You would be right in thinking that Superannuation taxes earnings and employer contributions at 15%. In the grand scheme of things this is a pretty good legal tax minimization scheme (pity about all the other rules of Superannuation - but let's not go there!). However, here is a trick to not only negate this 15% tax but to also get a 15% 'refund' inside your Superannuation.
It is a stupidly simple approach and it only has two steps:
1. Open a Superannuation accumulation account that allows you to trade shares - I use the Choiceplus platform inside my Hostplus Superannuation.
2. Simply only buy sensible fully franked dividend shares inside your Superannuation. The 15% 'refund' will automatically happen without you having to lift a finger.
Because shares that are fully franked already have 30% business tax paid on them in Australia, that means that this tax actually exceeds what is required to be paid inside Superannuation. Because Superannuation only requires 15% tax then the other 15% tax is paid back to your Super' fund.
The bigger your Superannuation balance grows the better this strategy works. You will still pay 15% on employer contributions, but by using this strategy you will stop paying tax on earnings and attract a 15% rebate. You will get to a positive tipping point when your dividend earnings begin to exceed your employer contributions and thus negate the 15% tax paid on your employer contributions too.
I guess this is positively gearing your Superannuation ;-)
It gets even better once your superannuation is in retirement mode as earnings inside Superannuation are not taxed at all - so then the full 30% tax from fully franked dividends would be credited back to you inside your Superannuation Pension. Your dividends are then worth far more during retirement.
Anyhow, I am not a financial adviser - I'm just sharing what I do to get the maximum legal tax benefit out of my compulsory Superannuation account. You do your own research and seek unbiased advice.
Take care and stay nice folks.
Mr HM (Phil)
Oh, our post picture today is a visual encouragement to get rid of your credit card debt.
There is SO much hype around how to prepare for retirement and making sure you have "enough". It can be plain confusing - scary even. It makes us nervously look at our superannuation, investments, budget spreadsheets and savings and chew our pencils down to the lead. Predictably, there is a whole vulturous industry out there making an absolute killing from folk's retirement fears.
As a dividend investor, I pretty much completely ignore all the advice floating around and I most certainly ignore the TV, glossy finance magazines and the papers.
I calculate my future retirement income needs differently - here's how:
Four Simple Steps To Retire
1. How much yearly income do I need to not have to go to paid work anymore and live a simple but interesting life? (write down your answer)
2. As a conservative, old-fashioned investor of fully franked dividend shares, then how many shares will I need to hold to give me that exact dividend income each year? (write down that number)
3. Get busy buying up that exact number of shares over as shorter time frame as possible.
4. Once that number of shares is bought - retire.
It truly is that simple. Start today.
I am going to do a post on each of these 4 steps to practically flesh this subject out a little - but it honestly is that simple.
Take care folks and stay nice.
Mr HM (Phil)
PS - today's blog picture is home made pizza made with scone dough as the base and left overs from the fridge as topping. Freshly baked, frugal and gone in a flash by the hungry hoards.
We have started attacking the garden at the new place. The poor old garden is fully overgrown and in poor condition after 40 years of minimal attention. We have our work cut out, that's for sure. The pictures today will give you a bit of an idea.
As we live in a temperate zone on the east coast of Australia, all the weeds and sword ferns grow rapidly even in very poor soil.
Here is the garden in its current state .......
Poor soil and ....sword fern
A lot of work will need to go into this soil to make it productive.
After pulling out four wheel barrow's full of sword fern. The bottom of the fence is rotting too. Joy.
A mostly dead tree and sword fern
Oh look, more sword fern and climbing fig ..... both out of control.
Un-cared for fern tree
A plain old mess
It'll make good kindling I suppose.
A pile of pulled-out sword fern .... will it rot down?
Overgrown garden beds and a feint outline of rock edging
A tiny piece of raised garden bed cleared of sword fern. This area get full sun, so it will one day be all vegetables
The remains of an old bush house
I feel like a living chapter out of "The Secret Garden" ! That climbing fig will grow through the window at night soon.
The pathways alive and the garden beds dead. Useful hey?!
One last impressive picture of (wait for it) sword fern.
Some of the HM daughters are really getting stuck into the garden today which is great to see. I am feeding off their energy.
I also have questions and a need for some suggestions and opinions please folks.
1. Sword fern - it is literally everywhere as you can see. How hard it is to banish or do those pesky rhizomes just keep rendering this fern immortal?
2. I am attempting to compost absolutely everything except for the virulent climbing fig that is infesting nearly every fence line. I need to have copious amounts of compost as the ground on this property is very depleted after 40 years of nearly zero care. Any thoughts, ideas or warnings on attempting this type of composting? I'm even seriously thinking of buying a mulcher.
3. The lawn is a total mess .... a veritable museum of every type of suburban weed ever known to mankind really. I am not a lawn fanatic, but it is nice to have some half decent turf I suppose. Any success stories for hard-wearing lawn types out there?
4. The area down the side of the house (where the old bush house is) gets plenty of sun from spring right through to autumn but unfortunately it is full shade during winter - ideas?
There is copious amounts of old weed matting underneath all the weeds (!!) which will be a big job to remove. I think I am just going to have to just tackled bits at a time.
As the soil is so depleted, we are going to eventually created no-dig gardens on top of the existing old soil. Over a period of 5 years this should eventually revitalise our tired soil. We intend to use Morag Gamble's upside-down no dig garden method.
We will eventually introduce a few hens, which, besides eggs are mainly useful as a source of fertiliser. Our little rabbit (Pan) produces a surprising amount if rabbit poo for one small creature and it is jolly good stuff on the garden too (who knew?).
I really want to do this garden frugally by composting everything, saving seeds, using cuttings, using weed tea, having worm towers and employing all the things I have learned over the years in one property.
I really hope you will be able to see the transformation as I do the odd update post on the garden over the next few years (looks like I will be continuing to blog then!!). Today's pictures show it at its worst. It will be fun to show you the updates as they occur.
Off to try and wash climbing fig sap residue off my hands now as it is burning and itching. Take care folks and stay nice Mr HM (Phil)
Well, June 30th is done and dusted and I am free to think about some other things besides work, work, work!
Last night we spied three owls that had landed on the roof and balcony of a local house. It's been many years since I have seen owls so close up. It was a lovely moment. Can you see them in the dim photo below?
Find the three owls
Toby-the-dog has been learning some new routines since we adopted him. Toby's quiet life has exploded into the equivalent of a particularly shattering version of a Donald Duck movie now that Toby lives with the seven of us - all our comings and going, multiple conversations and 'stuff' ..... poor puppa.
Who tried to eat their bone on the carpet? Toby is not looking at me as I go 'crook' about it.
We are getting used of the oven and cooker at house - they both cook rather fiercely and that means adjusting all our recipes to suit. Mrs HM reckons that only timid cooks cook on low heat anyway - hmmm. We burnt a few dishes until we figured it out.
Home roasted chicken from scratch.
Veggies with chili - looking very innocuous until you take the first mouthful.
We popped up to Surfers Paradise on the Gold Coast recently to celebrate our 29th wedding anniversary. It was a nice break and very frugal seeing it was off-season. We stayed at Pepper Soul on the beach and they put us up on the 29th floor as a nod to our amount of years married. Very luxurious at a very bargain price. However, I am hopeless with heights and needless to say did not spend much time on the balcony (tingly hands and feet!). Winter in Queensland - 21 degrees C every day .... that's the same as everyone else's mild summer day. No complaints from us.
A Gold Coast scene
The restructure of this blog is going MUCH slower than I hoped. Blogger is not quite as easy to reconfigure as I thought - lots of things just no longer working as I expected. I'm still toying with going across to WordPress. Let me know if something looks badly wrong - I probably will have no clue how to fix it - ha ha!!
Anyhow, off to sort dinner now. Take care folks and stay nice. Mr HM
Although I use several ways to invest, my most favourite way to invest is dividend investing.
Dividend investing is often viewed as old fashioned, boring and slow.....
Old fashioned? I am immediately interested! If it worked for the wise folk in times past, then it must be worth a look. Boring? That's me alright - no dramas please. I value my sleep too much. Slow? I'm not into losing quickly-gained profits to the caprice of 'the market' thanks very much.
You see, dividend investing (dividend growth investing to be exact) is certainly old fashioned and is currently largely out of favour compared to the excitement of value growth investing and/or index investing. Investing styles fall in and out of favour depending on the prevailing trends in the investment world - nevertheless, despite these ever-changing trends, dividends just quietly keep happening like the steady ticking of a mechanical clock.
I do not have the nerve or risk tolerance for value growth investing or even the more staid index investing (let alone speculative investing or day trading!) - I need more certainty and I need to create an ever-increasing source of real cash income from my investments. I need to build a future source of steady income. Hence dividend investing.
Dividend investing sends me a cheque every six months on the knocker of about 4% - 7% of the value of my investments which I immediately add to my savings. When I have a decent amount saved up from my salary added to my pile of ever-reliable dividends, I then wait till the price of my favourite investments drop below their real worth and I buy up as much as I can whilst they are 'on special'. The more of my favourite investments I own, the more dividends I get paid and the quicker I can save and purchase more of my favourite investments when they are 'on special' .... and so the snow ball grows and grows. At the end of each financial year I get a nice fat tax refund cheque on these dividends as they have already paid 30% tax paid on them before I received them ..... bonus! Soon enough, my investments will be paying enough to replace my current income - this is known as being financially independent. I never sell my investments (I ignore all the irrelevant stock market news on TV etc). I never have to worry about a stock market crash because my dividends will still pay regardless of a crash. I simply plow the dividends I earn back into my investments exactly as you would dig compost and fertiliser back into the soil.
Dividend investing is quiet, methodical, unexciting, cyclic, prudent and altogether way too sensible. Take care folks and stay nice Mr HM (Phil)
I am right in the middle of discovering what Blogger CAN'T do with regards to themes and the reorganisation of my content. I'm eyeing off WordPress right about now - just sayin'.
However, I had a small win tonight figuring out how to make separate pages for Frugality posts and Investing posts based on label searches. A small mercy indeed. Time will tell if it works well into the future......but now I have to go back through ALL my posts and re label them exactly as per the parameters required so the right posts show up on the right pages (I'm bored already just thinking about it). The things I do for ya'll !!
I have not even started tackling how to link YouTube video posts here on Blogger ..... eeep!
Anyway, I may be on a blogging break but lots is getting learned and done.
We have a long weekend coming up - petrol prices have hiked up already and we are all getting nervy about double demerit points from the boys and girls in blue (we love ya really but). Also, the hilarious phenomena of the Sunday-rush-for-the-supermarket-before-a-public-holiday is also sure to occur again.
I just thought I would throw a picture in (above) ..... our very sensible, sophisticated 17 year old still found some simple delight in hopping into a big packing box - channeling the inner child no doubt. Take care folks and stay nice. Mr HM (Phil)
Privacy laws have changed and as a blogger, the European Union Laws require me to give EU visitors information about cookies and data collected on this blog.
Evidently, there is a cookie and privacy notice displayed on my blog for EU visitors, however, because I'm not in the EU - guess what?..... I can't see it!
Please, if you're reading this from the EU, can you kindly write a short comment to let me know if you can see this notice (just type "yes"). If you can't see it then please type "no" and also mention which country you're in so we can get it fixed.
If you are not a EU reader then just roll your eyes and click away (!) - I'll be back with normal content soon enough
Hello to all you fine folk - love from Mr and Mrs HM
Yes, I am still on a bogging break, however I thought I would list off the things going around in my head about what I plan to do with this blog in the future.
1. Videos - I love watching videos on YouTube and plan to include a Mr HM YouTube channel to link to this blog too. Some things are just better done visually.
2. Free Stuff - The problem with blogs is that often it can be hard to find the post you want to revisit as it can get lost in the mists of time. To this end, I plan to have a dedicated blog page for printables, cheat sheets, links, recommendations and sensible promos.
3. Frugal Stuff versus Finance Stuff - To me they are both inseparable topics, but the poll I did on theMr HM Facebookpage tells me otherwise. You said you wanted more frugal tips and less finance stuff. So, I think I will separate the topics so you can easily access the topic of your choice on different pages (or something similar). I might have to change the entire blog layout (eeep!).
4. Ads and Merchandise - I have had Adsense ads up for a while and have had zero complaints as yet. I've tried to keep them out of the way of the body of the post. The money I earn from these will allow me to retire till at least supper time tonight!
Affiliated links etc - I'm still not sure how I feel about this, so unless it is a totally fabulous product that I could genuinely live and die by ... then no.
I'm also going to eventually add a SHOP page to sell some of my wares and writing and to also have free give away stuff too .... I have not quite figured this out yet.
5. What Kate Did - yes this will continue as it is a real life dramatisation of my grandmother's life from a teenager in the early 1900's right through to her passing in the late 1970's. It is a story full of frugality, grit, courage, self improvement, scandal and dry humour. If you have not read the first two chapters they are here and here
Flowers for Mothers day recently here in Australia
Any other ideas are very welcome please.
OK, must skedaddle. Thingses to do! Take care folks and stay nice. Mr HM (Phil)
Well, end of financial year is looming very close which means an insanely busy time for me at work right through till October.
To this end, I have decided to take a blogging break for a while. During this break I will be gathering my thoughts about blogging and asking myself some questions .... do I continue this blog, revert to vlogging instead, or perhaps start a new blog that is more intentionally focused, or stop blogging all together. We'll see.
Having said that, if I get super-excited about a topic going around in my head I may share it and do the odd post, but for all intents and purposes I will still be on a break. Take care folks and stay nice. Mr HM (Phil)
We recently went shopping at one of my favourite wholesalers Bibina. I love going to Bibina as we can pick up very different types of bulk foods and groceries compared what's available at Aldi, Woolworths of Coles. Like any store, it is still important to be be savvy with the prices we pay, but the variety and stock is fascinatingly different. The main post picture is of some nuts and lentils and the next couple of pictures also gives you the feel of the warehouse.
Drums and huge glass jars of pickles, oils, fruits and preserves.
So many different types of flours.....
Far more interesting than a shopping centre.
Huge tin cans of olives, fruit, fish, pickles and consumables.
There are so many good quality European, middle eastern and Asian foods here that we simply cannot get at a normal supermarket. I also love the huge glass jars that so many of the preserves come in - you would pay a fortune just for the jar normally.
Me: "Oh, can we get that?" Mrs HM: "10kg of rollmopps!!??" Me (whispers meekly): "I like the big jar..." Mrs HM: (the look) ..... (moves to next aisle without wasting breath answering)
In other news, we have been painting. I love the transformation from old to fresh, stained to sparkling, daggy to serene as the next few photos show ....
Cutting in ....
Patching holes and covering stubborn stains ....
Paint central. We are using Dulux Antique White USA.
Old versus new. The walls in the kitchen are very oily and need many more washes before I can paint - I'm leaving that till last.
Just like new - Bedroom 3 The 40 year old Berber wool carpet eventually came up looking respectable after a zillion go-overs with the rented Britex machine.
Just like new - Bedroom 4 (actually, it probably is the original sun room) I love the pattern the 1970's light fitting casts on the top of the walls
We have a few challenges too - what would you do with both these following scenarios that does not cost lots of money?
This mid 1970's kitchen made of laminated chip board is pretty ugly and worn and the once-apple-green bench top is also looking as appealing as a dropped pie (very scratched and faded). What would you do without spending too much?
This mid 1970's air conditioner was built into the brick feature wall from new. It is now beyond repair. What would you do with the gaping hole it will leave? (No, I do not have any of the original bricks)
Your ideas on both these challenges would be of great interest to me folks!
We are having a lovely Sunday evening here listening to the rain. Mrs HM and I are resting in our recliners with a cuppa and English muffins with butter and honey. Mrs HM is working on a knitted baby blanket for her new great niece and I am typing (obviously!). There are a few gentle conversations happening here and there as we think of things, Toshi-the-cat and Toby-the-dog are successfully re-triggering the cold war and the girls are organising themselves in their rooms for Monday morning. We hope you are having a contented Sunday evening too. Mr HM (Phil)