Wealth

Insights on wealth management, investments, and personal finance.

Wealth
Australian budget changes a double-edged sword
The Australian budget has revealed a positive surprise for Australian superannuation fund members and a problem for some of Australia’s lowest-paid workers, according to one of Australia’s peak super bodies. The Super Members Council (SMC) said super returns were expected to be higher than previously forecasted, but the cut in personal tax rates would create a structural problem for Australians on the lowest marginal tax rate. SMC Executive General Manager Strategy and Insights Matt Linden said people earning between about $28,000 and $45,000 per year would pay more tax on their super than on their wage income. The tax rate for Australians earning between $18,201 and $45,000 per year will fall to 15% from 16% from 1 July 2026 and 14% from1 July 27, putting them under the 15% flat rate on super fund earnings. “And that is a problem. So it's a structural problem which will need to be addressed,” Linden said on Wednesday on a webinar about the budget. “This will really sharpen the need for the next parliament to address these issues around the equity of superannuation concessions. Those mostly affected by this are young workers and women.” One of the benefits of Australia’s super system is that tax rates on earnings
Wealth
Time to package your salary? Smart says yes
It may seem obvious how salary payments work. But there are options that could offer workers additional benefits, according to Mike Daly, customer education specialist at salary packaging provider Smart. Through salary packaging — also known as salary sacrificing — employees can exchange a certain amount of their salary for goods like insurance, vehicles, or superannuation, which could then lower their tax owed. Azzet spoke with Daly to discuss the benefits employees could see from salary packaging, its growing recognition in Australia, and what Smart brings to the salary packaging world.What is salary packaging?“Salary packaging is a way for you to reduce the amount of tax that you pay by using pre-tax income to pay for some everyday living expenses,” Daly tells Azzet. Benefits can include health insurance, electronic devices, mortgages, and contributions to superannuation funds. The most common benefits to receive when salary packaging are mortgage assistance, rent, and meals or entertainment, according to data compiled by Smart. Offerings typically depend on an employee’s industry, however. “Some of our customers are saving in excess of $10,000 a year on taxable income,” according to Daly. Salary packaging arr
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Aussies see evergreen funds as private market hot-spot
After 23 straight years of outperforming public markets, it’s time for investors to recalibrate their exposure to private credit based on short-term pockets of risk and the long-term runway for growth. At least that is the conclusion of Mario Giannini, executive co-chairman of US-based alternative investment manager, Hamilton Lane. While private equity buyouts and real estate saw the run end last year, Giannini argues that investors who view this as a window into future performance are ignoring the previous 30 years.Protection against downside riskGiannini points to the numbers, which reveal that over no five-year period did investors ever lose money in buyouts, private credit or private infrastructure. “This is one of the most unappreciated benefits of private market exposure in a portfolio: protection against downside risk,” said Giannini. “A reasonably diversified buyout or private credit or private infrastructure portfolio would be hard pressed to lose money… the risk in these markets does not typically stem from losing money.” With that in mind, Giannini believes the credit, infrastructure and secondary sectors are "primed for future success."AI applicationsWhile Giannini recommends investors have exposure to
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One in five Australians are lying about their finances
New research from Compare the Market found that around one in five Australians are financially unfaithful to their loved ones. Of the 21% who admitted to lying to their partner or family about their finances, 33% reported being dishonest about what they spend money on. Compare the Market spokesperson, Sarah Orr said that money has become a sensitive topic with couples due to fear and stress exacerbated by the cost of living. “The cost of everything from insurance to energy bills, petrol and groceries has gone up and that’s added pressure on relationships where finances may be a concern,” Orr said. “There can be a lot of shame and guilt opening up about these issues but we know that being dishonest can cause more harm in the long-term, especially where debts are allowed to snowball. “If you share a bank account, mortgage, split bills or pay rent with a loved one, you shouldn’t be keeping them in the dark.” People surveyed reported being most dishonest about how much debt they're in (25%) and how much they spent on coffee or takeaway (24%). Respondents were also dishonest about gambling, alcohol and clothing spending as well as how much they earn. Orr encouraged people to open up conversations
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Unpopular financial planning document to be replaced
A deeply unpopular document that financial planners are required to give to clients will be thrown into the paper bin of superannuation history under draft legislation released forconsultation by the Australian Government. If the legislation is passed and enacted, the statement of advice (SOA) would be replaced by a more ‘fit-for-purpose’ client advice record under financial advice reforms which have been welcomed by super funds and their peak bodies. Assistant Treasurer and Minister for Financial Services Stephen Jones said in a media release the Labor Government invited feedback on the reforms by 2 May, 15 days before the next election must be held at the latest. Given that the Liberal/National Party Opposition have called for the Government to legislate the recommendations of the Quality of Advice Review which the reforms reflect, the changes seem likely to proceed irrespective of the outcome of the poll. Jones said the first components of the legislation also provided rules on what advice could be collectively charged to all members of the fund andallowed superannuation funds to provide ‘prompts’ to members to engage with them. He said the remaining pieces, including modernising the best interests duty and cre

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Risky business: Bridging the insurance gap
Australians facing steep insurance premium rises in a world of disasters are sharing a global problem. The solutions are out there, but they are complex. Australia faces a massive insurance gap that leaves home and business owners increasingly vulnerable to either dealing with disasters without being fully insured or paying more for premiums even if they live thousands of kilometres from a disaster zone. That potential lack of insurance cover also has sobering ramifications for those seeking a mortgage and home ownership, especially in a world where climate-linked disasters are increasing. The potential solutions are complex and will require government action. It’s a global problem that Australia knows too well. In 2022, when disastrous floods hit Queensland and NSW, the insured losses alone were more than $6 billion and about 48 percent of Australian losses were not covered by insurance. Everyday Australians are facing steep insurance premium rises and the number now seen as being under insurance stress has increased from 10 percent in 2022 to 15 percent last year. That leaves many people in vulnerable areas underinsured or uninsured and even those who can get insurance are paying much more.The disaster impact
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Avoid traps: Azzet’s guide to capital gains tax on shares
While refusing to lock-in profits or never cull the deadwood from your share portfolio is one sure-fire way to avoid capital gains tax (CGT), it's as nonsensical as choosing an investment for tax considerations over the underlying merits of the investment itself. With the new tax year just around the corner, there's no better time to take stock of the most common tax traps share investors can easily fall into and the best ways to side-step them. Capital gains tax is paid on profitLegitimately minimising the tax you pay on shares is something every investor should strive for, and where necessary you should seek expert help to get it right. Like it or not, paying tax is a present reality resulting from profits made by selling shares. So rather than agonising over it, pay the tax owing and get on with your next investment. Instead of being fixated on how much tax you’ll pay to receive the capital gain, you're better off focusing on what you’re left with after tax. Refusing to sell down a stock and lock-in a gain when you should – for example when it’s trading close to or above its intrinsic value – means you run the risk of retaining overpriced companies in your share portfolio. Remember, share prices eventually
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Harvard expands its financial aid initiative
Harvard University has announced upgrades to its financial aid that will allow middle-low-income families to receive more support. The expansion will allow families who earn US$200,000 or under to attend the university tuition-free starting in the 2025-26 academic year. “We know the most talented students come from different socioeconomic backgrounds and experiences, from every state and around the globe,” William R. Fitzsimmons, Harvard College’s dean of admissions and financial aid said. “Our financial aid is critical to ensuring that these students know Harvard College is a place where they can be part of a vibrant learning community strengthened by their presence and participation.” According to the Harvard website, the annual tuition for an undergraduate is $56,550 and grows to $82,866 when additional costs like food, housing and health services are included. Students whose family income is lower than $100,000 will receive free tuition with all billed expenses like food, housing, health insurance and travel costs included. They will also receive a $2,000 start-up grant in their first year and an additional $2,000 launch grant in their junior year. For those whose families earn less than $200,000, they will r
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ESG crackdown continues with super fund fined $10.5m
Active Super has been fined A$10.5 million (US$6.6 million) by the Federal Court for greenwashing after making misleading claims about its investments. The Australian Securities and Investments Commission (ASIC) said the fund broke the law when it invested in securities it had claimed were eliminated or restricted by its environmental, social and governance (ESG) investment screens. Active Super claimed in its marketing that it eliminated investments that posed too great a risk to the environment and the community, including gambling, coal mining and oil tar sands companies, and after the invasion of Ukraine, Russian investments. But it held direct and indirect investments in companies such as SkyCity Entertainment Group Ltd (gambling), Gazprom PJSC (Russia), Shell Plc (oil tar sands) and Whitehaven Coal (coal). ASIC Deputy Chair Sarah Court said this was a significant penalty that sent a strong message to companies that their sustainable investment claims needed to reflect the true position. “This case demonstrates ASIC’s commitment to taking on misleading marketing and greenwashing claims made by companies promoting financial services,” Court said in a media release. “It is our third greenwashing court outcome,