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Learn how interest rates influence loans, savings and investments, and find out why staying informed about interest rates can empower your financial decisions. Whether you’re planning to buy your dream home, save for a brighter future or simply manage your daily finances, interest rates play a key role. Here’s why they matter when planning your financial future. What are interest rates? Interest rates are essentially the cost of borrowing money or the reward for saving it. When you take out a loan, whether it’s for a car, home or business, you’ll pay back the amount borrowed plus an additional percentage per year, known as the interest rate. Conversely, when you save money in a high interest bank account, an interest rate determines the extra money you earn on your savings. What is the RBA and how do they control interest rates?  The Reserve Bank of Australia (RBA) is Australia’s independent central bank. The bank conducts the nation’s monetary policy and issues its currency. The RBA determines the cash rate target, which is a base rate that impacts other interest rates such as mortgage or deposit rates. Why does the RBA raise or lower rates? The RBA adjusts the cash rate target to preserve full employment and the economic prosperity and welfare of Australia. The RBA might raise rates to curb inflation when the economy is growing too quickly, as higher rates can help cool down consumer spending and borrowing or investments. On the other hand, the RBA may lower rates to stimulate economic activity during a slowdown. Lower rates make borrowing cheaper and encourage spending and investment, which can help boost employment and economic growth. By adjusting interest rates, the RBA aims to keep inflation within a target range of 2-3% and support the overall health of the Australian economy. How do banks set interest rates? The official cash rate isn’t the only factor that influences bank lending rates but it’s one of the most important. To make money, banks need to lend money out at a higher rate than they borrow – a home loan is riskier than a deposit account (a borrower can default on the mortgage or go bankrupt, whereas deposit accounts are guaranteed by the Australian government), which is why the interest rate you receive on your savings account tends to be lower than the interest rate you pay on your home loan. So an increase in the cost of borrowing money can affect you in different ways, depending on whether you’re a net saver or a borrower. Why do interest rates matter? Impact on loans and mortgages For Aussies looking to buy a home, interest rates are a key factor. A lower interest rate means lower and more affordable monthly repayments (everything else equal), On the flip side, higher rates can increase your costs, affecting your budget significantly. Savings growth Interest rates also matter for your savings. Higher interest rates mean more growth for your money over time. If you’re saving for a holiday, a car or retirement, a good interest rate can help you reach your financial goals faster. Economic influence Interest rates are a tool used by the RBA to control economic activity. By adjusting rates, the RBA influences inflation, employment and economic growth. Higher rates might slow down borrowing, investing and spending, while lower rates can encourage it. Why should you care about interest rates? Personal financial planning Understanding interest rates helps you make informed decisions about loans and savings. Whether you’re looking to buy a house or save for the future, knowing how rates affect your finances can guide your choices. Budgeting Interest rates can change over time, impacting your monthly expenses. Staying informed allows you to adjust your budget accordingly, ensuring you’re prepared for any changes in your financial commitments. Investment opportunities Interest rates also affect financial investments. They can influence stock market performance and property values. By keeping an eye on interest rate trends, you can make strategic investment decisions. Economic awareness Interest rate movements are a reflection of the economy’s trajectory. By understanding them, you gain insight into broader economic conditions, helping you navigate financial challenges and opportunities. Source: AMP

Managing debt can often feel overwhelming but there are several strategies you can implement to make the process more manageable and even accelerate your journey to becoming debt free. Here are some quick wins that can help you take control of your finances and reduce your debt more effectively. Remember, the key is to stay motivated and consistent with your efforts. Every small step you take brings you closer to financial freedom. Change your repayments from monthly to fortnightly One simple yet effective strategy to save money is to change your repayment schedule from monthly to fortnightly. By doing this, you end up making an extra month’s worth of payments each year. Here’s how it works: there are 26 fortnights in a year, so if you pay half of your monthly repayment every two weeks, you make 13 full payments instead of 12. This can significantly reduce the interest you pay over the life of the loan and help you pay off your debt faster. Attach an offset account to your mortgage If you have a mortgage, consider attaching an offset account to it. An offset account is a transaction account linked to your mortgage and the balance in this account is offset against your mortgage balance when interest is calculated. For example, if you have a $300,000 mortgage and $20,000 in your offset account, you’ll only be charged interest on $280,000. This can reduce the amount of interest you pay and help you pay off your mortgage sooner. Target the smallest debt first While it might seem logical to target the highest interest rate debt first, focusing on the smallest debt can provide a psychological boost and help you stay motivated. This approach is known as the “debt snowball” method. By paying off the smallest debt first, you achieve a quick win, which can give you the momentum to tackle larger debts. Once the smallest debt is paid off, you can use the amount you were paying on that debt to make extra payments on the next smallest debt and so on. This method can help you see progress more quickly and keep you motivated to continue paying off your debts. Seek a second job or side hustle If possible, consider taking on a second job or side hustle to increase your income. The additional income can be used to make extra payments on your debts, helping you pay them off faster. There are many options for side hustles, such as freelancing, gig economy jobs or selling items you no longer need. Even a small amount of extra income can make a significant difference in reducing your debt. Create a budget and stick to it Creating a budget is a crucial step in managing debt. A budget helps you track your income and expenses, identify areas where you can cut back and allocate more money towards debt repayment. Start by listing all your sources of income and all your expenses. Categorise your expenses into fixed (e.g. rent, utilities) and variable (e.g. groceries, entertainment). Look for areas where you can reduce spending and redirect those funds towards paying off your debts. Sticking to your budget can help you stay on track and make steady progress towards becoming debt free. Negotiate with creditors Don’t be afraid to reach out to your creditors/lenders/banks to negotiate better terms. Many creditors/lenders/banks are willing to work with you if you’re struggling to make payments. You might be able to negotiate a lower interest rate, a reduced payment plan or even a settlement for less than the full amount owed. It’s always worth asking, as any reduction in your debt or interest rate can help you pay off your debts more quickly. Use windfalls wisely If you receive any unexpected windfalls, such as a tax refund, bonus or inheritance, consider using that money to pay down your debts. While it might be tempting to spend it on something fun, using windfalls to reduce your debt can have a long-term, positive impact on your financial health. Every extra payment you make reduces the amount of interest you pay and brings you closer to being debt free. Avoid taking on new debt Finally, while you’re working on paying off your existing debts, it’s important to avoid taking on new debt. This means being mindful of your spending and avoiding unnecessary purchases. If you must use credit, try to pay off the balance in full each month to avoid accruing interest. By focusing on paying down your current debts and avoiding new ones, you’ll be able to make more progress towards your financial goals. Source: Money & Life  

One of the main reasons an individual would use an SMSF is for estate planning as it can offer greater flexibility to beneficiaries than what is available via a public offer fund. Where a member dies without a binding nomination, the distribution of the death benefits is at the discretion of the remaining trustees. This can result in some planning after the death of a member in order to achieve the optimal tax outcome. For example, one child may be still a minor and be entitled to receive the death benefits tax free. In this situation, the trustee could allocate a greater amount to that child and rely on an estate equalisation clause in the Will to ensure that the other children receive a greater share of the estate assets. However, there are a number of traps when using an SMSF for estate planning, particularly where there are blended families. It is possible that the individual controlling the trust does not agree with the wishes of the deceased. As they have control of the fund, they can frustrate the attempts of other beneficiaries, such as children from a previous marriage to receive their inheritance, even where the trustee has agreed there is a valid binding nomination in their favour. Nominations SMSF members have more options when making a nomination than what is available via a public offer fund. As well as having access to non-binding, binding, non-lapsing binding and reversionary nominations, members also have the option of establishing an SMSF Will. An SMSF Will is a collection of rules written into the governing rules of the fund’s trust deed which broadly have a similar format to a Will. These rules place an obligation on the trustee and they can be as complex as the member wishes specifying who is to benefit, any contingent beneficiaries and in what form. It may also be possible to provide for a ‘life interest’ death benefit pension whereby one beneficiary, such as a spouse has an entitlement to the pension payments during their lifetime, but on their death, the capital would be distributed to the beneficiaries of the first deceased, such as any children from a previous marriage. Superannuation dependants There are three types of dependants for the purposes of death benefits being paid from a superannuation fund. They are: SIS dependants, who can be paid directly from a superannuation fund dependants who are entitled to take their benefit as an income stream death benefit dependants who can receive lump sum death benefits tax-free. Relationship SIS Dependant Death Benefit (Tax) Dependant Spouse X X Former Spouse   X Child under 18 X X Child 18 or over X Only if financially dependant Financial Dependant X X Interdependent X X If a member wants some or all of their superannuation benefits to be paid to someone other than those in the above list, they would need to have that portion paid to their legal personal representative and make a provision for that person within their Will. All beneficiaries who are entitled to receive death benefits directly from a superannuation trustee are allowed, under superannuation legislation, to take that benefit as a lump sum. However, there are restrictions on who can receive death benefits as an income stream. While most of the dependants listed in this table can receive superannuation death benefits as an income stream, children of the deceased who are aged over 18 can only receive an income stream if they are financially dependent and under 25 or they are disabled. Where a child of the deceased receives death benefits as an income stream, the income stream must be commuted and the benefits withdrawn as a tax-free lump sum no later than their twenty-fifth birthday unless they are disabled. As with many aspects of superannuation, the legislation specifies what is allowable, however individual funds may have more onerous rules in place documented in their trust deed. Taxation of benefits paid to non-dependants Where the beneficiary is not a death benefit dependant, any benefits must be taken as a lump sum and the taxable component of the benefit will be subject to tax of up to 15% plus Medicare levy on the taxed element and up to 30% plus Medicare levy on the untaxed element. While the definitions of a dependant in the SIS Act and death benefit dependants in the Tax Act are substantially the same, there is a notable difference. Adult children are SIS Act dependants and therefore, can be paid directly by the trustees of the superannuation fund, however as they are not death benefits dependants as defined in the Tax Act, the benefits will be subject to tax. For tax purposes, the relevant beneficiary is the ultimate beneficiary. Therefore, a benefit that passes through the estate but is paid to a death benefit dependant beneficiary will be tax-free. There can be an issue where the benefits are paid to the beneficiaries via a testamentary trust. While it may be envisaged that the only persons to benefit from the fund are death benefits dependants, the trust may have potential beneficiaries that aren’t death benefit dependants in which case all benefits appropriated to the trust will be subject to tax. A possible solution is to provide in the will a superannuation benefits testamentary trust that limits beneficiaries and potential beneficiaries only to death benefit dependants. Source: BT  

During the Federal Election campaign, the Government made a number of election promises, which may impact your finances. There were also a number of support measures proposed in the recent Federal Budget. What could this mean for you? These announcements are proposals only and may or may not be made law. The information below, including the policy details and proposed start dates, is based on the information announced as at 5 May 2025. You should speak to your financial adviser to discuss how these proposals could apply to you. Election promises Taxation $1,000 instant tax deduction for work-related expenses, proposed from 1 July 2026. What’s proposed? Taxpayers who have eligible work-related expenses may be able to claim a tax deduction of up to $1,000 without having to keep individual receipts. It will still be possible to claim work-related expenses above this limit, however evidence will be needed. Who could benefit? The deduction will be available to people with ‘labour income’. This doesn’t include income from running a business or from investments, where the usual rules will continue to apply. $20,000 small business instant asset write-off extension, proposed from: 1 July 2025 to 30 June 2026. What’s proposed? The higher instant asset write-off threshold of $20,000, which currently applies until 30 June 2025, is proposed to be extended for another 12 months until 30 June 2026. The threshold is available for more than one asset. Eligible businesses can continue to place assets valued at $20,000 or more into a depreciation pool, where a deduction of 15% can be claimed in the first income year and 30% thereafter. Who could benefit? Small businesses with an aggregated annual turnover below $10 million will be able to claim an immediate tax deduction for the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2026. Help for home buyers Expanded ‘Help to Buy’ scheme, proposed from: to be confirmed. What’s proposed? The Government has proposed to expand access to the Help to Buy scheme to more home buyers by increasing the property price caps and income test thresholds, which determine eligibility to participate in the scheme. The scheme is a shared equity scheme, which allows eligible home buyers to purchase a home with a smaller deposit, of as little as 2%. The Commonwealth will contribute up to 30% of the purchase price of an existing home and up to 40% of the purchase price of a new home. The Help to Buy scheme is expected to open for applications later this year. Although the Federal Government has legislated the scheme, the States and Territories need to pass legislation for it to operate in each jurisdiction. Who could benefit? Increasing the income cap and property price caps will enable more people to participate in the scheme. For singles, the income cap will increase from $90,000 to $100,000. For joint applicants (and single parents), the income cap will increase from $120,000 to $160,000. The property price cap will depend on the location of the property and details can be found in the Government’s media release. Participants must meet a number of eligibility rules and conditions, including repaying the Government when the home is sold or when certain changes occur in their circumstances. So it’s very important to understand the rights and responsibilities of participating in the scheme before making an application. Previously announced measures Cost of living support The below proposals were announced by the Government in the March 2025 Federal Budget. Energy bill relief extended for six months, proposed from: July 2025. What’s proposed? The Government will provide further energy rebates in addition to the bill credits people have received since July 2024. The rebate will be applied automatically to electricity bills between 1 July and 31 December 2025, in two quarterly instalments of $75. Who could benefit? All Australian households and eligible small businesses will receive the additional energy rebate. It’s expected the eligibility rules that apply to small businesses (quarterly power consumption) will not change. Lower cap for PBS medicines, proposed from: January 2026. What’s proposed? The maximum cost of Pharmaceutical Benefits Scheme (PBS) medicines will decrease from $31.60 to $25 per script. Who could benefit? This will benefit people who don’t hold a concession card and would otherwise pay the maximum amount to fill a script. It doesn’t apply if the script is for a medicine not on the PBS, which may cost more than $25. Pensioners and Commonwealth concession cardholders will continue to pay the subsidised rate of $7.70 per PBS script until 1 January 2030. This is an existing measure. Student loans to be cut by 20%, proposed from: 1 June 2025. What’s proposed? Student loans will be reduced by 20% before the annual indexation (at a rate of 3.2%) is applied on 1 June 2025. Who could benefit? The changes will benefit all people who have Higher Education Loan Program (HELP) Student Loans, VET Student Loans, Australian Apprenticeship Support Loans, Student Start-up Loans and Student Financial Supplement Scheme, based on their outstanding 1 June 2025 balance. Importantly, voluntary loan repayments that are processed before 1 June will reduce the loan balance that’s indexed on 1 June. However, the 20% debt reduction will be applied to the 1 June balance. So if this proposal is legislated, before making a voluntary repayment, it’s worth doing the numbers to see if it’s best to make a voluntary repayment before or after the 20% reduction and indexation is applied on 1 June. The table below provides an example which shows the difference between making a $5,000 voluntary repayment before and after 1 June, where the outstanding debt balance is $30,000. Outstanding debt today Voluntary repayment before 1 June Loan balance on 1 June (after 20% reduction and indexation applied)   Voluntary repayment after 1 June Outstanding balance $30,000 $0 $24,768 $5,000 $19,768 $30,000 $5,000 $20,640            $0 $20,640   Reduced student loan repayment obligations, proposed from: 1 July 2025. What’s proposed? … Read more

Financial markets have been erratic lately, understandably causing some concern for those of us with super and investments. While dips and major market events are a common feature of investing, markets generally trend upwards over time. Most super funds invest in sharemarkets to help your money grow over in the long term. So when markets see-saw, so do super and investment balances and returns. While this can be worrying, it’s important to remember that although the value of investments may go up and down at different times, markets tend to recover and grow over the long term. So it’s important to keep your long-term investment goals in mind. What’s happened recently? On 3 April, President Donald Trump announced the US would place tariffs on goods imported into the US from countries around the world. This included a 10% tariff on goods from Australia, which was the minimum rate announced on the day. Major global economies and markets had been preparing for the announcements, but the tariffs imposed on some countries were bigger than expected. Other countries have also responded by putting similar tariffs on US goods coming into their markets. As a result, share markets in the US and elsewhere fell sharply in the days afterwards, including the Australian Stock Exchange. What is a tariff? A tariff is a tax added to the cost of goods imported from a particular country or countries. It is paid to the government where the goods are being imported. Tariffs are often used to protect domestic industries by increasing the price of foreign-made competitor products, or to raise revenue. The cost of those items to the public will generally increase by a similar amount to the tariff. What does this mean for markets and investments? The US tariffs are expected to slow global trade and push up the price of some things, which could cause inflation to rise. This could result in the Reserve Bank of Australia cutting the interest rate several times this year to prevent the economy from slowing down too much. In the short term, you may see a negative effect on the performance of investments. Short term volatility in response to political announcements and other geopolitical events is a common feature of investment markets. While difficult to forecast, history shows us that markets do recover from disruptive influences – for example, from the Global Financial Crisis and the COVID-19 pandemic. What led to this? Since Trump’s second presidency began, uncertainty has emerged about US policy in the areas of tariffs, defence and other critical areas of government spending. In recent months, shares have been quite weak, particularly US technology stocks. This group of stocks was optimistically priced after two years of strong growth, and therefore most at risk of uncertainty in the US market. This has unsettled businesses amid concerns the US economy could slow. It has also fed into uncertainty in global investment markets, including the Australian sharemarket. What does this mean for me? As global financial markets move up and down, the value and returns of your super and investments may also change in the short term. While this can be concerning, history shows that markets rise over time. So it’s important to keep your long-term savings and investment goals in mind and carefully consider before making any changes to your investment strategy. It’s understandable at times like these that some members think about changing how their money is invested. As this chart shows, the long-term trend across major investment types is positive, with shares experiencing more volatility but generating higher returns than more conservative options such as cash. While past performance is not a guarantee of future performance, historically more time invested in the sharemarket has meant a higher return on investment. How different investment types have performed over 20 years   It’s also worth noting that investment performance has generally been strong over the past two years, meaning the value of your investments or super may have been relatively high. Do I need to do anything? As with any significant market event, it’s best to avoid impulse reactions, but to take a long-term view. Source: CFS

Multi-factor authentication (MFA) is when you use two or more different types of actions to verify your identity and you may already be using MFA. For example, when you receive an authentication code by SMS text message after entering your password to log into an online account. MFA is one of the best ways to protect against someone breaking into your account. It makes it harder for cybercriminals to take over your account, by adding extra layers of protection. MFA requires you to use a combination of two or more of the following factors to access your accounts: Something you know (e.g. a PIN, password or passphrase); Something you have (e.g. a smartcard, physical token, authenticator app or SMS); and Something you are (e.g. a fingerprint, facial recognition or iris scan). MFA defends against the majority of password-related cyberattacks. For example, MFA protects against credential stuffing where cybercriminals use previously stolen passwords from one website and try to reuse them elsewhere so they can gain access to more accounts. Think of adding MFA to your account like adding a house alarm that requires a PIN to deactivate. It provides you with an extra layer of protection from cybercriminals trying to break in. Even if they break through one layer (for example, by guessing your password), they still need to break a second barrier to access your account. Having an extra step can be inconvenient at first but remember that taking shortcuts leaves your system more vulnerable. You are better off spending a few seconds entering a one-time code now, to avoid spending hours later on trying to regain access to your accounts and dealing with the consequences of your data being stolen. MFA often goes by different names. You may see it called two-factor authentication (2FA) or two-step verification. Options for MFA SMS code This is a random code that you receive to access or use an online service. For example, after you enter your username and password to log in, you will receive an SMS with a ‘one-time password’ (OTP) to enter to access your account. Another example is when you receive an SMS code when using online banking, before transferring money to a new payee for the first time. Authenticator app Authenticator apps are mobile applications that generate a random OTP and are more secure than receiving a code by SMS. You will first need to download an authenticator app on your device. Google Authenticator, LastPass Authenticator, Microsoft Authenticator and Authy Authenticator are a few popular ones. In the settings of your online account (e.g. your social media account), turn on MFA and select the authentication app option. This will reveal a QR code containing a unique key. Use your authenticator app to photograph this QR code or manually enter the key to link your account to the authenticator app. Once this step is done, the app will produce a new six-digit code every 30 seconds. Whenever you log in to your online account with your usual username and password, enter this code too. That’s it, MFA is on! Biometrics With biometrics, your unique characteristics become the authenticator. An example of biometrics is using your face or fingerprint to access your device or mobile apps. Using biometrics as MFA is convenient, because they are always with you and cannot be misplaced or forgotten. Security key A security key is a small physical token without a display screen, which is often plugged into your device via a USB port, or kept in close proximity for wireless versions. It prompts the user to activate authentication processes, and it is a more secure form of MFA than the other options above. Turn on MFA You should turn on MFA wherever possible, starting with your important accounts, such as: User and email accounts, since a cybercriminal with access to your email accounts can reset passwords for your other accounts. Financial services, such as your online banking. Accounts that save or use your payment details (e.g. eBay, Amazon, PayPal). Social media accounts (e.g. Facebook, Instagram). Any other accounts that hold personal information (e.g. myGov). How to turn on MFA depends on the software or service you are using; however the steps are somewhat similar for most applications. Refer here for links to the instructions on how to set up MFA for different services including user and email accounts, financial services, online shopping, social media and communication, government services and gaming. If you don’t see your account listed, try searching online for ‘how to turn on MFA’ for that service or check the settings of your account. If your account does not have an option for MFA, you should protect it with a strong password or passphrase that is not used anywhere else. Security tips Although MFA improves the security of your accounts, motivated cybercriminals may persist and succeed in compromising them. To help keep your account secure, consider the following security tips: Don’t click on account sign-in hyperlinks that you received via SMS or emails. Scammers may impersonate your bank or a government department and trick you into clicking a link and give out information such as your account number, password or credit card numbers. If you have any doubts about a message or call, contact the organisation directly: visit the official website to find their phone number or to log in to your account via the official website. Do not use the links or contact details given to you in the message. Don’t share MFA codes or approve unknown sign in attempts. Requests for sign in approvals and the security codes that you receive are the system’s way of checking that you are the person who signed in. If you give someone else your MFA code or approve unknown sign in attempts, then someone else might be able to log into your account. Never approve unknown sign in attempts or share your MFA code. Add extra layers of protection. You should use MFA whenever possible, especially when it comes to your most sensitive data, such as your primary email, … Read more

If your partner is earning a low income, working part-time, or currently unemployed, boosting their super could be a smart financial move for both of you. When your partner isn’t earning much, or is out of work, their super might not be growing enough to support them in retirement. By contributing to their super, you may not only help them but also enjoy some tax benefits yourself. We’ll explore how the spouse contributions tax offset works and how it differs from contribution splitting. The spouse contributions tax offset Are you eligible? To be entitled to the spouse contributions tax offset: You need to make a non-concessional contribution to your spouse’s super. This means you add money from your after-tax income and don’t claim a tax deduction for it. You must be married or in a de facto relationship together and are not living apart or separately. You must both be Australian residents. Your spouse’s income should be $37,000 or less for the full tax offset, and under $40,000 for a partial tax offset. Your spouse is under 75 years of age, and their total superannuation balance is less than the general transfer balance cap ($1,900,000 for 2024-25) as at 30 June of the prior year. What are the financial benefits? If eligible, you can generally make a contribution to your spouse’s super fund and claim an 18% tax offset on up to $3,000 through your tax return. To be eligible for the maximum tax offset, which works out to be $540, you need to contribute a minimum of $3,000 and your partner’s annual income needs to be $37,000 or less. If their income exceeds $37,000, you’re still eligible for a partial offset. However, once their income reaches $40,000, you’ll no longer be eligible for any offset, but can still make contributions on their behalf. Are there limits to what can be contributed? You can’t contribute more than your partner’s non-concessional contributions cap, which is $120,000 per year for everyone, noting any non-concessional contributions your partner may have already made. However, if your partner is under 75 and eligible, they (or you) may be able to make up to three years of non-concessional contributions in a single income year, under bring-forward rules, which would allow a maximum contribution of up to $360,000. Another thing to be aware of is that non-concessional contributions can’t be made once someone’s super balance reaches $1.9 million or above as at 30 June 2024. So you won’t be able to make a spouse contribution if your partner’s balance reaches that amount. There are also restrictions on the ability to trigger bring-forward rules for certain people with large super balances (more than $1.66 million in 2024-25). There are also different super balance limits in place if you want to take advantage of the bring-forward rules. How contributions splitting differs Another way to increase your partner’s super is by splitting up to 85% of your concessional super contributions with them, which you either made or received in the previous financial year. Concessional super contributions can include employer and or salary-sacrifice contributions, as well as voluntary contributions you may have claimed a tax deduction for. What rules apply for contribution splitting? To be eligible for contributions splitting, your partner must be between age 60 (preservation age) and 65 (and not retired). Are there limits to how much can be contributed? Amounts you split from your super into your partner’s super will count toward your concessional contributions cap, which is $30,000 per year for everyone. On top of this, unused cap amounts accrued in the last 5 years can also be contributed, if they’re eligible. Note, this broadly applies to people whose total super balance was less than $500,000 on 30 June of the previous financial year. Do all super funds allow for this type of arrangement? You’ll need to talk to your super fund to find out whether it offers contributions splitting, and it’s also worth asking whether there are any fees. What else you and your partner should know If either of you exceeds super contribution caps, additional tax and penalties may apply. The value of your partner’s investment in super, like yours, can go up and down, so before making contributions, make sure you both understand any potential risks. The government sets rules about when you can access your super. Generally, you can access it when you’ve reached age 60 (preservation age) and retire. While you can’t personally make further non-concessional contributions into your super once you have a total super balance of $1.9 million or above (as at 30 June of the previous financial year), it’s still possible to make contributions to your partner’s super (noting the caps). Where to go for more information Your circumstances will play a big part in what you both decide to do. And, as the rules around spouse contributions and contributions splitting can be complex, it’s a good idea to chat to your financial adviser to make sure the approach you and your partner take is the right one.   Source: AMP

US tariffs are poorly designed, badly implemented and are already damaging both the US and global economies. The economic damage will only get worse as uncertainty further undermines business and consumer confidence and results in dislocation of global supply chains. Determining the extent of economic damage, and financial market implications, is difficult because we don’t know what tariffs will actually be implemented or how many backflips there are before then. There’s no clear, defining strategy. The justification for tariffs oscillates between reinvigorating US manufacturing, raising revenue to fund tax cuts, the cost of the US providing global security, the provision of the US dollar to support global trade and financial markets, and broadly addressing an ‘unfair’ trading system. Different justifications would lead to different structures of the tariff regime. Adding to uncertainty, key individuals in the administration have different goals for tariffs. The obsession with bilateral trade deficits is baseless President Trump’s tariff obsession is rooted in a dislike of trade deficits. The United States has run a trade deficit since the mid-1970s (Figure 1). He attributes this deficit to unfair trade policies in other countries and an overvalued US dollar, resulting from US dollar demand given its role in international trade and finance. But the trade deficit also depends on US domestic conditions, notably the US Government’s huge fiscal deficit, currently 5% of GDP. Balanced national trade doesn’t need bilateral balanced trade Even if balanced trade at the country level was desirable, there is no reason for this to apply country by country. Even countries with balanced aggregate trade run large trade deficits or surpluses with almost all of their trading partners: Belgium had balanced trade with just two countries; and Canada, Finland, South Korea and South Africa each had balanced trade with just one of their trading partners. Each of these five countries had significant bilateral trade surpluses or deficits with over 150 of their trading partners. The US goal of balanced bilateral trade with every country is, frankly, bonkers. The calculation of tariff rates is absurd Bilateral trade balances are meaningless but determine the US ‘reciprocal tariffs’ (Figure 2). Even countries the US has a trade surplus with, including Australia get a 10% tariff. If Australia applied the same logic as the US, we’d impose a tariff on the US of around 50%. The US has a surplus in services trade of 0.25% of GDP (partly offsetting the goods trade deficit of 1% of GDP; Figure 1) but ignores services trade in its calculation of tariffs. The tariffs are badly designed reflecting unclear and inconsistent goals The US tariff regime has a mix of tariffs on specific goods (steel, aluminium, vehicles) and on specific countries (Canada, Mexico, China and the reciprocal tariffs) reflecting the varied goals of the tariffs. But many of these goals are in conflict. If, as Trump claims, tariffs raise revenue without increasing US prices by forcing foreign suppliers to absorb the tariff, then US manufacturers won’t be more competitive as US prices won’t be higher. And if tariffs are successful in boosting US production, then there would be fewer imports, and so less tariff revenue. Several bad design elements of the tariffs mean there will be further changes: Different tariff rates distort trade for little benefit – for example, Apple intends to ship iPhones to the US from India rather than China as US produced iPhones would be prohibitively expensive. High tariffs are being applied to goods the US can’t, or won’t, ever produce – for example, some minerals and shoes (most come from China and Vietnam with 145% and 46% tariffs). Tariffs are being applied to inputs used by US manufacturers, increasing exporters’ costs. The effective trade embargo with China will be disruptive to the US economy The 145% punitive tariff applied to China makes most imports from China prohibitively expensive. But the US economy is not ready to disengage from China, which has supplied 13% of US imports. Factories don’t pop up overnight. Using a fine disaggregation, breaking down goods into their constituent parts, over half of US imports are from China. Alternative suppliers just don’t exist. For finished consumer goods with very high import shares from China, large price increases and stock shortages will be disruptive to consumers and impact consumer sentiment and support for tariffs. The economic impact will be even greater for those imports predominantly sourced from China that are used as inputs in US production, such as explosives, machinery and various chemicals. For example, China is also a key source for base ingredients used in manufacturing medicines and finished medicines. The tariff regime won’t survive its poor design, but tariffs won’t go away completely The US tariff regime is already unravelling with holes poked in the tariff wall. Reciprocal tariffs were paused until 9 July (the baseline 10% tariff still applies to all countries). Consumer frustration will mount facing higher prices and product shortages. For example, phones, computers and some other electronics have been exempted from the China tariffs. Businesses are getting traction lobbying on the cost to production from tariffs, for example there will be a partial rebate on the 25% tariffs on car parts used as inputs in US manufacturing. The US has said some 70 countries want to negotiate tariff reductions. Yet negotiating a detailed trade agreement takes time. The renegotiation of the US-Canada-Mexico trade agreement in President Trump’s first term took 18 months. A rushed negotiation will contain flaws. However, President Trump strongly believes in the benefits of tariffs for promoting US manufacturing and he needs the revenue. He has committed to using tariffs to reduce income taxes, even musing that income taxes could be eradicated. But a 10% uniform tariff has been estimated to raise just $1.7 trillion over 10 years, a 20% tariff $2.6 trillion. This is substantially less than the estimated cost of $5 to 11 trillion of the tax cuts already promised by President Trump. What does the future hold? There will be many more turns in the … Read more

Global Global markets whipsawed following the “Liberation Day” tariff announcements on April 2, and subsequent developments throughout the month. Volatility was rife and trading volumes were robust. The Volatility Index (VIX) spiked to a 5-year high of 57.8 on April 9, though ended the month sub-25. This move came as markets responded to several significant rollbacks of Trump’s initially absolutist tariff agenda. Investors sold out of US assets at the beginning of the month on concerns around deglobalisation and fears that “US exceptionalism” had come to an end. This saw demand for US Treasuries (USTs) and the US dollar weaken, breaching the conventional wisdom that Treasuries and the USD should behave as safe havens during risk events. While the US Dollar Index (DXY) ended April -4.5% lower, 10y USTs recovered, closing the month near unchanged. Global equity indices fell substantially after the initial tariff announcements and recovered almost entirely on the 90-day pause and other concessions. Despite entering correction territory early in April, the MSCI World index closed near flat. Perhaps now the pre-eminent safe haven asset: gold, rallied nearly 10% in the first three weeks of April as investors sought an alternative to the USTs. The bullion continued to create new all time highs and briefly surpassed $3,500/oz, before paring gains into month-end. While hard data held up on order front-loading in the US, soft data showed a deterioration in economic conditions. In March, the Global Manufacturing Purchasing Managers’ Index (PMI) retreated to 50.3 and the Services PMI increased to 52.7. US The S&P 500 fell just shy of entering a bear market, down nearly 19% before the tariff pause resulted in a rebound. March quarter earnings releases were overshadowed by cautions from management regarding the dampened growth outlook for 2025. The S&P 500 closed the month down -0.76%. US Treasury prices began to trade in line with its equity counterparts, contrary to expectations. As equity markets rebounded in the back half of the month, so did Treasury prices. US Manufacturing PMI came in at 50.7, while the Services PMI dropped from 54.4 to 51.4 in March. The US labour market added +228k jobs during March ahead of the +140k expectation, with the unemployment rate ticking up slightly to 4.2%, from 4.1% in February. Notably, federal government employment declined. Job Openings and Labor Turnover Survey (JOLTS) data showed a largely stable labour market, but a subdued hiring rate of 3.4%. The layoff rate remained consistent at 1.0%. Core Personal Consumption Expenditures (PCE) increased +2.8% year on year during March, slightly ahead of expectations and unchanged from February. Retail sales in March rose +1.4%, primarily due to strong auto sales. This was likely a result of frontloaded car purchases ahead of expected price increases due to tariffs. Soft data from April showed that consumer and business sentiment continued to weaken. Existing homes sales fell -5.9% in March to 4.02m, likely due to a combination of higher mortgage rates and elevated uncertainty. Australia The AUD dropped below 0.60 USD post April 2 in a combination of risk-off sentiment and superannuation funds rebalancing currency hedges as their equity positions fell. The AUD recovered during the month, mostly due to weakness from the USD. The ASX 200 followed a similar pattern to broader global equity markets during April in response to tariff headlines, however closed the month up +3.61%. Q1 Consumer Price Index (CPI) came in at +0.9%, stronger than expectations of +0.8% off the back of higher motor vehicle prices and a greater rebound in electricity prices. Year on year CPI held steady at +2.4%. Trimmed mean inflation increased 0.7% QoQ, up from 0.5%, bringing annual inflation to +2.9%, down from 3.3% in the last quarter. The RBA opted to leave the cash rate unchanged at 4.10%, citing concerns that inflation may not fall sustainably within the target band. The RBA opted to take a “wait and see” approach given the substantial uncertainty regarding tariffs and global trade. The market is currently pricing in a 25bps cut in May. The unemployment rate was unchanged during March at 4.1%, with the labour force participation lower than expectations at 66.8%. The lower participation was mostly due to the impact of Cyclone Alfred. All measures of the labour market remain tight. Retail trade was weaker than expected in Feb, up +0.2% (vs +0.3% exp.) due to a surprise decline in household goods. New Zealand The RBNZ cut rates by 25bps to 3.50% in early April and advised that “the Committee has scope to lower the Official Cash Rate (OCR) further as appropriate”. Q1 CPI was up by +0.9%, slightly stronger than the +0.8% consensus expectations, bolstered unexpectedly by higher education fees (+8.9%). This was due to a +23% increase in tertiary and other post-school related education costs. Services inflation increased by +0.7% in Q1. Europe The ECB cut interest rates by 25bps for the second meeting in a row in April, bringing the cash rate to 2.25%. The Governing Council advised that the current climate is one of “exceptional uncertainty” and that it will assess further rate cuts on a meeting by meeting basis. The STOXX 600 declined -1.21% throughout the month, selling off in line with other global equities, before a shallow recovery. The Sterling gained over +3.5% during April, close to its highest level in over three years against the USD, following the sharp selloff in the greenback. However, the Sterling continued to underperform the Euro. The Euro saw its largest monthly gain against the Dollar in nearly 15 years, ending the month buying 1.1328 USD. European Union annual inflation slowed to +2.2% in March, in line with expectations. China China announced a slew of retaliatory tariffs against the US, landing at 125% before both companies implemented a 90-day pause. The April Politburo meeting saw the Politburo pledge to step up the implementation of more proactive macro policies, vowing to offset external uncertainty with the certainty of high quality development. GDP growth exceeded expectations at +5.4% year on year in Q1, vs … Read more

One of a property lender’s most important jobs is to make sure a borrower can manage the typical home loan term of 30 years. This becomes even more critical from the age of 50 because that 30-year term can see a borrower well into retirement. We have a retirement age in this country of 67, and yes, a lot of people work past that. But the banks want to make sure that, when someone does retire, they can meet that mortgage and they’ve still got somewhere to live. Lenders are obligated to assess whether a loan will place you in financial difficulty. Is there a home loan age limit in Australia? It’s clear that a lender can’t refuse a loan application purely based on age. Federal government legislation like the Age Discrimination Act prevents such blatant bias. However, under the “responsible lending” laws, a lender must ensure that every home loan application it approves makes sense and doesn’t place borrowers in any financial difficulty. The legislation is there to protect the client – to make sure that the client is always protected in any situation, whether it’s age or not. So, what can older borrowers do to increase their chances of a successful application? Tips for older borrowers applying for a loan While you’re never too old to get a home loan, you can take these extra steps to put your best foot forward. Keep your credit score high Lenders use your credit score or rating, together with their own risk criteria, to decide if you’re a safe bet. According to moneysmart.gov.au, your credit score is based on personal and financial information about you that’s kept in your credit report. This will include the amount of money you’ve borrowed, the number of credit applications you’ve made and whether you pay on time. Credit cards, utility bills and personal loans all come into play, as do any bankruptcies or debt agreements, court judgments, or personal insolvency agreements. It could be worth engaging a broker before you approach any lenders. Potential borrowers are also warned about buy now, pay later schemes, which count towards your tally of credit applications. What they’re saying to you is you can buy this now, but you’ll make the repayments over four weekly payments or eight weekly payments, so they’re actually doing a credit hit and can have quite a big impact on your file. If you plan to shop around for a home loan, it can work in your favour to engage a mortgage broker. Do the research first before you apply with a lender so that you don’t have any unnecessary credit hits. Plan your exit strategies Lenders need to have a clear understanding of your exit strategy if the term of your loan extends beyond retirement age. A 49-year-old loan applicant who plans to retire at 67, which leaves them 18 years to make repayments using a regular income. A broker or lender will calculate the loan balance at 67, then do a conservative calculation of the value of any assets and your likely super balance to help determine if there will be adequate funds to continue to service a mortgage in retirement or to pay out the loan. Downsizing is one common exit strategy for older borrowers in Australia. A plan to transition from a larger to a smaller home is another common exit strategy. When you retire, you could downsize. The amortised loan is paid down and the house that they’re selling has gone up in value. So they could have enough to go and buy a property unencumbered and still have their super to retire on. It’s in everyone’s interests to ensure a borrower is protected. It all still comes back to responsible lending … making sure the client has got income and equity, a good credit score. The majority of lenders assess on an individual situation, but obviously do more checks and balances when someone is a bit older to make sure they are looked after for the whole journey. Case study Having relocated to Australia and built up equity in his home, a 54-year-old male was looking to refinance and consolidate his debt. He felt confident about making repayments for the foreseeable future and had post retirement plans to downsize and put his super into play. The first lender approached wasn’t comfortable with his exit strategy. It was marginal because the bank didn’t feel the exit strategy was strong enough, based on the fact they had a requirement to have a minimum amount of super. Sometimes lenders have limits on certain types of borrowers – many factors influence home loan approval. Having completed all the requisite checks, the setback was surprising and disappointing but sometimes a lender hits a limit on a particular type of borrower, such as when investment lending came under the spotlight in 2021. Fortunately, the second lender quickly approved the loan. They would accept the downsizing and the super position, and they could clearly see that the client had so much equity in their home as well, and that they would be able to pay that debt down. Source: Domain