April 2016 Report

Spending was a bit lower this month, financial markets had moderately positive performance, but our salary income has now gone down as Moominmama's maternity leave salary has now ended. In the new financial year she will get another 18 weeks of payments from the government at the minimum wage ($30k something per year). We asked for those to happen next financial year to reduce tax.

Here are our monthly accounts (in AUD):

Spending was $4.7k. The biggest single expenditure was the $639 quarterly body corporate (condo association) fee and after that health insurance of $340. 

Moominmama actually got one last partial biweekly salary payment this month, so "current other income" came in at $10.3k and will fall further next month . After taking into account the mortgage payment of $3,567 (which includes implicit interest saving due to our offset account - the actual mortgage payment was about $400 less than this), which shows up as a transfer to the housing account, we saved $2.0k on the current account. We made $3.5k of retirement contributions, and saved a net $1.3k in added housing equity. Net saving was, therefore, $6.8k across the board.

The ASX 200 rose 3.37%, the MSCI World Index 1.54%, and the S&P 500 0.39%. The Australian Dollar fell from $US0.7676 to $US0.7616. We gained 1.96% in Australian Dollar terms and 1.09% in US Dollar terms. So we under-performed both Australian and international markets. The best performing investment (in total dollars not RoR) was again the Colonial First State Geared Share Fund, which gained $6.8k, followed by CFS Global Resources with $3.7k, and Unisuper with $3.5k.The worst performing investment was Cadence Capital, which lost $2.4k. All asset classes apart from hedge funds and commodities gained this month with U.S. stocks and then private equity being the best performers.

As a result of all this, net worth rose $29k including housing equity ($US13k) to $1.499 million ($US1.141 million).

Australian Federal Budget 2016

The budget released yesterday actually turned out pretty well for me despite some of the leaked stories. In the end the income level at which the 30% superannuation contributions tax start was lowered from $300,000 to $250,000 rather than $180,000 and the cap on concessional (pre-tax) contributions for people over 50 will stay at $35,000 per year. The cap for under 50s is reduced from $30k to $25k. The biggest changes are a lifetime cap on non-concessional (post-tax) contributions of $500k rather than $180k per year. I might just contribute $500k just before retiring, but it's not going to change my plans. Also there is a $1.6 million cap on how much you can transfer into a tax free account after you retire from an accumulation fund. This number seems to be designed to be equal to roughly the maximum contributions allowed under the new rules over a lifetime. Effectively earnings in retirement on earnings in the accumulation phase above the rate of inflation would be taxed....  Currently, I have $385k in Australian super. If I work to age 65 and continue my current rate of contribution I would add $450k in concessional contributions. So, I could certainly add the $500k just before retiring, as long as investment returns are not too spectacular in the interim.

Other news in the budget is that the 37% tax bracket threshold will be raised to $87k p.a. instead of $80k. That would reduced my tax by $315. So, all in all, it was an OK budget.

P.S.

Now I just read that the concessional cap has been lowered to $25k for everyone, regardless of age. So, what I read yesterday was wrong. But this is from 1 July 2017. So, in the next tax year I can keep my current contributions rate and then after that I will have to cut them and I will have a $3,000 tax hike. Of course, if Labor come to power at the election on 2 July this year that might not happen...

There are a lot of changes, which mostly make super more complicated.