June Newsletter
In this edition:
Words of Wisdom
Are you due a windfall?
The benefits of staying invested
Bigger not always better
Contribution flexibility for older Australians
Tax consequences of working from home
FPA to make staff redundant
Words of Wisdom
With more people venturing out and about, it seems we are starting to relax about the Coronavirus risk (unless you live in Victoria, which has been reporting a major spike and suffering panic toilet paper buying again).
Whilst there was certainly some warranted criticism of the handling of inbound travellers and the infamous Ruby Princess, it’s becoming increasingly clear that Australia has had a good run when compared with other countries. You can find charts and comparisons here.
As worldwide infections surpass the grim milestone of 10 million, there is still some uncertainty around whether we will be facing tougher restrictions again and whether the government will extend relief measures.
As we move into the 2020-21 financial year, it is worth bearing in mind that the reduced minimum pension still applies - so if you can stick to your reduced discretionary spending, you can take this opportunity to extend the life of your retirement capital.
We have seen an increase in the number of clients making personal super contributions to top up their accounts this year, which is an indicator that workers have been able to put aside some savings and that investors are seeing the opportunity to buy into a depressed market.
And if a traditional wealth-building model isn’t for you, you could always try the methods of Mark Clark, the US man who won $4 million after using a lucky coin to scratch a lottery ticket - twice!
Vicki
Are You Due a Windfall?
A recent segment on the ABC radio caused a flurry of activity and excitement as people across Australia used the NSW Office of State Revenue’s online service to search for unclaimed monies.
These could’ve arisen because you moved house, changed your name, lost paperwork or simply forgot about it!
The process is simple - go online to https://www.revenue.nsw.gov.au/unclaimed-money and look up your name. If there is anything owing to you, simply tick the relevant line, click “Submit a Claim” and complete the steps to identify yourself.
The Benefits of Staying Invested
You’ve probably heard me say this, but investors are more likely to reach their long-term goals if they remain invested and avoid short-term decisions that may take them off course.
The chart below, from PIMCO, shows that investors may make sub-optimal decisions when emotions take over, tending to buy out of excitement when the market is going up and sell out of fear when the market is falling.
Read more…
Bigger Not Always Better in Dividends
In the present low-rate environment, many income-seeking investors have taken on more risk by moving out of bonds into stocks, chasing extra yields.
While the dividend yield can be appealing, sometimes less now can mean more over the long-term. Dividend-focused equity strategies can run the risk of falling into “dividend traps” or yields that are too good to be true.
Higher quality companies typically pay dividends through thick and thin and can provide better value over the longer term.
Contribution Flexibility for Older Australians
On 13 May 2020, the Government introduced legislation to increase the age at which contributions can be made:
without meeting the work test
utilising the bring-forward rule, and
on behalf of a spouse.
Working From Home Tax Tips
With more Australians than ever working from home due to COVID-19, the Australian Taxation Office (ATO) is bracing itself for a surge in work-related tax claims.
While working from home can come with its benefits like getting to sleep in, avoid the daily commute and work from bed in your PJs, it can also hurt your hip pocket if you're having to fork out for expenses your employer would normally cover, such as:
Increased utility bills,
Increased use of your phone and home internet
Purchasing equipment so you can do your job
The good news is that you can claim most of these expenses back at tax time.
Here's what you need to know.