The 28/36 rule is a guideline to help investors ensure they can afford to take on debt. The rule states that no more than 28% of an individual’s or household’s gross monthly income should be spent on total household expenses.

At most, 36% should be spent on servicing total household debts, including housing and other loans. Mortgage stress is when mortgage repayments are over 30% of pre-taxed income. It is important to ensure that mortgage repayments stay within the 28/36 rule to prevent financial stress.

Super investing can provide superior tax savings over other investment vehicles, such as family trusts. However, the investment will not be accessible until the investor reaches a condition of release, like their preservation age. This makes super investing a long-term investment and not suited to those in their 20s or 30s.

With wealth generated through a family trust, the investments are accessible, and the beneficiaries can easily access income. In the right circumstances, a family trust can be tax-effective for investing or operating a business. It is essential to speak to a specialist adviser to evaluate each investment vehicle’s pros and cons and navigate through the process.

Deciding whether to invest in superannuation or a Separately Managed Account (SMA) is difficult. Both have the potential to grow your wealth, but it is important to consider your financial situation and goals before deciding which type of investment is right for you. Superannuation is an investment option with tax advantages, but it also carries restrictions around how and when you can access your money.

On the other hand, an SMA gives you more flexibility and control over how your money is invested but may be more expensive to maintain than superannuation. Ultimately, the right option depends on your individual goals, risk tolerance and financial situation.

SMAs:

An SMA is a portfolio of assets managed by a professional investment manager tailored to a retail investor’s goals and objectives. The minimum investment is relatively low, and investors have control over the underlying securities and real-time transparency, cost-effectiveness, and tax advantages.

The Institute of Managed Accounts Professionals (IMAP) estimates that investment via managed accounts will grow by 40% yearly for the next two years, bringing more innovation and competition to the retail investor market. ANIG provides SMA investment advice and management services.

Superannuation:

The modern superannuation system was introduced in 1991 with the Super Guarantee, a compulsory contribution system that pools money from employers and individuals to provide for retirement. Super funds can invest in a variety of assets such as shares, property, fixed interest and managed funds, and often offer life/death, TPD and income protection insurance.

Most investors join funds based on employer or friend recommendations, but a super choice option is available. Super funds are regulated by the Australian Prudential Regulation Authority (APRA), with contributions paid on top of salary/wages at 10.5% or more. Employers must pay super for those over 18 or under 18 and working over 30 hours with a salary of at least $450 (before tax) in a calendar month.

An SMA can be used similarly to a traditional superannuation product. Employer contributions can be made into an SMA account, just as with a self-managed super fund. An SMA can be used both as a superannuation and investment vehicle. When treated as a superannuation vehicle, the funds within the account are subject to the same conditions as super. They cannot be used for personal consumption until the investor reaches the conditions of release on their funds.

Yes, an insurance review and advice are necessary for those under 20 and over 30 investors. With age and income level factors in insurance eligibility, it is essential to have a review and advice to ensure the right coverage is obtained.

Millennials are in a unique position regarding insurance due to the lower health risk allowing them to lock in lower premiums. There are four main types of personal insurance to consider; life/death, TPD, income protection and trauma and these policies can be affordable to millennial consumers. Advice from an experienced and qualified financial advisor can help you determine what type of insurance you need and the level of coverage you require.

ANIG WM advisers are licensed to provide insurance advisory services. Our Risk advisers can provide advice and services to help millennials structure the most cost and tax-effective insurance for their financial commitments and lifestyle possessions such as cars and first mortgages.

The property ladder is one of the most difficult to climb in Australia. There are limited options for people wanting to get into the market. For a start, the First Homeowner Grant (FHOG) scheme is available to Australian citizens and people with residency status. There are certain eligibility criteria to meet, and more information is provided on this under our Home Investing page.

For those looking to buy their first asset, saving up to 20% of the purchase price is important. Some lenders may accept lower deposits. However, this could result in higher interest rates and lenders’ mortgage insurance (LMI). Depending on the purchase price and the state, there may be discounts or exceptions on stamp duty.

Many parents and loved ones have come to terms with the challenges of relying solely on savings to purchase a first mortgage. To help save time, they allow their children to access home equity to finance the purchase.

In summary, when buying a first home in Australia, it is important to consider affordability, market research, loan options, and professional advice. ANIG WM property and debt advisers can provide property advisory services for millennials, helping them assess their options and find the best outcome for their first home purchase.

When purchasing a home for the first time in Australia, it is important to consider a few key aspects. Firstly, it is important to determine how much you can afford to spend and to consider any additional costs such as stamp duty, legal fees and removal costs. Secondly, it is wise to research the current market and determine which areas you would like to live in. It is also important to consider the best loan options to suit your budget and lifestyle. Finally, it is beneficial to obtain professional advice from a qualified financial advisor or real estate agent to guide you through the process. In summary, when buying a first home in Australia, it is important to consider affordability, market research, loan options, and professional advice.

A few options available can help you achieve your financial goals, such as increasing your concessional superannuation contribution, borrowing to invest, or using tax structures like a family trust or Self-Managed Super Fund (SMSF).

Salary sacrifice is a form of concessional contribution additional to the standard employer super guarantee contribution made on your behalf by your employer upon the investor’s instruction. Salary sacrifice is generally the first tool to consider when boosting your super savings. There are caps on the concessional contributions you can make each financial year, as there is a penalty tax to pay when you go over.

Borrowing to invest is possible if savings or equity can be applied to support additional borrowing for investing. If the asset to be purchased is used for income-producing purposes, then income to be generated on the asset will be tax deductible against your marginal tax rate if the investment is held in your name or to a super fund if purchased through an SMSF. You can apply borrowed funds to direct property-based investments, shares, and other assets. You may understand the often-promoted idea of high borrowings for tax purposes if you’ve heard of negative gearing. ANIG WM approaches borrowing for investing differently, and we are happy to guide you through the process where an investor has the resources and is qualified to do so.

Trust vehicles such as family trusts (FT) and SMSFs can also be used for tax-effective investing. FT generally have beneficiaries receive the income associated with the investment. The beneficiaries pay the taxes at their marginal tax rate upon receipt of a family trust income. There is more to a family trust and several reasons for it being appropriate or inappropriate for an investor. ANIG WM can guide you through that process when necessary.

If the objective is to reduce personal income tax, insurance such as income protection can reduce an investor’s marginal tax rate if the investor has the cash flow to support it.

There are other tax-effective investment bonds and vehicles, such as a self-managed superannuation fund and SMAs. More materials on SMSFs under our over 50 & investing page for your reference. ANIG WM provides tax-effective investment strategies and recommendations, and we can help you explore further where it is identified such advice could help improve your finances.

SMSFs are often used by investors looking for flexible and unlimited investment options. They are for investors wanting their investment preferences considered and included in their superannuation investment decisions. Most investors employ the services of a qualified SMSF financial adviser to assist. They do so knowing their set goals and objectives will be considered, which is a service an SMSF-accredited ANIG WM adviser can provide their clients.

If you have been thinking of taking ownership of your superannuation savings and having a say in the how, where, and type of assets your funds get invested in, then an SMSF may be a tool to consider.