible “reference” point.
On the economic front, US data regularly printed stronger than expected. The September nonfarm payrolls report stunned economists with the creation of more than 300,000 jobs (double the consensus estimate). Wage growth remained resilient, and inflation data, while trending lower, remained too sticky in the minds of market analysts. The advance estimate for Q3 US economic growth also shot the lights out, with activity surging at an annualised rate of 4.9%. Consumer spending drove the increase, while residential investment rose for the first time in nearly two years.
In Australia, the September unemployment rate fell to a three-month low of 3.6%, driven by a decline in workforce participation. Meanwhile, the RBA paused official interest rates for the fourth consecutive month in October while retaining a hawkish stance in its commentary. Finally, the CPI inflation data for the September quarter delivered an upside surprise that left economists scrambling to raise estimates. A much stronger-than-expected retail sales print (triple the consensus estimate) added further impetus to the view that the cash rate would be hiked at the November meeting.
Elsewhere, European activity was mixed, with soft German data prints pointing to further weakness. In contrast, the UK economy showed signs of moderate improvement. Turning to China, industrial production, GDP, and retail sales were positive surprises. However, continued weakness in the real estate sector and reports of further US restrictions on AI chip exports dampened investor sentiment.
We hope you find the information useful, and if you want to discuss any details further or discuss your personal investment strategy, then please book a chat here.
To maximise the non-concessional contribution (NCC) opportunity, you may consider using the bring-forward NCC cap of up to $330,000, provided your Total Superannuation Balance (TSB) allows you to do so. If you are eligible, the bring-forward is triggered automatically when your total annual NCCs exceed the annual cap (currently $110,000).
From 2022-23 onwards, you are required to be under the age 75 on 1 July of the financial year to be able to access the bring-forward NCC cap. While age may determine whether or not a person is eligible to make NCCs above the annual cap, additional eligibility rules apply.
The maximum amount available under the bring-forward, as well as whether you have a 3 or a 2 year bring-forward period, depends upon your TSB on 30 June prior to the financial year in which the bring-forward is triggered. See table below.
If you make an NCC that exceeds the allowable amount based on your TSB on the prior 30 June, the contribution is assessed as an excess NCC.
If you’re considering putting more money into your super, let’s chat. Our experienced advisers can help you figure out which superannuation strategies make sense for you.
Successfully claiming a tax deduction for personal super contributions can reduce your taxable income and the income tax payable. The basic concessional contributions cap for the 2023–24 financial year is $27,500. However, it is important to understand that you may be able to claim more than the annual concessional contribution cap in some cases by accessing the carry-forward concessional contribution cap.
You will have a higher available concessional contributions cap (than the basic cap) in the current financial year if you can carry forward and apply available unused concessional cap amounts from previous financial years.
From July 2023, individuals can look back and carry-forward their unused concessional contributions for the previous five financial years. As the measure started on 1 July 2018, individuals could only look back to the ‘start’ and carry forward one previous year from FY2020, then two years from FY2021 and so on.
You are eligible to carry forward unused concessional cap amounts from previous years, and effectively increase your contribution caps in later years, if you have a total superannuation balance of less than $500,000 at 30 June of the previous financial year, and have unused concessional contributions cap amounts from up to five previous years.
Any unused cap amounts are available for five years and expire after this time. If an individual has an unused cap amount from the financial year ending 2019 and does not use that amount by the end of June 2024 it will expire.
If you’re considering putting more money into your super, let’s chat. Our experienced advisers can help you figure out which superannuation strategies make sense for you.
Financial markets took another leg down in September as investors came to grips with the narrative that the US Federal Reserve (the Fed) would need to keep interest rates higher for longer. Excluding dividends and share buybacks, the benchmark S&P 500 was down 4.9% in September, the Dow Jones Industrial Average decreased 3.5%, while the tech-heavy Nasdaq slumped 5.8%. This weakness was not limited to the US, as global indices across developed and emerging markets fell. However, a silver lining for unhedged Australian investors was the Australian dollar trading lower throughout September, partly insulating them from the losses.
In local shares, the ASX could not maintain its momentum from a rally in late August, with the S&P/ASX 200 index falling 2.8% after accounting for dividends. Small caps fared comparatively worse, posting a 4% decline. However, these moves paled compared to the 8.6% drop in listed property stocks, where rising risk-free rates revived valuation concerns and detracted from the impressive rally in A-REITs at the beginning of the financial year.
Fixed interest returns disappointed defensive investors, where exposures to safe-haven cash and high-grade credit continue outperforming government bonds. The ongoing large quantum of debt issuance by the US Treasury is proving to be an overhang. Finally, an extension of cuts in oil production by Saudi Arabia and Russia reignited inflation concerns and drove the price of crude above US$90/bbl.
Global shares accelerated their downward trend in September as the Fed’s ‘higher for longer’ theme rang more loudly in the aftermath of the September FOMC meeting. Upwardly revised economic projections by Fed officials were a case of ‘good news is bad news’, with investors disappointed a further rate hike could occur in 2023 before making way for potentially just two rate cuts in 2024. The Fed’s ongoing resolve to tame inflation was not well received by investors, with matters exacerbated by another lift in oil prices as Russia and Saudi Arabia coordinated their efforts to extend restrictions on output. As a result, transport-related costs were higher during the month.
The malaise in sentiment saw broad declines across major indices, often characterised by poor market breadth as decliners easily outnumbered gainers, culminating in most sectors finishing in the red. Trading volumes decreased significantly, while increased volatility and short positioning became prominent features across financial markets.
Our domestic sharemarket was not spared, as a jump in real yields put listed property to the sword, completely wiping the momentum seen in the sector since mid-July. Global REITs and infrastructure stocks similarly underperformed, with minimal respite to be found outside of energy and value plays.
In fixed-interest markets, the sell-off in US Treasurys continued in earnest, dragging other sovereigns along for the ride, including Australian bonds. Yields at the longer end of the maturity spectrum were particularly hard hit, imposing losses on composite bond indices and stoking anxiety that the bond bear market, which commenced in late 2021 had further to play out. Furthermore, the increase in yields and accompanying strength in the US dollar ensured that the gold sector underperformed.
On the economic front, data releases provided support that the US economy was experiencing a period of robust growth in the September quarter. In contrast, Europe was struggling with higher oil prices and an unexpected lift in official interest rates.
In the US, jobs market data remained strong despite a rise in the unemployment rate from 3.8%. Nonfarm payrolls exceeded expectations, and wage growth remained firm while job openings continued to outpace the available workers. Underlying inflation showed further signs of stickiness, and there was a reversal in the favourable base effects seen earlier this year. Notably, the US national debt reached US$33 trillion for the first time in September, while “excess” savings by households from the pandemic had now been depleted. This resulted in growing credit card balances, especially among poorer cohorts.
On the domestic front, the RBA again paused the official cash rate at 4.10% at its September meeting, with the minutes revealing that the central bank was concerned with the impact strong population growth was having on rents and house prices. The monthly CPI indicator for August jumped to 5.2%, as rising fuel and utility prices led to a rebound in inflation from a 4.9% gain in July. It was the first increase in annual inflation since April.
In China, the manufacturing sector finally stopped contracting in September, with key indicators pointing to a slight expansion. Another positive sign was that August retail sales exceeded expectations and accelerated from the previous month, posting the largest increase since May.
We hope you find the information useful, and if you want to discuss any details further or discuss your personal investment strategy, then please book a chat here.
Investors endured a difficult August as a combination of rising yields and negative news flow out of China weighed on returns. Weakness in the Australian dollar also attracted increasing attention but helped insulate unhedged domestic investors from the full brunt of the sell-down.
Developed market equities were generally lower in local currency terms. However, China’s faltering property market and piecemeal approach to stimulus meant that emerging market equities fared far worse. Increased volatility also impacted small caps as investors sought the safety of many blue-chip names.
Despite a market rally at the end of August, the benchmark US S&P 500 index closed the month 1.8% lower, while the Dow Jones and Nasdaq Composite were more than 2% lower. The S&P ASX 200 finished August in the red but was well off its lows. However, Australia’s listed property sector staged a strong rebound in the latter half of the month as corporate earnings and asset valuation downgrades came in better than many had expected.
Global bond indices struggled as a sell-off recommenced following Fitch’s controversial downgrade to the US Government’s credit rating from AAA to AA+. Strong bond issuance by the US treasury added to the selling pressure as the Biden administration continued its hefty spending program. Domestic bond markets recovered throughout the month, but this was due to signs that the economy was weakening.
August was a difficult month for global stocks, with the MSCI All Country World ex-Australia Index moving lower in local currency terms. However, the 3.6% decline in the Australian dollar ultimately delivered positive returns to domestic investors with no (or minimal) currency hedging. The first three weeks of the month were particularly brutal for sharemarkets, with the S&P 500 down more than 3% before a partial recovery in the final week. It was a similar story for the Dow Jones Industrial Average and the Nasdaq Composite, with the latter more than 5% lower before the late upswing. These pullbacks are in stark contrast to the market rally seen earlier this year, as the Nasdaq Composite delivered its best first-half performance in forty years.
On domestic markets, disappointing China data and numerous earnings downgrades announced during the August reporting season led to widespread weakness. On a brighter note, the consumer discretionary sector bucked the trend, as retailers often printed much stronger-than-expected profits. Over the first eight months of the year, most sectors remain in the green, with Technology leading the way. Gold has also been a strong performer, but small resources stay firmly in the red.
In fixed interest markets, the sell-off in US Treasurys saw 10-year bond yields briefly exceed 4.36% (its highest level since 2007) before ending August at 4.11%. The yield curve remains inverted across large segments, with 2-year Treasury Notes briefly exceeding 5.10% and ended the month at 4.86%. The key driver behind these moves was US economic data strength, leading to concerns that the Federal Reserve (the Fed) would keep its benchmark lending rates higher for longer than anticipated.
Despite weakening inflation data in the US, Fed Minutes from the July meeting noted that central bank officials still see “upside risks” to inflation, which could lead to more rate hikes. Specifically, the Fed expressed concern about the tight labour market and the impact solid wage growth could have on spending. July retail sales were robust (almost double expectations), and a measure of personal spending also printed stronger than expected. And despite 30-year mortgage rates exceeding 7%, US house prices continued to rise due to severely constrained supply. Many Americans have previously borrowed at ultra-low fixed rates and prefer to retain and renovate their homes rather than purchase another home and incur much higher financing costs.
On the domestic front, the RBA again paused the official cash rate in August, with the economy breathing a further sigh of relief. The RBA’s cash rate is now 4.10%. The base case is that they raise rates once more, but the RBA is highly data-dependent and taking small steps to the edge as they can’t quite see where they are yet.
NAB business confidence improved to its highest level since January, as leading indicators strengthened slightly. There was more positive news in late August when the monthly CPI indicator increased by 4.9% in the year to July 2023, below the market consensus of a 5.2% rise. This was the lowest inflation rate since February 2022, mainly due to a slowdown in housing costs and food prices. However, investor attention in August was laser-focused on China, which reported much weaker-than-expected retail sales and industrial production growth. Concerns over another real estate crisis continued to rise as the heavily indebted Country Garden Holdings fell to a record low and was removed from the Hang Seng stock index in Hong Kong. Meanwhile, Evergrande (another Chinese real estate giant) filed for bankruptcy protection in the US.
We now focus on the path for 2024 and the likely easing cycle. We estimate this commences in mid-2024, but there are myriad speedbumps along the way.
Our experienced financial planners provide tailored investment strategies and guidance to suit your unique needs and financial goals. If you’re seeking expert investment advice, book a chat with a Pekada financial planner today.
If you’re making less than $58,445 in the 2023/24 financial year, and at least 10% of that comes from your job or a business, consider putting extra money into your super after taxes.
If you do and meet specific criteria, the Government might chip in with up to $500 into your super account—which is a fantastic percentage return on investment!
You get the full co-contribution if you make a voluntary non-concessional (after-tax) super contribution of $1,000 and earn $43,445 a year or less. If you put in less than $1,000 or earn between $43,445 and $58,445 a year, you might still get something, but only part of the amount.
Just remember that what you earn, including regular income, certain benefits, and employer super contributions, counts here.
If you’re considering putting more money into your super, let’s chat. Our experienced advisers can help you figure out which superannuation strategies make sense for you.