Australians, if you live in NSW then be sure to see if you are eligible for a refund.
The NSW Government has reformed the compulsory third party (CTP) insurance scheme to reduce the costs of CTP Green Slips for vehicle owners and better support people injured on our roads.
If you were the registered owner of a private vehicle in NSW Australia, as at midnight 30 November 2017, you may be able to claim a CTP Green Slip refund for insurance policies bought or renewed before 1 December 2017.
One of the three basics of financial success is increasing our earnings. (You can read about what the other two are in this post here)
There are many ways to get ahead at work and stand out from the crowd of opinionated mediocrity - but there is only one method that I want to talk about today.
Without beating around the bush or the like, it is simply this: -
Put your hand up willingly to do the stuff nobody else wants to do
Yep, the project that is too hard, too messy, too frightening, too boring, too whatever. Consistently putting your hand up to do what others are unwilling to do will get you noticed and will give you a measurable platform to build success on.
I have a personal mantra at work and it goes like this - "eat your veggies first". In other words, always do the ugly/hard stuff first and all the fun stuff afterwards. By habitually doing this, it will stand you in good stead to easily take on that ugly project (or whatever) that no one else wants to do.
By being disciplined to do the tough stuff first and by putting your hand up to do what others will not do, the following benefits WILL come your way:
You'll learn how to tackle challenges
You'll learn how to get results despite the hurdles
You'll learn determination and stickability
You'll achieve what others do not (because they did not want the task)
You'll widen your network (solving problems always means collaborating for answers)
You'll learn more about your business
You'll learn things about yourself (self awareness is priceless in the workplace)
You'll gain the reputation of getting things done
You'll open your mind for other possibilities
You'll grow your confidence exponentially
You'll taste success
All the above creates professional wisdom which is a valuable commodity - it also has a currency.
I have personally tripled my income step by step by consistently using the above simple principle.
You all know my conspiracy theories on retirement Superannuation and how I am getting the best out of my Super despite it's inherent problems, however, I have not chatted to you about Investment Bonds yet.
Investment Bonds have taken a back seat as a legitimate form of investment with the rise of superannuation and folk's love of direct share and property investing. However Investment bonds are now making a comeback since Australian Superannuation laws have continued to change for the worse.
Slow baked sweet potato.
What are Investment Bonds?
They are not the low earning cash bonds you can trade on the stock market - these are actually insurance policies that invest directly into a variety of equity (share) investments. Investment bonds combine the features of a managed fund with the benefits of a life insurance policy. Here is an excellent write-up on investment bonds by ASIC HERE.
What are the benefits of Investment Bonds?
Due to these investments being held under the structure of an insurance policy, the following benefits are available to the holder of investment bonds in Australia.
Investment bonds are tax paid (30% company tax).
Zero personal tax is payable once you have held the bonds for 10 years
If you do need to withdraw funds in under 10 years you still get a 30% tax rebate on the taxable portion of the amount withdrawn.
Investment bonds can be pre-bequeathed outside of an estate.
Highly tax effective outside of Superannuation.
Can be accessed at any age or stage of life.
No need to ever declare the earnings of investment bonds for taxation purposes (unless you withdraw in the first 10 years).
Can start with as low as $1000 initial investment and then Bpay/EFT/Direct Debit as little as $100 a time for no fee.
Can swap investments for fee.
No limits on initial investment amount or subsequent amounts in the first year of investment.
Can invest 125% of the previous year's investment year on year and still have full tax benefit.
Tax effective investment for children from the age of 10.
Tax effective for early retirement before being able to access preserved superannuation
A variety of investments and funds available including Vanguard and iShares products (depending on the bond provider).
Fees comparable to Superannuation products (always scrutinise this however)
A delicious home cooked lamb roast. Even the mint jelly is home made.
Here is a link to a couple of high-level articles HERE and HERE to get you started on researching investment bonds.
There are many providers of investment bonds in Australia the largest being Australian Unity . As part of your research, always-always-always read the PDS thoroughly, be fully aware of all fee structures and also be aware of the return and quality of the investment products being offered by each bond provider. Australian Unity's PDS is well written and highly educational - I suggest you start your first PDS research with that one HERE. (No, Australian Unity are not paying me in any way!)
The reason I personally like investment bonds is that I can access these well before I can access my Superannuation and they have slightly better tax benefits than even fully franked dividend shares and after 10 years any of my earnings are tax free including GST (..... pokes tongue out at my Superannuation and makes an immature face). Investment bonds are also infinitely easier to deal with come tax time every year - no tracking of share parcel purchases, dividends, franking credit claims etc etc. Once retired you can organise a regular withdrawal plan for free too - and all tax free after 10 years (..... blows a childish 'rasberry' at Superannuation pension administration fees this time)
Now I am not a financial adviser but I think Australian investment bonds are truly worthwhile your time researching as a highly flexible and tax effective alternative or supplement to Superannuation. Many articles say that investment bonds are good tax havens for the rich (very true) but they are also excellent for low income earners, early retirees, those transitioning to retirement before preservation age and many other personal circumstances too.
Take care folks and stay nice.
Mr HM (Phil)
Here is a lovely picture of Mrs HM's mum and Toby-the-dog a few days before she passed. Toby lives with us now.
It is a sad day today. Mrs HM's birth mother passed away this morning from aggressive cancer. We spent the night around her bed and she slipped away quietly at 7:20 this morning.
I have mentioned her in other posts as our "aged relative" and we had recently moved house to be close to her after she broke her hip. Not long after we moved house, the diagnosis of inoperable aggressive cancer was given to her. She was a theater nurse all her life and knew exactly what the doctors were talking about. For us, the last seven weeks have just been an ever-shrinking round of hospital-work-sleep every single day .... hence not much activity here at Mr Home Maker.
This little old lady enriched all our lives in countless ways - I will always be utterly thankful that Mrs HM reached out and connected with her birth mother a few years ago.
I smile as I write this as she would often chat to me about frugality. She was the veritable queen of frugal and fully believed in saving in one corner to be able to spend on things that mattered to her. She would often say things like "Well, I had to buy several of those because they were so cheap!" ... which would explain the lifetime stockpile of so many things in her cupboards.
Anyway, I'm off to face the unlovely tasks of arranging her funeral ("Mind you don't spend too much" I hear her say "Just keep it very simple OK!?"), organising final bills, cleaning and organising the house (huge job), attending to the countless necessary legal responsibilities ..... we won't be coming up for air just quite yet.
On a nicer note, we have now permanently taken over the care of her little dog Toby. He is a real affectionate sweetie and so very brave .... at least he is on this side of a fly-screen door. Take care folks and stay nice Mr HM
Here is a small list of simple decisions that will save you 'big time'. 1. Cancel your pay TV subscription. Here in Australia, Foxtel was all the rage for many years but with the advent of very cheap online content through other providers or free content via the internet, paying for TV is simply a waste of your hard earned money.
2. Credit Card Debt. OK, so you just simply can't make it disappear but taking up one of the excellent interest free offers available (I saw 20 months interest free credit card transfer offer recently) you can smash this debt. BEWARE however, your old credit card will not be cancelled once the balance is transferred and represents a huge potential spending danger - go close that card at your bank immediately. BEWARE again however, if you have credit card debt then you are likely to spend on a credit card again so deal with this and do not carry your new credit card on you. 3. Make a few phone calls to insurance companies (car, house, content etc). If you are like most people and just auto-renew your insurances yearly, then you most probably are paying way too much. Make a few calls and compare all your insurance policies - you'll definitely get a better deal with 30 mins worth of phone calls.
4. Make a few phone calls to utility companies. If you just pay your electricity and gas bills without question every year, a few phone calls to other providers will certainly get you a better deal. You may even find that a different plan with your current provider is the answer to cheaper bills.
5. Ditch your post paid phone plan. There are literally 1000's of different phone and data plans out there. Phone and data providers are continually changing phone plan offers on purpose (I used to work in the industry so I know this is true). It is often cheaper to keep using your current phone and swap across to a prepaid plan (I pay $9.95 per month for my phone plan for instance). Even if you are not keen on doing this, at least shop around for a better plan and a cheaper price.
6. Cook from scratch. This will be the biggest saving by far. Bought lunches and regular bought meals out are a whopping waste of money. Did you know that for the price of a dinner out, you can probably feed yourself for the best part of the week. Cooking from scratch can mean that, with a little thought and planning, you can nourishingly (is that a word?) feed yourself daily for under $1 for breakfast, under $1 for lunch, under $3 for a main meal .... that's $35 per week for food, and it gets even cheaper the more people you are feeding. I'm currently eating a delicious, wholesome homemade chicken pie while I type this post.
7. Cars and commuting costs. I now often walk to and from work ... a leisurely 20 minute walk. Running two or more cars when you can be running one is a truly massive saving. Think about using public transport, or biking, or even a motor bike, perhaps walking or car pooling too.
8. Drop your gym membership. Seriously?! Yes, seriously. Walk or run for free around your city or suburb. Cycle for free around your city or suburb. Buy some secondhand weights (gumtree/craiglist etc has oodles of them). Educate yourself on body weight training.
9. Do small stuff consistently. By small stuff I mean things like the following: taking slightly shorter showers, washing clothes in cold water, turn a fan on instead of the air conditioner, sun dry your clothes instead of using a clothes dryer, plan your car trips to achieve several things per trip to cut down car usage, get up earlier and go to bed earlier, bake your own bread, make your own laundry liquid, stockpile groceries when cheap, cook meals in bulk and freeze, use the slow cooker, grow your own herbs, darn your socks, eat eggs occasionally instead of meat, keep warm by wearing layers instead of switching on the heater etc etc.
Lean in to some of these changes and experience the deep sense of satisfaction of saving oodles of your hard earned money.
I was messing around this evening with some calculations and one of them was how many actual weeks are left till Mrs HM and I officially and fully retire from full time paid work.
The calculator tells me I will retire in 505 weeks (3530ish days). Put like that, 505 weeks does not sound long at all! I think I'll cope after all.
So, lotses to do in 505 weeks hobbitses. Yes! (chews end of pencil)
List of things to do in 505 weeks
1. Think of ways to reduce 505 to less than that (never happy am I?) 2. Purchase that caravan (cash purchase) 3. Purchase a tow vehicle (also a cash purchase) 4. Purchase a small property to be a home base (small mortgage or pay cash??) 5. Develop two more passive income streams (2 already happening, but need 2 more) 6. Learn men's barbering (retirement job) 7. Finish my Financial Planning certification (a transition career into and during retirement) 8. Actively downsize and cull our 'stuff' 9. Increase percentage of income bearing investments 10. Start seriously studying frugal living-on-the-road skills 11. Plan and execute several extended caravan trips as a transition to life on the road
Since that post, I have had several emails from readers about how my Superannuation approach compares to Dave Ramsey's investment approach. I love much of what Dave Ramsey stands for and especially what he is helping others achieve with regards to debt busting, money literacy and investing. Much of Dave's core principles he has made freely available on his website.
So, to answer all those emails asking how to emulate Daves's investing approach in the Australia market, I have come up with the following investment portfolio which takes Dave's U.S. concepts ..... but applied in an Australian context. There are significant differences to international tax treatment, dividends, franking and taxation of dividends in Australia compared to the U.S., not to mention that Australians have quite limited access to certain stocks, mutual funds and index funds compared to our U.S. readers.
Mr Home Maker's Australian Superannuation Portfolio Very simply, we need to be able to access funds and stocks that fulfill the following four categories in an Australian context:
1. Growth and Income 2. Growth 3. Aggressive Growth 4. International
You will need a superannuation fund that allows you to trade stocks and funds inside your super. See here for details of the one I use.
I think the following interpretation may be a fairly good Australian equivalent to the concept Dave Ramsey illustrates in his four fund method of investment :-
1. Growth and Income These are good quality companies that are reliable and show continued long term growth and also pay reliable dividends that are 100% franked for potential excellent tax benefits. Old-school LIC's and Conglomerates would fit this description perfectly.
The ones I use in my super are Argo, AFIC, Milton and Washing H Soul Pattinson . I would allocated 10% of my portfolio to each of these 4 stocks thus giving this growth and income category a total of 40% of my total Superannuation portfolio. Dave Ramsey only says to allocate 25% to this category, but this is where Australia has superior dividend payments and superior dividend tax treatments compared to the U.S. hence my higher allocation to this category compared to Dave's.
2. Growth These stocks capture small or medium sized companies outside of Australia (because Australia is such a tiny percentage of the world stock market). In particular, we are talking U.S. small and mid-sized companies showing strong growth trends but not necessarily much dividend yield.
The ones I use in my super now are ETF's from Blackrock's iShares : IJR and IJH
I would allocated 10% of my portfolio to each of these 2 stocks thus giving this growth category a total of 20% of my total Superannuation portfolio. Dave is not keen on ETF's and prefers mutual funds, however in an Australian context these are very strong ETF's with very reasonable underlying costs.
3. Aggressive Growth These stocks can provide both fantastic wins and some really volatile ups and downs - but very worthwhile having in your Superannuation portfolio. These stocks are from emerging markets all over the world. Emerging markets are where very exciting new markets and booms are discovered.
The ones I use in my super now are emerging market ETF's: Vanguard's VGE and iShare's IEM
I would allocated 10% of my portfolio to each of these 2 stocks thus giving this aggressive growth category a total of 20% of my total Superannuation portfolio. Dave Ramsey is not keen on ETF's and prefers mutual funds, however in Australian, mutual funds with reasonable fee structures and good liquidity can be tricky to source compared to the abundance of offerings in the U.S.
4. International Australian stocks only represent a tiny percentage of the global share market so it makes sense to ensure our portfolio is taking advantage of all the solid gains and buying opportunities on offer across the rest of the world. To Dave Ramsey, "International" means everything except for U.S. company stocks - however, for Australians this is obviously very different. Seeing as the U.S. has a huge percentage of the world's big companies it is important that this category sees Australians tapping into these non-Australian stocks.
The ones I use in my super now are world ETF's both hedged and unhedged: Vanguard's VGS and VGAD. Both these are domiciled in Australia which immensely simplifies all the tax agreements between countries and both target the top strongest companies world wide. Approximately `60% of the underlying stocks are top U.S. companies and the approx. 40% of underlying stocks are all the other top companies across the rest of the world (excluding Australia).
I would allocated 10% of my portfolio to each of these 2 stocks thus giving this international category a total of 20% of my total Superannuation portfolio. Dave Ramsey prefers mutual funds, however in Australian, mutual funds with reasonable fee structures can be hard to easily source compared to the wide choice of offerings in the U.S. (Our U.S. readers have a massive array of shares, mutual funds, retails funds, wholesale funds et al to choose from when making investment choises - I'm very envious actually)
So there it is - that was Mr HM's attempt at creating an Australian version of Dave Ramsey's four-portfolio investment fund approach. I'm not sure Dave would approve .... but you never know - ha ha!
Please remember, I am not a qualified financial planner, so always do your own research. I have placed links all through this post on all products mentioned - simply click on the bolded words in the post to help with doing your own research.
With significant volatility now very evident in the stock market right across the world, there will be some very cheap prices on the stocks and funds mentioned in this post happening - it is a wise buyers market as we speak. Take care folks and stay nice. Mr HM (Phil)
Well, with the stock market in Australia losing nearly $60 billion in the last few days and the US stock market losing over $1 trillion ..... it is time to panic!!
Oh no!! (covers face with hands) What have I advised you all?? Dear me! All my posts about the stock market being a wise investment now look really bad! Gosh! How stupid was I!? (shallow breathing and nervous shaking) Soooooo embarrassed!
Actually, nothing of the sort and none of the above is true. It is NOT time to panic - in fact quite the opposite.
You see, market corrections (crashes) both big and small are a normal and expected cycle of the stock market. Folks who invest wisely in shares totally expect and even look forward to market corrections/crashes. (Really? Yes, really)
When serving out dinner, also serve some for the next day's lunch too. Frugal much! This will easily save you over $1000 a year in lunch money.
I have not sold a single share this week, but I am gearing up ready to buy more of the quality shares I already own while they are cheap. I am also keenly awaiting the dividends to pay on my existing shares very soon which will occur despite this market correction. I am as calm as calm can be.
How on earth can I be calm? Simply because my investments are wise, considered, boring, stable, income producing stocks which historically weather decades of market down turns and bounce back just fine. The only thing I am annoyed about is that I wished I had saved more money so I could spend more on quality stocks whilst the prices are low.
As Warren Buffet is quoted as saying - "When others are greedy be afraid and when others are afraid be greedy" - or something like that. This is exactly what is happening now.
One of the most powerful personal money tips I have ever embraced is to ensure every single coin (Dollar, Pound, Euro, Yen etc) has a job and a home. Loose coins get lost. Spare coins become untraceable. Extra coins get used accidentally-on-purpose. Homeless coins get lost into the mists of time and coins without a job are lifeless and dull.
When we allocate our coins out after we get paid, always ensure each coin has a specific job and a specific home. Coins are our personal servants and servants need to be working.
One of the easiest coins to lose are coins for the future. Providing for our future selves is serious business and this must be first priority in our allocation of coins each time we get paid. Coins for the future have a clear purpose and they need a home were they can breed happily and have lots of new baby coins without being disturbed. Coins for the future need a home where they can breed multiple generations of new coins without every being robbed or pilfered.
Did you know that ......
Just like the washing, coins when left alone will breed and multiply
Coins can have grand baby coins and great grand baby coins and great, great grand baby coins
Coins breed and multiply best when totally undisturbed
Some coins are clever enough to have babies twice a year no matter what their state of health
If coins are not allowed to breed and multiply then they shrink a bit every year
Coins are immortal, they never die.
Coins can breed from the instant they are born and they never are too old to breed.
A coin that has been prevented from breeding (even for decades) will start breeding again instantly if allowed.
Coins are breeders not readers
Disturbing breeding coins is just like disturbing egg-producing hens - it puts them off the lay.
Just like baby kittens and puppies are cute, so brand new baby coins are cute too. The problem is that not many people have ever seen or experienced the birth of a baby coin. I have several coins that are about to have babies and it is so exciting. I feel very proud every time my coins have baby coins. I get notified of the birth of my baby coins via SMS, then I proudly peek through the coin nursery internet window but I never disturb them.
Sometimes you just have to make money fun ..... fun enough to make you smile. My baby coin story is just one such way.
Take care folks - stay nice.
Mr HM (Phil)
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