Noel News 23 Jan 2024

If you wish to find you must search. 
Rarely does a good idea interrupt you. 

JIM ROHN

 


Welcome to our first newsletter of the year.

It’s hard to believe the end of January is nearly upon us. It’s going to be a big year with elections in the United States and several other American countries, the United Kingdom and Indonesia, and legislated tax cuts to take effect in Australia on 1 July. They are truly a game changer.

We’re probably only 15 months from another general election in Australia, so expect the May budget to be full of goodies. The trouble is goodies cost money, so as usual, the government will have a balancing act to deal with.

I think there are reasons to be optimistic. Inflation appears to be getting under control in most developed nations, and it’s a reasonable bet that interest-rate rises in Australia are a thing of the past – whether the RBA will start cutting rates is another matter.

 


A New Calculator

As requested, we now have a calculator on the website that checks your eligibility for the Commonwealth Seniors Health Card.

Try it here

 


Cost of Living

This week, the Prime Minister announced a special caucus meeting to alleviate the cost of living pressures facing ordinary Australians. Obviously, he’s got the forthcoming by election at Dunkley in mind, but if you think about it, there’s not much they can do. Food and groceries have gone up massively, fuel is high, and many people are suffering mortgage stress, because of all the interest rate rises.

Watch this space.

 


Stage 3 Tax Cuts

The Stage S3 tax changes are legislated, and the Prime Minister has said several times that no changes will be made to what is now law. Thanks to the progressive tax system high income earners will receive a bigger tax saving than low income owners because they are paying a much greater share of tax.

On Channel 9 news last night it was announced the government was considering changing the legislated tax brackets so the top rate would cut in at $180,000 a year instead of $200,000 a year. This would the reduce tax savings to high income earners by $3400 a year.

Tax Scale 2024 – 2025

Negative gearing is always under attack, but the opponents of negative gearing forget to mention that many of the tax deductions you receive while you own the property are clawed back through higher capital gains tax when you sell. Furthermore, when the tax cuts come in on 1 July, the 30% rate will go right from $45,000 a year to $200,000 a year. Almost everybody with negative gearing will therefore be in the 30% tax bracket.

It’s not going to be a good time to be a landlord. Your interest rate will have gone up and you’ll be paying 70% of all the outgoings. The problem is that if you can’t afford the cash flow, there could still be a hefty CGT if you decide to sell. The other side of the coin is a lower rate of CGT after 30 June, which is why I won’t be signing any sales contracts until 1 July.

 


A Property Story

Twenty years ago we decided a residential property would be a good investment and settled upon a suburban unit close to transport. We paid $220,000. Fifteen years ago, when the tenant left, we rented the property to an elderly lady who was a long-time friend. We charged her a reasonable rent, and because she was the perfect tenant, we were loathe to increase it.

Image by  Wirestock on Freepik

Recently she moved to aged care, and I took the opportunity to reflect on the investment. The key to success in real estate is to add value, which is hard to do with an apartment: they tend to lose their charm as time passes and more modern units become available. Two decades have passed since we bought it, and at this stage in my life I’m over rental property, so we have decided to sell. Agents tell us $550,000 is the going rate, so we’ll have more than doubled our money.

For interest, I ran the numbers through the Stock Market Calculator on my website and discovered that if I had invested $220,000 in the All Ordinaries Accumulation Index 20 years ago, I would now have $1.23 million. That’s a compound gain of 9% per annum. And there’s more. Instead of getting a taxable income of $500 a week rent – less outgoings such as body corporate fees, rates, insurance, and land tax – that $1.23 million in an index fund would be returning $55,530 a year, or $1063 a week. The cream on the cake would be that the income would be almost tax-free, thanks to franking.

Image by  Joshua Mayo on Unsplash

Then I had a quick look at my capital gains tax liability: I started with a back-of-the-envelope calculation that $530,000 less a base cost of $230,000 cost would create a taxable gain of $300,000, which would come back to $150,000 after the 50% discount, and then be split between my wife and me as joint owners. That hurt, but it got worse when I checked out the purchase file. On the accountant’s advice, we had negotiated the purchase price to be split $140,000 for land and buildings and $80,000 for depreciable items. The thinking was that it is always better to take a tax deduction sooner rather than later. True, but our base cost will be only $140,000 because we have enjoyed 20 years of tax deductions; that increased the taxable capital gain by $80,000.

This experience has reinforced what I’ve been saying for years: as you get older, your best investment is shares – not property. Shares give you tax-advantaged income and can be sold in whole or in part within a few days. With property, you have income with no tax advantage, lots of regular expenses, and if you need money, you can’t sell the back bedroom.

 


Shares

I wrote about the above experience in one of the local papers, and one reader gave me a dressing down. He claimed that he put $300,000 into a portfolio just before the GFC and lost a third of his capital. Fifteen years later the portfolio still has not recovered. I pointed out to him that according to my Stock Market Calculator, his portfolio would now be worth $738,000 if the money had been invested in a fund that matched the All Ordinaries Accumulation Index, and assuming all dividends were reinvested.

This made him even more unhappy. He told me it’s impossible to invest in a product that matches the All Ordinaries Accumulation Index because such an animal does not exist. Furthermore, I was gilding the lily by even mentioning the Index. He claimed that it would be far more ethical to select stocks such as AMP, BHP or Telstra.

This information is wrong in so many ways, but it’s worth a discussion for anybody thinking of investing in shares. It’s true that no investment matches the All Ordinaries Index exactly. Why would you want that? It contains about 2000 companies and 85% of them could be described as businesses with no cash and no hope. Many of them are speculative mining companies.

But the essence of the index is the top 300 companies make up 85% of the total value and produce 97% of the profits and dividends. And there most definitely are products that track the top 300 companies, such as the Vanguard Australian Share Fund (ASX.VAS). This fund started on 30 June 1997, and Vanguard tell me if $100,000 had been invested when the fund started and all dividends were reinvested, the portfolio would now be worth $732,412. That’s a total return of 632.4% after management fees and transaction costs.

The Stock Market Calculator on my website is an educational tool, which shows monthly values from 1 January 1980, when the concept of the All Ordinaries was formed. It enables people who are considering investing in shares to run ‘what if’ scenarios. You can enter a notional investment sum and a notional finishing and starting date to see how an investment would have performed if it matched the Index.

To check the validity of my calculator, I ran the Vanguard numbers through it. The answer was $775,000, a compound gain of 675%. The difference between the two is insignificant. The reason I never use specific shares when I’m talking about performance is that it requires a degree of skill in picking winners, which the average person does not possess.

The main risk with picking individual stocks is buying duds. It is a risk  even with household names, including the so-called ‘blue chip’ companies like ANZ, Qantas, Myer, etc. But the chances of the entire market covered by broad index funds going bankrupt is almost zero. Broad index funds have beaten the vast majority of professional fund managers most of the time.

Time and time again people tell me they want to invest in shares but they don’t know where to start, as they wouldn’t have a clue about picking stocks. My response has always been to invest in an index it pays around 4.5% annually, which is mainly franked; it cannot go broke; and over the last 120 years it has averaged around 9% per annum. That’s good enough for me.

 


Superannuation

The latest numbers are out, and as you can see, it ended up a good year.

 

The above information is written by SuperRatings and highlights the importance of getting a good rate on your superannuation. This is why I always urge people to check that their money is in the right asset class. As you can see Growth and Balanced are areas to be in. At least for most of the money.

But here is something interesting – and it’s purely hypothetical. Suppose in January 2014, I started a self-managed superannuation fund (SMSF) with a contribution of $100,000 and put the entire balance of the fund into an index fund that matched the All Ordinaries Accumulation Index, which assumes all dividends are reinvested.

My Stock Market Calculator tells me my SMSF would now be worth $209,000 – more than the top-rated funds mentioned above. The difference is probably fees because index funds have minimal fees.

But there’s something else to think about. My super fund would’ve been paying 15% tax on all its dividends but the franking credits would’ve been in excess of that. The return would’ve been even better than above due to the benefit of the tax refund from the excess franking credits when the funds tax return was lodged.

I appreciate this is a hypothetical exercise, because in the real world contributions would have been made to the super fund, and it would’ve enjoyed the benefit of dollar cost averaging. But it does prove what a good investment the All Ordinaries has been provided all dividends are reinvested.

 


A stock taking sale (kind of)

When we launched the film Think and Grow Rich the Legacy in 2015, James wrote a book to accompany it. It takes the 13 timeless principles of the book Think and Grow Rich and illustrates them with real-life examples of people today. They are wonderful stories and the book is a great learning experience.

It’s a hardcover book in high-quality paper of about 300 pages. It was published by the American publishing company Sound Wisdom, but when James launched it in Australia at that time, Sound Wisdom gave us the right to print 3000 copies. That was six years ago, and I thought all books had been sold. Just a month ago, when doing a stock take, we discovered we still had 250 copies in stock and because we own them, we have the right to sell them.

In 2015, I published what I thought was going to be my legacy book. It was called 25 years of Whitt and Wisdom and featured extracts from my columns from 1988 to 2015. It’s a hardcover book, 450 pages on high-quality paper and printed in two colours. It was the highest quality and most expensive book I’ve ever produced and was always going to be a one-off.

We also discovered that we had 300 copies of this book still in stock. I appreciate the fact that the information stops in 2015, but the history of the financial services industry in this book is just priceless. It’s also a great reference book.  When I was doing an article on deeming to be published this week, I looked it up to find the history of deeming. It’s also great to see how often history repeats itself. It’s full of property booms and busts, share market booms and busts, governments changing the rules and banks behaving badly.

Special Bundles added for $49.95:

 

Think and Grow Rich the Legacy is timeless, and 25 years of Whitt and Wisdom is a magnificent history book. Today we’re having our first-ever stock take sale, and putting them in bundles.  This is a one-off opportunity, as these books will never be reprinted.

GO TO BOOK SHOP

 


Here’s one for you

I never thought I’d see this. Jumbo, a grocery chain with more than 700 locations in Belgium and the Netherlands just reported that the value of items stolen from its stores by shoplifters was 25% greater than last year’s profits.

Image by Freepik

I think, unfortunately, this is a sign of things to come here as well.

 


Downsizing Made Simple

In last months newsletter, I mentioned our new book Downsizing Made Simple which was launched nationwide last month. We’re getting wonderful feedback and we thought you might like to know that we have also launched a new companion website www.downsizingmadesimple.com.au that accompanies the book.

Many people are asking for more information, so we’re now giving you the opportunity to read the first chapter of the book which covers some of the most important considerations in your downsizing decisions from ‘Why’ you want to downsize to aspects to contemplate about ‘Where’.  It also gets into the nitty gritty of understanding the costs and just as importantly the key considerations of your contracts and fees.

To access the first chapter of Downsizing Made Simple, simply click on the link below:

GET CHAPTER

 

Where to Buy

Downsizing Made Simple

Downsizing is now a big topic and it’s been the subject of our national tour in the last two weeks. Downsizing Made Simple is the updated version of the old edition, but it’s 100 pages longer and contains much more information.

This is such a complex topic and one of the main goals Rachel Lane and I had when we wrote this book was to highlight the things people need to take advice on. It also links to the special calculators on the downsizing made simple website.

BUY NOW

 

 

Value Bundle:

Downsizing Made Simple + Retirement Made Simple

Only $49.99

Save $9.91

BUY NOW

 

 

 


And Finally

Ponderances

So now cocaine is legal in Oregon, but straws aren’t. That must be frustrating.

Being popular on Facebook is like sitting at the ‘cool table’ in the cafeteria of a mental hospital.

You know you’re over 50 when you have ‘upstairs ibuprofen’ and ‘downstairs ibuprofen’.

 

Photo by Drazen Zigic on Unsplash

I woke up this morning determined to drink less, eat right, and exercise. But that was four hours ago when I was younger and full of hope.

How did doctors come to the conclusion that exercise prolongs life, when the rabbit is always jumping but only lives for around two years, and … the turtle that doesn’t exercise at all lives over 200 years.

If only vegetables smelled as good as bacon.

When I lost the fingers on my right hand in a freak accident, I asked the doctor if I would still be able to write with it. He said, “Probably, but I wouldn’t count on it.”

Still trying to get my head around the fact that ‘Take Out’ can mean food, dating, or murder.

Dear paranoid people who check behind their shower curtains for murderers. If you do find one, what’s your plan?

Anyone who says their wedding was the best day of their life has clearly never had two chocolate bars fall down at once from a vending machine.

We live in a time where intelligent people are silenced so that stupid people won’t be offended.

The biggest joke on mankind is that computers have begun asking humans to prove they aren’t a robot.

If Adam and Eve were Cajuns they would have eaten the snake instead of the apple and saved us all a lot of trouble.

You know you are getting old when friends with benefits means having someone who can drive at night.

After watching how some people wore their masks, I understand why contraception fails.

I have many hidden talents. I just wish I could remember where I hid them.

Apparently, exercise helps you with decision-making. It’s true. I went for a run this morning and decided I’m never going again.

 


I hope you have enjoyed the latest edition of Noel News.

Thanks for all your kind comments. Please continue to send feedback through; it’s always appreciated and helps us to improve the newsletter.

And don’t forget you’ll get more regular communications from me if you follow me on X – @NoelWhittaker.

Noel Whittaker

 


Noel News 18 December 2023

A credit card is an anaesthetic which simply delays the pain. 

HELEN MASON

 


Welcome to our last newsletter of 2023

It’s been another eventful year with no progress with the war in Ukraine and the unexpected attack by Hamas on Israel. I don’t think either of these battles will end soon. Next year’s presidential election in the United States will further complicate matters. The good news in Australia is that the interest rate cycle is getting very close to the top, with some economists even predicting a drop in rates within 18 months. I doubt that will happen, but I do think we won’t see many more rises.

Keep in mind that the Albanese government is about 18 months from an election, so expect the May 2024 budget to have more sweeteners than nasties. The controversial topic is the personal tax cuts that have been legislated to take effect from Monday, 1 July 2024. Of course, there are the predictable claims that the personal tax cuts are unfair, as high income earners will get a bigger tax cut than low-income earners. That is always the situation when the rate of tax rises with income. Most reasonable people would agree that the cuts are overdue.

It’s a major reform with the 30% tax bracket going from $45,000 a year right up to $200,000 a year. It’ll save workers being pushed into higher tax brackets every time they get a pay rise. On my website there are two income tax calculators – one gives the present tax rates and the other the proposed tax rates. Have a go with them for yourself and see what a difference the tax cuts may make to your after-tax income.

As I have said many times, if you take charge of what you can control, you shouldn’t need to worry unduly about what you can’t control.

 


Lessons for life

Last Saturday was a big day for me. It was graduation day at QUT Brisbane and I was thrilled to be awarded an honorary doctorate from the Faculty of Business and Law. After the honour was conferred, I was asked to address the entire graduation class. It was a challenge to ‘convey the secrets of success’ to a thousand students in just eight minutes. I started off by pointing out there are no secrets – success in life depends on following certain principles that have been known for millennia.

My dad always taught me that if you do one good turn you get two good turns back, which is really a variation of the Golden Rule, ‘Treat others as you would like them to treat you.’ Andrew Carnegie, the wealthiest man in the world in the 19th century, added that success is about more than just blindly following the Golden Rule; it’s about practising it. Once you start to make a habit of treating people as you think they would like to be treated you are practising one of the biggest success principles of all: going the extra mile.

Think about it – the people whose company you enjoy, and the people you want to do business with are people who go out of their way to take care of you. The principle of ‘Doing more than you are paid for’ is an extension of this. Some time ago I went to breakfast at the Sheraton Hotel in Townsville and asked the waiter where I could buy a copy of The Courier Mail, as I knew it would be featuring an event I had spoken at the day before. He replied that the papers wouldn’t be coming in until 8 am. To my surprise, just after 8 am he came to my table with a copy of the paper. That is going the extra mile. When I remarked on this behaviour to the manager, the response was, ‘We train our staff to anticipate what guests want.’

Carnegie says that going the extra mile develops a more attractive personality and friendly cooperation from others, and eliminates the dodgy desire to get something for nothing. Furthermore, it provides a person with an influential reputation for honesty and fair dealing, which is the basis of all confidence.

At the graduation last Saturday, I also made the point that compensation for our efforts can come from two sources: money and personal satisfaction.

I then told the QUT students that I believe in trusting the universe. Time and time again I have wanted an outcome, but that much desired outcome did not eventuate. Looking back, I now understand that I’m in a much better place than I would have been if I had got what I wanted. Life is a bumpy road, and we all face headwinds along the way. Reframing the situation as, ‘That was not meant to be – the universe has a better plan for me’ gives you the strength to move on. Ask any successful person what was their reaction to failure, and the reply is almost always, ‘It was a great learning experience.’

There is nothing radical about these ideas, but every successful person I know would agree with them. I did also remind the graduates that success is not having the biggest house in town or the most expensive car; it’s about becoming fulfilled and having a purpose in life. My experience is that the greatest happiness comes in helping other people and going the extra mile – the more you do this, the more successful, happier and more fulfilling your life will be.

 


Downsizing

Downsizing remains one of the hottest topics as people get older and try to work out their retirement finances. When I was in Sydney during our book tour. I recorded a 10 minute segment for Ausbiz. It explains a lot about it. Just click here:

WATCH NOW

 

Downsizing Made Simple

Downsizing is now a big topic and it’s been the subject of our national tour in the last two weeks. Downsizing Made Simple is the updated version of the old edition, but it’s 100 pages longer and contains much more information.

This is such a complex topic and one of the main goals Rachel Lane and I had when we wrote this book was to highlight the things people need to take advice on. It also links to the special calculators on the downsizing made simple website.

BUY NOW

 

 

Value Bundle:

Downsizing Made Simple + Retirement Made Simple

Only $49.99

Save $9.91

 

 


Superannuation

It hasn’t been the best year for superannuation, but according to the latest estimates from SuperRatings, we did enjoy strong returns in November. The strong result came after three months of decline for the median balanced option, with falls of -0.1% in August, -1.8% in September and -1.6% in October.

The median growth super option delivered an estimated return of 3.5% for the month, while the median capital stable option generated a more modest return of 2% due to its lower exposure to shares.

According to SuperRatings, November’s estimated returns have offset most of the losses observed in recent months, ‘setting up a modest, but positive, scene for most members as they approach the halfway point of the financial year.’ For the first five months of the financial year, the median fund is estimated to be up by 1%. Meanwhile, over the first 11 months of the calendar year, SuperRatings said that the median balanced option is up by 6.8%.

 

While December’s performance remains to be seen, the firm said that fund members will likely see a ’reasonable positive return’ over 2023, which may be similar to the estimated 6.4% p.a. return recorded for the median balanced option since 2000.

SuperRatings believe ‘inflation will be a strong driver of markets in 2024, coupled with softening consumer demand; however, most members should remain reassured by super funds ability to navigate the range of market conditions we’ve seen over the past few years.’

 


Win The Day Podcasts

James’ podcasts continue to flourish with  over 40 million views to date. We are looking forward to welcoming him and his family in Brisbane next Friday.

His recent podcast number 166 would be invaluable listening for you all over Christmas. It goes for just 25 minutes, but it summarises a selection of clips of great advice which have been chosen from his guests over the last 12 months.

Listen with Spotify above, or listen on Apple Podcasts here.

 


Bank Service!!

Bank customer service standards have been sliding for years, as has been well aired during a Senate enquiry into bank behaviour. Bank branches have been closing in droves, and their call centres have been restructured so that it’s typically a 30-minute wait if you try to ring them.

Image by  wayhomestudio on Freepik

I was stunned when I couldn’t bank a check for James to his BankWest account via the Commonwealth Bank (who own BankWest) – they sent me to the post office!

There are other issues that highlight their indifference to customers. Jack wrote:

“I am 91, and recently received an email from ANZ asking for details of bank deposits in two of my accounts, both were tax refunds from the ATO. The super fund refund was $67,368, and the personal refund was $23,129.

ANZ wrote to me demanding documentation about these deposits, how the refunds are to be used and if I’ll be receiving further deposits in the future. There was a clear threat that if a satisfactory reply was not received within 30 days my accounts may be closed. 

I responded that, given I am 91 years of age and in God’s hands, I cannot verify I’ll even be alive in 12 months. I also pointed out that all accounts are in credit and I have been a loyal customer of ANZ  for more than 55 years.”

I told Jack that this would probably be an AUSTRAC requirement. In the interests of general consumer education, I contacted the Media Unit of ANZ bank and asked if they could tell me, for general information, what information AUSTRAC requires from bank customers. The media people replied that they would contact ‘the team’. But they came back to me with the response that the customer had been notified, and ‘the team’ had no wish to make any further comment – they were just not interested.

I got back to Jack, who responded that he had not heard a word from the bank and that he found their initial and subsequent attitudes, ‘quite disgusting’.

I am left wondering … would it really have been too difficult for ANZ to write to Jack along the following lines?

‘We appreciate you have been a loyal customer for more than 50 years, but under government regulations we are required to get details of certain deposits. Two recent deposits into your accounts, namely, $67,368 and $23,129, come under this ambit, and we would appreciate your advising us more details of them. We regret the imposition and are happy to help you in need. We look forward to hearing from you.’

Mary emailed to say that she had paid $5,112 to a bullion company for 110 Britannia Silver coins at $44.70 each. She says, ‘So far, although I have supplied bank account details, driver licence, etc. to this company for identification, they now say they want details of how I obtained the money, i.e: details of inheritance, property sales, etc. Now I worry that I’m being scammed. I contacted my bank’s fraud squad, but they did not return my phone calls. I then sent a letter of demand to the bullion company, demanding they refund my money within seven days. That deadline passed without result. I am a 71-year-old self-funded retiree with mobility issues and I’m scared I have lost all my money.’

Image by Freepik

AUSTRAC were more helpful than ANZ. They said that, under Australian anti-money laundering and terrorism financing (AML/CTF) laws, financial institutions and other businesses need to identify and mitigate financial crime risks in their business. This includes ongoing monitoring of transactions to identify suspicious activity and, where appropriate, seeking further information from the customer.

Similarly, the efforts of financial institutions to protect their customers from the risks of frauds and scams are largely at their discretion. AUSTRAC does not have any powers to request banks or other entities to freeze accounts. So there’s no good reason why the banks should threaten this when requesting information from individual customers. It seems to all be part of the current attitude that the customer is always wrong, and banks can do whatever they please.

 


From a reader (this was news to me)

‘I discovered something today that I thought I’d share with you, as I don’t think many people know about this and think maybe they should!  

I am a very small employer and today I processed my first termination pay for a permanent staff member who’s been with me for four years. The payroll software makes this job very easy, but what instantly caught my eye was that no super is payable on unused annual leave, i.e., she was paid the SG for her hours worked this pay cycle, and received all outstanding accrued annual leave. The anomaly is that when annual leave is taken, 11% super is paid on top. However, when unused annual leave is paid out upon termination, super is not paid on it.  

Image by gpointstudio on Freepik

This struck me as both nonsensical and quite unfair. It is all the more inequitable as anyone who happens to know about this bizarre rule can easily circumnavigate it! Those who don’t know, and who ‘do the right thing’ by their employer, on the other hand, will miss out.  

Supposing an employee has 4 weeks accrued annual leave and is required to give two weeks’ notice. Assuming their employer approves a long holiday for them, they can simply give notice two weeks before their holiday ends. By doing so, they will receive the SG on all their annual leave.  

If however they simply give notice and the leave is paid out, they miss out on an extra 11% of their pay!  

If I’d known about this, I would have given my staff member the option of whether to have their leave paid out with SG on top or to take it earlier as a lump sum without the SG. The choice is theirs. As it currently stands, I feel as though they have been short-changed for no apparent logical reason.’

My accountant has confirmed this is correct. It’s worth knowing.

 


And Finally

I’ve just finished reading a book about the world’s greatest basement … It was a best cellar.

It’s my first week working at the bicycle factory and they already made me a spokesperson.

Horses have lower divorce rates. It’s because they are in stable relationships.

Photo by Mona Eendra on Unsplash

My laptop caught pneumonia, apparently because I left Windows open.

I thought swimming with dolphins was expensive until I went swimming with sharks … It cost me an arm and a leg.

The main function of your little toe is to make sure all the furniture in the house is in the right place.

It’s pretty obvious that if I run in front of a car I will get tired but if I run behind a car I will get exhausted.

My teachers told me I’d never amount to much because I procrastinate so much. I told them you just wait.

90% of bald people still own a comb; they just can’t part with it.

Every morning I get hit by the same bicycle … It’s a vicious cycle.

The word incorrectly is spelled incorrectly in every dictionary.

I’ve been experimenting with breeding racing deer. People have accused me of just trying to make a fast buck.

What do you call a row of rabbits hopping backwards? A receding hare line.

When I was a kid, we played spin the bottle with the girls, if they didn’t want to kiss you, they would have to give you a dollar. By the time I was 12, I owned my own home.

Always trust a nudist … They have nothing to hide.

 


Geraldine, the team and I wish you a wonderful Christmas and a healthy, prosperous and happy 2024.

The estate planning book is now with the editor, so expect notification of pre-sales in March.

As always, if you’re having any queries, don’t hesitate to email me.

Noel Whittaker

­


Special Christmas Bulletin

Special Christmas Bulletin

Home at last, after a whirlwind tour around the country, giving talks about downsizing and launching our new downsizing book. It was great to see so many of you who are subscribers, and to talk to people who brought older copies of my books to be signed and telling me that my books had changed their lives.

This is basically a Christmas catalogue because I haven’t had time to do a newsletter in the last two weeks –I’ll certainly be doing a newsletter before Christmas because there is so much to talk about.

When we think about Christmas, we think about Christmas gifts – and I can think of no better gift than a book that can change people’s lives. So, in this newsletter, I’ve got some suggestions for you plus another three books which are not mine, but which would be perfect gifts also. We’ve also put many of these in bundles, which are better value if you’re buying Christmas presents.

But, first, let me share an email I got recently:

“I’m wanting to write to show my appreciation for your books, ‘The Beginners Guide to Wealth’ and ‘Making Money Made Simple’. My Dad read Money Made Simple when it was first released, and encouraged my siblings and I to read these during high school to give us a good foundation to achieve financial independence. 

I am 22 years old on an annual wage of $55,000. I have $50,000 in shares, $35,000 cash in my account and $32,000 in super. I find other people my age simply are not interested in talking about investing, budgets or anything money related unless it’s about happy hour at a pub somewhere. In order to start some positive conversations around money with my friends, I have started gifting your books as birthday presents in the hope they also find them beneficial. 

I am grateful my family helped me gain the knowledge to make some positive financial habits early on to create a good start to my adult life. I understand not everyone has the same upbringing and sometimes it is hard to get started. I hope the books I have gifted to my friends creates a kind of a ripple effect, and helps other young people like they have helped me. I am looking forward to continuing to learn as I gain life experience, and I will continue to educate myself and improve my financial skills moving forward.”

 


Age 12 to 20:

10 Simple Steps to Financial Freedom

This is the time when people should be building good foundations, which was the whole ethos behind my book 10 steps to Financial freedom.

It’s a short book and designed to be an easy read for teenagers. Two of the main lessons are to spend less than you earn and learn how to set goals.

BUY NOW

 


Age 15 to 50:

Beginners Guide to Wealth

The thinking behind this book was to teach young people the principles of life. It covers all the stuff I’ve learnt from studying successful people for 40 years. It started its life as Getting it Together and I know many of you  have read that book, but the name was changed to Beginners Guide to Wealth because Getting It Together was seen by some as ambiguous.

It does have a small money section in the back, but basically, it’s about how to become a successful human being. It covers topics like going the extra mile, goal setting and learning success principles. I always laugh when people talk about the secrets of wealth – the “secrets “have been round for hundreds of years.

It’s co-written with my son James Whittaker and the new edition is coming off the presses as I write this. It’s been totally revamped for current conditions.

BUY NOW

 


Age 18 to 50:

Making Money Made Simple.

This is the original book that sold 2 million copies and has changed thousands of lives. The first edition was written in 1987 but so much has changed since then. When I discovered that people need more than information, they need an action list, I rewrote the book so it’s now focused on actions to take rather than merely giving information.

The feedback to the new edition has been fantastic – one of the guys in the golf pro shop told me he saved $30,000 when he bought his house just from the tips he got by reading the chapter on the negotiation.

BUY NOW

 


Value Bundles

10 Simple Steps to Financial Freedom
+ The Beginner’s Guide to Wealth

Only $39.95

Save $9.95

 

 

Making Money Made Simple
+ The Beginner’s Guide to Wealth

Only $49.99

Save $9.91

 


Age 45 upwards

Retirement Made Simple

My Retirement Made Simple, is perfect for anyone aged 45 and over. Retirement is often touted as a worry-free time – but right now it’s not. People are living longer, government budgets are stretched, financial markets are volatile, and interest rates are moving up. On top of that, there are the challenges of understanding investor psychology – including your own – and avoiding scams.

A major facet of a fulfilling retirement is preparation: the sooner you start to plan, the better your retirement is likely to be. Yet so many people facing retirement don’t know what they don’t know. Retirement Made Simple is a gift that can pay great dividends.

BUY NOW

 


Age 60 upwards

Downsizing Made Simple

Downsizing is now a big topic and it’s been the subject of our national tour in the last two weeks. Downsizing Made Simple is the updated version of the old edition, but it’s 100 pages longer and contains much more information.

This is such a complex topic and one of the main goals Rachel Lane and I had when we wrote this book was to highlight the things people need to take advice on. It also links to the special calculators on the downsizing made simple website.

BUY NOW

 


Value Bundle

Retirement Made Simple + Downsizing Made Simple

Only $49.99

Save $9.91

 


The Mindful Body – Thinking our Way to Chronic Health

Ellen Langer is one of the great psychologists of the 21st century. For more than 50 years she’s been studying the mind-body connection and her new book takes her work to a new level. One of her most famous experiments was in 1979 when she took six elderly people back in time by retrofitting their environment to what it was 20 years ago. In just one week their health improved dramatically.

There is a range of experiments along similar lines in the new book. Examples include hotel chambermaids who lost weight when they were told their work constituted  exercise, or patients whose wounds healed faster when the clocks in their rooms were sped up. She even points out that the way a doctor describes a diagnosis to a patient can make a massive difference to how well the patient responds to the treatment. This is a book that can change lives and I recommend it highly.

 


Magic Words

By Jonah Berger – professor of marketing at the Wharton School of University of Pennsylvania. I found this book riveting – the whole thrust of it is how the words we use can make a profound difference to the outcome of many situations. Interestingly, the book starts with a famous 1978 study by Ellen Langer. In this experiment they studied people queued at a Xerox machine awaiting their turn to make copies (this was the old days) and they discovered that if a person wished to jump the queue all they had do was give a reason why they had to get the copy in a hurry. From that it was determined that simply giving a reason when you make a request increases the chances of that request being agreed to by 85%.

Berger and his team analysed millions of words, and discovered that using “recommend” rather than “like” makes people 32% more likely to take your suggestion. They analysed over five million interactions in call centres and discovered the use of concrete language did not just increase customer satisfaction, it also led to many more return orders. There is also a wealth of material on the words to use to make your presentations more effective.

This is not a huge book, just 220 pages, but it’s packed full of examples, such as those mentioned above. It is a step-by-step guide to make your writing, your conversation and your presentations, much more meaningful and effective. This is a must for anybody in the communication business. Isn’t that all of us!

 


Andrew Carnegie’s Mental Dynamite

Many of you would know Think and Grow Rich by Napoleon Hill which has sold more than 130 million copies, and I am thrilled that my son James is now one of the leading authorities in the world on this book.

In 1908, Napoleon Hill met industrialist Andrew Carnegie who spent hours detailing his principles of success to the young magazine reporter. He then challenged Hill to devote 20 years to collating a proven formula that would propel people of all backgrounds to happiness, harmony, and prosperity. Hill accepted the challenge, which he distilled in the Think and Grow Rich.

A year or two ago the Napoleon Hill Foundation released the previously unpublished transcripts of these conversations and chose James Whittaker to write all the annotations explaining why they are essential for reaching your goals and prospering – for you, your family, and your community.

This book is an easy read – it’s just the transcript the conversations between Carnegie and Hill with comments by James as appropriate. I found it riveting to read Andrew Carnegie’s words. Don’t miss this one. You’re learning from the master.

 


And Finally

 A Student got 0% in an Exam!

I would have given him 100%! Each answer is absolutely grammatically correct and funny also. The teacher has no sense of humour.

In which battle did Napoleon die?
“His last battle.”

Where was the Declaration of Independence signed?
“At the bottom of the page.”

River Ravi flows in which state?
“Liquid.”

What is the main reason for divorce?
“Marriage.”

What is the main reason for failure?
“Exams.”

What can you never eat for breakfast?
“Lunch & Dinner.”

What looks like half an apple?
“The other apple.”

If you throw a red stone into the blue sea, what will it become?
“Wet.”

How can a man go eight days without sleeping?
“No problem, he sleeps at night.”

How can you lift an elephant with one hand?
“You will never find an elephant that has one hand.”

If you had three apples and four oranges in one hand and four apples and three oranges in the other hand, what would you have?
“Very large hands.”

If it took eight men ten hours to build a wall, how long would it take four men to build it?
“No time at all, the wall is already built.”

How can you drop a raw egg onto a concrete floor without it cracking?
“Any way you want, concrete floors are very hard to crack.”

 


Noel News 14 Nov 2023

“The easiest way to get to where you want to be is to find someone who is already there and ask them for directions.”
DAVID MELTZER

 


Welcome to our November Newsletter

Last week our Reserve Bank raised interest rates another 25 basis points. It was a bad decision.

I am one of 32 ‘experts’ who are surveyed each month for their prediction on the next monthly rate movement, and this month I was in the minority – just 30% of us forecast no change. It was not so much a prediction from me as it was a fervent wish. The last thing we need is another rate rise.

Image by stockking on Freepik

Central banks around the world are trying to combat inflation with one blunt instrument: interest-rate control. They have been sold on the idea that inflation should be kept within a specific target band, and all their efforts are directed to keeping it there, but the problem is that it’s a concept with no statistical validity.

Many people are flabbergasted to learn that the Reserve Bank of Australia’s 2% target was created out of thin air in 1990 by the Reserve Bank of New Zealand and has no basis in any sort of academic study whatsoever. In fact, it appears to have come from an off-the-cuff remark made during a TV interview with Roger Douglas, New Zealand’s finance minister at the time, who said that he’d ‘ideally’ want an inflation rate between 0% and 1%.

The 2% you hear today as a target was originally intended as a ‘boundary’ – nothing more – for inflationary bias, which was estimated to be just 0.75% at the time.

Following New Zealand’s lead, other countries, including Australia, Canada and the UK, adopted the 2% inflation target. The US Federal Reserve officially adopted the 2% inflation target in January 2012 under the leadership of Chairman Ben Bernanke.

The RBA is in challenging territory – it wants to see inflation drop, but increasing the loan repayments of average families will not affect inflation. We have imported inflation because of the wars in Ukraine and the Middle East. There are massive challenges in the building industry due to shortages and rising costs: architects tell me their developer clients who have approvals are not prepared to start building because the build costs are potentially so high the deals no longer work.

Image by gpointstudio on Freepik

And what are governments doing? They are exacerbating the problem. They are pouring money into the system with massive infrastructure building projects everywhere and keeping demand high with migrants arriving at a rapid rate. This puts huge pressure on the already overcrowded rental market. We now have the ridiculous situation where central banks are putting the brakes on, while the rest of the government does everything they can to keep their foot on the accelerator.

Despite 12 previous rate hikes in the current cycle, the anti-inflation battle is far from over. Last month the latest Australian inflation figures were released for the September quarter, with mixed news. Quarterly inflation rose from 0.8% to 1.2%, while the annual rate (rolling 12 months) fell from 6.1% to 5.4%. It’s going to be a slow road to the RBA target.

Certainly, the rate rises in the last cycle have dampened the enthusiasm of shoppers – companies like Harvey Norman and JB Hi-Fi report declining sales, but they have had little effect on the big picture. Our inflation is structural.

A big problem is unemployment. Job markets are still very tight here and around the world: wages are rising everywhere. Rising wages without an equivalent rise in output just pushes prices higher and feeds the inflationary spiral. So where to from here? It’s anybody’s guess – the Reserve Bank can’t keep crushing working families and small businesses in a futile attempt to stop inflation, but they show no sign of stopping. Sadly, I feel things will get much worse before they get better.

To make matters worse, we are approaching dangerous times for our spending. The Black Friday Sales are now a major shopping event, then we have Christmas and then the school fees arrive. This is a time to be particularly cautious about your spending and I suggest you use debit cards, not credit cards. At least that way there are no unexpected shocks when the credit card statement arrives.

 


Another attempted break-in

Wednesday 8 November 2023 was a memorable day. That was the day when Optus captured the media all day because of outages – it was also the day when we had our third attempted break-in. We weren’t affected by Optus because we have stuck with Telstra for our mobiles.

After two attempted burglaries in the last 10 years, we make a point of arming the entire house when we go to bed at night. It’s just a matter of pressing one switch and every room except our master bedroom is monitored – this includes the garage, which is a separate building from the house. Apart from the two big doors, this building has a small side door, which we keep unlocked when we arm the house at night.

Image by jcomp on freepik

The reasoning is that the perpetrators will look in the garage first to see if there are cars worth stealing, and this will trigger the alarm, causing the burglars to lose interest and flee. On police advice, we have a bevy of security lights around the house which come on if there’s any interference during the night.

Something unusual happened on the night in question when we were preparing for bed. I tried to trigger the alarm, but a fault sign came up. My first thought was it would be a hassle to ring the alarm company to fix this and a burglary was a one-in-a-million chance. However, a voice inside me said to go the extra mile, so I rang our alarm company and after 30 seconds on the phone the alarm system was back to normal. The security company told us they were receiving an unusual number of similar calls because the Optus outage had put a lot of monitoring systems out of action.

That night at 3:20 am, our alarm went off. We jumped out of bed and discovered all the security lights had come on automatically, and it seemed there was nobody on our premises. Our home has heaps of CCTV and when we played back the footage it showed three young males coming into our yard and entering the garage – which triggered the alarm. They were not fazed by all the lights automatically coming on around them. Once the alarm went off, they fled.

The police were there in 20 minutes but there wasn’t much they could do. They told us that manual cars and Teslas never get stolen. These young thieves have never learnt to drive a manual car, and Teslas have a remote facility whereby you can turn the car off from anywhere in the world. It also shows the position of the car in real time.

In most parts of Australia, youth crime is on the increase – it just pays to be aware and do everything you can to keep your home and your family safe.

 


You are Invited

In late November and early December, Rachel and I will be travelling the eastern coast to launch our new book, Downsizing Made Simple. There are five separate events which are detailed below. Each event will consist of a 20-minute speech from both of us, and then question time from the audience.

If you’re thinking of downsizing, this is a great way to understand the advantages and disadvantages. Books are due to come off the presses this week and will be available at each venue on the day.

Just be aware that registration is important, even though the events are free, but in three events, you must email the venue and the three events you register online. If you have any trouble, just email me at noel@noelwhittaker.com.au

If you select the menu where you need to send an email, the proforma form has no information on it, you will need to give them your details and confirm that you wish to attend a specific event. In Canberra, there will be two identical events.

 

 Nov 28 – Gold Coast

Odyssey Lifestyle Care Communities
1 The Crestway, Robina
2–3pm

RSVP by 24 November
ph 5551 6720 or via email
Places are limited, bookings are essential.

 

Nov 29 – Brisbane – morning

Moreton Shores
87–113 King Street, Thornlands
(entry via Shores Drive)
10.30–11.30am

RSVP by 24 November
to Leigha Watt on 286 8675 or via email
Places are limited, bookings are essential.

 

Nov 29 – Brisbane  – afternoon

Aveo Parkside Carindale Retirement Living
19 Banchory Court, Carindale
2–3pm

RSVP by 24 November here
Places are limited, bookings are essential.
On-site and street parking is limited. Additional parking can be located within Westfield Carindale and Harvey Norman.


Dec 1 – Sydney

McRae-McMahon Place by Uniting
17 Marion Street, Leichardt
10.30–11.30am

RSVP by 24 November here
Places are limited, bookings are essential.

 

Dec 5 – Melbourne

Europa on Alma
31 Alma Road, St Kilda
2–3pm

RSVP by 28 November
to Guy on 0499 714 196 or via email
Places are limited, bookings are essential.

 

Dec 6 & 7 – Canberra

Canberra Rex Hotel
(Grand Ballroom)
150 Northbourne Avenue, Braddon
10am–12noon

RSVP by 26 November here
Places are limited, bookings are essential.

 

How to buy Downsizing Made Simple

HARD COPY

To buy Downsizing Made Simple on its own.
Just go to downsizingmadesimple.com.au

To buy the bundle of Downsizing Made Simple and Retirement Made Simple
go to my website here

E-BOOK

The ebook is available now and you can
read the first 30 pages here

 


Protecting our Kids

I don’t usually put this kind of material in the newsletter, but I thought this was so important it was a must.

It would be comforting if there was room to argue with the data social psychologist Jonathan Haidt presented to a conference in London earlier this month. Sadly, there is not. We were not jumping at shadows when we suspected that ubiquitous access to social media had fundamentally reshaped childhood in mostly damaging ways.

Something happened across the Western world a decade ago when teenagers began using smartphones in significant numbers.

“If you plot out the trend lines for depression and anxiety, self-harm, and suicide, they’re relatively flat until 2010,” Haidt told the conference. “And then all over the English-speaking world, they start shooting up around 2012, plus or minus a year.”

Suicide rates are at peak levels across the Anglosphere and Nordic countries, for teenage girls. Not all are at equal risk. For kids who are religious conservatives, mental health conditions have hardly changed. For girls on the left and secular conservatives less grounded in traditional values, it is a very different picture.

The number of girls aged between 15 and 19 hospitalised for self-harm has increased by 78 per cent since 2010 in Australia. In the US, the number of 10-14-year-old girls admitted to hospital for non-fatal self-harm rose by 188 per cent in the same period. The trend is consistent in every jurisdiction where data is available.

“This is the biggest mental health crisis in known history for kids,” said Haidt. “The increased number of suicides since 2010 is so large that I suspect this is among the largest public health threats to children since the major diseases were wiped out.”

Haidt distinguishes between social media primarily used for networking, like Facebook and LinkedIn, and those that serve as platforms on which kids are compelled to perform.

“Social media platforms should never be accessed by children until they’re 18,” Haidt said. “it’s just insane that we let kids do these things that can ruin their lives.”

He singles out Instagram as the worst platform for bullying and TikTok as the worst for their intellectual development.

“It literally reduces their ability to focus on anything while stuffing them with little bits of stuff that was selected by an algorithm for emotional arousal,” Haidt said. He declares TikTok and Twitter incompatible with liberal democracy as it’s developed over the last few hundred years.

Yet access to social media is not the only behavioural change encouraged by smartphones.

“For all of human history, for millions of years, all mammals play,” Haidt said. “Mammal childhood is about building up your brain, and you do that through play.

“Once they all got phones, childhood stopped being play-based. It becomes phone-based.” He notes a significant decline in the habit of kids visiting other kids’ houses to play. Social interactions have become virtual, asynchronous, disembodied and transitory.

Some suggest that the rise in teenage anxiety might be because of greater self-reporting since mental health has been de-stigmatised. Haidt categorically rules that out.

“Right around 2013, in the U. S., Canada, Britain, Australia, and New Zealand, all these girls suddenly start checking in to psychiatric in-patient units.

“They’re making many more suicide attempts. Their level of self-harm goes up by two or three hundred per cent, especially for the younger girls, age ten to fourteen.

These, says Haidt, are not self-reporting variables. This is real.

“It’s the great rewiring of childhood. It happened between 2010 and 2015. It hit the U. S., Canada, Britain, Australia, New Zealand exactly the same way. New Zealand’s a little bit later, but the US and Canada are exactly in lockstep about what happened to our kids mental health.”

Haidt is writing his next book on the subject. Life After Babel is scheduled for publication early next year. In it, he will recommend the introduction of four norms to solve what he says is a collective action problem.

 

The first: “Don’t give a smartphone to your 10-year-old. Wait until 14.

“Rule number two, no social media before 16.

“The third rule: phone-free schools. That does not mean you can keep it in your backpack. Otherwise the kids will go to the bathroom. They’ll find ways to get their fix.

“Rule four is far more free play, unsupervised play and childhood independence.

“If we do those four things, and if, even if half of us do them, we solve the collective action problem.”


 And finally

I wanted to get my pants hemmed quickly, so I called Taylor Swift

I finally watched the documentary on clocks –  it was about time

A tombstone with a typo? Well, that’s a grave mistake

My wife and I can’t count calories and we have the figures to prove it

I made a chicken salad last night – apparently they prefer grain

Fruit farmers eat what they can and can what they can’t

Taking steps to overcome my hiking addiction – I’m not out of the woods yet

Women’s roofing Expo this weekend – all the shingle ladies will be there

My wife told me to put ketchup-up on the shopping list; now I can’t read anything

When the dentist married the manicurist, they fought tooth and nail

I have a black eye in karate

The banana went to the doctor because it wasn’t peeling well

Great hide-and-seek players are really hard to find

James Bond sports grey hair in his latest film – no time to dye

I married my wife for her looks, not the ones I’m getting late

When you dream in colour it’s a pigment of your imagination

It doesn’t make any sense but volunteering is rewarding

I think my wife is putting glue on my firearms. She denies it but I’m sticking to my guns

Man in boxers leaves police in brief chase

 


I hope you have enjoyed the latest edition of Noel News.

Thanks for all your kind comments. Please continue to send feedback through; it’s always appreciated and helps us to improve the newsletter.

And don’t forget you’ll get more regular communications from me if you follow me on X – @NoelWhittaker.

Noel Whittaker


Noel News 25 October 2023

“The unexpected blow lands heaviest.”
SENECA

 


Welcome to our October Newsletter

We have just got home from London, so today’s newsletter will be mainly about travel. Our original plan for the trip started with a Qantas return flight from Brisbane to Los Angeles to visit the grandkids, but the travel agent pointed out it would be no dearer to continue to London from Los Angeles and then fly home with Emirates. It was too good to resist!

Photo by Ross Parmly on Unsplash

There were some challenges, though. The first was travel insurance – once you turn 80 the options shrink. But I duly did my research – using Choice – and opted for Medibank. The process involved a simple phone call, and I did not get the usual message about “receiving an unusually high volume of calls” – their message was, ‘Your place in the queue is number two.’ I chose the basic policy because my main requirement was cover for unlimited medical expenses if a major health incident occurred. The cost was $933. It was interesting that once you get to 80 you cannot buy 12 months of cover via Medibank, you have to pay a premium for each trip.

The next challenge is always travel finance. Experience has taught me to carry more than one card in case one gets stolen or stopped, which happened to us on our last trip to America. I opted for a combination of the Latitude Credit Card and the ING Orange Everyday Visa debit card, plus an American Express card for backup. The debit card is useful if you need to go to an ATM for cash, but I haven’t needed to use cash in the past five years. Everything now is touch and swipe.

It’s recommended that you advise the credit card issuer if you’re travelling overseas. This was easy with ING: their app has a button that lets you advise your dates of travel and your destination. But it was a chore with Latitude because their website says to use their app, but there’s no place on their app to do it. I contacted Latitude via social media, and they told me that you no longer need to tell them you’re going overseas: they will know the moment you start making overseas transactions and will get in touch if they seem suspicious.

I like both these cards because there is no annual fee and their exchange rates are the best in the business (at least, so they claim – it’s a complex thing to verify). The debit card is good because you can’t overspend, and the credit card is also useful because you’ve got the extra money via your credit card limit if you get an unexpected expense. When we arrived in Los Angeles, both cards immediately worked without a hitch. Each has a great app that shows transactions in real time, so you can cry in horror when you see that the cup of coffee you just enjoyed cost AU$12 including tax, tips and conversion.

When we arrived in London, I put the two cards to the ultimate test. The moment we checked in at the hotel, I took out the Latitude card and the ING card and asked the hotel to charge £1000 to each card. Both transactions were instantaneous – there was no pin needed and no signature, and within a minute, I could see the Australian equivalent of both transactions on my phone. The difference was minuscule.

In fact, both cards passed all my tests with flying colours. The ING card has a slight advantage as a deposit to it from your bank account normally shows within five minutes; Latitude seems to take 24 hours.

I learnt more about commission when travelling. I’ve mentioned before that ING refund the commission, whereas cards such as Virgin charge commission. ING are transparent – they show the commission charge for each transaction and then the refund amount. I reckon that came to over $400 on this trip. Just as a check I didn’t one transaction on Virgin. Their statement says, ‘Foreign Amount U.S. Dollar 135.35 AUD 219.80 includes International Transaction fee AUD 7.02.’

The American Express card’s only purpose is to act as a guarantee for check-in, since most hotels  require you to leave a card with them when you check in, to cover possible expenses. The hotels then add a notional sum for contingencies. I’ve been caught with this before: the card may be blocked for days, and if it has a small limit, it can leave you short. This leaves me free to use the other cards without fear of them being blocked.

Travel is so much easier now thanks to e-passports. It took less than 15 minutes at Los Angeles Airport to get from touchdown to the baggage carousel and it was just as quick at Heathrow. Those long queues at passport control appear to be a thing of the past. Let’s hope so.

 


Self-driving cars

I have long been sceptical of self-driving cars and having had Teslas for four years, I think I know what I’m talking about. I have experienced my Tesla stopping on a freeway because it picked up traffic lights on the road underneath the freeway – I’ve seen it stop at red arrows even though the green light ahead was fine. I’ve seen it ignore speed signs and red lights and slow down in a major road because some months before there had been a 40 Km/h limit.

But when I was in Los Angeles, I had a total change of heart. My son James bought a Tesla Y last month and got three months of full self-driving as part of the package. He lives in Westchester, which is near Los Angeles Airport.

Image by Roberto Nickson on Unsplash

We got the car to take us to Manhattan Beach and then bring us home again. I was astounded. All he had to do was enter the destination and the car drove us with no assistance from the driver. Manhattan Beach has very steep, narrow streets going down towards the water. The car navigated them effortlessly, including turns.

When it approached a turn to a new road, it put the indicators on, moved to the right lane, and carefully crossed watching for cars coming. In California, you can turn right on a red light if it’s safe. James’s car came to a corner where many cars were turning right ignoring a sign that read ‘no right turn 3 pm to 6 pm’. The time was 5.55 pm. The car refused to move.

The car stopped at each stop sign near James’s home and then slowly eased itself forward while it checked there were no cars coming. It was faultless.

This is the Beta version, and I doubt it’s available in Australia – but think what it will be like in a couple of years.

 


New Edition of Downsizing Made Simple

Rachel Lane and I are about to launch the new edition of Downsizing Made Simple. The new edition covers even more downsizing options, more real-life case studies and more details about the care you can get at home. It is a sturdy 356 pages of valuable information.

It is also supported with calculators, checklists and exercises through the website: downsizingmadesimple.com.au

Here is an extract.

 

The Who, What, Where and Why of Downsizing

You may have spent years and a significant amount of money making your current home your ‘forever home’, so thinking about downsizing can be emotional. It helps to offset any sadness about leaving with excitement about your new home and the happy times to come. Like any big decision, getting your downsizing decision right is going to take some research. Here are some exercises to help you make your next move your best move.

Know your Why?

Understanding why you want to downsize is a crucial first step. Knowing the things you want to leave behind, those you want to keep and those you want to change can help you understand the driving force behind your decision. People decide to downsize for a variety of reasons; some want a ‘sea change’ or a ‘tree change’ – a different lifestyle. Many want a more manageable, low-maintenance home, while others are motivated by proximity to family and friends and social connection.

There are also often financial motivations for downsizing: paying off debt, freeing up equity to invest or spend, reducing home maintenance costs and having lower property taxes and utility bills.

The combined outcome can give you more money and time to spend doing the things you love.

Work out Where

Where you live affects how you live and it’s something you can’t change without moving again. So, think about the people and places you want to be close to (or far away from). Whether it is family or friends, the beach or a favourite club, identifying the people and places that you want to be close to can help you narrow down where to downsize to. Don’t forget to take into consideration what you don’t want around you. For example, if you don’t like noise then you may want to stay further away from places where people gather. If you’re considering a move across state lines and anticipate frequent visitors, proximity to an airport could be a practical consideration.

Consider the accommodation itself, taking into account the spaces you’ll need – a second bedroom if one person snores, a room for regular visitors, an outdoor space to enjoy your morning coffee. Think about how you will live in the space.

While you may be fighting fit now, it’s wise to contemplate your future needs, especially if your plan is to stay in your new home long term. Ask yourself, ‘What happens if I need care?’ Modern homes, including granny flats and those within retirement communities, are often designed with future care in mind. Examine the home for potential access challenges, such as narrow halls and doorways and cramped bathrooms.

Few people plan to spend their days in an armchair watching television, but if you don’t plan anything else, that’s what you can find yourself doing. So when you’re thinking where to downsize to, ask yourself, ‘How will I spend my time?’ If you are thinking about moving into a retirement community, there is normally an events calendar; grab a copy and circle the things that interest you.

Understand What you are signing

No matter what form your new home takes – whether it’s a freehold, strata title, leasehold, licence or a granny flat interest – you will need to sign a contract. Your contract spells out your rights, responsibilities and costs. Your job is to ensure that you understand it and that it has a fair balance of these three elements.

Of all the downsizing options, granny flats can be particularly complex as they involve family, are not necessarily on commercial terms and if the arrangement goes wrong the whole family can be affected.

Crunch the Numbers

While the purchase price of your new home may be obvious, there’s much more to consider when it comes to the cost of your new home.

In retirement communities, exit fees can be complex. They typically include a Deferred Management Fee (DMF) as a percentage of either your purchase price or future sale price and there can be shared capital gains or losses with the village operator, along with potential expenses for renovations, marketing and selling fees.

In freehold or strata properties, you will need to factor in stamp duty, owners’ corporation fees and the potential for special levies. While granny flat arrangements are typically with family, that doesn’t mean they are free. There is a simple exercise that I call the ‘ingoing, ongoing and outgoing’ that you can use to work out how much you will pay upfront, while you live there and when you leave.

In most granny flat arrangements, you don’t get any of the amount you have paid back. In some cases, because of state-based laws, you may actually need to pay to have your granny flat removed and the landscaping reinstated after you leave.

Armed with the knowledge of what your new home is going to cost you can get a clearer view of the bigger financial picture. How much money will you have to invest or spend, how much Age pension (and other benefits) you can receive, your cash flow, and in the longer term your financial position should the need for aged care arise. The Who, Where and Why of your downsizing decisions are just as important as the contract you sign and its associated costs. Ultimately, getting good ‘bang for your buck’ from your downsizing decision often comes down to how you invest your time and who you spend it with.
Downsizing Made Simple is available to pre-order online from downsizingmadesimple.com.au – I commend it to you as an invaluable resource.

 


From the mailbox

“I have just finished reading your wonderful book Retirement Made Simple. It is packed full of useful information. I’m still a decade or so from retiring but I got so much out of your book. So thank you so very much.

Incidentally, I especially enjoyed the final chapter on Living it Up and the section on Better Aging. This was my favourite part of the book. I have filled a notebook with all the tips I got from your book, both on finances and living better. 

I strongly agree with your philosophy on aging. In fact, I’m convinced I’m in my prime!

I also loved your simple-to-understand book on Superannuation. You’ve put me on the path to a more financially comfortable retirement. Having come out of a divorce with a greatly reduced financial position I was able to take many of the ideas in your book to help set myself up for the future. Thank you.”

 


And finally

‘Literally’ true…but is it?

‘Many of the prisons here are literally bursting at the seams.’
Michael Brissenden on 7.30 Report. (30 December)

‘This is literally the stuff dreams are made of.’
Paul Collingwood on England’s win in the Ashes.

‘She uses two boys, one hour on and one off, and literally chews them up and spits them out’.
Sam Smith on Caroline Wozniacki’s tennis practice sessions.

‘I was literally rooted to the spot.’
Caroline Dean on Conversations with Richard Fidler ABC Radio. (15 June 2017).

‘She literally melted out there.’
Jason Richardson on Kristina Mladenovic retiring from Sydney International tennis tournament. (8 January 2018).

‘She literally hasn’t looked back since then.’
Renae Stubbs on the resurgence of Caroline Wozniacki after saving match point and winning at the previous US Open tournament. (20 January 2018).

‘The gambling lobby literally has politicians in the palm of its hand.’
Tim Costello on the ‘Everest’ horse race being promoted on the Opera House. (9 October 2018.)

‘It’s literally bowled me over.’
Gladys Berejiklian talking about how people came together to assist.  (Sunday 22 December 2019)

‘He’s literally caught with his tail between his legs.’
Tasneem Chopra on The Drum (Thursday13 Feb 2020)

‘We’re living under the Sword of Damocles, literally.’
Joe Haddock, resident of Great Mackerel Beach on their house being in danger from a rockslide (ABC News 21 Feb 2021).

‘Twiggy Forrest literally puts his money where his mouth is.’
Joe Hildebrand Paul Murray show. (24 Feb 2021)

‘We’re literally cutting off our nose to spite our face.’
Richard Marles at the Press Club in reference to the outcome should we not maintain an R and D relationship with China. (24 March 2021)

‘India is literally gasping for oxygen.’
Greg Hunt on the evening news, around 27 April 2021.

‘My heart is literally in my mouth.’
Contestant Dan on MasterChef. (10 May 2021)

While some players are falling away ‘others are literally catching fire,’
Alison Whitaker, commentating during the final round of the Olympic golf for men. (1 August 2021)

’He literally leaves everything out on the track.’
Jason Richardson speaking of Steven Solomon at Tokyo Olympics. (2 August 2021)

‘Operators are literally at the end of their tether.’
Queensland Tourism Industry Council CEO, Daniel Gschwind on the need to open borders, on 2GB with Joe Hildebrand. (23 September 2021)

‘She’s literally dropped from the roof to win.’
Race caller Matt Hill describing Chaillot’s last to first win at Sandown. (25 September 2021)

‘…this is a last chance saloon, literally.’
Prince Charles on the climate change summit in Glasgow. (11 October 2021)

‘She was literally born in the snow.’
Jason Richardson on Network 7 talking about Jakara Anthony winning the Women’s Mogul, Winter Olympics Beijing. (6 February 2022)

‘The other horse that’s literally airborne is Quietly Discreet.’
Racecaller Brett Davis assessing the chances of horses at Murray Bridge on sports radio. (5 March 2022)

‘We were literally staring into the economic abyss.’
Treasurer Josh Frydenberg talking about the Covid crisis during a press conference. (12 April 2022)

‘She’s literally flying.’
Adelaide racecaller Brett Davis tipping the inform sprinter Comica on Sports radio. (7 May 2022)

After that, ‘the family literally imploded into a million pieces.’
Dr Phil on an episode aired on Channel 10. (26 May 2023)

‘She is literally jumping out of her skin!’
Andy Park ABC radio Drive host introducing a Matildas fan to report on the opening game. (21 July 2023)

‘You literally blew me away!’
Jessica Mauboy to a contestant on the Voice. (6 August 2023)

‘Your performance literally tore the roof off this place.’
Jason Derulo, Voice judge to contestant. (3 September 2023)

 


I hope you have enjoyed the latest edition of Noel News.

Thanks for all your kind comments. Please continue to send feedback through; it’s always appreciated and helps us to improve the newsletter.

And don’t forget you’ll get more regular communications from me if you follow me on X – @NoelWhittaker.

Noel Whittaker


Noel News 13 September 2023

“The difference between greatness and mediocrity is often how an individual views a mistake.”
NELSON BOSWELL

 


Welcome to our September Newsletter

It’s been another busy month and the good news is that the Reserve Bank did not increase interest rates at its monthly meeting on 5 September. I do think we’re getting near the top of the interest-rate cycle, but I can’t guarantee there will be no more rate rises. The problem is that so much inflation appears to be entrenched with big backlogs in the construction industry. Increasing rates won’t fix that.

The estate planning book is moving along but taking longer than I thought due to the vast amount of research needed. I do thank you all for the fantastic anecdotes you have sent me. I’m now working through these and I think they’ll be of immense benefit to the readers of that book. We’re still hoping for release in time for Christmas.

Geraldine and I will be leaving for Los Angeles and London in a couple of weeks. We had intended to go just to Los Angeles to visit James and his family, but the travel agent pointed out it would be cheaper for us to travel business class from Brisbane to Los Angeles then on to London, and back to Brisbane, than to fly to Los Angeles and back.

 

Image by Benjamin Davies Webb on Unsplash

Given we have no accommodation costs in Los Angeles because we will be staying with James, we feel it was too good a chance to miss out on. We have already booked tickets to see the musical Guys and Dolls in London; I hear it’s fantastic.

 


Quarterly pension changes

The quarterly age pension adjustments come into play on 20 September, and thanks to inflation all pensioners will get an income boost.  The pension rates are somewhat confusing because there are four changes a year: in July and January each year they adjust the thresholds, and in September and March they adjust the amount of pension paid. These changes can sometimes produce anomalous outcomes, and savvy pensioners should keep an eye on the changes, to see if they can tweak their situation to achieve better financial outcomes.

Go to my website, www.noelwhittaker.com.au, to download the new pension charts (on the Free Downloads page) and play with the age pension calculator and the deeming calculator, both of which have been updated with the new numbers.

 

Image by Centre for Ageing Better on Unsplash

The last pension changes took affect from 1 July. Because they raised the thresholds but not the amount of the pension itself, only part-pensioners got an increase in their pension. This meant the most needy pensioners – those under the asset and income thresholds – got no pension increase at all, despite record inflation. In fact, they went backwards. But part-pensioners who were just over the bottom threshold ended up with a full pension because of the threshold increase.

For example, on 1 July 2023 the level of assets at which the pension starts to reduce for a couple rose from $419,000 to $451,500. That meant that pensioners who were missing out on the full pension due to a tiny amount of excess assets ended up with the full pension because of a rise in the cut-off rate.

But when the rate of pension goes up, the upper limit threshold cut-off point automatically increases as well. So now retiree pensioner couples have cracked the million dollar mark in assets: the cut-off point for a homeowner couple has risen from $986,500 to $1,000,003.

Given the sad state of government finances, there must be some who will be thinking, “Why should people with $1 million of assets, plus most likely a luxury home, be getting welfare?”

Note how the tests intersect: Centrelink tests you on both the income test and the assets test, and then applies the one that gives you the least pension. But the tests are out of kilter, which can lead to some unusual results. For example, if you’re asset-tested, deeming is not relevant – it’s only used for the income test.

A couple with $1 million of assessable assets can earn $95,000 a year income because they’re not assessed under the income test. If those assets included $900,000 of financial assets they would be assessed as having a deemed income of just $18,246 a year, but they still have scope to earn an additional $76,754 a year.

 

Image by Freepik

Many pensioners deprive themselves of future income by overvaluing their personal positions. The value of your furniture should be only what you would get for it if you sold it in a garage sale on a wet Saturday morning. This puts $5000 – tops – on most people’s furniture. For assets-tested pensioners, every $10,000 reduction in assets is worth about $15 a week in extra pension. So by investing $15,000 in a funeral bond and giving $10,000 to charity or your kids, your pension could be increased by $37.50 a week. That’s a 7.8% guaranteed return on your money.

 

Image by gpointstudio on Freepik

There are now pension-friendly products that may enable self-funded retirees to get a part pension and all the concessions to go with it. For example, a couple with $1.1 million of assessable assets could invest $300,000 in an approved lifetime income product. The term “approved” means that only 60% of its value is assessed for the assets test – it’s as if they’ve disposed of the other 40%. Their assessable assets would drop by $120,000 to $980,000 and they would qualify for a pension of $68 a fortnight plus all the concessions. They would also receive a lifetime income from the new product, which could be worth $20,000 a year, indexed, depending on their situation.

If you think these sort of strategies may benefit you, talk to a good financial adviser for more details.

 


Shares

Vanguard has just released its 22nd annual Index Chart plotting the performance of major asset classes over the last 30 years, affirming that despite significant downturns, markets typically trend upwards over time.
Over the last 30 years, Australian shares on average have returned 9.2% per annum despite market events such as Russia’s invasion of Ukraine in 2022, the COVID-19 pandemic in 2020 and the Great Financial Crisis in 2007.
This financial year, Australian shares returned 14.8%, a marked improvement on the previous year when the same asset class returned -7.4%.

“Vanguard’s annual Index Chart puts into perspective the importance of approaching investing with a long-term mindset,” said Balaji Gopal, Head of Financial Adviser Services at Vanguard Australia.

 

Cartoon by Bob Rich on Hedgeye

“While investors shouldn’t rely on past performance, 30 years of market history has proved that the impact of geopolitical, economic and social events on performance is usually short-lived, and markets will typically recover and rise over time.

“Looking back over the last few decades, bear markets on average last only 0.9 years and are generally followed by a bull market, averaging 6.5 years. Investors who stay invested through downturns are therefore best poised to benefit when markets inevitably bounce back”.

Also illustrated in the chart is how an initial investment of $10,000 invested in broad Australian shares in 1993 would have grown to nearly $138,800 today, an average of 9.2% return per annum. The same $10,000 in U.S. shares would have grown to $176,200, returning 10% per annum.

 

 

Don’t forget you can track the Australian share market right back to 1980 using the stock market calculator on my website. You have the choice of choosing a starting and a finishing date.

 


Sixth Intergenerational Report

Last week we saw the release of the sixth Intergenerational Report (IGR). These reports were introduced 21 years ago by the treasurer of the time, Peter Costello, to give governments an idea of what the future may look like in 40 years, and to put in place appropriate strategies to handle a changing country.

Unfortunately, any action that should occur as a result of the IGRs has usually been put in the too-hard basket.

 

 

 

When the fourth IGR was released eight years ago, I wrote:

“Last Thursday’s Intergenerational Report contains some scary statistics. Within 40 years the life expectancy of the average male will be 95.5 years, and for a female 96.6 years. The population will be almost 40 million and include more than 40,000 people aged over 100. The bad news is that there will be just 2.7 people aged between 15 and 64 — potential taxpayers — for every person aged 65 and over.

“This imbalance will get worse as the ratio of dependants to workers grows over time. Our taxation system presents grave challenges too. Currently, 61% of personal income tax is received from a mere 11% of taxpayers, leaving the bulk of taxpayers contributing very little. In addition, 87% of those aged 65 and over pay no tax whatsoever.

“A full review of our tax and welfare system is overdue, but the adversarial nature of politics does not make for optimism. Right now, the federal government reminds me of a dysfunctional family. Dad and Mum (the two major parties) spend all their time abusing each other and promising the world to their children (us, their constituents) while well-meaning but inexperienced relations (the minor parties) add to the turmoil by telling the kids that their parents don’t know what they are talking about.”

Does that sound familiar?

 

Taken from Intergenerational Report 2023

 

The latest IGR points out that the share of the taxation burden will increasingly fall on ordinary workers. Yes, they will get some tax relief provided the legislated text cuts happen on 1 July next year, but already the Greens are claiming the tax cuts are far too generous and should not happen. Given the emphasis in the IGR on the burden that will be faced by future workers unless the tax brackets are adjusted, it would be a brave government who reversed the legislation and decided not to bring those tax cuts in. The proposal is that for taxable incomes from $45,001 to $200,000 there will be a flat tax of 30%. These cuts are long overdue and go a long way to aligning the personal tax rate with the company tax rate.

One way to reduce the burden of an ageing population is to encourage people to stay in the workforce much longer than they do now. But despite much lobbying from National Seniors, no government has done much to encourage pensioners to work.

In recent articles I mentioned that one way to get everybody paying their fair share of tax would be to raise the GST. I notice the Teals and Senator David Pocock are now pushing for just that, but Labor has always been opposed to a GST, so there may not be much chance of it happening. But remember the outcry when John Howard introduced a GST – then the main tax brackets were 34% from $20,700 to $38,000 a year and 43% for incomes between $38,000 and $50,000 a year. Imagine where we would be now if the GST had never happened, and the tax brackets were not adjusted.

 


Retirement Village Contracts

By Rachel Lane

If you’re thinking about moving into a retirement village it is crucial that you understand your contract. The recent 2023 Retirement Living Census shines a light on how retirement village contracts are changing. The census shows a significant swing towards contracts that base the exit fee on the purchase price and don’t share capital gain with the resident. Almost three quarters (73%) of the industry is now using this form of contract, up from around half (55%) of contracts in the previous year and more than triple what it was in 2017 (20%). This change is likely to be a result of residents preferring certainty and recent legislative changes.

 

Image by karlyukav on Freepik

In most states, retirement villages are now required to provide a guaranteed buyback to residents if their home in the village has not sold within a certain period. The timeframe varies across the states and does not apply to all contracts. For example, in New South Wales the buybacks are 12 months in regional areas and 6 months in metropolitan but do not apply to strata, company title or community title contracts.

While a move away from contracts that share capital gain with residents may appear to be a huge disadvantage, it’s important to understand the distinct differences between retirement villages and the broader property market. The average price of a two-bedroom unit went from $32,000 to $516,000, an increase of 6% for the year. If we look at the longer-term numbers the price increased from $398,000 in 2016, with no negative years, so retirement village properties are averaging a gain of around 4% p.a.

Retirement village contracts that give you some or all of the capital gain normally require you to meet some or all of the costs associated with achieving it. Such costs typically include renovation costs, marketing expenses and selling fees. The biggest of these is normally renovation costs. The census showed that half (49%) of renovations for retirement village units more than 15 years old cost at least $40,000 with 6% exceeding $80,000.

 

 

Interestingly, the reason why residents left a village changed significantly over the 12 months. In the previous census, the most common reason for leaving a village was to enter aged care (44%). In this census, entering aged care and moving to another village were the most common reasons for leaving (31% and 30% respectively). The increase in residents moving to another village was the highest ever recorded and a staggering 600% greater than the previous year (5%). The removal of the costs and uncertainty inherent in contracts that share capital gain has seen a number of village operators give residents the option to move between villages without restarting their exit fee calculation. This flexibility enables residents to move between villages within the same organisation to be closer to family or to change their accommodation as their circumstances change.

While not captured by the census, the move to contracts without capital gain has also enabled greater flexibility around how and when residents pay their management fee. Many of the new contracts offer residents the choice of paying their management fee upfront (for a discount) when they leave or in some cases paying a higher purchase price and not paying a management fee at all. Such payment options give residents the ability to pay in a way that suits them; it also creates transparency around the true price.

 

 

What you are losing on the merry-go-round of capital gain can be more than offset by what you pick up on the swings of certainty and flexibility. Ultimately your retirement village contract is a balance of rights, responsibilities and costs; you need to look at it through those three lenses and make sure it works for you.  A village guru can take the headache out of crunching all the numbers by showing you the village costs upfront, while you live and when you leave combines with an estimate of your age pension and rent assistance entitlements and home care package costs. It can show up to 3 options side by side, enabling you to easily compare different homes, villages or payment options.

 


Never Let Age Stop You

If you’re after an interesting podcast to listen to, or simply in need of some motivation, my son James just released a podcast with skydiving cinematographer Norman Kent who has spent a lifetime breaking world records.

Don’t miss the intro to the podcast episode – a world record in itself and must surely be one of the most unique things ever seen in podcasting. It involved 100 skydivers, all aged 60+ years old, jumping out of a plane together. It’s an extraordinary piece of filmmaking.

Before you ask, no, I do not intend to go skydiving anytime soon!!! However, I do feel that it’s an exceptionally powerful reminder that age should never restrict our belief in what we’re capable of.

The full episode is fantastic. Norman shares a lot of lessons on the relationship we should have with fear, what to do when it all goes wrong, and even anecdotes on how actor Tom Cruise is able to master skills in the fastest possible time so he can do all his own stunts that we see on the big screen.

You can watch the full episode here: https://youtu.be/rbuL2ZfOE54 

 

 


And finally

Question: If you could live forever, would you and why?
Answer: “I would not live forever, because we should not live forever, because if we were supposed to live forever, then we would live forever, but we cannot live forever, which is why I would not live forever,”
– Miss Alabama in the 1994 Miss USA contest.

“Whenever I watch TV and see those poor starving kids all over the world, I can’t help but cry. I mean I’d love to be skinny like that, but not with all those flies and death and stuff.”
– Mariah Carey

“Smoking kills. If you’re killed, you’ve lost a very important part of your life,”
– Brooke Shields, during an interview to become spokesperson for federal anti-smoking campaign

“I’ve never had major knee surgery on any other part of my body,”
– Winston Bennett, University of Kentucky basketball forward.

“Outside of the killings, Washington has one of the lowest crime rates in the country,”
– Mayor Marion Barry, Washington , DC .

 

Image by Mona Eendra on Unsplash

“That lowdown scoundrel deserves to be kicked to death by a jackass, and I’m just the one to do it,”
– A congressional candidate in Texas …

“Half this game is ninety percent mental.”
– Yankee HOFer Yogi Berra

“It isn’t pollution that’s harming the environment. It’s the impurities in our air and water that are doing it..”
– Al Gore, Vice President

“I love California. I practically grew up in Phoenix …”
– Dan Quayle

“We’ve got to pause and ask ourselves: How much clean air do we need?”
– Lee Iacocca

“The word “genius” isn’t applicable in football. A genius is a guy like Norman Einstein.”
– Joe Theisman, NFL football quarterback & sports analyst.

“We don’t necessarily discriminate. We simply exclude certain types of people.”
– Colonel Gerald Wellman, ROTC Instructor.

“Your food stamps will be stopped effective March 1992 because we received notice that you passed away. May God bless you.. You may reapply if there is a change in your circumstances.”
– Department of Social Services, Greenville , South Carolina

“Traditionally, most of Australia’s imports come from overseas.”
– Keppel Enderbery

“If somebody has a bad heart, they can plug this jack in at night as they go to bed and it will monitor their heart throughout the night. And the next morning, when they wake up dead, there’ll be a record.”
– Mark S. Fowler, FCC Chairman

 


I hope you have enjoyed the latest edition of Noel News.

Thanks for all your kind comments. Please continue to send feedback through; it’s always appreciated and helps us to improve the newsletter.

And don’t forget you’ll get more regular communications from me if you follow me on X – @NoelWhittaker.

Noel Whittaker


Noel News 21 August 2023

“Make the most of yourself, because that is all there is of you.”
RALPH WALDO EMERSON

 


Welcome to another Newsletter

The big news last week was the housing summit, but unfortunately, I can see nothing proposed to solve the alleged housing crisis. There are two basic problems: too much demand and too little supply. The only way to cut demand is to cut immigration, which the government is not prepared to do, and building all these proposed new houses will put further pressure on the building industry, which cannot complete the jobs they have.  I would hate to be building or renovating a house right now.

Then of course you have the Greens pushing for a rental freeze, one of the worst ideas imaginable. To increase the supply of rental houses, we need to make becoming a property investor attractive, not unattractive. If they want to freeze rents the government should be prepared to freeze rates, land tax, insurance and interest on the loan. You can’t attract investors by freezing their income at a time when their costs are going sky-high.


A Landlord’s Story

The following is an edited version of an email I received recently from a reader named Bob. I think it’s a perfect summing up of the current situation.

“I am 51 and fully employed. I bought a cottage in Footscray years ago –  it has a $350,000 mortgage with an interest-only loan at 5.99%. My strategy has always been to leave the investment property on interest only and focus on repaying the non-deductible debt on my own home. The rental property has shown good growth and is now worth $900,000. The rent is $450 a week or $23,400 a year, which is a yield of 2.6% based on the valuation.

Image by Scott Webb on Unsplash

Yes, rents have been rising, but not enough to offset increasing costs. The interest for the year ending June 2022 was $9,600 but became $13,000 for the current year. That’s an increase of 36%. I believe interest for this year will be $21,000, which will be an increase of 62%. In just two years interest has increased by 220%. The increase in interest in those two years is $220 a week while the rent has increased by just $30 a week.

On top of this is an electrical and gas compliance cost of $1500, increased land tax, and large increases in insurance. Based on these assumptions, there will be a loss of $10,000 for the current year with the only silver lining being a tax refund of $4000.

Image by pressfoto on Freepik

As a strategy to curb inflation higher interest rates are having the opposite effect by putting pressure on landlords to increase rents to keep their own heads above water. Rent is now one of the major influences on domestic inflation.

I would like to get out, but the potential capital gains tax bill of $150,000 makes me hesitate. I now understand why some people invest all their capital in the most expensive home they can afford and live in it well while enjoying its CGT-exempt status. When it comes to pension time, the home is excluded from the assets test – the investment property is not.

Looking at all this in totality, is it any wonder we have generated a rental crisis?”

 


Interest Rates

Interest rates are always in the news and I’m not convinced there will be a pause at next month’s Reserve Bank meeting on 5 September.

Outgoing Reserve Bank of Australia (RBA) governor Philip Lowe has warned against premature celebrations in the central bank’s ongoing battle against inflation while flagging the possibility of additional monetary policy tightening in the future.

Image by wayhomestudio on Freepik

In his final appearance as governor before the House of Representatives standing committee on economics, Dr Lowe said:

‘We’ve made progress here, and things are moving in the right direction, but it’s still too early to declare victory.’ While describing recent data as ‘encouraging’ and consistent with inflation returning to target in the next couple of years, Dr Lowe highlighted two key risks that the RBA is focusing on, including the possibility that services inflation remains at high levels.

‘High services price inflation reflects a combination of factors, including strong demand for services in the wake of the pandemic, stronger growth in nominal wages and incomes, and weak productivity growth – this weak productivity growth is a particular problem for a number of reasons. Amongst these is that, in combination with a high level of aggregate demand, it is adding to the upward pressure on prices.’

Image by Bob Rich on Hedgeye

The RBA governor noted that the central bank’s forecasts are based on productivity growth returning to near pre-pandemic levels. This, he said, would contribute to a moderation in the growth of unit labour costs and therefore inflation.

His summing up was:

‘Looking forward, it is possible that some further tightening of monetary policy will be required to ensure that inflation returns to target within a reasonable timeframe. Whether or not that’s the case will depend upon the data and the board’s evolving assessment of the outlook and the risks.’

But it’s a worldwide thing.

Minutes released last week from the American Federal Reserve showed that most Federal Reserve officials see ‘significant upside risks to inflation that may require more tightening’. Policymakers cited a range of scenarios that included the rising commodity prices that could lead to ‘more persistent elevated inflation’.

Image by Bob Rich on Hedgeye

Two of them favoured halting rate hikes, but the minutes showed no official dissenters. The Fed economists also expect a small rise (only) in the jobless rate in the US, but they warned that commercial real estate fundamentals could worsen.

As I was writing this, I got a newsflash from the Wall Street Journal saying the average new mortgage rate in America is now 7.09%, the highest in 20 years. As the paper said, it’s a disincentive for people to buy, and a disincentive for people whose rates are locked in at 2% for 30 years to sell.

 


Aged Care

Challenges in the aged care system continue to dominate the news. The facts are not in doubt: people are living longer, and within eight years, the number of people over 75 is expected to increase by 101%. The problem is that the number of people between 15 and 64 – the ones who pay taxes to support older people – is forecast to increase by just 28%.

The ageing population is putting an increasing cost on the welfare budget and the big challenge is how to pay for it. It’s been nearly three years since the Royal Commission into aged care proposed a simple solution: charge an aged care levy, like a Medicare levy, on all taxpayers.

The commission recommended a minimum levy of 1%, which would rise with age and with taxable income. For example, people in the second tax bracket would pay an extra 3.6% of their income, while people over 40 in the same tax bracket would pay 6.8% of their income.

The proposition was ludicrous and sank like a stone. Most retirees pay no income tax at all. Imagine the outcry if workers, already slugged with rapidly rising mortgage costs, were slugged with a massive tax on their income while the oldies continued to enjoy a tax-free retirement. It was never going to get traction. Besides, suggesting that the rate of income tax you pay should depend on your age is ridiculous.

Last week ACCPA (Aged Community Care Providers Association) released an issues paper in which they canvassed the problem in depth and pondered ways it could be rectified. They considered ways to plunder people’s superannuation, but they are on dangerous ground here.

For years, the anti-superannuation lobby have focused on the fact that most retirees die with substantial money in superannuation. They see this as proof that they should never have been allowed to accumulate that much money in the first place. Suddenly, there’s been a change of attitude, and now there are suggestions that superannuation should now be earmarked for their aged care.

If you talk to senior Australians, however, you will find they have good reasons for going easy on drawing down their superannuation. They can all relate stories of friends who had sudden and unexpected health issues, which incurred massive costs. As far as they’re concerned, their super is their safety net, and they are not going to fritter it away.

The ACCPA issues paper also mentions an ‘inheritance tax’ for super but gives no details on how such an animal might be created. For starters, there is already a death tax of 17% on super, which applies to that part of the taxable component left to non-dependents. But in any event, because of the way our income tax system works, a retired couple could have financial assets of up to $800,000 in their own name outside super and pay no tax whatsoever.

If the government tried to hit super with an inheritance tax, people would simply cash out their super and opt out of the system. It’s never going to work.

So we are stuck with a situation where it’s not practical to tax existing taxpayers to fund the aged care of senior citizens, and special taxes on superannuation would never work because people would opt out of the system. The only solution available is to raise the GST to 15% with no exemptions. This would not only catch every Australian irrespective of age but would also raise a fortune from the cash economy. Finally, every Australian would be paying their fair share of tax.

There is also a misconception about how much wealthy people pay for age care.

Image by Freepik

A reader emailed me as follows:

‘What about raising the caps for the means tested fees for wealthy aged care residents?

My mother has a valuable share portfolio and a couple of term deposits and yet her means tested fee as an aged care resident is capped at $29,399 per annum and there is a lifetime cap of $70,559. Seems overly generous to me even if it increases our inheritance.’

Rachel Lane responded:

‘I think it’s important to bear in mind that the means tested care fee is just one component of the cost of aged care. Most residents pay the market price for their accommodation, anywhere between $300,000 and $3mil as a lump sum or a daily amount equivalent to that based on a government-set interest rate (currently 7.9% p.a.). Beyond that, they pay a Basic Daily Fee of $59 per day plus an additional service fee for any services above the prescribed care and services: a choice of meals, a glass of wine with dinner, entertainment, hairdressing, etc.

On top of those fees is the Means Tested Care Fee, which is currently capped at $31,706 p.a. and $76,096 over a lifetime. Uncapping the means tested is unlikely to solve the problem, as around 1/3 of aged care residents are classified as low means and either don’t pay a means tested care fee or pay a very small amount. Of the market price payers, you would still have a significant proportion who don’t have sufficient means to make them liable for the maximum amount. It would pick up the very wealthy, and there is an argument for increasing or removing the caps for that reason, but it wouldn’t solve the issue of how to fund care for everyone.’
 


Do you want to Win the Day?

If you missed the event that my son James and I were speaking at in Brisbane last month, you’re in luck. James will be the keynote at a free online event with Success Magazine, facilitated by its editor-in-chief, Amy Somerville.

He will be sharing tips on how to think much bigger than your circumstances, achieve your goals, and upgrade your daily routine.

Date: Thursday, 31st August
Start time: 8am (BNE / SYD / MEL)

More than 300 people have registered so far.

If you’d like to attend, all you need to do is click here and add your email address – or click on the image below. You will then receive a calendar invite with the event access link.

It’s a busy week for James because it also coincides with the release of Episode 150 of his Win the Day podcast. He will be interviewing Mark Victor Hansen who is the creator of the Chicken Soup for the Soul book series that sold 500M+ copies worldwide. The theme of the episode is that the size of your questions determines the size of your results.

Many years ago, I was asked to contribute to Chicken Soup for the Teenage Soul, so it’s fascinating to see James and Mark connect for what I’m sure will be a thrilling conversation.

You can subscribe to James’ podcast below:

 


Super Returns

The median balanced option delivered a return of 1.5% in July according to estimates from SuperRatings, with funds continuing to build on the momentum in markets seen over the final quarter of FY23.

The impact of inflation continues to drive markets with most Australian and global equities delivering modest returns, while energy and commodities performed well over July. They expect returns will remain bumpy over the short term, despite the Reserve Bank of Australia taking a wait-and-see approach in both July and August, following indications that the tightening cycle is beginning to have a clearer impact on spending and consumption.

The median growth option rose by an estimated 1.8%, while the median capital stable option delivered a small positive result, with an increase of 0.8%.

 

 

Executive Director of SuperRatings Kirby Rappell commented, “Funds have had a strong finish to FY23 with the median balanced fund returning 9.1% over the year to June and it is pleasing to see funds maintaining that momentum into the first month of FY24.”

 


Protect your motor vehicles

Millions of Aussie motorists are taking precautions to reduce the risk of car theft, according to new research by Finder, Australia’s most visited comparison site. A Finder survey of 946 Australian drivers found almost half (41%) – equivalent to 3.5 million households – are taking additional measures to protect their vehicles.

Image by senivpetro on Freepik

The research found 1 in 6 (15%) are hiding their keys in their house, while installing surveillance cameras to curb car thefts (14%) was the second most popular anti-theft method.

Gary Hunter, car insurance expert at Finder, said, “Certain areas are witnessing a sharp increase in the rate of vehicle thefts, and fed-up owners are doing what they can to deter thieves. There’s a common misconception that car thieves only target new cars – but the statistics show the majority are a decade old or older.”

We live in a good area, but attempted car thefts are common. When we go to bed we turn on an alarm system that triggers the entire house apart from our bedroom. We also leave the side door to the garage unlocked because we figure the first place a thief will look is the garage to see what cars are in there. The moment they open the door the alarm will go off. We also keep our car keys in a safe, and the whole house is surrounded with security lights which come on the moment they are triggered. These deterrents are not hard to do and not expensive. I’m stunned 59% of people still take no precautions.

 


 And finally

Air Traffic Control Gems

Image by kues1 on Freepik

Tower: “Delta 351, you have traffic at 10 o’clock, 6 miles…”
Delta 351: “Give us another hint! We have digital watches!”

“TWA 2341, for noise abatement, turn right 45 degrees.”
“Center, we are at 35,000 feet. How much noise can we make up here?”
“Sir, have you ever heard the noise a 747 makes when it hits a 727?”

O’Hare Approach Control to a 747:
“United 239 heavy, your traffic is a Fokker, one o’clock, three miles, Eastbound.”
United 239: “Approach, I’ve always wanted to say this… I’ve got the little Fokker in sight.”

A DC-10 had come in a little fast and thus had an exceedingly long rollout after touching down.
San Jose Tower noted: “American 751, make a hard right turn at the end of the runway, if you are able. If you are not able, take the Guadalupe exit off Highway 101, make a right at the lights and return to the airport.”

A Pan Am 727 flight waiting for start clearance in Munich overheard the following:
Lufthansa (in German): “Ground, what is our start clearance time?”
Ground (in English): “If you want an answer you must speak in English.
Lufthansa (in English): “I am a German, flying a German airplane, in Germany. Why must I speak English?”
Unknown voice from another plane (in a beautiful British accent): “Because you lost the bloody war.”

One day the pilot of a Cherokee 180 was told by the Tower to hold short of the active runway while a DC-8 landed. The DC-8 landed, rolled out, turned around, and taxied back past the Cherokee. Some quick-witted comedian in the DC-8 crew got on the radio and said, “What a cute little plane. Did you make it all by yourself?” The Cherokee pilot, not about to let the insult go by, came back with a real zinger:
“I made it out of DC-8 parts. Another landing like yours and I’ll have enough parts for another one.”

While taxiing at London’s Gatwick Airport, the crew of a US Air flight departing for Fort. Lauderdale made a wrong turn and came nose-to-nose with a United 727.
An irate female ATC ground controller lashed out at the US Air crew, screaming:
“US Air 2771, where the hell are you going? I told you to turn right onto Charlie Taxiway! You turned right on Delta! Stop right there. I know it’s difficult for you to tell the difference between C and D, but get it right!”
Continuing her rage at the embarrassed crew, she was now shouting hysterically:
“God! Now you’ve screwed everything up! It’ll take forever to sort this out! You stay right there and don’t move till I tell you to! You can expect progressive taxi instructions in about half an hour and I want you to go exactly where I tell you, when I tell you, and how I tell you! You got that, US Air 2771?”
“Yes, ma’am,” the humbled crew responded.
Naturally, the ground control communications frequency fell terribly silent after the verbal bashing of US Air 2771. Nobody wanted to chance to engage the irate ground controller in her current state of mind. Tension in every cockpit out around Gatwick was definitely running high. Just then an unknown pilot broke the silence and keyed his microphone, asking:
“Wasn’t I married to you once?”

 


I hope you have enjoyed the latest edition of Noel News.

Thanks for all your kind comments. Please continue to send feedback through; it’s always appreciated and helps us to improve the newsletter.

And don’t forget you’ll get more regular communications from me if you follow me on twitter – @NoelWhittaker.

Noel Whittaker


Noel News 18 July 2023

“Don’t make your mistakes into a habit, rather make it a habit of learning from your mistakes.”
DAVID MELTZER

 


The Reserve Bank has spoken…

…and, as I predicted, interest rates are on hold for at least one more month. The big question now is where they will go from here. The simple answer is that they will keep going up until inflation is under control, and at this early point in the new financial year, I see no signs of that.

In the last two weeks our electricity bills have gone up by 15%, our car insurance bill is up 45%, all tolls have increased, and my favourite block of Lindt chocolate has leapt from $3.50 to $5.50. At the same time, the whole country is in a building frenzy, with massive projects going full steam in every state. My architect friends tell me it’s impossible to get anybody to work for you in the building trade, due to the growing shortage of workers.

The sad reality is that Australia, like most of the rest of the world, is still suffering a vicious hangover from all the reckless interest-rate dropping and money printing of the last decade. And in Australia, the gap between the haves and the have-nots is growing rapidly.

Image by Bob Rich for Hedgeye

Families with mortgages are suffering from a deadly combination of increasing home repayments and inflation on nearly every item they buy. Renters face the double whammy of accommodation shortages and rent rises, thanks to a thoughtless immigration program.

But the worst hit are people in small business. Small businesses should be the engine of the economy, but many of them are in serious trouble.

Imagine if you owned a small business. At the start of the financial year your staff had big pay increases, interest rates on your home and business mortgages went up, and compulsory superannuation rose from 10.5% to 11%. To make it worse, many of your customers may be cutting back on spending because their own situation is tight. The deadly combination of falling turnover and increasing on-costs could be the end of you.

But there’s more. I am told by a reliable authority that the tax office is now embarking on an uncompromising debt collection campaign. Apparently, during the Covid years, the ATO realised that many businesses had to pay reduced tax instalments just to stay in business and took a lenient stance on late tax payments. But the ATO have now changed tack: they are aggressively chasing late tax payments and have no hesitation in adding penalties. This could be the final straw for many people in small business.

Last week Michelle Bullock was confirmed as the new RBA governor. As I wrote in my last newsletter: “Last week Reserve Bank Deputy Governor, Michelle Bullock, argued that the unemployment rate would have to climb to 4.5% to tame inflation. For this scenario to happen 140,000 people may well lose their jobs. She was adamant that inflation will not return to the bank’s 2% to 3% target band without a sustained period of low employment growth. She said, “our assessment is that, for the first time in decades, firms’ demand for labour exceeds the amount of labour that people are willing and able to supply. That is, employment is above what we would consider to be consistent with our inflation target.”

The Reserve Bank is between a rock and a hard place. They cannot tolerate a continuing situation of negative real interest rates (i.e. interest rates below the rate of inflation), yet there is no sign that inflation is abating. The rest of the world is continually raising rates with no sign of stopping – if we don’t follow suit our dollar will drop further and make imports more expensive. Of course, this will add to inflation.

Furthermore, the more they delay increasing rates the bigger the shock will be when they have to start increasing again if inflation does not reduce. My tip is that the cash rate will hit 5%.

There’s no simple answer – all you can do is make your own situation as safe as possible.

 


Your feedback please

My new book Estate Planning Made Simple is coming on very well and we are on track for release in November this year. But I’m keen to get some real-life experiences.  I would love people to send me an email telling me what they went through when a special person in their life died and/or they had to wind up an estate. Have you been an executor, if so, what was that like? What advice would you give to anyone now given your experiences?

 

Image by Kerri Shaver on Unsplash

A typical one I received recently was from a widow who told me that they had been living on her husband’s account-based pension; when he died, the executor told the fund of his demise straightaway. They stopped her pension immediately and took six months to restore it. The lesson there is that the executor should not have been so fast, advising the fund about the death of the fund member.

 


Last Friday’s Event

 

As I foreshadowed in my last newsletter, my son James and I were the speakers at a business lunch in Brisbane last Friday. First of all, thanks to all of you who attended – your support is most appreciated.

 

 

The subject of my talk was the fundamentals of building wealth. It just happened that four days earlier I had addressed an investor group at which a chap asked me to sign a well-used copy of Making Money Made Simple, which his dad had given him 35 years ago. He said, “That book enabled me to retire at 52.”

The lesson here is that financial fundamentals do not change. Whenever I talk about becoming wealthy, I quote the famous 1926 book The Richest Man in Babylon by George Clason. The main message there is: “A part of all you earn is yours to keep.” To do this, you must be spending less than you earn – this habit alone would put you in the top 15% of Australians.

 

 

The next fundamental to understand is the power of compounding. How much you have when you retire depends mainly on the rate of return you achieve during your working life. I told the audience about Jess and Paul, each aged 20, on a salary of $25,000 a year, with $3000 in superannuation. Paul takes an active interest in his super and selects funds/assets that obtain an average net return of 9% over the next 45 years. At age 65, Paul has $2.1 million in super. Jess is disengaged with her super, so she takes no notice of the fees she is charged or how the fund is performing. She just leaves her money in the default investment option, which returns 4.5%. At age 65, Jess has only $640,000 in her super. That’s a difference of $1.5 million.

 

Image by Vishal at Safal Niveshak

Once you understand those two lessons, the next one makes sense: putting strategies in place to make saving and investment happen automatically. The money you invest is the foundation of your financial future. But let’s face it, if you try to save what’s left out of each pay, there is never anything there. There are many strategies to automate saving and investing, such as automatic debits to investment and superannuation, and reinvesting dividends on your share investments.

Once you have these in place and have built up a base, you can increase the money working for you by borrowing for growth assets.

When I wrote Making Money Made Simple in 1987, I pioneered the concept of paying your home loan fortnightly instead of monthly. The banks all laughed; they hadn’t realised that if you change from $2000 a month to $500 a week, you actually increase your repayments by $2000 a year. You pay your loan off significantly faster! And you don’t even feel it.

The next fundamental is to understand and work with the tax system. I always ask an audience what kind of tax they would prefer to pay: income tax, GST or capital gains tax (CGT). They never say CGT, even though it’s by far the mildest tax: you don’t pay until you dispose of an asset, and you get a 50% discount after a year. I guess because you pay it as a lump sum, rather than a trickle, people notice the pain of paying it more.

From July next year, the legislated tax cuts should be in place, which means the 30% tax bracket will extend from $45,000 a year to $200,000 a year. This is great news for many people: please make sure you take advantage of it. You’ll need to understand how franked dividends work – sadly, most people have no idea. Here’s the bottom line: once the new tax brackets are in place, franked dividends will be tax-free for everybody earning less than $200,000 a year.

Suppose you had $200,000 in an index fund returning 4% growth and 4% income. After 12 months you would have earned $16,000, which is all tax-free thanks to a combination of CGT and franking credits. This is the best way to build wealth there is!

These are the fundamentals we all need to know about money. I hope one day they will make it into the school curriculum. Until then, I’ll just have to keep writing and speaking.

 


Making Money Made Simple – 24th Edition

 

 

After my own children, there is nothing I am more proud of bringing into the world than “Making Money Made Simple”.

Over 36 years, and 24 editions, this book has been a north star guiding countless Australians to financial security and freedom in retirement. It was voted one of the most influential 100 books of all time and while the principles are timeless, tax and superannuation laws change every year.

I’ve just finished a methodical and thorough 24th update of Making Money Made Simple with the latest information and income tax rates, pension data and superannuation laws for the 2023-2024 financial year.

As a reader of this newsletter, you may already have Making Money Made Simple or another one of my books in your eBook library, so I’m offering an exclusive discount on the updated eBook to you.

If you would like a 30% discount on the eBook version of Making Money Made Simple to update your library, or you’d like to refresh your knowledge on the timeless principles of wealth building, then click here, to get your 30% discount on the 24th edition of Making Money Made Simple (eBook).

Regular retail price $16.99 special newsletter reader’s price $11.90.

The discount will automatically be applied at checkout. If you don’t see the discount applied, use the code 6718G291FZ0X

Remember, this offer applies to the eBook only – if you would like the paperback version, it’s in my main bookstore now.

 


ING debit card

 

I’ve mentioned this card a few times recently, but judging by emails from some of you, there still appears to be some confusion about their fees.

What follows has come directly from them. I was astounded to find you get a 1% cash back on utility bills just by using this card. That was news to me. I asked them for clarification and their reply is below:

Orange Everyday Benefits include:

  • 1% cashback on utility bills
  • Unlimited rebates on ING international transaction fees
  • 5 rebated ATM withdrawal fees a month (this will exclude international ATM operator fees from 1 August). 

To be eligible for these benefits you need to:

  • Deposit $1,000 per month from an external source into any personal ING account in your name (excluding Orange One and Living Super)
  • Make at least 5 card purchases in a month

Please note that Orange Everyday customers who hold an ING Home Loan are automatically eligible for Orange Everyday Benefits and are not required to meet this monthly criteria.

  • Re the point about withdrawing at least $200 in one ATM transaction in order to have your ATM fees reimbursed. This is not correct. To be eligible for the ATM rebates you only need to meet the eligibility criteria stated above.
  • The only change that will come into effect from 1 August is that we will no longer rebate the fee charged by international ATM operators. We will still rebate the fee ING charges for international ATM withdrawals so long as it’s within the 5 cap (highlighted above) per month.

Yes, on gas, water and electricity bills so long as you meet the eligibility criteria and your utility provider is listed here (most are).

https://www.ing.com.au/everyday-banking/utility-bill-cashback.html


Threads

From time to time I’ve passed on great information that comes from Keith Fitzgerald’s newsletters. He is based in America and always has an interesting and very rational view of what is going on in the financial world.

 

 

I was astounded to read this from him this morning. It speaks for itself and needs no further comment from me:

“I will not invest in Meta because I believe that CEO Mark Zuckerberg is as ruthless as they come, especially when it comes to collecting customer data in the name of manipulating… err, publishing… social commentary.

  • There was the Cambridge Analytica Scandal in 2018, which raised concerns about how Facebook handled (and facilitated) access to millions of users without their consent.
     
  • Facebook/Meta has been accused of creating echo chambers via content algorithms and highly targeted advertising, which expose people only to information Meta wants and arguably reinforce specific beliefs.
     
  • The company is under fire for emotional manipulation, thanks to studies like the 2012 “Facebook emotional contagion experiment,” in which it altered the content shown to users to measure emotional responses.
     
  • The platform’s design has raised serious concerns about addictive behaviour and negative mental impact—including features like infinite scrolling and notifications, which social scientists believe promote excessive usage and potential negative psychological effects like anxiety, depression, and decreased well-being.
     
  • Surveillance… people are worried about the Chinese, which makes no sense considering every user has just voluntarily contributed to the greatest human data repository in history.

Well, Zuck just did it again.

Meta now owns your tax return info.

According to a report by Senate Democrats, Meta has purchased the tax information of tens of millions of Americans from three large tax-preppers in order to improve its targeted Facebook and Instagram ads.

Put another way, what this means is you just got Zucked again if you’re doing your taxes with H&R Block, TaxAct, or TaxSlayer. Chances are that El Zucko and his bunch of merry marauders now own your super-private, sensitive tax return data (Read)… on top of insurance companies, credit reporting agencies, and more that have aggregated your medical records, financial records, etc.

Oh… and in case you think I’m joking around or this isn’t that bad, consider this.
You can deactivate your Threads profile at any time, but you can only delete it if you wipe your Instagram account too. 🤦‍♂️

My guess is that Zuck made a calculated decision that any fines levied when this comes to light will be an acceptable cost of doing business because he’s “got the data.”

 


Motor vehicle Security

On Channel Ten last week they featured some disturbing news. Most people, including Geraldine and myself, put the manual in the glovebox when taking delivery of a new car.

 

 

According to Channel Ten, that manual contains a QR code that can be used to start the car. Car thieves now are simply breaking the car window getting into the glovebox and starting the car using the information from the manual. Our car manuals are no longer kept in the car.

 


 And finally

 

We take English for granted. But if we explore its paradoxes, we find that quicksand can work slowly, boxing rings are square, and a guinea pig is neither from Guinea nor is it a pig.

And why is it that writers write, but fingers don’t fing, grocers don’t groce, and hammers don’t ham?

If the plural of tooth is teeth, why isn’t the plural of booth beeth? One goose, two geese. So, one moose, two meese? One index, two indices? Is cheese the plural of choose?

If teachers taught, why didn’t preachers praught? If a vegetarian eats vegetables, what does a humanitarian eat?

In what language do people recite at a play, and play at a recital?

Ship by truck, and send cargo by ship?

Have noses that run and feet that smell?

Park on driveways and drive on parkways?

How can a slim chance and a fat chance be the same while a wise man and a wise guy are opposites?

How can the weather be hot as hell one day and cold as hell another?

When a house burns up, it burns down. You fill in a form by filling it out, and an alarm clock goes off by going on.

When the stars are out, they are visible, but when the lights are out, they are invisible.

And why, when I wind up my watch, I start it, but when I wind up this essay, I end it.

 


I hope you have enjoyed the latest edition of Noel News.

Thanks for all your kind comments. Please continue to send feedback through; it’s always appreciated and helps us to improve the newsletter.

And don’t forget you’ll get more regular communications from me if you follow me on twitter – @NoelWhittaker.

Noel Whittaker


Noel News – Special Bulletin


Good morning,

This is a special bulletin to rectify the technical problems in yesterday’s newsletter. We had a huge response to the Brisbane event with James and me, but many people emailed me to say the link did not work.

I have responded to everybody who emailed me but I’m concerned that  many of you have given up. We all know the frustration caused  by links that don’t work. Any problems just email me on noel@noelwhittaker.com.au.

I’ve also taken this opportunity to respond to some questions about ING I got yesterday and also to give you  some security tips which were left out of yesterday’s newsletter because of space.

As cricket is hot news right now I have finished off with some great cricket jokes.

Have a lovely day.

 


Event in Brisbane alongside my son James

My choice of career has afforded me opportunities to speak to audiences all over the world about how to better manage their money. However, next month I’ve got something special in store for those in southeast Queensland.

On Friday 14 July, I’ll be speaking at an event in Brisbane alongside my son James. As you may know, James has been living in the US for the last 10 years and has built up an impressive audience, now reaching more than two million people each month through his podcast and social media channels.

Here are the details…

Date: Friday 14 July 2023
Time: 12 pm – 2 pm
Venue: The Warehouse, Fortitude Valley, Brisbane QLD

I’ll be talking about strategies for financial success in the uncertain times we’re in. James will be talking about how to Win the Day, which is a particularly timely message if you have children or grandchildren who could benefit from a positive and strong mindset.

We’ll also be doing a live Q&A and I’ll be gifting a copy of one of my books to every person who attends.

If you’re able to join us, we’d love to see you. Here is the link to register or for more information:

https://events.humanitix.com/the-springboard-and-co-presents-wintheday-with-james-whittaker

Tickets will sell out, so get in quickly if you’re interested.

 


ING Debit card

I wrote “this month Geraldine went to visit James in Los Angeles and used her ING card exclusively. She was refunded $210 of hidden commissions by ING.”

A few readers pointed out that ING will no longer be doing this after 30 June. I contacted ING who have clarified it. Their release said they will no longer refund fees for “operator ATMs”. This means people who take cash out of overseas ATMs. It’s the same in Australia – you need to approve the transaction when the ATM tells you the fee the operator will be charging. ING will continue to refund those fees in Australia but I think the limit is five a month.

The changes do not affect the commissions refunded on purchases such as food, clothing, etc.. To be frank I haven’t  used in overseas ATM for years because I don’t use cash any more when I travel. I rely solely on the debit card.

 


Survival Tips

Some  people left their car in the long-term parking at the airport while away, and someone broke into the car. Using the information on the car’s registration in the glove compartment, they drove the car to the  people’s home and robbed it. So I guess if we are going to leave the car in long-term parking, we should NOT leave the registration / insurance cards in it, nor your remote garage door opener. This gives us something to think about with all our new electronic technology.

A family had their car broken into while they were at a football game. Their car was parked on the green which was adjacent to the football stadium and specially allotted to football fans. Things stolen from the car included a garage door remote control, some money and a GPS which had been prominently mounted on the dashboard. When the victims got home, they found that their house had been ransacked and just about everything worth anything had been stolen. The thieves had used the GPS to guide them to the house. They then used the garage remote control to open the garage door and gain entry to the house. The thieves knew the owners were at the football game, they knew what time the game was scheduled to finish and so they knew how much time they had to clean out the house.. Something to consider if you have a GPS – don’t put your home address in it. Put a nearby address (like a store or gas station) so you can still find your way home if you need to, but no one else would know where you live if your GPS were stolen.

I never thought of this! This lady has now changed her habit of how she lists her names on her mobile phone after her handbag was stolen. Her handbag, which contained her phone, credit card, wallet, etc., was stolen. Twenty minutes later when she called her hubby, from a pay phone telling him what had happened, hubby says, “I received your text asking about our Pin number and I’ve replied a little while ago.” When they rushed down to the bank, the bank staff told them all the money was already withdrawn. The thief had actually used the stolen cell phone to text “hubby” in the contact list and got hold of the pin number. Within 20 minutes they had withdrawn all the money from their bank account.

A lady went grocery-shopping at a local mall and left her purse sitting in the children’s seat of the cart while she reached something off a shelf.  Her wallet was stolen, and she reported it to the store personnel. After returning home, she received a phone call from the Mall Security to say that they had her wallet and that although there was no money in it, it did still hold her personal papers. She immediately went to pick up her wallet, only to be told by Mall Security that they had not called her. By the time she returned home again, her house had been broken into and burglarised. The thieves knew that by calling and saying they were Mall Security, they could lure her out of her house long enough for them to rob it.

Moral lesson:

Do not disclose the relationship between you and the people in your contact list. Avoid using names like Home, Honey, Hubby, Sweetheart, Dad, Mum, etc.

And very importantly, when sensitive info is being asked through texts, CONFIRM by calling back.

Also, when you’re being texted by friends or family to meet them somewhere, be sure to call back to confirm that the message came from them. If you don’t reach them, be very careful about going places to meet “family and friends” who text you.

 


And Finally

Cricket wit 

“Geoffrey [Boycott] is the only fellow I’ve ever met who fell in love with himself at a young age and has remained faithful ever since” – Dennis Lillee

“The other advantage England have got when Phil Tufnell is bowling is that he isn’t fielding” – Ian Chappell

“Being the manager of a touring team is rather like being in charge of a cemetery – lots of people underneath you, but no one listening” – Wes Hall

“Shane Warne’s idea of a balanced diet is a cheeseburger in each hand” – Ian Healy

“I absolutely insist that all my boys are in bed before breakfast” – Colin Ingleby-Mackenzie Hampshire captain.

“The bowler’s Holding, the batsman’s Willey” – Brian Johnston as Peter Willey faces up to Michael Holding

“England have nothing to lose here, apart from this Test match” – David Lloyd

“No good hitting me there, mate, there’s nothing to damage” – Derek Randall to Dennis Lillee after being hit on the head by a bouncer.

“I just want to get into the middle and get the right sort of runs” – Robin Smith, suffering from Diarrhoea on an England tour of India.

“I’m a big believer that the coach is something you travel in to get to and from the game” – Shane Warne with a dig at coach John Buchanan

“Hell, Gatt, move out of the way, I can’t see the wickets” – Dennis Lillee after stopping in mid run-up to bowl to Mike Gatting

“Well, Andrew Strauss is certainly an optimist—he’s come out wearing sunblock” – Australian commentator in the fifth test of the 5-0 series whitewash in 2006-07

“It couldn’t have been Gatt. Anything he takes up to his room after nine o’clock , he eats” – Ian Botham on Mike Gatting involved with barmaid scandal

“I can’t really say I’m batting badly. I’m not out there long enough to be batting badly” – Greg Chappell

“It’s a catch he would have caught 99 times out of 1,000” – Henry Blofeld

“The hallmark of a great captain is the ability to win the toss.” – Richie Benaud.


I hope you have enjoyed the latest edition of Noel News.

Thanks for all your kind comments. Please continue to send feedback through; it’s always appreciated and helps us to improve the newsletter.

And don’t forget you’ll get more regular communications from me if you follow me on twitter – @NoelWhittaker.

Noel Whittaker


Noel News 28 June 2023

“The simple things that lead to success are all easy to do. But they’re also just as easy not to do.”
JIM ROHN

 


Another financial year ends

Good morning. We are almost at the end of another financial year. In the newsletter I wrote at this time last year, I was bemoaning the fact that the previous 12 months had been horrendous. However, I did point out that markets tend to have four bad years every decade and six good years, and my advice was to hang in there. That’s what I have been doing for as long as I can remember. Anyway, the market has done the right thing and the All Ordinaries Accumulation Index is up 13% from this time last year. It just proves the value of staying in there.

This is not to play down the state of the world right now. It seems that all the excesses and mistakes in the last few years are catching up. The trouble started when the GFC hit in 2008 and central banks around the world slashed rates to ridiculous levels. This was exacerbated when Covid hit and central banks poured petrol on the fire by printing trillions of dollars of money. Now it’s all caught up.

 

Photo by JC Gellidon on Unsplash

Australia is now between a rock and a hard place. Inflation is rampant but much of it cannot be fixed by driving up interest rates. Much of it is due to supply and labour issues. But to make it worse, the Labor government is pouring billions of dollars into increased wages and so-called schemes to fix the housing shortage. The problem is the resources are not available to build the houses that Labor wants to build. While it’s great to see workers getting wage increases to help them cope with inflation, it ends up in a vicious circle. The increases in wages given because of inflation are themselves inflationary. So, we have the Labor government with their foot on the accelerator and the Reserve Bank trying to put their foot on the brake. It’s going to end badly.

 

Photo of Labour government and Reserve Bank solving inflation and housing crisis – by Meritt Thomas on Unsplash

According to Domain, Australia is facing a significant challenge in meeting its housing demand. The country is projected to receive 1,235,000 net overseas migrants over the next four years, requiring an additional 497,984 homes by 2025-26. This translates to a staggering need for 341 new homes every day over the four-year period.

However, the likelihood of Australia being able to fulfil these housing supply requirements is extremely low. Construction rates are declining, compounded by widespread builder failures and the substantial increase in materials and financing costs. During a recent Senate Estimates hearing, Treasury Secretary Steven Kennedy stated that the downward trend in dwelling approvals is expected to persist until 2025. Furthermore, investment in new dwellings is projected to decline by 2.5% this year, followed by a further decline of 3.5% in 2023-24 and an additional 1.5% in 2024-25.

 


Interest Rates

All eyes will be on the Reserve Bank on Tuesday 4 July when they announce the next interest-rate decision. It’s anybody’s guess, but around the world the trend is going up.  Just this week the Bank of England (BoE) increased rates by 0.5%. It was the first major central bank to start hiking the rates to fight inflation and its efforts have been fruitless. British inflation is the worst among developed economies at nearly 9%. Consequently, the BoE may well be the last to finish hiking. The bank is expected to hike five more times by 0.25% to reach a peak rate above 6% by the end of this year or the beginning of the next.

Look at the latest UK inflation numbers – they are frightening. How would you cope if that happened here!?

 

 

Federal Reserve (Fed) Chair Powell recently said that the Fed will continue hiking rates, but because they are getting closer to the destination, it’s normal to slow down the pace. He repeated that two more hikes are a good guess and that the economy will suffer a period of tight credit conditions, below-average growth and higher unemployment to return to lower inflation.

Elsewhere, the Swiss National Bank (SNB) raised by 25bp as expected, Norges Bank of Norway surprised with a 50bp hike and announced there will be another rate hike in August – Turkey hiked from 8.5% to 15%.

Last week our Reserve Bank Deputy Governor, Michelle Bullock, argued that the unemployment rate would have to climb to 4.5% to tame inflation. For this scenario to happen 140,000 people may well lose their jobs. She was adamant that inflation will not return to the bank’s 2% to 3% target band without a sustained period of low employment growth. She said, “our assessment is that, for the first time in decades, firms’ demand for labour exceeds the amount of labour that people are willing and able to supply. That is, employment is above what we would consider to be consistent with our inflation target.”

Her statement was criticised as “entirely unnecessary” by Bill Kelty, the former ACTU secretary, who sat on the board of the RBA from 1987 to 1996. Kelty argued that inflation could be contained with an employment rate as low as 2.5%. Some union leaders called her speech “shameful” and asserted that it attacked a “busted system that was putting tens of thousands of lives at risk.”

 


Event in Brisbane alongside my son James

My choice of career has afforded me opportunities to speak to audiences all over the world about how to better manage their money. However, next month I’ve got something special in store for those in southeast Queensland.

 

 

On Friday 14 July, I’ll be speaking at an event in Brisbane alongside my son James. As you may know, James has been living in the US for the last 10 years and has built up an impressive audience, now reaching more than two million people each month through his podcast and social media channels.

Here are the details…

Date: Friday 14 July 2023
Time: 12 pm – 2 pm
Venue: The Warehouse, Fortitude Valley, Brisbane QLD

I’ll be talking about strategies for financial success in the uncertain times we’re in. James will be talking about how to Win the Day, which is a particularly timely message if you have children or grandchildren who could benefit from a positive and strong mindset.

We’ll also be doing a live Q&A and I’ll be gifting a copy of one of my books to every person who attends.

If you’re able to join us, we’d love to see you. Here is the link to register or for more information:

https://events.humanitix.com/the-springboard-and-co-presents-wintheday-with-james-whittaker

Tickets will sell out, so get in quickly if you’re interested.

 


The war on landlords

The rental crisis is not helped by the attack on landlords. Most states have passed onerous laws requiring landlords to comply with any “reasonable” request from a tenant and the Greens are calling for a national rental freeze, which would be a disaster. Analysis of new ATO data also shows that the net average annual number of people with rental property incomes has fallen a staggering 55% in five years across the nation.

 

Property Investors Council of Australia (PICA) Chair Ben Kingsley said it’s clear that the number of net individual investors isn’t keeping up with net rental demand, and the constant attacks and financial imposts on investors over the past five years in particular has pushed the country into a rental crisis, with Victoria the worst of the lot. Mr Kingsley said:

“Never in my lifetime would I have thought that a government of the day could be that dumb to consider rental freezes; yet, the Victorian Labor government is sounding a very clear message to mum and dad property investors – telling them your money is not required in Victoria, even though it has one of the lowest rental vacancy rates in the country.”

 

 

Property Investment Professionals of Australia Chair Nicola McDougall said investors had been selling up for years – which had resulted in a critical undersupply of rental properties nationwide – because for many it’s just not worth the financial risks nor the constant requirements to fund State Government coffers via higher taxes.

“PIPA has been warning for nearly a decade about the negative impacts of market intervention on rental markets, starting with the APRA lending restrictions that came into effect in 2015, and now a variety of rent caps or controls,” she said.

“The ATO stats don’t lie, investors have already deserted markets around the nation – and especially in Victoria and Queensland – because they no longer have control of their assets.

The negative annual result for investor numbers during the first year of the pandemic was the first time this had occurred since the GFC more than a decade before, but is set to happen again sooner rather than later as investors sell up in droves.”

 


Tax tricks

Tax is a big topic right now, as we rapidly approach 30 June. Be particularly careful when doing your tax returns, as the tax office have developed some of the most sophisticated data matching systems in the world. Their capabilities first came to my attention when I asked my accountant if I needed to let them know the interest I had received on my bank accounts – their reply was, “We don’t need that – the ATO has already told us.”

The accountant then alerted me to a problem that will affect a lot of people in the construction industry:

You may remember that, when Covid struck, part of the government stimulus was to give an instant write-off for items such as work vehicles. Think about Jack a tradie who took advantage of that and spent $110,000 on a new vehicle, trailer and equipment.

 

Of course, he didn’t have $110,000 sitting idly in the bank: the whole package was financed over a five-year term. The first problem is that Jack then had a liability of $110,000 on his balance sheet, but no corresponding asset to match. In some states that may preclude his ability to keep his building licence. But it gets worse – when Jack goes to trade the vehicle, the entire value of his trade-in will be taxable income, because the vehicle he trades will have a zero balance in his books. Furthermore, the debt may be more than the trade-in value. For many people, it’s a disaster waiting to happen.

And that’s just one example.

Let’s think about tax-deductible superannuation contributions:

Because you can claim a tax deduction for a concessional tax contribution up to $27,500 (which includes the employer’s contribution), it’s a strict requirement that you have to file a notice of intent with your superannuation fund before you lodge the tax return in which you claim that contribution as a tax deduction. I hear the tax office is very strict on this, and failure to lodge the notice on time can mean loss of the tax deduction.

 

 

Employers need to be aware that they must pay their compulsory employee superannuation contributions before 30 June if they wish to claim a tax deduction in the current year. If they pay the contribution after 30 June, they’ll have to wait till next year to claim the contribution. And note that to claim a tax deduction the contribution must be received by the employee’s fund by 30 June.

There is one strategy that may be useful for employers. If you intend to pay a staff bonus, you can record it in your books before 30 June as a liability to be paid in the next financial year. The bonus needs to be properly authorised by passing a resolution before year’s end. This will give the employer the tax deduction in the current year but the bonus won’t be taxable in the employee’s hands until next financial year. If determined and authorised after 30 June, it is not deductible for the employer until next year. Obviously, employers need to do some forward planning to make sure they reach an optimum situation.

These are just a few examples of why good advice is essential when tax time comes. The ATO has already announced a special focus on expenses for rental property – you can bet that they will know far more about your affairs than you think they do.

 


Moving into a retirement village

If you have ever investigated moving into a retirement village, you will know how hard it can be to crunch the numbers and understand the financial implications.

 

Image by karlyukav on Freepik

There are fees that you need to pay to the village when you move in, while you live there and when you leave. The exit fees in particular can be complicated formulas that involve paying a percentage of your original purchase price or future sale price, sharing capital gain or loss, renovation costs, sales commissions and guaranteed buybacks (if your unit doesn’t sell within a certain amount of time).

The complexity is multiplied if you are trying to compare different payment options, different properties or one village with another. And you also need to work out what each option means for your age pension, whether or not you will qualify for rent assistance, how much money you will have left over to spend or invest, and what it can mean for your contribution to a home care package.

My good friend and co-author Rachel Lane has created a software program designed to take the financial confusion out of downsizing to a village, and it’s proving to be a big hit with operators and seniors alike.

 

Image by pressfoto on Freepik

“My motivation was actually very simple,” she says. “Almost every person that I spoke to who had downsized to a retirement village (including my own grandma) said the same thing: ’My only regret is not moving sooner.’ I wanted to remove the financial confusion from that decision.

“Confusion about village fees, age pension entitlements, rent assistance and home care package costs leads to inaction,” she says. “And the delay isn’t just weeks or months; for many, it is years. Those are years they could have spent enjoying the lifestyle that retirement villages offer: feeling safe, being part of a community, engaging in hobbies and sports … in the words of a millennial, ‘living their best life’.”

Rachel understands the complexities of the financial arrangements and knows how impossible it all seems to people who don’t do it every day. “Unfortunately, many people who are thinking about downsizing into a village simply can’t work out what it all means for them, financially speaking. In theory, people can work out the village costs from the disclosure document, use an age pension calculator like the one on the Services Australia website, and then go to the My Aged Care home care costs estimator. But in reality, it’s virtually impossible, even for those comfortable with numbers. And the difficulty multiplies if they are comparing different homes, different contracts or one village with another.”

So what does Village Guru do?

In a nutshell, Village Guru gives you a personalised report showing the ingoing, ongoing and outgoing costs of moving to their village, plus an estimate of your age pension and rent assistance entitlements and home care package fees. It can compare different payment options (if the village offers them), different units in the village, or one village with another.

So if you are considering moving into a retirement village, ask for a Village Guru report; it’s free and it makes sure you understand the numbers before you sign on the dotted line.

There are already hundreds of villages using the software, from big providers like Ingenia, Aveo, Australian Unity, Bolton Clarke and Anglicare to more boutique options like Living Choice and Sencia.

And if a move has just seemed too hard, ask for a Village Guru report from the village you are considering moving to. It will make the move a whole lot easier.

See https://www.villageguru.com.au for more.

 


Latitude credit card

For a long time, I wrote good things about the 28° MasterCard because it has no annual fees and charges no commissions on overseas transactions. It’s now become the Latitude MasterCard and their service levels have dropped dramatically. I much prefer the ING debit card for overseas transactions as there are no fees and they refund the hidden commissions – nobody else does this. This month Geraldine went to visit James in Los Angeles and used her ING card exclusively. She was refunded $210 of hidden commissions by ING. In contrast, I used my Amex card recently for an American plane ticket and they charged a 4% flat commission fee.

 

I do keep a Latitude card as a backup. Recently I got a phone call from them with a recorded message telling me that they thought my Latitude card had been compromised and to press 1 if the transaction was genuine and 2 if not. The transaction question was for a “taxi for $24”. As I have not used a taxi for at least a month I pressed the 2 button. After waiting on for 35 minutes the person at the other end of the phone said it was meant to be an Uber transaction which was a genuine one. I confirmed it was genuine and thought that would be the end of it. My Apple wallet now tells me the card is suspended. This meant another phone call to Latitude, which this time I gave up on after waiting for 50 minutes. I then used their online communication mechanism and was told I would have an answer within 30 days. Imagine if you’re overseas and that was the only card you had. It’s pathetic.

 


And finally

Musical puns

 

I wanted to learn to play the organ, but it was only a pipe dream.

The piano in the aquarium needed attention, so they called in the piano tuna.

My teacher asked me why I was playing the piano with my head. I said I’m playing by ear.

The squeeze box is the best instrument there is, accordion to the experts.

The person who invented the electric guitar must have been a livewire.

Some violinists are so highly strung they should bow out.

My music teacher was going to replace me from the band. I asked, Is that a fret?

I dated a violinist but said no strings attached.

I started learning the violin but found it too fiddly.

My guitar band had a gig on a TV show, but then it got axed.

I wanted to sign up for a sitar course but there were too many strings attached.

Marvellous experience playing the bagpipes — breathtaking!

Considering the bagpipes? Think a glen!

Why do people keep bagging out that Scottish instrument?

A clarinet tried to join a string quartet but the others thought it was just a blow in.

My clarinet has a good pitch. I can hit someone in the audience at 20 metres.

All the brass players I know seem really nice, except for one guy who can blow his own trumpet.

My dad was a tuba player. Couldn’t take him anywhere. Such a blowhard.

 


I hope you have enjoyed the latest edition of Noel News.

Thanks for all your kind comments. Please continue to send feedback through; it’s always appreciated and helps us to improve the newsletter.

And don’t forget you’ll get more regular communications from me if you follow me on twitter – @NoelWhittaker.

Noel Whittaker