{"id":118431,"date":"2023-07-20T17:19:22","date_gmt":"2023-07-20T17:19:22","guid":{"rendered":"https:\/\/websitedesigns.com.au\/elankanew\/?p=118431"},"modified":"2023-07-20T17:20:17","modified_gmt":"2023-07-20T17:20:17","slug":"noel-news-50","status":"publish","type":"post","link":"https:\/\/websitedesigns.com.au\/elankanew\/noel-news-50\/","title":{"rendered":"Noel News"},"content":{"rendered":"

Noel News<\/span><\/h2>\n

\"Noel<\/p>\n

“Don\u2019t make your mistakes into a habit, rather make it a habit of learning from your mistakes.”<\/em><\/span>
\nDAVID MELTZER<\/span><\/p>\n

The Reserve Bank has spoken…<\/span><\/h1>\n

…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.<\/span><\/p>\n

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\u2019s impossible to get anybody to work for you in the building trade, due to the growing shortage of workers.<\/span><\/p>\n

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.<\/span><\/p>\n

\"Noel<\/span><\/p>\n\n\n\n
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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.<\/span><\/p>\n

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.<\/span><\/p>\n

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.<\/span><\/p>\n

But there\u2019s 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.<\/span><\/p>\n

Last week Michelle Bullock was confirmed as the new RBA governor. As I wrote in my last newsletter: \u201cLast 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\u2019s 2% to 3% target band without a sustained period of low employment growth. She said, \u201cour assessment is that, for the first time in decades, firms\u2019 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.\u201d<\/span><\/p>\n

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 \u2013 if we don\u2019t follow suit our dollar will drop further and make imports more expensive. Of course, this will add to inflation.<\/span><\/p>\n

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%.<\/span><\/p>\n

There\u2019s no simple answer \u2013 all you can do is make your own situation as safe as possible.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Your feedback please<\/span><\/h1>\n

My new book\u00a0Estate Planning Made Simple<\/em>\u00a0is coming on very well and we are on track for release in November this year. But I\u2019m keen to get some real-life experiences.\u00a0 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?<\/span><\/p>\n

\"Noel<\/span><\/p>\n

A typical one I received recently was from a widow who told me that they had been living on her husband\u2019s 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.<\/span><\/p>\n

Last Friday\u2019s Event<\/strong><\/span><\/p>\n

\"Noel<\/span><\/p>\n

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 \u2013 your support is most appreciated.<\/span>
\n\"Noel<\/span><\/p>\n

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\u00a0Making Money Made Simple<\/em>, which his dad had given him 35 years ago. He said, \u201cThat book enabled me to retire at 52.\u201d<\/span><\/p>\n

The lesson here is that\u00a0financial fundamentals do not change<\/strong>. Whenever I talk about becoming wealthy, I quote the famous 1926 book\u00a0The Richest Man in Babylon<\/em>\u00a0by George Clason. The main message there is: \u201cA part of all you earn is yours to keep.\u201d To do this, you must be\u00a0spending less than you earn<\/strong>\u00a0\u2013 this habit alone would put you in the top 15% of Australians.<\/span>
\n\"Noel<\/span><\/p>\n

The next fundamental to understand is\u00a0the power of compounding<\/strong>. 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\u2019s a difference of $1.5 million.<\/span><\/p>\n

\"Noel<\/span><\/p>\n\n\n\n
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Once you understand those two lessons, the next one makes sense:\u00a0putting strategies in place to make saving and investment happen automatically<\/strong>. The money you invest is the foundation of your financial future. But let\u2019s face it, if you try to save what\u2019s 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.<\/span><\/p>\n

Once you have these in place and have built up a base, you can increase the money working for you by\u00a0borrowing for growth assets<\/strong>.<\/span><\/p>\n

When I wrote\u00a0Making Money Made Simple<\/em>\u00a0in 1987, I pioneered the concept of\u00a0paying your home loan fortnightly instead of monthly<\/strong>. The banks all laughed; they hadn\u2019t 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\u2019t even feel it.<\/span><\/p>\n

The next fundamental is to\u00a0understand and work with the tax system<\/strong>. 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\u2019s by far the mildest tax: you don\u2019t 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.<\/span><\/p>\n

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\u2019ll need to\u00a0understand how franked dividends work<\/strong>\u00a0\u2013 sadly, most people have no idea. Here\u2019s 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.<\/span><\/p>\n

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!<\/span><\/p>\n

These are the fundamentals we all need to know about money.<\/strong>\u00a0I hope one day they will make it into the school curriculum. Until then, I\u2019ll just have to keep writing and speaking.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Making Money Made Simple – 24th Edition<\/u><\/u><\/span><\/h1>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\"Noel<\/span><\/p>\n\n\n\n
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After my own children, there is nothing I am more proud of bringing into the world than \u201cMaking Money Made Simple\u201d.<\/span><\/p>\n

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.<\/span><\/p>\n

I\u2019ve just finished a methodical and thorough 24th update of\u00a0Making Money Made Simple<\/em>\u00a0with the latest information and income tax rates, pension data and superannuation laws for the 2023-2024 financial year.<\/span><\/p>\n

As a reader of this newsletter, you may already have\u00a0Making Money Made Simple\u00a0<\/em>or another one of my books in your eBook library, so I\u2019m offering an exclusive discount on the updated eBook to you.<\/span><\/p>\n

If you would like a 30% discount on the eBook version of Making Money Made Simple to update your library, or you\u2019d 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)<\/a><\/span><\/p>\n

Regular retail price $16.99 special newsletter reader\u2019s price $11.90.<\/strong><\/span><\/p>\n

The\u00a0discount will automatically be applied at checkout<\/strong>. If you don\u2019t see the discount applied, use the code\u00a06718G291FZ0X<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Remember, this offer applies to the eBook only – if you would like the paperback version, it’s in\u00a0my main bookstore\u00a0<\/a>now.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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ING debit card<\/u><\/u><\/span><\/h1>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\"Noel<\/span><\/p>\n\n\n\n
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I\u2019ve 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.<\/span><\/p>\n

What follows has come directly from them. I was astounded to find you get a\u00a01% cash back on utility bills\u00a0<\/strong>just by using this card. That was news to me. I asked them for clarification and their reply is below:<\/span><\/p>\n

Orange\u00a0Everyday\u00a0<\/em>Benefits<\/em><\/strong>\u00a0include:<\/em><\/span><\/p>\n