Financial Planning Update

With the end of the financial year in sight, now is a great time to start thinking about your end of financial year strategies and next years strategies.
The following table represents opportunities depending upon your circumstances:
          Clients who:
Reduce/manage tax
  • Have realised capital gains
  • May expect a lower assessable income next year and can delay triggering a capital gain or redundancy
  • Will/have received a redundancy
  • Have capacity to contribute into super
  • Have expenses which can be prepaid such as income protection premiums or investment
Maximise super contributions
  • Are over age 65 and may have new opportunities to contribute
  • Can catch up on previous years concessional contribution caps 
  • May wish to maximise their non-concessional cap 
  • May wish to save in a concessional taxed environment for their first home
  • Wish to qualify for a $500 government co-contribution
  • Wish to qualify for a $540 tax credit
  • Split your contributions to your spouse 
Next financial year
  • Can increase their concessional contributions to $27,500 pa
  • Can increase non-concessional contributions as the cap is increasing
  • Can start an income stream
It was interesting to note for the 12 months ending March 31, the Australian property market achieved a return of 9.7%, with the highest returning capital city being Darwin, at 19.9%.
Compare this to the Australian share market, which has returned 38.46% and Afterpay was one of the best performing shares, earning approximately 1200%.
However, if you had invested in Australian shares just one month earlier i.e. February 2020, the return for Australian shares would have only been 2.05%.
Two very different results based on timing. The problem with this is the fact that investors may think timing is the most critical part of investing. And in this case, over the short term that was the reality. However, this belief creates poor behaviors and ultimately we approach investing in shares as a form of gambling.
Over the longer term, timing becomes less and less important. To put it simply, time in the market, not timing the market, is the most critical part of investing.
Over the last 5 years the Australian share market has had an average return of 10.20%. Although I do not have figures to give you a national average return for the property market over the last 5 years, I can give you a comparison to one of the best performing suburbs in the Illawarra – Thirroul. The average median house in 2016 in Thirroul was worth $987,500. Today this has grown to $1,387,500 (this does ignore rent and costs).
If we compare this to Australian shares, $987,500 invested at the start of 2016 would now be worth around $1,600,000.
Property is a very good investment: it is deemed more stable, and in most cases we will hold property over the long term due to significant transaction costs. If we approached shares the same way we approach property, i.e. hold for a long time and not worry about the price until we sell, you are more likely to have a successful result, rather than being held back from investing by worrying about timing.
Copyright © 2021 Webb Financial, All rights reserved.

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.

James Mottram  and Webb Financial (Financial Planning) Pty Ltd ABN 82 624 258 224 T/AS Webb Financial and are Authorised Representatives of Synchron AFS Licence No. 243313 for financial planning services only.
Click HERE for further information.