Mondy Financial Services

A Reverse Mortgage is a special type of loan for those 60 years and over, using the equity built up in your home to turn into cash to use for whatever you want – i.e. holiday, living expenses, new car, renovations, health costs.

This seniors loan does not have to be repaid until you choose to sell your home or the last surviving borrower passes away. It does not require any repayments on the life of the loan but voluntary repayments may be made.

You can receive your money in a variety of ways – as a Lump Sum or have your own “cash reserve” limit which you can then draw down as you need the money, or a combination of both. If you have a mortgage on the property this may be able to be paid out for you.

The amount you receive will depend on the value on your property and the age of the youngest borrower. eg a 60 year old may only be able to access 15% of the value of the home where a 90 year old may access 45%.

The No Negative Equity Pledge ensures that you (or your estate) will not have to pay any shortfall difference between the sale price of your home and the outstanding balance owed when the home is sold.

PROS

  • You never need to make repayments for the life of the mortgage
  • You have increased cash flow to use however you want
  • Your credit line grows with time as you get older

CONS

  • The value of your estate will decrease
  • Interest rates and closing costs are quite high (around 6.3% interest rate)
  • The balance of the loan grows with time as interest is added to the loan value

If you are receiving a pension you should seek advice to find out if it will be affected.

Note: This information is general, before acting upon any of these ideas you should seek professional advice to make sure it suits your personal circumstances. If you’d like to discuss options that could benefit you, why not contact me today on 0431 517 455 or email me at This email address is being protected from spambots. You need JavaScript enabled to view it..

It's starting to get very chilly in the mountains so we know it's that time of the year again...end of Financial Year. Just a reminder that some people may still have time to take advantage of a few strategies prior to June 30th;

Concessional Contributions - If you are working and under age 75 or under age 65 and working or not, adding an amount to super can reduce your taxable income. If your income is less than $40k this may not be beneficial as we pay 15% tax on the funds going in, however, this is generally less than the amount we pay if we take this as income. Don't forget the limit is $25 000 less your SG (9.5%). So if your employer adds $10 000 for the year, you could add a further $15 000 and get a tax deduction. Make sure you chat with me if you are unsure whether there is a benefit. To get the funds you need to complete a form before you lodge your tax return, so let us know if you make a contribution and we will forward the form. If you have made a Capital Gain this year, make sure you chat with us asap.

Malcolms Magic $500 - If you are working and under age 75 or under age 65 and working or not, you may get a payment from Malcolm by adding money to your super. If you or partner is earning under $51 813, adding $1000 into super using a Non-Concessional method (i.e. you can't claim on tax) you will receive a payment from the government. People earning less than $36 813 will get a full $500. People earning a higher amount will get a portion of this.

Spouse Contribution - If your spouse is making less than $37 000 you can also make a spouse contribution of $3 000 to super and receive a $540 rebate on your tax.

btw- don't forget to log on to service NSW and get your Greenslip renewal refund. I got back $17..better in mine than Malcolms (I should say Berejiklian!).

We are often asked this question and the answer depends on the individual circumstances of the client. Things such as age, income, amount of surplus funds, when they need it and tax situation all come into play.

Should I pay off my mortgage?

For some people, the peace of mind knowing the mortgage is paid off or ahead of schedule is worth more than any additional income. For others, the question of whether the interest rate they can access by investing elsewhere is greater than the interest rate they are paying on the mortgage is the deciding factor.

Should I add to my super?

Adding to super can be a good option for those close to retirement age as it allows funds to grow for retirement and once super is converted to pension phase is tax free. For younger clients on higher salaries, salary sacrifice into super is worthwhile to save on tax. It must be remembered that once money is in super it can’t be accessed until a condition of release has been attained.

Should I invest in a managed fund?

This can be a better option for those who want to save for something such as a holiday, a car or a house, and unlike investing in super you can easily access the money when you need it. Investing in a managed fund generally gives you a higher return than leaving it in the bank and allows you to diversify your investment.

Should I buy an investment property?

Some investors like to be able to drive past their investment and see ‘bricks and mortar’. Recently we did the projections for a couple on a joint income of $120,000 and found they could buy a $500,000 property at 5% interest, rent it at $480/week and it would cost them $30 per week after tax. There are always risks with any investment and property risks include interest rates rising, property decreasing in value and poor rental returns.

Note: This information is general, each person has different needs, goals and aspirations so its important to speak with a financial adviser before acting upon any of these ideas to make sure it suits your personal circumstances. If you’d like to discuss options that could benefit you, why not contact me today on 0431 517 455 or email me at This email address is being protected from spambots. You need JavaScript enabled to view it..

If you’re a business owner and you own, or are considering buying, your shop, factory office or other dwelling, it might be worth considering having your self-managed super fund (SMSF) buy these premises.

One of the biggest advantages of having an SMSF is that it can borrow to invest in real estate through a limited recourse borrowing arrangement. This effectively means that the other assets in the fund are held completely separately from the loan and can’t be accessed to meet any shortfall if the property doesn’t produce enough income (rent) to meet loan repayments.

How does it work? A loan is set up that’s attached to the SMSF and a trust is also created, which is the vehicle that borrows the money to buy the property.

Generally a bank will lend up to 60 per cent of the value of a commercial property that’s being acquired by a super fund. So if your business premises are worth $500,000, the bank will generally loan you $300,000, and the balance, plus costs, will come from your super fund.

Once this structure is established, the business pays commercial rent to the super fund to cover the cost of the loan and you’re building up equity in the property. But more importantly, as the asset is held through your super fund, once it’s in pension phase, any income it earns is tax free.

However, purchasing a property through your super fund can often mean you no longer have a diversified range of assets in it, to help reduce risk across the portfolio. So it’s important to get advice to ensure this is the right strategy for you.

If you’d like to find out more, why not contact me today on 0431 517 455 or email me at This email address is being protected from spambots. You need JavaScript enabled to view it..

All too often small business owners don’t pay themselves enough, or sometimes any, super. Here are five options if you’re self-employed:

  1. Certain contributions you make to your super fund, within limits, are tax deductible; therefore grow your nest egg and also reduce your tax bill.

     

  2. Depending on your structure, if you draw a salary from your business you are required to pay 9.5% of your salary into your super fund. You also have the option to salary sacrifice into super to increase your super savings and reduce the tax you pay. We would generally encourage business owners (sole traders etc) to put at least 9.5% of their income away, even if they are not compelled to do so.

     

  3. There are substantial benefits to business owners who place their business premises inside a self-managed super fund (SMSF).

    Let’s assume a business owner has $130,000 with which to start their SMSF. They might be able to borrow $400,000 and buy a $500,000 property to run their business from. Their rent would now be paid to their super fund to cover the borrowing costs, building up their interest in the property and their long-term wealth.

  4. If you have met a condition of release, a super pension strategy may allow you to draw an income from the fund and increase the amount you contribute to super from your salary. This can reduce the tax you pay and substantially increase your retirement savings.

  5. Small business owners over 56, wanting to retire permanently and sell assets they’ve owned in a SMSF for more than 15 years, worth less than $500,000, won’t pay capital gains tax on the proceeds. There are also significant tax advantages if they contribute the sale proceeds into their super fund. Under 56 you may still be eligible for capital gains tax concessions.

Note: This information is general, before acting upon any of these ideas you should seek professional advice to make sure it suits your personal circumstances. If you’d like help determining the best way to increase your super why not contact me today on 0431 517 455 or email me at This email address is being protected from spambots. You need JavaScript enabled to view it..

You still have time to save tax in the 2017/18 tax year.

Some of the ways you might be able to save paying too much income tax are as follows:

1. Lump Sums: If you receive an inheritance or sell an investment property and wish to invest your money why not consider putting some of it into superannuation. You may be able to contribute up to $100,000 per year (or $300,000 bringing forward 2 years). This is held within the super environment and therefore does not go against your personal tax return. If you have reached the age of 65 you will be able to draw out the money at any time and pay no tax on withdrawal.

2. Anyone (employees or self-employed) can now put tax deductible contributions into their super fund up to a maximum of $25,000 (including super guaranteed contributions by employers). This effectively means that the amount contributed will only be taxed at 15%. As an example a person selling a property and incurring a Capital Gains Tax liability may be able to reduce their taxable income and therefore reduce their overall tax by utilising this method. 

3. Putting super into a retirement phase – no tax in or out and earnings tax free (up to $1.6M)

4. Spousal Contributions - If your spouse earns less than $40,000 you will receive up to $540 if you make a contribution into their super account. The income thresholds for the spouse contribution tax offset are $37,000 (for lower threshold) and $40,000 (for upper threshold).

Note: This information is general, before acting upon any of these ideas you should seek professional advice to make sure it suits your personal circumstances. If you’d like to discuss tax strategies that could benefit you, why not contact me today on 0431 517 455 or email me at This email address is being protected from spambots. You need JavaScript enabled to view it..

 

 

 

From 1 July 2018, the Australian Government will introduce the 'Contributing the proceeds of downsizing into superannuation' (downsizing) measure. This measure is part of a package of reforms to reduce pressure on housing affordability in Australia.

This measure applies to the sale of your dwelling (your home), which was your main residence, where the exchange of contracts for the sale occurs on or after 1 July 2018.

If you are 65 years old or older and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.

Your downsizer contribution is not a non-concessional contribution and will not count towards your contributions caps. The downsizer contribution can still be made if an individual has a total super balance greater than 1.6 million.

Your downsizer contribution will not affect your total super balance until your total super balance is re-calculated to include all your contributions, including your downsizer contributions, on 30 June at the end of the financial year.

The downsizer contribution will also count towards your transfer balance cap, currently set at $1.6 million. This cap applies when you move your super savings into retirement phase.

You can only make downsizing contributions for the sale of one home. You can't access it again for the sale of a second home.

Downsizer contributions are not tax deductible and will be taken into account for determining eligibility for the age pension.

If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home.

Eligibility for the downsizer measure
You will be eligible to make a downsizer contribution to super if you can answer yes to all of the following:

  • You are 65 years old or older at the time you make a downsizer contribution (there is no maximum age limit).
  • The amount you are contributing is from the proceeds of selling your home where the contract of sale was exchanged on or after 1 July 2018.
  • Your home was owned by you or your spouse for 10 years or more prior to the sale.
  • Your home is in Australia and is not a caravan, houseboat or other mobile home.
  • The proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a pre-CGT (acquired before 20 September 1985) asset.
  • You have provided your super fund with the downsizer contribution form either before or at the time of making your downsizer contribution.
  • You make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually the date of settlement.
  • You have not previously made a downsizer contribution to your super from the sale of another home.Downsizer contribution amounts
    If eligible, you can make a downsizer contribution up to a maximum of $300,000. The contribution amount can't be greater than the total proceeds of the sale of your home.
    Example 1
    A couple sell their home for $800,000. Each spouse can make a contribution of up to $300,000.
    Example 2
    A couple sell their home for $400,000. The maximum contribution both can make cannot exceed $400,000 in total. This means they can choose to contribute half ($200,000) each, or split it – for example, $300,000 for one and $100,000 for the other. 

Source: ATO website
 

                                            

                                              Ever ridden in a car with worn-out shock absorbers?

                                              Every bump is jarring, every corner stomach-churning

                                     and every red light an excuse to assume the brace position.

                                    Owning an undiversified portfolio can trigger similar reactions.

Some clients have been worried about the current downturn in some investment sectors. Thefollowing article by Joim Parker from Dimensional will help you understand that a diversified portfolio will smooth out some of the bumps and make for a smoother ride.

Remember that you’re investing for the long term so a small bump in the road will seem insignificant a long way down the track.

 


 

BS in the market.....What gives you returns is what % of Growthy investments (=shares) you are invested. Do you really think one fund manager, one super fund or one indivudual can outpick all others...repeatedly..... over time. I would argue it is just not possible. So many people I see are biased towards their super fund, just because they are in that fund. I would prefer to do a considered analysis and get a non aligned professional opinion on my fund before I keep plowing money into it!
 

https://www.dropbox.com/s/r38xfx9ys84gnm5/History%20On%20The%20Run.pdf?dl=0

images/ThePolyphonyofMarkets.pdf

To make a plan for the future, it’s essential to look at what has and hasn’t worked in the past. Whether you're thinking about diversifying your super portfolio, are interested in trying the property market or are keen to play the stock market - making a plan that best reflects your needs and wants is a step in the right direction. Call Adam to find out how to get started - 0431 517 455


He says it should be evident by now that setting your investment course based on someone's stock picks or expectations for interest rates is not a viable way of building wealth in the long term. So the better option is to stay broadly diversified and, with the help of an advisor, set an asset allocation that matches your own risk appetite, goals and circumstances.


Every parent wants the best for their children but kids often won’t listen to the wisdom of your experience, especially when it comes to money. Don't give up! Here are some of the common beliefs and misconceptions kids have about managing money—and how you could get them to take your advice: http://bit.ly/1Xpyx5D


On 7 May 2015 the federal government announced changes to the Age Pension assets test (and confirmed this proposed policy in the May 2015 Federal Budget), affecting those retirees receiving a PART Age Pension. Click to read how the stricter Age Pension Test will operate: http://bit.ly/1lItRw3


There are so many super funds, and everybody seems to have the best one.

There are so many super funds, and everybody seems to have the best one.

Your choice of Super fund is a critical decision that can significantly impact your lifestyle on retirement – for better or for worse. It’s something not left to chance.

We’ll analyse your current superannuation fund and compare it against multiple funds to select the most appropriate super fund for you. We take into account fund performance, fees and your own appetite for risk to identify the best option for you. We're not owned by a large financial institution so we compare products across the spectrum for the best solution for each client.  

Contact us now to take the first step towards a better financial future.

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