Smart Investing
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The Federal Budget’s confirmation that the annual cap on concessional superannuation contributions for all fund members over 50 will halve to $25,000 from the 2012-13 financial year, has some investment commentators envisaging that more investors will turn to negative gearing.
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We've been told by the financial community at large that it's a tough time to be an investor. The financial markets are extremely volatile. Bond yields are near historic lows. The outlook is uncertain.
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The latest bouts of sharemarket volatility and this month’s cut in official interest rates once again highlight the crucial role of bonds in a properly diversified investment portfolio.
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Self-managed super funds typically have a much high exposure to cash than fixed interest.
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The Australian superannuation industry reverted this week to its unwanted status as one of the government’s favourite Budget ‘hollow logs,’ with billions of dollars in savings extracted from the system by reneging on a tax break meant to encourage higher retirement savings, and a doubling of the concessional tax rate on the super contributions of those earning more than $300,000.
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News & Commentary
Have a smart Christmas 08 Dec 11
Retailers must have their fingers crossed that this week’s cut to official interest rates will deliver a much-needed boost to Christmas sales.
But while the rate cut is likely to encourage many shoppers to spend more than otherwise, astute consumers will keep their spending strictly under control.
Of course, one of the quickest ways to waste money and set yourself up for a difficult start to next year is become a big spender over Christmas.
An interesting factor going into this Christmas is that personal borrowers have generally been keeping their money firmly in their pockets – so far.
The Household Saving Ratio from the ABS is at a 24-year high – rising from 9.1 to 10.1 per cent in the September quarter. A decade ago, it was negative as households spent more than they earned.
ASIC’s personal finance website, MoneySmart, has published some great tips on how to rein in your spending this year. Tips include:
- Make a Christmas budget rather than shopping blind. Set out what you are willing to spend on each person.
- Consider using a debit card or lay-by instead of a credit card. In other words, spend only your own money and avoid having a shocking credit card bill in January.
- Compare prices online. You can hunt down the best prices – whether you end up buying online or at a bricks-and-mortar store.
These tips are really just common sense. But common sense is typically the first casualty when shopping for Christmas.
* Written by Robin Bowerman, Principal, Corporate Affairs & Market Development at Vanguard Investments Australia.
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