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3 July 2024
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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!
Two commonly asked questions are: 'How much do I need to retire' and 'How much can I afford to spend in retirement'? This is a guide to help you come up with your own numbers to suit your goals and needs.
There seems to be more confusion than clarity about the mechanics of how the new $3 million super tax is supposed to work. Here is an attempt to answer some of the questions from my previous work on the issue.
Washington H. Soul Pattinson is an ASX top 50 stock with one of the best investment track records this country has seen. Yet, most Australians haven’t heard of it, and the company seems to prefer it that way.
We are often quoted life expectancy at birth but what matters most is how long we should live as we grow older. It is surprising how short this can be for people born last century, so make the most of it.
A new report suggests Australian housing is twice as expensive as that of the US and UK on a price-to-income basis. It also reveals that it’s cheaper to live in New York than most of our capital cities.
Here are 10 rules for staying happy and sharp as we age, including socialise a lot, never retire, learn a demanding skill, practice gratitude, play video games (specific ones), and be sure to reminisce.
The best way to lose money in markets is to chase the latest stock fad. Conversely, the best way to build wealth is by pursuing a timeless investment strategy that won’t be swayed by short-term market gyrations.
Australian consumers have held up remarkably well amid rising interest rates and inflation. Yet, there are increasing signs that this is turning, and the weakness in consumer spending may last years, not months.
The nine lessons include there is always a cycle, the crowd gets it wrong at extremes, what you pay for an investment matters a lot, markets don’t learn, and you need to know yourself to be a good investor.
It's that time of year when investors sell underperforming stocks at a loss to offset capital gains from profitable investments. This tax-loss selling is creating opportunities in three quality ASX stocks.
Across the globe, leaders are concerned about the fallout from declining birth rates and shrinking populations. Australia, though attractive to migrants, mirrors global birth rate declines, and faces its own challenges.
Australians are paying almost two billion dollars in credit and debit card fees each year and the RBA wil now probe the whole payment system. What changes are needed to ensure the system is fair and transparent?
Many Australians neglect key retirement planning tools. Investment bonds are increasingly valuable as they facilitate intergenerational wealth transfer and offer strategic tax advantages, thereby enhancing financial security.