Investopoly

Many lenders are taking a number of weeks (sometimes months) to approve loans at the moment. These delays have been caused mainly by significantly higher mortgage application volumes and the operational disruption from onshoring back-office services due to Covid lockdowns in the Philippines and India.As such, banks are prioritising applications for borrowers that have already purchased property and have a definitive settlement date to meet. Consequently, pre-approval applications are low priority and can take a long time to arrange. This blog discusses the pros and cons associated with buying a property without a loan pre-approval.What is a mortgage pre-approval?A pre-approval is a conditional loan approval. Typically, the main condition is that the borrower is able to offer a suitable property as security for the proposed loan. For example, a bank may approve a loan for $800,000 subject to the borrower buying an acceptable property that is valued by the bank at an amount of at least $1,000,000 (to keep the loan to value ratio at 80%). The only other condition might be that the borrower’s financial circumstances do not change. This is called an approval-in-principle (AIP) or pre-approval.Arranging a written pre-approval with a bank (via a mortgage broker), gives borrowers a higher level of certainty that, if they go ahead and purchase a property, that the bank will ultimately unconditionally approve a loan to fund that property.Pre-approvals do not attract any fees (they are free) and you are not obligated to use that lender or borrow the pre-approved amount.What could go wrong even if you have a pre-approval?Things can still go wrong even if you have a pre-approval.Typically, the only material risk is that the bank values your new property below the purchase price. The bank will lend against the contract price or valuation, whichever is lower. If the property valuation is lower than purchase price, it will mean you won’t be able to borrow as much and you must contribute more cash (or additional property as security).For example, if you buy a property for $1,000,000 and need to borrow 80% (or $800,000), and the property valuation comes back at $950,000, the bank will reduce your loan amount to 80% of that value, being $760,000. That means you must contribute another $40,000 of cash to be able to settlMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Treasurer Frydenberg handed down the federal budget last night and to be honest, there’s not a lot in it for individuals and investors. However, there are some real positives for small business, first home buyers and retirees. This blog provides a summary of the initiatives announced on 11 May 2021.First home buyers’ to be able to access more super for a depositThe First Home Super Saver (FHSS) scheme was introduced four years ago to help first home buyers save a deposit. In summary savers can make tax-deductible voluntary contributions into super of up to $15,000 per year. These contributions are usually taxed at a flat rate of 15%, which means it reduces their income tax liabilities. They can then access these savings (plus investment earnings) in the future and contribute the monies towards the purchase of a first home. Previously, the maximum a saver could access from super was capped at $30,000. However, this has been increased to $50,000 in this year’s budget.Savers cannot withdraw compulsory employer contributions i.e. the 9.5% (to increase to 10% after 1 July 2021) their employer contributes on their behalf. These contributions are still preserved inside super, which is good.The benefit of this is it makes it easier to save after-tax dollars. For example, someone earning $135,000 p.a. pre-tax would pay a marginal tax rate of 39% on the last $14,000 of pre-tax income – or $5,460 – allowing them to save only $8,540 after-tax ($14,000 - $5,460). However, if they salary sacrificed that $14,000 into super, their super fund would only pay $2,100 of tax, allowing them to save $11,900 after-tax. In this example, this person has increased their savings by almost 40% due to the tax savings.People earning greater than $120,000 p.a. could enjoy the highest tax savings.Expend the home loan guarantee schemeThe First Home Loan Deposit Scheme (FHLDS) allows borrowers to borrow more than 80% of a property’s value whilst avoiding the cost of mortgage insurance, because the government guarantees part of the loan. Places under this scheme are very limited. However, the government will make available another 10,000 places. Plus a further 10,000 places over the next four years to eligible single paMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

After 1 July this year, your employer must increase your super contributions from 9.5% to 10% of your salary. This contribution rate will then increase by 0.5% p.a. for the subsequent 4 years until it reaches 12%. This could boost your retirement savings but only if you optimise two things.The government was tempted to delay this increaseIt has been reported that the government was contemplating delaying increasing the Superannuation Guarantee Charge (SGC). The increase in SGC was proposed by the Gillard government back in 2012 but it was subsequently delayed until 1 July 2021. The Morrison government was probably concerned about whether businesses could afford higher employment costs during a pandemic. In addition, some commentators have suggested it would deter higher wage growth because any possibility for wage increases would be thwarted by higher superannuation costs.In my opinion, not delaying the super increase is the right decision. The underlying economy is recovering better than expected. And an increase in wage inflation in the short term is probably unlikely anyway for a variety of reasons. Forcing people to increase the amount they save for their future retirement is a good thing for them personally and the country as a whole.What effect will this have on your future super balance?The table below sets out the projected increase in super balance depending on your income and your super balance today. There are three numbers in each corresponding cell. The first number represents the percentage increase over a 10 year period, the second over 20 years and the third over 30 years. For example, if your super balance is $200k and your income is $150k, then this increased SGC rate over the next 5 years is projected to increase your super balance by 6.1% in 10 years, 9.1% in 20 years and 10.3% in 30 years.See table at https://www.prosolution.com.au/super-increase/As we can see, the increase in SGC really helps people with lower super balances the most.However, if you already have a healthy super balance, the increase in contributions probably isn’t going to have a material impact on your retirement. Instead, fees and returns will have a greater impact on your future balance.It is important to highlight that most people will need to invest in assets in additMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Tax isn’t necessarily a bad thing. If you’re paying tax, it means that you are making money (income or capital gains). But of course, there’s no need to pay any more than you legally have to. I discuss our common-sense approach to saving tax below.Minimising risk is often more important than saving taxIt is not worth it to bend or break the law to save a few hundred dollars in tax. For example, if you get audited and you have some dodgy deductions, it will encourage the ATO to look harder. The last thing you want is to attract the ATO’s attention.My approach has always been to stick within the black letter of the law. Bending the law is rarely worth it. However, if there are entirely legitimate ways to minimise tax liabilities, then it would be silly to not explore them.Remember, when you lodge a tax return, the taxpayer takes all the risk. If you get audited, you will be liable for the interest and penalties, not your accountant.Often, tax can only be delayed, not avoidedOf course, there are few things you can do to minimise tax. However, more aggressive tax minimising measures tend to delay tax rather than permanently reduce it. Often, implementing these strategies create cost (tax advice fees and documentation) and complexity. Even the best plans can be thwarted by the ATO issuing a tax ruling, practice statement or change in law to outlaw your plans. Sometimes, it’s better to keep things simple. Minimise tax as much as possible without creating too much cost and complexity.Minimise tax whilst you’re working (pre-retirement)I list some of the common strategies we use to help clients minimise taxation liabilities whilst they are working i.e. generating personal exertion income.Personal exertion income earners have few avenues to minimise taxIf you are a PAYG employee or earn Personal Services Income, there are not many avenues available to you to minimise your income tax liability. Of course, you can use negative gearing and/or contribute into super (discussed below), but that’s about it. There are some additional tactics available to certain professionals such as barristers and medicos. If there are limited avenues available to you to minimise income tax, then its best to focus on minimising other tax liabilities such as tax on investment returns, land tax and so on – which I discuss below.My new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

It’s stating the obvious to say interest rates are very low at the moment. But what can be easily missed is how powerful low rates can be for investors. And arguably, the next few decades could provide the best opportunities in a lifetime for investors, if they are diligent and invest in high quality assets.When will interest rates rise?That is the million-dollar question. The short answer is that no one really knows. But we should remind ourselves that interest rate expectations can change very quickly, so we must factor that into our investment decision making. That is, make sure you can afford higher loan repayments when rates eventually rise.The RBA has been very firm in regard to its intention. It has said that it will not raise rates until the inflation rate rises above 2% p.a., which it does not expect will occur before 2024. Therefore, it seems variable rates are on hold for at least 2.5 more years.We should consider the level of government indebtedness and the impact rising interest rates will have on the budget. Economies can become reliant on low interested rates – look at Japan as an example. It has been stuck on zero interest rates for more than 20 years.For what it’s worth, my view is that variable rates probably won’t change materially over the next 3 to 5 years. Beyond 5 years, they are likely to rise but probably at a relatively slow pace. It is quite difficult to fathom rates rising above 5-6% p.a. over the next few decades. Low rates could be the “new normal”.Simple math proves its powerInvestors can lock in an interest rate for 5 years at 2.69% p.a. with interest-only repayments. I think we can all agree that is low (especially compared to early 1990’s rates, as shown in this image doing the rounds on social media).Assuming you have a surplus annual cash flow of $25,000 to invest, you have two obvious options:1. Invest it incrementally each year in an investment such as a share market index fund; or2. Borrow a lump sum, buy an investment property and use the cash flow to pay for its net holding costs.If you chose the first option and you received a return of 10% p.a. over the next 20 years (which would be a very good outcome), your investment would be worth almost $1.45 million My new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Growth investors have been well-rewarded over the past decade. For example, the S&P500 index (US market) has delivered an average return of 14.5% p.a. over the past 10 years solely off the back of growth stocks, mainly technology. However, this year to date, value has outperformed growth. If this continues, it could have significant implications for investors.Value versus growthA ‘value’ approach involves investing in companies that appear to be under-valued by the market. Investors use a number of ratios to measure whether a company is under or overvalued including price-earnings (PE) ratio, book to market value and so on. The investment thesis is that there is a large body of evidence that demonstrates your starting valuation is a good indicator of future returns. When valuations are low, subsequent returns are high. Such companies also tend to have strong fundamentals including strong cash flow, profitability, strong balances sheets, etc.A ‘growth’ methodology is less concerned about whether the company is fairly valued by the market. It is all about future potential for growth. Growth investors are encouraged to focus mainly on top line indicators such as user numbers, revenue and growth potential e.g. how big the market could be one day. It seems that profitability is rarely a consideration.Tech has been a big contributor to growthThe large US tech companies have been major contributors to the stock markets growth over the past ten years. The chart below measures how much the FAAMG stocks (being Facebook, Amazon, Apple, Microsoft and Google) have contributed towards the overall performance of the S&P 500 index over the past 1 to 5 years. Over the past 5 years, they are responsible for driving almost half (48.4%) of the index’s return.If we look at the PE ratios that these FAAMG stocks, we can clearly see that valuations seem unsustainable (Facebook = 31, Amazon = 81, Apple = 36, Microsoft = 38 and Google = 37). To put this in context, the average PE for the S&P 500 has historically ranged between 14 and 18.Growth has been the clear winner over the past decadeThe chart below (published by My new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

The internet and newspapers are awash with stories of properties selling for amounts wildly above reserve. Such news can create FOMO and fuel buyer demand. But buyer overexuberance is rarely sustained for long periods of time. My feeling is that price growth will level out this year and I set out the reasons why below.Properties can sell above reserve for many reasonsLast month, a property located in the Eastern suburbs of Sydney (209 Edgecliff Road, Woollahra) sold for $1.5 million more than the reserve. Of course, this is an extreme example, but stories of properties exceeding reserves suggest the market is running away. I’m not suggesting these results aren’t noteworthy. They are. However, we must remind ourselves that multiple factors can contribute towards a property selling for more than its reserve.Firstly, of course, it could be that the demand is so strong for the property that multiple bidders push the price higher. Some of these bidders may be driven by emotion, particularly home buyers. They might fall in love with the property or their ego might kick in because they don’t want to “lose” at the action. Whatever the motivation, “paying more” contributes to high prices.Secondly, the reserve might be too low. Not all vendors are motivated to maximise their sale price – there might be other factors. Also, they might have an unrealistic expectation of current value (too low). Or maybe the selling agent was keen to quote the lowest possible reserve to attract more potential buyers.Finally, interest rates have a big impact on affordability, particularly for higher-value property, as buyers tend to borrow more. Fixed home loan interest rates of less than 2% p.a. make spending “a little more” on a property more affordable than it was 5+ years ago.Remember, prices have been stagnant for 3 yearsMedian house prices in most capital cities haven’t really changed since early 2018. The reason being is it’s been a pretty tumultuous period for the property market.Tightening in credit (borrowing capacity) occurred throughout 2017 and 2018, which reduced the volume of property buyers, particularly investors.In 2018 and 2019, the ALP’s federal election policy of banning of negative gearing and hiking the rate of capital gain tax weighed on property market sentiment.My new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

The word ‘holistic’ is defined by Oxford Languages as “characterised by the belief that the parts of something are intimately interconnected and explicable only by reference to the whole.” This definition implies what a holistic accountant is positioned to offer you the most value. But not all accountants are able to adopt a holistic approach.This blog sets out the key considerations to help you assess whether you would benefit from engaging a holistic accountant.Taxation and investing are inextricably intertwinedTaxation is typically your biggest lifetime expense. Therefore, it makes sense that you should take steps to minimise it. This includes ensuring your investments are tax-effective. The less tax you pay, the more investment returns you keep. The more you keep, the less assets you need to fund retirement.Take superannuation as an example. It’s a wonderful investment vehicle because its concessionally taxed at a rate of 15% for income and 10% for capital gains. However, in retirement (pension), all investment income and gains are tax free (if your account balance is less than $1.7 million after 1 July 2021).Therefore, it is natural for your accountant to recommend contributing into super. But if your super is invested poorly and doesn’t generate any returns, the rate of tax is inconsequential. This demonstrates how intertwined tax and investing is. In this situation, you need an accountant that not only recognises the tax benefits of super, but that can also direct you how to maximise your super investment returns. Of course, there are many examples of how tax and investing are inextricably intertwined, and this is only one.You trust your accountantAccording to research, accountants are rated as the most trusted financial professionals. The main reason for this is that they are independent. Typically, they have nothing to sell to you, other than their advice.Although, 15 to 20 years ago some accountants sold “tax-effective” agribusiness products to their clients. Unfortunately, everyone that invested lost thousands. Most accounting bodies have since banned accountants from selling products to their clients.Back to the topic of independence. Being independent means accountants don’t have any conflicts of interest. Their only interest is what is best for you. This sMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Almost everyone is predicting that property prices will surge higher this year. In fact, the newspapers are already full of stories about properties selling well above reserves.Low stock levels are partly responsible for the currently exuberant property market. That exuberance might cool as more stock becomes available. But the RBA and the government do not want prices to rise too quick as it might create a bubble, and all bubbles pop eventually.Predictions of rising property pricesWestpac’s chief economist, Bill Evans predicts that Australian property prices will rise by 20% over the next two years. Most other economists agree with him.Mr Evans cited Australia’s better-than-expected economic recovery, the vaccine rollout and historically low interest rates as the reasons for his optimistic property price prediction.According to ABS lending indicators, the property market is still dominated by owner-occupiers. However, as overall sentiment improves, it is likely that investors will return to the market and that could further fuel price rises. The government could become concerned if it believed growth rates were unsustainable.Imminent loosening of lending rulesLast year the government announced that it would scrap the ‘responsible lending’ rules in order to speed up loan approval times and eliminate the ‘one-size-fits-all’ approach (i.e. give banks more discretion). The practical consequence of this proposal change is that lenders may no longer have to ascertain what you currently spend each month (including discretionary expenses). Instead, they could use a benchmarks. In effect, for many borrowers, it would increase their borrowing capacity.The Senate Committee recently recommended to the government that these proposed changes become law. The Bill will now need to be debated and passed in the Senate and the House of Representatives before it becomes law. If the Bill is ultimately successful, this could further fuel property prices.Why the RBA cannot increase interestMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

It is alleged that Sydney-based financial advisor, Melissa Caddick stole $25 million from her clients. She has recently gone “missing”, leaving a trail of disaster for her clients and family members.Many con artists are very cunning and go to great lengths to conceal their wrongdoings. But there are a few simple steps you can take which will virtually eliminate any chance of you being ripped off.An advisor must be an independent intermediately, not a fund managerVirtually all fraud committed by financial advisors occurs when the advisor is in control of the investments. That is, they are investing the money on behalf of their clients. This impairs their independence and allows them to manipulate information.That is why you must demand absolute independence from any advisor you deal with. Your advisor’s job is to hire and/or fire fund managers (based on performance), not be a fund manager themselves. This allows the advisor to always represent your best interests. They are an intermediatory between you and the business investing your money, holding them accountable.At ProSolution, we invest in a variety of managed investments and Exchange Traded Funds (ETFs). At any time, our clients can go directly to the fund managers or ETF providers website to check on the investments and performance. It is a very transparent arrangement. Transparency is the enemy to fraudsters.Make sure there’s good internal controlsIt is acceptable to allow your financial advisor to make investments on your behalf. In fact, that’s what you are paying them to do. However, they should not have any ability to withdraw funds.For example, we use an investment platform to invest our clients’ monies. We can invest any monies on the platform, but we cannot withdraw money from that platform. Only our clients are able to do that. This add another layer of protection.A custodian should hold your assetsAll reputable investment platforms and fund managers use a custodian to hold all investment assets. A custodian protects the investor from counterparty risk. For example, if you use Macquarie investment platform and Macquarie goes bankrupt, your money is protected because it’My new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.