Do you know what assume means?

Do you know what assume means?

Do you know what assume means was a question a builder client asked us sometime ago?
We had to admit then that we didn’t know & so a brief translation was provided and starts off as ‘the mother of all’.

This has been the recurrent & comment mistake by government over recent times & something we never do with our spouse. I.e. we assume that all our taxx is well spent and the banks are as safe as houses & Kevin Flip flop is action what he spins a promise.

I.e. assume that property always goes up. Have we all forgotten all of that frozen funds in property trusts. Lets recall Centro which was the lead player before the GFC & was in fact in ‘the too big to fail’ category. Yes this is commercial property, such as retail office & offices. The banks are propping these funds up as otherwise the banks will need propping up. We have no expectations of residential prices doing other than a similar slide as elsewhere on the planet. Why else are we any different.

So we see from the Henry report the assumption that mining companies will pay a 40% super profits taxx RSPT as it will be good for your superannuation & infrastructure & whatever. That is a very big assumption as so far all super funds with any exposure to resources stocks have fallen 15%+. Thanks heaps. Ross Garnaut of Lihir & an economist was also questioning the treasury assumptions. One of them is China will continually grow & need our resources.

A big assumption is that this RSPT will kick in once companies earn over the risk free rate of 6 %. Risk free is benchmarked to government bond rate. We only need to read of ‘sovereign risk’ in Europe to be very aware that this risk has significantly increased. We attended a presentation by a fund manager recently that showed a slide of a Fosters bond being better priced i.e. less risk than that the Australian government bond in February this year.

We all assume that the health system which is a bottomless pit will look after us in our time of need. We are sorry but there are too many examples of a failing health system which takes a disproportionate share of everyone’s dollar. Yes there are some great emotional & success stories which we have commented on before such as road trauma & premature infants. In general there is a gap either in time or money that you have to find.

We only had this week an example with a client needing shoulder surgery. The estimated cost is 40k which Work Cover will pay. Work cover always needs serious convincing in such matters & it is even less likely for a major medical trauma. Hence you may need a solution for that & welcome to call us as we have two separate ideas on that. One of those is at a seminar in Brisbane on June 21st with a Collette Larsen who has an incredible health & income story. Welcome to call on 07 3848 1088 or email for free tickets.

As it is now June then it is time to act & do something on your taxx before June 30. We have made the above comments because you can safely assume that your taxx will be wasted. There is almost always something to be actioned before June 30.

If you find that more than too much of your money goes to Taxx you wouldn’t want the standard deduction the government wants to allow.

At some stage Australia could wake up & read what the new UK government read i.e. ‘sorry but no money lef’.

At least A. Robb [an appropriate name] commented in the budget reply after Joe lopped 42B off that ‘we can’t afford it’. That’s a start with an attitude change although Tony the loose cannon could also be very loose with your taxx.


The other chunk of your after taxx income may go to your mortgage. Then of course it time to act as one client has this week.

“Hi John,

Jackie here......Mick and I would be keen to have you offer us advice on how to better structure our loans etc.

Firstly, we want to make sure our loans etc are working to the best of the ability, and secondly, we are not happy with our BOQ service. Our latest home loan is with CBA and we also have a mortgage with Macquarie.

It is difficult for us to get down to see you from Dalby for the hours / days we work. I thought it might be possible to get the ball rolling over email - if you could let me know if this is OK, and what you would need to look at (Mortgage statements, rates etc).

I could either email or mail a package of everything you need for you to review and then hopefully we can get down to see you personally to wrap up.

How does that sound?

Thanks in advance for your assistance,
Jackie”

So if you need to reduce your taxx before June 30 or that mortgage is so big it is stressing you or you want to protect the downside then call on 3848 1088 or email as we have 26 years of happy clients. We have an elegant & simple strategy to achieve your goals.

Assuming all is good means you will end up as you are or maybe ‘the mother of all’.

John McAuliffe

What did Barnaby say? What have we learnt as we turn 60?

What did Barnaby say?
What have we learnt as we turn 60?


We had to check ourselves when last weekend we heard Barnaby say ‘They have got lovers’ fingers, every thing they touch smells’. We could never have imagined an accountant with we believe three daughters make such an earthy comment on the ‘Henry report’.

When it was followed up with a similar earthy comment from another commentator on PM agenda that ‘the others on the Henry report must have felt they had had a one night stand & must feel slightly used’ then there is a general & genuine feeling of mistrust with all big we know better governments.

There is the unholy Trinity with Kevin Flip Flop bringing out that rent resources super taxx on the miners. It is a taxx on super profits. A super profit apparently occurs when one exceeds the long term = 10 year risk free government bond rate.

Let’s listen to Kevin Flip Flop as he explains it.

Lets all put our money in government bonds because at the rate of government borrowing we are all going to have to so as to sustain big brother government largess to the masses. Greece & Europe & US & UK here we come. There is no reason at all for anyone to risk their money in any investment or activity if there is no incentive. Who said government bonds are risk free & hence we have sovereign risk to add to market volatility.

And what perfect timing so as to whack the values of everyone’s retirement nest egg.

Here is one email we received this week & Jean is not a client.

Hi John

I really do need your advice now as I have managed funds with Colonial First State in Global Resources which is in the mining sector and with the government’s introduction of 40% of the profits to be taken to fund the increase in Super I am concerned about what I need to do.

My phone number is XXX

Thanks
Jean


And today’s client email

Hi John,

I'll be away from 12 May - 27 June so I'd be glad to catch up sometime in mid- July.

I've attached April homework.

Thanks for your advice this year. It's been very predictive of what has happened. It looks like the PIIGS can't fly. Hope the euro stays down but not the market.

Regards
Kerry



Why would anyone in their right mind contribute any more money into superannuation when its going to be destroyed as it has in the last week? They are only going to because they have to. Therefore it’s a taxx because you can’t spend it & you have the choice of government with their proposed low cost low return fund or if they had their way an industry fund. If you don’t vote Labour then why are you in an industry fund? They are not a charity & who pays for all their advertising. You certainly wouldn’t want their advice. However we remember Don Chipp phrase & it’s why they want us out.

We have also been given the next blow to the family budget by the RBA who increased the cash rate to 4.5% & hence your mortgage rate to close to 7 %. Where is a family going to find that extra $50pw? Hence they are closer to mortgage stress as are 90,000 others. The banks don’t want that because that means selling & hence down go house prices. This is what has happened everywhere else globally.

Of course the banks had their semiannual results which gave Kevin Flip Flop the opportunity to pass the heat off him & onto the banks. It was so predictable. Then there was the suggestion that maybe the banks should be also super taxed. This could be argued as they have been ‘gouging’ on the back of the government guarantee. Where again does your super invest in & what is that going to do to your retirement values.

Then we read that customers are unhappy with their banks. Well it is always possible to change banks & we do offer better rates through our preferred partner. Give us a call on 07 3848 1088 or an email.


We could attempt to list the other big government knows better stimulus spending failures. Those that come to mind are the rort of the insulation & the Julia’s BER schools programme, the flip flop on the ETS, the destroying of TLS share price with the 42B +/-NBN which only 30% may subscribe to, 100m on swine flu …. It’s your money that is wasted.

Taxx kills growth & hence you have lost wealth, taxxes won’t reduce & interest rates will continue up by another 0.5%.

The other side is no different as the coalition spent 93% of it revenues. All government can’t help themselves & the Western model of government promises is breaking down as it is a Ponzi scheme.

We are more comfortable with the Norwegian model where the taxxes on oil goes into a separate ‘Future Fund’ & away from big government hands. The Swiss also have an idea where the new migrants only pay 10% flat taxx but have no entitlement to health or social security.

We understand that Kevin Flip speaks Mandarin & hence he might understand why China is in the position it is. Simply it saves. E.g. A huge % of new property is bought with no borrowing. However a China bubble is due to burst.

Our thoughts on turning 60 today is that daughters fib but the big boys lie & don’t ever confuse wants with needs.

Other events today are Naplan & we ask Julia why it will take months before our daughter’s results are known. Julia & the teachers flip flopped this week also. We have swan bumps in anticipation of Wayne’s platitudes.

We must play as the coach Robbie Deans says. ‘Play what’s in front of you’. Your taxx is not going to be any smaller & nor is your mortgage rate. Hence we offer our active wealth strategy which reduces both as you need to play the game. Of course you can always leave the country which many contemplate & sometime act.

Welcome to call, email or visit our websites if you are unhappy with your current financial progress.

There is always some financial tuning possible before June 30.

John McAuliffe