If you have been to Taipei 101 then you have been up there in the clouds.

If you have been to Taipei 101 then you have been up there in the clouds.

Yes Taipei 101 is  right up there in the clouds as it is the 2^nd highest building in the world despite being on the volcanic rim of fire.

As we are now storing our information in the cloud then Taipei 101 has other symbolism.

It was also explained by 101%  exceeds 100% & that is the expectations that the Taiwanese have for themselves.

 As 1 & 0 are the two digits used in computing it was also very relevant in the always connected, always on 21^st century.

Although we have travelled to various places such as Malawi, Mandalay, Marrakesh & Moscow,  Taiwan & Taipei is where the 21^st century will be centred.

This is why the family we visited & he hails from Narrabri is now making their home in Taipei. The family after 8 months are comfortable & winning scholarships in Mandarin.

We note on our return  in the W E Australian that a former & this week suggested by two Labour journalists a future PM was writing on China & the internal debates happening there at present. 

How do we handle China?

Another article mentioned Taiwan 4 times. If there is to be a challenging & flashpoint moment it will be over Taiwan & being aware of its significance is important for our future.

So what do we learn from Taiwan.

It has built up large gold reserves which represent Money.

I.e. we read today that Taiwan holds 422 tonnes of Gold & is ranked 13^th for such reserves. Fascinatingly we note that Australia doesn’t rank in the top 100 such gold holding countries. Maybe it ranks in the Warren Buffett camp & is not a ‘gold fondler’.

We understand that a certain Labour PM  who ‘touched’ the Queen flogged it off. What price did he get? Whose has the real wealth?. Why isn’t Australia purchasing gold? Is it because its debts & interest bills are too high. There is no insurance & as Young said ‘if you can’t afford the insurance you can’t afford the trip’.

How come Australia does not have real savings when it is the lucky country.

Where is Taiwan & how come when it has 22M on an island which is smaller that Tasmania.  

We observed 5 flights of fighter jets take off within 15 minutes as we watched the honour guard at the soldiers' memorial. Would that be more than the RAAF has & can the RAAF afford such regular flights?

Yes Taiwan might be known for its tea [which was brought in by Japan which occupied it for 50 years] but that is only enjoyed in the tea ceremony.

We learnt that Taiwan is where the Democratic forces ended up after Mao Ts Tung. Taiwan has done  a ‘ Dunkirk’ & turned a defeat into a victory. Mao reportedly said that it might take 100 years to reclaim Taiwan. We were advised that 5M mainland Chinese will visit there in 2012 & whom no doubt Australia would be keen to visit here.

The National Museum is the 3^rd largest museum in the world as Chinese history was ‘escorted’ from the mainland during the retreat to safeguard the treasuries from Mao Ts Tung’s destruction.  

We understand that it costs only 20M in Taiwan to monitor compliance on the 10% GST. Why because all receipts go in to a monthly lottery.

Now the ATO has spent a billion on tracking software & employs 20,950 to grab your earnings. Why don’t they tell us what they know to help us complete our taxx returns.

Why is it that Canberra has 3 suburbs in the top 10 expensive suburbs.

Maybe your taxx is being used to subsidise the car industry & is that what you want?

This all should be discussed over a tea ceremony. You are welcome to do so & to read your tea leaves so as to help you financially achieve your goals & to enjoy those canal trips or museum visits later.

That is easier when no debt & minimising taxx & planning for the financial journey. Let’s have ‘the taxx man subsidise your debt’.

 It is twice argued today that China is a ‘sell’  as government figures are a fudge, there is a huge RE bubble & hence bank debts are scary. What does that mean to your portfolio?

We made great use of the Metro in Taipei & the Metro map helped us see the major attractions. We all need a financial map.

As the Taiwanese  protects the downside with gold or fighters so every plan has insurances.

You are welcome to call on 07 3848 1088 or email or visit our websites for some Taiwanese tea.

John McAuliffe

If you are in the worried & concerned 62% then how do you improve your financial position?

 

We read this report & trust you are not in these categories.

“Household savings may be at a 20-year high, but the nation's attitudes towards their personal finances indicate several areas that financial advisers can focus on to grow their client base.

According to the latest Dun & Bradstreet’s Consumer Credit Expectations Survey, almost a third of Australians believe that the current economic conditions are refocusing their attention towards saving.

Aussies in the 50 to 64-year-old age bracket, in particular, could do with some expert financial advice: The survey found that 62% of 50 to 64-year-olds are worried about their personal financial health.

Other key findings that indicate the state of the nation’s finances included:

§  Fifty-nine per cent of consumers are concerned about their current financial situation, 21 per cent of which are very concerned about personal finances.

§  Eighteen per cent of consumers have no savings, while a further 31 per cent would survive on savings for no longer than a month following loss of full-time employment.

§  Thirty-seven per cent of consumers anticipate a positive impact on household finances from further interest rate reductions.

§  Thirty-seven per cent anticipate difficulty meeting existing credit commitments.

§  Sixty-nine per cent of low-income households are concerned about their financial situation.

§  Twenty-five per cent of low-income households have no savings, a further 34 per cent would survive no longer than a month following termination of full-time employment.

§  Twenty-eight per cent of 50-64 year-olds expect to use a credit card for an otherwise unaffordable purchase, while 33 per cent anticipate difficulty meeting existing credit commitments.

§  Forty per cent of low income households expect to use a credit card for an otherwise unaffordable purchase, with 41% anticipating difficulty meeting existing credit commitments.

Source: Dun & Bradstreet Consumer Credit Expectations Survey September Quarter 2012

“Our latest research clearly demonstrates that consumers are worried about their financial position,” said Dun & Bradstreet director Adam Siddique.

“This is partly symptomatic of lingering pessimism from the global financial crisis however, for certain demographics it reflects the reality that households are living hand-to-mouth; with very little savings buffer should unforeseen circumstances occur. So while national household savings levels are at a 20-year high, it is clear that not all consumers are in a position to put money aside.

“For the older demographic, concern over finances in part reflects the ongoing fallout from the global financial crisis and its impact on superannuation.

“Ten to 15 years ago consumers were more comfortable living with a lower savings to debt ratio. However, continued global economic uncertainty is weighing on Australian households and dissuading discretionary spending, credit usage and significant investments such as buying a property.”

See the full report here.”

This is a very scary position to be in.

If you want to meet & discuss & lunch how to improve your current financial position then you are welcome Monday to Saturday.

Just maybe you need to action a strategy so that you are in a better position in 3 years time.

You are welcome to call 3848 1088  or email or visit our websites

 John McAuliffe

Who wins, the big continent or the little towns?

Or the big guys or the little guys!

Isn’t that the debate at the moment. We have the big governments attempting to shore up the big banks who have lost out to the little guys who were tempted into big debts on the little houses. Often known as monuments to ego.

Peter informs Campbell that Queensland has a big 92 Billion debt & hence why Campbell missed the Red Queen’s gab fest’.

We note that Spain is now just above junk status even after 100B help  & that the next one i.e. Italy has to borrow 4billion this week. Hence the big guys are need support from an even bigger body & is the European continent big enough & will enough to make the big moves required.

As a stockbroker on J Parrot’s show said two weeks ago they need to write a big cheque which no doubt will bounce down the road probably to the US Fed. Increasing their Fed bank overdraft has never been a problem as they don’t have any other option until we end at the fiscal cliff.

It was certainly a very insightful documentary on Four Corners this week which traced back to the start of the Euro zone. We can certainly admire their wholesome  idealism with the objective of no more wars. Yes we did play Happy Families last millennium but how many families have communication breakdowns over time. How many break up & don’t talk to each other again?

We read of Italians driving across the border with their household silver to keep some of their own from big government. It been done many times before but usually through the stealth of inflation.

We also viewed another documentary on SBS on Towns & this particular town was Totnes in Devon, birthplace of a new environmental vision for the future. It was also the birthplace of England 1100 years ago. There was a business which was the global expert in ocean going rowing boats as the owner had rowed over both the Atlantic & Indian oceans.  The really interesting  fact was that it did have its own ‘currency’ 1100 years ago & today also has its own tradeable currency within town limits. Even more interesting is the fact that there are 350 similar towns in the UK that also use their own currency. We suppose Bartercard might fill a similar niche here.

So we are witnessing the breakdown of the big boys to the little guys. We heard a speech in Chicago  in 1986 titled ‘Elephants don’t Bite’ & the theme was it’s the small details that count & can come back to haunt us. The small details of limits on government spending were exceeded & glossed over or the rules amended by the rule makers & as always prevention is better than cure.

Doug Casey writes on Phyles - Casey Research where groups of the like minded meet. We read also of P2P which is Peer to Peer business. All the little guys don’t need the big guys & are adjusting to do so. Examples are TaskRabbit & Couchsurfing.org & RelayRides .

The uncertainty in markets means that individual tailoring of your super portfolios has been necessary & appreciated. As Albert commented ‘if the facts change then the answers change’. However that requires the effort to contact us & sit around the table.

Our car needs to be serviced every 6 months & as we are reminded today the service costs but the alternative of no service is more costly. Erik our dentist wants us to see him every 6 months.

We have been helping clients recently in small individual ways.

We reminded clients who live close of their 13,000 taxx refund mainly because of having most of their mortgage deductible. We are in the process of converting their deck, bathroom & kitchen renovations  into deductible debt over the next year. If you could built wealth outside big government super rules & minimise the taxx grab then why wouldn’t you.

If as was discussed on a contempory’s of mine  programme last night that for a lifestyle of 55K p.a. in retirement you need 850K then a radical approach is required. It was also suggested that if you live too long then you will run out of money which means portfolios should be tailored for you.

We have reviewed insurance covers as in a blink they may be needed. Don’t bet on Workcover. When Henry & Deborah meet us they found they saved 840p.a. & were able to cover both their mortgage & the debt on the rental property. They would be wise to sell their rental house as their own mortgage is too big for age 61.

Tom & Alison were telling us of their Antarctica travel plans in 2015 & brought us a quart [yes & a cleanskin & we may tell you when we meet] of the best red we have enjoyed. We intend to research that vineyard in the next school holidays.

Here to help the little guy you to  survive & thrive. This needs meeting  as ‘if we were to meet in three years time & do look back over the three years what do we need to do to make you feel happy with your financial & personal progress.’ We are not short of small ideas to help you & for you to make incremental progress. A financial tune up is today’s theme.

We do have an excellent 27 page article on gold as that should be a percentage  of your portfolio in our opinion. The percentage varies from 0 to 15% in most cases. You are welcome to contact us for this PDF.

If  1 in 10 will drop their medical insurance then is there a wise & smart alternative? Yes.

If you are interested in meeting for lunch Monday to Saturday here then contact us on 07 3848 1088 or email or our websites.

John McAuliffe

Well done Mavis & Doris & of course Gina & let’s not forget Mark

Well done Mavis & Doris & of course Gina & let’s not forget Mark

Mavis & Doris could be [we hope not] the names of two elderly shareholders of Campbell Brothers. According to James from the Courier Mail, Mavis is worth about 25m & Doris about 21m. They didn’t become that wealthy by leaving their money in term deposits or having property on Sydney harbor. They were related to the original founders who have certainly left a legacy.

As Campbell Brothers have just announced a special  50%increase in dividends  this will certainly help them push their walking frames around. Mavis & Doris are part owners & shareholders of a business which started life making soaps & now is a worldwide, world class company & laboratory for analyzing mining assays.

Gina  hit the headlines this week as being wealthy & some even suggested she might own the world. Again she certainly chose her Dad well but she has maximised her opportunity. She or rather her Trust is a shareholder in a major business & company. 

Mark of course sold some shares @ $38 each & made the top wealthy 20 as a billionaire.  

The above mentioned are just a few extreme individuals who have done very well out of being shareholders of businesses, risking their capital & their efforts & being rewarded for doing so.

This global & national & individual discussion at the moment is concerning interest rates. Sheila who is on an European canal today & is retired doesn’t want her interest from her deposits to drop any lower as that would drop her income & lifestyle down.

In fact as the clock ticks she along with Mavis & Doris & the government will find that their living & nursing costs will increase. Inflation is a sneaky way Governments pay off debts & elsewhere say Japan  they have been low for 20 years.

This is not good in a low interest world. I.e. There is a longevity risk in having all of your funds in cash or Term deposits or even annuities.

We aren’t convinced that there will be a low interest environment in the future as governments who would rather pay low Real interest rates are in the case of Creek or other governments case prefer to pay nothing & default are currently told by the bond rates to pay more. Hence the cost of money for all debts could rise.

We are also not convinced that the banks need the RBA as they reduced their mortgage rate by less than the RBA did on the cash rate.

Both Margaret & Linda mentioned this week that they might live to 100. Hence they each need a tailored portfolio both for their short term peace of mind & for the longer term.

Margaret today wanted a good return but no risk. Well just ask the Creeks if they want to leave their money in the bank. Just ask the Creek government & the Euro zone what if there is a ‘run’ on the Creek Banks. The UK government found out with Northern Rock Building Society in the very recent past.

What are we suggesting?. Simply ignore the headlines & concentrate on what it is that you control. We suggested to Margaret who wanted to capture some of her savings outside super [ because you can’t access it & the legislative risk] that there are several things she could do.

 E.g. paying down debt.

We have previously suggested that we have  13 more smart strategies before June 30.

Other Essentials  includes remaining healthy & minimising visiting the misnamed Health system.

She also wanted to leave 1m to her grandchildren when she is 100. Her term life cover which admittedly covers her after her super cover doesn’t will be prohibitive & actually expires at age 99. She did mention & ask for the very old Whole of Life product that in fact she used to sell. However that is another unintended consequence of government rule mongering.

However a few shares in Campbell Brothers or very maybe Facebook or an equity portfolio might create an estate. Margaret’s house will be needed to look after her first. Margaret also suggested Platinum which we can’t disagree with.

We are certainly only suggesting a percentage in equities as a recent investment seminar was titled that the benefits of shares are forgotten.

 In our own case if we make it to 100 then maybe 38% of our portfolio should be in shares.  How that % is allocated is another exercise. However as a Taurus we are bullish by nature & have a little more.

Lets discuss how much for you & welcome for lunch any day here.

There could be smart strategies to do before June 30. If you have a large debt & hence a large income then our PCMS* where ‘the taxx girl  subsidises your debt’ is for you & is for all seasons.

DYI is often suggested but is that your trade? You could call us on 3848 1088.

John McAuliffe

Have you considered Enamel?

This was the question we were subtly asked when at the paint shop. No ‘we hate enamel’ as too hard to work worth when doing our own DYI. However he was right as the finish isn’t quite there & hence we need to revisit the paint job to finish the presentation. I.e. DYI is good but not necessarily Efficient.  You don’t win the Cup that way.

We admit to other similar DYIs in last week. E.g. first mixing the sugar with the flour & not the canola oil first when baking the carrot cake.  It turned out delicious according to the neighbours but it is those simple missteps that can lead us astray. There was a doubt until the tester came out clean. Not Efficient & you don’t win the Cup that way.

 We spoke to Warren on Friday who has some cover on his industry fund which in no way will cover his proposed 472K DEBT. If he does worse than Molly on the 24^th Floor then he has made his mum a dependant. Mum is not a financial dependant & hence may get taxed @ 30% ~ 55,000 on the 272K life pay out. That is no good to Ellen who would be a joint owner in the proposed house debt. Does Ellen sell as she can’t afford the Debt or does she chase up his mum? Either option is very Dear & certainly not Efficient. Recall that workers compensation doesn’t cover illness or outside work.

However this wasn’t the main problem for Warren & Ellen. It was the very small < 10% deposit on a house. That is OK if all goes well & we certainly didn’t want to be ‘dream stealers’. However it meant paying to the bank a multiple say 3-6 times 472K or say 1.4m+ to the bank. That is a very expensive landlord & interestingly the Big banks stated they did NOT want more than 10k p.a. extra into Debt repayments. Who is that good for? As we stated 2 years ago this week ‘Daughters tell fibs But the big Boys tell lies’. The 12K into mortgage insurance is good for the bank & may as well be torn up by Warren. It's dear & certainly not Efficient.

 Also the mortgage insurers Gensworth aren’t making any profits in the last quarter & withdrew their IPO. What does that mean?

If that is the situation for the first home buyer then a similar inefficient story occurs for the baby boomer. Is that large house not too large as we saw on Saturday evening at a bar-b-que?

5 bed rooms & 3 bathrooms for usually 1 couple & one teen ager. How many are like that & hence too many are working hard to pay off too much DEBT. Of course the house is ‘risk proof’ so they say but in any negotiated sale then it is easy to drop perceived prices by 10% to 15% & that doesn’t take much to be 100K. SHA recently suggested that selling rural acreage can take up to 3 years. That’s a long time to discharge the bank landlord. Also on every SHA there is thousands of difference between vendors & buyers concept of price. That isn’t Efficient & doesn’t win the Cup.

 Archie, a small stake holder in Efficient, is at Ascot UK next month as he doesn’t own a big house. That extra capital which could be locked in a house can earn an income for those UK trips that those of any vintage would rather do.

That is what our PCMS* does. I.e. it is an Efficient solution to have the taxx man subsidise the debt & allow those European canal trips which Sheila with her 2 daughters is on now to enjoy earlier than others. It allows a portfolio outside those ever-changing super rules.

We note two of many changes from the Swansong budget that Sheila from next year will only be able to have 6 weeks overseas rather than 13 weeks before Centrelink reduces her part pension. She will also be means tested on her medical expenses over 5000 rather than 2000 & at 10% rather than 20%.

Wayne’s swansong will also require some guidance & due to the law of unintended consequences there will be efficient ways to play the game. We have here 13+ ways to maximise the moment & minimise Taxx before June 30^th.

You have the options of maximising & being efficient or DYI which is generally not efficient & hence dearer. As recent European events have shown it is up to you & being efficient is an Essential.

As we discussed with Warren & Ellen today you have to be more efficient with your money. E.g. Perhaps the opportunity to deposit today an extra 10K in the Debt or work an extra year or do. Which do you prefer? Which is most efficient & DYI can be costly.

At our age which we are again reminded this Friday that is a given.

You are welcome to call on 07 3848 1088 or email or visit our websites to meet & maximise your financial position. Although we are not as intimidating as the elite athletics’ coach we listed to last week then if you are cynical  we ‘break bread’ first as trust is the first step.

John McAuliffe

Have you seen The Hunger Games?

Have you seen The Hunger Games?

The Hunger Games is a trilogy which we stumbled across whilst researching what film to attend for a Tuesday night. It was our choice as the Orwellian theme resonated with our other readings of late.

The concept was of Big Brother Government & the political classes having 12 areas of populations annually fight in a gladiatorial contest with one survivor out of 24. The gladiatorial concept might have been extreme but it’s not that different from current cage fighting or the Roman circuses of the past.

 A trilogy suggests the theme globally hits the mark. When we reread George Orwell’s 1984 then how far away are we now from that?

Hence as was on every phone booth ‘be alert & alarmed’ as they want your money.

Thank you Bob Down.

Why? They have promised in every election since Federation that they will look after you & care & defend you. However as Europe is or has discovered that they have run out of money to fund these promises. Only last night on Sky Business we saw an older money trader saying that the pension will have to be deferred until much later as we are all living longer. We explained this week to Dan that for him today it is 67.

It is in fact the unseen liabilities of health, government pensions & today aged care that amount to trillions globally. Hence those taxx sniffer dogs for your money today.

Joe was very right when he commented that the West is stuck in ‘an age of entitlement’. Tony No commented otherwise but the reality is there.

Hence we are caught between saving taxx today or risking it in a super environment where the political classes change the rules during play  as they did in The Hunger Games.

There are loud suggestions that there should be more bonds meaning government bonds in your super. Yeah lets have some Greece or Spain or even Australian bonds in our super.

 I.e. using your money to fund some white elephant or the neighbour’s smoker’s leg amputation.

It is suggested today that the upcoming budget there will reduce superannuation concessions as at present  super is a ‘tax haven’ if you are earning more than the current $37,000.

We also read the taxx man holds $730,000,000 of your lost super. That is better in your account than theirs because they don’t give you any interest & you could have it earning more than zero. It will buy only ½ that in 24 years if government inflation is 3% or ½ in 7 years with real world inflation of 10%.

Hence a time to be proactive & we suggest before the budget which is 8^th May.

There are currently a number of provisions that could be maximised & we can be contacted on www.JohnMcAuliffe.com.au

or email or call  07 3848 1088.  

As Robbie says ‘play what’s in front of you’ & you can only play according to today’s rules.

 However the political classes need to be very aware of the Arab Spring & that the Great Wall of China confiscated so much taxx that eventually the ants opened the gates & let the hordes in.  That is why it is still standing.

We had a local reminder of Big Brother when the Police Minister had to resign as he hadn’t paid a speeding fine. When those arbitrary fines could fed a family for a week then it is usury.

We read that the Land of the Free is intending to legislate that if you have a  ‘'seriously delinquent tax debt’ i.e. greater than $50,000 then under MAP- 21 your passport could be revoked.

Hence minimising taxx today is judicious with the proviso of be alarmed tomorrow.

We suggest a time to be proactive is before the budget which is 8^th May.

There are currently a number of provisions that could be maximised & we can be contacted on www.JohnMcAuliffe.com.au

or email or call  07 3848 1088. 

As Super may have downsides in the future or you have maximised it today then there may be other alternatives that you may prefer to address.

We could give you a list including having the Taxx man subsidise your DEBT.

Will you need to use your super to pay off your DEBT on retirement?  Not if the rules change & there is no access to a  lump sum.

As you are different then personal advice is smart & wise & welcome for lunch here anytime.

John McAuliffe

What if Mum needs to go into Aged Care today?

What if Mum needs to go into Aged Care today?

Yes been there & done that. We have had that question ourselves & when it does it needs an answer.  As we said then ‘’we care but we are not carers’

However just as in economics it could be this or it could be that. It depends.

We read in the Weekend Australian 9/04/12  titled ‘Aged fear rip-offs to fund their care’ that the Minister for Aging Mark Butler say s ‘the conversations point to an industry in crisis.’

And again ‘the overwhelming message is that older Australians are not getting the quality of care & support that they deserve from the current system.’

when it was time to enter residential care ‘the price they pay…is based on how much money they have in their pockets rather than a reflection of the true cost of care & value for money’’.

and yes ‘ accommodation bonds paid to get into residential care cost an average of $264,000 but that can be more than a million and are usually raised through forced fire sale of the family home at a time of crisis’.

We had heard elsewhere the average was $365,000 & usually forced fire sale can mean a $50,000 to $100,000 which is only a 10% reduction.

What if it is a sale 15% below estimated by the real estate agent?

 So what is the process & steps that you have to go through & how can you minimise ‘family losses’ & maximise income & taxx benefits?

You need to be ready

o   The Need to enter aged care is often Sudden.

o   A significant bond payment maybe required.

o   There are ways to minimise how much the ‘resident’ pays.

o   Trusts maybe an effective strategy.

o   Planning with good advice is the key.

Decisions need to be made

o   What is the right facility?

o   How much will it cost?

o   How does it all work?

o   What happens to the family home & other assets?

Steps - a family Checklist

·         Get ACAT approval which determines  low, high or respite care.

·         Select home i.e. location, facilities care, culture. Then add name to waiting list.

·         Negotiate the fees & sign the residential agreement. [you won’t know the daily rate until after 28 days in there.]Yep.

·         Do we keep or sell the home? You will need to pay entry fees & review investments.

·         Has estate planning including Power of attorney been actioned?

·         Move Mum’s home into her unit. We still remember that part vividly.

 What is the Cost structure?

o   There is an entry fee payable if assets exceed $40,500.

o   There is an upfront bond or daily charge.

o   There is a basic daily care fee which is currently  15,089 p.a.

o   Then an income tested fee based on private income & government support.

o   At lastly there is an extra service fee which depends on the market & facility.

 What are these accommodation bonds.

·         As above the average is $ 350,000 but if it is $264,000 then that’s not small.

·         The facility uses it for debt reduction, or investing or building say.

·         It can retain 318p.m. for up to 5 years.

·         It is repaid when resident dies or leaves.

·         It is government guaranteed  & paid back within 14 days.

·         It is asset tested exempt.

What do you do when the moment or rather the decision is made?

You can DIY which usually means sell the house & pay what is negotiated. 

·         This often means an extra income from the bank interest earned.  This will have the consequence of increasing the cost of care, the daily care fee, the income tested fee and the extra service fee.

·         It will also reduce the pension.

As ‘it depends’ & everyone is different but you may be able to

·         reduce the income tested fee & the extra service fee.

·         You may be able to increase the pension.

·         Retaining the health card is also important.

You are welcome to call us now on 07 3848 1088 or email us or visit our websites.

Nothing has changed as good preparation means less stress later.

Here to help you negotiate through the aging minefield when you wish.

Yes Dad might need it too although Jack selected a better  & more tranquil place where dolphins pod & cruise ships berth to exit the stage.

John McAuliffe