How does asset allocation affect duration? Table 2 on the previous post shows the outcomes for effective earning rates ranging from 1% – 10%. The higher the earnings rate, the longer your money could potentially last, so asset allocation can have an important impact on the duration of your retirement savings. Picking an appropriate asset … Continue Reading
You might have heard the terms ‘income return’ and ‘capital return.’ These are the two different ways to make money on an investment. Income return is the return you receive while you continue to hold an investment. In the sharemarket, the income return comes as dividends. In the property market, the income return comes as … Continue Reading
The Federal Budget was handed down last Tuesday, May 8, 2018. While the measures announced in the budget are yet to be passed by Parliament, we can generally assume that most of the announcements will become reality. From an individual perspective – especially if you do not grow illegal tobacco or participate in the black … Continue Reading
When you sell an investment that has increased in value, you will typically be subject to capital gains tax, or CGT. That said, there are certain assets that can be sold CGT-free. The CGT-free asset par excellence is the home. The concept of the home as a CGT free investment (and as a Centrelink free … Continue Reading
You have probably heard the term ‘positive gearing.’ It is a similar concept to negative gearing, which is certainly in the news a lot these days. We use the term ‘gearing’ whenever debt is used to fully or partly finance an investment. If you have $90,000 of your own and borrow $10,000 to buy an … Continue Reading
Positive gearing is the opposite of negative gearing. It is jargon for borrowing to buy an investment where the expected assessable income is more than the expected deductible interest cost (and other costs). Income is greater than expenses, and your assessable income increases accordingly. In the context of housing, if you borrow the full purchase price, … Continue Reading
