What’s the fuss about interest only loans and offset accounts?
Interest only loans for residential property purchase, for both owner occupiers and investors, have been in the news lately. With no requirement to repay principal, the concern for financial regulators is that many borrowers don’t have the incentive to build sufficient equity “buffers” to cope with any falls in housing values and/or rising interest rates….
The ‘retirement spending smile’
Retirement spending shown to decrease with age We have written a lot about the pattern of retirement spending, with “Will spending remain constant in retirement?”, from 2013, and “How much do I need to retire, revisited?”, of only three months ago, being particularly relevant. The underlying theme of these articles is that we don’t believe…
Measures of happiness tell us less than economics of unhappiness
John Quiggin, The University of Queensland This article is part of a series, On Happiness, examining what it means and how it might be achieved in the 21st century. All happy families are alike; each unhappy family is unhappy in its own way. – Tolstoy, Anna Karenina Money doesn’t buy you happiness, but it does…
Borrowing to invest a risky solution to a savings problem
By Wealth Foundations Borrowing to invest has appeal to some high income professionals The Global Financial Crisis clearly revealed the dangers of attempting to accelerate wealth accumulation by borrowing to invest. Many were left owing considerably more to their lenders than their investment assets were worth. However, for many high income earning professionals in their…
Explainer: what are safe haven investments?
By Richard Heaney, University of Western Australia Safe haven investments are investments that provide a low level of risk during periods of extreme economic uncertainty. The problem is that a safe haven investment is a safe haven investment until it is no longer a safe haven investment. There are a number of assets that are…
Retirement planning: more than a financial exercise
By Wealth Foundations The non-financial aspects of retirement planning may be critical In our work with clients, our primary focus is the effective accumulation of wealth over the period to a nominated retirement date (or desired date for financial independence) and then the drawdown of that wealth to meet a desired retirement lifestyle. It is…
Borrowing to buy property within Super: Buyer Beware!
By Wealth Foundations Just because you can doesn’t mean your should Borrowing to buy property within a Self Managed Super Fund (SMSF) has been promoted by many within the advice industry as an exclusive opportunity you should seriously consider. And, while there can be occasions where this strategy makes sense, as a general rule the…
The Pros and Cons of Lifetime Annuities
By Wealth Foundations Lifetime Annuities and the quest for certainty Lifetime annuities offer you the opportunity to outsource a large slice of the uncertainty associated with managing your retirement capital. You get to exchange your capital for an annuity that will offer you a guaranteed income stream for life. And, for an additional cost, this…
Cash Vs Shares – Which Is Best?
By Wealth Foundations Most investors should hold a combination of defensive and growth assets In our last article, we explained why we don’t think that the past five years of poor share market investment performance provides sufficient evidence that the investment world has changed i.e. we don’t yet believe there has been a paradigm shift….
Should I borrow to invest or dump money into super?
By Wealth Foundations I don’t want to lock my money into super Two alternative strategies that many investors consider are: • borrowing to invest (i.e. entering into a gearing strategy), outside super; and • increasing pre-tax contributions to super and investing in the superannuation environment. Which is best? The comparison is not straightforward, but is…
