E-books

One of the features of 2011 has been the trend to on-line shopping and e-books are no exception.  I wrote in a previous newsletter that I had put my books on Kobo but wasn’t excited about Kindle but have changed my mind since I was given a Kindle as a thank you present for a speech I made.  I have both the Kobo and the Kindle on my Ipad and I still prefer to read e-books on the Ipad, but the benefit of the Kindle itself is a much longer battery life and the fact that you can read it on a plane at any time.  You are forced to turn off your Ipad when the plane is ascending or descending. 

It therefore gives me great pleasure to let you know that ALL my books are now available in both Kindle and Ipad form which means they can be downloaded almost instantaneously.  And one of the great features of having a Kindle as well as the Kindle app on the Ipad is the automatic synchronisation.  When you read a book on one device it automatically keeps pace on the other one. 

The other achievement for the year is that I am now on Twitter.  No, I don’t send out useless tweets telling you what I am eating but I do send out regular comments on the financial happenings of the day.  My Twitter name is @NoelWhittaker and I would be delighted if you chose to follow me. 

Interest Rates

Last week the Reserve Bank dropped interest rates by another 0.25% and we were subjected to headline after headline urging the banks to pass the cut on in full to boost retailer’s sales over Christmas.  Finally the banks relented and passed on the cut, but I fail to see what all the fuss was about.

The average mortgage is around $300,000, on which repayments would be close to $500 a week.  A cut of 0.25% is a saving of just $15 a week on a $300,000 mortgage - I doubt if a family who can afford to pay $500 on their home mortgage are going to change their Christmas shopping habits just because they are going to be charged $15 a week less interest on their housing loan. 

My advice has always been to put the rate cut to work for you by leaving your repayments at their present level.  This means the interest cut will go straight off the principal and reduce the term of your mortgage.

Mid Year Outlook

The government has now released the Mid Year Economic and Fiscal Outlook MYEFO, which projects an increased budget deficit of $37.1 billion for the year ending June 2012.  The current government debt is now in excess of $100 billion on which the interest is $5 billion a year.  This is money that can’t be used for services and appropriate cuts have been made to try to get the books back in order. 

From July the superannuation co-contribution will be halved to 50% of the clients after tax contributions, capped at $500 a year.  This means a person with total income of $31920 or less will receive a co-contribution of just $500 if they make an after tax contribution of at least $1000.  The maximum co-contribution payable will continue to phase out at the present rate which means it will be gone entirely once total income reaches $46920. 

Despite the tightening the co-contribution is still a great strategy - it is just a pity that the Gillard government is continually weakening it. 

Next was a further attack on superannuation.  When abolishing RBLs the Howard Government capped deductible contributions at $50,000 a year for the under 50s and $100,000 for those 50 and over.  On gaining power Labor halved these caps to $25,000 and $50,000, but the $25,000 cap was to be indexed so that contributions could keep pace with inflation.

They have now paused indexation until July 2014 which means the cap will stay at $25,000. 

We still have no news about the proposal that was to allow higher caps for people whose superannuation balances will be under $500,000 at the end of the current financial year. 

Christmas Books

I have been a fan of Michael Lewis ever since I read Liar’s Poker and can highly recommend his latest book Boomerang which is particularly timely given the present troubles in Europe.  In his usual unique and humorous style he gives readers a guided tour through Greece, Iceland, America and Ireland and explains how they came to be mixed up in the Global Financial Crisis.  There are characters as diverse as a cod fisherman, who with three days training became a currency trader for an Icelandic bank, and an Irish real estate developer that attacked the Irish Parliament with his earth moving equipment when his business failed. 

I have been travelling a lot in the last month and this has been my favourite plane read.  Just be warned that some of the statements he makes, although certainly true, are really scary.  For example in Greece a train driver is paid Euro65,000 a year whereas all doctors include taxable income of just Euro12,000 a year. 

This is because tax evasion is rife in Greece and the citizens would rather bribe the tax collector than pay tax themselves.  The population of Greece is just eleven million yet their total debt is over Euro1.2 trillion or more than Euro250,000 for each working Greek.  It is really frightening stuff, especially when you read that, on the advice on American investment banks, Greece has sold off over a billion Euro of future income streams such as income from tolls, airport landing fees and future receipts from the National Lottery.  According to Lewis, the US banks took nearly a third of this in fees.  It is a bit like an ordinary person cashing in the next seven years salary to buy a Ferrari. 

Life gets more complex by the day which is why we need to keep our brains and our bodies in good shape.  I particularly enjoyed Brain Rules, 12 principles for surviving and thriving at work, home and school by John Medina.  In it he describes how our brain works and gives us a range of ideas to improve performance in everything from improving our memory to getting better sleep.  He believes that we all have the ability to learn new things for our entire life - surely a welcome message for all the baby boomers out there and their parents. 

He stresses the importance of aerobic exercise on the brain as well as the importance of lifelong learning. 

Of course don’t forget my own books such as Making Money Made Simple and Beginners Guide to Wealth are perfect gifts as well.  They have the power to change lives. 

Here’s to a happy and holy Christmas and a healthy and prosperous 2012. 

And Finally

As we are in the Christmas season I thought you would enjoy three Christmas carols with the kind of comments that may be made about them now in our obsessively politically correct environment.

Jingle Bells

Dashing through the snow -
In a one horse open sleigh,
O’er the fields we go -
Laughing all the way

A risk assessment must be submitted before an open sleigh is considered safe for members of the public to travel on. The risk assessment must also consider whether it is appropriate to use only one horse for such a venture, particularly if passengers are of larger proportions. Please note, permission must be gained from landowners before entering their fields. To avoid offending those not participating in celebrations, we would request that laughter is moderate only and not loud enough to be considered a noise nuisance.

While Shepherds Watched

While shepherds watched
Their flocks by night,
All seated on the ground
The angel of the Lord came down
And glory shone around .

The union of Shepherds has complained that it breaches health and safety regulations to insist that shepherds watch their flocks without appropriate seating arrangements being provided, therefore benches, stools and orthopaedic chairs are now available. Shepherds have also requested that due to the inclement weather conditions at this time of year that they should watch their flocks via cctv cameras from centrally heated shepherd observation huts.
Please note, the angel of the lord is reminded that before shining his / her glory all around she / he must ascertain that all shepherds have been issued with glasses capable of filtering out the harmful effects of UVA, UVB and Glory.

Little Donkey

Little donkey, little donkey on the dusty road;
Got to keep on plodding onwards with your precious load

The RSPCA have issued strict guidelines with regard to how heavy a load that a donkey of small stature is permitted to carry; also included in the guidelines is guidance regarding how often to feed the donkey and how many rest breaks are required over a four hour plodding period. Please note that due to the increased risk of pollution from the dusty road, Mary and Joseph are required to wear face masks to prevent inhalation of any airborne particles. The donkey has expressed his discomfort at being labelled ‘little’ and would prefer just to be simply referred to as Mr. Donkey. To comment upon his height or lack thereof may be considered an infringement of his equine rights.