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2 April 2025
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I forgot to mention in my comments, more PETER THORNHILL or similar articles please.
The method of calculating "income" for the proposed $3 million "cap" contains within it the indefensible idea of including unrealized paper gains in the market value of investments which would have the potential effect of penalizing investment in any speculative early stage exploration biotech or "tech" stocks. An example from my own experience is a biotech stock whose market price in the three years has gone from 2 cents to 60 cents and back to 12 cents. Anyone fortunately buying and selling at the the right time would have made real taxable capital gains, but anyone who simply held during this period may have huge paper gains which could now be called "income", at the same time as when the total value of the portfolio was temporarily inflated and exceeded the new "cap". This looks like another unintended consequence of poorly thought out proposal.
I appreciate the range of views expressed in Firstlinks publications.
Good source of information. Have tried to influence/introduce women to your newsletters but find that once brackets, percentages and calculations appear they turn off. Accountant type hyperbole of no interest. Look at the Dixon Fiasco. Perhaps more info to those on balances under $350,000. That is the real world of super, we can only dream of figures in the millionaire bracket.
"dream of figures in the millionaire bracket": Millionaire full Age Pension at deeming rate: = (26 * -1547.6) / 2.25% = -$1,788,337.78 (- = invested) Regrettable only while alive. Mortals: = PV(0%, (87 - 67), 26 * 1547.6, 0) = -$804,752.00 (- = invested)
Survey done! We all need steady regular cashflow. Besides Peter Thornhill, who else out there is doing good old fashioned dividend growth investing and can capably write about it? Let’s hear them please. As for Super dramas, there are other products and places to keep retirement money. Super is now in the cross hairs of legislation change, so just don’t have all your eggs in that basket.
Anne, how about $360k in super? ASFA, March 2022. Average super balance for a 60-64 year-old male is $359,870. At a return of 7% pa a 64 year-old male will hit the cap at the age of 104 years.
Sorry Anne, that should have been 94 years, not 104 years, but I could give you some scary numbers for a 64 year old female on a median (not average) super balance.
"64 year old female on a median (not average) super balance": = (137051 + 180718) / 2 = $158,884.50 https://www.afr.com/policy/tax-and-super/how-your-super-balance-compares-with-people-your-age-20220318-p5a5sn Age Pension Asset Test single: = $280,000 Age Pension single home owner full: = 26 f * 1026.50 / f = $26,689.00 / y Plenty live & entertain with spare to save.
Any one who shrugs their shoulders and says in relation to the proposed $3M cap 'well it doesn't apply to me' you are on notice. At a return of 7% pa your asset will double in value every 10 years. That means that if you have $1.5M in super now, in ten years time you will be hitting the un-indexed cap of $3M. If you have 750K in super now you will hit the cap in 20 years. Therefore the valuable commentary, largely by Graham, is very relevant to many people.
That would assume that you're in accumulation phase and not drawing down on your super at all. So if you're 50-55 (depending on whether you're planning to commence a pension at 60 or 65) then you need to have 1.5 mill now. If you're 40-45 then you need to have $750k now. Those certainly aren't impossible figures to have, but we're really talking about the top 10% or so of the population. I don't like the fact that this is in real terms a retrospective change to super, but I also think that someone with 3 mill in super of which 1.7 mill is in pension should be paying a higher tax rate on earnings than 0% on their pension and 15% or the other 1.3 mill, which is an overall tax rate of roughly 5%. If someone wants to argue that they're also missing out on the $21,000 or $26,000 of welfare in the form of age pension (depending on marital status) then sure that's fair, but assuming earnings of 5% on the total super amount of $3,000,000 so $150,000, and tax of $9,750 on the 5% in the $1,300,000 in accumulation phase, plus foregone welfare of $21,000, then you're looking at a total of $30,000 out of $150,000. Not peanuts, but surely a sum of money that someone with 3 mill in super might consider to be reasonable.
leaving aside any withdrawals Anne.
That is the point of the $3m cap. $3m will provide a comfortable retired living. Until you reach that $3m balance, enjoy the tax shelter while your balance grows. After reaching the balance, a discounted tax rate is not required to be paid to you by most other tax payers who have a snowflake in hell of achieving 10% of $3m - particularly women.
"snowflake in hell of achieving 10% of $3m": Minimum real after super tax rate of return, with maximum concessional contributions, required to achieve "10% of $3m": = RATE((67 - 27), (1 - 15%) * -27500, 0, 10% * 3000000) = -7.438% / y (- = loss) Real contributions, with o% real return, required to achieve "10% of $3m: = PMT(0%, (67 - 27), 0, 10% * 3000000) / (1 - 15%) = $-8,823.53 / y (- = contribution) Middle of the road proof: = RATE((67 - 27), (1 - 15%) * -8823.53, 0, 10% * 3000000) = 0.0%
well prepared content
Agree with Raymond. Would you please focus more on those of us living in the real world of super balances.
Calculate using your own inputs: = NPER(7%, ((1 - 15%) * 27500) + -110000, -750000, 3000000) = 11.2 y
I have enjoyed it for many years and is one of my prime sources of information
Always a good read for current issues. Perhaps a reduced emphasis on poor $3m+ individuals.
Always a good read for current issues. Perhaps a reduced emphasis on boomers and more on Gen-X.
Totally agree. Tax-free $6m a couple in superannuation, income of $30,000 each from other sources and pay no tax! I feel good luck to them, enjoy life, no one has yet taken a cent to the afterlife! If there is one!
This time last year, I highlighted 16 ASX stocks that investors could own indefinitely. One year on, I look at whether there should be any changes to the list of stocks as well as which companies are worth buying now.
The CIO of Australia’s fourth largest super fund by assets, John Pearce, suggests the odds favour a flat year for markets, with the possibility of a correction of 10% or more. However, he’ll use any dip as a buying opportunity.
The ABS recently released figures which are used to determine key superannuation rates and thresholds that will apply from 1 July 2025. This outlines the rates and thresholds that are changing and those that aren’t.
With the arrival of the new year, the first members of ‘Generation X’ turned 60, marking the start of the MTV generation’s collective journey towards retirement. Are Gen Xers and our retirement system ready for the transition?
The intergenerational wealth transfer, largely driven by a housing boom, exacerbates economic inequality, stifles productivity, and impedes social mobility. Solutions lie in addressing the housing problem, not taxing wealth.
Warren Buffett's annual shareholder letter has been fixture for avid investors for decades. In his latest letter, Buffett is reticent on many key topics, but his actions rather than words are sending clear signals to investors.
Are you living your life by default or by design? It strikes me that many people are doing the former and living according to others’ expectations of them, leading to poor choices including with their finances.
After the recent market slump, it's a good time to brush up on the defensive asset classes – what they are, why hold them, and how they can both deliver on your goals and increase the reliability of your desired outcomes.
Lately, there's been a push by Government for lifetime income streams as a solution to retirement income challenges. We run the numbers on these products to see whether they deliver on what they promise.
The stellar run of the major ASX banks last year left many investors scratching their heads. After a recent share price pullback, has value emerged in these banks, or is it best to steer clear of them?
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Trump’s moves on tariffs, defence, and Ukraine, have awoken European Governments after a decade of lethargy. European small cap manager, Alantra Asset Management, says it could herald a new era for the continent.
Founder-led companies often attract investors due to leaders' personal stakes and long-term vision. But founder presence alone does not guarantee success, and the challenge is to identify which ones will succeed in the long term.