Monthly Archives: August 2019

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Stocks set to follow Wall Street lower

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Australian shares are set to open on a down note after the Aussie dollar fell and Wall Street was down on concerns the Fed may begin trimming stimulus measures later this year.

On the ASX24, the SPI futures contract is 14 points lower to 4884. The Aussie dollar was buying 96.57 US cents, down from 96.8 late yesterday, and down sharply from 97.9 in offshore trade early on Tuesday. It was also buying 96.54 yen, 73.73 euro cents and 63 pence.

Economic growth in the first three months of the year is expected to have been boosted by resources exports and strong consumer spending. The figures, due for release at 11.30am, are expected to show the economy grew at 0.7 per cent in the March quarter for an annual rate of 2.7 per cent, a Bloomberg survey of 25 economists found. This would be considered a strong result given the impact of the high Australian dollar and fall in investment in the mining sector during the first few months of the year.

What you need to knowSPI futures are 14 points lower at 4884The $A is lower at 96.57 US centsIn New York, the S&P500 was 0.55% lower at 1631.38 In Europe, the FTSE100 rose 0.51% to 6558.58China iron ore added $US4.70 to $US116.60 a metric tonne Gold fell 1% to $US1397.34 an ounceWTI crude oil lost 14 cents to $US93.31 a barrelReuters/Jefferies CRB index lost 0.34% to 285.94

Making news today

In economics news:ABS national accounts, including gross domestic product for March quarterAiG-CBA Performance of Services Index (PSI) for May

There is no major company news scheduled for today

Analyst rating changes:Oceanagold cut to hold at InvestecBillabong cut to sell at Deutsche BankSeven West Media raised to strong buy at BBYCochlear raised to neutral at Macquarie

How we fared yesterday

Australian shares finished 0.3 per cent higher on Tuesday, ending a three-session run of losses as Wall Street gains overnight bolstered sentiment and firmer metals prices underpinned miners.

The S&P/ASX 200 index tacked on 12.5 points, after a volatile morning session, to finish at 4,900.8. The benchmark fell 0.8 per cent to its lowest close in four months on Monday.

BusinessDay with agencies

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Smith promises Blues a taste of their own medicine

Queensland’s critics may suggest the Maroons are getting a bit long in the tooth but they aren’t too old to learn some new tricks, even from New South Wales.

The early verdict on the Maroons team for game was that it was light on muscle from the bench, with no specialist frontrowers being held in reserve.

But Queensland captain Cameron Smith said the inspiration for the mix of Ben Te’o, Matt Gillett, Corey Parker and Chris McQueen partly arose from the Blues, whose smaller bench forward have proven troublesome to the Maroons in recent clashes.

And while Queensland has moved towards a more mobile approach for 2013, the Blues have taken a step back towards a more traditional interchange platoon, featuring a utility in Josh Reynolds, backrower Anthony Watmough and powerhouses Trent Merrin and Andrew Fifita.

Laurie Daley’s vision of how he wants the Blues to play clearly differs from Ricky Stuart, who went into game three last year with Tony Williams, Ben Creagh and Luke Lewis alongside Watmough, whose speed and impact have been difficult to handle for the Maroons.

Smith said he had complete faith in the bench to compete physically and hoped the more mobile additions would turn the table on the Blues late in the halves.

“I know in previous years we’ve gone with three really big blokes who can get us going forward. But these guys, they can push up if we need them to and they’re all backrowers,” Smith said.

“It’s what NSW has done over the past couple of years and we’ve probably found that they’ve troubled us a bit with those smaller guys and more leg speed and lateral movement.

“I’m really happy with the bench that we’ve got. They’re pretty dynamic there. Hopefully they can have an impact on the game.”

A faster ruck speed would help the Queenslanders deploy players like Te’o and Gillett more potently. NRL referees have watched the ruck like a hawk this season but Smith was unsure how much latitude there would be in Origin, where the whistle is typically used more sparingly.

“I guess we’re going to have to see the referees in the first 10 minutes or so to see what they are allowing. State of Origin, traditionally, is a little bit slower. They allow a little bit more work on the ground,” Smith said.

“As long as it’s the same for both teams, I’ve got no dramas. But I think both players and fans would like to see a free-flowing game rather than referees pull their whistle out every two minutes.”

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The man behind the Maroons’ magic

Mal Meninga Mal Meninga

The puppet master … Queensland’s players say coach Mal Meninga has perfected the art of motivating his charges. Photo: Andy Zakeli

Billy Slater with his 1959 Queensland counterpart, Frank Drake. Photo: Peter Psaltis

It has been suggested that Mal Meninga is to rugby league coaching what John Buchanan was to Australian cricket, although with much more substantial thighs.

In Meninga’s possession is that rarest commodity in sport; not only a group of outright champions but a champion side. Honestly, how hard can it be?

Buchanan was famous for delving into the philosophical and encouraging his players to read extracts from The Art of War. But on the field, the get-out play didn’t require a PhD in psychology: “Warnie, you bowl at that end, McGrath you bowl from the other.”

Similarly for Meninga, the virtuosity of his squad has seen his contribution steadily diminished, or even criticised by some NSW observers as token. Surely coaching football isn’t that difficult when you can just throw it to Greg Inglis, or Billy Slater, or Darren Lockyer, or Johnathan Thurston.

Ask Queensland’s players and they’ll tell you the truth couldn’t be further from the perception. Far from a rent-a-legend that bellows a rousing pre-game call to arms, Meninga has become a master motivator and manipulator capable of extracting the last molecule of competitive edge from his playing staff.

With Origin now played by increasingly elite athletes and almost nothing between the sides, it matters. His players say it has been a huge part of their domination of the interstate series, which could stretch to eight-in-a-row should they triumph on Wednesday night and beyond.

“He was a player. He knows what made him tick and what makes us tick. He’s very good at doing those things and he thinks it’s very important for us to know the history of this jersey,” said Queensland lock Ash Harrison.

“He never ceases to amaze me with what he comes up with. He seems to push the right buttons every time. It’s one of the things he’s very, very good at.”

At the Queensland team reveal, now a full-scale gala dinner instead of a media-only event in a dingy hotel space, Meninga was at his best. He had assembled members from the 1959 side, the last team of northerners to win prior to the Origin concept proper in 1980.

Players like Noel Kelly and Frank Drake stood alongside their current-day counterparts as the 2013 side was announced on stage. It was a gesture Meninga had been cooking up since last November.

“Besides his coaching philosophies, Mal provides a really good environment for people to express themselves and play their best football,” said Maroons halfback Cooper Cronk. “The one thing he always does well is he makes us respect the past.

“I’ll be honest – I know about Origin from the ’80s but didn’t know much about it before then. When I was told that stat about the first successful Queensland team between that period of ’59 and ’82, I was blown away.”

Meninga has been a picture of relaxation and calm this time around. Zen master Buchanan would be impressed. But as in previous years, behind the scenes, Meninga will have rabbits in his hat.

In series past, when he’s said publicly that NSW taunts mean nothing, he has then showed his players footage of the offending quotes to fuel the fires. He’s had articles pasted on walls and footage of some of the best Origin biffo on rotation.

The now annual trip to regional towns like Emerald, Bundaberg and Roma has also given players an in-your-face reminder of what the game means to people in the regions. With many of his players growing up in bush towns, it’s not just the fans that benefit.

All of that adds to the unique mix, says Sam Thaiday, but the main ingredient is the man himself. Imposing, deeply respected and an unabashed personification of every Queensland cliché NSW detests, Meninga’s influence over his players is profound.

“If you want to know how good he is as a motivator, you just have to listen to him speak,” Thaiday said.

“We’ve got quite a mix in the coaching staff. We’ve got Steve Walters, who’s a bit of a character, Alfie [Langer] who likes to sling a bit on everyone. But as soon as Mal talks, everyone goes quiet in the room.

“It doesn’t matter if he’s talking about footy or whatever, everyone shuts up and listens. All of the boys have a great respect for him. Everything he says is gold to us.”

And Cronk, whose own philosophical ramblings reached cult status this week, put to bed once and for all the notion that Meninga is just along for the ride while assistants like Michael Hagan do all of the technical work.

“He’s very much the coach of this football team. But he is also the figurehead. He sets the example and creates a great environment that allows us to go out and hopefully play well,” Cronk said.

Harrison, a perennially underrated player who grows an extra leg in Origin football, said Meninga’s mystical touch extended well beyond game plans.

“We all just want to play for him. And that’s half the battle won.”

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There’s no super secret – it’s all in the mix

Illustration: Michael MucciQ I’ve never really understood super – my fund has 40 per cent invested in growth and 60 per cent in balanced. Is this a good idea or should I have it all in growth?

A The essence of superannuation is that it is not an asset class like property or shares, but merely a vehicle that lets you hold assets in a low-tax area. Therefore, whenever you make the decision to invest, a major question to ask yourself is whether that asset is best held inside super or outside super. The right asset allocation for you depends on your age, goals and risk profile – a good adviser will be able to help you decide which mix is right for you.

Q I am 65, recently retired, and will be going on an aged pension. I have $55,000 in super. I believe this would be taxed at 16.5 per cent for the first $41,000, with the balance as a taxed component, so I would have to pay $6765 tax on the $55,000. Do you think I should pay the 16.5 per cent tax and put the balance in a fixed-term deposit at 4 per cent or roll it over into the allocated pension fund, pay 15 per cent tax and an annual fee, and have to reduce the amount by withdrawing 3.75 per cent each year? I am leaning towards the fixed-term deposit as I would not have to reduce the amount each year and would get interest.

A Based on the information you have provided, it would appear that you lose 15 per cent no matter which strategy you adopt. In view of the relatively small amount you have in superannuation, it may be easier to simply withdraw it and invest outside the superannuation system.

Q I would like to invest in silver bars for my daughter’s university costs. It would be in her name and she has four years of high school left. What are the tax implications if we bought now and were to sell before she starts university?

A For starters, I wonder why you would want to invest in silver – why not gold, platinum or pork bellies? However, if silver is your thing, the profits will be taxed like any other investment asset. If you are carrying on the business of trading in precious metals, any profit will be added to your income and taxed at your marginal rate – if you are an occasional buyer, any profits will be capital profits and you will receive a 50 per cent discount if the asset is held for more than 12 months. These rules do not apply to collectables, which are taxed under a different system.

Q Our 19-year-old daughter has recently received $10,000 in back wages and compensation, which she sensibly wants to invest. We think she should lock it up for a very long period as she still lives at home and already has a small car. She can’t afford to seek help from a financial adviser and has been looking at term deposits. We have often read your advice about managed funds and term deposits but would not know who to contact to look at this form of investing. Any advice you could offer would be appreciated.

A It’s a pity the continuing ”reforms” of the financial advisory system have effectively priced lower-income people out of the market. A good first step for your daughter may be to read a book such as my own Making Money Made Simple and focus on understanding the difference between the way cash, property and shares work, and also the characteristics of short-term and long-term investments. The major benefit of share-based investments is that she can start with just $1000 to get a feel for that area.

Q My wife and I are in our early 30s with two children under five. Our combined annual income is $210,000 and we have a $300,000 mortgage on a home worth $700,000. I feel we should be more proactive in creating wealth but we have been too time poor to act. All our surplus income (after generous living expenses) is used to reduce the mortgage, as we consider a saving of 6 per cent to be better than most investment returns we would receive elsewhere, although this may be ignoring valuable negative-gearing benefits. Do you think we should be investing in shares or investment property, or is it better to reduce our home mortgage?

A I recommend that people try to reach a stage where they can pay $12 per $1000 a month on their home mortgage. On a mortgage of $300,000, this is $3600 a month. Repayments at this level will keep the term to about nine to 10 years, as long as rates stay at less than 9 per cent. Making bigger repayments than this means you are effectively wasting income that could be better placed to build wealth. For example, a spare $1000 a month could be used as interest on a home-equity loan of say $150,000 to buy quality share-based investments.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature. Readers should seek their own professional advice before making decisions. Email: [email protected]苏州美甲学校.You can follow Noel on Twitter – @NoelWhittaker

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Pension criteria set to change

Centrelink uses the deeming rules when assessing eligibility for the age pension under the income test. This means assets such as cash in the bank, shares and managed funds are deemed to be earning a certain income. The rates used now are 2.5 per cent and 4 per cent, depending on the amount of financial assets held.

However, a different treatment is accorded to account-based pensions. For income-test purposes, the amount that is assessed is the gross annual nominated pension payment less a deductible amount – this is calculated according to the recipient’s life expectancy.

For example, if Harry, aged 65, had a superannuation balance of $300,000, and began a pension of $20,000 a year, $16,949 of the payment would be the deductible portion and would be exempt. This figure is calculated as the account balance of $300,000 divided by the life expectancy of 17.7.

This means that only $3051 would be assessed as income for the income test. The rationale is that the $16,949 is a return of capital, and therefore should not be assessed.

If the pensioner chose to take the minimum payment, which would be $15,000 a year, the deductible portion would be in excess of that amount and the entire pension would not be assessed under the income test.

The account balance from year to year is assessed under the asset test.

Last month’s budget announced that from January 1, 2015, account-based pensions would also be subject to deeming and would not be assessed under the present method. Under the new rules, if Harry were single, he would be deemed to be earning $11,319 a year on his super balance of $300,000. The annual pension amount would become irrelevant.

The existing rules will remain for account-based pensions started before that date, unless the pension is commuted so as to start from January 1, 2015. This could occur if a pensioner changed income-stream providers, aggregated accounts for account-based pensions, started a new death benefit pension or added to an existing pension.

According to OnePath, the impact of these changes will depend on individual circumstances. It could include those receiving a defined-benefit pension from a government super scheme, an asset test-exempt income stream, employment or self-employment income, a foreign pension or a disability pension from the Department of Veterans’ Affairs.

The changes, if applicable, will have a bigger impact on non-home owners than home owners. Also, a large number of pensioners could be affected if the deeming rates start to increase – right now the rates are low.

It’s early days yet, but if the proposal becomes law, age pensioners who may be affected should take advice well before January 1, 2015.

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