Smart money weekly; Build a second income investing, financial advice through divorce, ASX down 12% and covid isolation scrapped
Hey team,
Happy Monday.
Inflation, inflation, inflation… It seems to be the only thing that anyone is talking about. Australia reached 6.8 per cent inflation in August, down from 7% in July. However, analysts expect this small reprieve to be short-lived with an estimated inflation rate of 8% by the end of the quarter driven by increasing energy prices.
Some good news for businesses as the mandatory five day isolation for a positive covid test was scrapped. From October 14th we will no longer need to isolate. This should provide some more stability within workplaces as a lot of positive cases are asymptomatic. Does this mean the pandemic is over? It seems not as chief medical officer Paul Kelly stated, "It does not in any way suggest that the pandemic is finished"
Upcoming events:
October is going to be a busy month. Financing 101, FIRE and building a second income - all great sessions to jump on. Start taking control of your finances NOW. Check out our other events below
Share market wrap
It has not been a great week for equity holders. The ASX is now down 12% since the year began. Constant and consistent volatility has plagued the markets this year. Wall street fell sharply towards the end of the week as well after a partial rebound on Wednesday as recession fears still linger. The Australian dollar also fell below 65 US cents throughout the week. Over in the UK, the new Prime Minister, Liz Truss stated she is prepared to make “controversial decisions” to face the difficult position their economy is in. Her new economic program, sent their currency to record low levels and left the UK with a borrowing capacity close to that of Greece. "We are facing difficult economic times," Ms Truss said on their local BBC radio. However, if history has taught us anything, it is that markets will recover - it is just a matter of time.
Key sharemarket numbers:
Investment story of the week: Queensland shelf the land tax change proposal
We typically look at investment stories about equities in this section, but let’s take a look at a story which impacts investment properties this week. If you aren't in the loop, here is a quick summary; under the initial proposal, the value of an investor's properties Australia-wide would be taken into account to calculate land tax rates paid according to Queensland's thresholds. That rate would then be applied to properties in Queensland. The idea behind the proposal is that those investors who buy properties in Queensland across jurisdictions can avoid paying land tax. The Government confirmed the changes had been shelved on Friday after the tax change was criticised by other premiers and the state opposition. This is a critical piece of news that property investors need to be aware of, especially before looking to purchase investment properties in Queensland.
Smart Money upside #89
Because people don’t often talk about the full ins and outs of their money, it’s hard to learn lessons from hearing what good and bad choices other people make. This story is from one of our clients to help you take your money game to the next level.
Numbers/Background
Individual, mid 40’s; household income ~ $420k; total assets ~ $5m; savings ~ $5k annually.
Frustrations
Going through a separation and did not know how to appropriately manage funds given new financial circumstances. Also frustrated not knowing a clear path to financial freedom and feeling like she was not saving as well as she could.
What they wanted from us / the advice process
Structure around selling the family home (and acquiring a new one), when the client had to return to work to stay cash flow positive, and how to continue providing support for children and herself while going through the separation.
What success looks like for them
Purchasing a new primary place of residence, having a clear understanding of what needs to be done to adjust to the change in lifestyle, and growing assets to look forward towards the future.
What money strategy they were following before we went through the planning process
Utilising an offset account where any spare cash was directed.
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What money strategy they chose to pursue from our planning work
Rollover superannuation to a more cost effective fund that better aligns to their risk profile, purchasing a new property, management of debt to ensure cash flow remains positive, investing into a portfolio to grow assets, and ensuring estate planning is up to date given the separation.
Key benefits of going through the process
Education on each financial component of their situation, comfort in knowing what is achievable and what is not, and setting a clear plan moving forward to set up the future.
Value of advice after all advice fees year one: $3k
Year 20 upside after advice fees: $470k
If this story resonates and you want to chat about how to get these sorts of results, you can book an intro call here.
Giving update of the week
This week we’ve had the privilege of starting work with a bunch of new clients, and we’ve celebrated by providing 100 underprivileged people in Africa with 365 days of access to clean, life saving water. This is all part of our ongoing commitment to make a difference in the lives of our clients and simultaneously make an impact on our world through our partnership with B1G1 (Buy 1 Give 1). You can check out more information about our giving here.
Money hack of the week: What are the best impacts of financial advice?
What results does a financial advisor ACTUALLY produce in the short term? I asked this of Pivot Wealth client Avani who is relatively new to financial advice. But, she's already seeing great results. However, one of her biggest takeaways has nothing to do with money itself. It's the peace of mind she now has about her finances and the day-to-day decisions she no longer has to make. Check out the chat here.
Money mistake of the week: Why running a business doesn't suit everyone.
It might not be what you want to hear, but not everyone suits business. I asked Sarah Davidson about her top tips for someone wanting to start a business. Needing to wear lots of hats isn’t for everyone, and if your heart isn’t in it, it’s going to be hard. Check out the chat here.
Jargon Buster of the Week: GDP (via Canstar)
GDP stands for Gross Domestic Product and refers to the monetary value of the finished goods and services of a country.
Podcast from last week: #254 w. Robbo - Aussie Mortgage Guy
Last week, I chatted with Robbo, the Aussie mortgage guy, TikTok superstar, and ex-mortgage broker who helps people understand mortgages, the lending market, getting into the property market and acts as a bit of a conduit between people and the best brokers in the country.
I picked Robbo's brain on some of the trends that he's seeing, talking to the 300,000 plus followers that he got on TikTok, and some of the mistakes that people are making in the market today, particularly in the soft market that we're seeing as well as how people can set themselves up to get into the property market and make their next purchase a smooth one.
This episode is perfect for anyone that wants to buy a property and do it without a headache
Helping people with this stuff is our jam, so if you want to chat about how to make your money success easier, you can book an intro call with us here.
Be awesome,
Ben
Disclaimer:
I know you’re smarter than someone that would need me to write the words that come next, but our compliance peeps are real hard-asses so here we go... This information is not personal advice, poetry, or a map of where Jimmy Hoffa is buried. It may only be regarded as general advice, and definitely shouldn’t be considered something worthy of inclusion for Donna Hay’s next cookbook or the Archibald prize. This is actually just an email communication that has been sent to a bunch of people and doesn’t even have your name on it. Your personal objectives, needs or financial situation have not been considered when preparing this email, but I want you to know that I have spent a lot of time thinking about the Venn diagram intersection of poetry, landscaping, and essential oils - if you’re fascinated by this same phenomenon please reply so we can compare notes. You should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs, and if necessary, seek advice before acting on it. You should also consider other people when getting on and off public transport, smiling more, eating healthy, and listening to your mum when she tells you that you’ve been working too hard. Where the information relates to a financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product. Where the information relates to a hilarious joke I’ve made, you should consider belly laughing deeply. Worth noting also that past performance is not a reliable indicator of future performance when it comes to investments, and definitely not when it comes to the Wallabies. Financial services guide.
Financial Adviser & Director | Financial Planning and Advice
2yAnd they do recover quicker than the economy